EXHIBIT 4.16
[UNOFFICIAL TRANSLATION]
AGREEMENT
Duly Signed on February 11th, 2007
Tel Aviv
BETWEEN
G. WILLIFOOD INTERNATIONAL LTD.
Company Registration Number 520043209
▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
(hereinafter :" WILLIFOOD"
On one hand
AND BETWEEN
1. MR. YA`ACOV BARON
I.D. Number 007772239
8, Montifiori Street,
Kiryat O`no
2. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
I.D. Number 007529969
▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Kiryat O`no
3. ▇▇. ▇▇`OR BARON
I.D. Number 029640794
▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇
4. ▇▇. ▇▇▇▇▇▇ OR`NA
I.D. Number 058239963
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Kiryat O`no
5. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ SHA`▇▇▇
I.D. Number 023633951
▇.▇.▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
(▇▇▇▇ of the Baron individuals as listed
in items 1 to 5, inclusive, together and
each one separately will be referred to
hereinafter: "BARON"
On the other hand
WHEREAS WilliFood is part of the WilliFood Group of Companies which deals with
marketing and distribution of food products, in Israel and worldwide,
directly or by means of others;
WHEREAS The Barons are family members dealing with exporting and marketing
Kosher food products abroad;
WHEREAS The parties reached an agreement to cooperate within the framework of
a company that will be established for that purpose of operating a
business of export and distribution of Kosher food products abroad,
and which will further continue the activities performed by the Barons
and strengthen them whilst maintaining their special characteristics
and contacts, relying on same when establishing that specific activity
and whilst expanding it.
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WHEREAS The parties wish to put in written all that has been agreed upon
between themselves with regards to same;
IT IS THEREFORE STATED, STIPULATED AND AGREED BETWEEN THE PARTIES AS HEREUNDER:
1. INTRODUCTION, HEADINGS, APPENDIXES AND DEFINITIONS.
1.1 The introduction to this Agreement constitutes an integral part of The
Agreement.
1.2 The headings of the various items in this Agreement are provided for
convenience purposes only and they should not be attached any
meaningful interpretation.
1.3 The Appendixes constitute an integral part of this Agreement.
1.4 Each of the following definitions, wherever they appear, will have the
following meaning:
1.4.1 "THE DETERMINING DATE" - within 3 (three) business days as of
the fulfillment of the Suspension Stipulations.
1.4.2 WILLIFOOD GROUP OF COMPANIES - the following groups: WilliFood
and WilliFood Investments Ltd.
1.4.3 "RATE OF EXCHANGE" - the U.S. Dollar ($) rate of exchange as
published from time to time by The Bank of Israel, and the latest
known on a specified date that payment is to effected by virtue
of this agreement.
1.4.4 "CONTROL" - Holding the majority of shares and stocks of the
relevant corporation and/or of the right to nominate the majority
of the members of his Board of Directors.
1.4.5 "THE MUTUAL COMPANY" - The Mutual Company which will be
established by the parties as specified in item 2.1 and 3 of this
Agreement as hereunder.
1.4.6 "BUSINESS DAY" - Monday to Thursday of each week, except for
holidays or holiday eve, sabbaticals or any other day on which no
foreign currency transactions are performed, as customary in
Israel.
1.4.7 " SUSPENSION STIPULATIONS" - The Suspension Stipulations
specified in item 17 of this Agreement.
1.4.8 "AUTHORIZED TRANSFEREE" - With regards to WilliFood , a
corporation controlled by WilliFood or by the one controlling
WilliFood, or a corporation or individual who controls WilliFood.
With regards to the Barons - Each of the Baron individuals, or a
corporation controlled by them.
1.4.9 " THE BARON BUSINESSES" - the Businesses of the Barons
individuals in the field of exports and distribution of Kosher
food products abroad prior to signing this Agreement, whether via
a registered business. or otherwise.
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1.4.10 "MINIMAL HOLDING RATE" - Holding of 25% of the issued and
redeemed share capital of the mutual company.
1.4.11 "COMPETITOR" - Anyone who deals with the same field of activity
as that of the mutual company.
2. THE PURPOSE OF THE AGREEMENT
2.1 In compliance to the fulfillment of the Suspension Stipulations, it
framework of the mutual company, for the purpose of exporting Kosher
food products abroad and distribution of Kosher food products abroad,
including exports of Kosher food products manufactured in various
countries abroad (including those manufactured by WilliFood and for
WilliFood) in order to be sold in other countries (hereinafter: "THE
BUSINESS"): all in compliance with instructions of this Agreement.
2.2 The parties state herein the following and are committed to each other
as follows:
2.2.1 In compliance with the correctness of the presentations
specified in items 2 and 5 of this Agreement, they are interested
in mutual business relationship, after holding meetings,
performing checks and enquiries, and having studied each other,
including the type of their activity, and the way each other
operates and performs.
2.2.2. In compliance to fulfilling all the suspension stipulations,
there is no prevention by law or by agreement or by any other
commitment to the contrary to entering into this Agreement and
the complete fulfillment of its commitments, as specified in the
Agreement.
3. THE MUTUAL COMPANY
3.1 It is hereby agreed by the parties that a mutual company will be
established and registered by both parties, at a time close by after
the signature of this agreement.
3.2 The mutual Company will be registered under the name " Baron Kosher
Food Ltd" or under any other similar name agreed upon by the parties,
and which will be certified and approved by the companies registrar.
3.3 The registered share capital of the mutual company upon its
registration will be 100,000 regular shares of NIS 1 nominal value
each (hereinafter:" REGISTERED CAPITAL" and "SHARES" or "THE MUTUAL
COMPANY SHARES", accordingly).
3.4 The share holders will be allocated 1000 shares out of the registered
capital (hereinafter :"The issued capital"), which will be divided
amongst them, as follows:
3.4.1 WilliFood 50.1% , i.e. 501 shares
3.4.2 Mr Ya`acov Baron - about 12.7%, i.e. 127 shares.
3.4.3 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ - about 12.7%, i.e. 127 shares.
3.4.4 ▇▇. ▇▇`or Baron - about 17%, i.e. 170 shares.
3.4.5 Ms Or`▇▇ ▇▇▇▇▇▇ - about 4.2%, i.e. 42 shares.
3.4.6 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Sha`hak - about 3.3%, i.e.33 shares.
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3.5 The articles of the mutual company will be formulated according to the
version as per Appendix A to this Agreement (hereinafter: "The
Articles").
3.6
3.6.1 The Articles of the mutual company will be formulated so as to
be in accordance with the consents object of this Agreement. In
the event of any contradiction and/or non reconciliation between
the instructions of this Agreement with he instructions of the
Articles of the company - the instructions of this Agreement will
overpower, and the parties will be obliged to amend the articles
of the company accordingly.
3.6.2 Moreover, the following instructions will be included, amongst
others, in the Articles of the company:
3.6.2.1 Settlement of provision of a right for first refusal in
case a share holder wishes to sell and/or transfer his
shares in the end of the stagnation period to a non
authorized transfereeof his If the right for first refusal
will not materialize, the buyer will be obliged - as a
prerequisite to the purchase - to undertake the seller` s
commitments per this Agreement by signing this Agreement.
3.6.2.2 Prohibition of selling, transference, endorsement and
mortgaging of the company shares by anyone of the parties
for a period of 3 (three) years as of the determining time
as above- mentioned (and hereinafter: " The stagnation
period"). And prohibition of selling shares to competitors
and all, except to authorized transferees, in accordance
with the instructions of item 15 of this Agreement.
3.6.2.3 "Bambi Settlement" (one shot) which could be operated by
anyone of the parties who would wish to , but only after the
stagnation period.
3.6.2.4 Settlement of WilliFood effective control of the mutual
company by endowing WilliFood the right to exclusively
nominate the Managing Director and the Chairman of the Board
Directors, as well as its right to decide upon the
termination of their engagement.
3.6.2.5 To remove any doubts and notwithstanding the Barons`
commitments as specified in this Agreement, the Baron
individuals will not be estopped from reaching mutual
agreements so as to organize the relationship between
themselves as share holders.
3.7 The directors of the mutual company will be as follows : On behalf of
WilliFood - ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
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On behalf of the Barons - Mr. Ya`acov Baron and ▇▇. ▇▇`or ▇▇▇▇▇.
Each party will be entitled to terminate the term of the service of
the director he nominated and nominate someone else instead. The
representatives of the Barons in the Board of Directors will be
entitled to bring forth the accountant, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, so as to
attend the meetings of the Board of Directors as observer on their
behalf (with no rights attached), provided to signing a standard Non
Disclosure Agreement.
3.8 Mr. Ya`acov Baron will be nominated as the chairman of the first Board
of Directors. The Chairman will have no deciding vote.
3.9 In compliance to the instructions of items 3.10 hereunder, one of the
directors to be nominated on behalf of WilliFood will have a deciding
vote in the event the Board of Directors will not be able to reach a
majority decision. A deciding vote means double vote.
3.10 All the decisions taken in the Board of Directors, the Board
Committees and in the General Assemblies of the mutual company will be
reached at by a majority of votes, except for decisions regarding each
of the following topics, in reference to which decisions must be
unanimously reached at.
3.10.1 Disengagement, merger, re-organization of the mutual company.
3.10.2 Fundamental change of the mutual company business, including
entry into businesses of which their essential nature is not
listed in the intended businesses of the mutual company,
according to this Agreement.
3.10.3 Any decision to be taken with regards to providing guarantee or
any commitment the nature of which is similar to that of a
guarantee, or providing securities in favor of any of the mutual
company share holders, and/or by anyone of the mutual company
share holders, as well as any decision to be taken regarding
funds raising and/or capital raising from share holders or third
parties.
3.10.4 Any meaningful business transaction between the mutual company
and any of the Willy Group of Companies, or one notwithstanding
market conditions, or one not performed in the course of daily
businesses of the mutual company, nomination of administration
fees for WilliFood, as specified in item 4.8 hereunder, any
business transaction between the mutual company and the Barons',
nomination of any monetary rewards, as specified in item 4.10
hereunder and nomination of monetary refund for WilliFood, as
specified in item 6 hereunder.
3.10.5 Change in the structure of the share capital of the mutual
company, issuance of shares, allocation of shares, expansion of
share capital, in compliance with the specified in item 7.5 as
hereunder.
3.10.6 Change in the signature rights of the mutual company.
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3.10.7 Any one-time business transaction and any transaction performed
not during the course of regular business of the mutual company
and which will entail the mutual company commitment (in one
installment or accumulatively) to an amount of over $250,000, as
well as current business deals performed in the course of regular
business of the mutual company, except for business deals as
specified above and accumulatively amounting to $500,000 per
month.
3.10.8 Employment of family relatives of the mutual company share
holder members, or relatives of the individuals holding shares of
the share holders of the mutual company; it is a priori agreed
that the Board of Directors of the mutual company will be
entitled to state that ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and Ms Or`▇▇ ▇▇▇▇▇▇ will be
employed by the mutual company, all together or partially, at a
salary that will match their position and contribution.
3.11 The right to sign on behalf of the mutual company will be as follows:
the signature of one of the directors representing WilliFood combined
together with the signature of one of the directors on behalf of the
Barons (two signatures altogether), with the company` s stamp or the
company` s name in type will bind the company to each and every issue.
3.12. The first accountants to inspect the mutual company will be
Breitmann, Algamor and Co.
3.13. The mutual company will publish quarterly financial reports and
yearly financial reports inspected in a format of a public company,
the stocks and shares of which are traded in the Tel Aviv Stock
Exchange Ltd. and in the Nasdak. However, the publication of the
quarterly reviewed financial reports will be submitted within 45 days
as of the first quarter, the second and the third, for that matter,
and the yearly inspected reports will be published within 90 days as
of the end of the year.
4. THE BUSINESS
4.1 The parties agree that as of the determining date the they will
operate and manage the business, based on the Barons` activities as
performed so far, within the framework of the mutual company, whilst
developing and expanding it; the parties agree to act and perform all
their activities in the field of exports of Kosher food products
abroad only within the business and the mutual company framework, all
in compliance with the instructions specified in item 4.4 of this
Agreement ( hereinafter: " the business field"). To remove any
possible doubt , it is stated hereby, in addition, that the business
field will not include the businesses and activities of Gold Frost
Ltd.
4.2 Starting from the determining date, the Barons and WillyFood will stop
performing all activities in the business field (and any other
accompanying activity) between them and their customers and suppliers,
and any activity that was performed with them until then - will be
performed as of that time by the mutual company. All the rights and
obligations that the Barons have concerning their activities in the
business field prior to the determining date, will pertain only to the
Barons.
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4.3 In compliance with the instructions of items 4.4 and 17.1.2 of this
Agreement, WillyFood will be responsible that the aforementioned in
item 4.2 be applied on WilliFood Investments Ltd. as well and
fulfilled by them, so that as of the determining date, any activity of
each company of the Willy Food Group of Companies worldwide that will
take place in the business field of exports of Kosher Food products
abroad and of marketing food products abroad or in foreign countries -
will be performed by the mutual company only.
4.4 To remove any doubt, the instructions of items 4.1 and 4.3 of this
Agreement will not apply to Layish Israeli Food products Ltd., a
company controlled by WilliFood and which deals in the U.S.A. with
imports, exports and marketing of food products ( Hereinafter: "
LAYISH"), and that with regards to:
4.4.1 Products which are being marketed by the company at the time of
signing this Agreement, and
4.4.2 Products bearing the brand name: WilliFood" (even if they are
not being sold to Layish at the time of signing this Agreement).
4.5 It is stated herein that any new product which is not marketed by
Layish at the time of signing this Agreement (except for products
bearing the brand name "WilliFood" as aforementioned), and which will
be marketed or sold or distributed by Layish in the U.S.A., will be
sold to Layish only through the mutual company, granting it a suitable
commission.
4.6 The parties agree that WilliFood will act in the intention of
transferring, in the near future, the mass of the current Layish
purchases so as to be under the responsibility of the mutual company,
in such a way that the mutual company will execute Layish purchases,
granting it a suitable and agreed upon purchase commission. For that
matter, "commission" means - the difference between the buy rate by
which the product was purchased from the manufacturer - and the sell
rate by which the product was sold to a customer of the mutual
company.
4.7 As of the determining date, both parties will act in the interest of
the benefit of the mutual company and of advancing its businesses;
moreover, WilliFood will make use of its connections with its
customers and assorted parties (including wholesale distributors,
institutional customers abroad etc.) in order to enlarge the group of
customers of the mutual company, on top of marketing activities that
will be performed by the mutual company.
4.8 The more WilliFood will contribute to the mutual company as aforesaid
in item 4.7 and/or contribute to the management efforts of the mutual
company, WilliFood will be entitled to get administration fees from
the mutual company, to be agreed upon by the Board of Directors of the
mutual company.
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4.9. The parties agree that the mutual company will give priority to
marketing WilliFood products in the field of Kosher food products
abroad; The mutual company will also regularly advise on marketing
Kosher food abroad, free of charge and every once in a while, and that
without harming the assignation of all of the Willy Group activities
in the field of Kosher food products in foreign countries - to the
mutual company.
4.10 Unless otherwise specified in this Agreement, and/or the Board of
Directors of the mutual company will unanimously decide otherwise, the
Barons and WilliFood will not be entitled to any payment in
consequence of the specified in item 4, and should anything be due to
any of them, it will be only in accordance to the explicitly specified
in this Agreement.
5. THE PRESENTATION OF THE PARTIES.
5.1 WilliFood states herein the following and is committed to the Barons
as follows:
5.1.1 that it is a duly registered company in Israel and that its
stocks and shares are traded in the Nasdak Exchange in New York.
5.1.2 that in compliance to the fulfillment of all the suspension
stipulations, there is no restriction or prohibition or
prevention, according to its corporate documentation and/or
corporate instructions or any agreement` s instructions or by any
regulation regarding its linkage within the framework of the
instructions of this Agreement, and regarding the fulfillment of
its commitments according to instructions of this Agreement, and
that its business linkage within the framework of this Agreement
and the fulfillment of its commitments according to its
instructions do not constitute and will not constitute a breach
of commitment, prohibition or restriction of any kind.
5.1.3 that the business linkage by means of this Agreement has been
approved by the Board of Directors of Willi Food; copy of the
protocol of the decision of WilliFood validated by WilliFood
legal advisor is attached as Appendix B of this Agreement.
5.1.4 that it will assist the mutual company in any new Kosher food
project, including handling the provision of Kosher
certification, as well as in any issue concerning the production
and marketing of Kosher food abroad, whether it is manufactured
in Israel or abroad.
5.1.5 that it will provide the mutual company the option to purchase
any of its products at convenient and competitive rates.
5.1.6 that it will contribute its know how, contacts and experience to
the mutual company and will assist it in expanding its export
activities.
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5.1.7 that it is aware of the fact that the Barons came into linkage
with them through this Agreement, amongst others, based on the
commitments and statements as specified in item 5.1, and that
would have those commitments and statements not have been
provided, the Barons would not have come into linkage by means of
this Agreement, including all its stipulations.
5.2 The Barons state hereby the following and are committed to WilliFood
as follows:
5.2.1 The suppliers of the Barons and/or the Barons` businesses prior
to the determining date, including their names, addresses and the
Barons` essential rights ( such as exclusivity) - are listed in
Appendix C of this Agreement.
5.2.2 The customers of the Barons` and/or the Barons` businesses prior
to the determining date, including their names, addresses and the
Barons` essential rights (such as exclusivity) - are listed in
Appendix D of this Agreement.
5.2.3 That Appendixes C and D are true and correct.
5.2.4 Should the mutual company be caused any harm due to commitments
or events, deeds or failure on the Barons` part in consequence to
reasons occurring prior to the determining date, the Barons will
then compensate the mutual company within 7 (seven) days as of
receipt of the mutual company` s first demand in written, or of
the demand of each two Directors in the company, due to any harm
caused, as aforementioned.
5.2.5 The Barons are committed to do their utmost so that the turnover
of transactions in consequence of which the mutual company may
reach a gross profit or commission in the first 4 (four) complete
quarters after the determining date will be at least 7.5 ( seven
and a half) million dollars, and that there be an increase in the
gross profit and/or in commission as aforementioned every
additional year for the 4 (four) years following the first four
complete quarters as aforementioned.
5.2.6 That there are no pending requests for bankruptcy and /or
dismantling and/or receivership and/or nomination of temporary
liquidator and/or temporary receiver and/or special manager
and/or trustee and/or request for creditor settlement submitted
to court and/or to any other authorized party against any Baron
individual, including any of the Barons` businesses, and that no
confiscation/ execution procedures took place against any Baron
individual or business during the last 5 years;
5.2.7 That no meaningful claims were submitted against any Baron
business and/or Baron individual during the last five years,
except for commercial claims. One, being a claim in the amount of
NIS 200,000 submitted against them as a third party claim , and
the second claim is one submitted against them and others by a
third party in an amount of CAN $ 7 millions. To remove any
doubt, it is stated herein that only the Barons are liable to
these claims.
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5.2.8 That in compliance to the fulfillment of all the suspension
stipulations, there is no restriction and/or prohibition and/or
prevention according to the instructions of the Agreement or any
regulation by law as to the coming into agreement and to the
fulfillment of their commitments within the framework of this
Agreement, and that their linkage within the framework of this
Agreement and the fulfillment of their commitments according to
its instructions do not and will not constitute a breach of
commitment, prohibition or restriction of any kind.
5.2.9 That they are aware that WilliFood came into linkage with them
through this Agreement, amongst others, based on their
commitments and statements as specified in item 5.2 herein, and
that would have those commitments and statements not have been
provided, WilliFood would not have come into linkage by means of
this Agreement, including all its stipulations.
6. SERVICES WLLIFOOD PROVIDES TO THE COMPANY
6.1 The offices of the mutual company will be located in the neighborhood
of WillyFood offices in Yavne, as an independent and autonomic unit.
The rental that will be paid to WilliFood will be at market conditions
and tariff.
6.2 Should the Board of Directors assume that it is in the interest of the
mutual company, the mutual company will received from WilliFood
logistic and administrative services against payment (accounting,
office services, etc) and the mutual company will be billed at cost of
the services by WilliFood, the service provider. The rate the company
will be charged with for the services provided by WilliFood will not
exceed the standard market rate or the rate of a quotation which the
mutual company will obtain by outsourcing.
7. FINANCING THE ACTIVITIES OF THE COMPANY
7.1 WilliFood commits hereby to finance the mutual company activities, as
follows:
7.1.1. According to the Company` s Managing Director` s decision in
written that will detail the requirements and goals for which the
mutual company needs monetary means, including relevant
timetables, WilliFood will transfer to the bank account of the
mutual company, every once in a while, sums of money required
only specifically for the current business activities of the
company, in such a way that the total amount in NIS will
accumulatively be equivalent to US $ 1,000,000 ( one million US
Dollars) according to the rate of exchange ( hereinafter : " THE
PRIMARY AMOUNT"). The primary amount will be calculated and
registered in the books of the mutual company as owners` loans
which WilliFood provided the mutual company ( hereinafter: " THE
LOAN"). WilliFood states herein and is committed to have this
primary amount available with her, and that once any decision of
the Managing Director as aforementioned regarding a specific
amount of money will be taken, the amount of money specified will
be transferred to the bank within 3 business days, unless the
timetable detailed in the decision will allow other dates.
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7.1.2 The loans will not bear any interest during the period of the
first year it was provided to the mutual company.
7.1.3 After the end first year, as aforementioned, the loan amount
will bear a yearly interest of a rate of US $ prime percentage +
1% per year ( the rate of prime as indicated on the date ending
the first year); it is agreed that the loan will be refunded to
WilliFood out of the initial profits of the mutual company in
such a way that will not harm the mutual company capacity to pay
current payments.
7.1.4 In the end of the first complete 4 (four) quarters after the
determining date, the results of the mutual company activities
will be reviewed based on the first 4 (four) complete quarterly
reports after the determining date and out of the loan amount. An
amount equivalent to the relevant profit amount, as defined
hereunder, will turn to be an investment of WilliFood in the
mutual company and will not be considered any longer as owner
loan provided to the mutual company.
Regarding this issue; "THE RELEVANT PROFIT AMOUNT" means - the
amount of profit of the mutual company after deduction of all
expenses including financing expenses, before tax, multiplied by
2 ( two).
7.2 In furtherance to the specified in item 7.1.1., Willy food is
committed hereby in compliance to reaching the targets detailed in
item 5.2.5 aforementioned, to provide the mutual company , should it
require additional financing on top of the primary amount, and at any
stage the mutual company will be requested to, any amount and/or any
guarantees the mutual company will need, up to a total amount in NIS
equivalent to US $ 1,000,000 ( one million US Dollars) per rate of
exchange. This amount will be calculated and registered in the mutual
company books as owner loan and will bear interest at a rate of dollar
prime + 1% yearly and will be refunded out of the first profits of the
mutual company in such a manner as not to harm the mutual company
capacity to pay current payments) hereinafter:" THE COMPLEMENTARY
FINANCING"). It is agreed that the mutual company will not distribute
any dividends to its share holders prior to paying off the owners
loans it was provided, such as the primary loan and the complimentary
financing loan.
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7.3 The parties mutually state that their intention - amongst others- is
that the mutual company will independently acquire products in order
to sell them to its customers, an activity that requires significant
financing; the parties also mutually state that the aforesaid
financing may be required as well due to the fact that a certain
period of time may pass till the mutual company will be getting income
from its customers, and that during that period of time a need for
full financing of the mutual company activities will be required.
7.4 It is explicitly agreed that the Barons will not be obligated to
provide any financing or guarantees or securities to the mutual
company, as long as WilliFood did not exhaust its commitment to the
fullest, according to item 7 herein, and that their holdings in the
mutual company will not be depleted, unless an investor will join the
mutual company (or in case of going public), according to company
value of at least 4 million US Dollars.
7.5 The parties agree that in case the mutual company will require an
additional financing on top of the primary loan and complementary
financing, and should the mutual company not be able to obtain such an
additional financing from the banking system, based on its own
resources, the parties will provide such a financing to the mutual
company, parallel and simultaneously and relatively ("pro-rated") to
their rate of holding the mutual company shares. Should they not do so
- the depletion system will be operated as indicated in the Articles
of the mutual company.
8. MANAGING THE COMPANY
8.1 The mutual company will be managed by a Managing Director.
8.2 The Managing Director of the mutual company will be appointed
according to the Board of Director` s decision and will be
subordinated to the Board of Directors. The first Managing Director of
the mutual company will be ▇▇. ▇▇` or ▇▇▇▇▇ and he will be nominated
for a period of 5 (five) years, unless the Board of Directors will
decide to stop his employment at an earlier stage. In order to remove
any doubt, it is herein stated that the decision of the Board of
Directors with regards to this issue means the decision of the those
Directors representing WilliFood. The first Managing Director will be
employed according to a Service Agreement as formulated in Appendix E
to this Agreement. This agreement will include, amongst others, the
following instructions:
8.2.1 Should the Board of Directors decide as aforementioned upon the
termination of employment of the Managing Director as consequence
of or in connection to the fact that the mutual company did not
reach the targets detailed in item 5.2.5 aforesaid, all or
partially, then, in that case, the Managing Director will be
entitled to get paid half of the special salary as specified in
item 8.2.3 hereunder.
8.2.2 Should the Board of Directors decide as aforementioned upon the
termination of employment of the Managing Director as consequence
of or in connection to circumstances wherein an employee may be
dismissed per law and without compensation (such as abuse of
office, etc), then, in that case, the Managing Director will not
be entitled to any payment from the mutual company and his
dismissal will be immediate.
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8.2.3 Should the Board of Directors decide as aforementioned upon the
termination of employment of the Managing Director as consequence
of or in connection to any reasons other than those specified in
items 8.2.1 and 8.2.2 aforementioned, and in spite of the fact
that the mutual company reached the target as specified in item
5.2.5 aforementioned, then, in that case, the Managing Director
will be entitled to receive a special payment from the mutual
company in an amount equivalent to his last monthly gross salary
prior to his cessation of work multiplied by 12, and in addition
dismissal compensation, as per law.
8.2.4 The mutual company will pay the Managing Director a gross
monthly salary of NIS 27,000 plus V.A.T.,as duly deemed, against
an official tax invoice.
8.2.5 The mutual company will provide the Managing Director a car
suitable to his position as Managing Director, as well as a
mobile phone, the incurring tax to be paid to be fully grossed up
by the mutual company.
8.2.6 The Managing Director is entitled to a bonus (gross, before tax)
in the rate of 25% of the operational profit of the mutual
company (as defined herewith: the income of the mutual company,
all operational expenses being deducted and prior to financing
expenses) during the 4 (four) first complete quarters after the
determining date, which is over $500,000 (five hundred thousand
US Dollars)( for example, if the operational profit in the end of
the four quarters will be, as aforementioned, $1,000,000- the
Managing Director will be entitled that year to a bonus of
$125,000).
8.2.7 In addition, the Managing Director is entitled to a bonus
(gross, before tax) for each additional year that he is employed
by the mutual company (on top of the first 4 (four) complete
quarters after the determining date, at a rate of 25% of the net
profit (after tax deduction), which will be higher than the
previous year net profit (after tax) with additional 20%; for
example - the net profit (after tax) in the end of the 4 (four)
first complete quarters after the determining date was 0.5
million US Dollars; in the end of the second year (that is: in
the end of the 4 (four) complete quarters following the first 4
(four) complete quarters which followed the determining date, the
net profit of the company was 1,2 million US Dollars. In which
case, the Managing Director is entitled to 0.25% (quarter) of the
difference between (1.2*0.5 and 1.2) which is equivalent to a US
$150,000 bonus.
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8.2.8 To remove any doubt, it is stated herein that the operational
profit aforementioned in item 8.2.8, will be defined according to
the financial quarterly reports for the first 4 (four) complete
quarters following the determining date, and the net profit, as
aforementioned in item 8.2.7, will be defined according to the
relevant inspected financial yearly reports and the quarterly
reviewed financial reports, as seen fit, and it is agreed that in
case the mutual company should have - for the relevant
calculation periods - yearly reviewed financial reports, then the
calculations is to be effected according to the yearly financial
reports.
8.2.9 The Managing Director is committed herewith to non-competition
with the mutual company as long as he is employed by the mutual
company, and for a further period of 6 (six) months thereafter.
This commitment is waived in case the mutual company will
terminate his engagement as aforementioned in item 8.2.3. The
aforesaid commitment will be limited for a period of 3 months on
top of his period of employment in case he was dismissed as
specified in item 8.2.1. The aforesaid commitment is to be fully
applied in case of resignation.
8.3 Moreover, Mr. Ya`acov Baron will be engaged by the company as active
chairman of the Board of Directors for NIS 18,000 (gross, per month)
plus V.A.T. payable against a duly tax invoice and in accordance to a
service provision agreement formulated as indicated in Appendix F of
this Agreement and constituting an integral part of it. The service
agreement will be drawn for an obligatory period of minimum 3 (three)
years. Mr. Ya`cov Baron will also be committed (within the framework
of the service agreement) to non competition with the mutual company
during the term of his engagement, including an additional period of 6
(six) months thereafter. This commitment will be waived in case of his
dismissal during the first three years of his employment by the mutual
company, as consequence of other reasons than that of breaching his
commitments.
9. ALLOCATION OF DIVIDENDS
The parties agree herewith that the mutual company will allocate dividends
to its share holder in the end of the each calendar year, at a rate of not
less than 40% of the profit accumulated by the mutual company that year,
and which can be lawfully allocated; provided that the allocation will not
harm the cash flow and development programs of the company. Allocation of
dividends will be performed in such a measure as not to cause deficiency in
the equity capital required for financing the company` s current activities
and its business development, and not prior to paying off owners loans.
10. SECRECY
10.1 Each party is committed herewith to the other to keep in complete
secrecy any information that will reach its knowledge or possession
regarding the mutual company and business, or regarding the other
party, its share holders and directors, companies it is linked with
and its daughter- companies.
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10.2 In reference to this item, "information" is any business information,
commercial and financial about the other party, its business,
customers, employees and managers, marketing programs, rewards and
development, financial status, contacts with customers and suppliers,
assets, debts, rights and any thing in connection with.
10.3 The aforesaid in this item is not applicable to information that was
or turned to be common knowledge, or to information that is to be
handed over by law (including stock and share law and rulings in
Israel and in the United States of America), or to information
requested by authorized parties in Israel and in the United States.
11. NON COMPETITION
Not withstanding the instructions as per items 8.2.9 and 8.3
aforementioned, the parties are committed herewith to each other, that as
long as each one of them is a share holder in the mutual company, and for a
period of 6 (six) months thereafter (hereinafter: " THE RESTRICTION
PERIOD"), they will not compete with the mutual company and its businesses,
and will not be dealing in its field of activities, directly or indirectly,
themselves or through other parties, as independents, partners, employees,
consultants etc, or in any other way.
12. AMENDMENTS
Any amendment in this Agreement will be executed in written only and will
be signed by both parties; otherwise, it will bear no validity whatsoever.
13. CONCESSIONS
Concession of a right and/or a claim within the framework of this Agreement
will not constitute a concession of any of the other rights and claims of
whichever party of this Agreement, nor harm them.
14. DESIGNATION OF THE AGREEMENT
This Agreement alone contains all which is agreed between the parties in
reference to establishing a mutual company and to its activities; any
understanding, promise, agreement, letter of agreement or presentation
transpired between the parties prior to signing this Agreement is null and
void as of the date of its signature.
15. TRANSFERENCE OF RIGHTS AND/OR COMMITMENTS
15.1 The parties` rights and commitments according to this Agreement cannot
be transferred, mortgaged or endorsed, in any way, except for the
specified in this Agreement.
15.2 Not withstanding the aforesaid, the parties may transfer and endorse
their rights as per this Agreement, all or part thereof, to any
authorized transferee provided the authorized transferee will accept
the commitments and obligations of the transferring party, according
to this Agreement, by joining this Agreement; the transferring party
will remain liable and guarantee that the transferee will keep and
fulfill its commitments.
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16. CONFIRMATION
The validity of this Agreement is stipulated by the fact that the approval
of the business transaction - the object of this Agreement - by the
person-in-charge of the Business Restriction Office, and/or that his
confirmation that the business transaction - object of this Agreement -
does not require his approval, is in receipt by the determining date; and
that all required certifications according to item 17.1.2 hereunder will be
in receipt (all in reference to the commitments as per item 4.3 of this
Agreement).
17. SUSPENDING CONDITIONS
17.1 The validity of this Agreement suspends on the fulfillment of all the
suspending conditions detailed in this item # 17, as follows:
17.1.1 Receipt of the approval of the business transactions - object
of this Agreement - signed by the person-in-charge of the
Business Restriction Office, if and in as much as such an
approval will be required.
17.1.2 Receipt of all approvals of WilliFood Investment Ltd.
authorized institutions, in consequence of instructions per item
4.3 of this Agreement, and as duly required per law.
17.2 In case, despite all efforts the parties made, not all the suspending
conditions will be fulfilled until and no later than the determining
date, then, in such a case, the determining date will be postponed to
an additional period of 30 (thirty) days ("THE POSTPONED DATE"). If
the determining date is postponed to the postponed date, then,
whenever the determining date is mentioned in this Agreement, it
should read: the postponed date.
17.3 In case, despite all efforts the parties made, not all the suspending
conditions will be fulfilled until and no later than the postponed
date, then, in such a case, this Agreement will be essentially null
and void and the parties will have no right or reason to submit claims
thereof.
17.4 In furtherance, and notwithstanding the instructions of the
aforementioned items 17.1 to 17.3 ( inclusive), it is herewith agreed
that whereas the parties sign this Agreement without attachment of its
Appendixes, then, once the parties will not agree upon the formulation
of the Appendixes within 14 (fourteen) business days as of signing
this Agreement, and attach them duly signed to this Agreement, then,
in such a case, each party will be entitled to submit to the other
party a written notice advising that this Agreement is null and void,
and none of the parties will have the right or reason to submit claims
as consequence of the Agreement or of the notice.
18. THE TERM OF THE AGREEMENT AND ITS EXPIRATION
18.1 In compliance to the aforementioned in item # 18.2, this Agreement
will be validated as from date that all the suspending conditions will
be fulfilled and up to becoming null and void, as agreed by both
parties in written, or by lawful rulings.
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18.2 Once the holdings of one party of this Agreement decreased to less
than the minimal rate of holdings, then the other party will be
entitled to submit to that one party a written notice of termination
of the linkage (hereinafter: "NOTICE OF TERMINATION OF LINKAGE") Once
the other party handed over the Notice of Termination to the one
party, the Agreement will be invalidated and none of the parties will
have any complaints, claims or demands to the other party as
consequence thereof, except for claims resulting from breach of
commitments included in this Agreement, in as much as there was a
breach. The expiration of the Agreement will not harm the rights of
any of the share holders of the mutual company to keep and maintain
shares of the mutual company, as held by the share holder when the
Notice of Termination of Linkage was submitted. However, it is stated
herein that these rights refer to standard rights of share holders,
and not to rights as stipulated by this Agreement.
To remove any doubt, it is stated herein that (a) nothing in the
aforementioned item subtracts from the stated in item
15.2.aforementioned: that is, this item will not be applied in case a
party of this Agreement sold or transferred his company shares to his
authorized transferee and that (b) regarding the holdings of the
Barons, the holdings of the Baron individuals will be considered as
mutual Baron holdings.
19. JURISDICTION AND APPLICABLE LAW
19.1 Jurisdiction regarding any dispute or disagreement between the parties
is that of the relevant authorized courts, in Tel Aviv -Yaffo only.
19.2 The law applicable on this Agreement will be the Israeli law only.
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20. THE ADDRESSES OF THE PARTIES
The addresses of the parties regarding any matter in connection to this
Agreement are as indicated in the introduction. Any notice to be forwarded
from one party to the other according to the aforementioned addresses, by
registered mail, will be considered as delivered to the addressee within 96
hours from the time of its being submitted for delivery.
IN WITNESS THEREOF THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE DULY EXECUTED:
/S/ LI`OR BARON /S/ YA`ACOV BARON /S/ CHEN SHLEIN
--------------- ----------------- ---------------
▇▇. ▇▇`OR ▇▇▇▇▇ MR. YA`ACOV BARON G. WILLIFOOD INTERNATIONAL LTD.
/S/ OR`▇▇ ▇▇▇▇▇▇ /S/ ▇▇▇▇▇▇ ▇▇▇▇▇ SHA`▇▇▇ /S/ ▇▇▇▇▇ ▇▇▇▇▇
---------------- ------------------------ ---------------
MS. OR`▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ SHA`▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
18
