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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Amendment No. 1
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED TO PURSUANT TO RULE 13d-2(a)
Tefron Ltd. - TFR
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(Name of Issuer)
Common Stock, par value NIS 1.0 per share
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(Title of Class of Securities)
M87482-10-1
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(CUSIP Number)
Arie Wolfson, President
Tefron Ltd.
28 Chida Street
Bnei-Brak, 51371, Israel
011-972-3-579-8701
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 31, 2000
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement in Schedule 13G
to report the acquisition that is the subject of this Schedule 13D , and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|
Note. Schedules filed in paper format shall include signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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AMENDMENT NO. 1 TO STATEMENT ON SCHEDULE 13D PURSUANT TO RULE 13d-1
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (the "Exchange Act"), the
undersigned hereby file this Amendment No.1 to Statement on Schedule 13D filed
by the undersigned on February 17, 2000 (the "Schedule 13D") with the Securities
and Exchange Commission (the "Commission") with respect to the Ordinary Shares,
par value NIS 1.0 per share(the "Tefron Ordinary Shares") of Tefron Ltd. (the
"Tefron"). In this Amendment, the undersigned amend and restate the entire text
of Items 3 and 7.
Item 3. Source and Amount of Funds or Other Consideration.
Wolfson acquired his interest in Tefron through the purchase of Macpell Ordinary
Shares, as defined in Item Four hereof, in three separate transactions. Pursuant
to the Arwol Purchase Agreement, as defined in Item Four hereof, Wolfson
acquired 11,853,214 Macpell Ordinary Shares for an aggregate purchase price of
$44,981,761. On September 24, 1998 following the exercise of put options
pursuant to Article 10 of the Arwol Purchase Agreement, Wolfson acquired an
additional 283,249 Macpell Ordinary Shares for an aggregate purchase price of
$879,564. On June 1, 1999 following the exercise of additional put options
pursuant to Article 10 of the Arwol Purchase Agreement, Wolfson acquired an
additional 47,208 Macpell Ordinary Shares for an aggregate purchase price of
$146,392. The transactions were funded through (i) a loan in the principal
amount of $33,500,000 provided to Wolfson through Arwol in equal parts by First
International Bank of Israel Ltd. and its subsidiary Bank Poali Agudat Israel
Ltd. (collectively, "FIBI") (the "FIBI Loan") pursuant to a loan application
dated as of April 21, 1998, attached hereto as Exhibit K under an existing
revolving credit facility with FIBI, and an agreement of pledge and charge dated
as of April 21, 1998, attached hereto as Exhibit N, whereby Arwol pledged
Macpell ordinary shares as collateral, (ii) an unsecured loan in the principal
amount of $11,600,000 provided to Arwol by Tabriz Anstalt Limited NV ("Tabriz")
(the "Tabriz Loan") pursuant to a loan agreement (the "Tabriz Loan Agreement")
attached hereto as Exhibit L, and an amendment to the Tabriz Loan Agreement,
attached hereto as Exhibit M and (iii) a loan secured by Macpell Ordinary Shares
provided to Arwol on July 7, 1998 by Bank Hapoalim Ltd. ("Hapoalim") (the
"Hapoalim Loan") pursuant to a deed of undertaking dated as of July 7, 1998,
attached hereto as Exhibit O and a debenture dated as of July 14, 1998, attached
hereto as Exhibit P, whereby Arwol pledged certain Macpell Ordinary Shares to
secure the Hapoalim Loan. The FIBI Loan was repaid with funds received from the
issuance of a dividend by Macpell and with the proceeds of the Hapoalim Loan.
The outstanding balances on the Tabriz Loan and the Hapoalim Loan were repaid
with the proceeds of the transactions described in the Riza Purchase Agreement,
as defined in Item four hereof.
Rabinowicz acquired his interest in Tefron through the purchase of
Macpell Ordinary Shares by Riza. Pursuant to the Riza Purchase Agreement, as
defined in Item Four hereof, Riza purchased 3,893,086 Macpell Ordinary Shares
for an aggregate purchase price of $13,635,144. The purchase price was funded
with the proceeds of a loan provided to Riza by Hapoalim in the principal amount
of $13,650,000 pursuant to an
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application for allocation of credit under an existing credit facility, attached
hereto as Exhibit Q, and a debenture, attached hereto as Exhibit R, whereby Riza
pledged its Macpell Ordinary Shares as collateral, together with a letter from
Hapoalim to Arwol, attached hereto as Exhibit S, and a debenture, attached
hereto as Exhibit T, pursuant to which Arwol pledged certain Macpell Ordinary
Shares as security for its guarantee of 35% of the loan. As security for Arwol's
guarantee, Riza granted Arwol a subordinate security interest in Riza's Macpell
Ordinary Shares.
Item 7. Material to be filed as Exhibits.
Exhibit A. Shareholders Agreement dated September 17, 1997 between Macpell,
Tabriz, Discount Investment Corporation, Ltd. and PEC Israel
Economic Corporation.*
Exhibit B. Purchase Agreement dated February 26, 1998 between Arwol and
Eliezer Peleg, Nachum Peleg, Mast Industries, Inc., a Delaware
corporation, Shimon Topor, and Michael Steinhardt, with respect
to Arwol's purchase of 81% of the Macpell Ordinary Shares.*
Exhibit C. Purchase Agreement dated December 28, 1999 by and among Arwol and
Ruimi with respect to Ruimi's purchase of Macpell Ordinary
Shares. *
Exhibit D. Voting Agreement dated December 28, 1999 by and among Arwol and
Ruimi. *
Exhibit E. Purchase Agreement dated December 30, 1999 by and among Arwol and
Riza with respect to the purchase of Macpell Ordinary Shares by
Riza from Arwol. *
Exhibit F. Option Agreement dated August 27, 1997 by and among Tabriz,
Wolfson and Rabinowicz. *
Exhibit G. Option Agreement Extension Letter dated December 21, 1997 by and
among Tabriz, Wolfson and Rabinowicz. *
Exhibit H. Option Agreement Extension Letter dated September 4, 1998 by and
among Tabriz, Wolfson and Rabinowicz. *
Exhibit I. Option Agreement Extension Letter dated January 24, 2000 by and
among Tabriz, Wolfson and Rabinowicz. *
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* Previously filed by the Filing Persons on Schedule 13D dated
February 17, 2000 and incorporated herein by reference.
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Exhibit J. Option Agreement dated December 28, 1999 by and among Wolfson,
Rabinowicz and Ruimi. *
Exhibit K. Revolving Credit Facility Loan Application dated as of April 21,
1998 by and among Arwol and FIBI.
Exhibit L. Loan Agreement dated February 18, 1998 by and among Arwol and
Tabriz. *
Exhibit M. Addendum to Loan Agreement dated February 18, 1998 by and among
Arwol and Tabriz. *
Exhibit N. Agreement and Pledge of Charge dated as of April 21, 1998 by and
among Arwol and FIBI.
Exhibit O. Deed of Undertaking dated July 7, 1998 by and among Arwol and
Hapoalim.
Exhibit P. Debenture dated July 14, 1998 by Arwol in favor of Hapoalim.
Exhibit Q. Application for Allocation of Credit dated January 24, 2000 by
Riza.
Exhibit R. Debenture dated January 24, 2000 by Riza in favor of Hapoalim.
Exhibit S. Letter dated January 24, 2000 by Hapoalim to Arwol.
Exhibit T. Debenture dated January 24, 2000 by Arwol in favor of Hapoalim.
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* Previously filed by the Filing Persons on Schedule 13D dated
February 17, 2000 and incorporated herein by reference.
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: March 13, 2000
ARWOL HOLDINGS LTD.
By: /s/ ARIE WOLFSON
------------------
Name: Arie Wolfson
Title:
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: March 13, 2000
By: /s/ ARIE WOLFSON
------------------
Name: Arie Wolfson
Title:
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: March 13, 2000
/s/ SIGI RABINOWICZ
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Sigi Rabinowicz
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: March 13, 2000
RIZA HOLDINGS, LTD.
By: /s/ SIGI RABINOWICZ
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Name: Sigi Rabinowicz
Title:
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: March 13, 2000
MACPELL INDUSTRIES LTD.
By: /s/ ARIE WOLFSON
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Name: Arie Wolfson
Title: President
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Schedule I
JOINT FILING AGREEMENT
The undersigned parties hereby agree that the Schedule 13D filed
herewith relating to the Common Stock, par value NIS 1.0 per share of Tefron
Ltd., is being filed jointly with the Securities and Exchange Commission
pursuant to Rule 13d-1(f) on behalf of each such person.
Date: March 13, 2000
ARWOL HOLDINGS LTD.
By: /s/ ARIE WOLFSON
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Name: Arie Wolfson
Title:
/s/ ARIE WOLFSON
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Arie Wolfson
/s/ SIGI RABINOWICZ
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Sigi Rabinowicz
RIZA HOLDINGS LTD.
By: /s/ SIGI RABINOWICZ
----------------------
Name: Sigi Rabinowicz
Title:
MACPELL INDUSTRIES LTD.
By: /s/ ARIE WOLFSON
--------------------
Name: Arie Wolfson
Title: President
<PAGE>
APPLICATION FOR LOANS
Made and entered into at Tel Aviv on the 21st day of April 1998
To
The First International Bank of Israel Ltd.
Bank Poalei Agudat Israel Ltd.
(the two banks will henceforth be referred to collectively and individually
as: "the Banks", and each of them separately as: "the Bank")
In the framework of the general overdraft contract signed with each of you
(hereinafter: "the Revolving Credit Contract") and subject to all our
undertakings to you pursuant thereto and according to any other document we
have signed and/or may sign in your favour, we request you to grant us
loans as described below (hereinafter: "the Loans") for purposes of
financing the purchase of 11,853,214 ordinary shares of NIS 1 nominal value
each in the company Macpell Industries Ltd. (hereinafter: "the Shares")
pursuant to a share purchase agreement signed between us and Messrs.
Eliezer Peleg, Nahum Peleg, Mast Industries (Delaware) Inc., Shimon Topor,
Michael Steinhart, the Topor Family Foundation, Zipora Ben-Tovim, Rivka
Volkowitz, Palmach Zeevi, Arie Rotlevy, Shmuel Nu, Tsafi Peleg, Nir Peleg
and Pnina Peleg dated 26th February 1998, in accordance with the following
conditions:
1. Definitions
"The First International Bank" - the First International Bank of Israel
Ltd., of 9 Ahad Haam Street, Tel Aviv;
"PAGI Bank"- Bank Poalei Agudat Israel Ltd., of 9 Ahad Haam Street, Tel
Aviv;
"Business day" - a day on which most of the businesses of the banks are
operating and on which clearing is done of instruments in the interbank
clearing house;
"Business day in foreign currency" - a business day on which transactions
in foreign currency, as hereinafter defined, without limitation as to the
amount of the transaction, are conducted at the First International Bank;
"Foreign currency" - foreign currency of the type the borrower will select
with the approval of the Bank;
"Base interest" - the interest also known by the name prime interest, which
is fixed by the Bank and which varies from time to time in accordance with
developments in the economy and in the credit market and as published the
Bank at its branches.
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"Libor interest" - the highest rate of interest (rounded upwards to the
nearest 1/8 of one percent) at which interbank deposits in foreign currency
for three months are offered on the Interbank Euro market in London, as
quoted at 11:00 (London time) or soon thereafter, two business days in
foreign currency prior to the date of commencement of each interest period,
and will be published by Reuters News Service on the page FRBD, FRDE, as
the case may be. Should the relevant page not appear as aforesaid, the
First International Bank will fix the "Libor interest" rate based on
another similar page/document appearing on Reuters;
"Date of granting of the loan" - 21st Apri1 1998.
"Dollar" - the United States dollar.
"Representative rate" - the last representative rate published by the Bank
of Israel which is known on the date the loan is given.
2. Giving of Loan in shekels
2.1 Amount of the Loan and giving thereof
2.1.1 Subject to furnishing of the collateral security as agreed
to by you, you will, on the date of giving of the Loan,
provide us with a loan in shekels in an amount in shekels
equivalent, according to the representative rate, to
$33,500,000 (hereinafter; "the Loan in Shekels") on a basis
that the share of each Bank is as set forth below:
a. An amount in shekels equivalent, according to the
representative rate, to $16,750,000, which constitutes
50% of the amount of the Loan in Shekels, will be given
to us by the First International Bank in the framework
of account no. 409-434671 in our name at the main
branch in Tel Aviv.
b. An amount in shekels equivalent, according to the
representative rate, to $16,750,000, which constitutes
50% of the amount of the Loan in Shekels, will be given
to us by the Bank Pagi in the framework of account no.
409-669539 in our name at the Rabbi Akiva branch, Bnei
Brak.
2.1.2 Please transfer the amount of the Loan in Shekels in
accordance with the schedule attached hereto as Appendix A.
Execution of above instructions will constitute proof that
we have received the Loan in Shekels in accordance with the
terms and conditions of this application.
2
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2.2 Payments of principal and interest on the Loan in Shekels
2.2.1 Payment of principal amount of the Loan in Shekels
The principal amount of the Loan in Shekels will be repaid
on 21st July, 1998 (hereinafter: "the Due Date of Payment of
the Loan in Shekels").
2.2.2 Interest on the Loan in Shekels
The unpaid balance of the principal amount of the Loan in
Shekels, as same stands from time to time, shall bear
compound interest at the base rate of interest as same
prevails from time to time, plus 0.5% per annum
(hereinafter: "the Extra Interest") commencing from the date
on which the Loan is given and up to the date(s) of payment
thereof.
The base interest together with the aforesaid Extra Interest
on the date of signing of this deed is a rate of 14.2% per
annum (adjusted interest of 14.9742% per annum).
2.2.3 Due dates for payment of interest
The due date for payment of the principal of the Loan in
Shekels as specified in sub-paragraph 2.2.1 above.
2.2.4 Deferment of due dates of payment
Should the due date of payment of any instalment on account
of the principal amount of the Loan in Shekels, and/or the
interest thereon, fall on a day which is not a business day,
the due date of payment of the instalment shall be postponed
to the first business day immediately following, and the
interest shall be calculated correspondingly up to such
date.
2.2.5 Early repayment
a. We will be entitled to repay the principal amount of
the Loan in Shekels, or any part thereof, and the
interest which has accumulated thereon up to such time,
prior to the Due Date of Payment of the Loan in
Shekels, provided that notice in writing of 15 days in
advance shall be given to the Bank in regard to the
date of early repayment and of the amount we request to
repay. Giving of such notice shall constitute an
irrevocable instruction to the Bank to act in
accordance with the matters set forth in the notice,
and we will not be entitled to cancel or to alter our
notice.
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b. If the date specified in our notice is not a business
day, the early repayment will be effected on the first
business day subsequent thereto.
2.2.6 Manner of repayment of the loan in shekels
a. We hereby give you irrevocable instructions to debit
the accounts which are conducted and/or may be
conducted in our name at your bank, as described below,
in your proportionate share, as specified above, with
the amounts of the payments on account of the principal
amount of the loans in shekels and the interest
thereon, on the due dates of payment specified above,
on the deferred due dates of payment or on the due
dates of payment which will be fixed by you in the
event that our obligations to you in respect of the
loan in shekels should be made immediately due and
payable as stated in the Revolving Credit Contract
and/or in this Application, as the case may be
(hereinafter: "the Agreed Due Dates of Payment") and we
undertake to pay such amounts on due date.
b. In the event that there is no credit balance in our
account at the Bank sufficient to cover the amount of
the debit on one of the Agreed Due Dates of Payment,
each amount which will be debited as aforesaid and
which is not paid by us on the day specified for the
payment thereof shall, from that date onwards, bear
penalty interest at the highest rate prevailing at the
Bank at such time on debit balances which have not been
paid to the Bank on due date, commencing from the
Agreed Due Date of Payment and up to the date of actual
payment.
3. Alternative loan
Subject to the cumulative fulfilment of all the following conditions, you
will provide us with an alternative loan to the balance of the Loan in
Shekels. The loan will be given to us in foreign currency (hereinafter:
"the Loan in Foreign Currency") or in new shekels (hereinafter: "the Loan
in Israeli Currency"), at our election, of which we shall notify you in
writing 7 days prior to the loan being given, in an amount which shall not
exceed 20.3 % of the amount of the Loan in Shekels (hereinafter: "the
Amount of the Alternative Loan")(hereinafter: "the Alternative Loan"), and
the proceeds thereof shall be applied towards the liquidation of Bank
Pagi's share of the Loan in Shekels,
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The following are the cumulative conditions:
3.1 Actual payment has been made to the First International Bank, up
to the Due Date of Payment of the Loan in Shekels of 100% of the
amounts due to it in respect of its share of the Loan in Shekels,
and to Bank Pagi at least 59.4% of the amounts due to it in
respect of its share of the Loan in Shekels.
3.2 No event has occurred which entitles you to make the Loan in
Shekels, or any portion thereof, immediately due and payable, in
accordance with the terms and conditions of the Revolving Credit
Contract and/or pursuant to the conditions of this deed.
4. Providing of Alternative Loan in Foreign Currency
4.1 Amount of the Loan in Foreign Currency and giving thereof
4.1.1 The amount of the Loan in Foreign Currency will be
equivalent to the amount of be Alternative Loan
according to a selling rate to be agreed with us. In the
absence of agreement, the amount of the Loan in Foreign
Currency will be determined according to the rate for
transfers and cheques (the low rate) for the foreign
currency as published by the First International Bank on
the date on which the Loan in Foreign Currency is given.
4.1.2 The Loan in Foreign Currency will be given to us by the
First International Bank through a branch of Bank Pagi
by debiting our account at the First International Bank,
Bank Pagi branch, and the proceeds thereof will be
converted into shekels according to the rate mentioned
in Paragraph 4.1.1 above and will be transferred to the
credit of our account no. 409-669539 at Bank Pagi, Rabbi
Akiva Branch, Bnei Brak, for liquidation of the balance
of Bank Pagi's share in the Loan in Shekels.
4.1.3 Crediting of our account as aforesaid by the Bank will
constitute proof that we have received the Loan in
Foreign Currency in accordance with terms and conditions
of this Application.
4.2 Due date for the payment of the principal amount of the Loan in
Foreign Currency
The principal amount of the Loan in Foreign Currency will be
repaid in one payment at the end of three years from the date on
which the Loan in Foreign Currency is given.
4.3 Due dates of payment of interest on the Loan in Foreign Currency
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The interest on the Loan in Foreign Currency shall be paid every
three months, on the same day in the month on which the Loan in
Foreign Currency was given, commencing from the end of three
months from the date on which the Loan in Foreign Currency was
given. The last payment shall be made on the date of repayment of
the principal amount of the Loan in Foreign Currency.
4.4 Interest periods
The interest on the unpaid balance of the principal amount of the
Loan in Foreign Currency shall be determined and calculated by
the Bank in respect of interest periods. The first interest
period is the period from the date of giving of the Loan in
Foreign Currency (including that day) and up to the first date
for payment of the interest, as specified above or as may be
postponed (not including that day).
The following interest periods are the periods between one date
for payment of interest (including that day) and the next date
for payment of interest (not including that day) as specified
above, or as may be postponed.
4.5 Rate of interest on the Loan in Foreign Currency and manner of
fixing thereof
The unpaid balance of the principal amount of the Loan in Foreign
Currency, as same may stand from time to time, shall bear
compound interest from the date the Loan in Foreign Currency is
given and up to the date of the full actual repayment thereof at
the Libor interest rate, as shall be determined from time to time
by the First International Bank as at the date of commencement of
each interest period, plus 1.2% per annum.
If an any interest period has been shortened in actual practice,
by virtue of payment of interest and/or principal of any Loan in
Foreign Currency, the Libor rate of interest fixed in respect of
such period shall not change.
4.6 Postponement of due dates of payment
Where the due date of payment of any instalment on account of the
principal amount of the Loan in Foreign Currency and/or the
interest thereon falls on a day that is not a business day in
foreign currency, the due date for payment of the instalment
shall be postponed to the first business day in foreign currency
immediately thereafter, and the interest shall be calculated
correspondingly up to such day.
4.7 Early repayment of the Loan in Foreign Currency
We will be entitled to pay the principal amount of the Loan in
Foreign Currency and the interest which has accrued thereon up to
such time, in
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whole or in part, prior to the due date(s) of payment mentioned
above, provided we give the Bank written notice 15 days in
advance in regard to the date of early repayment, the amount we
request to pay and what payments of principal we wish to make,
and also on the express condition that payment shall be made only
on one of the due dates of payment of the interest on the Loan in
Foreign Currency, as specified in Paragraph 4.3 above. Giving of
such notice shall constitute an irrevocable instruction to the
Bank to act in accordance with the contents of the notice, and we
will not be able to cancel and/or alter our notice.
4.8 Early repayment at other times
Apart from early repayment under the conditions set forth in
Paragraph 4.7 above, we will not be entitled to pay the principal
amount of the Loan in Foreign Currency and the interest thereon,
in whole or in part, prior to the due dates of payment above,
unless we receive your prior written consent to do so. You shall
be entitled, in your discretion to make your consent subject to
conditions.
4.9 Manner of repayment of the Loan in Foreign Currency
4.9.1 We hereby give you an irrevocable instruction to debit
our account in foreign currency with the amounts of the
instalments in foreign currency on account of the
principal amount of the Loan in Foreign Currency and the
interest thereon on the due dates of payment specified
above, on the deferred due dates of payment, on dates of
early repayment, or on the dates of payment as specified
by you in the event that our debts to you in respect of
the Loan in Foreign Currency should be made immediately
due and payable as stated in the Revolving Credit
Contract, or in this deed, as the case may be
(hereinafter: "the Agreed Dates of Payment of the Loan
in Foreign Currency"), and we undertake to pay the
amounts which are debited as aforesaid on due date. In
the event that there was no credit balance in foreign
currency for payment of the aforesaid amounts, our
current account at Bank Pagi will be debited with any
amount which may be required for buying foreign currency
in the amounts of the aforesaid payments, according to
the rate for transfers and cheques (the high rate) for
the foreign currency as shall be published by the First
International Bank on the date of the purchase.
4.9.2 If the credit balance in our account at Bank Pagi is
insufficient to cover the amount of the debit on one of
the Agreed Due Dates of Payment of the Loan in Foreign
Currency, any amount which may be debited as aforesaid
and which is not paid by us on the date specified for
payment shall, from that date, bear penalty interest at
the highest rate prevailing at the Bank at that time on
debit
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balances (in foreign currency or in Israeli currency, as
the case may be) which have not been paid to the Bank on
due date.
5. Providing of the Loan in Israeli Currency
5.1 Amount of the Loan in Israeli Currency and giving thereof
5.1.1 The amount of the Loan in Israeli Currency will be
equivalent to the amount of the Alternative Loan.
5.1.2 The Loan in Israeli Currency will be given to us by Bank
Pagi by way of crediting our account no. 409-669539 at
Bank Pagi for liquidating the balance of Bank Pagi's
share in the Loan in Shekels.
5.2 Due date for payment for the principal of the Loan in Israeli
Currency
The Loan in Israeli Currency will be paid in one payment at the
end of one year from the date the Loan in Israeli Currency is
given (hereinafter: "the Short Loan in Israeli Currency") or at
the end of three years from the date the Loan in Israeli Currency
is given (hereinafter: "the Long Loan in Israeli Currency"), at
our election, of which we shall notify you in writing 7 days
prior to the Loan in Israeli Currency being given.
5.3 Interest on the Loan in Israeli Currency
5.3.1 Interest on the Short Loan in Israeli Currency
Where a Short Loan in Israeli Currency has been given,
at our election, the unpaid balance of the principal
amount of the Short Loan in Israeli Currency, as same
stands from time to time, shall bear compound interest
at the base rate of interest as prevailing from time to
time, plus 0.6% per annum, commencing from the date on
which the Short Loan in Israeli Currency is given and up
to the date(s) of payment thereof.
5.3.2 Interest on Long Loan in Israeli Currency
Where a Long Loan in Israeli Currency has been given, at
our election, the unpaid balance of the principal amount
of the Long Loan in Israeli Currency, as same stands
from time to time, shall bear compound interest at the
base rate of interest as prevailing from time to time,
plus 0.75% per annum, commencing from the date on which
the Long Loan in Israeli Currency is given and up to the
date(s) of payment thereof.
5.4 Due dates of payment of interest
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The interest on the Loan in Israeli Currency shall be paid every
three months, on the same day of the month on which the Loan in
Israeli Currency was given, commencing from the end of three
months from the date the Loan in Israeli Currency was given. The
last payment shall be effected on the due date of payment of the
principal amount of the Loan in Israeli Currency.
5.5 Postponement of due dates of payment
Where the due date of payment of any instalment on account of the
principal amount of the Loan in Israeli Currency and/or the
interest thereon falls on a day that is not a business day in
foreign currency, the due date for payment of the instalment
shall be postponed to the first business day immediately
thereafter, and the interest shall be calculated correspondingly
up to such day.
5.6 Early repayment
5.6.1 We shall be entitled to repay the principal amount of
the Loan in Israeli Currency, or any part thereof, and
the interest which has accumulated thereon up to such
time, prior to the due date of payment as specified in
Paragraphs 5.2 and 5.4 above, provided that notice shall
be given to the Bank in writing 15 days in advance with
regard to the date of early repayment and of the amount
we wish to repay. The giving of such notice constitutes
an irrevocable instruction to the Bank to act in
accordance with the contents of the notice, and we will
not be entitled to cancel or to alter our notice.
5.6.2 Should the date mentioned in our notice not be a
business day, the early repayment will be effected on
the first business day subsequent thereto.
5.7 Manner of repayment of the Loan in Israeli currency
5.7.1 We hereby give you irrevocable instructions to debit the
account which is conducted and/or which may be conducted
in our name at Bank Pagi, as described below, with the
amounts of the payments on account of the principal
amount of the Loan in Israeli Currency and the interest
thereon on the due dates of payment mentioned above, on
the deferred due dates of payment or on due dates of
payment as shall be fixed by you in the event that our
debts to you in respect of the Loan in Israeli Currency
should be made immediately due and payable as stated in
the Revolving Credit Contract and/or in this
Application, as the case may be (hereinafter: "the
Agreed Due Dates for Repayment of the Loan in Israeli
Currency") and we undertake to pay these amounts on the
due date thereof.
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5.7.2 If the credit balance in our account at Bank Pagi is
insufficient to cover the amount of the debit on one of
the Agreed Due Dates of Payment of the Loan in Foreign
Currency, any amount which may be debited as aforesaid
and which is not paid by us on the date specified for
payment shall, from that date, bear penalty interest at
the highest rate prevailing at the Bank at that time on
debit balances which have not been paid to the Bank on
due date, commencing from the agreed due date of payment
and up to the date of actual payment.
6. Additional costs
In every case that, as a result of any change in the provisions of any law
or regulation (including a change in the interpretation of any such
provisions) and/or as a result of compliance with an obligation, demand or
any directive of the Bank of Israel, or of any other competent authority
(including liquidity requirements and/or the setting aside of provisions
for payments), the cost of providing the Alternative Loan should increase,
whether it be the Loan in Foreign Currency or the Loan in Israeli Currency,
or any part thereof, or the continued existence thereof, as compared with
the cost as it applies on the date the Loan was given:
6.1.1 The Bank shall notify us in writing with regard to the
extent of the increase in price is and what the reasons
for it are (hereinafter: "Notice of Increased Cost").
6.1.2 We will pay the Bank additional amounts which will be
sufficient, as determined by the Bank, in order to
indemnify the Bank for the increase in costs and/or in
the reduction in yield.
6.1.3 Where Notice of Increased Cost has been given, we shall
be entitled to repay the Alternative Loan prior to the
dates specified above, under the conditions stipulated
for early repayment in Paragraphs 4.7 or 5.6 above, as
the case may be. In respect of the period from the date
of giving of the Notice of Increased Cost and up to
actual repayment, we will pay the Bank the additional
amounts as referred to in Paragraph 6.1.2 above.
7. Undertaking to repay the loans out of dividends and other receipts
7.1 We hereby undertake that any amount which may be paid from time
to time as a dividend in respect of the Shares (after deduction
of withholding tax at source, to the extent that there is an
obligation for such withholding) and any receipts or income which
may be received by us in connection with the Shares and/or any
rights in respect thereof (all henceforth referred to as: "Other
Receipts") shall be applied solely to the repayment of the loans,
in whole or in part, either on the due date of payment according
to the payments schedule or for repayment prior to such time.
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<PAGE>
We will give Macpell Industries Ltd. an irrevocable instruction
to pay all the Other Receipts solely to the credit of the account
to be opened by the First International Bank of Israel Trust
Company Ltd. (hereinafter: "the Trust Company") in trust for us
(hereinafter: "the Trust Account").
7.2 We will instruct the Trust Company to act as follows:
7.2.1 The aforesaid amounts shall be deposited in the account
on interest-bearing deposits (unlinked shekels or
deposits in foreign currency or foreign currency-linked,
in the event that the Alternative Loan is a Loan in
Foreign Currency) from the date of receipt thereof and
up to the date of set-off against them of the payments
in respect of the Loans, as referred to in Paragraph
7.2.2 below.
In this period the aforesaid amounts will continue to
serve as security for repayment of the loans. We will
not be entitled to withdraw the aforesaid amounts, or
any portion thereof, or to act thereon or in relation
thereto. In the absence of your prior consent, you shall
be entitled to treat any operation and/or writing and/or
instruction which may be made and/or signed and/or given
by us in connection with the aforesaid amounts as being
null and void and as being of no binding effect,
7.2.2 When the time for each payment arrives as aforesaid, the
deposit shall be repaid, in whole or in part, and shall
be paid to you in respect of your pro rata share in the
amounts of the payments in relation to the Loans due to
each of you from us at such time.
7.2.3 Nothing in this paragraph shall derogate from our
obligation to repay to you the Loans which have been
given and/or will be given to us in accordance with the
conditions of this deed.
8. Making of the Loans immediately due and payable
On the occurrence of one or more of the events set forth below, you shall
be entitled to demand in writing the immediate payment of the unpaid
balance of all the amounts due to you from us in respect of the Loans,
including principal, interest, linkage differentials, if any, and expenses:
8.1 If an event has occurred which entitles you, or either of you, in
your decision, to make the credit granted to us in the scope of
the Revolving Credit Contracts signed by us, immediately due and
payable.
8.2 It the undertaking given to you by Tabriz Anstalt Limited N.V.,
pursuant to which the aforesaid company undertook not to transfer
and/or to encumber its Shares in Tefron Ltd., has been breached.
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<PAGE>
8.3 If the undertaking given to you by Mr. Arie Wolfson and Mr. Ziggy
Rabinowitz, pursuant to which the aforesaid persons undertook,
jointly and severally, not to exercise an option granted to them
to purchase shares in Tefron Ltd., has been breached.
8.4 If an amount due to either of you has not been paid to you, or to
either of you, on the due date for payment thereof.
9. Commissions and expenses
We will pay you an amount in shekels equivalent to a sum of $10,000,in
respect of the preparation of legal documents, at the time of signing of
this deed.
10. Levies, taxes and fees
Without prejudice to our above obligations, we undertake to pay you any
amount which may be demanded by you for payment of any levy, tax and fee
for the payment of which you were liable and/or may in the future be liable
and/or for the payment of which we were liable and/or will in the future be
liable in respect of the Loans, including in the event that the Loans are,
for any reason, made immediately due and payable.
11. Use of the plural
In this deed the plural shall also include the singular.
In Witness whereof the parties have hereunto Signed
(-)
Arwoll Holdings Ltd.
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EX.N
Customers (Pledgors) ARWOLL HOLDINGS LTD.
For internal use/filing
-------------------------------- -------------
Address 30 Ahad Haam Street, Tel Aviv Account No._
c/o Adv. Pinhas Volovelsky
-------------
AGREEMENT OF PLEDGE AND CHARGE
Made and entered into at Tel Aviv on the 21st day of April 1998
BETWEEN
FIRST INTERNATIONAL OF ISRAEL LTD.
AND
BANK POALEI AGUDAT ISRAEL LTD.
jointly and severally: "the Bank"
of the one part
AND
ARWOLL HOLDINGS LTD. Pvte. Co. 51-260178-2
of 30 Ahad Haam Street, Tel Aviv, c/o Adv. Pinhas
Volovelsky
(hereinafter: "the Pledgors")
of the other part
WHEREAS the Pledgors have received and/or are about to receive from
time to time from the First International Bank of Israel and Bank Poalei Agudat
Israel Ltd. (hereinafter collectively and individually: "the Bank" credit
facilities and/or documentary credit and/or various loans and/or overdrafts on a
current or other account and/or guarantees of the Bank for and/or at the request
of and/or on the responsibility of the Pledgors and/or discounting of bills of
exchange and/or purchase of bills of exchange and/or broking of bills of
exchange and/or banking facilities and/or all types of other banking services
and/or other payments (hereinafter collectively and individually: "the Banking
Services"), in accordance with conditions which have been agreed and/or will be
agreed upon from time to time in respect of each and every such Banking Service;
AND WHEREAS the Pledgors owe and/or will owe the Bank various money
from time to time in connection with the supply of the Banking Services;
AND WHEREAS the Pledgors owe and/or are likely to owe the Bank various
money from time to time also without reference to the supply of the Banking
Services;
<PAGE>
AND WHEREAS it has been agreed between the Bank and the Pledgors that
the Pledgors will secure all the amounts due and which will be due to the Bank
from the Pledgors, whether in consequence and as a result of the supply of the
aforesaid Banking Services or without reference to the supply of the Banking
Services; without limitation of amount, plus interest, damages, expenses,
commissions and additional amounts which are due and/or may be due as a result
of conditions of linkage as have been agreed and/or will be agreed upon from
time to time, by creating a pledge and a lien over the assets of the Pledgors as
stated below;
NOW THEREFORE IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. In this deed:
a. The term "the Pledgors" and reference to them shall be construed as
including or relating to the Pledgors, or any one of them, including
their heirs, executors and the administrators of the estate of the
Pledgors, and any successor-in-title of any one of them.
b. The term "the Bank" includes each and every one of the branches
existing at the date of this deed and/or which may be opened at any
time in the future, and persons acting on behalf of the Bank and its
successors-in-title, and any company or body with which the Bank may
amalgamate in any manner.
c. If at any time there is no maximum legal rate of interest the term
"the maximum legal rate of interest" shall be interpreted as meaning
the maximum rate of interest prevailing for the time being at the
Bank.
d. The term "bills of exchange" also means any negotiable instruments.
e. The singular shall include the plural, and vice-versa, unless the
context otherwise dictates.
f. Where this deed has been signed by two or more Pledgors, it shall be
binding on the individual parties who make up the Pledgor jointly and
severally.
g. All the provisions and stipulations contained in this deed with
respect to the relationship between the Bank and the Pledgors shall
also apply where the Pledgors themselves are guarantors to the Bank
for others, as if the Pledgors were directly indebted to the Bank for
the debt for which they are guarantors.
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<PAGE>
2. This deed witnesses that the Pledgors are responsible for and hereby
undertake to make payment to the Bank from time to time of all the amounts
which are due and/or which may be due from them to the Bank, and also any
moneys which have been given or will be given, paid or will be paid to the
Pledgors or on their behalf, or at their request, and on the responsibility
of the Pledgors, in order for same to be reimbursed or repaid to the Bank,
and also all moneys the Pledgors have undertaken, or may in the future
undertake, to reimburse or to pay to the Bank and have failed to do so, as
well as all the amounts which are due and/or may be due to the Bank from
the Pledgors on the strength of bills of exchange signed by the Pledgors,
their endorsement thereof or their suretyship thereto, which have been
delivered or may be delivered to the Bank by the Pledgors or by any third
party, and also any money the Bank is entitled and/or may be entitled to
sue for and/or to receive from the Pledgors for any reason, whether or not
such reason is connected with the banker-customer relationship. The
Pledgors undertake to pay the Bank all the amounts for which they are
responsible as aforesaid, without limitation of amount, together with
interest on such amounts, damages, expenses, including expenses for the
safeguarding of the pledged assets and realisation of the security hereby
given, commissions and additional amounts which are due and/or may be due
to the Bank as a result of conditions of linkage as have been agreed or may
be agreed upon from time to time.
3. The security hereby given guarantees and will guarantee payment of all the
amounts for which the Pledgors are liable pursuant to this deed, whether
such amounts are due from the Pledgors collectively or from any one of
them, whether due from the Pledgors alone or from the Pledgors together
with others, and whether they were given and/or will in the future be
given, were paid or will in the future be paid to the Pledgors or on their
behalf at their request or on their responsibility, and whether the
Pledgors have undertaken or may undertake, alone or jointly with others, to
reimburse or to repay same to the Bank, whether as principal debtors or as
guarantors or as endorsers. In addition this security guarantees and will
guarantee payment of all the amounts for which the Pledgors are responsible
pursuant to this deed, whether such amounts were due, are due or will be
due, were given or will be given, were paid or will be paid, in the past,
present or future, whether same are due and payable prior to the execution
of this security or subsequent thereto, and whether these amounts were due,
are due or will be due, were paid or will be paid, were given or will be
given in a particular way, on any condition or in any other manner, and
whether the Pledgors have undertaken or will undertake to reimburse or
repay same in a particular way, on any condition or in any other way, and
whether they are due directly or indirectly, in the first name of the
Pledgors or in their business name or in any other name, whether they are
due from the Pledgors according to their present composition or according
to any other composition, and over and above that, all the payments and
expenses which the Pledgors are liable to pay pursuant to the conditions of
this deed. All the amounts secured under this deed shall henceforth be
referred to as: "the Secured Amounts".
3
<PAGE>
4. In the event that the Pledgors are any legal entity, whether incorporated
or unincorporated, or a committee or firm, or partnership, or trustee, or
board of trustees, or executor of a will or administrator of an estate, or
joint owners of an account at the bank, or any organisation or body which
constitutes any combination of one or more of such bodies, the obligations
of the Pledgors will not be affected by any change in the name, structure
or composition of the Pledgors, and without derogating from the generality
of the foregoing in this clause, the obligations of the Pledgors will
continue to be of full force and effect as though the Pledgors, having the
different and/or the new name, structure or composition, had existed under
the same name, structure and composition on the date of signing of this
deed.
5. a. This deed witnesses that the Pledgors hereby pledge and encumber to
the Bank and to its order, by way of a first-ranking pledge, as
security for payment of the Amounts Secured in accordance with the
terms and conditions of this deed, the shares mentioned in the list
below (hereinafter: "the Shares") of the company whose name is
mentioned in the aforesaid list (hereinafter: "the Company") and all
the rights, income and benefits deriving from the Shares or relating
thereto, throughout the entire period the pledge exists, including
those described in sub-clause (b) below (hereinafter collectively:
"the Pledged Rights").
The Shares and the Pledged Rights shall henceforth be collectively
referred to as: "the Assets Pledged".
b. The pledge hereby created shall also apply to:
1) All the dividends which may be paid and/or be payable in respect
of or pursuant to the Shares at any time, commencing from the
date of signing of this deed.
2) All the rights, money and assets which may be due and/or may be
conferred in respect of the Shares or pursuant thereto, as
bonuses, bonus shares, an alteration of the rights attaching to
the Shares, or in any other manner.
3) All the rights, money and assets which will be conferred and/or
will be due in lieu of the Shares and/or in addition thereto, for
any reason, including the monetary proceeds in respect of the
Shares and substitute shares ranking pari passu or having other
rights in the Company, or in another company with which the
Company may merge (hereinafter: "the Other Shares"), and
including any right to compensation or indemnity or otherwise
which may exist as against a third party (including the Company)
in respect of an equalisation of voting rights, loss of any
rights attaching to the Shares or a reduction in the value of the
Shares for any reason.
4
<PAGE>
4) All the rights in the Company and as against the Company which
the law and/or the Memorandum and/or the Articles of the Company
confer and will confer on the Pledgors in respect of and pursuant
to the Shares and/or the Other Shares.
5) All the Pledgors' rights as against the Trust Company as defined
in Clause 9 below in respect of and in connection with the Shares
and/or the Other Shares.
6. The Pledgors hereby declare that:
a. The Assets Pledged are fully paid.
b. All the consents, approvals and licences required for the holding and
possession of the Assets Pledged by the Pledgors and for the
encumbrance thereof pursuant to this deed have been duly obtained.
c. 1) The Assets Pledged are in their full ownership and same are
free of any pledge, lien, attachment or any other third party
right in relation thereto.
2) Subject to the Articles of the Company, no restriction pursuant
to any law or any agreement or otherwise applies to the transfer
of the Assets Pledged or the pledging thereof, and the Pledgors
are entitled to pledge and to encumber same in accordance with
this deed.
3) The Pledgors undertake to repay to the Bank, on the Bank's first
demand, all the amounts the Bank may incur in connection with a
lawsuit in which allegations are advanced against the validity of
this collateral security, whether or not the Bank is a party to
the lawsuit.
d. The Company has not passed any resolution with regard to winding-up
and no application has been filed against it for liquidation and/or
the appointment of a provisional or permanent receiver.
e. The Pledgors have not committed any act of insolvency or liquidation
and no application has been filed against them for liquidation or for
the appointment of a provisional or permanent receiver and/or a
trustee.
7. The Pledgors hereby undertake:
a. Not to sell, not to dispose of in any manner and not to undertake to
sell or in any manner to dispose of the Assets Pledged or any part
thereof, directly or indirectly, for consideration or otherwise,
except with the Bank's prior written consent.
5
<PAGE>
b. Not to pledge and not to encumber the Assets Pledged, or any part
thereof, in any manner whatsoever, with rights which rank prior to,
pari passu with or ranking after the rights conferred on the Bank
pursuant to this deed, except with the Bank's prior written consent.
c. Not to create any floating charge over its assets, or any part
thereof, in favour of any third party (save and except for floating
charges which the document creating same expressly states that such
floating charges do not apply to the Assets Pledged), unless the Bank
has agreed thereto in writing and in advance.
d. Promptly to notify the Bank about any event of the imposition of an
attachment, the taking of Execution Office proceedings or the filing
of an application for the appointment of a receiver over the Assets
Pledged, or any part thereof, and immediately to give notice of the
fact of the pledge in favour of the Bank to the authority which has
imposed the attachment or taken Execution Office proceedings or has
been requested to appoint a receiver as aforesaid, and to the third
party who initiated or applied for same, or portion thereof, and at
its expense immediately to take all the steps required for the removal
of the attachment, the cancellation of the Execution Office action or
the appointment of a receiver, as the case may be.
e. Immediately they become aware thereof, to notify the Bank of the
occurrence of any event which entitles or is likely to entitle the
Bank to make the Amounts Secured immediately due and payable, as
stated in Clause 15 below and/or to realise the pledge over the Assets
Pledged.
8. The Pledgors hereby further undertake that without the Bank's prior
written consent:
a. They, or related parties or persons or bodies connected with them,
will not receive any loans from the Company or guarantees in their
favour and/or any assistance in order to obtain credit.
b. Until the repayment of at least 79.7% of the Amounts Secured, they
will not receive any payments from the Company, including salary
and/or management fees, either directly or indirectly.
c. Dividends will be paid to the Trust Company as defined in Clause 9
below or to whomever the Trust Company may direct.
d. Not to file an application for the winding-up of the Company or for a
receivership of its assets.
e. Not to agree to an amendment of the documents of incorporation of the
Company and to its share capital, and they will refrain from any act
or
6
<PAGE>
omission which is likely, directly or indirectly, to prejudice the
Assets Pledged and/or the Bank's rights pursuant to this deed.
f. Not to agree to any change in the Company's business or its designated
purpose.
g. Not to agree that the Company will obtain credit and/or create a
guarantee or other undertaking, except in the ordinary course of
business, or that the Company should purchase debts and/or give credit
to affiliated companies and/or to allow the exploitation, in its
stead, of tax and other advantages and benefit of the Company.
h. Not to agree to a sale, transfer, lease or delivery of occupation of
the Company's real estate assets or of its other significant assets,
including shares in subsidiaries, save and except for leasing out or
allowing use in the ordinary course of business.
i. Not to agree that the Company create and/or undertake to create
charges and/or pledges and/or mortgages of any ranking over its
property and its assets, in whole or in part, as same exist at present
and as same may exist in the future.
j. They will not agree that the Company make significant acquisitions,
apart from purchases in good faith and for the best interests of the
Company from a third party who is not related to the Company or to the
Pledgor, and at market price, in the ordinary course of business.
k. They will not agree to and will not take steps for the amalgamation or
merger of the Company with any corporation or body and/or an
amalgamation or merger of any corporation or body into the Company.
9. As security for the Bank's rights in relation to the assets which are
pledged pursuant to the pledge under this Agreement, the Pledgors
undertake:
a. To deposit with the First International Bank of Israel Trust Company
Ltd. (hereinafter: "the Trust Company") at the time of signing of this
Agreement, the original share certificates in respect of the Assets
Pledged which have been issued, if issued, by the Company, or written
confirmation by the Company that such share certificates have not been
issued by it, together with valid deeds of transfer of the Shares
signed by the Pledgors for purposes of the transfer thereof into the
name of the Trust Company in the Company's register of members.
b. To notify the Company immediately upon the signing of this Agreement
and in a text approved by the Bank, of the creation of the charge and
the pledge pursuant to this Agreement and registration of the Shares
in the name of the Trust Company, and shortly after the signing of
this Agreement to furnish the Bank with a certificate from the Company
7
<PAGE>
stating that the board of directors has noted the Pledgors' notice
which was sent to it as aforesaid.
c. To sign all the documents and to take all the steps which are
required, in the Bank's opinion, in order that the force of the pledge
over the Assets Pledged and/or over what will be given in the
realisation of any right included in the Assets Pledged - if any such
right should be realised - will be valid and effectual against other
creditors of the Pledgors, including the signing, upon the occurrence
of the foregoing, of a new and/or additional agreement of pledge
and/or an amendment to this Agreement of Pledge, as well as any other
documents the Bank may require for these purposes.
d. The Pledgors will not be entitled to dismiss the Trust Company from
its function, except with the Bank's prior written consent.
e. Upon the full and absolute payment of the Amounts Secured, in
accordance with the Bank's books, the pledge over the Assets Pledged
will be cancelled and same will be returned to the Pledgors.
10. The Pledgors hereby release the Bank and the Trust Company from any
obligations that are imposed according to the law and/or pursuant to the
Articles of the Company on its shareholders in respect of the Assets
Pledged, and the Pledgors hereby undertake to fulfil any such obligation
and to pay any amount which, according to law or pursuant to the Company's
Articles, shareholders may be called upon to pay in respect of the Assets
Pledged. Should the Pledgors fail to comply with their above undertaking,
the Bank shall be entitled, but not obliged, to fulfil any such obligation
on behalf of and at the expense of the Pledgors,and the Pledgors hereby
undertake to reimburse to the Bank, upon the Bank's first demand, with any
amounts which the Bank has disbursed in the aforesaid connection, together
with interest at the maximum legal rate.
11. a. The Pledgors hereby give the Bank an irrevocable power of attorney
to give the Trust Company instructions with regard to the exercise of
any right which is conferred, or may be conferred, on the Trust
Company as registered owners of the Assets Pledged, according to the
law or pursuant to the Memorandum and Articles of the Company,
including the attending of general meetings, voting, election or
appointment of directors, receipt of dividends, and so forth, and the
Pledgors undertake to furnish the Trust Company with irrevocable
instructions, in a text to be approved by the Bank, to act in respect
of the Assets Pledged solely in accordance with the Bank's
instructions.
b. Notwithstanding the contents of sub-clause (a) above, the Bank agrees
that its instructions to the Trust Company will be given in accordance
with directives which the Pledgors will give the Bank (and not
directly to the Trust Company), provided that the Bank shall be
entitled not to act in accordance with the Pledgors' directives, if:
8
<PAGE>
1) In the Bank's sole discretion, the aforesaid directives are
likely to be prejudicial, directly or indirectly, to the Assets
Pledged or to the Bank's rights under this Agreement of Pledge;
or -
2) If one or more of the events described in Clause 15 below has
occurred and in respect of which the Bank is entitled to demand
immediate payment of the Amounts Secured, or any part thereof.
c. The Pledgors hereby agree that the Bank will not be obliged to
exercise its powers to give instructions to the Trust Company in
accordance with this clause, whether directives have been given to the
Bank by the Pledgors as aforesaid or at the Bank's initiative, and the
Bank may exercise such powers it has or refrain from the exercise
thereof, in its sole discretion, for purposes of safe-guarding its
rights under this Agreement of Pledge.
The Bank or the Trust Company shall send the Pledgors a copy of the
notices or other information of whatsoever nature which may come into
the possession of the Bank or of the Trust Company, as registered
owners of the Shares, or in any other manner, including notices of
general meetings, election or appointment of directors, appointment of
a receiver, etc.
Notwithstanding the foregoing, the Pledgors hereby declare that to the
extent that the notices or information of the aforesaid type is
required by them, they will attend to obtaining the appropriate
notices or the appropriate information, despite the fact that they do
not and will not appear in the Company's register of members.
d. At the request of the Pledgors, the Bank and/or the Trust Company will
empower the Pledgors or anyone on their behalf, to attend general
meetings of the Company on behalf of the Trust Company and to vote
thereat in their discretion, subject to the right of the Bank and/or
the Trust Company to revoke the aforesaid power of attorney completely
or in relation to any general meeting or in relation to matters which
are on the agenda of the meeting, in the circumstances set forth in
sub-clause (b)(1)(2) above, mutatis mutandis, or due to a fear of a
conflict of interest connected with the use of the power of attorney.
Should the Pledgors fail to act in accordance with this power of
attorney, no responsibility in regard thereto shall be imposed on the
Bank and/or on the Trust Company.
12. The Pledgors hereby give their irrevocable consent to the Bank's being
entitled, from time to time, to transfer its rights and obligations
pursuant to this deed, in whole or in part, to whomever it may please,
whether prior to same being payable or subsequent thereto, with this being
at different degrees of ranking in relation to the rights, as the Bank
shall deem fit.
9
<PAGE>
13. The Bank will be entitled to calculate interest on the Amounts Secured at
such rate as shall be agreed upon from time to time with the Pledgors, or
with any one of them, and if no such rate has been agreed, at the maximum
legal rate in force for the time being, and to add the interest to the
principal amount at the end of each quarter and/or at the end of any other
permitted period, and also from time to time to raise the rate of interest
to the maximum legal rate without prior notice, in a case where any amount
forming part of the Amounts Secured is not paid on the due date of payment
thereof, or if the Pledgors should breach any of the conditions of this
deed.
14. The Pledgors hereby accept responsibility to the Bank for the discharge of
the Amounts Secured, and the Bank may at any time demand from the Pledgors
the liquidation of the Amounts Secured, in whole or in part (except in
those cases where it has been or may be otherwise stipulated in writing),
without the Bank being obliged first to realise any other collateral
security, and the Pledgors hereby undertake to make payment to the Bank,
from time to time, of the amount which the Bank may demand, and will do so
within seven days from the date of the Bank's first written demand, from
time to time. Without prejudice to or without derogating from the contents
of this deed, and in addition to the matters set forth in this deed, this
pledge shall secure the liquidation of the Amounts Secured by the Pledgors
in accordance with this clause.
15. Without derogating from anything stated in any other document signed by the
Pledgors or which may be signed by the Pledgors, it is hereby expressly
stipulated that in each of the instances specified in the loan documents,
the Bank will be entitled to make all the Amounts Secured immediately due
and payable, whether or not the due date for payment thereof has arrived.
16. This pledge shall serve as continuing security and if the Bank has received
or may receive other or additional collateral security from any person or
body, the security hereby created shall be additional to such other or
additional collateral security and independent thereof, and shall not
affect such other or additional collateral security or be affected thereby.
The obligations of the Pledgors under this deed shall remain in full force
also in the event that the Bank, with or without the Pledgors' consent, and
also without giving them notice, solely in the Bank's discretion:
a. Should give the Pledgors or any other person responsible with them or
for them, whether as a guarantor or otherwise, any extension of time
or indulgence, or cause the non-fulfilment of any obligation for which
the Pledgors are liable or are guarantors.
b. Should stop, increase, alter or renew any credit or loan or guarantee
or any other Banking Service which it has given or may give to the
Pledgors, and stop, alter or renew any conditions of such credit,
loan, guarantee and Banking Service.
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c. Receive, alter, exchange, release, renew, amend or refrain from
meeting or realising bills of exchange, negotiable instruments,
suretyships, guarantees and/or other collateral security which are
held and/or may be held by the Bank, whether it has received or may
receive same from the Pledgors or from others, and whether or not, as
a result thereof, it causes the Pledgors damage.
d. Should compromise, make any arrangement with the Pledgors, or with
others, or with some of them, separately, or with another person
responsible jointly with the Pledgors or with any guarantor for them.
e. Should release any of the Pledgors from all or any of their
obligations pursuant to this deed and/or should accept any
participation or make any arrangement with the Pledgors or with any
one of them separately.
17. Without derogating from the Bank's other rights, the Bank will have a right
of possession, a banker's lien and a right of set-off in respect of all
moneys held by it at any time to the credit of the Pledgors in any account
whatsoever, and in respect of any asset (including, without derogating from
the generality of this term, gold, securities, bills of exchange, coins,
bank notes, documents in respect of goods, insurance policies, assignments
of debt, any negotiable instruments, deposits, collateral security,
mortgages and other rights) which are held for and/or stand or may stand to
the credit of the Pledgors at the Bank in any manner and form, including
those which have been delivered or will be delivered to the Bank for
collection and/or as security and/or for safekeeping and/or otherwise, and
over the proceeds thereof.
The Bank may, at any time and from time to time, make any use of any asset
over which the aforesaid lien applies, including collection and sale at any
price and under such conditions as the Bank shall deem fit, and may from
time to time apply the proceeds (in whole or in part) that may be received
as a result of or in connection with such use and/or collection and/or
sale, for the frill or partial liquidation of the Amounts Secured. For
purposes of the implementation of the matters aforesaid, the Bank will be
entitled to take all legal or other steps it may deem expedient. All the
expenses connected with the use and/or sale and/or the aforesaid legal
steps, shall be borne by the Pledgors, and the Bank will be entitled to
debit same to the Pledgors' account. In every case of collection of bills
of exchange by the Bank, the Bank will be entitled to transfer and discount
the bills of exchange with others, to take all the legal or other steps for
purposes of collecting the bills of exchange, to charge the costs of
collection to the Pledgors' account, to compromise with the signatories,
endorsers or the guarantors, or to make any waivers to them, to accept from
them partial consideration and to make use from time to time of the
proceeds of the bills of exchange for the full or partial liquidation of
the Amounts Secured.
At any time that the Pledgors may owe the Bank money pursuant to this deed,
or will be likely to be indebted or will be contingently liable only, the
Bank may
11
<PAGE>
make full use of the aforesaid right of possession, lien and set-off, or
any one of them, for liquidation of the Amounts Secured or as security for
the liquidation thereof.
18. a. Any amount and/or payment, in any form whatsoever, which the Bank
may receive from the Pledgors or on their account or from any person,
or other property or from the realization of any right and/or
collateral security in any manner whatsoever for purposes of reducing
the Amounts Secured, whether such amount and/or payment was given or
paid prior to the due date for the payment of the Amounts Secured, in
whole or in part, or at the time of the due payment thereof, or
subsequent thereto, shall be deemed to be a general payment, and the
Bank shall be entitled to hold it as pending without there being an
obligation on it to apply same to the reduction of the Amounts
Secured, even if the amount of the payment is allocated for this
purpose by the person entitled to allocate it in such manner in his
accounts or generally.
b. The Bank may from time to time, in its sole discretion and as it deems
fit, debit any account of the Pledgors with the Amounts Secured or
with any portion thereof. The Bank may, in its sole discretion, from
time to time apply all the amounts it has received or may receive
prior to the due date of payment of the Amount Secured, in whole or in
part, or at the time of due payment thereof, or subsequent thereto, in
any manner from and/or for and/or on account of the Pledgors and/or by
the exercise of any right and/or the realization of any collateral
which is or may be in the Bank's possession, to any account the Bank
may deem fit and/or on account of any amount which is due and/or may
be due to the Bank and/or on account of the interest and/or the
principal and/or the damages and/or the expenses and/or the
commissions and/or the linkage increments, or partly in one way and
partly in another, and may transfer any amount which stands to the
credit of the Pledgors in any account to any other account it may see
fit, and the Pledgors will have no right to claim and/or to benefit
from any amount which has been received and/or may be received and/or
which will be debited and/or will be transferred and/or will be
applied by the Bank as aforesaid, or in any other manner, in reduction
of the Amounts Secured. The Pledgors will not be entitled to rely on
Sections 49 and 50 of the Contracts Law (General Provisions),
5733-1973, or any legal provisions which may come in their stead.
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<PAGE>
19. a. In the event that the Pledgors fail to pay the Amounts Secured, or
any part thereof, on the dates specified for the payment thereof, or
in the event that the Pledgors should breach or fail to comply with
any of the conditions of this deed, or in the case that the Bank
should make the Amounts Secured due and payable as stated in Clause 15
above, the Amounts Secured shall bear interest at the maximum legal
rate, and the Bank will be entitled (without this prejudicing the
Bank's right to institute a regular legal claim instead of realizing
the pledge, or in addition thereto, and without prejudice to the
Bank's remaining rights as against the Pledgors), to realise the
pledge, in whole or piecemeal, and to apply the proceeds to the
liquidation of the Amounts Secured or on account thereof, without the
Bank being obliged first to take any steps in order to execute and
implement any of its rights against the Pledgors and against others,
or any of them, or to realise all the collateral security held by the
Bank at present, or as may be held by it in the future.
b. Should the net proceeds from the sale of the Assets Pledged be
insufficient to cover the Amounts Secured, the Pledgors hereby
undertake to pay the difference immediately upon the Bank's first
demand.
20. If at the time of sale of the Assets Pledged (whether the sale is effected
at the request of the Bank or at the request of any other party), the due
date for payment of the Amounts Secured (or any portion thereof) has not
yet arrived, or if the Amounts Secured (or part thereof) will be due to the
Bank contingently only, the Bank will be entitled to collect out of the
proceeds of the sale an amount which is sufficient to cover such amounts,
and the sum collected will be encumbered to the Bank as security for the
Amounts Secured and shall remain in possession of the Bank until the
liquidation thereof.
21. All the expenses connected with the drawing of this deed, the stamping and
registration hereof, and all the expenses connected with the realisation of
the pledge and/or the cancellation and/or the redemption thereof, including
fees to attorneys, and all the expenses connected with the safeguarding and
holding of the Assets Pledged, shall be borne by the Pledgors and shall
also be secured by this pledge.
22. The Bank shall be entitled at any time to demand and to receive from the
Pledgors, on the Bank's first demand, a report and statement with regard to
the state of the Pledgors' business and a balance sheet in respect of the
preceding period, and the Pledgors hereby undertake that in their business
they will regularly maintain proper books of account which will at all
times be open for inspection by the Bank.
23. a. The Bank will be entitled to deposit the Assets Pledged with any
bailee the Bank shall deem fit, and from time to time to replace the
bailee, in the Bank's sole discretion.
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b. The Bank will be entitled to register the pledge with any competent
authority according to the provisions of any law.
24. The books and account of the Bank shall be acceptable to the Pledgors as
being correct and copies of the accounts, signed by the Bank, shall serve
as prima facie proof against the Pledgors in all matters connected with
and/or arising out of this deed.
25. The address of the Pledgors is as set forth above, or any other address in
Israel of which they may notify the Bank by registered post, the receipt of
which shall be confirmed in writing by the Bank. Any notice sent to the
Pledgors by the Bank by ordinary mail according to the above address shall
be deemed to have been received by the Pledgors within 72 hours from the
time of delivery thereof to a post office in Israel. A declaration in
writing by the Bank regarding the contents of the notice, the delivery
thereof to the post and the time of delivery thereof, shall serve as proof
against the Pledgors with respect to delivery of the notice, the time of
its delivery and the contents thereof.
26. The Pledgors hereby waive the necessity for the sending of warnings or
other notices in connection with a breach of the conditions of this deed.
27. The Pledgors hereby fix the city of Tel Aviv as the venue of jurisdiction
for all purposes connected with this deed, but nothing stated in this deed
shall prejudice the Bank's right to apply to any other competent court.
28. The Pledgors agree that in every instance that the Bank fails to make
immediate use of its rights as flowing from this deed or which are
connected herewith, this fact of procrastination shall not be deemed to be
a waiver of any rights or any form of acquiescence or admission on the part
of the Bank, or as any precedent, and the Bank shall be entitled to
exercise the rights flowing from this deed and/or connected herewith and/or
at law, at any time it deems fit.
29. The Pledgors and/or any person whose right is likely to be prejudiced by
the giving of this pledge or the realisation hereof, will not have a right
to repay the debts pursuant to this deed prior to the due date fixed for
the payment thereof having arrived, nor will they have any other right
which is conferred on them in accordance with Section 13(b) of the Pledge
Law, 5727-1967, or any provision which may come as an amendment to or in
replacement of that provision.
30. The Pledgors undertake to sign any document and any form at the Bank's
request, if and to the extent that according to the laws in the State of
Israel, in whole or in part, there is a necessity, in the Bank's sole
discretion, for signature by the Pledgors of any document or form in order
to give or maintain full validity for this deed and all the provisions
hereof.
For purposes of implementation of the provisions of this clause, the
Pledgors hereby appoint the Bank as their authorised agent which shall be
entitled itself or through another person to whom the Bank transfers its
powers and authorities, to
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<PAGE>
sign any document and any form which may be required by the Bank, and
without the Bank or the authorised agent being responsible in any way to
the Pledgors for any actor omission by it or him pursuant to or in
consequence of this clause. This appointment shall be irrevocable by virtue
of the fact that the Bank's rights are dependent hereon.
15
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Account Number(s)
Name of Customer: Arwoll Holdings Ltd.
To
Bank Hapoalim B.M.
_________________ branch
DEED OF UNDERTAKING
Made and entered into at _________ on the 7th day of July 1998
WHEREAS I the undersigned have requested and/or will request from Bank
Hapoalim B.M. (hereinafter: "the Bank") to allocate credit facilities
to me, from time to time, by way of loans and/or overdrafts and/or
revolving credit in US dollars and/or in other freely convertible
foreign currency (hereinafter: "Credit" or "Credit Facilities") in an
account conducted in foreign currency (hereinafter: "the Account") in
accordance with the terms and conditions of this Deed of Undertaking;
and
WHEREAS The Bank makes its favourable response to my application conditional,
inter alia, on my signing this Deed of Undertaking;
ACCORDINGLY I HEREBY DECLARE AND UNDERTAKE AS FOLLOWS:
Application for allocation of Credit Facilities
1. a. I, the person whose details appear above, have opened an account at
the Bank in my name and this Deed of Undertaking and the documents
which will be attached hereto constitute an integral part of the
application for the opening of an account and the general conditions
for the conduct of an account which has been signed by me
(hereinafter: "the Application for Opening an Account").
b. My obligations pursuant to this Deed of Undertaking are in addition to
my obligations under the Application for Opening an Account, and
nothing contained in this Deed of Undertaking shall derogate from any
of the Bank's rights as set forth in the Application for Opening an
Account.
c. In order to induce the Bank to allocate credit facilities to me, I am
obliged to submit to the Bank an appropriate application in the form
to be delineated by the Bank, but the receipt of any application by
the Bank shall not obligate the Bank to grant any credit or to accede
to the application, and until such time as the credit has been
allocated to me, the Bank may, in its discretion, refrain from
allocating it. Under all circumstances the terms and conditions of
this Deed of Undertaking shall apply to any credit, whether given
prior to the signing of this Deed of
<PAGE>
Undertaking or subsequent thereto, unless otherwise agreed in writing
between me and the Bank.
Interest, additional interest, penalty interest and imposts
2. a. Any Credit Facilities which may be allocated to me within the scope
of this Deed of Undertaking shall bear interest at the rates specified
in my application for the allocation of such Credit that has been
granted by the Bank.
b. I undertake to make payment to the Bank, from time to time, of
additional amounts (hereinafter: "Additional Interest") at such rate
as is sufficient, in the Bank's opinion, to compensate the Bank for an
increase in the cost of the Credit to the Bank for any reason,
including an increase in the cost of the Credit to the Bank:
1. As a result of an obligation according to any law or agreement or
otherwise imposed on the Bank, or as a result of a demand
addressed to the Bank by the Bank of Israel and/or by any
competent or other authority in Israel or abroad:
aa. To hold liquid assets in any percentage, or in any currency,
in connection with the providing of the Credit and/or the
continued providing thereof; and/or
bb. To pay and/or to set aside any payments to the State
Treasury and/or to the Bank of Israel and/or to any
competent and/or other authority in connection with the
providing of the Credit and/or the continued providing
thereof, or
2. If as a result of any obligation or demand as aforesaid, in
consequence of which the Bank is not able to obtain the same
percentage return on all its capital resources which it would
have obtained had it not acceded to my application to allocate
the Credit Facilities to me.
In the event that we are called upon to pay the Bank Additional
Interest as aforesaid, we shall be entitled within 30 days from
receipt of the Bank's notice with regard to the imposition of the
Additional Interest, to make early repayment of the Credit Facilities,
subject to the condition that we pay the Bank all the expenses and
damages which may be caused to the Bank as a result of the early
repayment.
c. If I fail to repay the Credit Facilities on the date fixed for the
payment thereof in my application for the allocation of such Credit
and/or if I do not repay any amount I may owe to the Bank in
accordance with this Deed of Undertaking and/or pursuant to my
application for the allocation of such Credit Facilities, such amount
shall bear penalty interest at the
2
<PAGE>
maximum rate prevailing at the Bank for the time being in respect of
defaults in the currency of the Credit Facilities, but not less than
5.5% per annum above the rate of interest which applies on the Credit
Facilities (hereinafter: "Penalty Interest"), calculated from the date
which was fixed for the payment of such amounts, or if no date was
fixed for the payment thereof, from the date on which I was called
upon to make payment thereof, and up to the date of actual payment
thereof.
Penalty Interest will be calculated by the Bank on the daily, weekly
or other balances, in the sole discretion of the Bank, and shall be
paid by me or shall be added to the principal at the end of each
quarter or any other period as may be decided by the Bank, in its sole
discretion.
Manner of payment; taxes
3. a. All the payments which will be paid by me to the Bank pursuant to
this Deed of Undertaking, shall be paid to the Bank free of any tax,
deduction, impost or compulsory payment without set-off or
counter-claim, in freely convertible foreign currency which is the
currency of the Credit Facilities, at the branch at which the Credit
Facilities were placed at my disposal, or at any other place that may
be specified for the purpose by the Bank, provided that I shall be
given 30 days advance notice in regard thereto.
b. If I should be required or if any financial institution through which
the payment is effected should be required, at any time, according to
any law and/or administrative directive of any authority or of a
central bank, to deduct tax or to pay tax in respect of any payment
due from me in respect of the Credit Facilities to which this Deed of
Undertaking applies, the amount due from me in respect of the
aforesaid payment shall increase by the percentage required in order
to ensure that after the aforesaid deduction or the aforesaid payment,
the Bank will receive the net amount, on the date of payment, which is
equivalent to the amount the Bank would have received had such
deduction or payment in respect of tax not been made. I will indemnify
the Bank in respect of any loss or actual cost to the Bank in respect
of an omission and/or any breach in effecting the deduction or payment
of tax or due to non-payment of the increased amount. I will promptly
deliver to the Bank all receipts, certificate and/or other forms of
proof evidencing the amounts which have been paid or are being paid in
respect of any tax deduction or tax payment as aforesaid.
Appropriation of payment
4. Any amount, payment or credit of whatsoever nature which may be paid or
received to my credit, as well as any amount which may be in the possession
of the Bank as a result of the realisation of any collateral which has been
given or may be given by me or by others for my benefit, shall serve for
the repayment and/or as security for repayment of the Credit Facilities,
the Interest, the
3
<PAGE>
Additional Interest, Penalty Interest, and the commissions for which I will
be liable (hereinafter: "the Commissions" and other payments I may owe
pursuant to this Deed of Undertaking, according to the order of priority as
decided by the Bank, in any circumstances where any payment on account of
the Credit Facilities has not been paid on the due date for payment
thereof.
Early repayment
5. a. The Bank will not be obliged to accept from me any payment on account
of the Credit Facilities and/or the Interest and/or the Additional
Interest and/or the Commissions, prior to the date fixed for the
payment thereof having arrived.
b. Subject to the provisions of any law, if the Bank should accede to my
request for early repayment (without it being obliged to do so), the
Bank shall be entitled to debit my Account, either in Israeli currency
or in foreign currency, with an amount which is sufficient to
liquidate and discharge the amount the payment of which has been
brought forward, plus an early repayment commission at the maximum
rate as shall be determined by the Bank and which results from the
Bank's consent to the early repayment requested.
Collateral security
6. All the collateral security which has been given and/or may be given by me
and/or on my behalf to the Bank, and all the bills of exchange and other
negotiable instruments which I have delivered and/or may deliver, or which
my guarantors have delivered and/or may deliver to the Bank, from time to
time, as well as additional collateral which may be delivered to the Bank
after the signing of this Deed of Undertaking, shall serve as security for
the full and precise fulfilment of one or more of my obligations in respect
of Credit Facilities or pursuant to this Deed of Undertaking.
7. At any time, on the Bank's first demand, I will furnish additional
collateral which the Bank may demand as security for my obligations in
respect of Credit Facilities or pursuant to this Deed of Undertaking, and
these and/or other collateral which the Bank agrees to accept, shall serve
as security as stated in Clause 6 above.
8. The furnishing of collateral security to the Bank, as mentioned in Clauses
6 and 7 above, shall constitute conclusive proof that same were delivered
to the Bank as security for repayment of the amounts I owe the Bank in
respect of Credit Facilities or pursuant to this deed, and shall not
succeed any instrument of charge or other document in order to extend or
apply such collateral to the amounts which I owe as aforesaid. These
amounts will be referred to below as: "the Aforesaid Amounts".
9. a. In every case that the Bank holds bills of exchange as mentioned in
Clause 28 below (hereinafter: "the Bills of Exchange") bearing my
signature, my
4
<PAGE>
endorsement and/or with my guarantee, which have been delivered or may
be delivered to the Bank for collection and/or for safekeeping and/or
as security and/or otherwise, such Bills of Exchange will be and will
be deemed to be pledged and encumbered to the Bank as a first-ranking
pledge and charge and the Bank shall be entitled to transfer the Bills
of Exchange to others or to discount same, or to take any legal or
other steps, as it deems fit, for purposes of collection of the Bills
of Exchange, and it will be entitled to debit the expenses of
collection to my account. The Bank may compromise with the
signatories, endorsers or guarantors, or any one of them, under other
conditions, and may waive, release, accept partial consideration from
them and apply the proceeds of the Bills of Exchange to the repayment
of debts which are due and/or may be due by me to the Bank. The
receipt of the Bills of Exchange or acceptance of the full or partial
consideration thereof as aforesaid shall not derogate from my
obligation to repay all the aforesaid amounts. I hereby declare that
the Bills of Exchange which have been delivered and/or which may be
delivered by me to the Bank, from time to time, are in my possession
and under my absolute ownership, and that they and the proceeds
thereof are free and clear of any lien, attachment and third party
right of whatsoever nature, and that I am entitled to pledge and
encumber same to the Bank.
b. The following provisions will apply to Bills of Exchange bearing my
signature, endorsement or with my guarantee which are held by the
Bank:
1. The Bank will be free and exempt from all the obligations of a
holder of a bill of exchange, including presentation, protest and
sending of notice of dishonour, and all my obligations stemming
from my signature, endorsement or guarantee, shall remain in full
force even without the Bank performing the obligations of a
holder as aforesaid.
2. I waive all the rights and defences accorded to me pursuant to
the Bills of Exchange Ordinance and/or any other law in relation
to prescription.
3. In every case that the Bills of Exchange have been delivered to
the Bank for discounting or otherwise, and I have been given
consideration in respect thereof, and the Bills of Exchange are
not met, the Bank will be entitled to debit my account with the
amount of the Bills of Exchange which have not been met.
4. I release the Bank from any responsibility for the loss of the
Bills of Exchange and/or procrastination in the collection
thereof.
5. I assume full responsibility for the regularity of the Bills of
Exchange, the authenticity and correctness of the signatures, the
5
<PAGE>
endorsements and the signatures of the guarantors on the Bills of
Exchange, as well as for the stamping thereof according to law.
6. I agree that in the event that the Bank should decide to sell the
Bills of Exchange itself, notice of seven days in advance with
regard to the steps the Bank is about to take shall be deemed to
be a reasonable period for purposes of Section 20(b) of the
Pledge Law, 5727-1967, or any legal provision which may come in
its stead.
7. I undertake not to create any pledge or any other charge over the
Bills of Exchange or the proceeds thereof, having prior rights,
ranking pari passu or ranking after the rights conferred on the
Bank pursuant to this Deed of Undertaking, except with the Bank's
prior written consent.
10. In every case that any deed of encumbrance should serve as security for
payment of the Aforesaid Amounts, or for the fulfilment of the obligations
contained in this deed, it is hereby expressly stipulated that the deed of
encumbrance constitutes an integral part of this Deed of Undertaking, and
all the provisions, terms and conditions, declarations and undertakings
contained in the deed of encumbrance shall constitute an integral part of
this Deed of Undertaking and are incorporated herein. It is further hereby
expressly stipulated that this Deed of Undertaking does not have the effect
of altering the deed of encumbrance or of derogating therefrom.
11. All the Bills of Exchange, guarantees, charges and the remaining collateral
security which have been given and/or may be given to the Bank by me, or by
others in my favour, as security for payment of the Aforesaid Amounts, or
to guarantee the performance of my obligations pursuant to this Deed of
Undertaking, shall be cumulative and independent of one another, and shall
not affect other collateral the Bank is holding or may hold, nor shall it
be affected by such collateral, and shall serve as repeating or continuing
security until the full liquidation and discharge of the Aforesaid Amounts.
The Bank may realise the collateral according to an order of priority to be
decided by it, and the realisation of one form of collateral security shall
not affect another collateral security or derogate therefrom.
12. If at any time the value of the collateral I have delivered to the Bank is
insufficient, in the assessment of the Bank and in its sole discretion, to
secure payment of the Aforesaid Amounts, or as a guarantee for the
performance of my obligations pursuant to this Deed of Undertaking, or if
the validity of any collateral security is about to lapse, I hereby
undertake to pay the Bank, upon its first demand, any amount which be
demanded from it as additional security, or to furnish the Bank with other
collateral to its satisfaction, and in the event that I should breach or
fail to comply with such demand by the Bank, the Bank will be entitled to
realise the collateral security, in whole or in part, and in particular
6
<PAGE>
those forms of collateral security the validity of which is about to
expire, in such manner and on such conditions as the Bank shall deem fit,
and to credit the proceeds (after deduction of expenses) in part payment or
in liquidation and discharge of all the Aforesaid Amounts.
Immediate repayment
13. Without derogating from the other provisions of this Deed of Undertaking,
the Bank shall be entitled, by its first demand, to make all the Aforesaid
Amounts immediately due and payable, on the occurrence of any of the events
enumerated below. In such case, I undertake to pay the Bank all the
Aforesaid Amounts, and the Bank will be entitled to debit any account of
mine with the Aforesaid Amounts, and to take such steps as it sees fit to
recover such amounts, and in particular to realise the collateral security
in any manner the law permits, at my expense.
The following are the events:
a. If I should breach or fail to comply with any of the conditions of
this Deed of Undertaking, or any other obligations I have undertaken
or may in the future undertake to the Bank, in connection with the
Credit Facilities which have been given and/or may be given in
accordance with this Deed of Undertaking, or if it should become
apparent that any of my declarations with regard to the granting of
Credit Facilities pursuant to this Deed of Undertaking is incorrect or
inaccurate;
b. If I should pass a resolution for voluntary winding up or if a
liquidation order should be granted against me, or if my name should
be expunged from any register maintained according to law or is liable
to be expunged;
c. If a receiver should be appointed in respect of my property or portion
thereof, or if a receivership order should be granted against me, or a
provisional liquidator or special manager should be appointed for me;
d. If an attachment is imposed, or similar Execution Office proceedings
are taken, in respect of portion of my property, or in respect of any
of the collateral security that has been delivered by me to the Bank;
e. If it should appear to the Bank, in its sole discretion, that a change
has taken place in the control over me as compared with the situation
prevailing at the date of signing of this Deed of Undertaking;
f. If I have ceased to pay my debts or to conduct my business;
g. If work, or a substantial portion thereof, in my business has been
stopped for two months or more;
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h. If it should appear to the Bank, in its sole discretion, that an event
has occurred likely to affect my financial capabilities detrimentally;
i. If I should be in default, for a period in excess of 7 days, in the
payment of any amount I owe the Bank;
j. If I fail to deliver to the Bank periodic financial statements, books
of account and other vouchers in connection with the state of my
business, as described in Clause 19 below, or if I am called upon by
the Bank to do so and have failed to respond to the demand;
k. If the number of my shareholders and/or the number of members which
constitute me should fall below the minimum number required according
to the law;
l. In the case of the death, legal incapacitation, bankruptcy,
liquidation, arrest, leaving of the country, or breach of an
obligation of mine, or of any of my guarantors, or by any party to
bills of exchange, documents and securities which have been delivered
or may be delivered to the Bank as collateral;
m. If in the absolute discretion of the Bank, and in its sole assessment,
there has been an adverse change in the value of the collateral
security given to secure payment of the Aforesaid Amounts, or in the
ability of any of my guarantors to pay, including in the case of the
early death of a guarantor, his bankruptcy or his leaving the country;
n. If I am called upon to make early repayment of debts which I owe to
other creditors;
o. If one of the events enumerated in this clause should occur, mutatis
mutandis, to any guarantor for payment of the Aforesaid Amounts;
p. If the Bank is unable to fix the rate of interest or is unable itself
to finance the currency of the Credit Facilities due to reasons
connected with happenings on the international money market, and/or
the Bank is unable to fix the rate of interest for any reason and/or
if in the opinion of the Bank, the continued providing of the Credit
Facilities becomes unlawful or impossible of execution.
14. In every case that I do not pay the Aforesaid Amounts on or before the date
of termination of the credit period, or the date to which same were made
immediately due and payable in accordance with Clause 13 of the Deed of
Undertaking (hereinafter: "the Due Date of Payment"), the Aforesaid Amounts
will bear Penalty Interest at the maximum rate currently charged by the
Bank at that time, and from time to time, on excesses or defaults in
respect of credit in the foreign currency in which the Credit Facilities
are denominated, calculated from
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the Due Date of Payment and up to the final and absolute liquidation and
discharge of all the Aforesaid Amounts.
Other rights of the Bank
15. a. The Bank has rights of possession, a banker's lien and set-off in
respect of all the amounts, assets and rights, including securities,
coins, gold, bank notes, documents in respect of goods, insurance
policies, bills of exchange, assignments of debt, deposits, collateral
security and the proceeds thereof, which may be held at the Bank at
any time to my credit or for me, including those delivered for
collection, security, safekeeping or otherwise. The Bank will be
entitled to withhold the aforesaid assets until the full discharge and
liquidation of all the Aforesaid Amounts, or to sell same and to apply
the proceeds thereof, in whole or in part, to the discharge and
liquidation of the Aforesaid Amounts.
b. Without derogating from the Bank's right of lien, as referred to in
sub-clause (a) above, the Bank shall be entitled (but not obliged) at
any time:
1. To set off any amount forming part of the amounts due from me
against amounts which are due to me from the Bank in any account,
manner or on any grounds (even prior to the Due Date of Payment
of the amounts which are due to me from the Bank as aforesaid).
2. To purchase and to credit to my account any amount in foreign
currency which is required for the discharge and liquidation of
any of the amounts due from me, or to sell any foreign currency
which may stand to my credit at the Bank, and to apply the
proceeds of the sale to the discharge and liquidation of any
amount forming part of the amounts due from me.
3. To debit any account of mine with any of the amounts due from me,
whether or not payment thereof has been demanded in accordance
with the provisions contained in this Deed of Undertaking.
4. Under all circumstances the Bank will be entitled to effect a
set-off without any advance notice. However, in the following
cases the Bank will be entitled to effect the set-off by way of
prior notice which shall be given to me 10 (ten) days before the
date on which the set-off is effected:
(1) In the case of a set-off against amounts the Due Date of
Payment of which has not yet arrived,
(2) In the case of a set-off against a fixed deposit which, but
for the set-off, would automatically have been extended or
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renewed, in a manner whereby I would have derived certain
rights or benefits therefrom.
(3) Notwithstanding the contents of sub-clause (b)(4)(1) above,
if a postponement in effecting the set-off would be likely
to be adverse to the Bank's position or to prejudice any of
the Bank's rights, the Bank will be entitled to effect the
set-off immediately. In addition, in a case that notice has
been sent to me and in the course of the ten days an
attachment order and/or notice of receivership in connection
with me should arrive, or a similar event should occur, the
Bank will be entitled to effect the set-off forthwith.
5. Any purchase or sale as referred to in sub-clause (b)(2) shall be
effected (if effected) according to the rate customarily
prevailing at the Bank, out of amounts in Israeli currency or in
foreign currency, as the case may be, standing to my credit at
the Bank, or as will be obtained from the realisation of any
collateral which has been given or may be given by me to the
Bank.
The expression "rate customarily prevailing at the Bank" means -
in respect of any purchase of foreign currency to the credit of
my account - the highest rate for transfers and cheques at the
relevant time at which the Bank sells the relevant foreign
currency to its customers in consideration for Israeli currency
plus exchange commission, any tax, levy, compulsory payments and
other payments, etc.
With respect to any sale of foreign currency to the debit of my
account -- the lowest rate for transfers and cheques at the
relevant time at which the Bank buys the relevant foreign
currency from its customers in consideration for Israeli
currency, less exchange commission, any tax, levy, compulsory
payments or other payments, etc.
6. I hereby declare that I am aware that in cases that the Bank
exercises rights of set-off as aforesaid prior to the Due Date of
Payment of any deposit of mine, in whole or in part, this is
likely to be prejudicial to my interests (such as: with respect
to rates of interest, linkage differentials, currency
differentials, rights to grants or loans, an income tax exemption
or rebates, withholding tax at source, including the right not to
be liable for expenses and commissions necessitated by effecting
the set-off, if pursuant to the conditions of such account I
would have had such rights). I also agree to bear all expenses of
the payments caused as a result of such set-off operations being
effected.
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16. The Bank shall be entitled at any time to debit any account of mine
(including any account held by me jointly and severally with other account
owners) with any amount which is due and which may be due from me in any
manner, and to apply any amount it may receive from me or for me to the
credit of such account as it deems fit, and to transfer any amount which
may stand to my credit to any other account it may see fit.
17. I hereby give the Bank an instruction and authorisation to debit my
account, the number of which is mentioned at the head of this Deed of
Undertaking, account no. ____, from time to time, with the amount required
for payment of the Aforesaid Amounts. This instruction and authorisation
does not derogate from the Bank's right to debit any other account of mine
as stated in Clauses 15 and 16 above. If the state of any account of mine
does not make it possible for the Bank to debit it for purposes of the
final payment of any amount on account of the Aforesaid Amounts, the Bank
shall be entitled not to act according to my instruction and authorisation,
and if the Bank has acted pursuant thereto, it will be entitled to cancel
any such debit and to treat any amount the debit of which has been
cancelled as an amount which was not paid on account of the Aforesaid
Amounts, and in accordance therewith to take such action as it sees fit in
accordance with this deed.
18. a. I confirm that the books of the Bank, its accounts and records are
acceptable to me as being correct, and will be deemed to be correct
and will serve as prima facie proof against me with respect to all the
details therein, and inter alia with regard to the calculation of the
Aforesaid Amounts, with respect to details of the bills of exchange,
the guarantees and the other collateral security and any other matter
connected with this Deed of Undertaking.
b. I confirm that I have been informed by the Bank in accordance with the
Protection of Privacy Law, 5741-1981, as follows:
1. All the details I have given and/or may give to the Bank shall be
used by the Bank as is customary in its current work, in its sole
discretion.
2. All the details I have given and/or may give to the Bank will be
stored in accordance with the Bank's needs in data bases of the
Bank and/or of whomever supplies the Bank from time to time with
computer, data processing and information storage services, and I
hereby confirm my consent to the foregoing.
Financial statements
19. a. I am aware that by virtue of the fact that I am obliged to prepare
periodic financial statements according to law, a condition precedent
to receiving the Credit Facilities is the furnishing of such financial
statements to the
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Bank in accordance with the directives of the supervisor of banks or
the Bank of Israel and/or the provisions of any law, and I undertake
to furnish them as aforesaid in the format as specified according to
law or in accordance with accepted accounting principles, and at such
frequency as is demanded from me by the Bank from time to time.
b. On the demand of the Bank from time to time, I will place at the
disposal of the Bank's representative for inspection during normal
working hours any balance sheet, financial statement, books of
account, ledger cards, journals and other vouchers in connection with
my financial position.
Receipt of orders and notices other than in writing
20. The Bank will be entitled, in its sole discretion, to accept or to refuse
to receive orders or notices of any sort that are given to it verbally, by
telephone or in any other manner which is not in clear and legible writing.
Should the Bank agree to act according to my instructions or requests which
are not an instruction in writing in the ordinary course, I assume all
responsibility for any mistake, misunderstanding or contradiction, and
damage and/or loss which may be caused as a result of such instructions
being given.
Right of transfer and assignment; credit management
21. a. The Bank may, at any time, in its discretion and without requiring my
consent, transfer and/or assign its rights in connection with the
Aforesaid Amounts and/or pursuant to this Deed of Undertaking, in
whole or in part, including collateral that has been delivered or may
be delivered in accordance with this Deed of Undertaking, in whole or
in part, to another or others, and any transferee will also be
entitled to transfer and/or assign the aforesaid rights without
requiring my further consent. The transfer and/or assignment may be
made in any manner the Bank or any subsequent transferee may deem fit.
b. I agree that I will not be entitled to transfer or to assign to
another any right or obligation in relation to the credit which has
been given and/or may be given pursuant to this Deed of Undertaking,
except after receipt of the Bank's prior written consent.
22. The Bank shall be entitled to manage the Credit, or any part thereof, by
the recording thereof at any branch of the Bank it may choose, whether in
Israel or abroad, and the Bank may also at any time and from time to time,
in its sole discretion and without requiring my further consent, transfer
the management of the Credit or any part thereof from one branch of the
Bank to another of its branches, whether in Israel or abroad. The Bank may,
from time to time in its sole discretion and without requiring my further
consent, sell participations in or assign its rights in relation to the
Credit Facilities or any part thereof, or which relate to the Aforesaid
Amounts and/or pursuant to this Deed of Undertaking, in
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whole or in part, to another or others, and each of the purchasers of the
participation or the assignees may sell the participation or may assign the
aforesaid rights without requiring my prior consent. The sale of a
participation or the assignment of rights as aforesaid may be effected in
any manner the Bank, or any of the purchasers of the participation or the
assignees shall deem fit.
Lodgement of collateral
23. The Bank shall be entitled to lodge the collateral which has been delivered
or will be delivered in connection with the Aforesaid Amounts and/or in
accordance with this Deed of Undertaking, or part thereof, in the hands of
a bailee to be chosen by it in its discretion, with this being at my
expense, and may replace the bailee from time to time. The Bank may further
register the aforesaid collateral, in whole or in part, with any competent
authority according to any law and/or in any register the public is
entitled to inspect.
Customer's obligation to give notice
24. a. I undertake to notify the Bank in writing with regard to any
reservation or objection I may have, if any, in connection with any
account, condensed account, or any certificate or notice I may receive
from the Bank, including the obtaining of information via Adken. If I
fail to do so within 30 days from the date of the sending of the
account, the condensed account, certificate or notice as aforesaid,
the Bank will be entitled to relate to me as having confirmed the
correctness thereof.
b. Without derogating from the other provisions of this Deed of
Undertaking, any waiver, extension of time, indulgence, silence,
failure to take action (hereinafter: "Waiver") on the part of the Bank
in respect of the non-compliance or partial compliance or incorrect
compliance with any of my obligations in connection with the Aforesaid
Amounts and/or pursuant to this Deed of Undertaking, will not be
deemed to be a waiver on the part of the Bank of any right, but merely
as limited acquiescence with respect to the specific occasion in
relation to which the Waiver is given. Any Waiver which may be granted
by the Bank to any party to a bill of exchange the Bank may hold shall
in no way affect my obligations.
25. I undertake to notify the Bank immediately:
a. About every event of the claim of a right relating to any collateral
security which has been given or may be given to the Bank.
b. With regard to any of the acts mentioned in Clause 13 above.
c. About a change of address.
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d. With regard to any application for liquidation which may be filed
against me or on my behalf, including the passing of a resolution for
voluntary winding-up and/or merger.
e. Regarding any application to declare me bankrupt or to appoint a
receiver in respect of my property, or portion thereof.
Expenses
26. All the expenses, as set forth in the Bank's tariff, including legal
expenses connected with the drawing of this Deed of Undertaking and the
other documents which are required and which may be required by the Bank in
connection with the grant of the Credit and/or the collateral security, and
also the stamping thereof, if stamp duty applies on any of the aforesaid
documents, including other and/or additional payments in connection
therewith, as well as expenses connected with the registration and
realisation thereof, including fees to the Bank's attorney, shall be paid
by me to the Bank on the Bank's first demand, together with interest at the
maximum rate prevailing at the Bank for the time being on unauthorised
excesses and/or defaults in a revolving credit account, reckoned from the
date of the demand and up to full liquidation. Until the full discharge and
liquidation thereof, all the aforesaid expenses, together with interest
thereon, shall be secured by the collateral referred to in Clause 7 above.
In addition the Bank shall be entitled to debit my account with the
aforesaid expenses and the interest thereon.
Fundamental terms
27. Clauses 1, 2, 3, 6, 7, 12, 13, 18 and 19 are fundamental and material terms
and conditions of this Deed of Undertaking.
Interpretations
28. In this Deed of Undertaking - (a) the singular includes the plural, and
vice-versa; (b) the masculine includes the feminine, and vice-versa; (c)
"the Bank" means "Bank Hapoalim B.M." and any of its branches existing at
the date of this Deed of Undertaking and/or which may be opened at any
place in the future, in Israel or abroad, and any persons acting on behalf
of the Bank; (d) "bills of exchange" mean-- promissory notes, negotiable
instruments, cheques, undertakings, guarantees, collateral, drafts, bills
of lading, bills of deposit, and any other negotiable documents; (e) the
preamble to this Deed of Undertaking constitutes an integral part hereof;
(f) the term "the Bank's books" shall be construed as also including-- any
book, register, ledger page, copy of a ledger page, loan contract, deed of
undertaking, note signed by the customers, ledger, journal, reel, any means
for storage of data for purposes of electronic computers, and also any
other means of storing data; (g) the expression "registration thereof"
shall be interpreted as also including any registration or copy of
registration, whether registered or copied in handwriting or by typewriter
or registered or copied by way of printing, duplicating, photography
(including microfilm or microfiche) or by means of any
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mechanical, electrical or electronic device, or by recording means of
electronic computers or any other means of registration or presentation of
words or figures or any other symbols which are customarily used by banks.
A disclosure of information
29. Every branch of the Bank which manages the Credit, or part thereof, may
disclose to the head office administration of the Bank, to any participant
or potential participant, assignee or transferee, or to any other person or
body interested in entering into a contract with such branch of the Bank in
connection with the Credit, or such portion thereof, and also to the Bank
of Israel, the Supervisor of Banks, the Controller of Foreign Currency, or
any other person acting with their authority, or to any other competent
authority to which that branch or the head office administration is
subordinate to, or to the head office administration of the Bank, in order
for the head office to transfer onwards to such competent authorities,
details about me, or which pertain to any credit granted to me pursuant to
this Deed of Undertaking, whether on a request by such competent authority
or as the branch or the head office administration of the Bank shall, in
its discretion, see fit.
Notices
30. The Bank may give me any notice pursuant to this Deed of Undertaking by
sending it or delivering it as stated in this Deed of Undertaking or in any
other manner. Any notice sent to me by post by the Bank in a registered
letter or by ordinary mail, according to the address specified above, or to
some other address in Israel of which I shall notify the Bank in writing,
shall be deemed to be notice received by me within 72 hours from the time
the letter containing the notice was sent. A declaration in writing by the
Bank shall serve as conclusive proof with regard to the time and sending of
the notice. Any notice given to me in any other manner shall be deemed to
have been received at the time it was given, or at the time of its
publication.
Substantive law and venue of jurisdiction
31. a. This Deed of Undertaking shall be interpreted in accordance with and
pursuant to the laws of the State of Israel.
b. The sole venue of jurisdiction for purposes of this Deed of
Undertaking is hereby fixed as the competent court nearest to the
place of signing of this Deed of Undertaking, or the competent court
in one of the following cities: Jerusalem, Tel Aviv, Haifa, Beersheva
or Nazareth.
c. I hereby agree that any summons, notice, judgement, legal proceeding
or pleading in connection with the legal proceedings referred to in
sub-clause (b) above may be delivered to me by delivery thereof to my
representative in Israel whose name and address is
_______________________. I shall be entitled at anytime, and from time
to time, by written notice to the
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Bank, sent by registered mail, to change my representative in Israel
and/or his address in Israel, for purposes of the service on me of
court processes and the remaining documents mentioned above.
Indemnity
32. I hereby undertake to indemnify the Bank in respect of any loss which may
be caused to the Bank as a result of a judgement by a court and/or an order
of court which may be given for payment of any of the Aforesaid Amounts
where the currency for payment of such judgement or such order is specified
as a currency differing from the currency of the Credit Facilities, and
also for any loss likely to be caused as a result of any change in rates of
exchange of the Israeli currency as against the rate of exchange of the
currency of the judgement, during the period between the dates specified
for the payment of such amount, in accordance with this deed, and the
actual date the payment is effected. My aforesaid undertaking for indemnity
is a separate and independent undertaking, and shall remain valid and in
force without reference to any waiver and/or indulgence that has been
granted to me from time to time by the Bank, and this undertaking of mine
shall remain effectual without any derogation from and/or prejudice to the
validity thereof as a result of such judgement or order.
In witness whereof the parties have hereunto signed:
Arwoll Holdings Ltd.
(-)
---------------------------
Arwoll Holdings Ltd.
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DEBENTURE
Made and entered into on the 14th day of July 1998 at Tel Aviv
WHEREAS The undersigned ARWOLL HOLDINGS LTD., 51-260178-2 (hereinafter -
the Pledgor)
Whose address is: c/o Ecker and Volovelsky, Advocates, 30 Ahad Haam Street, Tel
Aviv 65151
has received and is due from time to time to receive from Bank Hapoalim B.M.
(hereinafter - the Bank), credit facilities, documentary credit, various loans,
overdrafts on current account, on revolving debitory account or on another
account, letters of indemnity and any guarantees for the Pledgor or for others,
at the Pledgor's request, the discounting of bills, the giving of extensions of
time and various banking facilities and other various banking services
(hereinafter, collectively and individually - Banking Services), on conditions
as have been agreed and/or will be agreed from time to time in relation to each
such Banking Service;
NOW THEREFORE it is agreed that the Pledgor will secure the repayment of various
amounts of money which the Pledgor owes and/or will owe to the Bank in
connection with the providing of Banking Services and/or in connection with
other obligations which are not banking and/or other services, all in accordance
with the conditions set forth below.
Nature and substance of the Debenture
1. This Debenture is being executed as security for the full and punctual
payment of all the amounts which are due and which may be due to the Bank
from the Pledgor in connection with the providing of Banking Services to
the Pledgor by the Bank and/or in connection with other obligations which
are not Banking Services or in any other manner, whether due from the
Pledgor alone or jointly with others, and whether the Pledgor has given an
undertaking for them or may in the future give an undertaking for them, as
debtor and/or as a guarantor and/or as an endorser or otherwise, which are
due and/or may in the future be due, that are due and payable prior to the
realisation of the collateral to which this Debenture applies or subsequent
thereto, owing absolutely or conditionally, owing directly or indirectly,
without limitation of amount, plus interest, commissions, expenses of
various types, including expenses for realisation, attorneys' fees,
insurance fees, stamp duty and other payments in accordance with this
Debenture, and together with linkage differentials of any type, which are
due or may be due form the Pledgor to the Bank in any manner or way, in
respect of linked principal and linked interest and in respect of any other
linked amount (all the aforesaid amounts will henceforth be referred to,
collectively and individually, as - the Secured Amounts).
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Pledge and fixed charge
2. As security for the full and punctual discharge of all the Secured Amounts,
the Pledgor hereby charges and pledges in favour of the Bank and its
successors-in-title, by way of a first fixed charge and by way of pledge,
the properties and the income from the properties and the fruits thereof as
more fully described in the schedule attached hereto, marked with the
letter "A" and forming an integral part of this Debenture, as well as the
Pledgor's uncalled share capital and/or its share capital that has been
called but not yet paid up, and its goodwill, as same exists at present and
as same may exist at any time (hereinafter, collectively and individually
the - Assets Charged).
3. As additional collateral security for the full and precise liquidation of
all the Amounts Secured, the Pledgor hereby pledges and encumbers in favour
of the Bank all those securities, documents and bills of exchange of
others, which the Pledgor has delivered or may from time to time deliver to
the Bank, whether for collection, safe-keeping or otherwise (hereinafter:
"the Encumbered Documents"), and upon delivery thereof they will be and
will be deemed to be pledged and encumbered to the Bank as a first-ranking
pledge and fixed charge in accordance with the terms and conditions of this
Debenture, and the provisions hereof shall apply, mutatis mutandis, to the
encumbrance and pledge thereof. The Bank will be exempt from taking any
action in connection with the Encumbered Documents and will not be
responsible for any damage which may be caused in connection therewith, and
the Pledgor undertakes to indemnify the Bank in any event that the Bank
should be sued by others in respect of such damage. The Pledgor hereby
waives in advance any claims of prescription in relation to the Encumbered
Documents.
4. The Assets Charged and the Encumbered Documents will henceforth be referred
to as - the Property Charged.
The pledge and the charge created pursuant to this Debenture shall apply to
any right to compensation or indemnity the Pledgor may have by virtue of a
loss of the Property Charged, damage thereto or the expropriation thereof
Representations by the Pledgor
5. The Pledgor hereby represents as follows:
a. The Property Charged is not encumbered, pledged or attached in favour
of others;
b. The Property Charged, in its entirety, is in the sole ownership and
possession of the Pledgor or in the possession and/or under control of
the Bank;
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c. That there is no restriction or condition at law or by agreement which
applies to the transfer of the Property Charged or to the encumbrance
thereof;
d. That it is entitled to encumber the Property Charged;
e. That no assignment of rights or any other action has been effected
which derogates from the value of the Property Charged.
Undertakings by the Pledgor
6. The Pledgor hereby undertakes as follows:
a. To hold the Property Charged solely in accordance with the Bank's
instructions;
b. To use and deal with the Property Charged with the utmost care and to
notify the Bank with regard to any case of breakdown, damage, defect
or fault which may occur therein, and to repair any breakdown, damage,
defect or fault which may come about in the Property Charged as a
result of use, or for any reason, and to be responsible to the Bank
for every case of breakdown, damage, defect or fault as aforesaid;
c. To allow the Bank's representative to inspect and examine the
condition of the Property Charged, at any time, at the place at which
it is kept;
d. On the Bank's first demand, to deliver the Assets Charged and/or the
Encumbered Documents to the Bank or to a bailee on its behalf. Should
the Pledgor refuse to comply with the provisions of this sub-clause,
the Bank may, without the necessity for the Pledgor's consent, remove
the Assets Charged and/or the Encumbered Documents from the possession
of the Pledgor and may keep same in its possession or deliver same to
a trustee on its behalf, at the Pledgor's expense. Should the Assets
Charged and/or the Encumbered Documents be delivered to such bailee,
the Bank will be released and exempted from any damage which may be
caused, for any reason, to the Assets Charged and/or to the Encumbered
Documents;
e. Not to sell, transfer, lease under leasehold, and not to let or to
dispose of the Assets Charged and the Encumbered Documents, or any
part thereof, and not to allow another to make use thereof in any
manner, and not allow another to perform any of the aforesaid actions,
except with the Bank's prior written consent thereto;
f. Not to sell, transfer, lease under leasehold, let, deliver, allow to
be taken out of its possession, and not to pardon or waiver, fully or
partially, in respect of any asset, claim, right of the Pledgor which
the Pledgor has, or may have, from time to time, unless what is
involved is a transaction relating to assets which are not charged in
favour of the Bank under a
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fixed charge, and in the ordinary course of the Pledgor's business and
against full consideration, except with the Bank's prior written
consent.
g. Promptly to notify the Bank with regard to any instance that an
attachment is imposed on the Property Charged, and immediately to
notify the party making the attachment of the encumbrance in favour of
the Bank, and at its expense, to take all the steps, promptly and
without delay, in order to have the attachment removed;
h. Not to encumber and not to pledge the Property Charged in any manner
whatsoever on a pari passu basis or having prior or later rights than
the rights of the Bank, and not to assign any right the Pledgor may
have in the Property Charged, except after receiving the Bank's prior
written consent;
i. To be responsible to the Bank for any defect in the Pledgor's right of
title in acid to the Property Charged and the authenticity, validity,
and correctness of all the signatures, endorsements and details of the
bills of exchange, documents and securities which have been delivered
or may be delivered to the Bank as collateral;
j. To make payment on due date according to any law of all the taxes and
compulsory payments imposed on the Property Charged and/or on the
income deriving therefrom, and to deliver to the Bank, on its demand,
all the receipts in respect of such payments. Should the Pledgor fail
to pay the aforesaid payments on due date, the Bank will be entitled
to make payment thereof on the Pledgor's behalf and to debit the
Pledgor with the payment thereof, together with expenses and interest
at the maximum rate. Such payments are secured by this Debenture;
k. To maintain proper books of account and to allow the Bank or a
representative on its behalf to examine the books at any time. The
Pledgor undertakes to assist the Bank, or its representatives, and to
deliver to them, on their first demand, any balance sheet, financial
statement, books of account, ledger card or ledger, tape, books,
vouchers and other documents, and any information which may be
required by them, including explanations with regard to the financial
and operating condition of the Pledgor and/or its business;
l. Not to make loans to the Pledgor's shareholders and not to repay
existing or future loans to shareholders of the Pledgor in any year,
until such time as the Pledgor has paid die Bank the payments due from
it to the Bank in respect of the Amounts Secured in that year, or
prior thereto, except with the Bank's prior written consent. The
Pledgor undertakes to cause a situation that its shareholders will
undertake to the Bank not to demand or to claim the repayment of such
loans;
4
<PAGE>
m. That no change will take place in the structure relating to the
Pledgor or any change in control of the Pledgor, except with the
Bank's prior written consent;
n. Not to take any steps in relation to the Amounts Secured which would
be likely to have an adverse effect on the Bank's ability to realise
this Debenture.
7. The Pledgor undertakes to notify the Bank immediately:
a. About every case of any right being claimed in and to collateral in
favour of the Bank to which this Debenture applies and/or any
Execution Office proceedings or other steps for realisation of such
collateral;
b. With regard to any of the acts mentioned in Clause 17 below;
c. With regard to a diminution in the value of any collateral which has
been given and/or may in the future be given by it;
d. About any application which may be filed for the winding-up of the
Pledgor's business or for a receivership over its assets, and also any
resolution relating to a change in the structure of the Pledgor or any
intention to do so;
e. Of a change of address.
Insurance
8. The Pledgor hereby undertakes to keep the Property Charged insured at all
times at the full value thereof, against the usual risks which the Bank
will designate from time to time, with insurance companies and according to
conditions to which the Bank will agree, and to transfer to the Bank,
within the limits of the Amounts Secured, the rights deriving from the
insurance certificates according to a text which the Bank will approve, and
to pay all the insurance fees on due date and to deliver to the Bank all
the insurance certificates and the receipts in respect of the payment of
the insurance fees.
9. Without prejudice to the foregoing, and in addition thereto, the Pledgor
hereby undertakes to give the insurance company with which the Property
Charged has been insured, the following instructions:
a. The irrevocable nomination of the Bank as a beneficiary under the
contract of insurance (the insurance policy) and an instruction to
include the Bank in the body of the insurance contract, without the
Bank being liable for payment of any premiums.
b. Payment of insurance compensation directly to the Bank for the
Property Charged at any time the insurance company is liable for
payment of such
5
<PAGE>
compensation in accordance with the insurance contract, or pursuant to
any law.
c. Delivery of a copy of the contract of insurance to the Bank after the
Bank has been included therein as a beneficiary as aforesaid.
All the foregoing shall be without the necessity for any additional consent
on the part of the Pledgor or on the part of persons acting on its behalf
and/or its successors-in-title.
The Pledgor further undertakes to furnish the Bank with confirmation from
the insurance company and an undertaking from the insurance company not to
set off anything against the insurance compensation payable to the Bank in
respect of the Property Charged, apart from the balance of the unpaid
insurance premium in respect of the insurance of the Property Charged for
the current year of insurance only, and if the insurance policy also
applies to other property, in addition to the Property Charged, the
confirmation shall include the insurance company's agreement to attribute
the premium payments received in connection with this insurance first to
the insurance premium due in respect of the insurance of the Property
Charged, and to actin accordance with the above instructions and to notify
the Bank in every case of a cancellation or lapse of the insurance
contract, at least 30 (thirty) days prior to such cancellation or lapsing -
all notwithstanding any other provision in the Insurance Contract Law,
5741-1981, and on the basis that such notification shall constitute a
condition precedent to the cancellation of the insurance contract or the
lapsing thereof.
10. In each of the cases enumerated below, the Bank may, in its sole
discretion, insure file Property Charged in the name of the Bank and debit
the Pledgor with the expenses and the insurance fees:
a. If the Property Charged has not been insured by the Pledgor to the
satisfaction of the Bank;
b. If the Pledgor has not furnished the Bank, within 10 days from the
date of signing of this Debenture, with insurance certificate in
respect of the Property Charged, according to the conditions and for a
period as is to the sole satisfaction of the Bank;
c. If 30 days prior to the termination of validity of the insurance of
the Property Charged, the Pledgor fails to deliver to the Bank
insurance certificates in respect of the Property Charged under the
conditions and for a period to the sole satisfaction of the Bank;
In the event that the insurance is effected by the Bank as aforesaid, the
Bank will not be liable for any defect or fault which may be discovered in
connection with the insurance. Amounts which are paid as expenses and
insurance fees as aforesaid are secured by this Debenture.
6
<PAGE>
11. In connection with the insurance of the Property Charged, the Pledgor
hereby appoints the Bank as its sole representative and confers on the Bank
exclusive rights to conduct on behalf of the Pledgor negotiations, to
institute claims, to agree to arrangements, to compromise, renounce, to
receive money from the insurance companies and to apply same to the
liquidation and discharge the Amounts Secured. The aforesaid power of
attorney is irrevocable by virtue of the fact that be rights of me Bank and
the rights of a third party are dependent thereon. The Pledgor will have no
claims or allegations with respect to arrangements, waivers and compromises
the Bank may mace with the insurance companies.
12. All the Pledgor's rights deriving from the insurance of the Property
Charged, including rights under the Property Tax and Compensation Pond Law,
5721-1961, as in force at any time, and according to any other law, whether
or not same have been transferred to the Bank as aforesaid, are hereby
encumbered in favour of the Bank by way of a first-ranking fixed charge and
by pledge.
13. The Pledgor hereby undertakes that upon the Bank's first demand it will
sign all the certificates and the documents required for implementation of
its obligations pursuant to this chapter. The Pledgor further undertakes
not to cancel or in any way to alter any condition or conditions of the
aforesaid insurance, except with the Bank's prior written consent.
Interest
14. a. The Bank may calculate interest on the Amounts Secured at the rate
which has been agreed or may be agreed from time to time between it
and the Pledgor. In those cases where it has not been agreed on die
rate of interest, the Bank shall be entitled to fix the interest at a
rate which does not exceed the maximum rate of interest, and to give
the Pledgor notice to that effect. The Pledgor will be debited in
accordance with the aforesaid rate of interest and the Bank may add
the amounts of interest to the principal at the end of each month or
at the end of any other period, as the Bank may decide;
b. In every case of a default in payment of the Amounts Secured, or part
thereof, the Amounts Secured shall bear penalty interest at such rate
as was agreed in the agreement for the providing of Banking Services.
In the absence of a stipulation regarding penalty interest, the
Amounts Secured will bear interest at the maximum rate;
7
<PAGE>
c. In every event which confers on the Bank the right to realise the
collateral security pursuant to this Debenture, the Bank will be
entitled to increase the rates of interest on the Amounts Secured up
to the maximum rate of interest.
Due dates of payment
15. The Pledgor hereby undertakes to liquidate the Amounts Secured, or any part
thereof, to the Bank, promptly and punctually on the due dates of payment
thereof as have been fixed and as may be fixed from time to time.
16. a. The Bank shall be entitled not to accept early repayment of the
Amounts Secured, or any part thereof, prior to due date for payment
thereof having arrived, and the Pledgor will not be entitled to redeem
the Property Charged, in whole or in part, by liquidating the Amounts
Secured and/or any part thereof until the due date for the payment
thereof has arrived.
The Pledgor, or anyone whose right is likely to be prejudiced by the
giving of this Debenture, or the realisation hereof, will not have a
right under Section 13(b) of the Pledge Law, 5727-1967, or any legal
provision which may come in its stead.
b. Subject to the provisions of any law, if the Bank should agree to
early repayment on account of the Amounts Secured (without it being
obliged to do so), the Pledgor shall pay the early repayment
commission of which the Bank will notify it.
17. Without prejudice to the generality of the provisions of this
Debenture, the Bank will be entitled in each of the cases
enumerated below, to make the Amounts Secured immediately due and
payable and to debit the aforesaid amount to any account of the
Pledgor at the Bank, and the Pledgor undertakes to pay all the
Secured Amounts, and die Bank will be entitled to employ all
means it may deem fit for the collection and recovery of the
Amounts Secured and may realise the collateral in any manner the
law may permit, at the Pledgor's expense:
a. If the Pledgor breaches or fails to comply with any of the conditions
of this Debenture, or if the Pledgor should breach other undertakings
it has made or may make to the Bank, or if it should transpire that
any of the Pledgor's declarations or representations in this
Debenture, or any other statement or declaration which has been given
or may be given to the Bank by the Pledgor in connection with the
Amounts Secured, is incorrect or inaccurate;
b. If the Pledgor should pass a resolution with regard to a change in the
structure of the Pledgor, or any intention to make such change,
whether as an absorbing company, a transferring company or a company
that is splitting, or a resolution for voluntary winding-up, or if a
liquidation order should be granted against it or a provisional
liquidator or special manager
8
<PAGE>
should be appointed for any of them, or if the name of the Pledgor is
expunged from any register maintained according to law, or is about to
be expunged;
c. If a receiver is appointed or a receivership order or an order for the
receivership of the Property Charged, or portion thereof, is granted;
d. If an attachment is imposed or similar Execution Office proceeding is
taken in respect of portion of the Pledgor's property, ox against any
of the collateral security that has been delivered by the Pledgor;
e. If it should appear to the Bank, in its sole discretion, that a change
has taken place in the ownership or in the control of the Pledgor as
compared with the situation on the date of signing of this Debenture;
f. If the Pledgor has ceased to pay its debts or to conduct its business;
g. If the work or a substantial portion thereof at the Pledgor has been
stopped for a period of two months or more;
h. If it should appear to the Bank, in its sole discretion, that an event
has occurred which is likely to have an adverse effect on the
Pledgor's financial capability;
i. If the Pledgor should default in the payment of any amount forming
part of the Amounts Secured for more than 7 days;
j. If the Property Charged or any portion thereof should be destroyed,
burned, lost or if it should lose its value;
k. If the number of holders of the shares of the Pledgor and/or the
number of members who constitute the Pledgor should fall below the
minimum number required according to law;
l. In the case of the death, legal incapacitation, bankruptcy,
liquidation, arrest of the Pledgor, or in the case of the Pledgor
leaving the country, or in the case of death, legal incapacitation,
bankruptcy, liquidation, arrest of any party to the bills of exchange,
documents and securities which have been delivered or may be delivered
to the Bank as collateral, or such third party leaving the country or
otherwise breaching obligations;
m. If, in the Bank's discretion and according to its sole assessment,
there has been a deterioration in the value of the collateral given as
security for payment of the Amounts Secured, or the ability of the
guarantors to make payment for the Pledgor, including the death of the
guarantor, his bankruptcy, or his leaving the country;
9
<PAGE>
n. If the Pledgor is called upon to make early repayment of debts which
the Pledgor owes to other creditors;
o. If one of the events mentioned in this clause should occur, mutatis
mutandis, in respect of any guarantor for the payment and discharge of
the Amounts Secured;
p. If the Pledgor should breach its obligation to furnish the Bank with
balance sheets, financial statements, books of account and other
vouchers and authorities in connection with the state of its business.
The Bank's rights
18. a. The Bank lags rights of possession, lien, set-off and charge over all
the amounts, assets and rights, including securities, coins, gold,
bank notes, documents in respect of goods, insurance policies, bills
of exchange, assignment of obligations, deposits, collateral and the
proceeds thereof, which may be in the possession of the Bank or under
its control at any time, to the credit of the Pledgor or for the
Pledgor, including those which are delivered for collection, as
security, in safe custody, or otherwise. The Bank may retain and
withhold the aforesaid assets until the full discharge of the Amounts
Secured, or may sell same and apply the proceeds, in whole or in part,
to the discharge and liquidation of the Amounts Secured. In the event
that the amounts which are set off are deposited in a currency in
which the Amounts Secured are not denominated, the Pledgor hereby
gives the Bark instructions in advance to sell the credit balance in
the other currency, according to the rate to be fixed by the Bark, or
which the Bank shall obtain in respect of such balance at such time,
and to apply the proceeds of the sale, after deduction of the
necessary expenses and commissions, against the Amounts Secured.
b. Without derogating from the Bark's right of lien as referred to in
Clause 18 (a) above, the Bank shall be entitled (but not obliged) at
anytime:
1) To set off any amount forming part of be Amounts Secured, which
are owed by the Pledgor, against amounts which are due to the
Pledgor from the Bark in any account in Israeli currency or in
foreign currency, in any manner or on any grounds whatsoever,
even before the due date for payment of the amounts which are due
to tile Pledgor from the Bank as aforesaid, against which a
set-off will be made, but in the case of a set-off which is made
against savings scheme deposits, this shall not be before the
date on which the Pledgor would have been entitled to demand
early repayment of the deposit.
2) To purchase for the Pledgor's account any amount in foreign
currency which may be required for the liquidation and discharge
10
<PAGE>
of any amount forming part of the Amounts Secured, or to sell any
foreign currency which may stand to the credit of the Pledgor at
the Bank, and to apply the proceeds of the sale to the
liquidation and discharge of any amount forming part of the
Amounts Secured.
3) To debit any of the Pledgor's accounts with any amount forming
part of the Amounts Secured. However, if the state of any such
account does not allow for the debiting thereof by the Bank for
purposes of the final discharge and settlement of any amount, the
Bank will be entitled not to debit the account, and if it has
done so, it will be entitled to cancel any such debit and to
treat any amount the debit of which has been cancelled as an
amount which was not paid on account of the Amounts Secured, and
in accordance therewith to take any action it may deem fit in
accordance with this Debenture.
4) Under all circumstances the Bank shall be entitled to effect a
set-off without any advance notice. However in the following
cases, the Bank may effect a set-off upon giving advance notice
to be given to the Pledgor 10 (ten) days before the date for
effecting the set-off:
(a) In the case of a set-off against amounts the due date for
payment of which has not yet arrived.
(b) In the case of a set-off against a fixed deposit, which
would, had it not been for the set-off, have been extended
or renewed automatically, in a manner whereby the Pledgor
would have derived rights or benefits from it.
(c) Notwithstanding the foregoing in this sub-paragraph 4)(a)
above, if the postponement in effecting the set-off is
likely to worsen the Bank's position or prejudice any of the
Bank's rights, the set-off will be effected immediately.
Likewise, in a case that notice has been sent to the Pledgor
and in the course of ten days of the notice an attachment
order, notice of a receivership order against the Pledgor
should arrive, or similar event should occur, the set-off
will be effected immediately.
c. The Pledgor hereby declares that it is aware that in cases in which
the Bank exercises rights of set-off as referred to above prior to the
due date of any deposit belonging to the Pledgor, in whole or in part,
there are likely to be changes to the Pledgor's detriment in relation
to the Pledgor's rights in respect of or in connection with that
deposit (such as with respect to interest rates, linkage
differentials, currency differentials, rights to
11
<PAGE>
grants or loans, an exemption from or rebate on income tax and
withholding tax at source - if, pursuant to the conditions of such
deposit, the Pledgor would have had such rights). The Pledgor shall
bear all the expenses and payments which are customarily charged at
that time by the Bank for purposes of performing such action.
d. Any purchase or sale as referred to in Clause 18(b.2) above shall be
effected at the rate prevailing at the Bank, out of amounts in Israeli
currency or out of amounts in foreign currency, as the case may be,
which stand to the credit of the Pledgor at the Bank or which may be
received from the realisation of any collateral which has been given
or may be given to the Bank by the Pledgor.
The expression "the rate prevailing at the Bank" - means - in respect of
any purchase of foreign currency for the Pledgor's account - the highest
rate for cheques and transfers at which the Bank sells the relevant foreign
currency, at the relevant time, to its customers in consideration for
Israeli currency, plus exchange commission and any tax, levy, compulsory
payments or other payments, and so forth, and in respect of any sale of
foreign currency out of the Pledgor's account, the lowest rate, for cheques
and transfers, at which the Bank buys the relevant foreign currency, at the
relevant time, from its customers in consideration for Israeli currency,
less exchange commissions and any tax, levy, compulsory payments or other
payments, and so forth.
19. The Bank shall be entitled at any time debit any account belonging to the
Pledgor with any amount which is due and/or may be due from the Pledgor in
any manner, and to apply any amount it may receive from the Pledgor or for
the Pledgor to the credit of such account as it deems fit, and to transfer
any amount which it may place to the credit of the Pledgor to any other
account as it deems fit.
20. The Pledgor confirms that the books and accounts of the Bank are acceptable
to it, and will be deemed to be correct and will serve as prima facie proof
against it with regard to all details therein, and inter alia with respect
to the calculation of the Amounts Secured, details of promissory notes,
guarantees and other forms of collateral and any other matter connected
with this Debenture.
21. The Bank will be entitled, in its sole discretion, to accept or to refuse
to receive orders or notices of any sort that are given to it verbally, by
telephone or by facsimile or in any other manner which is not in reliable
and/or in clear and legible writing. Should the Bank agree to act pursuant
to the Pledgor's instructions other than according to an instruction in
writing in the ordinary course, the Pledgor assumes all responsibility for
any mistake, misunderstanding or contradiction, and damage and/or loss
and/or breach which may be caused as a result of such instructions being
given.
22. Without derogating from the other provisions of this Debenture, any waiver,
extension of time, indulgence, silence, failure to take action (hereinafter
- Waiver)
12
<PAGE>
by the Bank in respect of non-compliance or partial compliance or incorrect
compliance with any of the obligations of the Pledgor pursuant to this
Debenture, will not be deemed to be a Waiver on the part of the Bank in
respect of any rights, but merely as acquiescence limited to the specific
occasion in relation to which it is given. Any waiver the Bank may grant to
any party to a bill of exchange which the Bank may hold as security for the
Amounts Secured, will in no way affect the Pledgor's obligations.
23. a. In each of the cases specified in Clause 17 above, the Bank will be
entitled to utilise any means it deems fit in order to recover the
Amounts Secured and to realise all its rights pursuant to this
Debenture, including a realisation of the Property Charged, in whole
or in part, and to apply the proceeds thereof to the discharge and
liquidation of the Amounts Secured, without the Bank being obliged
first to realise guarantees or other collateral security, in the event
that the Bank has any;
b. Should the Bank decide to realise the securities, bills of exchange
and other negotiable instruments, notice of three days in advance
regarding the steps the Bank intends taking shall be deemed to be a
reasonable time for purposes of Section 19(b) of the Pledge Law,
5727-1967, or any legal provision which may come in its stead;
c. The Bank shall be entitled, as attorney and agent for the Pledgor, and
for purposes of this clause the Pledgor irrevocably appoints the Bank
as its attorney and agent, to sell the Property Charged, or portion
thereof, by public auction or otherwise, itself or through others, for
cash or in instalments or otherwise, at such price and on such
conditions according to the Bank's absolute discretion, and the Bank
may, itself or through the court or through the Execution Office,
realise the Property Charged or any other property, inter alia, by the
appointment of a receiver or a receiver and manager on behalf of the
Bank, who shall, amongst his other powers and authorities, be
entitled:
1) To take possession of all the Property Charged, or portion
thereof.
2) To manage and conduct the Pledgor's business or to participate in
the management thereof, as he sees fit.
3) To sell or to agree to sell the Property Charged, in whole or in
part, to transfer it or to agree to transfer it in any other
manner, on such conditions as he shall see fit.
4) To make any other arrangement in relation to the Property
Charged, or any portion thereof, as he shall see fit.
d. All the income which is received by the receiver, or the receiver and
manager, from the Property Charged, as well as any consideration that
may be received by the Bank and/or by the receiver, or the receiver
and
13
<PAGE>
manager, from the sale of the Property Charged or portion thereof,
shall be applied according to the following order of priority:
1) For liquidation and discharge of all the expenses which have been
incurred and will be incurred in connection with recovery of the
Amounts Secured, including the expenses of the receiver, or the
receiver and manager, and his remuneration in an amount to be
fixed by the Bank or as shall be approved by the court or the
Execution Office.
2) For the liquidation and discharge of the Amounts Secured which
will be due to the Bank as a result of the conditions of linkage,
interest, damages, commissions, bank charges and expenses which
are due and may be due to the Bank in accordance with this
Debenture.
3) For the liquidation and discharge of tie principal of the Amounts
Secured, or any other order of application as may be decided by
the Bank.
24. If at the time of sale of the Property Charged the due date for payment of
the Amounts Secured, or portion thereof, has not yet arrived, or if the
Amounts Secured, or portion thereof, are due to the Bank only
conditionally, the Bank shall be entitled to recover out of the proceeds of
the sale an amount which is sufficient in order to cover the Amounts
Secured, and the amount which is collected and which has not yet been
applied in liquidation and discharge of the amounts referred to in Clause
15(d) above, will be encumbered in favour of the Bank as security for the
Amounts Secured and shall remain in the possession of the Bank until the
discharge and liquidation thereof.
Nature of the collateral
25. The collateral which has been given and/or may be given to the Bank in
accordance with this Debenture is continuing security and shall remain in
force until the Bank gives confirmation in writing that this Debenture has
been cancelled.
26. If other collateral security or guarantees have been given or will be given
to the Bank for payment of the Amounts Secured, each such form of
collateral security or guarantees will be independent of one another.
27. Should the Bank compromise or grant an extension of time or indulgence to
the Pledgor, or should the Bank alter any of the Pledgor's obligations in
connection with the Amounts Secured, or release or waive other collateral
or guarantees, these acts shall not alter the nature of the collateral to
which this Debenture applies and all the Pledgor's collateral and
obligations to which this Debenture applies shall remain in full force.
14
<PAGE>
28. The Bank may deposit the collateral which has been delivered or may be
delivered in accordance with this Debenture, or portion thereof, in the
hands of a bailee who shall be chosen by the Bank in its discretion, and at
the Pledgor's expense, and it may replace the bailee from time to time; the
Bank may also register the aforesaid collateral, in whole or in part, with
any competent authority according to any law and/or in any public register.
Right of transfer
29. The Bank may, at any time in its discretion, without requiring the
Pledgor's consent, transfer this Debenture or be rights pursuant hereto, to
another, including the collateral, in whole or in part, and any transferee
shall also be entitled to transfer the aforesaid rights to another, without
requiring additional consent from the Pledgor. The transfer may be made by
endorsement at the foot hereof or on the back of this Debenture, or in any
other manner the Bank and the transferee shall deem fit.
Notice regarding reservation
30. The Pledgor undertakes to notify the Bank in writing with regard to any
reservation or objection it may have, if any, in connection with any
account, condensed account, certificate or notice of any sort it may
receive from the Bank, including receipt of information through "Adken". If
the Pledgor does not express reservation or does not object within 21 days
from tie date of sending the account, the condensed account, the
certificate, or the aforesaid notice, the Bank will be entitled to deem the
Pledgor to have confirmed the correctness thereof.
Expenses
31. All the expenses connected with this Debenture (as set forth in the Bank's
tariff as in force from time to time), including bank commission for the
drawing of documents in respect of credit facilities and collateral
security, stamp duty and registration of documents, costs of realisation of
the collateral and the taking of recovery proceedings (which shall include
the fees of the Bank's attorney), insurance, safe-keeping, holding and
repair of the Property Charged, shall be paid by the Pledgor to the Bank
upon the Bank's first demand, together with interest at the maximum rate
from the date of the demand and up to the date of full payment thereof.
Until payment thereof, all the aforesaid expenses, plus interest thereon,
shall be secured by this Debenture. The Bank shall be entitled to debit the
Pledgor with the aforesaid expenses and the interest thereon.
Interpretation
32. In this Debenture - (a) the singular includes the plural, and vice versa;
(b) the masculine includes the feminine, and vice versa; (c) "the Bank"
means - Bank Hapoalim B.M. and each of the branches of the Bank which
exists at the date of this Debenture and/or which may be opened at any
place in the future, its transferees and substitutes and the Bank's
successors-in-title; (d) "bills of
15
<PAGE>
exchange" mean - promissory notes, negotiable instruments, cheques,
undertakings, guarantees, collateral, drafts, bills of lading, bills of
deposit, and any other negotiable documents; (e) "interest at the maximum
rate" means: interest at the maximum rate prevailing at the Bank for the
time being, and from time to time, in respect of excesses and defaults on
overdraft accounts or on current accounts, whichever is the higher; (f)
"change in structure" means, with regard to the Pledgor, a merger or split
(within the meaning of these terms in Part E2 of the Income Tax Ordinance
or any other legal provision which tray come in its stead), and the
transfer of assets in consideration for shares, either in accordance with
the aforesaid Part E2, or otherwise; (g) the headings to clauses have been
inserted solely as place finders and no use shall be made thereof in the
interpretation of this Debenture; (h) the preamble to this Debenture
constitutes an integral part hereof.
Notices and warning notices
33. Any notice which is sent via the post by the Bank to the Pledgor by
registered or ordinary mail, according to the address recorded above, or
according to the address of the registered office of the Pledgor, or
according to another address of which the Pledgor has notified the Bank in
writing, shall be deemed to be lawful notice received by the Pledgor within
72 hours from the time the letter containing the notice was despatched. A
declaration in writing by the Bank shall serve as evidence as to the date
of sending of the notice. Any notice which may be given to the Pledgor in
any other way shall be deemed to have been received by them at the time it
was given or at the time of its publication.
Substantive law and venue of jurisdiction
34. a. This Debenture shall be interpreted in accordance with the laws of
the State of Israel.
b. The sole venue of jurisdiction for purposes of this Debenture is
hereby fixed as the competent court nearest to the place of signing of
this Debenture, or the competent court in one of the following cities:
Jerusalem, Tel Aviv-Jaffa, Haifa, Beershev a or Nazareth.
Special Conditions
IN WITNESS WHEREOF THE PLEDGOR HAS HEREUNTO SIGNED:
( - ) Riza Holdings Ltd.
--------------------------
Riza Holdings Ltd.
16
<PAGE>
APPENDIX "A"
Bank Hapoalim B.M.
Schedule of the Assets Charged
By: Arwell Holdings Ltd.
In favour of Bank Hapoalim B.M.
- -------|------------------------------------------------------------------------
No. | Description
- -------|------------------------------------------------------------------------
1. | 11,853,214 ordinary shares of NIS 1 nominal value each of Macpell
| Industries Ltd. (hereinafter: "the Company"), numbered in the books
| of the Company as follows:
- -------|------------------------|-----------------------|-----------------------
| From Number | To Number | Certificate No.
| ----------- | --------- | ---------------
- -------|------------------------|-----------------------|-----------------------
| 1 | 8,697,433 | 97
| 8,864,259 | 9,464,823 | 98
| 9,600,996 | 10,638,457 | 99
| 10,660,501 | 11,196,163 | 103
| 11,287,095 | 11,957,863 | 104
| 13,750,001 | 13,801,956 | 105
| 14,025,001 | 14,237,158 | 106
| 14,398,543 | 14,445,750 | 107
- -------|------------------------------------------------------------------------
2. | All the dividends which will be paid and/or will be payable in respect
| of or in accordance with the aforesaid shares at any time whatsoever,
| commencing from the date of signing of this Deed of Pledge.
- -------|------------------------------------------------------------------------
3. | All the shares and stock (including all the dividends which will be
| paid and/or will be payable in respect of or in accordance therewith)
| (hereinafter: "the Other Shares") and all the rights and funds and
| assets which will be due or will be issued in lieu of the aforesaid
| shares and/or in respect thereof and/or in accordance therewith, as
| bonuses, benefits, preferential rights or otherwise.
- -------|------------------------------------------------------------------------
4. | All the rights in the Company and as against it, which the law and/or
| the Memorandum and/or the Articles of the Company confer and will
| confer on the Pledgor in respect of and in accordance with the
| aforesaid shares and/or the Other Shares.
- --------------------------------------------------------------------------------
<PAGE>
Bank Hapoalim B.M.
Bnei Brak Branch
Date: 24th January 2000
Application for Allocation of Credit - in pursuance of
Application for Opening of Account and General Conditions for conduct of
Account, signed by me on 23rd January 2000
(hereinafter: "the General Conditions")
I hereby request that credit in foreign currency in US dollars (hereinafter:
"the Currency of the Credit Facilities") in an amount of $13,650,000 (thirteen
million six hundred and fifty thousand US dollars) (hereinafter: "the
Principal") be allocated to me in my account with you No. 29976 (hereinafter:
"the Account").
I will regard the allocation of the aforesaid Principal to the Account as being
agreement on you part to provide certain facilities as stated in the aforesaid
conditions and in the special conditions set forth below:
1. The date of allocation of the Principal amount of the credit
facilities will be 24th January 2000.
2. Conditions for repayment of Principal.
I hereby undertake to repay the Principal in the Currency of the Credit
Facilities in one payment on 24th January 2003.
3. Interest
3.1 Rate of interest
I will pay the bank interest according to the bank's calculations,
commencing from the date of allocation of the credit facilities, at
a rate of 1% (one percent) per annum above the Libor rate (as
hereinafter defined) (hereinafter: "the Interest").
3.2 For purposes of fixing the rate of interest which applies from time
to time to the Principal, the following provisions and definitions
shall be used:
"Libor - London Interbank Offered Rate" means: the rate of interest
which will be fixed by the bank as the highest rate of interest
(rounded upwards to the nearest 1/8 of one percent) at which
deposits in the currency of the credit facilities are offered to it
on the effective date (as hereinafter defined) on the London
Interbank market or on some other interbank market in Europe, for a
period corresponding to the relevant period of update (as
hereinafter defined).
<PAGE>
"The effective date" - means, in relation to each period of update
(as hereinafter defined) two business days preceding the start of
such period of update (as hereinafter defined).
3.3 Period of update
The interest which applies to the Principal will be fixed by the
Bank every six months in advance, on the Effective Date, having
regard to the Libor rate/s applied by the Bank in respect of the
relevant period of update (hereinafter: "the Period of Update").
3.4 Date for payment of the Interest
The Interest will be paid by me to the Bank in the Currency of the
Credit Facilities at the end of each period of six months
(hereinafter: "Interest Period"), calculated on the unpaid balance
of the Principal as same stands from time to time, commencing from
the start of the Interest Period and up to the end thereof,
according to the rate of interest which has been fixed for the
Period of Update in the course of which such Interest Period
applied.
3.5 The Interest shall be calculated on the basis of the number of days
which have actually elapsed, divided by 360.
4. Business days
4.1 If the due date of any payment which I own pursuant to this deed
and/or if the last date of any Interest Period, should fall on a day
which is not a business day (as hereinafter defined), payment will
be effected and/or the Interest Period in question will be extended,
as the case may be, on or to the following day, as the case may be,
which is a business day (as hereinafter defined) and will bear
interest at the rate necessitated pursuant to Paragraph 3 above,
unless as a result thereof payment will fall in the next calendar
month, in which case payment shall be brought forward to the
preceding date which is a business day (as hereinafter defined).
4.2 Where any payment on account of the Principal of the credit
facilities falls in a calendar month in which an Interest Period
ends, the date for payment shall fall on the last day of such
Interest Period, in order to ensure that the date of effecting the
payment on account of the Principal and the date of payment of the
interest will fall on the same day.
4.3 For purposes of this paragraph - "business day" - means: a day on
which the banks in Tel Aviv, London, and in the country in which the
Currency of the Credit Facilities constitute legal tender, are open
for business.
2
<PAGE>
5. The headings to paragraphs are for the sake of reference only and
shall not be used for purposes of interpreting this Application.
6. This Application is intended to supplement the contents of the above
conditions, but in the event of any contradiction between them, this
Application shall govern. Subject thereto, all the terms and expressions
used herein shall be construed according to the meaning ascribed to them
in the aforesaid conditions.
7. Notwithstanding the contents of the General Conditions, we will be
entitled to repay the credit facilities, or any part thereof, by way of
early repayment, subject to the condition that the date of early repayment
shall fall on a date of payment of interest and provided we give you 30
days prior written notice with regard to the early repayment.
IN WITNESS WHEREOF THE PARTIES HAVE HEREUNTO SIGNED:
( - ) Riza Holdings Ltd.
--------------------------
Riza Holdings Ltd.
Certificate by Attorney
I the undersigned, P. Volovelsky, Adv., who serves as legal advisor to the
Company Riza Holdings Ltd., hereby confirm that the authorised signatory/ies of
the company, Mr. Ziggy Rabinowitz, signed the foregoing document before me, and
that their (his) signature is binding on the company for all purposes.
( - )
Pinchas Volovelsky
Advocate
Signature and rubber stamp License No. 3770
76 Rothschild Boulevard, Tel Aviv
3
<PAGE>
DEBENTURE
Made and entered into on the 24th day of January 2000
WHEREAS The undersigned RIZA HOLDINGS LTD., 51-288767-1 (hereinafter
- - the Pledgor)
Whose address is: c/o Tefron Ltd., 28 Hida Street, Bnei Brak
has received and is due from time to time to receive from Bank Hapoalim B.M.
(hereinafter - the Bank), credit facilities, documentary credit, various loans,
overdrafts on current account, on revolving debitory account or on another
account, letters of indemnity and any guarantees for the Pledgor or for others,
at the Pledgor's request, the discounting of bills, the giving of extensions of
time and various banking facilities and other various banking services
(hereinafter, collectively and individually - Banking Services), on conditions
as have been agreed and/or will be agreed from time to time in relation to each
such Banking Service;
NOW THEREFORE it is agreed that the Pledgor will secure the repayment of various
amounts of money which the Pledgor owes and/or will owe to the Bank in
connection with the providing of Banking Services and/or in connection with
other obligations which are not banking and/or other services, all in accordance
with the conditions set forth below:
Nature and substance of the Debenture
1. This Debenture is being executed as security for the full and punctual
payment of all the amounts which are due and which may be due to the Bank
from the Pledgor in connection with the providing of Banking Services to
the Pledgor by the Bank and/or in connection with other obligations which
are not banking or in any other manner, whether due from the Pledgor alone
or jointly with others, and whether the Pledgor has given an undertaking
for them or may in the future give an undertaking for them, as debtor
and/or as a guarantor and/or as an endorser or otherwise, which are due
and/or may in the future be due, that are due and payable prior to the
realisation of the collateral to which this Debenture applies or
subsequent thereto, owing absolutely or conditionally, owing directly or
indirectly, without limitation of amount, plus interest, commissions,
expenses of various types, including expenses for realisation, attorneys'
fees, insurance fees, stamp duty and other payments in accordance with
this Debenture, and together with linkage differentials of any type, which
are due or may be due from the Pledgor to the Bank in any manner or way,
in respect of linked principal and linked interest and in respect of any
other linked amount (all the aforesaid amounts will henceforth be referred
to, collectively and individually, as - the Secured Amounts).
<PAGE>
Pledged and fixed charge
2. As security for the full and punctual discharge of all the Secured
Amounts, the Pledgor hereby charges and pledges in favour of the Bank and
its successors-in-title, by way of a first fixed charge and by way of
pledge, the properties and the income from the properties and the fruits
thereof as more fully described in the schedule attached hereto, marked
with the letter "A" and forming an integral part of this Debenture, as
well as the Pledgor's uncalled share capital and/or its share capital that
has been called but not yet paid up, and its goodwill, as same exists at
present and as same may exist at any time (hereinafter, collectively and
individually - the Assets Charged).
3. The Assets Charged will henceforth be referred to as - the Property
Charged.
The Pledge and the Charge created pursuant to this Debenture shall apply
to any right to compensation or indemnity the Pledgor may have by virtue
of a loss of the Property Charged, damage thereto or the expropriation
thereof.
Representations by the Pledgor
The Pledgor hereby represents as follows:
a. The Property Charged is not encumbered, pledged or attached in
favour of others;
b. The Property Charged, in its entirety, is in the sole ownership and
possession of the Pledgor or in the possession and/or under control
of the Bank;
c. That there is no restriction or condition at law or by agreement
which applies to the transfer of the Property Charged or to the
encumbrance thereof;
d. That it is entitled to encumber the Property Charged;
e. That no assignment of rights or any other action has been effected
which derogates from the value of the Property Charged.
Undertakings by the Pledgor
The Pledgor hereby undertakes as follows:
a. To hold the Property Charged solely in accordance with the Bank's
instructions;
b. To use and deal with the Property Charged with the utmost care and
to notify the Bank with regard to any case of defect or fault which
may occur therein, and to repair any defect or fault which may come
about in the
2
<PAGE>
Property Charged for any reason, and to be responsible to the Bank
for every case of defect or fault as aforesaid;
c. Not to sell, transfer, let under leasehold, lease out and not to
dispose of the Property Charged, or any portion thereof, and not to
allow another to make use thereof in any manner, and not to allow
another to perform any of the above-mentioned actions, except with
the Bank's prior written consent;
d. Promptly to notify the Bank with regard to any instance that an
attachment is imposed on the Property Charged, and immediately to
notify the party making the attachment of the encumbrance in favour
of the Bank, and at its expense, to take all the steps, promptly and
without delay, in order to have the attachment removed;
e. Not to encumber and not to pledge the Property Charged in any manner
whatsoever on a pari passu basis or having prior or later rights
than the rights of the Bank, and not to assign any right the Pledgor
may have in the Property Charged, except after receiving the Bank's
prior written consent;
f. To be responsible to the Bank for any defect in the Pledgor's right
of title in and to the Property Charged;
g. To make payment on due date according to any law of all the taxes
and compulsory payments imposed on the Property Charged and/or on
the income deriving therefrom, and to deliver to the Bank, on its
demand, all the receipts in respect of such payments. Should the
Pledgor fail to pay the aforesaid payments on due date, the Bank
will be entitled to make payment thereof on the Pledgor's behalf and
to debit the Pledgor with the payment thereof, together with
expenses and interest at the maximum rate. Such payments are secured
by this Debenture;
h. That no change will take place in the structure relating to the
Pledgor or any change in control of the Pledgor, except with the
Bank's prior written consent;
i. Not to take any steps in relation to the Amounts Secured which would
be likely to have an adverse effect on the Bank's ability to realise
this Debenture.
6. The Pledgor undertakes to notify the Bank immediately:
a. About every case of any right being claimed in and to collateral in
favour of the Bank to which this Debenture applies and/or any
Execution Office proceedings or other steps for realisation of such
collateral;
b. With regard to any of the acts mentioned in Clause 10 below;
3
<PAGE>
c. With regard to a diminution in the value of any collateral which has
been given and/or may in the future be given by it;
d. About any application which may be filed for the winding-up of the
Pledgor's business or for a receivership over its assets, and also
any resolution relating to a change in the structure of the Pledgor
or any intention to do so;
e. Of any change of address.
Interest
7. a. The Bank may calculate interest on the Amounts Secured at the rate
which has been agreed or may be agreed from time to time between it
and the Pledgor. In those cases where it has not been agreed on the
rate of interest, the Bank shall be entitled to fix the interest at
a rate which does not exceed the maximum rate of interest, and to
give the Pledgor notice to that effect. The Pledgor will be debited
in accordance with the aforesaid rate of interest and the Bank may
add the amounts of interest to the principal at the end of each
month or at the end of any other period, as the Bank may decide;
b. In every case of a default in payment of the Amounts Secured, or
part thereof, the Amounts Secured shall bear penalty interest at
such rate as was agreed in the agreement for the providing of
Banking Services. In the absence of a stipulation regarding penalty
interest, the Amounts Secured will bear interest at the maximum
rate.
c. In every event which confers on the Bank the right to realise the
collateral security pursuant to this Debenture, the Bank will be
entitled to increase the rates of interest on the Amounts Secured up
to the maximum rate of interest.
Due dates of payment
8. The Pledgor hereby undertakes to liquidate the Amounts Secured, or any
part thereof, to the Bank, promptly and punctually on the due dates of
payment thereof as have been fixed and as may be fixed from time to time.
9. a. The Bank shall be entitled not to accept early repayment of the
Amounts Secured, or any part thereof, prior to due date for payment
thereof having arrived, and the Pledgor will not be entitled to
redeem the Property Charged, in whole or in part, by liquidating the
Amounts Secured and/or any part thereof until the due date for the
payment thereof has arrived, unless otherwise agreed between the
Pledgor and the Bank in the agreement for the providing of Banking
Services.
4
<PAGE>
The Pledgor, or anyone whose right is likely to be prejudiced by the
giving of this Debenture, or the realisation hereof, will not have a
right under Section 13(b) of the Pledge Law, 5727-1967, or any legal
provision which may come in its stead.
b. Subject to the provisions of any law, if the Bank should agree to
early repayment on account of the Amounts Secured (without it being
obliged to do so), the Pledgor shall pay the early repayment
commission of which the Bank will notify it.
10. Without prejudice to the generality of the provisions of this Debenture,
the Bank will be entitled in each of the cases enumerated below, to make
the Amounts Secured immediately due and payable and to debit the aforesaid
amount to any account of the Pledgor at the Bank, and the Pledgor
undertakes to pay all the Secured Amounts, and the Bank will be entitled
to employ all means it may deem fit for the collection and recovery of the
Amounts Secured and may realise the collateral in any manner the law may
permit, at the Pledgor's expense:
a. If the Pledgor breaches or fails to comply with any of the
conditions of this Debenture, or if the Pledgor should breach other
undertakings it has made or may make to the Bank, or if it should
transpire that any of the Pledgor's declarations or representations
in this Debenture, or any other statement or declaration which has
been given or may be given to the Bank by the Pledgor in connection
with the Amounts Secured, is incorrect or inaccurate;
b. If the Pledgor should pass a resolution with regard to a change in
the structure of the Pledgor, or any intention to make such change,
whether as an absorbing company, a transferring company or a company
that is splitting, or a resolution for voluntary winding-up, or if a
liquidation order should be granted against it or a provisional
liquidator or special manager should be appointed for any of them,
or if the name of the Pledgor is expunged from any register
maintained according to law, or is about to be expunged;
c. If a receiver is appointed or a receivership order or an order for
the receivership of the Property Charged, or portion thereof, is
granted;
d. If an attachment is imposed or similar Execution Office proceeding
is taken in respect of portion of the Property Charged, or against
any of the collateral security that has been delivered by the
Pledgor;
e. If it should appear to the Bank, in its sole discretion, that a
change has taken place in the ownership or in the control of the
Pledgor as compared with the situation on the date of signing of
this Debenture;
f. If the Pledgor has ceased to pay its debts or to conduct its
business;
5
<PAGE>
g. If the work or a substantial portion thereof at the Pledgor has been
stopped for a period of two months or more;
h. If it should appear to the Bank, in its sole discretion, that an
event has occurred which is likely to have an adverse effect on the
Pledgor's financial capability;
i. If the Pledgor should default in the payment of any amount forming
part of the Amounts Secured for more than 7 days;
j. If the number of holders of the shares of the Pledgor and/or the
number of members who constitute the Pledgor should fall below the
minimum number required according to law;
k. If, in the Bank's discretion and according to its sole assessment,
there has been a deterioration in the value of the collateral given
as security for payment of the Amounts Secured, or the ability of
the guarantors to make payment for the Pledgor;
l. If the Pledgor is called upon to make early repayment of debts which
the Pledgor owes to other creditors;
m. If one of the events enumerated in this clause should occur, mutatis
mutandis, in respect of any guarantor for the payment and discharge
of the Amounts Secured;
n. If the Pledgor should breach its obligation to furnish the Bank with
balance sheets, financial statements, books of account and other
vouchers and authorities in connection with the state of its
business.
The Bank's rights
11. a. The Bank has rights of possession, lien, set-off and charge over
all the amounts, assets and rights, including securities, coins,
gold, bank notes, documents in respect of goods, insurance policies,
bills of exchange, assignment of obligations, deposits, collateral
and the proceeds thereof, which may be in the possession of the Bank
or under its control at any time, to the credit of the Pledgor or
for the Pledgor, including those which are delivered for collection,
as security, in safe custody, or otherwise. The Bank may retain and
withhold the aforesaid assets until the full discharge of the
Amounts Secured, or may sell same and apply the proceeds, in whole
or in part, to the discharge and liquidation of the Amounts Secured.
In the event that the amounts which are set off are deposited in a
currency in which the Amounts Secured are not denominated, the
Pledgor hereby gives the Bank instructions in advance to sell the
credit balance in the other currency, according to the rate to be
fixed by the Bank, or which the Bank shall obtain in respect of such
balance at such time, and to apply the
6
<PAGE>
proceeds of the sale, after deduction of the necessary expenses and
commissions, against the Amounts Secured.
b. Without derogating from the Bank's right of lien as referred to in
Clause 11 (a) above, the Bank shall be entitled (but not obliged) at
any time:
1) To set off any amount forming part of the Amounts Secured,
which are owed by the Pledgor, against amounts which are due
to the Pledgor from the Bank in any account in Israeli
currency or in foreign currency, in any manner or on any
grounds whatsoever, even before the due date for payment of
the amounts which are due to the Pledgor from the Bank as
aforesaid, against which a set-off will be made, but in the
case of a set-off which is made against savings scheme
deposits, this shall not be before the date on which the
Pledgor would have been entitled to demand early repayment of
the deposit.
2) To purchase for the Pledgor's account any amount in foreign
currency which may be required for the liquidation and
discharge of any amount forming part of the Amounts Secured,
or to sell any foreign currency which may stand to the credit
of the Pledgor at the Bank, and to apply the proceeds of the
sale to the liquidation and discharge of any amount forming
part of the Amounts Secured.
3) To debit any of the Pledgor's accounts with any amount forming
part of the Amounts Secured. However, if the state of any such
account does not allow for the debiting thereof by the Bank
for purposes of the final discharge and settlement of any
amount, the Bank will be entitled not to debit the account,
and if it has done so, it will be entitled to cancel any such
debit and to treat any amount the debit of which has been
cancelled as an amount which was not paid on account of the
Amounts Secured, and in accordance therewith to take any
action it may deem fit in accordance with this Debenture.
4) Under all circumstances the Bank shall be entitled to effect a
set-off without any advance notice. However in the following
cases, the Bank may effect a set-off upon giving advance
notice to be given to the Pledgor 10 (ten) days before the
date for effecting the set-off:
(a) In the case of a set-off against amounts the due date
for payment of which has not yet arrived.
(b) In the case of a set-off against a fixed deposit, which
would, had it not been for the set-off, have been
extended
7
<PAGE>
or renewed automatically, in a manner whereby the
Pledgor would have derived rights or benefits from it.
(c) Notwithstanding the foregoing in this sub-paragraph
4)(a) above, if the postponement in effecting the
set-off is likely to worsen the Bank's position or
prejudice any of the Bank's rights, the set-off will be
effected immediately. Likewise, in a case that notice
has been sent to the Pledgor and in the course of ten
days of the notice an attachment order, notice of a
receivership order against the Pledgor should arrive, or
similar event should occur, the set-off will be effected
immediately.
c. The Pledgor hereby declares that it is aware that in cases in
which the Bank exercises rights of set-off as referred to above
prior to the due date of any deposit belonging to the Pledgor, in
whole or in part, there are likely to be changes to the Pledgor's
detriment in relation to the Pledgor's rights in respect of or in
connection with that deposit (such as with respect to interest
rates, linkage differentials, currency differentials, rights to
grants or loans, an exemption from or rebate on income tax and
withholding tax at source - if, pursuant to the conditions of such
deposit, the Pledgor would have had such rights). The Pledgor
shall bear all the expenses and payments which are customarily
charged at that time by the Bank for purposes of performing such
action.
d. Any purchase or sale as referred to in Clause 11(b.2) above shall be
effected at the rate prevailing at the Bank, out of amounts in
Israeli currency or out of amounts in foreign currency, as the case
may be, which stand to the credit of the Pledgor at the Bank or
which may be received from the realisation of any collateral which
has been given or may be given to the Bank by the Pledgor.
The expression "the rate prevailing at the Bank" - means - in
respect of any purchase of foreign currency for the Pledgor's
account - the highest rate for cheques and transfers at which the
Bank sells the relevant foreign currency, at the relevant time, to
its customers in consideration for Israeli currency, plus exchange
commission and any tax, levy, compulsory payments or other payments,
and so forth, and in respect of any sale of foreign currency out of
the Pledgor's account, the lowest rate, for cheques and transfers,
at which the Bank buys the relevant foreign currency, at the
relevant time, from its customers in consideration for Israeli
currency, less exchange commissions and any tax, levy, compulsory
payments or other payments, and so forth.
12. The Bank shall be entitled at any time debit any account belonging to the
Pledgor with any amount which is due and/or may be due from the Pledgor in
any manner, and to apply any amount it may receive from the Pledgor or for
the Pledgor to the
8
<PAGE>
credit of such account as it deems fit, and to transfer any amount which
it may place to the credit of the Pledgor to any other account as it deems
fit.
13. The Pledgor confirms that the books and accounts of the Bank are
acceptable to it, and will be deemed to be correct and will serve as prima
facie proof against it with regard to all details therein, and inter alia
with respect to the calculation of the Amounts Secured, details of
promissory notes, guarantees and other forms of collateral and any other
matter connected with this Debenture.
14. Without derogating from the other provisions of this Debenture, any
waiver, extension of time, indulgence, silence, failure to take action
(hereinafter - Waiver) by the Bank in respect of non-compliance or partial
compliance or incorrect compliance with any of the obligations of the
Pledgor pursuant to this Debenture, will not be deemed to be a Waiver on
the part of the Bank in respect of any rights, but merely as acquiescence
limited to the specific occasion in relation to which it is given.
15. a. In each of the cases specified in Clause 10 above, the Bank will
be entitled to utilise any means it deems fit in order to recover
the Amounts Secured and to realise all its rights pursuant to this
Debenture, including a realisation of the Property Charged, in whole
or in part, and to apply the proceeds thereof to the discharge and
liquidation of the Amounts Secured, without the Bank being obliged
first to realise guarantees or other collateral security, in the
event that the Bank has any;
b. Should the Bank decide to realise the Property Charged, notice of
three days in advance regarding the steps the Bank intends taking
shall be deemed to be a reasonable time for purposes of Section
19(b) of the Pledge Law, 5727-1967, or any legal provision which may
come in its stead;
c. The Bank shall be entitled, as attorney and agent for the Pledgor,
and for purposes of this clause the Pledgor irrevocably appoints the
Bank as its attorney and agent, to sell the Property Charged, or
portion thereof, by public auction or otherwise, itself or through
others, for cash or in instalments or otherwise, at such price and
on such conditions according to the Bank's absolute discretion, and
the Bank may, itself or through the court or through the Execution
Office, realise the Property Charged or any other property, inter
alia, by the appointment of a receiver or a receiver and manager on
behalf of the Bank, who shall, amongst his other powers and
authorities, be entitled:
1) To take possession of all the Property Charged, or portion
thereof.
2) To manage and conduct the Pledgor's business or to participate
in the management thereof, as he sees fit.
9
<PAGE>
3) To sell or to agree to sell the Property Charged, in whole or
in part, to transfer it or to agree to transfer it in any
other manner, on such conditions as he shall see fit.
4) To make any other arrangement in relation to the Property
Charged, or any portion thereof, as he shall see fit.
d. All the income which is received by the receiver, or the receiver
and manager, from the Property Charged, as well as any consideration
that may be received by the Bank and/or by the receiver, or the
receiver and manager, from the sale of the Property Charged or
portion thereof, shall be applied according to the following order
of priority:
1) For liquidation and discharge of all the expenses which have
been incurred and will be incurred in connection with recovery
of the Amounts Secured, including the expenses of the
receiver, or the receiver and manager, and his remuneration in
an amount to be fixed by the Bank or as shall be approved by
the court or the Execution Office.
2) For the liquidation and discharge of the Amounts Secured which
will be due to the Bank as a result of the conditions of
linkage, interest, damages, commissions, bank charges and
expenses which are due and may be due to the Bank in
accordance with this Debenture.
3) For the liquidation and discharge of the principal of the
Amounts Secured.
Or any other order of application as may be decided by the
Bank.
16. If at the time of sale of the Property Charged the due date for payment of
the Amounts Secured, or portion thereof, has not yet arrived, or if the
Amounts Secured, or portion thereof, are due to the Bank only
conditionally, the Bank shall be entitled to recover out of the proceeds
of the sale an amount which is sufficient in order to cover the Amounts
Secured, and the amount which is collected and which has not yet been
applied in liquidation and discharge of the amounts referred to in Clause
15(d) above, will be encumbered in favour of the Bank as security for the
Amounts Secured and shall remain in the possession of the Bank until the
discharge and liquidation thereof.
Nature of the collateral
17. The collateral which has been given and/or may be given to the Bank in
accordance with this Debenture is continuing security and shall remain in
force until the Bank gives confirmation in writing that this Debenture has
been cancelled.
10
<PAGE>
18. If other collateral security or guarantees have been given or will be
given to the Bank for payment of the Amounts Secured, each such form of
collateral security or guarantees will be independent of one another.
19. Should the Bank give or allow an extension of time or indulgence to the
Pledgor, or should the Bank alter any of the Pledgor's obligations in
connection with the Amounts Secured, or release or waive other collateral
or guarantees, these acts shall not alter the nature of the collateral to
which this Debenture applies and all the Pledgor's collateral and
obligations to which this Debenture applies shall remain in full force.
20. The Bank may deposit the collateral which has been delivered or may be
delivered in accordance with this Debenture, or portion thereof, in the
hands of a bailee who shall be chosen by the Bank in its discretion, and
at the Pledgor's expense, and it may replace the bailee from time to time;
the Bank may also register the aforesaid collateral, in whole or in part,
with any competent authority according to any law and/or in any public
register.
Right of transfer
21. The Bank may, at any time in its discretion, without requiring the
Pledgor's consent, transfer this Debenture or the rights pursuant hereto,
to another, including the collateral, in whole or in part, and any
transferee shall also be entitled to transfer the aforesaid rights to
another, without requiring additional consent from the Pledgor. The
transfer may be made by endorsement at the foot hereof or on the back of
this Debenture, or in any other manner the Bank and the transferee shall
deem fit,
Notice regarding reservation or objection
22. The Pledgor undertakes to notify the Bank in writing with regard to any
reservation or objection it may have, if any, in connection with any
account, condensed account, certificate or notice of any sort it may
receive from the Bank, including receipt of information through "Adken".
If the Pledgor does not express reservation or does not object within 21
days from the date of sending the account, the condensed account, the
certificate, or the aforesaid notice, the Bank will be entitled to deem
the Pledgor to have confirmed the correctness thereof,
Expenses
23. All the expenses connected with this Debenture (as set forth in the Bank's
tariff as in force from time to time), including bank commission for the
drawing of documents in respect of credit facilities and collateral
security, stamp duty and registration of documents, costs of realisation
of the collateral and the taking of recovery proceedings (which shall
include the fees of the Bank's attorney), insurance, safe-keeping, holding
and repair of the Property Charged, shall be paid by the Pledgor to the
Bank upon the Bank's first demand, together with interest at the maximum
rate from the date of the demand and up to the date of full payment
11
<PAGE>
thereof. Until payment thereof, all the aforesaid expenses, plus interest
thereon, shall be secured by this Debenture. The Bank shall be entitled to
debit the Pledgor with the aforesaid expenses and the interest thereon.
Interpretation
24. In this Debenture - (a) the singular shall include the plural, and vice
versa; (b) the masculine shall include the feminine, and vice versa; (c)
"the Bank" means - Bank Hapoalim B.M. end each and every one of the
branches of the Bank which exists at the date of this Debenture and/or
which may be opened at any place in the future, its transferees and
substitutes and the Bank's successors-in-title; (d) "interest at the
maximum rate" means: interest at the maximum rate prevailing at the Bank
for the time being, and from time to time, in respect of excesses and
defaults on approved overdraft accounts or on current accounts, whichever
is the higher; (e) "change in structure" means, with regard to the
Pledgor, a merger or split (within the meaning of these terms in Part E2
of the Income Tax Ordinance or any other legal provision which may come in
its stead), and the transfer of assets in consideration for shares, either
in accordance with the aforesaid Part E2, or otherwise; (f) the headings
to clauses are inserted solely as place finders and no use shall be made
thereof in the interpretation of this Debenture; (g) the preamble to this
Debenture constitutes an integral part hereof.
Notices and warning notices
25. Any notice which is sent via the post by the Bank to the Pledgor by
registered or ordinary mail, according to the address recorded above, or
according to the address of the registered office of the Pledgor, or
according to another address of which the Pledgor has notified the Bank in
writing, shall be deemed to be lawful notice received by the Pledgor
within 72 hours from the time the letter containing the notice was
despatched. A declaration in writing by the Bank shall serve as evidence
as to the date of sending of the notice. Any notice which may be given to
the Pledgor in any other way shall be deemed to have been received by them
at the time it was given or at the time of its publication.
Substantive law and venue of jurisdiction
26. a. This Debenture shall be interpreted in accordance with the
laws of the State of Israel.
b. The sole venue of jurisdiction for purposes of this Debenture is
hereby fixed as the competent court in Tel Aviv-Jaffa.
IN WITNESS WHEREOF THE PLEDGOR HAS HEREUNTO SIGNED:
(-) Riza Holdings Ltd.
-------------------------------------
Riza Holdings Ltd.
12
<PAGE>
APPENDIX "A"
Bank Hapoalim B.M.
Schedule of the Assets Charged
By: Riza Holdings Ltd.
In favour of Bank Hapoalim B.M.
- --------------------------------------------------------------------------------
No. Description
- --------------------------------------------------------------------------------
1. 3,893,086 ordinary shares of NIS 1 nominal value each of Macpell
Industries Ltd. (hereinafter: "the Company".
- --------------------------------------------------------------------------------
2. All the dividends which will be paid and/or will be payable in respect
of or in accordance with the aforesaid shares at any time whatsoever,
commencing from the date of signing of this Deed of Pledge
- --------------------------------------------------------------------------------
3. All the shares and stock (including all the dividends which will be
paid and/or will be payable in respect of or in accordance therewith)
(hereinafter: "the Other Shares") and all the rights and funds and
assets which will be due or will be issued in lieu of the aforesaid
shares and/or in respect thereof and/or in accordance therewith, as
bonuses, benefits, preferential rights or otherwise.
- --------------------------------------------------------------------------------
4. All the rights in the Company and as against it, which the law and/or
the Memorandum and/or the Articles of the Company confer and will
confer on the Pledgor in respect of and in accordance with the
aforesaid shares and/or the Other Shares.
- --------------------------------------------------------------------------------
(-) Riza Holdings Ltd.
--------------------------------------
Riza Holdings Ltd.
<PAGE>
BANK HAPOALIM
Head Office Management
Electronics, Chemicals, Metals and Textiles Sector
"Beit Zion" 41-45 Rothschild Boulevard Tel Aviv
24th January 2000
427/95/24-200
Arwoll Holdings Ltd.
re: Pledge of 4,302,885 Shares in Macpell Industries Ltd. in Our Favour
-------------------------------------------------------------------
Whereas you have created and/or will create in our favour a charge over the
aforesaid shares as security for your debts and obligations to us (hereinafter:
"Arwoll's Debts") and/or as security for the debts and/or obligations of Riza
Holdings Ltd, to us (hereinafter: "Riza's Debts");
Accordingly and pursuant to your request, we hereby confirm to you that you will
not be guarantors for an amount in excess of 35% of Riza's Debts and that we
will be entitled to apply the proceeds deriving from a realisation of the charge
to the payment of Riza's Debts, but not more than 35% thereof.
For the avoidance of doubt, the foregoing does not oblige us in any way to apply
the proceeds of the aforesaid realisation to payment of Riza's Debts, and,
subject to the foregoing, we will be entitled to make use thereof for payment of
Arwoll's Debts and/or Riza's Debts, in our discretion.
We further hereby confirm to you that so long as Riza's Debts are repaid to us
regularly and provided Arwoll's Debts have been repaid in full, any dividend
which may be paid in respect of the above-mentioned shares may be paid to you
directly.
Apart from the matters set forth above, our rights pursuant to the aforesaid
charge will not be affected.
Yours faithfully,
Bank Hapoalim B.M.
Head Office Management
(-) (-)
A. Lanir D. Alhanatti
<PAGE>
DEBENTURE
Made and entered into on the 24th day of January 2000 at Tel Aviv
Whereas the undersigned ARWOLL HOLDINGS LTD., 51-260178-2
(hereinafter -- the Pledgor)
has received and is due from time to time to receive from Bank Hapoalim B.M.
(hereinafter - the Bank), credit facilities, documentary credit, various loans,
overdrafts oil current account, on revolving debitory account or on another
account, letters of indemnity and any guarantees for the Pledgor or for others,
at the Pledgor's request, the discounting of bills, the giving of extensions of
time and various banking facilities and other various banking services
(hereinafter, collectively and individually - Banking Services), on conditions
as have been agreed and/or will be agreed from time to time in relation to each
such Banking Service;
And Whereas RIZA HOLDINGS LTD. 51-288767-0 (hereinafter -- the Party in whose
favour the Guarantee is given) has received and/or is due to receive, from time
to time, Banking Services from the Bank with the Pledgor's guarantee or is
likely to owe the Bank various amounts of money in any manner which is not
connected with the providing of Banking Services;
NOW THEREFORE it is agreed that the Pledgor will secure the repayment of various
amounts of money which the Pledgor and/or the Party in whose favour the
Guarantee is given owes and/or may owe to the Bank in connection with the
providing of Banking Services and/or in connection with other obligations which
are not banking and/or other services, all in accordance with the conditions set
forth below:
Nature and substance of the Debenture
1. This Debenture is being executed as security for the full and punctual
payment of all the amounts which are due and which may be due to the Bank
from the Pledgor and/or from the Party in whose favour the Guarantee is
given, in connection with the providing of Banking Services by the Bank to
the Pledgor and/or to the Party in whose favour the Guarantee is given
and/or in connection with other obligations which are not banking services
or in any other manner, whether due from the Pledgor and/or from the Party
in whose favour the Guarantee is given, alone or jointly with others, and
whether the Pledgor has given an undertaking for them or may in the future
give an undertaking for them, as debtor and/or as a guarantor and/or as an
endorser or otherwise, which are due and/or may in the future be due, that
are due and payable prior to the realisation of the collateral to which
this Debenture applies or subsequent thereto, owing absolutely or
conditionally, owing directly or indirectly, without limitation of amount,
plus interest, commissions, expenses of various types, including expenses
for realisation, attorneys' fees, insurance fees, stamp duty and other
payments in accordance with this Debenture, and together with linkage
differentials of any type, which are due or may be due from the Pledgor
and/or
1
<PAGE>
from the Party in whose favour the Guarantee is given to the Bank in any
manner or way, in respect of linked principal and linked interest and in
respect of any other linked amount (all the aforesaid amounts will
henceforth be referred to, collectively and individually, as -- the
Secured Amounts).
Pledge and fixed charge
2. As security for the full and punctual discharge of all the Secured
Amounts, the Pledgor hereby charges and pledges in favour of the Bank and
its successors-in-title, by way of a first fixed charge and by way of
pledge, the properties and the income from the properties and the fruits
thereof as more fully described in the schedule attached hereto, marked
with the letter "A" and forming an integral part of this Debenture, as
well as the Pledgor's uncalled share capital and/or its share capital that
has been called but not yet paid up, and its goodwill, as same exists at
present and as same may exist at any time (hereinafter, collectively and
individually -- the Assets Charged).
3. Deleted.
4. The Assets Charged and the Encumbered Documents will henceforth be
referred to as -- the Property Charged.
The pledge and the charge created pursuant to this Debenture shall apply
to any right to compensation and/or indemnity the Pledgor may have by
virtue of a loss of the Property Charged, damage thereto or the
expropriation thereof.
Representations by the Pledgor
5. The Pledgor hereby represents as follows:
a. The Property Charged is not encumbered, pledged or attached in
favour of others;
b. The Property Charged, in its entirety, is in the sole ownership and
possession of the Pledgor or in the possession and/or under control
of the Bank;
c. That there is no restriction or condition at law or by agreement
which applies to the transfer of the Property Charged or to the
encumbrance thereof;
d. That it is entitled to encumber the Property Charged;
e. That no assignment of rights or any other action has been effected
which derogates from the value of the Property Charged.
2
<PAGE>
Undertakings by the Pledgor
6. The Pledgor hereby undertakes as follows:
a. To hold the Property Charged solely in accordance with the Bank's
instructions;
b. Deleted.
c. Deleted.
d. Deleted,
e. Deleted.
f. Not to sell, transfer, lease under leasehold, and not to let or to
dispose of the Assets Charged, or any part thereof, and not to allow
another to make use thereof in any manner, and not allow another to
perform any of the aforesaid actions, except with the Bank's prior
written consent thereto;
g. Deleted.
h. Promptly to notify the Bank with regard to any instance that an
attachment is imposed on the Property Charged, and immediately to
notify the party making the attachment of the encumbrance in favour
of the Bank, and at its expense, to take all the steps, promptly and
without delay, in order to have the attachment removed;
i. Not to encumber and not to pledge the Property Charged in any manner
whatsoever on a pari passu basis or having prior or later rights
than the rights of the Bank, and not to assign any right the Pledgor
may have in the Property Charged, except after receiving the Bank's
prior written consent;
j. To be responsible to the Bank for any defect in the Pledgor's right
of title in and to the Property Charged;
k. To make payment on due date according to any law of all the taxes
and compulsory payments imposed on the Property Charged and/or on
the income deriving therefrom, and to deliver to the Bank, on its
demand, all the receipts in respect of such payments. Should the
Pledgor fail to pay the aforesaid payments on due date, the Bank
will be entitled to make payment thereof on the Pledgor's behalf and
to debit the Pledgor with the payment thereof, together with
expenses and interest at the maximum rate. Such payments are secured
by this Debenture;
l. To maintain proper books of account and to allow the Bank or a
representative on its behalf to examine the books at any time. The
Pledgor undertakes to assist the Bank, or its representatives, and
to deliver to them,
3
<PAGE>
on their first demand, any balance sheet, financial statement, books
of account, ledger card or ledger, tape, books, vouchers and other
documents, and any information which may be required by them,
including explanations with regard to the financial and operating
condition of the Pledgor and/or its business;
m. Not to make loans to the Pledgor's shareholders and not to repay
existing or future loans to shareholders of the Pledgor in any year,
until such time as the Pledgor has paid the Bank the payments due
from it to the Bank in respect of the Amounts Secured in that year,
or prior thereto, except with the Bank's prior written consent. The
Pledgor undertakes to cause a situation that its shareholders will
undertake to the Bank not to demand or to claim the repayment of
such loans;
n. That no change will take place in the structure relating to the
Pledgor or any change in control of the Pledgor, except with the
Bank's prior written consent;
o. Not to take any steps in relation to the Amounts Secured which would
be likely to have an adverse effect on the Bank's ability to realise
this Debenture.
7. The Pledgor undertakes to notify the Bank immediately:
a. About every case of any right being claimed in and to collateral in
favour of the Bank to which this Debenture applies and/or any
Execution Office proceedings or other steps for realisation of such
collateral;
b. With regard to any of the acts mentioned in Clause 17 below;
c. With regard to a diminution in the value of any collateral which has
been given and/or may in the future be given by it;
d. About any application which may be filed for the winding-up of the
Pledgor's business or for a receivership over its assets, and also
any resolution relating to a change in the structure of the Pledgor
or any intention to do so;
e. Of a change of address.
Insurance
8. Deleted.
9. Deleted.
10. Deleted.
4
<PAGE>
11. Deleted.
12. Deleted.
13. Deleted.
Interest
14. a. The Bank may calculate interest on the Amounts Secured at the rate
which has been agreed and/or as may be agreed from time to time
between it and the Pledgor and/or the Party in whose favour the
Guarantee is given. In those cases where it has not been agreed on
the rate of interest, the Bank shall be entitled to fix the interest
at a rate which does not exceed the maximum rate of interest, and to
give the Pledgor and/or the Party in whose favour the Guarantee is
given notice to that effect. The Pledgor and/or the Party in whose
favour the Guarantee is given will be debited in accordance with the
aforesaid rate of interest and the Bank may add the amounts of
interest to the principal at the end of each month or at the end of
any other period, as the Bank may decide;
b. In every case of a default in payment of the Amounts Secured, or
part thereof, the Amounts Secured shall bear penalty interest at
such rate as was agreed in the agreement for the providing of
Banking Services. In the absence of a stipulation regarding penalty
interest, the Amounts Secured will bear interest at the maximum
rate.
c. In every event which confers on the Bank the right to realise the
collateral security pursuant to this Debenture, the Bank will be
entitled to increase the rates of interest on the Amounts Secured up
to the maximum rate of interest.
Due dates of payment
15. The Pledgor hereby undertakes to liquidate the Amounts Secured, or any
part thereof, to the Bank, promptly and punctually on the due dates of
payment thereof as have been fixed and as may be fixed from time to time.
16. a. The Bank shall be entitled not to accept early repayment of the
Amounts Secured, or any part thereof, prior to due date for payment
thereof having arrived, and the Pledgor will not be entitled to
redeem the Property Charged, in whole or in part, by liquidating the
Amounts Secured and/or any part thereof until the due date for the
payment thereof has arrived.
The Pledgor and/or the Party in whose favour the Guarantee is given,
or anyone whose right is likely to be prejudiced by the giving of
this Debenture, or the realisation hereof, will not have a right
under Section 13(b) of the Pledge Law, 5727-1967, or any legal
provision which may come in its stead.
5
<PAGE>
b. Subject to the provisions of any law, if the Bank should agree to
early repayment on account of the Amounts Secured (without it being
obliged to do so), the Pledgor shall pay the early repayment
commission of which the Bank will notify it.
17. Without prejudice to the generality of the provisions of this Debenture,
the Bank will be entitled in each of the cases enumerated below, to make
the Amounts Secured immediately due and payable and to debit the aforesaid
amount to any account of the Pledgor at the Bank, and the Pledgor
undertakes to pay all the Secured Amounts, and the Bank will be entitled
to employ all means it may deem fit for the collection and recovery of the
Amounts Secured and may realise the collateral in any manner the law may
permit, at the expense of the Pledgor and/or the Party in whose favour the
Guarantee is given:
a. If the Pledgor breaches or fails to comply with any of the
conditions of this Debenture, or if the Pledgor and/or the Party in
whose favour the Guarantee is given should breach other undertakings
the Pledgor and/or the Party in whose favour the Guarantee is given
has made or may make to the Bank, or if it should transpire that any
of the Pledgor's declarations or representations in this Debenture,
or any other statement or declaration which has been given or may be
given to the Bank by the Pledgor in connection with the Amounts
Secured, is incorrect or inaccurate;
b. If the Pledgor or the Party in whose favour the Guarantee is given
should pass a resolution with regard to a change in the structure of
the Pledgor and/or of the Party in whose favour the Guarantee is
given, or any intention to make such change, whether as an absorbing
company, a transferring company or a company that is splitting, or a
resolution for voluntary winding-up, or if a liquidation order
should be granted against it or a provisional liquidator or special
manager should be appointed for any of them, or if the name of the
Pledgor or the Party in whose favour the Guarantee is given is
expunged from any register maintained according to law, or is about
to be expunged;
c. If a receiver is appointed or a receivership order or an order for
the receivership of the Property Charged, or portion thereof, is
granted;
d. If an attachment is imposed or similar Execution Office proceeding
is taken in respect of portion of the property of the Pledgor and/or
of the Party in whose favour the Guarantee is given, or against any
of the collateral security that has been delivered or may be
delivered by the Pledgor and/or by the Party in whose favour the
Guarantee is given;
e. If it should appear to the Bank, in its sole discretion, that a
change has taken place in the ownership or in the control of the
Pledgor and/or of the Party in whose favour the Guarantee is given
as compared with the situation on the date of signing of this
Debenture;
6
<PAGE>
f. If the Pledgor and/or the Party in whose favour the Guarantee is
given has ceased to pay its debts and/or to conduct its business;
g. If the work or a substantial portion thereof at the Pledgor and/or
at the Party in whose favour the Guarantee is given has been stopped
for a period of two months or more;
h. If it should appear to the Bank, in its sole discretion, that an
event has occurred which is likely to have an adverse effect on the
financial capability of the Pledgor and/or of the Party in whose
favour the Guarantee is given;
i. If the Pledgor and/or the Party in whose favour the Guarantee is
given should default in the payment of any amount forming part of
the Amounts Secured for more than 7 days;
j. Deleted.
k. If the number of holders of the shares of the Pledgor and/or of the
Party in whose favour the Guarantee is given and/or the number of
members who constitute the Pledgor or the Party in whose favour the
Guarantee is given should fall below the minimum number required
according to law;
l. Deleted.
m. If, in the Bank's discretion and according to its sole assessment,
there has been a deterioration in the value of the collateral which
has been given and/or may be given as security for payment of the
Amounts Secured, or the ability of the guarantors to make payment
for the Pledgor and/or for the Party in whose favour the Guarantee
is given;
n. If the Pledgor and/or the Party in whose favour the Guarantee is
given is called upon to make early repayment of debts which the
Pledgor and/or of the Party in whose favour the Guarantee is given
owes and/or may owe to other creditors;
o. Deleted.
p. If one of the events mentioned in this clause should occur, mutatis
mutandis, in respect of any guarantor for the payment and discharge
of the Amounts Secured;
q. If the Pledgor should breach its obligation to furnish the Bank with
balance sheets, financial statements, books of account and other
vouchers and authorities in connection with the state of its
business.
7
<PAGE>
The Bank's rights
18. a. The Bank has rights of possession, lien, set-off and charge over
all the amounts, assets and rights, including securities, coins,
gold, bank notes, documents in respect of goods, insurance policies,
bills of exchange, assignment of obligations, deposits, collateral
and the proceeds thereof, which may be in the possession of the Bank
or under its control at any time, to the credit of the Pledgor or
for the Pledgor, including those which are delivered for collection,
as security, in safe custody, or otherwise. The Bank may retain and
withhold the aforesaid assets until the full discharge of the
Amounts Secured, in whole or in part, or may sell same and apply the
proceeds, in whole or in part, to the discharge and liquidation of
the Amounts Secured. In the event that the amounts which are set off
are deposited in a currency in which the Amounts Secured are not
denominated, the Pledgor hereby gives the Bank instructions in
advance to sell the credit balance in the other currency, according
to the rate to be fixed by the Bank, or which the Bank shall obtain
in respect of such balance at such time, and to apply the proceeds
of the sale, after deduction of the necessary expenses and
commissions, against the Amounts Secured.
b. Without derogating from the Bank's right of lien as referred to in
Clause 18(a) above, the Bank shall be entitled at any time:
1) To set off any amount forming part of the Amounts Secured,
which are owed by the Pledgor, against amounts which are due
to the Pledgor from the Bank in any account in Israeli
currency or in foreign currency, in any manner or on any
grounds whatsoever, even before the due date for payment of
the amounts which are due to the Pledgor from the Bank as
aforesaid, against which a set-off will be made, but in the
case of a set-off which is made against savings scheme
deposits, this shall not be before the date on which the
Pledgor would have been entitled to demand early repayment of
the deposit.
2) To purchase for the Pledgor's account any amount in foreign
currency which may be required for the liquidation and
discharge of any amount forming part of the Amounts Secured,
or to sell any foreign currency which may stand to the credit
of the Pledgor at the Bank, and to apply the proceeds of the
sale to the liquidation and discharge of any amount forming
part of the Amounts Secured.
3) To debit any of the Pledgor's accounts with any amount forming
part of the Amounts Secured. However, if the state of any such
account does not allow for the debiting thereof by the Bank
for purposes of the final discharge and settlement of any
amount, the Bank will be entitled not to debit the account,
and if it has done so,
8
<PAGE>
it will be entitled to cancel any such debit and to treat any
amount the debit of which has been cancelled as an amount
which was not paid on account of the Amounts Secured, and in
accordance therewith to take any action it may deem fit in
accordance with this Debenture.
4) Under all circumstances the Bank shall be entitled to effect a
set-off without any advance notice. However in the following
cases, the Bank may effect a set-off upon giving advance
notice to be given to the Pledgor 10 (ten) days before the
date for effecting the set-off
(a) In the case of a set-off against amounts the due date
for payment of which has not yet arrived.
(b) In the case of a set-off against a fixed deposit, which
would, had it not been for the set-off, have been
extended or renewed automatically, in a manner whereby
the Pledgor would have derived rights or benefits from
it.
(c) Notwithstanding the foregoing in this sub-paragraph
4)(a) above, if the postponement in effecting the
set-off is likely to worsen the Bank's position or
prejudice any of the Bank's rights, the Bank will be
entitled to effect the set-off immediately. Likewise, in
a case that notice has been sent to the Pledgor and in
the course of ten days of the notice an attachment
order, notice of a receivership order against the
Pledgor should arrive, or similar event should occur,
the set-off will be effected immediately.
c. The Pledgor hereby declares that it is aware that in cases in which
the Bank exercises rights of set-off as referred to above prior to
the due date of any deposit belonging to the Pledgor, in whole or in
part, there are likely to be changes to the Pledgor's detriment in
relation to the Pledgor's rights in respect of or in connection with
that deposit (such as with respect to interest rates, linkage
differentials, currency differentials, rights to grants or loans, an
exemption from or rebate on income tax and withholding tax at source
if, pursuant to the conditions of such deposit, the Pledgor would
have had such rights). The Pledgor shall bear all the expenses and
payments which are customarily charged at that time by the Bank for
purposes of performing such action.
d. Any purchase or sale as referred to in Clause 18(b.2) above shall be
effected at the rate prevailing at the Bank, out of amounts in
Israeli currency or out of amounts in foreign currency, as the case
may be, which stand to the credit of the Pledgor at the Bank or
which may be received
9
<PAGE>
from the realisation of any collateral which has been given or may
be given to the Bank by the Pledgor.
The expression "the rate prevailing at the Bank" -- means -- in respect of
any purchase of foreign currency for the Pledgor's account -- the highest
rate for cheques and transfers at which the Bank sells the relevant
foreign currency, at the relevant time, to its customers in consideration
for Israeli currency, plus exchange commission and any tax, levy,
compulsory payments or other payments, and so forth, and in respect of any
sale of foreign currency out of the Pledgor's account, the lowest rate,
for cheques and transfers, at which the Bank buys the relevant foreign
currency, at the relevant time, from its customers in consideration for
Israeli currency, less exchange commissions and any tax, levy, compulsory
payments or other payments, and so forth.
19. The Bank shall be entitled at any time debit any account belonging to the
Pledgor with any amount which is due and/or may be due from the Pledgor in
any manner, and to apply any amount it may receive from the Pledgor or for
the Pledgor to the credit of such account as it deems fit, and to transfer
any amount which it may place to the credit of the Pledgor to any other
account as it deems fit; whether such account is in the name of the
Pledgor alone or together with another, and whether in Israeli currency or
in foreign currency, and whether such account exists at the time of
signing of this Debenture or is opened in the future.
20. The Pledgor confirms that the books and accounts of the Bank are
acceptable to it, and will be deemed to be correct and will serve as prima
facie proof against it with regard to all details therein, and inter alia
with respect to the calculation of the Amounts Secured, details of
promissory notes, guarantees and other forms of collateral and any other
matter connected with this Debenture.
21. Deleted.
22. Without derogating from the other provisions of this Debenture, any
waiver, extension of time, indulgence, silence, failure to take action
(hereinafter -- Waiver) by the Bank in respect of non-compliance or
partial compliance or incorrect compliance with any of the obligations of
the Pledgor pursuant to this Debenture, and/or any obligations of the
Party in whose favour the Guarantee is given, will not be deemed to be a
Waiver on the part of the Bank in respect of any rights, but merely as
acquiescence limited to the specific occasion in relation to which it is
given. Any waiver the Bank may grant to any party to a bill of exchange
which the Bank may hold as security for the Amounts Secured, will in no
way affect the Pledgor's obligations.
23 a. In each of the cases specified in Clause 17 above, the Bank will
be entitled to give the Pledgor notice of immediate exercise of the
Property Charged, or portion thereof, to utilise any means it deems
fit in order to recover the Amounts Secured and to realise all its
rights pursuant to this Debenture, including a realisation of the
Property Charged, in whole or in part, and to
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apply the proceeds thereof to the discharge and liquidation of the
Amounts Secured, without the Bank being obliged first to realise
guarantees or other collateral security, in the event that the Bank
has any;
b. Should the Bank decide to realise the securities, bills of exchange
and other negotiable instruments, notice of three days in advance
regarding the steps the Bank intends taking shall be deemed to be a
reasonable time for purposes of Section 19(b) of the Pledge Law,
5727-1967, or any legal provision which may come in its stead;
c. The Bank shall be entitled, as attorney and agent for the Pledgor,
and for purposes of this clause the Pledgor irrevocably appoints the
Bank as its attorney and agent, to sell the Property Charged, or
portion thereof, by public auction or otherwise, itself or through
others, for cash or in instalments or otherwise, at such price and
on such conditions according to the Bank's absolute discretion, and
the Bank may, itself or through the court or through the Execution
Office, realise the Property Charged or any other property, inter
alia, by the appointment of a receiver or a receiver and manager on
behalf of the Bank, who shall, amongst his other powers and
authorities, be entitled:
1) To take possession of all the Property Charged, or portion
thereof.
2) Deleted.
3) To sell or to agree to sell the Property Charged, in whole or
in part, to transfer it or to agree to transfer it in any
other manner, on such conditions as he shall see fit.
4) To make any other arrangement in relation to the Property
Charged, or any portion thereof, as he shall see fit.
d. All the income which is received by the receiver, or the receiver
and manager, from the Property Charged, as well as any consideration
that may be received by the Bank and/or by the receiver, or the
receiver and manager, from the sale of the Property Charged or
portion thereof, shall be applied according to the following order
of priority:
1) For the liquidation and discharge of all the expenses which
have been incurred and will be incurred in connection with
recovery of the Amounts Secured, including the expenses of the
receiver, or the receiver and manager, and his remuneration in
an amount to be fixed by the Bank or as shall be approved by
the court or the Execution Office.
2) For the liquidation and discharge of the Amounts Secured which
will be due to the Bank as a result of the conditions of
linkage, interest, damages, commissions, bank charges and
expenses which
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are due and may be due to the Bank in accordance with this
Debenture.
3) For the liquidation and discharge of the principal of the
Amounts Secured
or in any other order of application as may be decided by the Bank.
24. If at the time of sale of the Property Charged the due date for payment of
the Amounts Secured, or portion thereof, has not yet arrived, or if the
Amounts Secured, or portion thereof, are due to the Bank only
conditionally, the Bank shall be entitled to recover out of the proceeds
of the sale an amount which is sufficient in order to cover the Amounts
Secured, and the amount which is collected and which has not yet been
applied in liquidation and discharge of the amounts referred to in Clause
15(d) above, will be encumbered in favour of the Bank as security for the
Amounts Secured and shall remain in the possession of the Bank until the
discharge and liquidation thereof.
Nature of the collateral
25. The collateral which has been given and/or may be given to the Bank in
accordance with this Debenture is continuing security and shall remain in
force until the Bank gives confirmation in writing that this Debenture has
been cancelled.
26. If other collateral security or guarantees have been given or will be
given to the Bank for payment of the Amounts Secured, each such form of
collateral security or guarantees will be independent of one another.
27. Should the Bank compromise or grant an extension of time or indulgence to
the Pledgor and/or to the Party in whose favour the Guarantee is given, or
should the Bank alter any of the Pledgor's obligations in connection with
the Amounts Secured, or release or waive other collateral or guarantees,
these acts shall not alter the nature of the collateral to which this
Debenture applies and all the Pledgor's collateral and obligations to
which this Debenture applies shall remain in full force.
28. The Bank may deposit the collateral which has been delivered and/or may be
delivered in accordance with this Debenture, or portion thereof, in the
hands of a bailee who shall be chosen by the Bank in its discretion, and
at the Pledgor's expense, and it may replace the bailee from time to time;
the Bank may also register the aforesaid collateral, in whole or in part,
with any competent authority according to any law and/or in any public
register.
Right of transfer
29. The Bank may, at any time in its discretion, without requiring the
Pledgor's consent, transfer this Debenture or the rights pursuant hereto,
to another,
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including the collateral, in whole or in part, and any transferee shall
also be entitled to transfer the aforesaid rights to another, without
requiring additional consent from the Pledgor. The transfer may be made by
endorsement at the foot hereof or on the back of this Debenture, or in any
other manner the Bank and the transferee shall deem fit.
Notice regarding reservation
30. The Pledgor undertakes to notify the Bank in writing with regard to any
reservation or objection it may have, if any, in connection with any
account, condensed account, certificate or notice of any sort it may
receive from the Bank, including receipt of information through "Adken".
If the Pledgor does not express reservation or does not object within 21
days from the date of sending the account, the condensed account, the
certificate, or the aforesaid notice, the Bank will be entitled to deem
the Pledgor to have confirmed the correctness thereof.
Expenses
31. Without derogating from the Bank's rights as set forth in this Debenture,
all the expenses and commissions connected with this Debenture (as set
forth in the Bank's tariff as in force from time to time), shall be paid
by the Pledgor upon the Bank's first written demand (unless same have
actually been paid by the Party in whose favour the Guarantee is given, in
circumstances in which this Debenture is being executed as security for
the obligations and liabilities of the Party in whose favour the Guarantee
is given), together with interest at the maximum rate calculated from the
date of the demand and up to the date of full payment thereof.
The aforesaid expenses and commissions include, inter alia (and without
derogating from the generality of the foregoing) fees for the handling of
the collateral security, stamp duty and registration of documents, costs
of realisation of the collateral and the taking of recovery proceedings
(which shall include the fees of the Bank's attorney), insurance,
safe-custody charges, holding and repair of the Property Charged.
All the aforesaid expenses and commissions, plus interest thereon as
referred to in Clause 14 of this Debenture, shall be secured by this
Debenture until the full actual discharge and liquidation thereof.
The Pledgor's responsibility
32. Deleted.
Interpretation
33. In this Debenture -- (a) the singular includes the plural, and vice versa;
(b) the masculine includes the feminine, and vice versa; (c) "the Bank"
means -- Bank Hapoalim B.M. and each of the branches of the Bank which
exists at the date of this Debenture and/or which may be opened at any
place in the future, its
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transferees and substitutes and the Bank's successors-in-title; (d) "bills
of exchange" mean -- promissory notes, negotiable instruments, cheques,
undertakings, guarantees, collateral, drafts, bills of lading, bills of
deposit, and any other negotiable documents; (e) "interest at the maximum
rate" means: interest at the maximum rate prevailing at the Bank for the
time being, and from time to time, in respect of excesses and defaults on
overdraft accounts or on current accounts, whichever is the higher; (f)
"change in structure" means, with regard to the Pledgor, a merger or split
(within the meaning of these terms in Part E2 of the Income Tax Ordinance
(New Version) or any other legal provision which may come in its stead),
and the transfer of assets in consideration for shares, either in
accordance with the aforesaid Part E2, or otherwise; (g) in all cases
that, pursuant to this Debenture, the Bank is entitled to perform any
action, it is not under obligation to do so; (h) in every case a right is
conferred on the Bank to debit any account of the Pledgor, the Bank may
debit such account, whether that account has a credit balance or a debit
balance, and including a case in which the debit balance is created as a
result of such account being debited by the Bank, as aforesaid (i) the
headings to clauses have been inserted solely as place finders and no use
shall be made thereof in the interpretation of this Debenture; (j) the
preamble to this Debenture constitutes an integral part hereof.
Notices and warning notices
34. Any notice which is sent via the post by the Bank to the Pledgor and/or to
the Party in whose favour the Guarantee is given, by registered or
ordinary mail, according to the address recorded above, or according to
the address of the registered office of the Pledgor and/or of the Party in
whose favour the Guarantee is given, or according to another address of
which the Pledgor has notified the Bank in writing, shall be deemed to be
lawful notice received by the Pledgor and/or by the Party in whose favour
the Guarantee is given within 72 hours from the time the letter containing
the notice was despatched. A declaration in writing by the Bank shall
serve as evidence as to the date of sending of the notice. Any notice
which may be given to the Pledgor and/or to the Party in whose favour the
Guarantee is given in any other way shall be deemed to have been received
by them at the time it was given or at the time of its publication.
Substantive law and venue of jurisdiction
35. a. This Debenture shall be interpreted in accordance with the laws of
the State of Israel.
b. The sole venue of jurisdiction for purposes of this Debenture is
hereby fixed as follows: in the competent court in Tel Aviv-Jaffa.
IN WITNESS WHEREOF THE PLEDGOR HAS HEREUNTO SIGNED:
( - ) Arwoll Holdings Ltd.
--------------------------
Arwoll Holdings Ltd.
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APPENDIX "A"
Bank Hapoalim B.M.
Schedule of the Assets Charged
By: Arwoll Holdings Ltd.
In favour of Bank Hapoalim B.M.
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No. Description
- --------------------------------------------------------------------------------
1. 4,302,885 ordinary shares of NIS 1 nominal value each of Macpell
Industries Ltd. (hereinafter: "the Company")
- --------------------------------------------------------------------------------
2. All the dividends which will be paid and/or will be payable in respect
of or in accordance with the aforesaid shares at any brae whatsoever,
commencing from the date of signing of this Deed of Pledge.
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3. All the shares and stock (including all the dividends which will be paid
and/or will be payable in respect of or in accordance therewith)
(hereinafter: "the Other Shares") and all the rights and funds and
assets which will be due or will be issued in lieu of the aforesaid
shares and/or in respect thereof and/or in accordance therewith, as
bonuses, benefits, preferential rights or otherwise.
- --------------------------------------------------------------------------------
4. All the rights in the Company and as against it, which the law and/or
the Memorandum and/or the Articles of the Company confer and will confer
on the Pledgor in respect of and in accordance with the aforesaid shares
and/or the Other Shares.
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( - ) Arwoll Holdings Ltd.
15
