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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DECEMBER 31, 1998 1-9078
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Date of Report (Date of earliest event reported) Commission File Number
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-1620387
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(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
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(Address of Principal Executive Offices) (Zip Code)
(212) 757-3333
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 31, 1998, The Alpine Group, Inc.'s 50.1% owned subsidiary,
Superior TeleCom Inc. (the "Company"), through its majority owned Israeli
subsidiary, Cables of Zion United Works Ltd. ("COZ"), acquired all the assets
relating to the wire and cable business of Cvalim - The Electric Wire and Cable
Company of Israel Ltd. ("Cvalim") for an adjusted purchase price of $41.2
million in cash. The terms of the acquisition, including the amount of
consideration paid in connection therewith, were the result of arms-length
negotiation among the Company, Cvalim and Dash Cable Industries (Israel) Ltd.
("Dash"). For further information with respect to the acquisition, reference is
made to the Asset Purchase Agreement, dated October 2, 1998, among COZ, Cvalim
and Dash, as amended by Amendment No. 1 thereto, dated December 31, 1998, which
are Exhibits 1 and 2, respectively, hereto and which are incorporated herein by
reference.
In connection with the acquisition, COZ and Bank Hapoalim B.M. (the
"Bank") entered into Addendum No. 1 to the Application to Open an Account, dated
December 29, 1998 (the "Addendum"). The Addendum provides for total borrowings
of up to $83.0 million. Advances under the Addendum have been used to finance
the acquisition and to pay related fees and expenses and will also be used to
provide for working capital requirements of COZ.
The Addendum provides for a term loan of up to $53.0 million and a
revolving line of credit of up to $30.0 million. Interest on amounts outstanding
under the term loan component is based upon either (a) LIBOR plus 1.0% per
annum, (b) the average of the gross yield to maturity of all the series of fixed
rate bonds issued by the State of Israel, listed on the Tel-Aviv Stock Exchange
Ltd. and having a remaining maturity of 18-30 months, plus 1.3% per annum, or
(c) the Bank's wholesale rate of interest for credits linked to the Israeli
consumer price index (before application of any margin) for the purpose of
determining the Bank's rate of interest in respect of cost of living index-based
loans, plus 0.7% per annum. Interest on amounts outstanding under the revolving
line of credit is based upon either (a) LIBOR plus 0.4% per annum, (b) the
Bank's prime rate minus 1.1% per annum, or (c) a rate to be agreed upon by the
parties. Advances granted under the term loan component have a 10-year term. The
indebtedness incurred under the Addendum is secured by, among other things, a
blanket lien on the assets of COZ.
For further information with respect to the Addendum, reference is made
to Exhibit 3 hereto, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a), (b) Not applicable.
(c) EXHIBITS
Exhibit 1 Asset Purchase Agreement, dated October 2, 1998, among COZ, Cvalim
and Dash.
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Exhibit 2 Amendment No. 1 to Asset Purchase Agreement, dated December 31,
1998, among COZ, Cvalim and Dash.
Exhibit 3 Addendum No. 1 to the Application to Open an Account, dated
December 29, 1998, between COZ and the Bank.
Exhibit 4 Press release issued January 5, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ALPINE GROUP, INC.
By: /S/ DAVID S. ALDRIDGE
------------------------------
David S. Aldridge
Chief Financial Officer
Dated: January 15, 1999
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EXHIBIT INDEX
Exhibit 1 Asset Purchase Agreement, dated October 2, 1998, among COZ, Cvalim
and Dash.
Exhibit 2 Amendment No. 1 to Asset Purchase Agreement, dated December 31,
1998, among COZ, Cvalim and Dash.
Exhibit 3 Addendum No. 1 to the Application to Open an Account, dated
December 29, 1998, between COZ and the Bank.
Exhibit 4 Press release issued January 5, 1999.
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EXHIBIT 1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made the 2nd day of October 1998.
BETWEEN:
CVALIM -The Electric Wire and Cable Company of Israel Ltd. ("Cvalim"), an
Israeli company having its headquarters at Migdalei Hakiryon, Kiryat Bialik,
27103, and Dash Cable Industries (Israel) Ltd. ("Dash"), an Israeli company with
its principal place of business at Industrial Zone C, Nazaret-Illit, 17000
(together, Cvalim with Dash, hereinafter jointly and severally referred to as
"Seller").
AND
Cables of Zion United Works Ltd., an Israeli company having its headquarters in
Rishon Lezion.
WHEREAS Seller is engaged in the business of designing,
production, marketing, distribution and sale of optical
fiber cable, copper and aluminum wire cable and
conductors of various types at factories located in
Haifa, Bet-Shean, Maalot, Upper Nazareth and Carmiel, and
at other properties located in Tel-Aviv (finished goods
warehouse) and, Kiryat Bialik (management offices) (the
"Cable Business"); and
WHEREAS Seller is willing to sell and the Purchaser is willing to
acquire the Assets, as defined in sub-Clause 1.1 below, on the
terms and conditions contained in this Agreement so that the
Purchaser may, upon closing of the transactions contemplated
by this Agreement, continue to operate the Cable Business as a
going concern;
Now, Therefore, the Parties Hereby Declare, Agree and Covenant as
Follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the contrary intention appears:
1.1.1 "Assets" means all of Seller's right, title, and
interest in, under and to the assets of Seller,
whether tangible or intangible, used or held for
use in the conduct of the Cable Business wherever
such assets are located and whether or not any
such assets have any value for accounting
purposes, save however the Excluded Assets, and
including without limitation, the following:
1.1.1.1 all machinery and equipment, spare parts
and supplies, motor vehicles,
accessories, tooling, tools dies,
furniture, including such
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items paid for but not yet delivered to
Seller, including, without limitation,
the items on SCHEDULE 1.1.1.1 (save land
and buildings) ("Form 11" "[Alef][Yod]
[Samekh][Pe][Vav][Tet]" for accounting
purposes) attached hereto and updated as
of June 30th, 1998 (the "Equipment");
1.1.1.2 all of Seller's inventories, including
finished products, samples, work-in
process, raw materials (including raw
materials in transport or transit),
packaging materials, auxiliary
materials, spare parts, maintenance
materials, supplies, drums and engineer
stores (the "Inventory"). A preliminary
Schedule 1.1.1.2 which shall list the
Inventory used by Seller to determine
the Estimated Inventory Adjustment
pursuant to Clause 4.2 shall be
delivered by Seller to Purchaser with
the delivery of the Estimated Inventory
Adjustment. The final Schedule 1.1.1.2
which shall list the Inventory as of the
Closing Date shall be delivered to the
Purchaser by Seller fifteen (15)
Business Days after the Closing Date.
1.1.1.3 subject to Clauses 9.9 and 11.1, all of
Seller's rights in and to contracts,
arrangements, agreements, rights under
existing leases for real properties in
Tel-Aviv, Kiryat Bialik, Haifa (Ashbar
and Paz leases) and Carmiel (amended
according to SCHEDULE 1.1.1.3 hereto),
leases for personal properties,
transferable licenses and purchase
orders for the sale or purchase of goods
or services with suppliers and
customers;
1.1.1.4 all of Seller's correspondence,
engineering, maintenance, operating and
production records, advertising
materials, customer lists, cost and
pricing information, supplier lists,
catalogues, quality control records and
manuals, copies of personnel records and
customer credit records, and copies of
Seller's records and correspondence in
connection with the Cable Business (the
"Records"). For the sake of clarity, if
Seller requires original of any of the
Records, Seller shall only be obliged to
supply copies of such Records, however
at Purchaser's request, Seller shall
make available to Purchaser copies
certified by counsel or originals of
Records reasonably required by Purchaser
for legal or other processes where same
is necessary;
1.1.1.5 all of Seller's trademarks, trade names,
service marks and service names, and
registrations and any applications for
registration thereof and foreign
counterparts thereof and licenses with
respect thereto, including, without
limitation, those listed in SCHEDULE
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1.1.1.5 (the "Trademarks"). Schedule
1.1.1.5 shall be prepared as of the date
hereof and shall be updated by Seller,
only for changes occurring in the
ordinary course of business, for the
Closing Date and incorporated as part of
this Agreement;
1.1.1.6 all of the Seller's inventions,
discoveries, trade secrets,
improvements, formulae, practices,
processes, methods, technology and know-
how, whether or not patented or
patentable, including any of the
foregoing in the process of development,
and any similar proprietary rights and
licenses with respect thereto owned by
Seller, together with all product
specifications, drawings, blueprints,
research and development files, records
and laboratory books, (the "Know-How");
Trademarks and Know-How are hereinafter
collectively referred to as the
"Intellectual Property Rights";
1.1.1.7 subject to Clause 6, all of Seller's
prepaid items and expenses, rights
deriving from the Approved Enterprise
status of Seller's factories (save (i)
grants received by Seller and recorded
in its books and (ii) all rights to
receive money in respect of grants
relating to Approved Enterprises and to
the extent such amounts are or were due
to Seller on or before the Closing Date
relating to performance of its
obligations to the Investment Center
prior to the Closing Date and recorded
in the books of Seller in respect
thereof), customer deposits (other than
customer deposits that in effect
represent payments for products shipped
by Seller prior to Closing), rights of
offset and credits relating to the
Inventory, Equipment or Intellectual
Property Rights (other than (i) rights
of offset or credits that are
respectively deducted from the valuation
of Inventory and the calculation of the
Inventory Adjustment and (ii) rights of
offset or credits relating to Inventory
that are compensatory in nature and the
amounts related thereto are not
reflective of a reduction in the value
of the Inventory to which they relate);
1.1.1.8 all of Seller's computer and automatic
machinery, software, firmware, programs
and source disks, program documentation,
tapes, manuals, forms, guides and other
materials with respect thereto and any
licenses and other agreements with
respect thereto;
1.1.1.9 all of Seller's goodwill and rights in
and to the names (A) "Cvalim", (B)
"Cvalim -The Wire and Cable Company of
Israel
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LTD", (C) "D.A.S.H. Cable Industries
(Israel) Ltd" and (D) "D.A.S.H." and any
derivatives of such names;
1.1.1.10 casualty insurance proceeds payable as a
result of the loss or destruction of any
Equipment.
Subject to Clauses 9.9 and 12.1 the term "Assets"
with respect to any date prior to the Closing Date
shall be deemed to refer to the assets of Seller
that would constitute the Assets hereunder if
Closing were to take place on that date.
1.1.2 "Agreement" shall mean this agreement and any
Schedule or Appendix attached hereto.
1.1.3 "Appendix" means an appendix of Schedule 8.1.1
hereto.
1.1.4 "Assumed Liabilities" shall have the meaning set
forth in Clause 7.1 hereof.
1.1.5 "Assumed Transferred Hedging Transactions" shall
mean the hedging, futures and option arrangements
or transactions that are to be assumed by Purchaser
as set forth on SCHEDULE 1.1.5 hereto.
1.1.6 "Assumed Redundancy Payments" shall have the
meaning set forth in Clause 11.5 hereof.
1.1.7 "Assumed Warranty Obligations" shall have the
meaning set forth in Clause 7.4.
1.1.8 "Business Day" shall mean a day on which most of
the banks in Israel and in the U.S. are opened for
business.
1.1.9 "Competitive Activity" means any activity involving
the carrying on a business in Israel directly or
indirectly competitive with the Cable Business.
1.1.10 "Closing Date" means the date of Closing determined
in accordance with Clause 3.1.
1.1.11 "Contracts" shall have the meaning set forth in
Clause 8 of Schedule 8.l.1.
1.1.12 "Customers' and Suppliers' Backlog shall mean
Seller's backlog of suppliers and customers set
forth on SCHEDULE 1.1.12 to be attached hereto
prior to the Closing in accordance with Clause
9.14.3.
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1.1.13 "Damages" shall have the meaning set forth in
Clause 8.3 hereof.
1.1.14 "Employees" shall have the meaning set forth in
Clause 9.4 hereof.
1.1.15 "Encumbrances" means debentures, mortgages, charges
(fixed or floating), pledges, liens, security
interests and other encumbrances.
1.1.16 "Environmental Liability" means Damages (whether or
not arising out of third-party claims and including
amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained
or suffered by Purchaser arising out or based
upon (a) environmental conditions occurring,
existing or arising prior to Closing, including
without limitation, the presence of, Environmental
Release of, threat of Environmental Release of or
exposure to Hazardous Materials at any property
owned, operated or leased by the Seller or in
connection with the Cable Business (whether into
air, soil, ground or surface waters on or off-site)
(" Environmental Conditions"); (b) arising from the
off-site transportation, storage, treatment,
recycling or disposal of Hazardous Materials
generated by the Seller prior to Closing or during
the Seller's tenure at any property owned, operated
or leased by the Seller or in connection with the
Cable Business or (c) any violation by Seller prior
to Closing of any Health Safety and Environmental
Laws applicable in Israel and in effect on or prior
to the Closing Date, provided, however, that Seller
shall not be responsible for Damages arising out of
or based upon the clean-up or remedy of any
pollution or damage to any property under
subsections (a) or (b) of this section unless such
clean-up or remedy (i) arises out of or is based
upon a third-proxy claim or action, or (ii) is
required pursuant to Health Safety and
Environmental Laws in effect on or prior to the
Closing Date.
1.1.17 "Environmental Release" shall mean any action or
omission whereby any substance is released,
spilled, leaked, discharged, disposed of, pumped,
poured, emitted, emptied, injected, leached, dumped
or allowed to escape into the air, ground or water.
1.1.18 "Estimated inventory Adjustment" shall have the
meaning set forth in sub-Clause 4.2 hereof.
1.1.19 "Exchange Rate" for any relevant date means the
representative rate of NIS to the US$ as published
by the Bank of Israel on the relevant date or if
such relevant date is not a business day, the last
business day prior to such relevant date.
1.1.20 "Excluded Assets" shall have the meaning set forth
in SCHEDULE 1.1.20 hereto.
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1.1.21 "Exempted Amount" shall mean an aggregate amount of
US$500,000 which Seller is exempted from satisfying
with regard to the indemnities provided both under
Clause 7.4 (product warranty claims) and Clause
8.6.1 (Seller's indemnities).
1.1.22 "Financial Statements" means the
consolidated balance sheet, statement of
income, changes in shareholders equity and
changes of cash flows of the Seller,
including the notes related thereto, for the
year ended 31 December 1997 (annual audited)
and for the period ended 30 June 1998
(interim reviewed), all prepared in
accordance with applicable law and Israeli
GAAP.
1.1.23 "Hazardous Materials" shall mean any
hazardous, toxic or polluting materials,
substances, wastes, pollutants or
contaminants (including, without limitation,
petroleum, petroleum products,
polychlorinated biphenyls, radioactive
materials, asbestos, or asbestos-containing
materials, lead) or any material regulated
by any Health Safety and Environmental Laws
in Israel.
1.1.24 "Inventory Adjustment" shall have the meaning set
forth in Clause 4 hereof.
1.1.25 "Insurance Coverage" shall have the meaning set
forth in Clause 18 of Schedule 8.1.1.
1.1.26 "Israeli GAAP" means the generally accepted
accounting principles as promulgated by the
Institute of Certified Public Accountants in Israel
as consistently applied by Seller.
1.1.27 "LG Agreement" shall mean the agreements between
Seller and LG Cable and Machinery Ltd. both dated
September 17th 1997 relating to the supply of Super
High Voltage Products to IEC and certain
Supplementary Technical Assistance committed by LG
Cable and Machinery Ltd.
1.1.28 "Long Term Financing" shall have the meaning set
forth in SCHEDULE 1.1.28 hereto.
1.1.29 "NMAC" shall mean the following non-majority
associated companies of Seller: (i) H.T.
Cable Ltd., (ii)Trans Security and
Technological Systems Ltd, and (iii) Eldor
Marketing Company Ltd.
1.1.30 "Net Estimated Adjustment" shall have the meaning
set forth in Clause 4 hereof.
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1.1.31 "Net Final Adjustment" shall have the meaning set
forth in Clause 4.3 hereof.
1.1.32 "Performance Guarantees" shall mean guarantees,
letters of credit, performance or bid bonds,
progress payment guarantees, down payment
guarantees, advance payment guarantees and other
similar items listed in SCHEDULE 1.1.32 hereto.
1.1.33 "Permits" shall mean all licenses and permits,
required under law for the operation of the Cable
Business and Assets; the absence of which may
materially and adversely affect the Cable Business
and/or
the Assets.
1.1.34 "Properties" shall mean the land and buildings in
which the various structures and facilities of the
Cable Business are located as set out in SCHEDULE
1.1.34.
1.1.35 "Purchase Price" shall mean the aggregate price to
be paid by the Purchaser for the purchase of the
Assets being US$ 50,000,000 payable in US$ PLUS the
Net Final Adjustment.
The Purchase Price shall be allocated as follows
(subject to the Inventory Adjustment):
<TABLE>
<CAPTION>
<S> <C>
Inventory - Cvalim and Dash US$21,600,000
Fixed Assets - Cvalim US$27,300,000
Fixed Assets - Dash US$1,100,000
Total US$50,000,000 __________
</TABLE>
1.1.36 "Redundancy Payments" shall have the meaning set
forth in Clause 9.5 hereof.
1.1.37 "Retained Liabilities" shall have the meaning set
forth in Clause 7.2 hereof.
1.1.38 "Schedule" means a schedule to this
Agreement.
1.1.39 "Super High Voltage Products" shall mean copper
conductor, lead-seathed, cross-linked polyethylene
insulated power cables, 161 KV 1200 square
millimeter conductor size compatible with the
technical requirements referred to in the LG
Agreement, all as ordered under same agreement.
1.1.40 "US$" shall mean United States Dollars.
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1.1.41 "Warranties" means the warranties and
representations of Seller and/or the
Purchaser, as the contest shall so admit;
1.2 INTERPRETATION
In this Agreement, unless the contrary intention appears:
1.2.1 words denoting the singular include the plural and
vice-versa;
1.2.2 words denoting individuals include corporations
and vice versa;
1.2.3 headings are included for convenience only and
shall not affect the interpretation of this
Agreement; and
1.2.4 reference to time and dates shall be construed in
accordance with the Gregorian Calendar.
2. SALE AND PURCHASE OF ASSETS
Seller hereby agrees to sell, assign, transfer and convey to the
Purchaser and Purchaser agrees to purchase, receive the assignment,
transfer and conveyance from Seller for the Purchase Price, the Assets
free from all Encumbrances other than the Encumbrances set forth on
SCHEDULE 2 (Investment Center Charge/s), all in accordance with the
terms and subject to the conditions of this Agreement, and Seller
agrees to transfer title and to deliver possession of the Assets to the
purchaser at Closing.
3. CLOSING DATE, PURCHASE PRICE AND RELATED MATTERS
3.1 Subject to the conditions set out in Clause 10 below being
fulfilled and subject to Clause 3.2 below, the Closing shall
take place at the offices of Zellermayer Pelossof Adv., at
10:00AM on November 30th, 1998 (the
"Closing Date").
3.2 Should the conditions set forth in Clause 10.1.11 (Controller)
and 10.1.11 (Contract) not be met before the Closing Date, the
Closing Date shall be postponed, to the fifth Business Day
following the date all the conditions set forth in Clause 10
are met but not later than December 31st, 1998.
3.3 This Agreement may be terminated (i) by mutual written consent
of Seller and Purchaser, (ii) by Seller or Purchaser, if less
than the minimum percentage of stockholders required by law
have failed to approve this Agreement at least twenty (20)
days before the Closing Date or, if their board of directors
will not have approved this Agreement within 20 days, (iii) by
Purchaser if the conditions set out in Clause 10 have not been
satisfied or waived by Purchaser on or before the Closing Date
as may be postponed pursuant to Clause 3.2 above or (iv) by
Purchaser or Seller
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if Closing shall not have occurred prior to December 31st,
1998. Notwithstanding clause (ii) and (iii) of the preceding
sentence, Purchaser or Seller, as the case may be, shall not
have the right to terminate of this Agreement if the
non-fulfillment of a condition is due to the failure of such
party to perform its obligations hereunder. If this Agreement
is terminated pursuant to the foregoing sentences, the
transaction contemplated by this Agreement shall be deemed
null and void, and neither party shall have any claim against
the other party or its respective officers or directors
arising from this Agreement, except damages arising from a
breach of this Agreement prior to such date.
3.4 At the Closing the following shall take place
simultaneously:
3.4.1 Purchaser shall make the payments referred to in
Clause 4 below.
3.4.2 Purchaser shall either (i) provide Seller with a
copy of an exemption from the Value Added Taxes
("VAT Taxes"), if any, resulting from the sale,
assignment or transfer of the Assets or (ii)
provide Seller with a cheque dated ten (10) days
after the end of the month in which the Closing
takes place payable to the Seller for the amount
of the VAT Taxes, if any, resulting from the sale,
assignment or transfer of the Assets.
3.4.3 Seller shall deposit with Purchaser for payment to
the Employees the amount of the special transfer
bonus provided for in the Special Collective
Agreement between Cvalim and the New General
Hisdatrut in Bet Shean and the Bet Shean Labor
Association dated May 15, 1998, and as applicable
to all the Employees, all as provided in SCHEDULE
3.4.3 (which will state the terms of Clause 6(a) of
said Special Collective Agreement). Upon such
deposit of said amount, the payment of said
transfer bonus shall become the sole responsibility
of Purchaser relating to said liabilities.
3.4.4 Each party hereto shall deliver to the other party
certified copies of appropriate resolution of the
shareholder and/or board of directors of each party
required to implement the transactions contemplated
by this Agreement, and each party shall provide a
legal opinion.
3.4.5 Seller shall execute, where required, and/or
deliver, inter alia, the following:
3.4.5.1 Validly issued VAT Invoice with respect
to the Assets and the amounts paid
therefor.
3.4.5.2 the approvals, consents and discharges
referred to in Clause 10.1 below, and
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3.4.5.3 A certificate from Seller in the form
attached hereto as SCHEDULE 3.4.5.3
(compliance certificate).
3.4.5.4 Seller shall transfer title (ownership
or leasehold) free and clear of all
Encumbrances (excluding Investment
Center Charges) and deliver possession
of the Assets to the Purchaser and
execute and deliver any document or
instrument reasonably required by
Purchaser to give full effect to such
transactions at the Closing.
3.4.5.5 Seller shall deliver to Purchaser a
valid certificate exempting the Seller
from withholding tax, failing which
Purchaser will withhold from the
Purchase Price the applicable
withholding tax.
3.4.5.6 Seller shall deliver to Purchaser a
valid certificate from an "authorized
officer" under Section 2 of Law of
Transactions of Public Bodies
(Enforcement of Bookkeeping and Payment
of Tax Debts) -- 1976.
3.4.6 Each Party shall execute and/or deliver to the
other any other document or instrument required to
be provided hereunder on or prior to the Closing.
4. CLOSING DATE PAYMENTS ADJUSTMENTS
On the Closing Date, if the Net Estimated Adjustment is greater than
zero, the Purchaser shall (i) pay to Seller the Purchase Price by wire
transfer of immediately available funds to the account or accounts
designated by Seller in writing at least five business days prior to
Closing and (ii) deposit an amount equal to the Net Estimated
Adjustment into an escrow account as provided in Clause 5 (the "Escrow
Account"). If the Net Estimated Adjustment is less than zero, the
Purchaser shall pay, on the Closing Date, to Seller the Purchase Price
LESS the amount of the Net Estimated Adjustment.
If the Purchase Price, as finally determined pursuant to this Clause 4,
exceeds the total of the amount paid to Seller at Closing plus any
amounts previously distributed to Seller by the Escrow Agent (save
amounts distributed to Seller by the Escrow Agent which represent
interest) (such excess being the "Purchase Price Excess"), then
Purchaser and Seller will direct the Escrow Agent to distribute the
amount of the Purchase Price Excess to the Seller together with
interest as contemplated by Clause 5 and will direct the Escrow Agent
to distribute any remaining amount in the Escrow Account to the
Purchaser. If the Purchase Price Excess exceeds the amount remaining in
the Escrow Account, then Purchaser will pay to Seller within five days
after the date the Purchase Price is finally so determined the amount
of such excess, plus interest at the rate of six percent (6%) per annum
on such amount accruing since the Closing Date.
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If the amount paid to the Seller at Closing plus any amount distributed
to Seller by the Escrow Agent exceeds the Purchase Price (such excess
being the "Purchase Price Overpayment") then Purchaser and Seller will
direct the Escrow Agent to distribute any remaining amount in the
Escrow Account to the Purchaser. If the Purchase Price Overpayment
exceeds the amount remaining in the Escrow Account, then Seller will
pay to Purchaser within five days after the date the Purchase Price is
finally so determined the amount of such excess, plus interest at the
rate of six percent (6%) per annum on such amount accruing since the
Closing Date.
As used herein:
"Inventory Adjustment" shall mean the amount equal to the difference
(positive or negative) between (x) the GAAP Value of the Inventory (in
NIS) on the Closing Date determined in accordance with Israeli GAAP
plus the Israeli GAAP value of down payments made by Seller on account
of Inventory items ordered but not delivered before Closing; and (y)
NIS 81,650,000, linked to the Consumer Price Index (with the base index
for June 1998 published on July 15, 1998 and the new index being the
one to be first published after the Closing Date). The Inventory
Adjustment shall be determined in NIS as aforesaid and shall be
converted to US$ according to the Exchange Rate on the Closing Date.
"GAAP Value" shall mean the book value of such item prepared in
accordance with Israeli GAAP and calculated using a consistent
methodology as noted in the Financial Statements and including the
effects, if any, of adjustments for the changes in the general
purchasing power of the New Israeli Shekel ("NIS") as measured by the
Israeli consumer price index.
"Net Estimated Adjustment" shall mean the Estimated Inventory
Adjustment (as defined in Clause 4.2).
4.1 On the Closing Date, Seller and Purchaser shall conduct a
detailed physical count of the Inventory (the "Physical
Count"). The Physical Count shall be conducted with full
cooperation through the parties' representatives and shall be
certified by the parties' CPA's in a joint protocol as having
been conducted in accordance with Israeli GAAP.
4.2 On or before two days prior to the Closing Date, Seller will
provide Purchaser with preliminary Schedule 1.1.1.2 setting
forth an estimate of the positive or negative Inventory
Adjustment (the "Estimated Inventory Adjustment"). Such
written estimate shall set forth the amounts necessary to
calculate the Inventory in accordance with Israeli GAAP.
4.3 Within thirty (30) days after the Closing Date, Purchaser
shall prepare and deliver to Seller a statement (the "Final
Adjustment Statement") setting forth and detailing the
Inventory Adjustment (the sum, positive or negative, of the
Inventory Adjustment set forth on the Final Adjustment
Statement being the "Net Final Adjustment". The
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Final Adjustment Statement shall be based on amounts prepared
in accordance with Israeli GAAP.
4.4 The Final Adjustment Statement shall be final, binding and
conclusive on the parties hereto unless Seller notifies
Purchaser in writing fifteen (15) days after the receipt on
the Final Adjustment Statement of a disagreement therewith
(which notice shall state with reasonable specificity the
reasons for any disagreement and the amount in dispute),
PROVIDED, that Seller may dispute the amounts on the Final
Adjustment Statement only on the basis that the Final
Adjustment Statement was not prepared in accordance with this
Clause 4 or that the amounts used to prepare the Final
Adjustment Statement were not determined in accordance with
Israeli GAAP.
4.5 In the event of such a dispute, Seller and the Purchaser shall
attempt in good faith to reconcile their differences and any
resolution by them as to any disputed amounts shall be final,
binding and conclusive ono the parties. If Seller and the
Purchaser are unable to resolve their disputes within twenty
(20) days of Sellers' written notice of dispute to the
Purchaser, the parties shall submit the items remaining in
dispute for resolution to Yizhaq Forer, CPA or another
mutually acceptable and recognized independent international
accounting with offices in Israel (the "Independent
Accountant") and with no affiliation with any of the parties,
and withing thirty (30) days after such submission, the
Independent Accountant shall determine and report to the
parties upon such remaining disputed items, and such report
shall be final, binding and conclusive on the parties hereto.
The Independent Accountant shall act as an expert and not as
an arbitrator. Such determination by the Independent
Accountants shall be limited to determining whether the Final
Adjustment Statement was prepared in accordance with this
Clause 4 or that the amounts used to prepare the Final
Adjustment Statement were not determined in accordance with
Israeli GAAP. If the Independent Accountant determines that
the Final Adjustment Statement was not prepared in accordance
with this Clause 4 or that the amounts used to prepare the
Final Adjustment Statement were not determined in accordance
with Israeli GAAP, the Independent Accountant shall provide to
the parties the corrected amounts that should have appeared on
the Final Adjustment Statement. The fees and expenses of the
Independent Accountant shall be borne by the party whose
position is not supported by the decision of the Independent
Accountant, unless otherwise determined by the Independent
Accountant.
5. THE ESCROW ACCOUNT
5.1 On the Closing Date, the amount required to be deposited into
an escrow account pursuant to Clause 4 shall be delivered to
The Trust Company of the Israel General Bank Ltd. (the "Escrow
Agent") which will hold and disburse the Escrow Amount in
accordance with this Clause 5. The Escrow Agent shall be
instructed to deposit the Escrow Amount in an interest bearing
account with the Israel General Bank Ltd.
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or institutions mutually agreed by Purchaser and Seller.
Interest on the entire balance of the Escrow Amount shall be
deemed to be part of the Escrow Amount.
5.2 The amount of the Net Final Adjustment not disputed by Seller
pursuant to Clauses 4.4 and 4.5 and any interest on such
amount shall be distributed to Seller or Purchaser, as the
case may be, upon written notification to the Escrow Agent
executed by the Purchaser and the Seller indicating the
allocation (between Purchaser and Seller) of the Net Final
Adjustment not in dispute. Any amount of the Net Final
Adjustment not distributed pursuant to the foregoing sentence
and any interest on such amount shall be distributed to Seller
or Purchaser, as the case may be, upon (i) written
notification to the Escrow Agent executed by the Purchaser and
the Seller indicating the allocation (between Purchaser and
Seller) of the remaining Net Final Adjustment or (ii) a
written determination by the Independent Accountant if
Purchaser and Seller are unable to agree as to the allocation
of the remaining Net Final Adjustment.
5.3 The fees and expenses of the Escrow Agent shall be equally
borne by the parties.
6. ALLOCATION OF EXPENSES AND CHARGES
Save as expressly stated otherwise in this Agreement, all Cable
Business operating expenses, including, but not limited to, (a) salary,
real and personal property taxes relating to the Assets (b) utility
charges, (c) rentals and service charges, (d) financial charges and
expenses relating to Performance Guarantees (e) down payments made by
Seller to suppliers recorded on the books and records of Seller, (f)
other amounts with respect to the Assets that (i) were prepaid by
Seller and for which Purchaser shall receive the direct benefit of
after Closing or (ii) are to be paid by Purchaser after Closing, shall
be prorated in accordance with Israeli GAAP. At Closing, as between
Seller and Purchaser, such charges relating to the period and/or
performance prior to and including the Closing Date shall be allocated
to and be the obligations of Seller and such charges relating to the
period and/or performance subsequent to the Closing Date shall be
allocated to and be the obligations of the Purchaser. On the Closing
Date, such prorations shall be based on actual amounts calculated in
accordance with Israeli GAAP (the "Actual Prorated Amounts"), and, to
the extent actual amounts are not available, amounts estimated by
Seller based on actual amounts for the most recent comparable billing
period and calculated in accordance with Israeli GAAP (the "Estimated
Prorated Amounts"). Purchaser and Seller shall settle and pay amounts
owing to each other based on Actual Prorated Amounts on the Closing
Date. At the Closing Date the Estimated Prorated Amounts shall be
transferred by Seller or by Purchaser, as the case may be, to the
Escrow Agent who shall deposit same in an escrow account (the "Second
Escrow Account") as provided below.
The Escrow Agent will hold the Estimated Prorated Amounts in an
interest bearing account with the Israel General Bank or institutions
mutually agreed by Purchaser and Seller.
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Interest on the entire balance of the Second Escrow Amount shall be
deemed to be part of the Estimated Prorated Amounts.
When actual amounts become known, the Estimated Prorated Amounts shall
be recalculated by Purchaser and Seller, and Purchaser and Seller shall
make additional payment, if necessary and as the case may be, to the
Escrow Agent so that the corrected prorated amount shall have been paid
by each of Purchaser and Seller, as the case may be, promptly after
Closing, but in no event later than thirty (30) Business Days after
Closing. The amount of the Estimated Prorated Amounts not disputed by
Seller or Purchaser and any interest on such amount shall be
distributed to Seller or Purchaser, as the case may be, upon written
notification to the Escrow Agent executed by the Purchaser and the
Seller indicating the allocation (between Purchaser and Seller) of the
amount not in dispute.
In the event of a dispute, Seller and the Purchaser shall attempt in
good faith to reconcile their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive on the
parties. If Seller and the Purchaser are unable to resolve their
disputes within twenty (20) days of a written notice of dispute by one
party to the other, the parties shall submit the items remaining in
dispute for resolution to the Independent Accountant and within thirty
(30) days after such submission, the Independent Accountant shall
determine and report to the parties upon such remaining disputed items,
and such report shall be final, binding and conclusive on the parties
hereto. The Independent Accountant shall act as an expert and not as an
arbitrator. Such determination by the Independent Accountant shall be
limited to determining the adjustment of the Estimated Prorated Amounts
based on the actual amounts available in accordance with Israeli GAAP.
The Independent Accountant shall provide to the parties and the Escrow
Agent the corrected amounts. The fees and expenses of the Independent
Accountant shall be borne equally by Seller and Purchaser.
Any amount of the Estimated Prorated Amounts not distributed pursuant
to the foregoing sentence and any interest on such amount shall be
distributed to Seller or Purchaser, as the case may be, upon (i)
written notification to the Escrow Agent executed by the Purchaser and
the Seller indicating the allocation (between Purchaser and Seller) of
same or (ii) a written determination by the Independent Accountant if
Purchaser and Seller are unable to agree as to the allocation of the
remaining Estimated Prorated Amounts.
Amounts payable pursuant to this Clause 6 shall be payable in U.S.
Dollars based on the Exchange Rate on (i) the date of each such
payment, if such Exchange Rate is known at the time of Closing, or (ii)
the Closing Date, if such Exchange Rate is not known at the time of
Closing and such amounts shall bear interest at the rate of six percent
(6%) on such amount accruing since the Closing Date.
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7. ASSUMPTION OF LIABILITIES
7.1 At Closing, Purchaser shall assume and agree to be responsible
for (i) the liabilities and obligations arising under the
terms of the Contracts (as defined in Section 8 of Schedule
8.1.1) and the Long Term Financing pursuant to the terms of
Schedule 1.1.28 attached hereto (the "Assumed Contracts") and
disclosed on the schedules hereto to the extent such liability
or obligation relates to any period after the Closing Date but
excluding liabilities and obligations resulting from a breach
or default by the Seller prior to the Closing Date; (ii) the
liabilities and obligations resulting from a breach or default
by Purchaser under the Assumed Contracts, which breach first
occurs after the Closings Date, (iii) subject to Clause 7.4,
the Assumed Warranty Obligations, (iv) liabilities and
obligations deriving from the Approved Enterprise status of
Seller's factories, other than liabilities and obligations
resulting from Seller's failure to comply with the
requirements imposed by the Investment Center on Seller that
were required to be complied with on or before the Closing
Date, (v) liabilities and obligations under Performance
Guarantees maintained by Seller on behalf of Purchaser to the
extent such obligations and liabilities arise from or relate
to breaches first occurring after the Closing Date, (vi) to
the extent disclosed to Purchaser pursuant to Clause __of
Schedule 8.1.1, payment obligations under letters of credit
issued by Seller relating to raw materials received by
Purchaser in the ordinary course of business after the Closing
Date and not included in the calculation of the Inventory
Adjustment, (vii) the Assumed Transferred Hedging
Transactions, (viii) purchase orders for the sale of products
to customers or for the purchase of raw materials from
suppliers and agreements for other products and services used
in the operation of the Cable Business that are (A)
outstanding on the Closing Date, (B) which were entered into
the ordinary course of business consistent with the past
practice of the Cable Business and (C) subject to Clause 9.15,
which are not required to be disclosed on the Schedules to
this Agreement and (ix) the Assumed Redundancy Payments
(collectively, (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii) and (ix), the "Assumed Liabilities"). The Assumed
Liabilities shall exclude any liabilities and obligations
arising under contracts the assignment of which pursuant to
this Agreement is not consented to by the other parties to
same contracts, in which case such liabilities shall be deemed
part of the Retained Liabilities, only to the extent that
Purchaser was unable to act in accordance with Clause 11.1 (a)
due to limitation contained in the terms of such contracts.
7.2 Other than the Assumed Liabilities, Purchaser shall not assume
or be obligated to pay, perform or otherwise assume or
discharge any obligations, liabilities or claims, including,
without limitation, tax liabilities, product liability claims,
warranty claims, Environmental Liabilities (subject to Clause
7.5 below), Redundancy Payments which are not transferred
pursuant to Clause 9.5 herein, employee claims and any claims
on SCHEDULE 7.2, whether due or become due, whether accrued,
whether or not related to the Cable Business and whether
direct or indirect, known or unknown, or absolute, contingent
or otherwise existing on the Closing Date or arising out of
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any transactions entered into or state of facts existing, or
the use, ownership, possession or operation of the Assets or
conduct of the Cable Business, prior to the Closing Date (all
such liabilities and obligations being "Retained
Liabilities").
7.3 Purchaser shall be responsible for the liability and
obligations first arising after the Closing Date out of the
use, ownership, possession or operation of the Assets or the
conduct of the Cable Business by Purchaser after the Closing
Date, but excluding the Retained Liabilities. Without limiting
the generality of the foregoing, if Inventory, or any partial
order for Inventory, is received after the Closing Date and
the cost of such Inventory (including, freight, customs and
insurance) is included in the calculation of the Inventory
Adjustment, then Seller shall remain obligated to discharge
any payment obligations (including freight, customs, and
insurance) relating to such Inventory.
7.4 If, following the Closing Date, any customer of Seller makes a
valid product warranty claim with respect to defective product
shipped by Seller prior to the Closing Date, Purchaser shall
have the right and obligation (the "Assumed Warranty
Obligation") to satisfy Seller's warranty obligation for such
defective product. Seller shall promptly reimburse Purchaser's
cost incurred in satisfaction of such warranty claims, subject
to the Exempted Amount.
7.5 The Seller shall be liable for, perform, pay and
discharge, when due, the Retained Liabilities.
Notwithstanding the aforesaid, Environmental Liabilities
which although arising out of or based upon Environmental
Conditions first occurring, existing or arising prior to the
Closing Date, but are then exacerbated or aggravated by
activities of the Purchaser after the Closing Date, shall be
pro rated between the parties according to general principles
of tort law.
8. WARRANTIES
8.1 (a) Seller hereby represents and warrants to the
Purchaser that, save as expressly excepted in this
Agreement and the relevant Schedules hereto, each
of the statements made in SCHEDULE 8.1.1 hereto is
correct and complete.
(b) Purchaser hereby represents and warrants to the
Seller that save as expressly excepted in this
Agreement, each of the statements made in
subclauses (i) through (vi) herein are correct and
complete:
(i) The Purchaser has the corporate power
and full corporate authorization to
enter into this Agreement and to fulfill
its obligations with respect thereto.
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(ii) Except as disclosed on SCHEDULE 8.1.2.2
no consent, approval, authorization of,
or designation, declaration, notice to
or filing with any governmental
authority or other persons or entities
is required in connection with the
execution, delivery or consummation of
the transactions contained in this
Agreement.
(iii) At and after Closing, Purchaser believes
that it will have the financial
resources to fulfill its obligations
under this Agreement and the
transactions contemplated hereby.
(iv) purchaser recognizes that the Cable
Business is conducted in Israel and that
it has two primary customers and that
the Purchaser is fully aware of the
business and economic environment in
Israel.
(v) Purchaser has not employed, nor is
subject to any claim of, any broker,
finder, consultant or other intermediary
in connection with the transactions
contemplated by this Agreement who might
be entitled to a fee or commission upon
the consummation of the transactions
contemplated hereby.
8.2 All Warranties given by the Seller and the Purchaser:
8.2.1 Shall remain in full force and effect as of
execution hereof and after the Closing Date,
subject to updates pursuant to Clause 9.15 below;
and
8.2.2 are given as at the date of this Agreement and as
at the time of Closing, except Warranties which
address matters only as of a particular date which
are given as of such date.
8.3 Seller shall indemnify the Purchaser against and hold it
harmless from any and all losses, damages and liabilities (or
claims or actions in respect thereof) ("Damages") incurred by
Purchaser and arising out of or resulting from any
misrepresentation, inaccurate Warranty and/or breach of a
Warranty, under this Agreement, including all appendices and
schedules attached hereto, any claim asserted with respect to
the Retained Liabilities or Seller's failure to perform, pay
or discharge the Retained Liabilities when due or any
Environmental Liability. If Seller is obligated to indemnify
Purchaser hereunder, Seller shall pay the amount to which the
Purchaser shall be entitled. If Seller fails to pay all or any
part of any indemnification obligation when due, the Seller
shall also be obligated to pay interest on the unpaid amount
for such day during which the obligation remains unpaid at the
rate of 6% per annum together with linkage to the consumer
price index for the respective period.
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8.4 Purchaser shall indemnify the Seller against and hold it
harmless from any and all Damages incurred by Seller and
arising out of or resulting from any misrepresentations,
inaccurate Warranty and/or breach of a Warranty, under this
Agreement, including all appendices and schedules, any claim
asserted with respect to the Assumed Liabilities or
Purchaser's failure to perform, pay or discharge the Assumed
Liabilities when due. If Purchaser is obligated to indemnify
Seller hereunder, Purchaser shall pay the amount to which the
Seller shall be entitled. If Purchaser fails to pay all or any
part of any indemnification obligation when due, the Purchaser
shall also be obligated to pay interest on the unpaid amount
for each day during which the obligations remains unpaid at
the rate of 6% per annum together with linkage to the consumer
price index for the respective period.
8.5 No claim for indemnification may be brought pursuant to Clause
8.3-8.4 if such claim has been expressly waived in writing by
the party seeking indemnification.
8.6 The following shall be the governing principles for
indemnification claims pursuant to Clause 8.3-8.4 of this
Agreement:
8.6.1 Subject to sub-clauses 8.6.2 and 8.6.3, claims for
indemnification pursuant to Clause 8.3 or 8.4 for
the inaccuracy or breach of Purchaser's or
Seller's Warranties, must be made within a period
of twenty four (24) months (the "Time Limit") from
the Closing Date. Such claims shall also be
subject to the Exempted Amount. Notwithstanding
the foregoing, the Time Limit and the Exempted
Amount shall not apply to Seller's Warranties in
Sections 1, 2, 4, 12 and 19 of Schedule 8.1.1.
8.6.2 Except for time limits imposed by law, the Time
Limit and the Exempted Amount shall not apply for
submitting any claim which is the result of a
Warranty which when made by Seller was fraudulent
or known to be incorrect.
8.6.3 The party (the "Indemnified Party") submitting a
claim hereunder shall, within thirty (30) days
after the Indemnified Party has knowledge of such
claim, notify the other party (the "Indemnifying
Party") in writing of the claim for
indemnification, and/or of all matters known to
the Indemnified Party which are likely to give
rise to the right to indemnification hereunder,
specifying in detail the basis of such claim, the
facts pertaining thereto and, if known, the
amount, or an estimate of the amount, of the
liability arising therefrom. Failure to provide
such notice shall not relieve the Indemnifying
Party of any liability hereunder (except to the
extent that the Indemnifying Party has suffered
actual prejudice thereby). The Indemnified Party
shall provide the Indemnifying Party as promptly
as practicable thereafter all information and
documentation necessary to support and verify the
claim asserted.
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8.6.4 The Indemnifying Party shall have the right,
exercisable upon written notice to the Indemnified
Party within thirty (30) days of the receipt from
the Indemnified Party of notice of a third party
claim in which indemnity may be sought hereunder,
to defend and, subject to sub-Clause 8.6.6 below,
control the settlement of any third such party
claim through counsel of its own choosing at its
own expense, PROVIDED (I) the Indemnifying Party
agrees in writing to be solely obligated to satisfy
and discharge such claim, (ii) except for claims
which involve (and continue to involve) solely
monetary damage, the defense or settlement of such
claim will not, in the reasonable judgment of the
Indemnified Party, have any continuing adverse
effect on the business of the Indemnified Party,
and (iii) the Indemnifying party provides the
Indemnified Party with reasonable evidence of the
ability of the Indemnifying Party to satisfy the
full amount of any adverse monetary judgment that
may result. In the event that the conditions
described in the foregoing proviso cease to be
satisfied, the Indemnifying Party's right to defend
any such thirty party claim shall terminate until
such conditions are satisfied.
8.6.5 The Indemnifying Party or the Indemnified Party, as
the case may be, shall have the right to
participate in (but not control), at its own
expense the defense of any third party claim which
the other is defending as provided in this
Agreement.
8.6.6 The Indemnifying Party, if it shall have assumed
the defense of any third party claim as provided
hereunder, shall not consent to a settlement of or
the entry of any judgment arising form any such
third party claim without the prior written
consent of the Indemnified Party if such
compromise or settlement (I) commits the
Indemnified Party to take, or to forbear to take
any action, (ii) does not provide for a complete
release by such third party of the Indemnified
Party or (iii) includes any statement as to or an
admission of fault, wrongdoing, guilt, culpability
or failure to act by or on behalf of the
Indemnified Party.
8.6.7 If the Indemnifying Party does not assume the
control of the defense of a third party claim
pursuant to sub-Clause 8.6.4, the Indemnified Party
shall have the right to defend such third party
claim with counsel of its own choosing and
reasonably acceptable to the Indemnifying Party (or
if such third party claim will be covered by the
Indemnifying Party's insurance and the carrier of
such insurance policy expressly requires counsel
acceptable to it, counsel reasonably acceptable to
such insurance carrier) and to settle any third
party claim with the written consent of the
Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
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8.6.8 Whether or not the Indemnifying Party chooses to
participate in the defense or prosecution of a
third party claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof
and shall furnish all records, information, and
testimony, and attend at such conferences,
proceedings, hearings, trials and appeals, as may
be reasonably requested in connection therewith.
9. OBLIGATIONS PRIOR TO CLOSING
From and after the date hereof, and pending Closing, the parties agree
that:
9.1 The Purchaser and Seller shall promptly, with the fullest
cooperation between them, and in addition to any other
specific matters referred to herein, jointly prepare
applications which are required for the transaction
contemplated herein to include, without limitation, the
applications to the Controller of Restrictive Trade
Practices (the "Controller"), the Ministry of the
Environment and to the Ministry of Health for the re-
issue of permits and licenses, and the Investment Center
as referred to in Clause 10.1 below, or which is
necessary for the purchase of Assets and conduct of the
Cable Business by the Purchaser and will use their best
endeavors to obtain such consents, permits, licenses and
benefits, or to the extent any such consents have been
obtained prior to the date hereof, they will use their
best endeavors to maintain until Closing such consents,
permits and licenses, including without limitation
providing any additional materials or information which
may be required in that connection. Seller undertakes to
fully cooperate with Purchaser in obtaining an exemption
from the VAT Taxes. Seller and Purchaser shall equally
share the cost of engaging Prof. Swary to prepare the
economic study required to obtain said approval of the
Controller and pursue same, estimated at a total of US$
40,000.
9.2 Seller undertakes to use its best endeavors to continue
operating the Cable Business in the ordinary course consistent
with past practice, comply with all existing orders from
Seller's customers, promote and market its products and to
compete for tenders consistent with past practice. Seller
shall promptly notify Purchaser in writing if Seller needs to
deviate from said mode of operation. This Clause shall not
derogate in any way from Clause 10.2 below and Schedule 8.1.1.
9.3 Subject to Clause 12.6, Seller shall, at Closing provide duly
authorized resolutions authorizing the changes of its and its
associated companies names so that the names (A) "Cvalim", (B)
"Cvalim -The Wire and Cable Company of Israel LTD", (C)
"D.A.S.H Cable Industries (Israel) Ltd" and (D) "D.A.S.H." and
any derivatives of such names do not appear in its name or any
of its associated company's names (including Barak Cables
Holding Ltd.). Seller shall procure that a power of attorney
for purposes of name changes, in the form and substance
reasonably acceptable to Purchaser, is handed over to the
Purchaser at Closing. In addition to its obligations under the
preceding sentences above, Seller shall take all actions
necessary to
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immediately after Closing, change its name used in the
listings of companies at Tel Aviv Stock Exchange ("TASE") so
that the term "Cvalim" does not appear in the name of Seller
used in the listings of companies at TASE.
9.4 At Closing, all of Seller's existing employees shall be made
available by the Seller to the Purchaser on their existing
terms and Purchaser shall continue to employ such employees
subject to the same terms and conditions currently applicable
thereto respecting all accrued rights of employees and the
Collective Agreements applicable to Seller will apply to the
Purchaser both towards the employees, and Worker
Organizations.
9.5 Seller is solely liable for all of the employment and all
other benefits and payments of any kind (other than sick leave
payments) due to all Seller's Employees for the period through
the Closing under such Employees' terms and conditions of
employment and retirement whether under any collective
bargaining or personal agreements and arrangements or under
any applicable laws, practices and procedures ("Applicable
Law"), including, without limitation, recreation and holiday
payments (including accrued but unused holiday and vacation
leave), payments into Seller's severance payment fund,
manager's insurance policies, payments towards Employees'
unemployment, disability and health insurance, education fund
and pensions or provident funds, payments toward national
insurance, professional literature payments, any severance
payments to which senior personnel are entitled, any taxes
payable in respect of salaries and benefits paid/to be paid by
Seller to the Employees (to the extent not withheld or
transferred to the Tax Authorities) ("the Redundancy
Payments"). Purchaser shall request that each key Employee
that enters into an employment agreement with Purchaser prior
to the date hereof include a provision in such employment
agreement acknowledging the termination of Seller's obligation
for the Redundancy Payments to such key Employees upon
Closing, provided, that Purchaser shall not be obligated to
negotiate or make any concessions to such Employee as an
incentive for such Employee to include such an acknowledgment.
On or prior to Closing Date, Seller agrees to procure the
transfer to the Purchaser of the money equivalent to the
Redundancy Payments. For the sake of clarity, it is hereby
provided that Seller shall not be required to fund Redundancy
Payments that are first imposed after the Closing and
constitute a change in the Applicable Law existing before the
Closing.
Seller shall transfer to Purchaser the Redundancy Payments set
forth on SCHEDULE 9.5 hereto as adjusted for the Closing by
the parties' CPAs using the same methodology used in
preparation of Schedule 9.5 in accordance with Israeli GAAP.
In the event the two accounting firms mentioned above cannot
agree on the update of Schedule 9.5, two accounting firms
shall be finally determined by the Independent Accountant
referred to in Clause 4.5 regarding the settlement of the
dispute shall apply, mutatis mutandis. It is hereby stated
that, in addition to the transfer of Purchaser's name of the
Mivtachim, Taoz, Tadiran, Simon and Visel, the Fenix Central
funds and any
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other fund, the amount required to be funded under Schedule
9.5 shall in any event not fall below the total of the
respective amount recorded in Seller's books in accordance
with Israeli GAAP plus NIS3.6m. It is further agreed that
notwithstanding anything to the contrary herein, with respect
to those specific Redundancy payments listed in Schedule 9.5,
Seller shall not have any further liability than as shall be
specified in said schedule. For the avoidance of doubt Seller
shall have no obligation with respect to "prior notice" or
"adjustment grants" to managers. Purchaser shall apply in good
faith any excess Redundancy Payments transferred pursuant to
Schedule 9.5 as credit for additional Redundancy Payments
Seller may be obligated to pay Purchaser pursuant to this
Agreement.
The attachment of Schedule 9.5 shall be deemed to be
acknowledgment of Seller that the methodology applied in
calculating the amounts included therein should be employed by
Seller.
9.6 Seller will use all best efforts to preserve the business
organization of Seller intact, to keep available to Purchaser
the present officers and Employees of Seller, and to preserve
for Purchaser the good will of the suppliers, customers and
others having business relations with Seller.
9.7 Subject to the following, Seller undertakes that at the
Closing the Warranties of Seller contained in this
Agreement shall be true and correct as though such warranties
were made on, as of, and with reference to the Closing, it
being understood that Seller is entitled to update certain
Schedules and Appendices pursuant only to Clause 9.15 below.
Without derogating from the aforesaid, Seller will promptly
notify Purchaser in writing of any event or fact which
represents or is likely to cause breach of any of its
warranties, covenants or agreements and shall promptly advise
Purchaser in writing of the occurrence of any condition or
development (exclusive of general economic factors affecting
business in general) of a nature that is or may be material to
the Cable Business or Assets of Seller.
9.8 Seller shall maintain in full force and effect the Insurance
Coverage, subject only to variations required by the ordinary
operations of its business, or else will obtain, prior to the
lapse of any such policy, substantially similar coverage with
insurers of recognized standing. Seller shall promptly advise
Purchaser in writing of any change of insurer or type of
coverage in respect of its policies.
9.9 It is understood and agreed that the transfer of rights or
obligations in or to the contracts specified in SCHEDULE 9.9,
may be subject to consents of third parties and to conditions
which might be attached thereto. Purchaser and Seller (i)
agree to cooperate and satisfy reasonable third party's
requirements, in order to obtain any third party consent
required to transfer and assign same to Purchaser, and
Purchaser (ii) agrees to use its reasonable endeavors to
provide the customers on SCHEDULE 9.9(ii) with comfort
regarding its financial standing and continued commitment to
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the Cable Business after Closing, and (iii) agrees to provide
the suppliers on SCHEDULE 9.9(iii) with a reasonable financial
guarantee. Seller agrees not to disclose the terms of this
Clause to the third parties mentioned in this section.
Notwithstanding the foregoing, Purchaser shall not be required
to provide any Performance Guarantee for any contract for
which Seller has received all of the benefits of such
contract. Purchaser shall only be required to provide a pro
rata portion of any Performance Guarantee required under any
contract (each a "Partially Performed Contract") for which
Seller has received a portion of the benefits of such
contract. Seller agrees to maintain a pro rata portion of any
existing performance guarantee required under any Partially
Performed Contract until Seller's portion of such contract has
been satisfied. Should the respective third party insist on
having one Performance Guarantee, the
aforesaid prorating shall be made as between Seller and
Purchaser.
On or as soon as practicable after the Closing Date (not to
exceed thirty (30) days), Purchaser shall replace any
Performance Guarantee for any Assumed Contract for which
Purchaser will receive all the benefits of such Assumed
Contract after Closing.
9.10 Seller shall not, and shall not authorize or permit any of its
directors, officers, employees, agents or representatives,
directly or indirectly, to (i) solicit, initiate, encourage or
facilitate or furnish or disclose information in furtherance
of any inquiries or the making of any proposal with respect to
the acquisition of all or a major part of the Assets or the
Cable Business or all or substantially all of the capital
stock of Cvalim or Dash in a single transaction or series of
related transactions (each, an "Acquisition Proposal"), (ii)
engage in negotiations or discussions concerning an
Acquisition Proposal, (iii) agree to recommend any Acquisition
Proposal or (iv) enter into any agreement or understanding
regarding an Acquisition Proposal.
9.11 Seller shall take all actions necessary to convene at least 10
days before Closing a meeting of the stockholders of Seller to
consider and vote upon approval of this Agreement and the
transactions contemplated hereby.
9.12 Seller attaches hereto as SCHEDULE 9.12 the written
undertaking of Barak Cables Holding Ltd, being the beneficial
owner of the majority of the issued and outstanding voting
capital stock of the Seller, to exercise the voting rights
attached to its shares in the Seller and to instruct its duly
appointed attorneys-in-fact to exercise the voting rights
attached to its shares of the Seller, at any meeting of the
shareholders of the Seller and any postponement thereto at
which the matters coming before such meeting to vote (i) in
favor of this Agreement and the transactions contemplated
hereby, (ii) against any action or agreement the purpose or
effect of which would be to impede, interfere or discourage
Closing, and (iii) against any action the taking of which
would constitute a breach by Seller of any of its
representations, warranties, covenants or agreements contained
in this Agreement.
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9.13 - deleted.
9.14 Seller will provide Purchaser on a current basis and at least
two weeks prior to Closing a written description of
any items that Seller wishes to add to the following
Schedules and Appendices as an update for the Closing:
9.14.1 Schedule 1.1.32 indicating any additional
Performance Guarantees entered into by Seller after
the date hereof;
9.14.2 Schedules 1.1.1.1, 1.1.1.2, 3.4.3, 10.1.3 and
Appendices 6.1, 8.1, 8.2, l2.1, 12.2, 12.3, 12.5,
12.6, 17, 18.1 indicating changes in the subject
matter thereof.
If the aforesaid updates reflect changes in the
ordinary course of business which are consistent
with past practice and may not individually or in
the aggregate have a material adverse effect on the
Cable Business, they shall be deemed incorporated
in the respective Schedules and Appendices.
9.14.3 Seller will use its best efforts to provide
Purchaser with a list of its Customers' and
Suppliers' Backlog updated, to the best of
its knowledge, for the Closing which shall
be attached hereto as Schedule 1.1.12, it
being understood that such schedule is
provided for information and does not
constitute a Warranty.
Seller shall advise Purchaser promptly after it
enters into any option, future or hedging
arrangement as of execution hereof and until the
Closing and at least on a biweekly basis and, at
Purchaser's written request, Schedule 1.1.5 (list
of Assumed Transferred Hedging Transactions) shall
be updated to include any such transaction.
9.15 Within 6 Business Days following the Closing the parties shall
attach hereto all Schedules and Appendices which were not
attached upon execution hereof.
10. CONDITIONS PRECEDENT TO CLOSING
10.1 Closing of the transaction contemplated by this Agreement
shall not take place unless and until each of the following
has occurred or been waived by Purchaser at its sole
discretion:
10.1.1 an unconditional approval or an approval with
conditions satisfactory to Purchaser given by the
Controller pursuant to the Restrictive Business
Practice Law - 1988, and that approval is in full
force and effect;
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10.1.2 an approval with conditions expressly set
forth in SCHEDULE 10.1.2 and reasonably
satisfactory to Purchaser, of the transfer
to Purchaser of Approved Enterprise status
from the Investment Center and referred to
in the investment programs with the dates
and reference numbers as set forth on
Schedule 10.1.2 and approval of any relevant
person to allow a first charge on the Assets
in favor of the lenders of Purchaser;
10.1.3 except for a charge registered in favor of
the Investment Center pursuant to Clause
10.1.2 above, all Encumbrances over the
Assets shall have been discharged and Seller
has provided Purchaser with evidence of such
discharge or Seller has provided Purchaser
with a letter from the beneficiaries of such
Encumbrances agreeing that the Encumbrances
will be released effective upon Closing, all
reasonably satisfactory to Purchaser.
10.1.4 the making available to Purchaser of the Employees
and that a sufficient number of them will have
become employees of the Purchaser at Closing as
contemplated under Clause 9.4 above so as to enable
Purchaser to continue to operate the Cable Business
in the ordinary course.
10.1.5 the transfer to Purchaser of Redundancy Payments
pursuant to Clause 9.5 above.
10.1.6 the consent of the Israel Lands
Administration to all of the leases of the
Properties at Haifa, Maalot and Nazareth,
the details of which are set out in Schedule
1.1.1.3 and the sub-lease or assignment of
the leases of the other Properties utilized
in the Cable Business at Bet-Shean, Haifa,
Tel Aviv, Kiryat Bialik, Carmiel and
Nazareth, the details of which are set out
in [paragraph A, points 1-5] of Schedule
1.1.1.3, shall be obtained to Purchaser's
reasonable satisfaction.
10.1.7 Seller shall have complied with its covenants,
obligations and agreements set forth herein that
are required to be complied with prior to Closing.
10.1.8 Seller, Purchaser and Escrow Agent shall have
entered into a mutually satisfactory Escrow
Agreement regarding the Escrow Account and the
Second Escrow Account;
10.1.9 Seller and Purchaser shall have entered into
the leases or sub-leases required by Clause
12 hereof;
10.1.10 Seller shall have valid Permits and Purchaser shall
be in a position for the Permits to be reissued in
the name of the Purchaser upon Closing or
immediately thereafter.
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10.1.11 The other parties to the Contracts specified in
Appendix 8.1 shall have agreed in writing to their
assignment to Purchaser where such agreement is
required thereunder and subject to Section 9.9
above, the terms of same Contracts shall not be
adversely affected by the transactions contemplated
herein.
10.1.12 The Board of Directors of both parties and the
General Meeting of the Shareholders of Seller shall
have adopted a resolution authorizing the execution
and delivery of this Agreement and the consummation
of the transactions contemplated herein.
10.2 The obligation of the Purchaser to close the acquisition of
the Assets shall be subject to the additional condition, which
is agreed to be material, that, each of Seller's Warranties
shall be true and correct as at the Closing Date with the same
force and effect as if made on the Closing Date in accordance
with Clause 9.7 above.
The obligation of the Purchaser to close the acquisition of
the Assets pursuant to this Agreement shall not be terminated
or postponed due to any strike, lock out, work-slowdown, labor
dispute or any other adverse action taken by the Employees,
whether collectively or individually, through workers
committees, labor unions or otherwise as a result of this
Agreement or negotiations that had taken place prior thereto.
10.3 Any of the above conditions may be waived by the Purchaser at
its discretion expressly in writing but such waiver shall not
be deemed a waiver of any rights or remedies that the
Purchaser may have against Seller by reason of any breach of
Clause 8.1 above.
11. POST-CLOSING OBLIGATIONS
11.1 Nothing in this Agreement shall be construed as an attempt to
assign any contract, agreement, permit, franchise, or claim
included in the Assets which is by its terms or by law
nonassignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or
as to which all the remedies for the enforcement thereof
enjoyed by the Seller would as a matter of law, pass to the
Purchaser as an incident of the assignment provided for by
this Agreement. In the event that a third party refuses to
consent to an assignment or a novation of a contract,
arrangement or license, (a) the Purchaser shall be entitled,
insofar as this is not considered to be breach by the relevant
third party or by the Seller, to continue the contract,
arrangement or license on behalf of and in the name of Seller
in fact on the Purchaser's own account; PROVIDED, Purchaser
shall indemnify and hold harmless Seller for damages to Seller
associated with maintaining and performing any such contract,
arrangement or license and/or (b) Seller should use and
continue to use its best endeavors to transfer to the
Purchaser all rights in and to the contracts,
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arrangements, agreements, leases, licenses, purchase orders
for the sale or purchase of goods or services with suppliers
and customers, as the Purchaser shall determine in its sole
discretion, prior to Closing, that it seeks to be a party to.
11.2 In addition to Seller's other obligations under this
Agreement, Seller shall fully cooperate in regard to making
applications and/or declarations for any outstanding
certificates, permits and licenses required for the continued
operation of the Cable Business of the Seller under the
ownership of the Purchaser.
11.3 In the event that Seller does not settle any Retained
Liability when due, and such omission may adversely affect the
continuing Cable Business of the Purchaser and the related
goodwill and/or customer/supplier relations ("Adverse Effect")
and Seller does not make the necessary arrangements with such
creditor(s) to prevent the Adverse Effect, in Purchaser's
reasonable discretion, the Purchaser shall be entitled to
settle such outstanding liability upon giving Seller 30
Business Days notice of its intention to do so and Seller
shall forthwith reimburse the Purchaser for its costs in
connection therewith.
11.4 For a period of seven (7) years after Closing, Seller shall
maintain all existing liability insurance policies for past
and existing directors and officers of the Seller relating to
acts or omissions by such directors and officers prior to
Closing, and Seller agrees to pay on behalf of such directors
and officers any deductible
payable under such insurance policies. The cost of such
insurance shall not be subject to Clause 6 hereof.
11.5 After the transfer of the Redundancy Payments pursuant to
Section 9.5, Purchaser shall take any reasonable and customary
actions required to ensure that the Redundancy Payments will
be available for payment to the employees of Purchaser when
due. To the extent Redundancy Payments are transferred to
Purchaser pursuant to Section 9.5 (such Redundancy Payments so
transferred being the "Assumed Redundancy Payments"),
Purchaser agrees and undertakes to pay and discharge such
Assumed Redundancy Payments, when due, to the employees of
Purchaser entitled to receive such Assumed Redundancy
Payments. Redundancy Payments which are not transferred to
Purchaser pursuant to Clause 9.5 shall be deemed Retained
Liabilities.
If agreed to by Purchaser expressly in writing and in advance,
any additional payment to Employees which results from the
implementation of this Agreement, shall be the responsibility
of Purchaser.
11.6 Purchaser undertakes to pay the Employees, within 20 Business
Days as of the Closing Date, the amounts of the special
transfer bonus deposited by the Seller with Purchaser pursuant
to Clause 3.4.3 above. Purchaser further undertakes to provide
Seller with a CPA certificate confirming such payment.
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11.7 Purchaser hereby grants (i) Shanghai Cvalim Telecommunication
Optical Fiber Cable Ltd. a non-exclusive, perpetual, royalty
free license to use the name "Cvalim" in its name in China and
(ii) Eldor -- Trade and Marketing Company of Cable and
Electronic Equipment Ltd. a non-exclusive, perpetual, royalty
free license to use the name "Cvalim" in its name in Israel,
provided said companies shall not present themselves as
associated in any way with the Cable Business to be
transferred hereunder.
11.8 For the periods set forth below, and in so far as relating to
the Cable Business, Purchaser will provide the following
services to Seller free of charge:
11.8.1 During the twelve month period after the Closing
Date, Purchaser shall: (i) perform the
administrative functions concerned with collection
of trade accounts receivable owing from third
parties to Seller after the Closing Date (such
administrative functions will be substantially the
same as the those performed by Purchaser for its
own account); (ii) perform the administrative
functions associated with pursuing any insurance or
other claims relating to the Cable Business and
(iii) perform the administrative functions
associated with collecting loans extended by Seller
to Employees and down payments made by Seller to
Employees on account of salary payable immediately
after Closing. Purchaser undertakes to deduct said
loans and down payments from the Employees'
emoluments, subject to any applicable laws and
agreements. If a dispute with Seller's debtor
arises the parties shall collaborate and use their
efforts to resolve the dispute with the minimal
possible interference with the relations Purchaser
has with same party. Failing that within 21 days,
Seller may take legal action to recover the debt in
question. For purposes of clarification it is
hereby stated that administrative functions include
correspondence, telephone communication and follow
up.
11.8.2 For the period beginning on the Closing Date and
ending on June 30, 1999, Purchaser shall (i)
perform the administrative functions associated
with paying bills and expenses of Seller to third
persons and, subject to Purchaser continuing to use
the software currently used by Seller for producing
financial records (ii) assist with the transfer of
electronic financial records to Seller's new
computer system and (iii) provide duplicate
electronic financial records of Seller for the
years ending December 31, 1998 and for the period
ending [June 30, 1999]. If a dispute with a third
party arises concerning bills and expenses of
Seller, the parties shall act in accordance with
Clause 11.3 above.
11.8.3 For the period beginning after the Closing Date and
ending on the date of publication of Seller's
financial statements for the period ended [June 30,
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1999], Purchaser shall provide bookkeeping services
for maintaining the books and records of Seller and
the operations of Seller.
11.8.4 For the period beginning after the Closing Date and
ending seven years after the Closing Date,
Purchaser shall provide Seller with reasonable
access to any documents that Seller reasonably
requires for pursuing any insurance or other claims
relating to the Cable Business.
Purchaser shall provide the aforesaid services in
good faith and shall not be liable for any damages
or any loss to Seller associated therewith except
in case of willful misconduct. Seller shall
indemnify Purchaser and hold it harmless against
any claim or other legal proceedings and any out of
pocket cost concerned with same services.
11.9 Deleted
11.10 The Parties agree to cooperate in applying to the Investment
Center to amend the approved Investment Center plans (the
"Approved Plans") granted in respect of the plants at Carmiel
& Maalot, as follows:
11.10.1 Carmiel
The Parties will jointly endeavor to amend
Approved Plan in respect of the Carmiel plant,
within twelve (12) months from the Closing Date in
order to obtain; (i) an extension of two (2) years
for the commencement of the export obligation
included in the said Approved Plan, (ii) if so
desired by Purchaser, a reduction of the investment
commitment in the said Approved Plan to the amounts
invested by Seller prior to the Closing Date or
such higher amount the Purchaser shall wish, (iii)
the transfer of the said Approved Plan, as amended
under (i) and (ii) above to the "Shaar Hanegev"
plant of Purchaser; and (iv) reduction of the level
of the export obligation included in the said
Approved Plan.
If the amendments stipulated in subsections (i)
through (iii) above, are not cumulatively agreed
to by the Investment Center within twelve (12)
months from the Closing Date, Seller shall satisfy
any liability or obligation imposed by the
Investment Center with respect to the said Approved
Plan notwithstanding anything to the contrary in
this Agreement.
11.10.2 If the conditions stipulated in Section 11.10.1 (i)
through (iii) above are consented to by the
Investment Center within twelve (12) months from
the Closing Date, Seller shall be relieved of any
liability or obligation with respect to the said
Approved Plans, notwithstanding anything to the
contrary in this Agreement.
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11.10.3 Ma'a lot
11.10.3.1 The Parties will jointly endeavor to
amend Approved Plan in respect of the
Maalot Plant, within twelve (12) months
from the Closing Date in order to obtain
(i) an extension of one (1) year for
completion of the performance of the
said Approved Plan, and (ii) a reduction
of the investment commitment in the said
Approved Plan.
If the above two amendments are not
cumulatively agreed to by the Investment
Center within twelve (12) months from
the Closing Date, Seller shall satisfy
any liability or obligation imposed by
the Investment Center with respect to
the said Approved Plan in connection
with the subject matter of any of said
amendments notwithstanding anything to
the contrary in this Agreement.
11.10.3.2 If the two (2) amendments stipulated in
Section 11.10.3.1 above are consented to
by the Investment Center within twelve
(12) months from the Closing Date,
Seller shall be relieved of any
liability or obligation with respect to
the said Approved Plan, notwithstanding
anything to the contrary in this
Agreement.
11.10.4 In performing their undertakings as set out
in this Section hereinabove, the parties
shall provide the Investment Center promptly
with all documents, data and other materials
requested thereby for the purposes of
processing, evaluating and approving the
applications to amend the Approved Plans as
stated in this Section hereinabove.
11.11 Without derogating from any provision of Clause 11.10 above,
it is clarified that Seller shall not be liable for any
liability towards the Investment Center arising as a result of
Purchaser's closing factories or transferring facilities to
other locations.
12. LEASE
On the Closing Date, Seller agrees to enter into a mutually
satisfactory lease or sub-lease substantially on the terms attached
hereto as SCHEDULE 1.1.1.3 for all of the Properties. [Seller/Purchaser
agrees to pay all transfer or consent fees, including fees payable to
the Israel Lands Authority, necessary to lease the Properties or
sub-lease the real property utilized in the Cable Business to Purchaser
-- pending check].
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13. RESTRICTION ON SELLER
13.1 Seller hereby covenants with the Purchaser that neither Seller
nor any of its associated companies (other than the NMAC)
will, whether on its own account or in conjunction with or on
behalf of or through any other person or entity, carry on or
be engaged in a Competitive Activity for a period of 7 years.
13.2 Seller hereby covenants with the Purchaser that from the date
hereof until the third anniversary of the Closing Date, Seller
shall not directly or indirectly, solicit for employment any
senior manager, general manager, sales or technical employee
of Seller who is or was recently engaged in the conduct of the
Cable Business or any employee transferred to Purchaser
performing any of the foregoing functions; PROVIDED, HOWEVER,
that general solicitations of employment published in journal,
newspaper or other publication of general circulation and not
specifically directed towards such employees shall not be
deemed to constitute solicitation for purposes of this Clause.
13.3 Seller acknowledges that given the nature of Seller's business
the covenants contained in this Clause contain reasonable
limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater
restraint than is necessary to protect and preserve for the
benefit of Purchaser the goodwill of the Cable Business and to
protect the legitimate business interests of Purchaser. If,
however, this Clause is determined by any court of competent
jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too large a geographic
area or by reason of its being too extensive in any other
respect or for any other reason it will be interpreted to
extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in
all other aspects as to which it may be enforceable, all as
determined by such court and in such action.
13.4 From and after the Closing, Seller shall keep confidential and
not disclose to any other person or use for its own benefit or
the benefit of any other person (i) any information in its
possession or control regarding the Cable Business and the
Assets and (ii) any information of or concerning this
Agreement or the transactions contemplated hereby. The
obligation of Seller under this Clause shall not apply to
information which: (i) is or becomes generally available to
the public without breach of the commitment provided for in
this Clause; or (ii) is required to be disclosed by law, order
or regulation of a court or tribunal or governmental
authority; PROVIDED, HOWEVER, that, in such case, Seller shall
notify the Purchaser as early as reasonably practicable prior
to disclosure to allow the Purchaser to take appropriate
measures to preserve the confidentiality of such information.
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14. OPTION TO ACQUIRE SELLER'S INTEREST IN NMAC
14.1 Purchaser shall have the right and option during a period of
12 months from the Closing Date to acquire all of Seller's
interest in any of the NMAC, PROVIDED, that such option shall
be subject to (i) any right of first refusal existing on the
date hereof and disclosed to Purchaser on SCHEDULE 14.1
hereto, (ii) any existing right of first refusal transferred
to a transferee of such NMAC interest pursuant to Schedule
14.1 or (iii) any right of first refusal hereafter granted to
bona fide new investor (i.e., an investor after the date
hereof) in such NMAC that is not on terms any more favorable
to such new investor than any existing right of first refusal.
14.2 The purchase price for Seller's interest in any of such
company will be an amount equal to the amount Seller paid to
acquire such interest plus an amount reflecting the
adjustments for the changes in the general purchasing power of
the New Israeli Shekel as measured by the Israeli price index
plus interest (compounded annually at a rate equal to six
percent (6%)) for the period after Seller acquired such
interest until the date Purchaser acquires such interest.
14.3 Notwithstanding the above the purchase price for Seller's
interest in HT Cable Ltd. shall be an amount equal to the
amount of capital loans from Seller to HT Cable Ltd. plus any
interest accrued thereon pursuant to their terms [plus an
amount reflecting the adjustments for changes in the general
purchasing power of the New Israeli Shekel plus interest
(compounded annually at a rate equal to 6%) for the period
beginning from the date or dates Seller made the capital loans
until the date Purchaser acquires Seller's interest in HT
Cable Ltd.
14.4 Purchaser's right to purchase such interest shall be exercised
by providing Seller with a written notice setting forth the
time and location of the closing for the purchase of such
interest. At such closing Seller shall deliver duly executed
instruments of transfer and any other documents necessary to
transfer the interest to Purchaser free from Encumbrances and
Purchaser shall pay the purchase price to Seller.
14.5 Seller shall give Purchaser prompt written notice whenever it
is offered to purchase any NMAC interest so that Purchaser
shall be able to timely exercise its option hereunder and
accept such offer.
14.6 At Purchaser's request, Seller shall forthwith forward for
Purchaser's review any information available to Seller
concerning the NMAC during the option period mentioned in
Clause 14.1 above.
15. LIQUIDATION OF DASH
Purchaser hereby agrees that after the execution of this Agreement; (i)
Dash shall sell and transfer to Seller the real property owned thereby
in Nazareth as detailed in SCHEDULE 15 and
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(ii) Dash shall adopt a resolution for its voluntary liquidation,
without creditors. Seller is and shall remain directly liable and
responsible for all obligations and liabilities of Dash arising under
this Agreement.
For the sake of clarity, nothing stated above shall in way prejudice or
derogate from the rights of the Purchaser pursuant to this Agreement.
16. ANNOUNCEMENTS
The parties hereto shall consult together as to the terms, time and
manner of any announcement to employees, customers, supplier or to the
press or otherwise of this Agreement, the completion of the acquisition
hereby agreed or of any supplemental or related transaction - prior to
Closing. No such announcement shall be made prior to Closing except in
agreed terms save (in the absence of agreement) for any statement or
disclosure which may be required by law or called for by or conforming
with the requirements of the Tel Aviv or New York Stock Exchange or
other regulatory body, and any such statement or disclosure shall be no
more extensive than is necessary to meet the minimum requirements upon
the party making such statement or disclosure. The obligation of the
parties under this Clause shall not apply to announcements required to
be made by law, order or regulation of a court or tribunal or
governmental authority; PROVIDED, HOWEVER, that, in any such case the
announcing party shall notify the other party's early as reasonably
practicable prior to such
announcement to permit the other party to take appropriate measures
regarding such announcement.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject hereof and supersedes all prior agreements,
understanding, negotiations and discussions, whether oral or written,
of the parties in connection with the subject matter hereof except as
specifically set forth herein.
18. AMENDMENT
No amendment, supplement or modification of this Agreement shall be
binding unless executed in writing by all the parties to this
Agreement.
19. ASSIGNMENT
This Agreement shall bind and inure to the benefit of the successors of
the parties but shall not be assignable without the prior written
consent of all the other parties.
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20. WAIVER
No waiver by any party of any default in the strict and literal
performance or compliance with any provision, condition or requirement
in this Agreement shall be deemed to be a waiver of strict and literal
performance or compliance with any other provision, condition or
requirement in this Agreement nor to be a waiver of or in any manner
release any party from strict compliance with any provision, condition
or requirement in the future nor shall delay or omission of any party
to exercise any right under this Agreement in any manner impair the
exercise of any such right accruing to it thereafter.
21. SEVERABILITY
If any provision or identifiable part of the Agreement is held to be
invalid or unenforceable by any court of competent jurisdiction, then
such invalidity or unenforceability shall not affect the remaining
provisions or identifiable parts of the Agreement.
If any provision of this Agreement should be or become invalid or cease
to be binding in whole or in part, the parties shall negotiate in good
faith in order to replace such provision by a new provision approaching
as closely as possible the commercial intent of the replaced provision.
22. COSTS AND EXPENSES
Each party shall bear the costs and expenses incurred by it in
connection with the preparation, negotiation and execution of this
Agreement and consummation of the transaction contained herein.
If a stamp duty is required to be paid, the cost of such stamp duty
will be borne equally by the parties hereto.
23. GOVERNING LAW AND JURISDICTION
This Agreement is governed by and shall be construed in accordance with
the laws of the State of Israel and subject to Clause 23 below, the
competent courts in Tel-Aviv (the "Court") shall have exclusive
jurisdiction over any dispute relating to the subject matter of this
Agreement.
24. ARBITRATION
24.1 Notwithstanding anything contained in this Agreement to the
contrary, this Clause 24 shall survive termination or Closing
of this Agreement.
24.2 The parties shall endeavor in good faith to resolve amicably
any dispute relating to the subject matter of this Agreement.
In the event that any such dispute is not amicably
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resolved, it shall be resolved by binding arbitration before a
single arbitrator (who is a former Supreme Court Justice), if
the parties are able to agree on the selection of such
arbitrator, or, if the parties are unable to agree, a panel of
three arbitrators. The arbitration shall be conducted pursuant
the to rules of the [Israeli Institute of Commercial
Arbitration] (the "Institute") in Tel-Aviv, Israel. If
arbitration is before a panel of three arbitrators, one
arbitrator shall be selected by the Seller, one arbitrator
shall be selected by the Purchaser and the third arbitrator
shall be selected by the two arbitrators from a panel provided
by the Institute. In any event, the arbitrator or arbitrators,
as the case may be, shall be bound by substantive applicable
law and shall state in writing the reasons for his or their
award/decision. In connection with any arbitration hereunder,
the attorneys (or attorneys in any law firms with which those
attorney's are associated) who have represented the
negotiation and/or drafting of this Agreement:
24.2.1 shall be precluded from serving as an
arbitrator; and
24.2.2 shall not be precluded from:
24.2.2.1 submitting expert or other testimony; or
24.2.2.2 representing any of those same parties
in the arbitration or any related
proceedings.
24.3 Any arbitration hereunder shall be conducted in English, and
the arbitrator shall sit in Tel-Aviv, Israel unless otherwise
agreed by the parties. Nothing in the preceding sentence shall
preclude the taking of evidence in a place other than Tel
Aviv, Israel (or such other place as is agreed) if the
arbitrator deems that appropriate.
24.4 In the event that any party to this Agreement is not a formal
participant in an arbitration proceeding hereunder, such party
shall cooperate with any reasonable request, from the
arbitration panel or from any participant in such arbitration
proceeding, for the producing of evidence. The arbitration
panel will be entitled to request the submission of expert
testimony.
24.5 Nothing in the Clause 24 shall preclude any party from making
an appropriate application to the Court for injunctive or
other equitable relief ancillary to the arbitration
proceeding.
24.6 Unless the participants in an arbitration proceeding hereunder
and the party producing evidence otherwise agree in writing,
the arbitration panel and the participants in an arbitration
proceeding hereunder shall take all reasonable steps to ensure
the confidentiality of all evidence produced in connection
with any such arbitration proceeding. As used in this clause,
"evidence" includes document and
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testimony (whether written or oral), and "producing evidence"
included giving, providing or otherwise furnishing evidence.
24.7 The arbitrator(s) shall award the recovery of all costs and
fees (including reasonable attorney's fees, administrative
fees and arbitration fees) to the prevailing party or if the
arbitrator(s) determines that there is no clear prevailing
party as the arbitrator(s) shall deem just and equitable.
25. NOTICES
25.1 Unless expressly stated otherwise, any demand, consent, notice
or other communication authorized or required to be made under
this Agreement shall be in writing and shall be given or made
by facsimile, registered mail (registered airmail if
international post) or personal delivery addressed to the
respective parties as follows (or to such changed address as
to which they may give notice):
To Purchaser:
Copy to:
To Seller:
Cvalim - The Electric Wire and Cable Company of
Israel Ltd.
(or the new name thereof)
C/O Ofer Brothers
6 Ramat Yam St.
Herzelia Pituach 46851
Attention: Yuli Ofer
Ofer Rafiah
Fax: (09)-9540893
Copy to: Zvi Ephrat
6 Ramat Yam St.
Herzelia Pituach
Fax: 09-9589596
25.2 A notice given by registered mail (registered airmail if
international post) shall be deemed delivered of the 7th
Business Day following the date it is posted. Personal
delivery shall be deemed to be given and received on the date
of delivery to the address of the addressee provided that if
such a day is not a Business Day, then the notice shall be
deemed to have been given and received on the next following
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Business Day. A notice given by facsimile shall be deemed
given and received on the date of transmission to the fax
number of the recipient provided the recipient expressly
confirms in writing receipt thereof.
/S/ /S/
-------------------------------- ---------------------------------
Seller Purchaser
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Exhibit 2
AMENDMENT NO. 1
Made and Entered into on the 31st day of December, 1998
BY AND BETWEEN:
1. Cvalim - the Electric Wire and Cable Company
of Israel Ltd.
2. Dash Cable Industries (Israel) Ltd.
("the Seller")
AND
Cables of Zion United Works Ltd.
("the Purchaser")
WHEREAS the Parties entered in to an Asset Purchase Agreement dated October 2,
1998 (hereinafter: "the Agreement"); and
WHEREAS after the signature of the Agreement the Purchaser claimed that the
Information (as defined below) provided to it prior to the signature
of the Agreement was incorrect and accordingly Purchaser has been
entitled to request a Purchase Price adjustment; and
WHEREAS the Seller rejected Purchaser's claims both on the factual and on the
legal basis; and
WHEREAS the Parties entered into discussions, without derogating from their
respective positions and without prejudice to their rights, and in
order to resolve amicably their differences of opinion; and
WHEREAS without derogating from the claims and rights of each Party in the
event the transaction contemplated in the Agreement is not closed for
any reason, the Parties agree to adjust the Purchase Price as
specified hereinafter;
Now, therefore the Parties hereby agree as follows:
1. PREAMBLE
The Preamble to this Amendment forms an integral part hereof.
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2. DEFINITIONS
Unless otherwise provided herein all terms used herein shall have the
meaning given thereto in the Agreement.
multiplying the amount of the Purchase Price by the exchange rate
published by the Bank of Israel in respect of the Closing Date and
dividing the total sum by 4.20.
On the Closing Date the payment of the Purchase Price shall be
effected initially based upon the exchange rate last published by the
Bank of Israel prior to the Closing Date and the Parties will
reconcile any exchange rate differentials within 24 hours of the
publication by the Bank of Israel of the exchange rate in respect of
the Closing Date.
The Purchaser shall have the option to pay the Purchase Price in U.S.
Dollars by notifying the Seller of its intent to do until 11.00 a.m.
on December 30, 1998. If the Purchaser elects to pay in U.S. Dollars,
the amount due shall be the NIS amount stated above divided by 4.20.
3.2 Without derogating in any way or manner from the force of all
representations and warranties of the Seller as contained in the
Agreement or the Schedules or Appendices thereto, the Purchaser waives
any claim it has regarding the financial information provided to it
prior to the signature of the Agreement and upon which Purchaser based
its request for the Purchase Price Adjustment specifically certain
data and assessments of Seller's Cable Business EBITDA
("Information"). Purchaser's waiver is given and received without
admission by Seller that the Information was inaccurate, wrong or
misleading in any manner. The Seller waives any claim it may have in
connection with Purchaser's request to have the Purchase Price
adjusted.
3.3 The Parties also agree to amend Section 1.1.35 of the Agreement so the
allocation of the Purchase Price, as adjusted, shall be as follows:
<TABLE>
<S> <C> <C>
Inventory -Cvalim and Dash NIS 93,534,000
Fixed Assets - Cvalim NIS 81,690,000
Fixed Assets - Dash NIS 7,476,000
Total NIS 182,700,000
</TABLE>
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4. LONG TERM FINANCING
4.1 For the purposes of this Section 4 the following terms shall have the
meanings set forth below:
"Long Term Financing"or "LTF"or "the Loan"- the total amount of the
loan to be provided to IEC by the Seller under tenders No 616314,
596053 and 589635.
"Seller's Portion of the Loan" - the principal amount borrowed by
Purchaser from Bank Hapoalim Ltd. ("the Bank")that shall be equal to
the total amount specified in the invoices submitted by Seller to the
IEC for the orders supplied by Seller to the IEC under tender No
616314, 596053 and 589635 until the Closing Date calculated in U.S.
Dollars according to the Exchange Rate on the Closing Date.
"The Amount in Arrears" - the amount which is in arrears by IEC in the
repayment to Purchaser of the LTF.
"Seller's Portion of the Amount in Arrears"- the ratio between
Seller's Portion of the Loan and the total amount of the LTF
multiplied by the Amount in Arrears.
4.2 The Purchaser agrees to provide the entire amount of the LTF to the
IEC.
4.3 In the event of a default by IEC in repaying the Loan, Seller will be
responsible for repayment of Seller's Portion of the Amount in Arrears
and accordingly, the Seller will provide the Bank, to its full
satisfaction, with a security for the payment of Seller's Portion of
the Amount in Arrears, which will be exercisable, in whole or in part,
as the case may be, by the Bank if the Bank or Purchaser will fail in
collecting the Amount in Arrears or any part thereof through legal
proceedings and by any other mean available to it. The amount of
Seller's security will include also the amount of interest payable to
the Bank in respect of the Seller's Portion of the Amount in Arrears.
4.4 Notwithstanding the provisions of Section 4.1 above, in the event that
IEC will claim or assert that its failure in repaying the Loan was
permitted by circumstance relating to the conduct of the Purchaser and
if and when such claim or assertion will be accepted by a competent
court or arbitrator, as the case may be, the security provided by the
Seller under the provisions of Section 4.3 will be released to the
Seller by the Bank and Seller shall cease to be responsible for the
repayment of Seller's Portion of the Amount in Arrears
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4.5 On the date of the first draw down, the Seller will pay the Purchaser
an amount of US$7,830 for each US$ million of Seller's Portion of the
Loan in satisfaction of Seller's obligation to compensate Purchaser
for its related finance cost and expenses, i.e., if such portion
equals US$5mm Seller will pay purchaser US$39,150.
4.6 Whereas the IEC gave its consent to the assignment of the agreements
between Seller and IEC subject to the Seller remaining jointly and
severally liable with Purchaser towards IEC for the provision of the
LTF, the Parties hereby agree, without derogating from the Purchaser's
obligation to provide the entire amount of the LTF as stated in
Section 4.2 above and from the other provisions of this Section, as
follows:
(i) In the event IEC will request from Seller to provide thereto
any part of the LTF ("the Amount") then Seller will convey to
Purchaser immediately IEC's request and Purchaser will
immediately provide to the IEC the Amount requested from the
Seller pursuant to the terms of the finance agreement between
Purchaser and IEC.
(ii) In the event Purchaser has failed to provide the Amount to the
loss IEC, Purchaser shall indemnify and hold Seller harmless
from any damages, expenses or costs incurred by Seller as a
result of IEC's claims for Seller's failure to provide the
Amount, after purchaser shall have the opportunity to
participate in and defend such claim.
(iii) If Purchaser fails to provide the amount of the LTF requested
from Seller as specified above, subject to the receipt of the
consent of the Bank and the IEC, which the Purchaser will use
its best efforts to obtain at its own cost, the Purchaser will
make available upon Seller's request, all the securities the
Purchaser was required to provide the Bank, if the Purchaser
had provided the Amount requested by IEC from the Seller, in
order to enable the Seller to lend the such amount to IEC and
upon receipt of such securities, Seller shall assign to
Purchaser by the way of security all of its rights under its
agreement with IEC, including but not limited to any
contractual rights, promissory notes or instruments of
indebtedness issued by IEC ("the IEC Security") to the extent
permissible by the Bank and IEC so Purchaser may enforce the
IEC Security in the event the Bank enforces the securities
provided by Purchaser to Seller and release Purchaser's
securities back to Purchaser upon payment of the Amount to
Seller.
(iv) If the effective cost of the financing obtained by the Seller
to provide the Amount requested therefrom by the IEC will be
greater than the effective cost of the financing arranged that
by the Purchaser has
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arranged on the date hereof within the Bank for the provision
of the LTF to the IEC, Purchaser will immediately pay the
difference to the Seller.
5. ORDERS FOR EQUIPMENT
The Purchasers acknowledges that Seller has recently ordered a packing
machine at a price of DM 450,000 and has paid a downpayment equal to 10%
therefor and has also ordered a data cable machine at a price of USD
400,000. The Purchasers acknowledge that they will be responsible to pay
the purchase price due for both orders less the said downpayment.
6. COMPENSATION FROM BOREALIS
Purchaser agrees that the compensation in the amount of USD 160,000 that
Borealis has agreed to pay Seller, shall be paid to Seller by Purchaser in
increments equal to the discount received by Purchaser or value of goods
supplied at no charge to Purchaser by Borealis under the agreement with
Borealis attached hereto as Appendix 6 - up to a total of USD 160,000 -
such increments to be paid on the 5th Business Day after the day the
discounted payment is transferred to Borealis in the case of deliveries of
discounted goods or in the cast of goods supplied at no charge to Purchaser
by Borealis thirty (30) days after the end of the calendar month during
which such goods were delivered to Purchaser.
7. DUSSEK CAMPBELL RAW MATERIAL
The raw material supplied to Seller by Dussek Campbell and which is subject
of the claim of Seller against Dussek Campbell shall not be sold to the
Purchaser and shall not be counted as part of the Inventory and if so
requested by Seller will be returned by Purchaser to Seller or to Dussek
Campbell at Seller's expense.
8. CONSIGNMENT STOCK ABROAD
It is agreed between the Parties that with respect to Seller's consignment
stock abroad the following principles will apply:
a) As to Seller's consignment stock in China - Seller will provide on the
Closing Date a written confirmation by a recognized international
accounting firm of the physical count conducted by representatives of
the Seller; and
b) As to Seller's consignment stock in England, Germany and France -
representatives of Seller and Purchaser will conduct a physical count
of the inventory toward the end of December 1998;
and the parties will act in accordance with Section 4 of the Agreement.
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9. JOINT VENTURE AGREEMENT
For the removal of doubt it is hereby stated that Purchaser shall not
assume the agreement between Cvalim, Shanghai Light-wave Communication
Industry Co., U.D.I. Ltd. Shanghai Telephone Development Company and
Shanghai Zi-Jiang Group dated February 3, 1994 and any liabilities, duties
and obligations of Cvalim thereunder shall be Retained Liabilities. It is
agreed between the Parties that in the event that Cvalim will have to
provide services under said agreement to Shanghai Cvalim Telecommunications
Optical Fiber Cable Ltd, the Purchaser will provide such services subject
to Seller's prior consent. Seller will reimburse Purchaser's costs incurred
in rendering the services.
10. BET SHE'AN LEASE
The Parties agree to amend the typing error in Schedule 1.1.1.3 regarding
the Bet She'an lease so that the rent stipulated therein will be $2.5 per
sq. meter per month.
11. IEC AGREEMENTS
Whereas the IEC has notified the Parties that it shall confirm its consent
to the assignment of the agreements between it and Seller after receipt to
its full satisfaction of certain documentation, it is hereby agreed that
for the purposes of meeting the conditions for the Closing, the Parties
have already submitted to the IEC the documents provided in section 10 A of
the IEC Assignment Agreement attached hereto as Appendix 10 (except for the
Parties notice that the "sale has closed") and the Parties shall fully
cooperate to receive the written confirmation of the IEC as soon as
possible prior to the Closing Date that it had received, to its full
satisfaction, all the documents required under the said section 10A (except
for said notice), which written confirmation will be a condition precedent
for the Closing, and shall provide in writing on the Closing Date or as
soon as possible thereafter the IEC irrevocable approval for the assignment
of the IEC orders as stipulated in the said Assignment Agreement, which
assignment shall go into effect no later than 30 days after the Closing
Date.
The Parties will cooperate in providing on a timely manner the documents
mentioned above which require their signature under the Assignment
Agreement.
The parties acknowledge that the IEC assignment was one of the conditions
precedent for Purchaser's obligations pursuant to the Purchase Agreement and the
Amendment. The parties hereby agree to comply with the terms of the IEC
assignment and to take all actions necessary to maintain the assignment in full
force and effect.
For the removal of doubt it is hereby agreed that notwithstanding the fact
that the IEC operational assignment shall go into effect 30 days after the
Closing, the provisions of the Agreement with respect to the respective
rights and obligations of
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the Parties applicable prior to or as of the Closing Date shall prevail and
accordingly, in the event that Seller will have to act on behalf of the
Purchaser in certain IEC business matters until the assignment shall go
into effect, the Purchaser shall reimburse Seller for all costs and
expenses incurred by Seller in such instances.
Seller will notify Purchaser in advance of each instance it will have to
act on behalf of the Purchaser as aforesaid and will do so subject to
Purchaser's prior consent.
12. ASSIGNMENT OF AGREEMENTS BETWEEN SELLER AND ADVANCED TECHNOLOGY LTD (AT)
AND SAP AKTLENGESELBSCHAFT (SAP)
12.1 As the Parties have not received until the date hereof the consents
of AT and SAP for the assignments to the Purchaser of the Agreements
signed between Seller and AT ("the AT Agreement") and between Seller
and SAP ("the SAP License Agreement") on March 31, 1996
(collectively: "the SAP Agreements") it is agreed between the
Parties that the Seller and Purchaser will use their best commercial
efforts in order to obtain the consents of AT and SAP for such
assignments until the Closing Date and that if the consents will not
be obtained until such date the Parties will endeavor to obtain such
consents as soon as possible thereafter.
Subject to the provisions of this Section 12 below, Purchaser waives
hereby the requirement that the SAP Agreements will be assigned to
it prior to or on the Closing Date.
12.2 In the event that the SAP Agreements will not be assigned to the
Purchaser until the Closing Date, Seller will use its best
commercial efforts to cause the assignment to COZ as soon as
possible after the Closing Date. Purchaser recognizes that the
assignment of the SAP License Agreement may take place after the
Closing Date and accordingly, subject to the provisions of this
Section 12 below, Purchaser waives hereby the requirement that the
SAP License Agreement will be assigned to it prior to or on the
Closing Date.
12.3 In the event that AT will refuse for any reason to consent to the
assignment of the AT Agreement , insofar as this is not considered
to be breach of the agreement, the Purchaser will be entitled to
continue the agreement in the name of Seller on the Purchaser's own
account including all amounts payable under the AT Agreement. It is
further agreed between the Parties that in the event Purchaser will
request the Seller to initiate legal proceedings against AT with
respect to the AT Agreement, the Seller will take the necessary
steps as requested by the Purchaser provided that all related
expenses, costs and any monetary consequences will be fully covered
by the Purchaser including, notwithstanding anything to he contrary
in the Agreement, expenses, costs or damages resulting from a claim
or a counter claim submitted against Seller as a direct consequence
of the steps initiated by it at the request of the
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Purchaser. The Purchaser shall be entitled to all proceeds payable
to Seller in connection with such proceedings. Without derogating
from Seller's obligation to indemnify Purchaser under the Agreement
and this Amendment for third party claims, Purchaser acknowledges
that it is fully aware of the fact that AT may argue that it is not
obligated to implement the AT Agreement for reasons relating to
Seller's conduct and performance and accordingly Purchaser waives
hereby any right it may assert it has against Seller regarding this
matter.
12.4 In the event that SAP's consent will not be obtained for the
assignment of the SAP License Agreement prior to or on the Closing
Date, the Parties will endeavor to designate interim alternate forms
of operation among themselves which will enable Purchaser to use the
Software System (as defined in SAP License Agreement) for purposes
relating to finance, management and accounting functional modules
without infringement of the SAP License Agreement. In the
circumstance dealt with in this Sub-Section the Purchaser shall
refrain from using the segments of the Software System which relate
to the production functional modules until such time as SAP's
consent for the use of the Software System will be obtained.
The Parties will use their best commercial efforts to obtain as soon as
possible and no later than 180 days from the Closing Date ("the Interim
Period") the consent of SAP for the Assignment of the SAP License Agreement
to the Purchaser or for the novation of the agreement or for the signature
of a new license agreement between SAP and the Purchaser.
Seller will be responsible for the payment of the license fee which will be
charged by SAP to the Purchaser for granting the Purchaser the right to use
the Software System whether if granted directly to Purchaser or granted to
it through an umbrella agreement to be entered into between Superior
Telecom Inc. and any wholly owned subsidiaries thereof and SAP provided
that Seller will not be obligated to pay in any such event an amount
exceeding $300,000. Seller shall indemnify Purchaser and hold it harmless
from damages or liabilities, cost and expenses incurred by Purchaser
resulting from any claim or action submitted by AT or SAP against Purchaser
with respect to the use of the Software System as aforesaid by or for the
Purchaser until the end of the Interim Period or until the date Purchaser's
received the license to use the Software System, whichever is the earlier,
or with respect to such period/s of such usage by Purchaser.
12.5 In the event that until the end of the Interim Period SAP will not
consent to the assignment of the SAP License Agreement to the
Purchaser or to its novation or to the signature of a new agreement
or if Superior Telecom Inc. or any wholly owned subsidiaries thereof
will not enter into an umbrella agreement with SAP as aforesaid
until the end of the Interim Period, the Purchaser will make all
necessary arrangements in order to replace the
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Software System by another software system. Seller will pay to
Purchaser at the last day of the Interim Period an amount of
$200,000 for license fees and all costs relating to a new software
system license for the use of functional modules relating to
finance, management and accounting. When Purchaser will install, or
license a new software system license for production functional
modules Seller will pay to Purchaser an additional amount of
$400,000.
12.6 Notwithstanding anything to the contrary in the Agreement, it is
hereby agreed by the Parties that all obligations and
responsibilities of Seller explicitly detailed in this Section 12
will exhaust all Seller's responsibilities and obligations towards
Purchaser with respect to the subject matter dealt with in this
Section.
13. ASSIGNMENTS
For the removal of doubt, the Parties hereby confirm that notwithstanding
anything stated in the letters of assignment executed, or to be executed,
with any third parties to any Contract, including without limitation IEC,
Bezeq and LG, nothing stated in such letters shall derogate from the
Parties' rights and obligations under the Agreement and to the extent they
place upon a Party ("the First Party") any obligation or confer thereupon a
right contrary to the terms of the Agreement, the other Party shall
indemnify the First Party in respect of such obligation.
It is further agreed between the Parties that in the event the Purchaser
agreed in the assignment letters to undertake future new obligations as
between it and the assignor which did not exist as such with respect to the
Seller under the agreement which is the subject of the letter of
assignment, will be the sole responsibility of the Purchaser
notwithstanding anything to the contrary in the Agreement.
14. CERTAIN ISSUES
14.1 The Parties hereby agree that the Escrow Account referred to in
Sections 4 and 5 of the Agreement and the Second Escrow Account
referred to in Section 6 of the Agreement will not be opened and
managed for purposes of the Agreement and accordingly the Parties
will not sign any Escrow Agreement with the Escrow Agent. The
Parties waive hereby the condition precedent included in Section
10.1.8 of the Agreement.
14.2 All payments due from one Party to the other under the provisions of
Section 6 of the Agreement will be made directly between the Parties
within 20 days from the Closing Date unless otherwise specifically
provided in this Amendment.
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14.3 All payments due from one Party to the other under the provisions of
Section 4 of the Agreement will be made directly between the Parties
pursuant to said Section.
14.3 For the removal of any doubt the Final Adjustment Statement will
include provision for the CPI linkage under the definition of
"Inventory Adjustment".
14.4 Furthermore, the amounts transferred at the Closing as Redundency
Payments pursuant to Schedule 9.5 shall be subject to verification
by the parties CPAs within 20 days from Closing and any shortfall or
surplus shall be paid or returned thereupon.
14.5 Notwithstanding the provisions of the Agreement, the power of
attorney which should be delivered to Purchaser to secure the change
of name of Seller at the Closing, shall be delivered pursuant to
APPENDIX 14a hereto.
14.6 Notwithstanding section 3.4.2 of the Agreement, the parties hereby
agree and undertake as follows:
14.6.1 The parties shall collaborate with each other in order to
obtain the consent of VAT Manager pursuant to Section 20 of
the Value Added Tax Law-1975 ("VAT Law"), for the
assumption by the Purchaser of the VAT liability resulting
from the performance of the Agreement (the "Consent").
14.6.2 In the event that the Consent is granted, the Sellers shall
not be required to issue respective VAT invoices, nor shall
the Purchaser be required to pay the Sellers any VAT
amount. Instead, the Purchaser shall issue a VAT invoice
addressed to the Purchaser and further shall report the
transaction in its current periodic VAT report.
14.6.3 In the event that the Consent is not obtained on or before
January 14, 1999 or any later date approved by VAT Manager
for issuance of the VAT invoices, the Sellers shall issue
to the Purchaser the respective VAT invoices against the
delivery of the VAT amount to the Seller.
14.6.4 In order to secure payment of the VAT amount pursuant to
the preceding Paragraph, the purchaser shall deposit with
Zvi Ephrat, Adv. (the "Escrow Agent") a check in the VAT
amount, and the parties will provide the Escrow agent with
a letter of instructions in the form attached hereto as
APPENDIX 14b.
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14.6.5 Without derogation to Seller's undertakings under Paragraph
9.5 of the Agreement, the parties shall collaborate in
order to obtain the consent of the Income Tax Commissioner
for the transfer of the provident funds, managers'
insurance etc. to be tax free. The Parties shall sign and
file with the Income Tax Commission any document required
in that respect.
14.7 It is acknowledged that Purchaser has provided IEC with performance
guarantees in place of Seller for orders supplied by Seller to IEC
in the amount equivalent to 10% of the Seller's Portion of the Loan
(as defined in Section 4.1 above and Seller will indemnify Purchaser
for any amount drawdown under the said guarantees and any cost and
expense associated therewith. Seller has 30 days to cause Purchaser
to receive a complete release from the issuing bank with respect to
those guarantees that Purchaser shall not be liable to the bank for
any amount in connection with said guarantees. Purchaser's
obligation to replace Performance Guarantees pursuant to the
Agreement is subject to satisfaction by Seller of the aforesaid.
14.8 Purchaser is aware of the Development of Human Resources Scheme of
the Ministry of Industry and Commerce ("the Ministry") under which
Seller is entitled to receive a payment in an amount of
approximately NIS 700,000 for expenses incurred by Seller during
1998, for the implementation of a program submitted by it to the
Ministry. Purchaser will cooperate with Seller at sellers sole
expense, in providing all necessary documentation needed for the
receipt of the grant. Purchaser further agrees to provide the
Ministry, simultaneously with the other necessary documents to be
provided, a program for development of human resources identical to
the draft program submitted by Seller to the Ministry for the year
1999 and will endeavor to fulfill the targets of the program. In the
event that Purchaser will not carry out all or certain items of the
program and as a consequence of which the Ministry will duly demand
return of the payment received by Seller for 1998 or any part
thereof Seller will be solely responsible to the return of the
Ministry of the relevant amounts and will indemnify Purchaser on any
related cost and expense.
15. EMPLOYEES
It is hereby agreed between the Parties that any settlement initiated by
the Purchaser under the provisions of Section 11.3 of the Agreement with
respect to an employee claim relating directly or indirectly to such
employee's term of employment prior to the Closing Date and which could
affect Seller's rights, shall be subject to the written consent of the
Seller, which consent shall not be unreasonably withheld or delayed. Any
dispute between the Parties concerning the subject matter dealt with in
this Section shall be resolved as promptly as possible by a binding
arbitration before a single arbitrator who will be selected by the Parties
within 5 days of the receipt of a notice by a Party from the other Party of
the existence of a dispute between the
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Parties. If the parties are unable to agree on the selection of such
arbitrator the arbitrator will be selected by President of Israeli CPA. The
arbitrator shall be requested to submit its decision/award as soon as
possible and no later then within 30 days. The arbitrator shall be bound by
substantive applicable law and shall state in writing the reasons for his
award/decision.
16. BOARD OF DIRECTOR APPROVALS
The Parties represent that their respective boards of directors have
approved the execution, delivery and consummation of the transactions
contemplated under the Agreement at the reduced Purchase Price stipulated
above.
17. APPROVED ENTERPRISES
Notwithstanding the provisions of section 11.10 of the Agreement the
Purchaser waives any requirement to amend the Approved Plan regarding the
factory in Maalot and the requirement to reduce the investment commitment
in the Approved Plan for the factory in Carmiel. Without derogation from
the aforesaid, for the removal of doubt, the issuance of approvals by the
Investment Center with conditions contrary to Section 11.10 of the
Agreement and their attachment to the Agreement, shall not derogate in any
way from the provisions thereof.
18. SPECIAL TRANSFER BONUS
The Parties hereby agree that the employee's salary payment for the month
of December 1998 will be paid by Seller no later than January 4, 1999 (the
"Payment Date"). The net amount of the special transfer bonus referred to
in Sections 3.4.3 and 11.6 of the Agreement will be paid by the Seller to
the employees separately on the Payment Date by valid cheques of the Seller
which will be deposited with the Purchaser on the Closing Date and which
shall be deemed to be satisfaction of the condition precedent in this
regard in the Agreement. The honoring of these cheques shall be fulfillment
of Seller's obligation in this regard, subject to Seller's responsibility
to make good any mistakes made in the amount of the special transfer bonus
paid to any employee or any omissions in payments due to employees.
19. Except as expressly stated herein all other terms of the Agreement shall
remain unchanged.
12
<PAGE>
In Witness Whereof the Parties Have Set Their Hands Hereunto.
/s/ /s/
- --------------------------------------- -----------------------------------
Cvalim -- The Electric Wire and Cables of Zion United Works Ltd.
Cable Company of Israel Ltd.
/s/
- ---------------------------------------
Dash Cable Industries (Israel) Ltd.
<PAGE>
Exhibit 3
ADDENDUM NO. 1 TO THE APPLICATION
TO OPEN AN ACCOUNT DATED DECEMBER 22,1998
Between
BANK HAPOALIM B.M.
and
CABLES OF ZION UNITED WORKS LTD.
December 29, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND INTERPRETATIONS.................................. 1
2. FACILITY ........................................................ 5
3. AVAILABILITY AND DISBURSEMENT ................................... 5
4. INTEREST AND DEFAULT INTEREST ................................... 6
5. ADDITIONAL INTEREST ............................................. 6
6. REPAYMENT AND PREPAYMENT......................................... 7
7. PLACE AND MANNER OF PAYMENT; TAXES............................... 8
8. APPLICATION OF PAYMENTS.......................................... 9
9. CHANGES IN MARKET CONDITIONS..................................... 9
10. REPRESENTATIONS AND WARRANTIES................................... 9
11. SECURITY......................................................... 10
12. UNDERTAKINGS AND COVENANTS ...................................... 11
13. EVENTS OF DEFAULT................................................ 12
15. OTHER RIGHTS OF THE BANK......................................... 14
18. FINANCIAL STATEMENTS............................................. 15
19. ACCEPTANCE OF ORDERS AND NOTICES NOT REDUCED TO WRITING.......... 16
20. ADMINISTRATION OF THE FACILITY................................... 16
21. THE BORROWER'S DUTY TO NOTIFY.................................... 16
23. EXPENSES......................................................... 17
24. ESSENTIAL PROVISIONS............................................. 17
25. DISCLOSURE OF INFORMATION........................................ 17
26. NOTICES.......................................................... 17
27. GOVERNING LAW AND PLACE OF JURISDICTION.......................... 17
28. CURRENCY INDEMNITY............................................... 18
</TABLE>
i
<PAGE>
ADDENDUM NO. I TO THE APPLICATION
TO OPEN AN ACCOUNT DATED DECEMBER 22, 1998
as signed on the day 29 of December 1998
Between
BANK HAPOALIM B.M.
of 50 Rothschild Blvd., Tel Aviv Israel (the "Bank")
and
CABLES OF ZION UNITED WORKS LTD.
of 18 Lishanski Street, Rishon Le-Zion, Israel (the "Borrower")
WHEREAS the Borrower has requested the Bank to grant, and the Bank
agrees, on and subject to the terms of this Agreement, to
grant, to the Borrower, a credit facility on terms and
conditions as set down in this Agreement;
WHEREAS all the credit which will be granted by the Bank under this
Agreement will finance the Acquisition of the Business
Activities of Cvalim as defined in the Agreement and the
funding of the Borrower's other business activities;
NOW THEREFORE it is hereby agreed and declared between the parties as follows:
1. DEFINITIONS AND INTERPRETATIONS
1.1. Definitions
In this Agreement, the following words and expressions shall bear the
following meanings unless the context otherwise requires:
"ADVANCE" means each borrowing of a portion of the Facility by the
Borrower.
"AUTHORISED CURRENCY" means any or all of the following: U.S. Dollars
Deutch Mark, French Franc, Pound Sterling (UK), Swiss Franc, Euro and
Yen.
In any case that any Advance was made available to the Borrower in
currency other than U.S. Dollars, in order to calculate the money
available to the Borrower on account of the Facility the countervalue
of the Advance in U.S. Dollars will be the rate customarily used in
the Bank for converting such currency to U.S. Dollars on the
Disbursement Date.
"ACQUISITION OF THE BUSINESS ACTIVITIES OF CVALIM". The acquisition of
the business activities of Cvalim - the Electric Wire 8 Cable Company
of Israel Ltd. which includes the
<PAGE>
production capabilities, inventory, goodwill etc. regarding the
productions and marketing of wires and cable products.
"AVAILABILITY PERIOD" (a) for Term Loan Credit means a period of
2 (two) years from the date hereof
through DECEMBER 31, 2000.
(b) For Revolving Line of Credit: a period
of 5 (five) years from the date hereof
through DECEMBER 31, 2003.
The "BANK" means, Bank Hapoalim B.M. and any of the branches or office
of the Bank in Israel, now or hereafter existing, wherever they may be
and the respective successors and permitted assignees of the Bank.
The "BANKS BOOKS" means, any books, records, statements of account,
any copy thereof, card catalogues, pages, films, any means of storage
and retrieval of data for purposes of electronic computers and any
other means of storage and retrieval of data, and any copies of the
foregoing.
"BANKING DAY" means a day on which banks are open for business in Tel
Aviv, London and the principal centr of the country of the relevant
Authorised Currency.
"BOND RATE" means the arithmetic mean of the gross yield to maturity
(rounded upwards, if necessary, to four decimal places)as published by
the Tel-Aviv Stock Exchange Ltd. ("TASE"), of all the series of fixed
rate bonds issued by the State of Israel and listed on the TASE, and
having a remaining period until maturity of 18 - 30 months,
denominated in NIS and fully linked to the Israeli consumer price
index, in each of the seven trading dates of the TASE immediately
preceding the beginning of the relevant rate period.
"CREDIT" Term Loan Credit
Revolving Line of Credit
"DISBURSEMENT DATE" with respect to each Advance means a Banking Day
upon which an Advance is actually disbursed.
"DISBURSEMENT REQUEST" means the request for an Advance in the form of
Exhibit "A" duly signed by the Borrower.
"FACILITY" (a) For Term Loan Credit: up to US$53,000,000 (Fifty
Three Million United States Dollars).
(b) For Revolving Line of Credit: up to US$30,000,000
(Thirty Million United States Dollars).
"FIXED LINKED RATE" means the rate of interest which is applied by the
Bank at the time of the relevant Disbursement Request to reflect the
Bank's wholesale rate of interest for credits linked to the Israeli
consumer price index, before application of any margin, for the
purpose of determining the rate of interest to be charged by the Bank
in respect of Cost of Living Index based loans to its customers in
amounts similar to the amount of the relevant credit and for similar
periods for such credit.
2
<PAGE>
"INTEREST"
(a) for Term Loan Credits:
(i) for Term Loan Credits in Authorised Currency - Libor plus
the Margin.
(ii) for Term Loan Credits in NIS - the Bond Rate plus the Margin
or the Fixed Linked Rate plus the Margin.
(b) for Revolving Line of Credit:
(i) for loans in Authorised Currency - Libor plus the Margin.
(ii) for loans in NIS - On Call credit not to exceed the "Prime
Rate" minus 1.1% p.a. for all other credit - as shall be
agreed between the Bank and the Borrower. The interest
mentioned in clause (b)(i)and (ii)above will be valid for a
period of 2 (two) years commencing on the day of signature
of this Agreement. The Borrower will have the right that the
above rate of interest shall apply also for a period of 1
(one), 2 (two)or 3 (three)years following such period (" The
Three Year Period"), provided that within 30 (thirty)days
from the date of the Acquisition of the Business Activities
of Cvalim becomes effective the Borrower will notify the
Bank of its request and provided further that the Borrower
will pay the Bank a commitment fee in the amount of USD
25,000 per each year, together with such notice. Otherwise
the rate for the Three Year Period will be set in accordance
with the best terms generally available to similar customers
and similar credits in similar circumstances at the time of
providing each credit.
"INTEREST PERIOD" means with respect to each Advance for which
interest is calculated on a quarterly basis:
(a) The period commencing on and including the Disbursement Date of
the respective Advance and ending on the last day of the Quarter
following the Disbursement Date (hereinafter "THE FIRST INTEREST
PERIOD"); and
(b) every Quarter succeeding the First Interest Period.
With respect to Advances for which interest is calculated on a
Semi-annual basis:
(a) The period commencing on and including the Disbursement Date of
the respective Advance and ending on the last day of the
Semi-annual period following the Disbursement Date (hereinafter
"the First Interest Period"), and
(b) every Semi-annual period succeeding the First interest Period.
"LIBOR" means the rate of interest (expressed as an annual rate)
determined by the Bank as hereinafter provided to be the arithmetic
mean (rounded up, if necessary, to the nearest whole multiple of
1/8%)of the (i)rates for Eurocurrency deposits in the relevant
Authorised Currency offered to the Bank for the respective Interest
Period which appears on the FRBD page for US Dollars, Euro, Pound
Sterling (UK), Deutch Marks the FRBF page for French Francs and the
FRBE page for Swiss Francs and Japanese Yen of the Reuters Screen as
3
<PAGE>
of 11:00 a.m. London time, two Banking Days prior to the commencement
of the respective Interest Period, or (ii) if Clause (i) above is
inapplicable, the rates of interest communicated to, and at the
request of, the Bank, by or on behalf of the principal London offices
of the Reference Banks or any two of them, as being the rates at which
they would offer to the Bank deposits in the relevant Authorised
Currency in the London Interbank Eurocurrency Market, for the
respective Interest Period as of 11:00 a.m. London time two Banking
Days prior to the commencement of that respective Interest Period, or
(iii) if Clauses (i) and (ii) are inapplicable, the rates of interest
communicated to and at the request of, the Bank, by at least two other
banks in London Interbank Eurocurrency Market, at the rates at which
such banks would offer the Bank a deposit in the relevant Authorised
Currency for the respective Interest Period as of 11:00 a.m. London
time, two Banking Days prior to the commencement of that respective
Interest Period.
"MARGIN": (1) for Term Loan Credits:
(a) in Authorised Currency - 1%per annum.
(b) in NIS -
(i) for loans on a Bond Rate basis: 1.3%per annum
(ii) for loans on a Fixed Linked Rate basis: 0.7%per annum
(2) For Revolving Line of credit:
(a) in Authorised currency 0.4% p.a.
(b) in NIS - (i) for On Call Credit - not to exceed the Prime
Rate minus 1.1% p.a. (ii) for all other credits as shall be
agreed upon between the Bank and the Borrower
"NIS" - New Israeli Shekel.
"ON CALL CREDIT" means credit granted in NIS on a revolving overnight
basis.
"PRIME RATE" means the arithmetic mean of the rate announced by the
Bank as its Prime Rate from time to time and applicable to all its
customers.
"QUARTER" means each of the three month periods; from the 1st January
through the 31st March; from the 1st of April through the 30th of
June; from the 1st of July though the 30th of September; and from the
1st of October through the 31st of December in each year.
"REFERENCE BANKS" means Bankers Trust Company, Barclays Bank PLC and
National Westminster Bank PLC.
"REVOLVING LINE OF CREDIT" means credit granted during the
Availability Period for a period of up to 12 (twelve)months (Renewable
upon Borrower's Request during the Availability Period)from the
Disbursement Date.
"SEMI-ANNUAL PERIOD" means a six months period from 1st of January
through the 30th June; from 1st of July though the 31st December in
each year.
4
<PAGE>
"TERM LOAN CREDIT" means credit granted for a period of 10 (ten) years
from the Disbursement Date.
1.2. INTERPRETATIONS
(a) This Agreement forms an integral part of the Borrower's
applications to open an account and the general conditions for
operating an account which have been signed by the Borrower in
the Bank ("the applications to open an account").
(b) Unless otherwise agreed the Borrower's obligations in this
Agreement are in addition to those contained in the Application
to open an account and nothing in this Agreement shall derogate
from any of the Banks rights under the Applications to open an
account.
(c) In the case of any contradiction between this Agreement and the
Application to open an account the provisions of this Agreement
shall govern.
(d) In this Agreement -
(i) the singular includes the plural and vice versa;
(ii) the masculine gender includes the feminine gender and vice
versa.
2. FACILITY
The Borrower hereby requests the Bank to grant, and the Bank hereby agrees,
on and subject to the terms and conditions of this Agreement to grant, to
the Borrower, Advances up to the outstanding principal amount of the
Facility to be advanced during the Availability Period. It is agreed that
an amount of at least US$43,000,000 (Forty Three Million United States
Dollars)of the Term Loan Credit will be disbursed on account of the Term
Loan Credit not later than the date on which the Acquisition of the
Business Activities of Cvalim is effective and in any event not later than
January 15, 1999 and provided all conditions set out in Sections 10,11,12
of this Agreement are complied with to the extent applicable and provided
that the Borrower shall notify the Bank that the above acquisition has
become effective.
3. AVAILABILITY AND DISBURSEMENT
In order to induce the Bank to provide the Borrower advances under the
Facility, the Borrower must furnish the Bank, 5 (five) Banking Days before
the date which the Advance is requested, a Disbursement Request. The sum
requested in each Advance for Term Loan Credit shall be not less than
US$1,000,000 (One Million United States Dollars), The Revolving Line of
Credit on an On Call basis will be made available provided the Borrower has
signed an agreement regarding the conditions upon which the Bank will
provide the Borrower such credit. Such On- Call Credit shall not be denied
or called from Borrower unless at that time the Bank shall deny or call
same from most its customers. The Borrower may on the last day of every
Interest Period subject to giving a 30 (thirty)days prior written notice
convert the currency on which an Advance was made available to it to
another currency of the Authorised Currency or to NIS loan based on the
Bond Rate or the Fixed Linked Rate (the "Converted Amount"). In such case
the Converted Amount shall bear Interest according to the terms specified
in this Agreement for Advances given on such Authorised Currency or NIS.
5
<PAGE>
Loans granted in NIS on the Bond Rate basis may be converted to Authorised
Currency every 2 (two) years on the date of computing the Bond Rate
interest as specified in section 4 (b) below. Loans granted in NIS on the
Fixed Linked Rate basis may be converted to Authorised Currency or to Bond
Rate basis subject to payment of Loss of Profit pursuant to section 6(c)
below.
4. INTEREST AND DEFAULT INTEREST
(a) Interest shall accrue on the Advances disbursed under the Facility.
(b) The interest for Term Loan granted on a Bond Rate basis will be
computed every 2 (two) years as of the date of each drawdown as
follows: one month before the end of the relevant 2 (two) years period
the Borrower will notify the Bank if it wishes the interest to be on
the Bond Rate basis or the Fixed Linked Rate. If the Borrower chooses
the Fixed Linked Rate basis, the interest for the following 2 (two)
years will be 0.7% p.a. If the Borrower chooses the Bond Rate basis,
the Bank will notify the Borrower the Margin which will be applicable
to such 2 (two) years period it being understood and agreed that such
margin may be higher, lower or equal to 1.3% p.a.
If the Borrower does not notify the Bank which rate basis it has
chosen then the interest for the following two year period will be the
Fixed Linked Rate plus 0.7% p.a.
(c) All Interest payable hereunder shall be due and payable on the last
Banking Day of each Interest Period, according to the Borrowers choice
as set out in the Disbursement Request, as of the day which the
principal to which such interest relates was disbursed.
(d) Interest for Loan in Authorized Currency payable under this Agreement
shall be computed on the basis of actual number of calendar days
elapsed divided by 360. Interest on loans granted on NIS shall be
computed on the basis of actual number of calendar days elapsed
divided by 365.
(e) If the Borrower does not repay the outstanding balance of the Credit
on the date specified therefor or if the Borrower does not repay any
sum which he is obliged to pay the Bank pursuant to this Agreement,
then that sum shall carry default interest at the rate of 4% per annum
in excess of the rate of interest applicable to the Credit
(hereinafter - "Default Interest") from the due date of payment of
that sum - or if there is no due date for the payment thereof from the
date of the Bank's demand to pay same in accordance with the terms
hereof and up to 7 (seven) Banking Days from that date and rate of
interest of 5.5% p.a. in excess of the rate of interest applicable to
the Credit for such sums after the said period of 7 Banking Days and
until its actual payment.
(f) Default Interest shall be calculated by the Bank on the daily, weekly
or other balances outstanding, as the Bank in its discretion shall
decide, and shall be paid by the Borrower or capitalised at the end of
each quarter, or any other period as the Bank shall decide in its sole
discretion.
5. ADDITIONAL INTEREST
The Borrower shall pay the Bank from time to time the additional amounts
(hereinafter "the Additional Interest") which as reasonably determined by
the Bank will be necessary to compensate the Bank for any actual increased
costs of the Advances incurred by the Bank by reason of the following:
6
<PAGE>
(a) any obligation under any law or under any agreement with, or any valid
demand imposed on the Bank by, the Bank of Israel and/or by any other
competent authority in Israel or abroad following the execution
hereof;
(i) to hold liquid assets to any degree or in any currencies in
connection with the disbursing of the Advances and/or the
continued funding of the Advances; and/or
(ii) to pay and/or make provision for any payments whatsoever to the
State of Israel and/or the State Treasury and/or any other
competent authority in connection with the disbursing of the
Advances and/or the continued funding of the Advances.
(b) The aforesaid shall apply provided that the Bank will notify the
Borrower in writing of any increased cost upon the Bank becoming aware
of the same, and provided such obligation or demand then applies to
all Banks in Israel.
(c) Without derogating from the provisions of Clause 5 hereof, the
Borrower may, after receipt of the demand referred to in this clause,
notify the Bank that it will prepay, on the last day of the current
Interest Period or within 30 days from the Bank's above notice,
whichever is later the whole (but not part only)of the outstanding
balance of the Credit which was granted on Authorised Currency;
whereupon the Borrower shall prepay to the Bank the outstanding
balance of such Credit together with accrued interest thereon and all
other amounts owing to the Bank hereunder.
6. REPAYMENT AND PREPAYMENT
(a) Each Advance shall be repaid to the Bank in Quarterly or Semi-annual
Period payments of principal as the case may be on the last day of
every Quarter or Semi-annual Period as the case may be, beginning on
the first Interest Period succeeding 2 (two)years following the
Disbursement Date.
(b) The Borrower may, on the last Banking Day of any Interest Period and
upon giving at least 30 (thirty) days prior written notice to the Bank
(which shall be irrevocable and shall constitute an undertaking by the
Borrower to prepay accordingly) prepay the principal indebtedness of
the Authorised Currency Advances without premium or penalty in whole
or in part (such part being in each instance not less than
US$l,000,000 (One Million United States Dollars). Advances granted in
NIS which bear interest under the Bond Rate basis may be prepaid every
2 (two)years from the Disbursement Date of such Advance without any
premium or penalty providing the Borrower has given a 30 days prior
written notice.
(c) If the Borrower chooses to prepay any portion of the principal of NIS
Advances on a Fixed Linked Rate basis then together with the prepaid
amount on account of the principal amount of such Advances, the
Borrower shall pay to the Bank an amount equal to the loss of profit
caused to the Bank by reason of such prepayment (hereinafter "the Loss
of Profit"). For the purposes hereof, the Loss of Profit shall mean
the difference between (i) the whole of the amounts which the Bank
would have earned on the prepaid amounts (had such prepayment not have
been effected) by way of linkage to the Index and interest in
accordance with the provisions hereof from the date of prepayment and
until the agreed date of repayment as stipulated in Subsection (a)
above, and (ii) the amounts which the Bank could earn on such prepaid
amount by investing same in bonds of the State of Israel or any other
entity deemed by the Bank to have a "AAA" rating, (linked to the Index
in whole or in part if and is available) for a similar period. The
Bank shall calculate the amount of the Loss of Profit and shall give
the Borrower notice of such amount not later than 7 (seven) days
before the date
7
<PAGE>
of prepayment. The amount so calculated shall be deemed the actual
Loss of Profit and shall be binding on the Borrower.
(d) If any payment due by the Borrower under this Agreement falls due on a
day which is not a Banking Day such payment shall be made on the next
day which is a Banking Day unless it would thereby be made in the next
calendar month, in which case such payment will be made on the
immediately preceding Banking Day.
(e) Where any instalment on account of the Facility falls due in a
calendar month in which any interest Period ends, the due date of said
instalment shall, if necessary, be deferred to the last day of said
Interest Period so as to ensure that the due date for payment on
account of the Facility and the due date for payment of interest in
any such case are one and the same.
7. PLACE AND MANNER OF PAYMENT; TAXES
(a) All payments to be paid by the Borrower hereunder shall be made to the
Bank free of any taxes, deductions or charges and without set-off or
counterclaim, in lawful and freely transferable currency of the
Advances and in funds available to the Bank at the Branch the Borrower
received the Advances or at any other place in Israel nominated by the
Bank and not prohibited for that purpose by any applicable law
provided that 30 (thirty) days prior written notice thereof shall have
been given to the Borrower by the Bank.
(b) (i) Notwithstanding the provisions of Section 7(a) above, in the
event that the Borrower is required under the laws of the State
of Israel to deduct or withhold any amount in respect of income
tax on payments of interest payable hereunder, the Borrower shall
be entitled to make such deduction or withholding, provided
always that in any such case the Borrower shall furnish to the
Bank forthwith adequate tax receipts in respect of any such
deduction or withholding, in form and substance as required under
the tax legislation.
(ii) In the event that the Borrower shall not furnish to the Bank any
available tax receipts as aforementioned and that the said income
tax authorities will not treat any such deduction or withholding
as a payment on account of the Bank's income tax for reasons not
related to the Bank, the Borrower shall take all customary steps
necessary to obtain the said tax receipts, the payment of
interest under this Agreement, as well as other payments due to
be paid by the Borrower to the Bank under this Agreement, shall
be increased to such amount as is necessary to yield and remit to
the Bank interest at the rate specified in this Agreement after
provision for payment of such tax. The Borrower shall, at the
request of the Bank, execute and deliver to the Bank such
instruments as may be necessary or desirable to give full force
and effect to such increase in the interest. The Borrower shall
timely issue the adequate tax receipts.
(iii) The Borrower shall indemnify the Bank against any losses or
costs actually incurred by it by reason of any failure to make
any such deduction or withholding or by reason of any increased
payments not being made on the due date for such payment.
(iv) In the event all or a portion of such deduction or withholding is
returned to the Bank, the Bank shall return the same sum to the
Borrower.
8
<PAGE>
(v) The Borrower shall promptly deliver to the Bank any receipts,
certificates or other proofs evidencing the amounts (if any)paid
or payable in respect of any deduction or withholding as
aforesaid.
8. APPLICATION OF PAYMENTS
Every sum, payment or credit of every kind whatsoever, which shall be paid
or received to the Borrower's Credit or in favour of the Borrower, from
realisation of any security which has or will have been given by the
Borrower or others on it's behalf, shall serve for repayment of the
Facility, Additional Interest, Default Interest, Interest, commissions
payable by the Borrower (hereinafter - "Commissions")and other payments, in
the following order of precedence:
(1) firstly, to the discharge of all the costs and expenses incurred and
which may be incurred pursuant to this Agreement;
(2) secondly, to the discharge of the sums becoming due to the Bank by
reason of any terms of linkage or on account of interest, damages,
commissions, fees, charges and expenses due and becoming due to the
Bank pursuant to this Agreement;
(3) thirdly, to the discharge of the principal amount of the sums
according to this Agreement.
9. CHANGES IN MARKET CONDITIONS
(a) If at any time by reason of changes affecting the Eurodollar Interbank
Market, the Bank is unable, due to circumstances beyond its control,
to determine the LIBOR, or there shall be no objective possibility for
the Bank to refinance itself in the Authorised Currency in respect of
the then outstanding balance of the principal amount of the Facility
then and in any such event the Bank shall give written notice as soon
as possible to the Borrower to that effect.
(b) The Bank shall then offer the Borrower an alternative basis (the
"Substitute Basis")for the continuation of the Facility, which shall
retain to the extent possible the same conditions applicable to the
Credit the Substitute Basis may include alternative currencies or
alternative rates of interest taking into account the outstanding
balance of the principal amount of the Facility. The Substitute Basis
shall be binding upon the Borrower and shall take effect in accordance
with its terms from the date specified in the Bank's notice.
(c) If the Borrower determines that it does not wish to continue to borrow
the Facility or part thereof under the Substitute Basis, it shall so
notify the Bank within 60 (sixty) days of receipt of the Banks written
notice specifying such Substitute Basis whereupon the outstanding
balance of the principal amount of the Facility coupled with interest
accrued and accruing thereon at a rate prevailing during the last
Interest Period in respect of which LIBOR and the rate of interest has
been determined shall thereupon become immediately due, owing and
payable.
10. REPRESENTATIONS AND WARRANTIES
(a) The Borrower is a company duly organised and validly existing under
the laws of the State of Israel and has the power and authority to
carry on and conduct its business as currently conducted and to own
its property and other assets.
9
<PAGE>
(b) The Borrower has the power to execute, deliver and perform its
obligations under this Agreement and to borrow the amount of the
Facility; all necessary actions have been taken to authorise the
execution, delivery and performance of this Agreement and all other
documents to be executed and delivered by it in connection with same
or pursuant thereto.
(c) This Agreement constitutes a valid and legally binding obligation of
the Borrower and the Bank, enforceable in accordance with its terms.
(d) The execution and delivery of, the performance of the Borrower's
obligations under, and in compliance with the provisions of this
Agreement will not (i) contravene any existing applicable law,
statute, rule or regulation or any judgement, decree or permit, to
which the Borrower is subject, (ii) conflict with, or result in any
breach of any, of the terms of, or constitute a default under, any
agreement or other instrument to which the Borrower is a party or
subject or by which the Borrower is bound, (iii) contravene or
conflict with any provisions of the the Borrower's Memorandum or
Articles of Association.
(e) To the Borrower's knowledge no event has occurred and is continuing
that constitutes, or that, with the giving of notice or the lapse of
time or both, would constitute an event of default specified in
section 13 hereof or would constitute a default under any agreement or
instrument evidencing any indebtedness of the Borrower, and no such
event will occur upon the provision of the Facility.
(f) No consent or approval of, a notice to, any creditor of the Borrower
is required by the terms of any agreement or instrument evidencing any
indebtedness of the Borrower for the execution or delivery of, or the
performance of the obligation under this Agreement.
(g) There are no actions, proceedings or claims pending, or to the
Borrower's knowledge threatened, the adverse determination of which
might have a materially adverse effect on the Borrower's financial
condition or impair its ability to perform its obligations under or
affect the validity or enforceability of this Agreement.
11. SECURITY
As security for the due and punctual payment of the Credit and the
performance of other Borrowers obligations under this agreement the
following securities will be given by the Borrower and/or on its behalf to
the Bank:
(a) A first priority floating charge and pledge over all the Borrower's
assets.
6 (six)months after the first drawdown of the Term Loan Credit and
pursuant to the Borrowers request the Bank shall consent to the
Borrower's creating a floating charge of the same nature as the charge
the Borrower created in the Banks favour for the benefit of other
Israeli banks, provided that such other Israeli banks will sign an
agreement in form and substance as customarily executed by the banks
according to the terms of which the Bank will be entitled to receive
80%of the net proceeds from the realization, of said floating charge.
(b) The Borrower will create in the Bank's favour a first ranking fixed
charge over all the Borrower's rights in the land situated in
Rishon-Le-Zion, Sha'ar Hanegev and Eilat.
In any case where any deed of charge serves as security for the payment of
the above sums or for the performance of the undertakings herein contained,
it is hereby expressly stipulated that the deed
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of charge forms an integral part of this Agreement and all the terms and
conditions, declarations and obligations contained in the deed of charge
form an integral part of this Agreement and are included herein. It is also
hereby expressly stipulated that this Agreement shall not operate so as to
derogate from or alter the deed of charge, unless otherwise intended
therein. For the removal of doubt, the provisions herein regarding
immediate repayment, set-off, lien etc., shall govern.
12. UNDERTAKINGS AND COVENANTS
(a) The Borrower undertakes and covenants that from the date of this
Agreement and as long as any monies owing by the Borrower under this
Agreement :
(i) It will not declare or pay any dividend other than when the ratio
between Shareholders Equity to the Total Assets for the
immediately preceding 12 calendar months reaches 40% and when the
Total Assets is not less than USD 70 million.
(1) In computing the above ratio the Bank will not take into
account the loan granted by the Borrower to the Israel
Electric Company Ltd. according to tenders no. 589635,
616314, 596053 or on additional loan granted by the Bank to
the Borrower in that respect.
(2) In any event the payment of dividend will be executed
only after the Borrower has repaid the sum due to the
Bank during the current calendar year in which the
dividend is to be paid
(ii) As of the financial statement from the year 2001 onwards, the
EBITDA will equal not less than USD 13,250,000 , calculated and
converted to US Dollars basis so long as the Financial Reports of
the Borrower are on NIS basis, as the average of the
Representative Rate of Exchange of the NIS to the US Dollar on
the last day of the last 4 (four)quarters preceding such
calculation. For the purpose hereof, "EBITDA" shall mean, for any
calendar year, the net income, less interest income and
profits/losses of an extraordinary nature, plus the sum of
interest expenses, taxes, depreciation, charges of any
extraordinary nature, amortization and all other non-cash charges
as evidenced by the audited financial statements of the Borrower
for such calendar year.
(iii) The Borrower will inform the Bank about any investment which is
not done in the ordinary course of its main business activities
which is over 10%(ten percent)of its Shareholders Equity.
(b) In addition to all conditions set forth above, the Revolving Line of
Credit will be available to the Borrower provided the following
covenants computed with respect to the two immediately preceding
calendar quarters, are complied with:
(i) The ratio of the Shareholders Equity to the Balance Sheet will
not be less than 25%. In any event the Borrower will cease to
present its financial statements in NIS linked to the Israeli
consumer price index and such financial statements will be
presented in US Dollars then the above ratio will not be applied
and will be replaced by a new ratio as will be agreed between the
Bank and the Borrower.
(ii) The percentage of the Operating Income from Sales shall not be
less than 4%.
(iii) The ratio between Current Assets and Current Liabilities will
not be less than 1.
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(iv) In computing the above ratios for the years 1999 and 2000,
expenses which were utilised for the reorganisation of the
Borrower as a result of the acquisition of the Business
Activities of Cvalim will not be taken into account, and the
loans mentioned in Section 12(a)(i)1 above
(v) All the terms used in section 12 shall be interpreted according
to generally accepted accounting principles in the State of
Israel from time to time.
(c) (i) The Borrower will provide the Bank all financial reports, interim
and annual, as required by the Tel-Aviv Stock Exchange from
publicly traded companies. Notwithstanding the above the Bank has
no objection that the Borrowers financial statements will be on a
USD basis provided that the above financial statement will comply
with USA, GAAP reporting principles as long as the Borrower will
provide the Bank such reports on a quarterly basis.
(ii) The Borrower will provide the Bank quarterly reports specifying
all credits granted by all financial institutions to the Borrower
at that date, and semi-annual reports in which the Borrower will
specify the status of the Borrowers Inventory, and provide
details reasonably satisfactory to the Bank with respect to the
Borrower Receivables and Payables, all as reasonably demanded by
the Bank.
(iii) Borrower will provide the Bank a 10 Banking Days prior written
notice in the case of early repayment of a debt in an amount
exceeding $5,000,000.
(iv) There will be no change in the control over the Borrower. For
this purpose "control" means the holdings of Superior Telecom
Inc. ("Superior") directly or indirectly in the Borrower's issued
share capital shall not be less than 40%at all time and provided
that at all times Superior will have the majority of the
Borrower's Board of Directors.
13. EVENTS OF DEFAULT
Without derogating from the generality of this Agreement, the Bank shall be
entitled to demand the immediate payment of all the above sums in any one
of the events enumerated below by giving the Borrower written notice, in
which case the Borrower undertakes to pay the Bank all the above sums, and
the Bank shall be entitled to debit any of the Borrowers accounts with any
of the above sums and to take whatever steps it sees fit for the collection
thereof and in particular to realise on the account the securities by any
means permitted by law. The events are as follows:
(a) If the Borrower commits a material breach of or fails to perform any
material term and conditions herein contained or of any other material
obligation which the Borrower has incurred or may incur towards the
Bank in relation to any Advance granted or which may be granted
pursuant to this Agreement or if it transpires that any material
declaration or representation made by the Borrower in relation to the
granting of any Advance pursuant hereto is materially false or
inaccurate provided the Bank has notified the Borrower's 30
(thirty)days in advance and Borrower failed to cure same within said
period.
(b) If the Borrower adopts a voluntary winding up resolution without the
Bank's prior written consent or if an order for winding up is made
against it or if its name is struck out or is about to be struck out
from any official register kept by law.
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(c) If a receiver is appointed over all or substantially all of the
Borrowers assets, or if an order is made against the Borrower for
receivership or an interim liquidator or special manager is appointed
over such assets and the appointment of such interim liquidator or
special manager is not cancelled within 10 days of its appointment.
(d) If an attachment or similar process of execution is levied against all
of or substantially all of the Borrower's assets or any substantial
part of them or against any collaterals given by it or on its behalf
to the Bank and such an attachment is not cancelled within 30 days of
its issuance.
(e) If there is a change in ownership or control over the Borrower without
the Bank's prior written consent. Change in ownership or control means
that Superior Telecom Inc. has ceased to hold directly or indirectly
at least 40% of the paid up share capital of the Borrower.
(f) If the Borrower ceases to pay substantially all of the Borrower's
debts.
(g) If work at the Borrower's business ceases or is substantially
curtailed for 3 (three) consecutive months or more. The Bank shall
apply reasonable discretion in exercising its rights under this
section.
(h) If the Bank in its reasonable discretion considers that a material
occurrence has taken place which is most likely to prevent the
Borrower from performing its obligations hereunder towards the Bank;
(i) if the Borrower falls behind in the payment of any amount owed by it
to the Bank for more than 7 (seven)days after the Bank has given the
Borrower prior written notice of 7 days.
(j) If the Borrower does not furnish the Bank with periodic financial
statements, as provided in section 18 hereof, or if the Borrower is
required so to do and it does not comply with any such requirement
within 30 days after being given a written notice.
(k) If there is a decrease in the number of the Borrower's shareholders
and/or members below the minimum number required by law.
(l) If, in the discretion of the Bank reasonably applied, a material
deterioration has occurred in the value of the collateral security for
the payment of the Secured Sums i.e. where the proceeds according to
the Banks reasonable discretion that will be received from the
realization of such collaterals can not cover the amount of the
Secured Sums, provided that in such case the Bank has notified the
Borrower 30 (thirty)days in advance of its intention to act according
to this clause and the Borrower has not furnished additional adequate
security to the reasonable satisfaction of the Bank within that
period;
14. If the Borrower does not repay any of the above sums on the expiration date
of the Advance or upon same becoming due for immediate repayment pursuant
to section 13 hereof, (each of such dates being hereinafter called - "the
due date of payment") then the above sums shall carry Default Interest from
the due date of payment until their actual and final payment.
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15. OTHER RIGHTS OF THE BANK
(a) Subject to the following the Bank shall have the right of possession,
lien and set-off over any amounts, assets and rights including
securities, Bank notes, documents in respect of goods, insurance
policies, bills, assignments of rights, deposits, collaterals and
their countervalue held at the Bank at any time for the Borrower or on
its behalf including such as have been delivered to the Bank for
collection, security, safe-keeping or otherwise. in case the Bank is
entitled to Immediate repayment under section 13 above and to the
extent of such payment Subject to the following the Bank shall be
entitled to retain the said assets until payment in full of the above
sums or to realise them by selling them and applying the countervalue
thereof in whole or in part to the payment of the above sums.
(b) In case the Bank is entitled to immediate repayment of the Credit
according to section 13 above, without derogating from the Bank's
right of lien in accordance with sub-paragraph (a)above, the Bank may
at any time, but subject to the following shall not be obliged:
(i) To apply to any amounts owed by the Borrower, any amounts owed to
it by the Bank in any account or manner or for any reason (even
before the maturity of the amounts owed to it by the Bank as
aforesaid).
(ii) To purchase for the Borrower's account, any amount in foreign
currency which may be required for payment of any of the amounts
owed by it, or to sell any foreign currency standing to the
Borrower's credit at the Bank and to apply the proceeds to the
payment of any of the amounts owed by the Borrower.
(iii) To debit any of the Borrower's accounts with any of the amounts
owed by the Borrower, irrespective of whether the Borrower has
been called upon to effect payment thereof pursuant hereto or
not.
(iv) The Bank may effect set-off without any prior notice. as stated
in sub-section B(i), (ii) and (iii) above. However in the
following cases the Bank may effect such set- off by giving the
Borrower 10 (ten)days written notice prior to effecting such set-
off:
(1) In case of applying any amounts prior to their maturity.
(2) In case of applying any time deposit which but for such
application would have been automatically extended or
renewed, so that certain rights or benefits would have
accrued to the Borrower.
(3) Notwithstanding sub-clause (b)(iv)(1) above, if the delay in
effecting such application might be detrimental to the Bank
or adversely affect any of its rights, such application may
be made without such notice.
Moreover, where notice has been sent to the Borrower and in the course
of the 10 (ten)day period an attachment order or a receivership notice
affecting the Borrower is received or a similar event occurs, such
application may be made immediately.
(v) Any purchase or sale under sub-clause (b)(ii)above, shall be effected
at the rate of exchange prevailing at the Bank, out of the amounts in
Israeli currency or foreign currency, as the case may be, standing to
the Borrower's credit at the Bank, or which may be obtained by
realising as aforesaid collaterals given or which may have been given
by the Borrower to the Bank.
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The term "the rate prevailing at the Bank" shall mean, with respect to
any purchase of foreign currency for the Borrowers account, the
highest rate for cheques and transfers at which the Bank at any
relevant time generally sells to its customers the relevant foreign
currency against Israeli currency, in addition to any conversion
charge, tax, levy, compulsory payments or any other similar payments;
and with respect to any sale of foreign currency from the borrower's
account, the lowest rate for cheques and transfers at which the Bank
at any relevant time generally purchases from its customers the
relevant foreign currency against Israeli currency, after deducting
any conversion charge, tax, levy, compulsory payments or any other
similar payments.
(vi) Subject to the aforesaid the Borrower hereby declares that it is aware
of the fact that in such cases where the Bank may use its rights of
set-off prior to the maturity of any of the Borrowers deposits or any
part of them, the Borrowers rights may be affected (for example in
relation to interest rates, linkage differences, exchange differences,
rights to bonuses or loans, tax exemptions or reductions, deductions
at source, including the right not to be debited with charges and fees
necessarily resulting from making any such set-off, if according to
the terms governing any such account it had such rights).
Nevertheless, the Borrower agrees to bear such costs and charges
incurred by making any such set-off.
16. Subject to the aforesaid the Bank shall be entitled at any time to debit
any of the Borrower's accounts with any sum due or which shall be due from
it in any way and apply any sums received from or for it, to whichever
account it may see fit and to pass any amount standing to the Borrowers
credit to any other account, as it may see fit.
17. (a) The Borrower hereby confirms that the Bank's Books, accounts and
entries shall be deemed to be prima facie correct and shall be prima
facie evidence against it in all their particulars, including all
reference to the calculation of the above sums, the particulars of the
bills, guarantees and other securities and any other matter related
hereto.
(b) The Borrower hereby confirms receipt of the Bank's notification that
according to the Protection of Privacy Law, 5741-1981:
(i) All the particulars furnished or which may be furnished by the
Borrower to the Bank may be used by the Bank in the normal course
of its operations at its own discretion in connection with this
Agreement;
(ii) All the particulars furnished or which may be furnished by the
Borrower to the Bank shall be stored in keeping with the Bank's
requirements from time to time in data bases of the Bank and/or
of suppliers to the Bank from time to time of computer and data
processing and warehousing services and the Borrower hereby
confirms its agreement thereto.
18. FINANCIAL STATEMENTS
The Borrower confirms that it is aware that since it is obliged by law to
prepare periodic financial statements, the furnishing of such financial
statements to the Bank in accordance with the regulations for the
supervision of banks and/or of the Bank of Israel and/or any provision of
law is condition precedent for the provision of Facility, and it undertakes
to furnish same as aforesaid, in the form laid down by law or in accordance
with generally accepted accounting principles and with
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<PAGE>
such regularity as may be required by the Bank from time to time according
to applicable rules and regulations.
19. ACCEPTANCE OF ORDERS AND NOTICES NOT REDUCED TO WRITING
The Bank shall be entitled, in its sole discretion to accept or refuse any
orders or notices given verbally, by telephone or by any other mode which
is not reduced to clear and legible writing. In the event that the Bank
agrees to act on the Borrowers instructions or requests not being an
instruction in writing in the usual way, the Borrower accepts all
responsibility for any mistake, misunderstanding, or discrepancy and for
any damage, loss or breach which may be caused as a result of such
instructions being so given.
20. ADMINISTRATION OF THE FACILITY
The Bank may administer the Facility or any part thereof by booking same
with any of its branches, whether in Israel or abroad. The Bank may at any
time and from time to time at its own discretion and without any consent
being required from the Borrower, transfer the administration of the
Facility or any part thereof from one branch of the Bank to another,
whether in Israel or abroad, without prejudice to the Borrower.
21. THE BORROWER'S DUTY TO NOTIFY
(a) The Borrower undertakes to notify the Bank in writing of any
contention or objection it may have, if any, in connection with any
statement, extract of any account, confirmation or notice received
from the Bank including information received through any automatic
terminal facility of which the Borrower is specifically aware.
(b) Without derogating from the other provisions of this Agreement, any
waiver, extension, concession, acquiescence or failure to act
(hereinafter: "waiver") on the Bank's part as to the non-performance,
partial performance or incorrect performance of any of the Borrower's
obligations pursuant to this Agreement, such waiver shall not be
treated as a waiver on the part of the Bank of any rights, but as a
limited consent given in respect of the specific instance.
22. The Borrower hereby undertakes to notify the Bank within 7 (seven)Banking
Days of becoming aware of the following:
(a) of any claim of right filed to court in the sum of at least $1,000,000
to any collateral security given or which may be given to the Bank
pursuant hereto and/or of any execution or injunction proceedings or
other steps taken to attach, preserve or realise any such security.
(b) of any of the events enumerated in section 13 above.
(c) of any change of address.
(d) of any application for winding-up the Borrower's affairs which is
filed against the Borrower or by the Borrower as well as the adoption
by the Borrower of a resolution for voluntary winding-up and/or
merger.
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(e) of any application to appoint a receiver over all or substantially all
of the Borrower's property.
23. EXPENSES
All of the expenses in preparing this Agreement as agreed with the
Borrower, the stamping thereof, and all and any expenses customary at the
Bank involved in the enforcement thereof or in the realisation of the
securities for the enforcement thereof, (including fees of the Bank's
advocates)shall be paid by the Borrower to the Bank upon the Banks first
written demand. From the date the demand was made until payment in full,
the aforesaid expenses together with the interest thereon, shall be secured
by the securities mentioned in section 11 hereof. Moreover, the Bank may
debit any account of the Borrower with the aforesaid expenses together with
interest thereon by giving written notice.
24. ESSENTIAL PROVISIONS
Sections 2, 4, 6, 8, 9, 10 as to material representations and warranties
only, 11 as to material provisions of the Deed of Charge/Debenture, 12
a(l)(1)(2), 13, 15 and 18 are essential provisions of this Agreement.
25. DISCLOSURE OF INFORMATION
Any branch or agency of the Bank on whose books any Credit or any part
thereof is recorded may disclose to the Head Office of the Bank or if
required by law to the Bank of Israel, the Examiner of Banks, the
Controller of Foreign Exchange or any person acting under their authority
or to any other regulatory authority having jurisdiction over such branch
or the Head Office of the Bank, for delivery by the latter to any such
regulatory authorities, such information about the Borrower or any Credit
granted on the strength hereof as may be required by such regulatory
authorities or as the branch of Head Office of the Bank may reasonably deem
is required by law.
26. NOTICES
The Bank may give any notice pursuant hereto by sending same to the
Borrower. Any notice sent by the Bank to the Borrower by registered mail
according to the address first above written or according to any other
address in Israel of which the Borrower shall advise the Bank in writing
shall be deemed to be prima facie evidence that such notice has been
received by the Borrower within 72 hours of the time of dispatch of the
letter containing the notice. A certificate in writing signed by the Bank
shall be prima facie evidence as to the time of dispatch of any such
notice. The Bank will send a copy of such notice by fax to Superior Telecom
Inc. through the following fax number 212-7573423. A certificate originated
from the fax evidencing the same shall be conclusive evidence to its
dispatch.
27. GOVERNING LAW AND PLACE OF JURISDICTION
(a) This Agreement shall be construed in accordance with the laws of the
State of Israel.
(b) For the purposes hereof the exclusive place of jurisdiction shall be
the competent court of law in Israel situated in the city Tel Aviv -
Jaffa.
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28. CURRENCY INDEMNITY
The Borrower agrees to indemnify the Bank against any loss incurred by it
as a result of any judgement or order being given or made for the payment
of any of the above sums and such judgement or order being expressed in a
currency other than the currency in which such sums are payable and as a
result of any variation having occurred in the rates of exchange between
the date on which any such sum becomes due pursuant hereto and the date of
actual payment thereof. The foregoing indemnity shall constitute a separate
and independent obligation of the Borrower and shall apply irrespective of
any indulgence granted to the Borrower from time to time and shall continue
in full force and effect notwithstanding any such judgement or order
provided that such judgment has not declared this section to be invalid or
ruled in contrary of this section.
AND IN WITNESS WHEREOF THE BORROWER HAS SIGNED
----------------------------------
CABLES OF ZION UNITED WORKS LTD.
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EXHIBIT "A"
DISBURSEMENT REQUEST (NO. __________)
TO: BANK HAPOALIM B.M.
RE: REQUEST FOR ADVANCE ON ACCOUNT OF THE FACILITY UNDER THE CREDIT
AGREEMENT DATED AS OF __________199___. (THE "AGREEMENT").
---------------------------------------------------------------
---------------------------------------------------------------
1. Unless the context otherwise requires, words and expressions defined in the
Agreement shall have the same meaning when used in this Request.
2. We hereby request an Advance on account of the Term Loan Credit/Revolving
Line of Credit of the Facility in the amount of ______________________ in
________________ (name of currency) to be paid on a Quarterly /Semi-annual
basis.
3. We hereby give you an irrevocable instructions to credit the proceed of the
Advance to our Account No. ____________ with the ______________ Branch of
the Bank on ______________ (date).
----------------------------------
CABLES OF ZION UNITED WORKS LTD.
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EXHIBIT 4
SUPERIOR TELECOM ANNOUNCES COMPLETION OF CVALIM ACQUISITION
NEW YORK, Jan. 5 /PRNewswire/ -- Superior TeleCom Inc. (NYSE: SUT - NEWS) today
reported that Superior's majority owned Israeli subsidiary Cables of Zion
completed its previously announced acquisition of the wire and cable operations
of Cvalim -- The Electric Wire and Cable Company of Israel. The all cash
purchase price of $43.5 million was paid at the closing.
BT Alex Brown acted as the strategic advisor to Cables of Zion and Bankers Trust
Company through its local Israeli affiliate arranged acquisition and working
capital credit facilities in connection with the transaction.
Superior TeleCom Inc. is the largest domestic wire and cable manufacturer and
the fourth-largest wire and cable manufacturer in the world. Superior TeleCom
manufactures a broad portfolio of products with primary applications in the
communications, original equipment manufacturer and electrical wire and cable
markets. It is a leading manufacturer and supplier of telecommunications cable
and wire products to telephone companies, distributors and system integrators;
electrical insulation materials for motors, transformers and electrical
controls; industrial wire for applications in appliances, construction,
recreational vehicles and industrial facilities; and automotive wire and
specialty wiring assemblies for automobiles and trucks.
