Document:

20-F

Exhibit 4.11 

Agreement  

Drawn Up and Signed on
19 March 2006 

Between: 

	 	
Tzlil Ad Ltd. Private Company 512718958

Of Rehov Raoul Wallenberg 4, Ramat Hechayal, Tel Aviv

(C/O SGS Construction Co. Ltd)

(Hereinafter: "The Seller") 

On the one hand;  

And Between 

	 	
Check Point Software Technologies (or someone on its

 behalf) Public Company 52002821

Of Rehov Jabotinsky 3a, Ramat Gan, 52520

(Hereinafter: "The Buyer")  

On the other hand;  

	Whereas  		the
seller declares that he is the registered leaseholder of the property, as
                        defined below, and according to the Contact of Lease, as defined
below; 

	and whereas  		
            the building has been erected on the property, as defined below; 

	and whereas 		 the
buyer wishes to buy from the seller the Sale, as defined below, after the completion of
works, as defined below, and all contingent upon and in return for the mentioned in this
agreement below;  

	and whereas  		
            the parties wish to arrange the relations between them within the framework
of                         this agreement; 

It is therefore declared
stipulated and agreed amongst the parties as follows:  

	1. 	Introduction

	 	1.1. 	The
introduction and all the attached appendixes are an integral and inseparable
               part of it. 

	 	1.2. 	The
tiles of the sections of the agreement are for convenience only and will not
               serve as a basis for interpretation for the agreement and/or for any of
its                conditions. 

	 	1.3. 	The
time counted in this agreement will be according to the Gregorian calendar. 

	2. 	Definitions

	 	2.1 	The
following words as detailed below will have the following definitions as appear bedside
them, unless specifically determined otherwise or if the context of the matters dictates
another interpretation: 

	  	 "The Land" 
	–	 The known as Plot 69, lot 7094, registered located at Rehov
Hassollelim in Tel Aviv. A copy of the Land registries attached as
Appendix "A" to the agreement.  

	  	 "The Municipality" 
	–	 The Tel Aviv - Jaffo Municipality

	  	 "The Lease Contract" 
	–	 The Lease Contract dated 19.5.1954 and signed between the
Municipality and "Lachmeinu Cooperative Bakeries Ltd. Relating to
the land, and according to which the duration of the lease is until
31.8.2010 (hereinafter "The Duration of Lease") and was recorded in
the Lands Registry Bureau. A copy of the Lease Contract is attached
to this Contract as Appendix "B" 

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	  	 "The New Lease Contract" 
	–	 The new Lease contract attached as Appendix "C" to this Contract, to
which the Municipality expressed its consent on 12/3/2003 and is
attached as Appendix "D" to this Contract. 

	  	 "The Lease Fees" 
	–	 The  payment  to be paid to the  municipality  for it to sign the new
lease contract with the buyer.

	  	"The Building or Structure" 
	–	 A two segmented  eight storey  structure built on the land (including
a high entrance floor) to an area of  approximately  16,000sqm,  also
with basements,  as defined below, that were constructed on the land.

	  	 "The Basements" 
	–	 A high upper basement (level -1) and three  additional  basements (on
Levels -2, -3, -4) with an area of approximately 26,000sqm.

	  	 "The Current UCP" 
	–	 The Urban  Construction  Plans numbered K, 221, 376, 1043, 1386, 651a
'ayin' 'chet' 1043a 3262 and 'ayin' 1that relate also to the land.

	  	 "Urban Construction Plan" "UCP" 
	–	 All the  Urban  Construction  Plan  applicable  and/or  that  will be
applicable to the land, including the current UCP

	  	 "The Proposed UCP" 
	–	 The UCP whose principals are attached as Appendix "C" to this
contract. 

	  	 "The Sale" 
	–	 The land included built on land  (including  the building)  including
the  leaseholders  rights  to  contractually  consent  to a new lease
contract with the  municipality,  and  including  the current  and/or
future  building  rights.  In the definition of a sale the details in
the technical specifications will be included as defined below.

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	  	 "Bank Hapoalim" 
	–	 Bank Hapoalim Ltd.

	  	 "The Bank Hapoalim Lien" 
	–	 A primary  mortgage for an unlimited  amount  recorded  with the Land
Registration  Bureau under the name of Bank  Hapoalim for the land in
a deed  numbered  024298/1999/0001  (hereinafter:  "The Bank Hapoalim
Mortgage");  and another two liens to Bank Hapoalim recorded with the
registrar of companies in relation to the sellers rights on the land.

	  	 "The Architect" 
	–	 The Buildings Architect, Mr. Avner Yashar.

	  	"Areas of main Purpose" 
	–	 As defined by the Building Planning  Ordinances (Area Calculation and
Construction Percentages in Plans and Permits), 5752 - 1992.

	  	 "The Supervisor" 
	–	 A person appointed by the buyer to act as a supervisor

	  	 "The Representative Rate
of Exchange" 
	–	 For the purpose of payments  paid till 11:00  noontime - the known US
Dollar  representative  exchange  rate  for  the day of  payment,  as
published by the Bank of Israel.

	 	
For
payment  paid after 11:00  noontime - the US Dollar the US Dollar representative  exchange
 rate as  published by the Bank of Israel at noon on that same day or the known US Dollar
representative  exchange on the morning of the day  determined  for payment, according to the higher of the two. 

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	  	 "The Buyer's
Representative" 
	–	 Yaron  Horowitz  and/or Shmuel Lechner and/or Oren Maor and/or one of
the attorneys from the offices of Naschitz  Brandeis & Co.  Attorneys
at Law.

	  	 "The Seller's
Representative" 
	–	 Eyal Marom and/or Shiri Shani  and/or one of the  attorneys  from the
offices of Gurtnisky & Co. Attorneys at Law.

	  	 "The Building Permit" 
	–	 Permit No. 250162 from 26.9.2004 that constitutes a modification to
permit No. 6230580 from 27.3.1992 and of which a copy is attached to
the contract as Appendix "F" 

	  	 "The Trustees" 
	–	  Gurtnisky & Co.  Attorneys at Law of Shderot  Rothschild 45, Tel Aviv
 and  Nachitz  Brandeis & Co.  Attorneys  at Law of Rehov Tuval 5, Tel
 Aviv.

	  	 "Trustee's Account" 
	–	 An  account  that  will be opened  in the  Montefiore  branch of Bank
Hapoalim.

	  	 "The Permit Request" 
	–	 The request submitted by the seller in connection with the new
building permit of which a copy is attached as Appendix "G". 

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	  	 "The New Building Permit" 
	–	 The building permit as drawn up by the seller and at his expense,  to
be drawn  up  following  approval  of  easement,  as  defined  below,
according to the permit request or minor modifications  therein to be
approved of by buyer  including  the use of 4 parking  basements  for
all  permitted  uses in Plan 'Ayin' 1 and for the parking of not less
than 700 parking spaces in total in the 4 basements.

	  	 "The Easement" 
	–	  An easement in Plan 'Ayin' 1 in the framework of which the Tel Aviv
Local Planning & Building Committee approves the opening of the
fourth basement through granting the easement in the instruction in
Plan 'Ayin' 1 to permit the possibility for parking in excess of the
standards. The minutes of the decision of the Planning & Building
Sub-Committee from 8.3.2006 are attached to the contract as Appendix
"G1". 

	  	 "Form No. 4" 
	–	 Approval for a supply of Electrical,  Water and telephone services to
the  building  in  accordance  with  regulation  5 of the  Planning &
Building  Regulations  (Approvals  for the  provision of  Electrical,
Water and Telephonic Services), 5741 - 1981.

	  	 "The Technical
Specifications" 
	–	 The technical specifications attached as Appendix "H" to the
Contract. 

	  	 "The Works" 
	–	  All the work the seller is  committed  to execute and are detailed in
 the technical specifications.

	  	 "The Final Works" 
	–	  All works of all kinds to be  executed by the buyer or someone on his
 behalf in the sale.

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	  	 "Accountant's Letter" 
	–	 The Letter from N, Sueliman & Co. attached as Appendix "I" to the
contract. 

	  	 "The Arbitrator" 
	–	 Engineer  Eldad  Spivak  and in cases  that he is  unable to serve as
arbitrator,   the  Arbitrator  will  be  someone   appointed  jointly
consented  by the  parties or in the lack of consent by the  chairman
of The  Association  of  Engineers  and  Architects  in  Israel.  The
Arbitrator's authorities will those specified in the agreement.

	3.  	The
Transaction – Suspending Condition  

	 	3.1 	A
suspending condition (hereinafter: “The Suspending Condition”) for
fulfillment of the transaction, the subject of this contract, is the fulfillment of the
accrued conditions below: 

	 	3.1.1 	Receiving
confirmation from the Tel Aviv Municipality of their consent to sign with the buyer a new
lease contract.  

	 	3.1.2 	The
municipality's signature on the agreement (subject to the payment of the "lease fees"). 

	 	3.1.3 	Confirmation
of the request for easement in its entirety from the Planning and Building Committee. 

	 	3.1.4 	The
Issuance of the new building permit. 

	 	3.2 	The
buyer will be entitled to annul the agreement by notification to the seller without
either of the sides having any claim or demand in connection with it or to inform on the
fulfilling of the agreement with a deduction (hereinafter: “Notification of
Fulfillment”) of return of $2,150,000 (two million, one hundred and fifty
thousands US Dollars) (hereinafter: “The Amount of Deduction”) for each
one of the following cases: 

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	 	3.1.1 	If
90 day from the signing of the contract have passed and no easement has been granted; 

	 	3.1.2 	If
an easement has been granted and legal proceedings for the nullification of the easement
have begun and/or the nullification of the new building permit prior to the date of
payment of the return as mentioned in section 16.1 below;  

	 	3.1.3 	If
120 have passed from the date of signing the agreement and not all the suspending
conditions have been fulfilled (hereinafter: "The Period for
the Fulfillment of the Suspending Conditions");  

	 	3.2.a 	To
remove all doubts, the agreement will be annulled without the dispatch of any
notification if 120 days have passed from the date of signing of the agreement and not
all the suspending conditions have been fulfilled in their entirety and that no
notification of the fulfillment has been dispatched and no notification for an extension
for the period for the fulfillment of the suspending conditions before the end of the
aforementioned 120 days. 

	 	3.3 	The
right to dispatch a notification of fulfillment despite the non fulfillment of suspending
conditions remains for the whole of the period of fulfillment of suspending conditions,
as defined below, including the extension period for as long as the buyer extends,
according to section 3.4 below. 

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	 	3.4 	The
buyer has the right to wait for the fulfillment of the suspending conditions without the
necessity to dispatch a notification of fulfillment and to extend the period of
fulfillment of suspending conditions for an additional two period of 60 days each period
in a written notification to be sent by the end of the period for the fulfillment of
suspending conditions (the original or extended according to this sub section). If the
buyer extended the period for fulfillment of the suspending conditions for the mentioned
periods and during which the suspending conditions were not fulfilled and no notification
of fulfillment was dispatched, the agreement will be annulled without the parties having
any claims whatsoever in relation to the nullification of the agreement. 

	 	3.5 	As
soon as the buyer dispatches a notification of fulfillment after which the opening of the
fourth basement will be approved during the four years following the dispatch of the
notification of fulfillment in a manner such that it will be possible to issue the new
building permit in its entirety as mentioned in a manner that will allow the issuing of
the new building permit, the buyer will complete payment to the seller of the reduced
amount, with the adage of differential linkage to the US Dollar interest free
(hereinafter: “The Amount Paid”). If two years pass from the date of the
signing of the agreement and the opening of the fourth basement has not yet been approved
as mentioned and as mentioned in such a manner to allow the issue of a new building
permit, the amount paid will be reduced by 15% and by 1.5% for each month after the
passage of two years. If four years pass from the date signing the agreement and the
opening of the fourth basement has not been approved as mentioned allowing for the issue
of a new building permit, the seller will not be entitled to any payment with the
approval of the opening of the fourth basement. The seller will be entitled take further
planning measures to that do not constitute an easement in order to facilitate the
opening of the fourth basement and the issuing of the new building permit and that these
measures are coordinated with the buyer and are applicable only to the basement. No costs
will be incurred on the buyer in relation to these measures and all related costs are
applicable only on the seller. 

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	 	3.6 	If
on any date following the payment of the sum, the new building permit is revoked, or the
easement is annulled for any reason whatsoever, such that the suspending conditions
mentioned in this sub section are not fulfilled, the amount paid will be reduced by the
aforementioned amount deducted and instructions of the above section 3.5 will apply. The
buyer will not cancel the agreement if the easement or new building permit is revoked
after full payment of the amount. If all of the above mentioned occur after the full
payment (without deduction) is made by the buyer and after the amount for payment is
deposited by him with the trustees, the trustees are irrevocably charged to return the
reduced amount to the buyer. As long as the trustees are not in possession of an amount
sufficient to cover the reduced amount, the seller will be responsible tp return the
“reduced amount” in full to the buyer. 

	 	3.7 	The
seller will commence works within 7 day of signing the agreement and will complete them
according to the timetable mentioned in this contract. 

	 	3.8 	The
seller will transfer the sale to the buyer and the buyer will purchase the sale from the
seller subject to all that is mentioned in the agreement. 

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	 	3.9 	From
the date of signing the contract, the buyer is entitled to execute at his expense and his
responsibility the final works, at his own discretion in order to complete the building
and to actually populate it, subject to instructions of this agreement and subject to the
provision of approvals concerning the matters of insurance that the buyer must fulfill as
mentioned in section 21 below. 

	4.  	The
Seller’s Declarations and Liabilities  

	 	
The
Seller declares and undertakes towards the buyer the following:  

	 	4.1 	That
he is the legal sole rightful and owner of the rights and user and holder of the property.

	 	4.2 	That
the construction of the structure actually used 168.92% of the total permissible area for
construction on the land for the principal purposes, and that in addition to these used
building rights as mentioned above, the rights that can be used without payment of any
improvement tax or additional capitalized lease fees to the Tel Aviv – Jaffo
Municipality according to the new lease contract, are up to an area covering 216% of the
land for the principal purposes with no expropriations, and for a total area of 14,111sqm
for the principal purposes. 

	 	4.3 	According
to the present UCP the structure can be used for offices, Hi-tech, Hi tech industry,
catering, workers welfare services and extra services. and he is not aware of any
planning obstructions for utilizing the structure for the purposes that the buyer wishes
to employ in the structure, namely: offices, Hi-tech, Hi tech industry, conferences,
catering, workers welfare services such as a kindergarten for the workers children,
fitness room and extra miscellaneous services all subject to lawful registration. 

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	 	4.4 	That
the building was constructed according to the building permit. That there are no
irregularities from the UCP, and the permit, and as far as there are irregularities in
construction as mentioned, the seller will settle them at his own expense and
responsibility the licensing for the irregularities in construction. 

	 	4.5 	That
the building was built according to law.

	 	4.6 	That
the building was built to a high quality and according to all Israeli standards.

	 	4.7 	That
there no squatters on the property.

	 	4.8 	That
all payments for development, levies and fees to the municipality whose payment is
required in order to receive the building permit have been paid in full for the signing
of this agreement. 

	 	4.9 	That
to the best of his knowledge, no claims were made against him by the Tel Aviv –Jaffo
Municipality concerning irregularities to the building permit. 

	 	4.10 	That
he disclosed to the buyer all substantial details concerning the structure of which he
has knowledge, including environmental concerns. 

	 	4.11 	That
he has not breached the lease contract with the Municipality and that to the best of his
knowledge, there are no pending claims by the Municipality concerning a breach of the
lease contract. 

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	 	4.12 	That
he will act diligently tin order that the Tel Aviv – Jaffo Municipality will lease
him the structure after payment of the capitalized lease fees. In the principals of
assessment that will be consensually submitted to the appraisers, and it ill be written
that the capitalized lease fees include amongst other things the payment for the 216% of
the areas for principal purposes in the structure, and that the four basements have been
paid for in full and for the proper use of parking for not less than 700 cars and for the
full permissible uses according to the present UCP up till the year 2059. A copy of the
principals of assessment as presented by the seller and by the Tel Aviv Municipality for
the purpose of drawing up the lease agreement is attached as Appendix “J”. 

	 	4.13 	That
it is physically possible to park in the structures car parks (namely in all four
basements together) an amount of about 700 standard parkings. 

	 	
That
in the building permit, the construction of 422 parking spaces was permitted.  

	 	4.14 	That
he is able to execute the works imposed on him according to the instructions of the
agreement. The seller declares that the engineering survey, attached as Appendix
“J1” to the agreement was delivered to him and its details were
discussed with him and he will deal with it within the framework of the execution of his
commitments according to the technical specifications. For the avoidance of any doubt, it
is made clear that the engineering survey does not add and/or detract from the sellers
commitments according to the technical specifications. 

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	 	4.15 	That
he undertakes to act, at his own expense to gain approval of the easement immediately
following the signing of the contract and for the issuing of the new building permit. 

	 	4.16 	That
he is the sole registered leaseholder of the property, and that his rights on the sale
are clean of any mortgage, lien, forfeiture, debt, or third party right with the
exception to the lien to Bank Hapoalim and that is made clear that at the time of the
signing of the agreement the seller will deliver the buyer a letter of conditional
release, according to which in return for payment of the amount mentioned in the
aforementioned letter to the account, No. 662766 in branch No. 600 of Bank Hapoalim
(hereinafter “The Letter of Release”). The letter of release is
attached to the agreement and marked as Appendix “K”. 

	 	4.17 	That
he will complete the works as specified in the technical specifications at his own
expense and responsibility, within the schedule as specified in the agreement and
according to the instructions of the agreement. 

	 	4.18 	That
the basements were constructed paying attention to the fact of the existence of the
expropriation in favor of the Municipality, and that the basements are designed to bear
the loads of urban roads. Attached to the agreement as Appendix “L” is
an approval by the construction engineer who designed the building. 

	 	4.19 	That
on 10.8.1999 he paid the lease fees to the municipality to extend the building rights up
to the end of the period of lease for an increment in building right of 200%. The
aforementioned approval is attached as Appendix “M” to the
agreement. Likewise, he paid the lease fees to the municipality for the additional two
parking basements (basements -3 and -4), and that on 23.5.2000 he paid the lease fees to
the municipality for the extension of the building right till the end of the period of
lease for the easement granted for a rate of 16%. The aforementioned approval is attached
to the agreement as Appendix “N”. 

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	 	4.20 	Immediately
following the signing of the agreement, he will deliver to the buyer the structures’ plans
in his possession or in the possession of his consultants on magnetic media as far as
this is possible, including the plans for A wing and the initial plans for B wing (which
is a three storey structure designed to be built on the eastern side of the building).
The buyer will be entitled to use the plans without the need for consent from the seller
or architect or other consultants. The architects consent for the use of the plans and
the waiver of the architects copyright in this regard are attached as Appendix
“O”. It should be made clear that the architects fee for the
execution of works is born by the seller. The seller will not be responsible for the
quality or the content or correctness of the plans that were not executed by the seller
regarding the B building. 

	 	4.21 	That
to the best of his knowledge  and according to the  accountants  letter,  no betterment
 tax is expected for                 this transaction.

	 	4.22 	That
according to the report from 29.1.2003, attached as Appendix “P” to
the agreement, and according to the report from 15.6.2005, attached as Appendix
“P1” to the agreement, there are no known environmental problems
that are likely to prevent the parking in the basements and that the seller is not aware
of any existing problems whatsoever connected with the environment related to the
building itself resulting from the circumstances described in Appendix “P” and
Appendix “P1” and that the buyer will not have any claim for this, 

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	 	4.23 	That
he made all necessary decisions in accordance with his articles of incorporation and all
laws to to enter into this agreement. 

	 	4.24 	That
there is nothing legally, factually and/or otherwise to prevent the entering into the
agreement and to accordingly fulfill his liabilities in full and on time. 

	5.  	The
Buyer’s Declarations and Liabilities  

	 	
The
Buyer declares and undertakes towards the buyer the following:  

	 	5.1 	That
he saw and properly inspected and examined, it to his full satisfaction in all respects
the property, the building, the sale including (but not only) the physical and design
conditions, the locations and surrounding, of the relevant urban construction plans
(included the proposed UCP), the building permit, the permit request, the lease contract
and the new lease contract, the designations and the possibilities for their use
according to law and/or contract, the state of the registration of the sellers rights in
the Land Registry Bureau and all other registries. And as soon as the new building permit
is issued, the buyer declares that they were all appropriate for his needs and purposes
and that he waives towards the seller and/or anyone on his behalf all demand and/or
claims and/or allegations including unsuitability and/or defect; it should be made clear
that there is nothing mentioned in this section to add or detract from the sellers
declaration in the aforementioned section 4 and/or to present any waiver from them. 

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	 	5.2 	That
he is aware that the seller is not responsible in any way whatsoever for the proposed
UCP, for its advancement and/or its approval and that he releases the seller from all
commitments and/or liabilities in connection with this including in connection to future
handling of the request for the construction of B Building. Likewise, the seller declares
that he does not owe any payments and/or fees and/or tax and/or betterment tax and/or
consent fees and/or equity fees or any other fees, whose payment constitutes a condition
for the approval of the proposed UCP and its publication for validity. 

	 	5.3 	He
is aware that on 20.11.1992 the seller signed an agreement with Mr. Gadi Ken and a copy
of which is attached to the agreement as Appendix “Q1” and
the seller signed on 20.11.1992 and agreement with Messrs. Davidi Neta and Eyal and a
copy of which is attached to the agreement as Appendix “Q2” (hereinafter:
“Compromise Agreements”). The Buyer declares and undertakes to
meet all the sellers’ liabilities according to the compromise agreements, and not to
take any action in opposition to and/or in contradiction to the undertakings according to
the aforementioned compromise agreements. The buyer agrees to indemnify and/or compensate
the seller for all expenses and/or costs and/or payment and/or liability that is incurred
on him in connection with a breach of the aforementioned compromise agreements by the
buyer, and this is in accordance with the indemnity instructions in section 12.6 below.
The seller will not pay any payment according to the instruction of this section without
the consent of the buyer. As far as the seller is demanded to make any payment according
to the instructions of this section he will bring this demand to the attention of the
buyer and allow the buyer to defend himself against any related claim or allegation. The
buyer will indemnify the seller only for a peremptory ruling binding the buyer to pay the
seller payment according to this section. This section will not be interpreted as a
contract beneficial to a third party. 

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	 	5.4 	That
he undertakes to allow the seller or someone on his behalf to execute the works,
uninterrupted, and he undertakes not to delay and/or prevent and/or disturb the seller
and/or someone on his behalf to execute the works, in any way whatsoever and including in
a case trhat the buyer executes the final works at the same time that the seller executes
the works, and all subject to the buyers right to act according to the instructions of
section 8.5 below. 

	 	5.5 	That
he made the required decisions according to his articles of incorporation and all laws to
enter into this agreement and purchase the sale from the seller accordingly. 

	 	5.6 	That
there is no legal economic or factual prevention and/or any other prevention from
entering into the agreement and to fully meet all liabilities on time. 

	6.  	The
Parties obligations Concerning the Easement, New Building permit, Lease Contract and New
Lease Contract  

	 	6.1 	The
seller undertakes to act in order to obtain the approval for easement and to obtain the
new building permit, within the framework of the permit request as speedily as possible
as far as it in dependant upon him. To this end the seller undertakes to do all that is
necessary to pay all required payments for the approval of easement and for the issue of
the new building permit. 

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	 	6.2 	The
buyer declares that he is aware that the seller may act to receive reimbursements for
permit fees paid by him but with no construction executed, and this is according to the
seller’s own discretion. The buyer declares that he will not have any allegations or
demands against the seller in this regard. 

	 	6.3 	The
Municipality’s letter from 13.3.2006 concerning the lease fees that have to be paid
in respect of the new lease contract is attached as Appendix “Q3” to
this contract. 

	 	6.4 	The
buyer undertakes to pay the Municipality (as part payment) the amount due for the lease
fees according to and subject to the existence of the suspending conditions and other
conditions appearing in section 16 below and also the buyer undertakes to sign the new
lease contract, as soon as he is required to do so by the municipality subject to the
suspending conditions until that date. 

	 	
It
should be made clear, that in any case the seller will be entitled to manage procedures
of any kind whatsoever with the municipality to facilitate a reduction in lease fees as
determined by the municipality. As far as it is possible to pay installments to the
municipality without affecting the seller’s right of appeal or reservation, the
seller will do so in a manner that the buyer will pay (for the seller according to the
conditions of section 16 below) the lease fees and the seller will continue with the
appeal and reservation proceedings. If it is determined that the lease fee assessment is
to be reduced, as a result of the mentioned proceedings, the seller will be entitled to a
reimbursement of the said payments. 

	 	6.5 	The
buyer undertakes that he will not have any demand and/or claim and/or allegation against
the seller in relation to the new lease agreement. 

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	7.  	Execution
of Works and Final Works  

	 	7.1 	The
seller takes upon himself and hereby undertakes to execute the works and to complete them
to a high level of expertise, and professionalism and on times determined in the
agreement, with suitable manpower, equipment and materials and all according to the
instructions of the agreement and its appendixes. 

	 	7.2 	The
seller will be entitled to execute the works himself and/or through third parties on his
behalf, but the execution of works by a third party on behalf of the seller as mentioned,
in order to detract from the sellers obligations and/or responsibilities towards the
buyer as mentioned in the agreement, and the seller will be responsible for towards the
buyer for all matters relating to the execution of the said works according to the
instructions of the contract. 

	 	7.3 	The
buyer will be entitled to, from the date of the signing of the agreement, to enter the
sale under his own authority in order to execute the final works. It should be made clear
that there is nothing mentioned regarding delivery of the holding of the sale to the
buyer, and it will be deliver against the actual full payment according to the
instructions of the contract. As much as the buyer enters sale prior to the existence of
the suspending conditions, this will not infer notification of existence or nullification
of the suspending conditions according to the agreement. 

	 	7.4  	Contacts,
The supervisor and his Authorities  

	 	7.4.1 	The
buyer will be eligible to appoint contacts on his behalf and one or more supervisors, who
wall fill their roles specified below and will serve as the professional representatives
of the buyer in matters relating to the supervision of the works and their completion.  

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	 	7.4.2 	The
execution of the works will be supervised and overseen by supervisor and contacts on his
behalf.  

	 	7.4.3 	The
right of supervision given to the buyer or someone on his behalf does not grant any
release whatsoever to the seller from fulfilling his obligations according to the
agreement and no act of negligence by the supervisor or contact will free the seller from
fulfilling his obligations according to the agreement subject to that mentioned in
section 25 below.  

	 	7.5  	Inspection
and Supervision  

	 	7.5.1 	The
seller undertakes to continuously supervise and inspect the execution of the works,
whether by himself or through a foreman authorized by the Ministry of Labor having
appropriate professional qualifications, and will be constantly on site at the place of
the execution of the works during the entire of execution of the works and will supervise
their execution. Instructions and/or notification and/or demands delivered to the seller’s
execution engineer will be considered as if they have been delivered to the seller.  

	 	7.5.2 	The
seller will notify the buyer in writing the details of the sub contractors who will
execute the works prior to the commencement of execution of works.  

21

	 	7.5.3 	The
buyer undertakes to continuously supervise and inspect the execution of final works,
whether by himself or through an authorized foreman and will be constantly on site at the
place of the execution of the final works and will supervise and inspect their execution.  

	 	7.6  	Manpower  

	 	7.6.1 	The
seller undertakes to execute the works and complete them by himself or through someone on
his behalf in accordance with the aforementioned section 4.17, and through professional,
skilled and experienced workers.  

	 	7.6.2 	To
this end, the seller undertakes to employ by himself and at his own expense all the
required suitable manpower for the execution and completion of the works and the
fulfillment of all his remaining obligations according to the agreement. It should be
made clear that the buyer will be solely responsible for the employment of manpower to
execute of the final works and that the seller will not be responsible and/or liable
concerning these matters.  

	 	7.6.3 	If
for the purpose of execution a license, permit or suitable classification is required by
law, the parties undertake to employ only people of suitable classification for the
execution of that work, or have an appropriate license or permit, each according to the
matter in hand.  

	 	7.6.4 	Either
party will be responsible for its workers, the work conditions, the employment and social
security of its worker and either party will bear at its own expense (each one for his
own workers) payment of income tax, social insurance, national insurance, workers funds,
pension payments and all other payments applicable or that will be applicable to the
parties for their workers according to instructions of law.  

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	 	7.7  	Equipment,
Materials and Labor  

	 	7.7.1 	If
it is not specifically mentioned otherwise in the agreement, the seller undertakes to
supply at his expense all the equipment, tool, facilities, materials and anything else
required for the efficient execution and completion of the works according to the
agreement.  

	 	7.7.2 	If
an error and/or an imprecision in the marking of the works or part of them is found in
the plans, even if they were checked by the supervisor and/or by the planner and/or by
the buyer, the seller is obligated to make repairs at his own expense.  

	 	7.7.3 	The
seller is responsible, at his own expense, for the safekeeping of equipment and materials
that will serve him for the execution of the works. For the avoidance of any doubt, it is
made clear that the buyer will be responsible for the safekeeping of the equipment and
materials that will serve the buyer for execution of the final works.  

	 	7.7.4 	The
seller will execute, at his expense, the cleaning of the structure and the disposal of
waste and/or garbage and/or other surplus materials connected to the execution of the
works, from the building and/or its surroundings. Upon completion of the execution of the
works, the seller undertakes to remove from the worksite all equipment, materials and
surplus facilities that served for the execution of the works. It should be made clear
that the buyer will be responsible for the expenses for the cleaning of the building and
the disposal of waste and/or garbage and/or other surplus materials connected to the
execution of the final works, from the building and/or its surroundings.  

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	 	7.8  	The
Quality of Materials and Labor  

	 	7.8.1 	The
seller undertakes for the purpose of execution of the works to utilize only high quality
materials, in sufficient amounts and according to that mentioned in the agreement, and he
also undertakes that all labor performed by him during the execution of the works will be
of a high standard and quality.  

	 	7.8.2 	Materials,
for which standards have been set by the Standards Institute, will conform to those said
standards.  

	 	7.8.3 	The
seller undertakes for the purpose of the execution of the works and their completion to
utilze only materials that have been inspected by the Standard Institute, or have been
approved by the supplier of the materials regarding their type and quality, likewise to
use materials approved according to standards in places if so required, following their
inspection by the supervisor and deemed them suitable for their intended use.  

	 	7.9 	In
all cases of dispute between the parties concerning matters of section 7, the arbitrator
will settle the dispute. 

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	8.  	The
Commencement of Execution of Works, the Rate of Execution of Works and the Date for Their
Completion  

	 	8.1 	For
the purpose of the agreement the meaning of “The Initial Date for Completion” – The
date that the buyer’s supervisor confirms that the seller has completed all that was
required from him to permit the buyer to execute the final works in the entire structure
as mentioned in Appendix “R”. “The Completion Date
of Works” will be the date on which the seller completes all the works
and receives a certificate of completion from the buyer as mentioned in section 8.12
below. 

	 	8.2 	The
seller undertakes to reach the initial date for completion to the satisfaction of the
buyer’s supervisor by no later than three months after signing the agreement or two
and a half months after receipt of the plans mentioned in section 8.7 below – the
latter of the two. Any delay whatsoever in the completion of the required works by the
initial completion date will be considered a breach of agreement. 

	 	8.3 	The
seller undertakes to complete the works, by no later tan 6 months from the signing of the
contract. A delay of 30 days in the completion of the works will not be considered a
breach of the agreement. 

	 	8.4 	The
seller is aware that the subject of time schedules is of great importance to the buyer
and he undertakes, as far as it is dependant on him, to keep to the schedules according
to the agreement. 

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	 	8.5 	If
the seller is not be entitled to get the certificate of completion on the completion date
or if the seller does not work at the required rate despite him receiving a notification
of warning from the supervisor, the buyer will be entitled to (but not obliged to) take
possession of the sale in its entirety or in part and to make use of it following receipt
of approval from the arbitrator permitting the seller to raise his claims in this matter.
In this case, the buyer will be entitled to a reimbursement from the trustees for the
amount reflecting the costs of completion of works by the buyer resulting from the non
completion of the works by the seller, and determined upon by the arbitrator, and all
without detracting from any other existing right and/or measure and/or remedy for the
buyer under these circumstances. The arbitrator will examine the costs of the buyer works
to complete the works in lieu of the seller and will rule what compensation the buyer is
entitled to for the said circumstances. An irrevocable instruction is hereby issued to
the trustees to pay the buyer all amount awarded as he is entitled to under the said
circumstances of this sub section, without delay, immediately following the receipt of
the arbitrators ruling. In case of clarification with the arbitrator of the circumstances
of this sub section, there will be a moratorium of payments by the trustees until
completion of the proceeding of clarification and for an amount determined by the
arbitrator. 

	 	8.6 	If
a delay in execution occurs for any circumstances whatsoever and it is the arbitrator’s
opinion that the seller did not have any control over them, and there was no reasonable
possibility that he could prevent them, including delays that may have been caused due to
the execution of final works by the buyer and/or delays that may have been caused by a
breach by the buyer of commitments in the above section 5.4 and/or commitments in section
8.7 below, the seller is entitled to request an extension for the completion of works or
part of them and the arbitrator will determine the period of extension according to the
period in which the delay occurred. 

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	 	8.7 	The
buyer undertakes to commence itemized planning of the final works immediately following
signing the contract. It is agreed that the buyer will submit to the seller, within no
later than 14 days after the date of the signing of the contract or within 14 days of the
sellers demand, the latter of the two, requisite architectural specifications and designs
for the seller in order to execute the works for the buildings bathrooms. In case of a
delay in the delivery of the plans, the dates for completion will be accordingly delayed
and this will not be considered a breach of the agreement by the buyer. 

	 	8.8 	If
the seller does not remain on the schedule determined in the above sections 8.2 and 8.3
and there is a delay in the initial completion date or in case of a delay in excess of 30
days in the completion of works, the seller will compensate the buyer an amount of $9,000
(nine thousand US dollars) for each day of delay beyond the 30 days after the date of
completion of the works, whichever the case may be, represented an agreed amount of
compensation assessed in advance. The amount of compensation will be transferred by the
trustees to the buyer and will be deducted from the sum payable.  

	 	
As
long as the said circumstance in the above mentioned section 8.5 and section 8.8 exist,
the seller will be entitled to claim for a reduction of compensation whilst drawing the
attention to the rate of the execution of works by the buyer. 

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	 	8.9 	If
a dispute arises between the parties concerning the question of the delay in completion
of the works, was according to instruction of the contract or whether we are talking
about a breach of contract, the dispute will be passed on for settlement by the
arbitrator. 

	 	8.10 	When
the circumstances of the in the above section 8.6 become apparent, the seller will notify
the buyer in writing and will itemize the circumstances of the case. 

	 	8.11 	30
day prior the planned date of completion of works, the seller will invite the buyer to
inspect and verify the works as detailed in the technical specifications. 

	 	8.12 	The
buyer will deliver to the seller within 14 days of the date of receipt of the sellers
said notification, a list of defects found by him and the seller undertakes to repair the
said defects in a reasonable period of time according to the nature of the defect and the
urgency of repair. Urgent defects that prevent reasonable use of the sale will be
repaired as soon as possible (hereinafter: “The Urgent Defects”). With
the repair of the said urgent defects, the supervisor will confirm in writing that the
works have been completed. (The supervisors said written confirmation will be known as
hereinafter “The Certificate of Completion”). The certificate of
completion will be issued after the seller has completed all activities that were in his
power to execute at that time for the purpose of issuing Form No. 4. In order to remove
any doubts, it should be made clear that, non urgent defects will not prevent the
granting of the certificate of completion by the buyer to the seller and this without
derogating from the obligation of the seller affect repairs at some later date. 

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	 	8.13 	The
seller undertakes that on the date of completion of works, that part of the air
conditioning electrical and plumbing systems for which the seller is responsible
according to the agreement, will be in good working order, and the seller will
responsible towards the buyer for any fault or breakdown of that part of the air
conditioning, sprinkler, elevator systems in the building that were executed by the
seller for a period of two years from the date of delivery of possession and this will
detract from his responsibilities according to the Sale of Apartments Act 5733 – 1973
towards the buyer, with the exception in cases where the damage and/or defects are caused
by the buyer and/or someone on his behalf and/or due to an act of negligence executed by
the buyer and/or someone on his behalf, in contradiction to the instructions for use that
the seller will deliver to the buyer after which the seller will be released from his
obligation. 

	 	8.14	“The
Completion of Work” meaning – the full execution of works subject of the
specifications and the receipt of Form No. 4 as far as is possible and subject to that
mentioned in section 9.1 below, and the functioning of part of the systems that are under
the responsibility of the seller according to this contract, in a full and current
manner. 

	 	8.15 	With
the completion of works, the seller will deliver the As Made plans to the buyer and the
up to date plant files. 

	 	8.16 	If
the supervisor is of the opinion that the progress of execution of the works is too slow
to be able ensure completion of works or any part of them on the determined date, he will
inform the seller and request that the seller take all necessary measures including
increasing the work force, adding equipment and increasing the rate of work, in order to
complete the works or part of them on schedule. 

29

	 	8.17 	If
the supervisor is of the opinion that the said above measures taken by the seller are not
sufficient, the supervisor will be entitled to request that the arbitrator instruct the
seller to take measure necessary in order to meet the date for completion of the works
and for which the arbitrator instructs, and the seller undertakes to take those measures
and at his expense. 

	 	8.18 	In
all cases of dispute between the parties in matters of this section 8, the arbitrator
will settle. 

	9.  	Form
No. 4, Certificate of Completion  

	 	9.1 	The
seller will obtain a Form No. 4 at his expense and his responsibility by the date of
completion of works, as previously defined and/or by the first possible deferred date.
The costs involved for the issuing of Form No. 4 (including inspections) in relation to
the “final works” and/or will be at the buyer’s expense. If there are
delays in the issuance of Form No. 4 or the Certificate of Completion and/or if there is
an impediment preventing the issuing of these approvals for reasons dependant on the
buyer, including but not only, due to the buyer executing final works or for any other
reason that is not connected to the completion of works by the seller (hereinafter: “The
reasons dependant on the buyer”), the date for the issue of Form No. 4 will be
deferred until the first possible date. In any event the seller will obtain a Form No. 4
by no later than 45 days from the date the buyer completed the final works but only if
the final works and all the works required to receive the Form No. 4 and which are the
buyer’s responsibility have been completed by the buyer. The buyer will execute
everything required from him in a reasonable manner in order to assist the seller to
obtain the Form No. 4 and the Certificate of Completion for the structure and to remove
any impediment connected with it preventing the issue of the Form No. 4. In all cases of
dispute between the parties in matters of this section the arbitrator will settle. If the
delay is due to reasons dependant on the buyer the seller will make a request from the
Tel Aviv Municipality for an approval for works that have been completed and required for
the issue of the From No. 4, and regarding the works that have not yet received approval
from the Municipality, approvals will be obtained from the relevant consultants (The
municipality’s approvals and the additional approvals from the consultants will be
called from hereinafter conjointly by the shortened name: “The Municipality’s
and/or Consultants Approvals”). 

30

	 	9.2 	The
seller will obtain a Final Certificate of Completion at his own expense and
responsibility. The required costs for the obtaining of the certificate of completion,
(including inspections) connected with the “final works” will be at the expense
of the buyer. The “final certificate of completion” will be obtained by the end
of one year from the date of issue of the said certificate of completion unless there are
reasons dependants on the buyer preventing the issue of the Final Certificate of
Completion. 

	10.  	Work
Safety  

	 	10.1 	The
parties declare that they have the suitable tools, means, materials, knowledge and
manpower to execute the works or the final works whichever is relevant, with full
preservation of caution and safety at work according to instruction of law. 

31

	 	10.2 	The
parties declare that they are aware of the all the instruction in law relating to safety
at work in general and the safety in execution of the works (or the final works,
whichever is relevant) subject of the agreement in particular, including without
derogating from the generality of the Work Safety Issues, Instructions and Regulations
(New Version) 5730 – 1970 and regulations set by the instruction of the Organization
and Supervision of Work Law 5714 – 1954. 

	 	10.3 	The
seller and the buyer undertake each one in relation to his workers that every worker
working for him in the place of execution of works or in the place of the execution of
final works will be briefed by them in everything related to the instruction and safety
rules for the work according to the instruction of law. 

	 	10.4 	The
seller and buyer undertake to execute the works, or the final works, whichever is
relevant, and also undertake to make their workers execute the works, or the final works,
whichever is relevant, while meticulously preserving the adherence of to all the
instruction of the law concerning safety measures and safety and caution regulations
applicable to the execution of works for the type of works that are the responsibility
for each one of them. 

	 	10.5 	The
seller and buyer undertake, each one in relation to the works that they must execute
according to this contract, that the equipment operated by any one of them or by one of
their workers in the framework of the execution of the works or within the framework of
the execution of the final works, whichever is relevant, will be in good repair and safe
to operate and will be equipped with licenses, permits, confirmation of good repair as
required by law. 

32

	 	10.6 	The
seller and buyer undertake, each one in relation to the works that they must execute
according to this contract, that the equipment operated by them or by one of their
workers in the place of the execution of the works or the place of the execution of the
execution of the final works, whichever is relevant, will be operated by an authorized,
skilled and experienced operator also for all any one driving a vehicle belonging to one
of them. 

	 	10.7 	The
seller and buyer undertake, each one in relation to the works that they must execute
according to this contract, to pave a proper and safe access road in the place of
execution of the works or the place of execution of the final works, whichever is
relevant, and to determine proper passage with no obstructions or any thing else
interrupting the use of them. 

	 	10.8 	The
seller and buyer undertake each one in relation to the works that they must execute
according to this contract, to cover and/or fence off and pit or opening that can be
fallen into and is located in the place of execution of the works or the place of
execution of the final works, whichever is relevant. 

	 	10.9 	The
seller and the buyer undertake each one in relation to his workers that all the workers
will be medically fit for the work after having been through all the medical examination
as required by law. 

33

	 	10.10 	The
seller and buyers and anyone acting on their behalf must take all safety and caution
measures required to prevent the loss of or damage to person and/or property belonging to
any person and/or body whomsoever in connection to the execution of activities according
to the agreement. Without derogating from the agreement, the seller, buyer and anyone
acting on their behalf, all in their own respect, to uphold the instruction of the law
and to arrange their activities including the instructions concerning safety procedures. 

	 	10.11 	The
buyer, supervisor and/or any other of their representatives, will be entitled at any
time, to visit the place of execution of works and/or any other place in which work is
done and/or from any place from where material machines, products are prepared and/or
brought for the execution of works, and the seller and/or anyone on his behalf fully
cooperate with the visitors and provide them with any data and/or information as mat be
required of them. The buyers expenses and those of anyone acting on his behalf for the
above mentioned will be born by the buyer. 

	11.  	Maintenance
of the pace of execution of work  

	 	11.1 	For
the whole of the duration of works the seller undertakes to maintain the place of
execution of works in a clean and orderly manner with the exception of the dirt or
disorder resulting from the execution of final works by the buyer. 

	 	11.2 	With
the completion of the execution of works, the seller undertakes to clean the place of
execution of works from all surplus materials, garbage and all other dirt belonging to
the seller resulting solely from of the execution of works. 

34

	 	11.3 	If
the contract is annulled because of the lack of the upholding of the suspending
conditions, on the date of cancellation, the buyer will vacate immediately the sale from
all equipment and/or materials and/or tools and/or facilities trhat served him for the
purpose of the execution of final works, and the buyer also undertakes to clean the place
of execution of the final works from the surplus materials, garbage and other dirt
belonging to the buyer or resulting from of the execution of the final works. 

	12.  	Responsibility
for Damages  

	 	12.1 	The
seller and buyer will be responsible, each one in relation to the works that they must
execute according to this contract. The seller will be responsible for any loss caused to
work under his responsibility according to the agreement or for equipment or materials,
tools and facilities supplied by him within the framework of the execution of works under
the sellers responsibility till the completion of the works under the sellers
responsibility. 

	 	12.2 	In
any case that damage is made to the place of execution of work or to the work in its
entirety or in part, the damaging party must repair the damage at his expense immediate
with the occurrence of the damage. 

	 	12.3 	The
instruction of the above sections will be applicable for any damage caused by any of the
parties or someone on their behalf during the execution of the repair works during the
trial period (concerning the seller – as mentioned in section 15 below). 

	 	12.4 	The
parties will be responsible for each other, for damage or loss whether material or person
caused to the injured party or someone on his behalf or to a third party whosoever, at
any time whatsoever as a result of actions or neglect of the injuring party or someone on
his behalf. 

35

	 	12.5 	The
parties will be responsible for each other, for damage caused during the execution of
works or final works, whichever is relevant, as a result of actions or neglect of the
injuring party or one of his or one of his sub contractors employed by him, to the water
systems, to the electric lines, telephone and such like, he undertakers to repair them at
his expense. 

	 	12.6 	The
injuring party as above mentioned, undertakes, to indemnify, compensate the injured party
for all damages, loss, charges, incurred expenses within the framework of a verdict
handed down resulting from a claim served for damages under the responsibility of the
injuring party according to the contract, and for expenses born by the injured party
during to protect himself against demands for the aforementioned, including attorneys
fees. The injured party undertakes to inform the injuring party immediately after
becoming aware of receipt of the claim and/or demand for the abovementioned, and to allow
the injuring party to defend himself at his own expense. 

	 	12.7 	The
seller will appoint on his behalf and at his expense a safety officer for the work site
and will inform the buyer of this in writing. The safety officer will remain on site
until receipt of the certificate of completion from the buyer and will be responsible
also for the buyer’s workers. 

36

	13.  	The
Date of Transfer of Possession  

	 	13.1 	The
possession of the sale will be transferred to the buyer against full payment of the
return, as mentioned in section 16 below (above and hereinafter: "The
Date of Transfer of Possession"). 

	 	13.2 	For
the avoidance of any doubt, it should be made clear herein, that under no circumstance
will the possession of the sale be delivered to the buyer, and no rights whatsoever will
be transferred to the buyer, prior to the actual payment in full of the consideration the
actual payment of the VAT for the full amount of the return. 

	14.  	Modifications
and Additions  

	 	14.1 	The
seller will execute all modifications (including additions) to the project and/or works
so requested of him by the buyer (hereinafter “Modification”), subject
to the technical feasibility of the modification and agreement for the schedule, and
return for the modification and its manner of payment. The parties agree, that for a
modification necessitating extra work, the buyer will pay to the seller the cost of the
modification whereas the cost of the modification will be calculated as inclusive of the
cost of work, material, design, supervision and management (jointly hereinafter: “The
Cost” ) with an additional 4%. For the avoidance of any doubt, the Cost includes
an additional 10% of the said costs in this section for the management and supervision by
SGS Construction CO. Ltd. 

	 	14.2 	The
seller will not be entitled to any extension of the work schedule for the execution of
works for the above mentioned modification, unless the modification obligates a change to
the schedule therefore there is a necessity to grant an extension, and according to the
extension as determined by the supervisor. 

37

	 	14.3 	In
case of a dispute between the parties concerning section 14, the matter will be ruled on
by the arbitrator. 

	15.  	Trial
and Responsibility – Guarantees and Trial  

	 	15.1 	The
seller will be responsible for all defects and their repair in the sale according to the
instruction of the Sale (of Apartments) Law 5733 – 1973 with the exception of works
executed by the buyers. 

	 	15.2 	Repair
to vital systems in the sale such as seals, and any other fault, that are under the
responsibility of the seller according to this contract, and that do not allow for
reasonable use of the sale (hereinafter: “Urgent Repair”) will be
executed by the seller at the earliest possible opportunity after he is made aware in
writing for the necessity to execute the above mentioned repair, taking into
consideration the nature of the required repair, the type of damage and the urgency of
the repair. Repairs that are not urgent will be executed within a reasonable period of
time depending on the circumstances at the time. 

	 	15.3 	In
case of necessity to execute such repairs, the buyer will permit such execution. The
seller will reduce, as far as possible, the disruption that will be caused, if at all
caused to the buyer. 

38

	 	15.4 	If
the buyer does not execute any repair that he is supposed to repair as specified in the
above section 15.1, despite the written demand to do so, the buyer will be entitled to
execute such repair at the expense of the seller, and this after delivery of an
additional written warning of seven days during which the seller did not effect the
repair the defect for which as mentioned he was responsible. In this case the seller will
immediately repay the buyer at this first written demand all reasonable amounts for
actual payments for the execution of the abovementioned repairs, against a receipt
submitted by the buyer to the seller. In case of an emergency, in which no additional
warning can be given, the buyer will be entitled to execute the repair by himself with no
additional written warning. 

	 	15.5 	The
sellers responsibility to execute the works and execute repair to the sale that are the
sellers responsibility according to the instructions of the contract, will apply also to
any third party to whom the buyer transfers, rents, delivers or sells his right to the
sale. 

	 	15.6 	To
ensure the sellers undertakings to execute the repairs, as mentioned in this section, the
seller will submit to the buyer an autonomous bank guarantee for execution (hereinafter:
“The Trial Guarantee”) in a version as attached as Appendix “S” for
an amount of $650,000 (six hundred and fifty thousand US dollars) which will be valid for
a period of one year from the date of receipt of the certificate of completion. At the
end of one year from the date of receipt of the certificate of completion, the guarantee
will be replaced by a guarantee of $450,000 (four hundred and fifty thousand US dollars)
which will be valid for an another one year. 

	 	
It
is agreed that at the end of two years from the date of receipt of the certificate of
completion the guarantee will be replaced by a guarantee amounting to $150,000 (one
hundred and fifty thousand US dollars) which will be valid for an another one year period. 

39

	 	15.7 	In
case of any dispute concerning this section 15, it will be settled by the arbitrator.

	16.  	Upholding
the Suspending Conditions, the Return, The date for Payment of the Return  

	 	
For
the payment for the sale the buyer undertakes to pay to the seller the amount of
$35,250,000 (thirty five million, two hundred and fifty thousand US dollars) with the
lawful addition of VAT (above and hereinafter: “The Return”). In
case of a reduction of the amount of the return due to circumstances mentioned in the
abovementioned section 3.2, the consideration will reduced by the amount of the reduction
as previously defined.  

	 	
The
payment paid by the buyer will carry a dollar interest of 4% per annum for a period of
three months from the date of the signing and after three months 3.5% per annum until the
full payment of the return to the seller or to the trustees or to the bank and to the
municipality whichever is relevant according to the instructions of section 16.3 below.  

	 	
VAT
for the return will be paid on the date of payment of the return, with a deferred check
payable to The Treasury – Value Added Tax, issued to the 14th day of the
month following the payment of the return in return for a tax invoice for the full amount
of the return.  

	 	
All
payments mentioned in the agreement will be paid by the buyer with bank drafts payable to
the seller and/or the trustee and/or Bank Hapoalim and/or the Tel Aviv Municipality,
whichever is relevant.  

40

	 	16.1 	The
return will be paid subject to and against the upholding of the following accrued
conditions (hereinafter: "Conditions of Payment") 

	 	16.1.1 	The
existence of the suspending conditions. 

	 	16.1.2 	The
recording of a warning in favor of the buyer that the sale is clean of any third party
rights whatsoever with the exception of a mortgage for the benefit of Bank Hapoalim.  

	 	16.1.3 	Transfer
of possession in the Sale to the buyer. 

	 	16.1.4 	Delivery
to the buyer power of attorney as defined in section 18.2 below. 

	 	16.1.5 	Delivery
of a power of attorney to the buyer to delete notices of caution as mentioned in section
17.1 below.  

	 	16.1.6 	Delivery
of the protocol to the buyer. 

	 	16.1.7 	Presentation
of confirmation for the arrangement of an insurance as mentioned in the insurance
appendix. 

	 	16.1.8 	The
deletion of the mortgage for the benefit of Bank Hapoalim and the registration of the
mortgage for the benefit of the buyer.  

	 	16.1.9 	Receipt
of a written confirmation from the seller that there are no outstanding legal procedures
(appeal/ administrative petition) against the new building permit or the easement.  

41

	 	16.2 	The
return will be paid as follows (above and hereinafter: "The date for the Payment of the
Return"): 

	 	16.2.1 	If
there are no objections to the request for an easement or if there are only objection
that are removed by consent, the return will be paid within no later than 10 day from the
date of issuance of the new building permit or 50 days from the date of receipt of
possession, the latter of the two and subject to the existence of all the “conditions
of payment” and that no legal proceeding was submitted to cancel possession.  

	 	16.2.2 	If
there are objections to the possession request, that are not removed by consent, then the
return will be paid within 50 days from the date of issuance of the new building permit
that includes the easement and subject to existence of “the conditions of payment” and
that the for the payment no legal proceeding was submitted for the cancellation of the
easement.  

	 	16.3 	Payment
to the Municipality and Bank Hapoalim 

	 	16.3.1 	In
the event that the payment to the Municipality and Bank Hapoalim exceeds $30,600,000
(thirty million and six hundred thousand US dollars) or $28,450,000 (twenty eight million
four hundred fifty thousand US dollars) provided the agreement is complied with by a
reduction as provided in the foregoing clause 3.2, the buyer shall pay the difference
above the said amount and the seller shall, at the time of payment of the price, complete
the difference by means of a cashier’s check to the order of Bank Hapoalim. Failure
of the seller to deposit the said payment shall constitute a fundamental breach of the
agreement, whereupon the buyer shall not provide the payment. 

42

	 	16.3.2 	The
seller instructs the buyer to make the payment demanded by the Municipality for signing
the new lease contract directly to the Municipality by a check drawn to the order of the
Municipality against the Municipality’s signature of the new lease agreement and the
lease amendment deed (hereinafter: the payment to the Municipality). It is stipulated for
the sake of clarity that the invoice/receipt to issued by the Municipality in connection
with the payment to the Municipality shall be under the name of the seller. 

	 	16.4  	Payment
to Bank Hapoalim 

	 	16.4.1 	The
seller instructs the buyer to arrange that the amount indicated in the release letter be
paid by a check to the order of Bank Hapoalim, for clearing the attachment made in favor
of Bank Hapoalim (hereinafter: the payment to Bank Hapoalim). From the amount of payment
to Bank Hapoalim, the equivalent of approximately $10,000,000 (ten million US dollars) as
established by the seller shall be paid in US dollars and the balance of payment to Bank
Hapoalim shall be paid in NIS. It is agreed that the payment to Bank Hapoalim shall be
made against erasure of the mortgage made in favor of Bank Hapoalim and against the
registration of a first degree mortgage of unlimited amount in favor of the buyer,
according to mortgage deeds and mortgage terms as per the enclosed Appendix 20, and
against an encumbrance at the Companies Registrar’s Office in the wording enclosed
as Appendix 20(1), ensuring the rights of the buyer hereunder. It is stipulated for the
sake of clarity that all expenses for registration of the mortgage and attachment,
including taxes, shall be payable by the buyer only. 

43

	 	16.4.2 	The
NIS equivalent of $4,650,000 (four million six hundred thousand US dollars), at the
representative exchange rate, shall be paid to the account of the trustees (hereinafter:
“the payment to the trustees” and “the deposit”, as the case may be. 

	 	16.4.3 	The
balance of the price, i.e. the price less the payment to the Municipality, less the
payment to Bank Hapoalim and less the payment to the trustees (hereinafter: the payment
to the seller) shall be paid in NIS at the representative exchange rate to the seller
less the deductions for arrears in completion of the works inasmuch as determined by the
arbitrator. 

	 	16.5 	The
parties hereby irrevocably instruct the trustees to hand over the amount of the deposit
to the seller, including the fruits thereof, but less the bank commissions, everything as
stipulated below. Notwithstanding the provisions hereinbelow, if it shall become evident
that a legal proceeding is under way for cancellation of the concession or the new
building permit and the buyer having paid the full price (without any reduction thereof),
the trustee shall withhold the shekel equivalent of $2,150,000 (two million one hundred
and fifty thousand US dollars) pending completion of the legal proceeding by way of a
final judgment even in case of conditions for the release thereof as stated hereinbelow
in this clause. Nothing in the withholding of money by the trustees under this subclause
shall be construed as entitling the seller to withhold the discharge of its obligations
toward the buyer, and it shall finance the discharge of its obligations from its own
resources. Noncompliance with any of the provisions of clauses 16.5.1, 16.5.2 and 16.5.4.
hereinbelow shall delay the release of the amounts indicated thereafter in the agreement,
except those referred to in clauses 16.5.5 and 16.5.3 hereinbelow, pending compliance
with all the provisions to be met by that time in the order of their appearance in the
agreement: 

44

	 	16.5.1 	At
the time of preliminary completion with approval by the supervisor (or the adjudicator,
as the case may be), the buyer shall pay the NIS equivalent of $500,000 (five hundred
thousand US dollars) less the amounts established by the adjudicator for arrears, if any.
If at the time of payment of the price the initial payment has already matured, the said
amount shall be paid in full directly to the seller at the time of payment of the price,
subject to compliance with the “conditions of payment” balance.  

	 	16.5.2 	On
completion of the receipt of the completion certificate from the supervisor (or from the
adjudicator in case of disputes between the parties in connection therewith), and
submission of a bank guarantee as stated in clause 15.6 hereinabove to the buyer, the NIS
equivalent of $1,650,000 one million six hundred fifty thousand US dollars) at the
representative exchange rate less the amounts established by the adjudicator for arrears,
if any, shall be released in favor of the seller.  

45

	 	16.5.3 	The
NIS equivalent of $900,000 (nine hundred thousand US dollars) according to the
representative exchange rate shall be used by the trustees for payment of sale tax
according to self assessment to the Land Tax Administration. The balance of the sum
referred to in clause 16.5.3 after payment of sale tax shall be remitted to the seller
after payment to the trustees of the said sale tax, even in the absence of other
conditions for release of the sums indicated above. In the event of the seller having
paid the sale tax according to a self assessment by the time of payment of the price, the
said amount shall be paid in full directly to the seller at the time of payment of the
price, even in the absence of other conditions for release of the above-mentioned
amounts.  

	 	16.5.4 	Upon
the issuance of Form 4, the NIS equivalent of $700,000 (seven hundred thousand US
dollars) according to the representative exchange rate (hereinafter: the Form 4 deposit)
shall be released to the seller. It is agreed that in case of impossibility of obtaining
Form 4 for reasons attributable to the buyer as noted in the foregoing clause 9, then
subject to presentation by the seller of the certificates by the Municipality and/or the
consultants as defined in the foregoing clause 9.1 the trustees shall release to the
seller, out of the Form 4 deposit, the NIS equivalent of $450,000 (four hundred fifty
thousand US dollars) at the representative exchange rate. The balance of the Form 4
deposit shall be released to the seller on presentation of a comprehensive Form 4 by the
seller.  

46

	 	16.5.5 	At
the time of registration of the property in the name of the buyer at the Land Registry,
or on expiry of 14 days from submission of the transfer documents by the seller, as
defined in clause 18.1 hereinbelow, whichever occurs first, the NIS equivalent of
$600,000 (six hundred thousand US dollars) according to the representative exchange rate
shall be released to the seller even in the absence of other conditions for release of
the aforementioned amounts. The seller undertakes that the property shall be registered
in the name of the buyer not later than 12 months after the signing of this agreement,
except in case of circumstances that preclude the registration.  

	 	16.5.6 	On
submission of a completion certificate to the buyer, the NIS equivalent of $300,000
(three hundred thousand US dollars) at the representative exchange rate of the US dollar
at the time of payment shall be released to the seller.  

	 	16.5.7 	It
is stipulated that any amounts remaining in the trust account after the release of all
the foregoing amounts shall be remitted to the seller.  

	 	16.6 	It
is agreed that the following provisions shall apply to the deposit to   be made by the
trustees:

	 	16.6.1 	The
trustees shall deposit the money in an interest yielding manner according to written
instructions by the seller, and in the absence of such instructions, the money shall be
deposit by way of a weekly renewable shekel deposit.  

47

	 	16.6.2 	Subject
to the provisions of the Trust Law, 1979, the parties hereby exempt and release the
trustees from all liability in connection with any damage and/or shortage caused to any
of them, if at all, as a result of and/or in connection with any act or omission on the
part of the trustees, unless committed with malice aforethought.  

	 	16.6.3 	The
signature of the parties on this agreement constitutes an irrevocable instruction to the
trustees to act in accordance with this agreement.  

	 	16.6.4 	It
is stipulated that a payment by the buyer to the to the trustees is tantamount to payment
to the seller. 

	 	16.7 	It
is agreed that payments hereunder shall be made by cashier’s check or confirmed bank
transfer. Whenever a payment is made hereunder by way of cashier’s check, the latter
shall only be deemed as actual payment after being approved and verified by the issuing
bank. 

48

	17.  	Sureties
in Favor of the Buyer  

	 	17.1 	Upon
the signing of this contract, a caveat shall be inserted on the land in favor of the
buyer. The buyer shall sign an irrevocable power of attorney worded according to Appendix
21 hereto, empowering the counsel for the seller to cancel and erase the caveat to be
entered in the name of the buyer at the Land Registry and/or any other caveat and/or
encumbrance and/or other entry made in favor of the buyer and/or persons on its behalf at
any registry and/or authority, if existent. The said power of attorney, legally signed
and certified and accompanied by a protocol made by the buyer and empowering the
signatories on the buyer’s behalf to sign the aforementioned power of attorney,
shall be deposited with the counsel for the seller upon the signing of this contract. The
said power of attorney shall be returned to the buyer against payment of the full price.
Notwithstanding the foregoing, in the event of cancellation of this contract under law or
upon the occurrence of the suspensive condition and the buyer failing to pay the full
price and/or upon expiry of 240 days from the time of signing the agreement and the
agreement being voided and the buyer having obtained a full refund of the payments, if
any, made to the seller, or alternatively on expiry of 120 days after signing the
agreement and the buyer failing to extend the time limit for compliance with the
suspensive condition and the agreement being terminated and the buyer having obtained a
full refund of all payments, if any, made to the seller, linked to the representative
exchange rate of the US dollar, the counsel for the seller shall be entitled to erase the
caveat subject to sending a notice of 30 days’ length to the buyer of its intent to
do so. The parties hereby irrevocably instruct the counsel of the seller to act pursuant
to this clause 17.1. 

	 	       17.2 	For
securing the compliance with the seller's undertaking according to this contract, the
seller's                 shareholders - the companies Hamama Bros & Co. Ltd., Gitam Image
Systems Ltd., Yarongal Ltd. and Asaftal                 Ltd. - shall sign a guarantee
letter on the margins of this contract, guaranteeing compliance with the
                seller's obligations. In addition to the foregoing, a guarantee is hereby
given by S.G.S. Construction                 Company Ltd. with regard to all aspects of
the quality, standards and warranty on the property as well as                 Form 4 and
completion certificate worded according to Appendix 21(1).

49

	 	17.3 	Moreover,
against payment to Bank Hapoalim and subject to payment of the full price as stipulated
in the foregoing clause 15, a first-degree mortgage shall be entered in favor of the
buyer at the Land Registry with regard to the seller’s rights to the land, without
any restriction as to amount, as stipulated in the foregoing clause 16.4.1. 

	18.  	Registration  

	 	18.1 	Without
prejudice to the seller’s obligation to register, the counsels for the buyer shall
register the rights to the property in the name of the buyer. For this purpose the seller
undertakes to provide the buyer’s counsel with the respective documents addressed to
the Land Registry, namely: betterment tax certificate, sale tax certificate, certificate
by the Municipality, certificate by the Local Committee concerning the transfer of the
rights to the property in the buyer’s name, and protocol by the seller concerning
encumbrance and protocol by the seller concerning the sale of the property, worded as in
Appendix 22 (hereinabove and hereinafter: the transfer documents); all of this without
prejudice to the provisions of clause 18.3 hereinbelow. Concerning the certificates by
the Municipality and the Local Committee it is stipulated that any charge applicable to
the buyer pursuant to this contract and causing a delay and/or suspension of the
submission of the said certificate shall be construed as submission of the foregoing by
the seller. 

	 	18.2 	For
securing the buyer’s rights under this contract, the buyer shall provide the seller,
against payment of the full price to the seller, with an irrevocable power of attorney
made to the order of the buyer’s counsels, empowering them to do in the buyer’s
name and on the buyer’s behalf, all legal operations arising from his undertakings
hereunder. A copy of the said power of attorney is enclosed herewith as Appendix 23 to
this contract, constituting an integral part hereof (hereinafter: the power of attorney). 

50

	 	18.3 	The
parties undertake mutually to appear and sign all documents, applications, statements and
forms of any kind and description that may have to be submitted for an effective
implementation of this contract and/or to present all the necessary certificates and/or
to appear before any body and/or institution and/or office and/or authority, everything
as necessary and/or as required by their respective counsels. 

	 	18.4 	The
buyer undertakes to approach all the relevant authorities and entities on delivery of
possession of the property and to sign all the necessary documents for the transfer of
the current accounts to its name. 

	19.  	Taxes
and Other Compulsory Payments  

	 	       19.1 	Purchase
tax regarding the acquisition of the property shall be payable by the buyer.

	 	19.2 	Value-added
tax for the purchase of the property shall be payable by the buyer against a tax invoice.

	 	19.3 	Property
tax, betterment tax and/or income tax as applicable to transaction involved herewith
shall be due by the seller and payable by the latter at the time established by law. 

	 	19.4 	Sale
tax for the transaction concerned herein shall be due by the seller and payable by the
latter at the time                 established by law.

51

	 	19.5 	All
taxes, fees and other compulsory payments, including road tax, supertaxes, construction
taxes, sidewalk, sewerage tax, development taxes, municipal and state compulsory payments
and other compulsory payments concerning the property and applicable by the compliance
with a suspensive condition or by the time of delivery of possession, whichever occurs
first, and not related to or arising from the completion works and/or from any other
operation of the buyer in connection with the property, as well as payments as aforesaid
related to the building permit shall be payable by the seller, and any other payment,
including those from the said time onward, shall be payable by the buyer. 

52

	 	19.6 	All
payments and charges for water and electricity for the property as applicable for the
performance of the works by the seller shall be payable by the seller. All payments and
charges for water and electricity for the property with regard to the performance of the
completion works by the buyer shall be applicable to and paid by the buyer. It is agreed
that since the works shall be carried out alongside the performance of the completion
works by the buyer, each of the parties shall pay its own share of these charges
according to a distribution agreed between the parties, and in the absence of such
agreement, the matter shall be resolved by the arbitrator. It is further agreed that in
the event of the works being performed simultaneously with the execution of the
completion works by the buyer the parties shall share the cost of security according to a
distribution to be agreed upon between them, and in the absence of such agreement the
matter shall be resolved by the arbitrator. 

	 	
The
buyer undertakes within 7 days from delivery of possession of the property to notify
Tel-Aviv Municipality and the Electric Corp. of the sale transaction and to have the
bills for electricity and water transferred to its own name. 

53

	20.  	Financing
of the Purchase  

	 	20.1 	In
addition to or instead of the registration of a mortgage in favor of the buyer as
provided in the foregoing art. 16.4.1 and to the extent that the buyer shall desire to
have the seller’s rights to the land encumbered in favor of a bank (“the
financing bank”), and to the extent that the financing bank shall have requested to
enter a first degree mortgage on the seller’s rights to the land (hereinafter: the
mortgage to the financing bank), the seller shall sign mortgage deeds and special
conditions in favor of the financing bank in a wording to be approved by the financing
bank and the seller, everything subject to the provisions of this contract, strictly
against payment of the full price to the seller, provided that nothing therein shall
impose any liability and/or obligation on the seller toward the financing bank beyond the
mortgage of the property in favor of the financing bank. It is stipulated that the
encumbrance deed shall clearly stipulate that the bank shall have no grounds for any
claim and/or demand toward the seller and/or any of the seller’s representatives,
with the stipulation that the seller is not liable for any obligations of the buyer, and
that with regard to the seller the property (i.e. the asset to be encumbered) alone shall
serve as guarantee for the secured amounts, and that the financing bank may recover its
due strictly from the property to the exclusion of any other asset belonging to the
seller. It is further stipulated that in the event of the price obtained from the sale of
the property being insufficient for covering the buyer’s secured debts at the time
the financing bank shall not be entitled to claim anything from the seller. It is also
stipulated that the seller neither owes nor guarantees any other obligations of the
buyer. 

54

	 	
It
is stipulated for the sake of clarity, that the signature of the seller on the mortgage
deeds and the special conditions as aforesaid shall be strictly conditional on the full
payment of the price to the seller. 

	 	20.2	It
is expressly agreed and provided that nothing in the foregoing shall impose any liability
on the seller for the grant of financing/credit by the financing bank to the buyer. 

	21.  	Insurance  

	 	21.1 	Insurances
of the Seller

	 	21.1.1 	Without
prejudice to the seller’s liability under law and/or according to this agreement,
the seller undertakes to acquire and maintain at its own expense the insurances according
to the conditions and amounts indicated in the insurance certificate enclosed herewith as
appendix 24 and constituting an integral part hereof (hereinafter: “the seller’s
insurances” and/or “the insurance purchase certificate”, as the case may
be), for the entire duration of the works being performed by the seller and pending the
delivery of final possession of the building to the buyer and as long as the seller’s
liability thereunder remains in effect. 

	 	21.1.2 	The
seller further undertakes to acquire and maintain at its own expense the remaining
insurances and undertakings necessary and/or required for the performance of the works
including, without prejudice to the generality of the foregoing, payments for National
Insurance and the Insurance Fund for Construction Workers, also including mandatory
insurance for all vehicles brought by the seller to the site and/or serving for
performance of the works, and also third-party liability insurance for the said vehicles. 

55

	 	21.1.3 	Without
needing any demand by the buyer, the seller undertakes to provide the buyer with the
respective insurance certificates duly signed by the insurers – prior to the
performance of the works and as a condition precedent to the contractual commitment.  

	 	21.1.4 	Void.  

	 	21.1.5 	Void  

	 	21.1.6 	Void.  

	 	21.1.7 	It
is agreed and stipulated that the limits of liability required for the insurance
certificate constitute a minimum requirement imposed on the seller. The seller
acknowledges and declares that it may not raise any claim toward the buyer and/or toward
persons on the buyer’s behalf on any matter related to the said limits of liability.  

	 	21.1.8 	In
the event of the seller having acquired further and/or complementary insurances to those
of the seller as indicated in the insurance certificate, the seller undertakes that every
such additional and/or complementary insurance shall comprise a waiver of a subrogation
right by the insurer toward the buyer and/or persons on the buyer’s behalf, with the
provision that such waiver of the subrogation rights shall not apply in favor of a person
causing malicious damage. Any additional and/or complementary insurance shall be extended
to include the buyer as an additional insured party (as principal ordering the works),
subject to the provisions on cross liability.  

56

	 	21.1.9 	The
seller exempts the buyer and/or persons on the buyer’s behalf from liability with
regard to any loss and/or damage for which the seller is entitled to indemnity on the
basis of the insurances referred to in clause 1(a), (b) and (c) and 2 of the insurance
certificate (or would have been entitled to indemnity were it not for the deductible);
and the seller shall have no grounds for any claim and/or demand against the buyer and/or
against persons on the buyer’s behalf for any such loss and/or damage; the said
exemption shall not apply to a person causing malicious damage.  

	 	21.1.10 	The
insurance benefits payable under the seller’s insurance for any loss and/or damage
shall serve for restoration and rehabilitation of the damage and for completion of the
works.  

	 	21.1.11 	In
the event of the seller failing to arrange the seller’s insurances and/or the
insurances falling short of the required coverage according to the insurance certificate
and/or the seller having failed to provide the buyer with the insurances certificates as
required, the buyer shall be entitled though under no obligation to cancel the agreement
forthwith. In the case of the buyer not canceling the agreement, the buyer shall be
entitled though under no obligation to make the seller’s insurances or part of them
instead of the seller and to pay the insurance premium, in which case the buyer shall be
entitled to full immediate indemnification from the seller and/or to offset of the
insurance premiums against the price. All this without prejudice to any additional and/or
other remedy and/or relief available to the buyer under law.  

57

	 	21.1.12 	Nothing
in the foregoing shall impose on the buyer any obligation for arranging any insurance
except as stated in clause 21.2 hereinbelow, and the buyer shall have no liability toward
the seller for an insurance arranged,if at all, by him, or with regard to its extent,
nature or coverage.  

	 	21.1.13 	Without
prejudice to any of the provisions of this agreement or in the matter of assignment
hereof, and in the case of the works hereunder or part thereof being performed by a
subcontractor on behalf of the seller, the seller undertakes to ensure that the
subcontractor has insurance policies according to the conditions and amounts necessary
under this agreement. It is stipulated for the sake of clarity that the seller bears
liability toward the buyer concerning the performance of the works in full, including
works to be carried out by a subcontractor, and shall be liable for indemnifying and/or
compensating the buyer for any loss and/or damage caused directly or indirectly in
connection with any works performed by the subcontractor, regardless of whether or not
such loss and/or damage is covered by any of the above policies.  

58

	22.  	Reliefs
and Remedies  

	 	22.1 	For
breach of any of the provisions hereof the injured party shall be entitled to all of the
reliefs and remedies provided in the Contract Law (Remedies for Breach of Agreement),
1970. 

	 	
In
the event of a fundamental breach hereof, the injured party shall be entitled to
liquidated damages estimated at $4,000,000 (four million US dollars), without prejudice
to any other relief available under law.  

	 	22.2 	It
is agreed between the parties that the provisions of clauses 4, 5, 6, 7, 9, 11, 12, 13,
15, 16, 17, 18, 19, and 21 of this agreement constitute fundamental conditions hereof, so
that the breach of any one of them amounts to a fundamental breach hereof. 

	 	22.3 	For
being in arrears with the payment of the price, the buyer shall pay to the seller arrears
interest on the amount in arrears at the rate of extraordinary interest on debit accounts
as applied at Bank Hapoalim at the time of actual payment, calculated for the period
between the date of maturity and the time of actual payment. 

	23.  	Jurisdiction  

	 	
The
competent court of law in Tel-Aviv shall have specific exclusive local jurisdiction on
all matters arising from and/or related to this agreement, to the exclusion of any other
court of law.  

	24.  	Miscellaneous  

	 	       24.1 	The
parties undertake to cooperate with one another and to sign every document necessary for
its                 implementation.

	 	24.2 	Nothing
herein and/or arising herefrom constitutes any undertaking toward a third party, i.e. one
that is no                 direct party hereto.

59

	 	24.3 	Without
prejudice to the liability of the parties for making the payments imposed on them
hereunder, each party may after sending to the other party a written notice of 14 days’ length
of its intent to do so, pay any amount imposed on the other party hereunder and/or
pursuant to law but not actually paid (hereinafter: “the paying party”). In
such case the paying party shall be entitled to demand the refund of the sum paid in lieu
of the other party, and the other party shall refund the sum to the paying party plus
linkage differentials and interest at the annual rate of 6%. 

	 	24.4 	This
contract and its appendices formulate and express the set of relations, rights and
obligations between the buyer and the seller in an exclusive and absolute manner. Any
agreement, memorandum, presentation, statement, contract, assurance, obligations made
orally or in writing by any of the parties hereto or on their behalf, if at all, are null
and void. 

	 	24.5 	No
behavior by any of the parties shall be construed as waiver of any of its rights
hereunder and/or according to law, or as waiver and/or consent with regard to any breach
of and/or noncompliance with any of the provisions hereof by the other party and/or as
entitling to any extension. 

	 	24.6 	Any
modification, amendment of and/or addition to this agreement shall only be valid if made
in writing and signed by the parties. No oral consent concerning the cancellation and/or
amendment of a provision of this clause shall be valid unless and inasmuch as made in
writing with the legal signatures of the parties. 

60

	 	24.7 	Any
notice sent by one of the parties hereto to the other party at the address indicated in
the preamble hereto shall be deemed as having reached its destination on expiry of three
business days from sending by registered mail. Nothing in the foregoing shall impair the
right of a party hereto to deliver notices to the other party by any other way including
fax, personal delivery, etc. 

	25.  	Arbitrator  

	 	25.1 	Any
dispute between the buyer and the seller and/or between the supervisor and the seller
concerning matters expressly referred to herein shall be resolved to the arbitrator. The
arbitrator may rule on disputes arising whenever the seller objects against an
instruction or guideline or ruling by the inspector. It is stipulated that the matter
submitted to the arbitrator shall be strictly of a technical and/or engineering and/or
operational nature only. 

	 	25.2 	The
arbitrator shall not be bound to the laws of evidence or the procedures applied in courts
of law; however, he shall be bound to present grounds for his rulings.

	 	25.3 	Nothing
in the referral of disputes and conflicts to the arbitrator’s resolution as
aforesaid shall provide grounds for any delay in the implementation of the provisions of
this agreement by the seller, nor shall it justify any interruption in the performance of
construction works or the discharge of its obligations hereunder. It is nevertheless
agreed that the arbitrator shall be required to determine whether the instructions given
by the supervisor were reasonable and in line with the provisions of the contract and
also to find out the repercussions of the issue of such instructions by the supervisor,
including those in connection with a deferral of the timetables hereunder. Moreover, as
necessary, the arbitrator shall be requested to issue urgent interim instructions. 

61

	 	25.4 	The
content of this clause constitutes an arbitration deed as defined in the Arbitration Law,
1968. 

	 	 25.5 	The
arbitrator shall hand down his ruling within 14 days from being requested by one of the
parties in writing to deliver his position on the matter in dispute between the parties
and after allowing each of the parties to present its position.

	 	25.6 	The
arbitrator's ruling shall be final and binding upon the parties.

	 	25.7 	The
parties shall share the arbitrator s fee in equal parts between them unless ordered by
the adjudicator to proceed otherwise. 

IN WITNESS THEREOF THE PARTIES HAVE
SET THEIR HAND: 

	——————————————

Zlil Ad Ltd.	——————————————

Check Point Ltd.

62_

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is executed as of this 15th day of March, 2007, by and between Thomas Slagle ("Employee") and School Specialty, Inc. (the "Company").

RECITALS

The Company desires to employ Employee, and Employee desires to be employed by the Company, on the terms and conditions set forth herein.

As a result of Employee's employment with the Company, Employee will have access to and be entrusted with valuable information about the Company's business and customers, including trade secrets and confidential information; and

The parties believe it is in their best interests to make provision for certain aspects of their relationship during and after the period in which Employee is employed by the Company.

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Company and Employee ("Parties"), the Parties agree as follows:

ARTICLE I

EMPLOYMENT

1.1Position and Duties.  Employee shall be employed in the position of President and Chief Operating Officer, for the "Company" and shall be subject to the authority of, and shall report to, the Company's Chief Executive Officer.  Employee's duties and responsibilities shall include all those customarily attendant to the position of Chief Operating Officer, and such other duties and responsibilities as may be assigned from time to time by the Company's Chief Executive Officer. Employee shall devote Employee's entire business time, attention and energies exclusively to the business interests of the Company while employed by the Company except as otherwise specifically approved in writing by or on behalf of the Chief Executive Officer

1.2Term of Employment.  The Company employs Employee, and Employee accepts employment by the Company, for the period commencing on the date hereof and ending on March 14, 2010 ("Employment Term"), subject to earlier termination as hereinafter set forth in Article III.  Following the expiration of the Employment Term, this Agreement shall be automatically renewed for successive one year periods (collectively, "Renewal Terms"; individually, "Renewal Term") unless, at least 180 days prior to the expiration of the Employment Term or the then current Renewal Term, either party provides the other with a written notice of intention not to renew, in which case this Agreement shall terminate as of the end of the Employment Term or said Renewal Term, as applicable.  If this Agreement is renewed, the terms of this Agreement during such Renewal Term shall be the same as the terms in effect immediately prior to such renewal, subject to any such changes or modifications as mutually may be agreed between the parties as evidenced in a written instrument signed by both the Company and Employee.

ARTICLE II

COMPENSATION AND OTHER BENEFITS

2.1Base Salary.  The Company shall pay Employee an annual salary of Five Hundred Twenty Five Thousand ($525,000) ("Base Salary"), payable in accordance with the normal payroll practices and schedule of the Company.

2.2Incentive Bonus.  Employee will be eligible to participate in the Company's Corporate Plan I Bonus Program ("Program"), effective for Fiscal year 2008 pursuant to the terms and conditions of the Program.  Program will have a 75% of annual base salary target with a maximum opportunity of 130%. The Company reserves the right, and Employee acknowledges and agrees that the Company retains the right, to unilaterally interpret, change, modify, suspend, amend, delete, or cancel the Program or any provision of the Program or the procedures or benefits of the Program at any time in its sole discretion.  In order to be paid any amount under the Program, Employee must be employed by the Company at the time such payment is made.

2.3Fiscal 2008 - First Quarter Bonus.  Company agrees to a  one time bonus payment of One Hundred Fifty Thousand ($150,000) Dollars if the Company meets or exceeds 90% of budgeted EBITA for the First Quarter of Fiscal 2008.  Employee must be actively employed at time of payout in order to receive said bonus. Payment will be made by August 17, 2007.

2.4Perquisites, Benefits and Other Compensation.  During the Employment Term and any Renewal Term, Employee may be entitled to receive perquisites and benefits provided by the Company to its executive employees, subject to the eligibility criteria related to such perquisites and benefits and to such changes, additions, or deletions to such perquisites and benefits as the Company may make from time to time, as well as such other perquisites or benefits as may be specified from time to time at the sole discretion of the Board and/or the Chief Executive Officer of the Company.

2.5Equity Incentive. 

(a)Stock Options.  On date of hire employee shall be granted an initial award of 100,000 options with opportunity for additional options after each subsequent three (3) years of service at the discretion of the Executive Performance Compensation Committee. Exercise price for initial award will be set at close of business on date of hire.

(b)Non Vested Stock Units (NSUs) or Restricted Stock.  Employee will receive an initial target number of NSUs of 15,000 shares for the three year fiscal period of 2008 - 2010. These shares will take the form of a performance award granted upon attainment of performance objectives for each fiscal year. The performance objective will be average earnings per share over a three year period and the award may be earned in a range of 80% to 200% of target. The EPS target will be established annually by the Executive Performance Compensation Committee.

(c)Basis of above Award.  While it is anticipated that a restricted stock award will be made annually and an option award every three years, the size and valuation of the awards will be determined by the Executive Performance Compensation Committee. The award is granted at the discretion of the Committee.

2.6Relocation.  With the employee's relocation to the Appleton, WI area all reasonable relocation expenses will be covered. Reasonable relocation expenses are defined as what the Company has paid in the past for other Executives when they have relocated to the Corporate office. Employee will move to Appleton, WI or surrounding area, as soon as employee's home sells in Lake Forest, IL.

ARTICLE III

TERMINATION

3.1Right to Terminate; Automatic Termination.

(a)Termination Without Cause.  Subject to Paragraph 3.2(a), below, the Company may terminate Employee's employment and all of the Company's obligations under this Agreement at any time and for any reason.

(b)Termination For Cause.  Subject to Paragraph 3.2(b), below, the Company may terminate Employee's employment and all of the Company's obligations under this Agreement at any time for Cause (as defined below) by giving notice to Employee stating the basis for such termination, effective immediately upon giving such notice or at such other time thereafter as the Company may designate.  "Cause" shall mean any of the following:  (1) Employee has breached this Agreement or any other agreement to which Employee and the Company are parties or has breached any other obligation or duty owed to the Company, including, but not limited to, Employee's breach of or failure or refusal to perform his duties and responsibilities to the Company and Employee's violation of any Company policy (including the Company's policy against unlawful harassment); (2) Employee has committed negligence, misconduct or any violation of law in the   performance of Employee's duties for the Company; (3) Employee has taken any action likely to result in discredit to or loss of business, reputation or goodwill of the Company; (4) Employee has failed to follow reasonable instructions from the Board, officer, body or other entity or individual to whom Employee reports concerning the operations or business of the Company; (5) Employee has committed a crime the circumstances of which substantially relate to Employee's employment duties with the Company; (6) Employee has misappropriated funds or property of the Company or engaged in any material act of dishonesty; (7) Employee has attempted to obtain a personal profit from any transaction in which the Company has an interest, and which constitutes a corporate opportunity of the Company, or which is adverse to the interests of the Company, unless the transaction was approved in writing by the Company's Board after full disclosure of all details relating to such transaction.

(c)Termination by Death or Disability.  Subject to Paragraph 3.2(b), below, Employee's employment and the Company's obligations under this Agreement shall terminate automatically, effective immediately and without any notice being necessary, upon Employee's death or a determination of Disability of Employee.  For purposes of this Agreement, "Disability" means the inability of Employee, due to a physical or mental impairment, to perform the essential functions of Employee's job with the Company, with or without a reasonable accommodation.  A determination of Disability shall be made by the Company, which may, at its sole discretion, consult with a physician or physicians satisfactory to the Company, and Employee shall cooperate with any efforts to make such determination.  Any such determination shall be conclusive and binding on the Parties.  Any determination of Disability under this Paragraph 3.1(c) is not intended to alter any benefits any party may be entitled to receive under any long-term disability insurance policy carried by either the Company or Employee with respect to Employee, which benefits shall be governed solely by the terms of any such insurance policy.

(d)Termination by Resignation.  Subject to Paragraph 3.2(b), below, Employee's employment and the Company's obligations under this Agreement shall terminate automatically, effective immediately upon Employee's provision of written notice to the Company of Employee's resignation from employment with the Company or at such other time as may be mutually agreed between the Parties following the provision of such notice.

3.2Rights Upon Termination.

(a)Paragraph 3.1(a) Termination.  If Employee's employment is terminated pursuant to Paragraph 3.1(a), above, Employee shall have no further rights against the Company hereunder, except for the right to receive (1) any unpaid Base Salary with respect to the period prior to the effective date of termination, (2) payment of any accrued paid time off under the Company's paid time off policy that is unused through the effective date of termination, (3) a Severance Payment (defined below), the payment of which is contingent upon Employee's execution of a written severance agreement (in a form satisfactory to the Company) containing, among other things, a general release of claims against the Company, and (4) reimbursement of expenses to which Employee may be entitled.  For purposes of this Agreement, "Severance Payment" means twelve (12) months of Base Salary, payable following termination in accordance with the normal payroll practices and schedule of the Company.

(b)Paragraph 1.2 and Paragraph 3.1(b)-(d) Terminations.  If Employee's employment is terminated pursuant to Paragraph 3.1(b) or (c), above, if Employee resigns pursuant to Paragraph 3.1(d), above, or if either the Company or Employee fails to renew this Agreement pursuant to Paragraph 1.2, above, Employee or Employee's estate shall have no further rights against the Company hereunder, except for the right to receive (1) any unpaid Base Salary with respect to the period prior to the effective date of termination, (2) payment of any accrued paid time off under the Company's paid time off policy that is unused through the effective date of termination, and (3) reimbursement of expenses to which Employee may be entitled.

ARTICLE IV

CONFIDENTIALITY

4.1Confidentiality Obligations.  Employee will not, during the term of his/her employment, directly or indirectly use or disclose any Confidential Information or Trade Secrets except in the interest and for the benefit of the Company.  After the end, for whatever reason, of Employee's employment with the Company, Employee will not directly or indirectly use or disclose any Trade Secrets. For a period of eighteen (18) months following the end, for whatever reason, of Employee's employment with the Company, Employee will not directly or indirectly use or disclose any Confidential Information.  Employee further agrees not to use or disclose at any time information received by the Company from others except in accordance with the Company's contractual or other legal obligations; the Company's Customers are third party beneficiaries of this promise. 

4.2Definitions.

(a) Trade Secret.  The term "Trade Secret" has that meaning set forth under applicable law.  The term includes, but is not limited to, all computer source code created by or for the Company.

(b)Confidential Information.  The term "Confidential Information" means all non-Trade Secret or proprietary information of the Company which has value to the Company and which is not known to the public or the Company's competitors, generally.  Confidential Information includes, but is not limited to: (i) inventions, product specifications, information about products under development, research, development or business plans, production know-how and processes, manufacturing techniques, operational methods, equipment design and layout, test results, financial information, customer lists, information about orders and transactions with customers, sales and marketing strategies, plans and techniques, pricing strategies, information relating to sources of materials and production costs, purchasing and accounting information, personnel information and all business records; (ii) information which is marked or otherwise designated as confidential or proprietary by the Company; and (iii) information received by the Company from others which the Company has an obligation to treat as confidential.

(c)Exclusions.  Notwithstanding the foregoing, the terms "Trade Secret" and "Confidential Information" shall not include, and the obligations set forth in this Agreement shall not apply to, any information which: (i) can be demonstrated by Employee to have been known by him/her prior to his/her employment by the Company; (ii) is or becomes generally available to the public through no act or omission of Employee; (iii) is obtained by Employee in good faith from a third party who discloses such information to Employee on a non-confidential basis without violating any obligation of confidentiality or secrecy relating to the information disclosed; or (iv) is independently developed by Employee outside the scope of his/her employment without use of Confidential Information or Trade Secrets.

ARTICLE V

NON-COMPETITION

5.1Restrictions on Competition During Employment.  During the term of Employee's employment with the Company, Employee shall not directly or indirectly compete against the Company, or directly or indirectly divert or attempt to divert Customers' business from the Company anywhere the Company does or is taking steps to do business.

5.2Post-Employment Non-Solicitation of Restricted Customers.  For eighteen (18) months following termination of Employee's employment with the Company, for whatever reason, Employee agrees not to directly or indirectly solicit or attempt to solicit any business from any Restricted Customer in any manner which competes with the services or products offered by the Company in the twelve (12) months preceding termination of Employee's employment with the Company, or to directly or indirectly divert or attempt to divert any Restricted Customer's business from the Company.

5.3Post-Employment Restricted Services Obligation.  For eighteen (18) months following termination of Employee's employment with the Company, for whatever reason, Employee agrees not to provide Restricted Services to any Competitor in any geographic area in which the Company sold pre-kindergarten through 12th grade educational products and services during the twelve (12) month period preceding termination of Employee's employment.  During such eighteen (18) month  period, Employee also will not provide any Competitor with any advice or counsel concerning the provision of Restricted Services anywhere in such geographic area.

5.4Definitions.

(a)Customer.  The term "Customer" means any individual or entity for whom/which the Company has provided services or products or made a proposal to perform services or provide products.

(b)Restricted Customer.   The term "Restricted Customer" means any individual or entity (i) for whom/which the Company provided services or products and (ii) with whom/which Employee had contact on behalf of the Company or about whom/which Employee acquired non-public information in connection with his/her employment by the Company during the twenty-four (24) months preceding the end, for whatever reason, of Employee's employment with the Company; provided, however, that the term "Restricted Customer" shall not include any individual or entity who/which, through no direct or indirect act or omission of Employee, has terminated its business relationship with the Company.

(c)Restricted Services.  The term "Restricted Services" means services of any kind or character comparable to those Employee provided to the Company during the twelve (12) months preceding the termination of Employee's employment with the Company relating to pre-kindergarten through 12th grade educational products and services of the type sold by the Company within any geographic area in which the Company engaged in the sale of such products or services within the last twelve (12) month period preceding termination of Employee's employment.

(d)Competitor. The term "Competitor" means any business which is engaged in the sale of pre-kindergarten through 12th grade educational products and services of the type sold by the Company within any geographic area in which the Company engaged in the sale of such products or services within the twelve (12) month period preceding termination of Employee's employment.

 

 

ARTICLE VI

Business Idea Rights

6.1Assignment.  The Company will own, and Employee hereby assigns to the Company and agrees to assign to the Company, all rights in all Business Ideas which Employee originates or develops whether alone or working with others while Employee is employed by the Company.  All Business Ideas which are or form the basis for copyrightable works are hereby assigned to the Company and/or shall be assigned to the Company or shall be considered "works for hire" as that term is defined by United States Copyright Law.  

6.2Definition of Business Ideas.  The term "Business Ideas" means all ideas, designs, modifications, formulations, specifications, concepts, know-how, trade secrets, discoveries, inventions, data, software, developments and copyrightable works, whether or not patentable or registrable, which Employee originates or develops, either alone or jointly with others while Employee is employed by the Company and which are (i) related to any business known to Employee to be engaged in or contemplated by the Company; (ii) originated or developed during Employee's working hours; or (iii) originated or developed in whole or in part using materials, labor, facilities or equipment furnished by the Company.  

6.3Disclosure.  While employed by the Company, Employee will promptly disclose all Business Ideas to the Company. 

6.4Execution of Documentation.  Employee, at any time during or after the term of his/her employment with the Company, will promptly execute all documents which the Company may reasonably require to perfect its patent, copyright and other rights to such Business Ideas throughout the world. 

ARTICLE VII

NON-SOLICITATION OF EMPLOYEES

During the term of Employee's employment with the Company and for eighteen (18) months thereafter, Employee shall not directly or indirectly encourage any Company employee to terminate his/her employment with the Company or solicit such an individual for employment outside the Company in any manner which would end or diminish that employee's services to the Company. 

ARTICLE VIII

Employee Disclosures and Acknowledgments

8.1Confidential Information of Others.  Employee warrants and represents to the Company that he/she is not subject to any employment, consulting or services agreement, or any restrictive covenants or agreements of any type, which would conflict or prohibit Employee from fully carrying out his/her duties as described under the terms of this Agreement.  Further, Employee warrants and represents to the Company that he/she has not and will not retain or use, for the benefit of the Company, any confidential information, records, trade secrets, or other property of a former employer.

8.2Scope of Restrictions.  Employee acknowledges that during the course of his/her employment with the Company, he/she will gain knowledge of Confidential Information and Trade Secrets of the Company.  Employee acknowledges that the Confidential Information and Trade Secrets of the Company are necessarily shared with Employee on a routine basis in the course of performing his/her job duties and that the Company has a legitimate protectable interest in such Confidential Information and Trade Secrets, and in the goodwill and business prospects associated therewith. Employee acknowledges that the Company sells pre-kindergarten through 12th grade educational products and services  to all states in the United States.  Accordingly, Employee acknowledges that the scope of the restrictions contained in this Agreement are appropriate, necessary and reasonable for the protection of the Company's business, goodwill and property rights, and that the restrictions imposed will not prevent him/her from earning a living in the event of, and after, the end, for whatever reason, of his/her employment with the Company.

8.3Prospective Employers.  Employee agrees, during the term of any restriction contained in Articles IV, V, VI, VII and VIII of this Agreement, to disclose this Agreement to any entity which offers employment to Employee.  Employee further agrees that the Company may send a copy of this Agreement to, or otherwise make the provisions hereof known to, any of Employee's potential employers.

8.4Third Party Beneficiaries.  Any Company affiliates are third party beneficiaries with respect to Employee's performance of his/her duties under this Agreement and the undertakings and covenants contained in this Agreement and the Company and any of its affiliates, enjoying the benefits thereof, may enforce this Agreement directly against Employee.  The terms Trade Secret and Confidential Information shall include materials and information of the Company's affiliates to which Employee has access.

8.5Survival.  The Covenants set forth in Articles IV, V, VI, VII and VIII of this Agreement.

ARTICLE IX

RETURN OF RECORDS

Upon the end, for whatever reason, of his/her employment with the Company, or upon request by the Company at any time, Employee shall immediately return to the Company all documents, records and materials belonging and/or relating to the Company (except Employee's own personnel and wage and benefit materials relating solely to Employee), and all copies of all such materials.  Upon the end, for whatever reason, of Employee's employment with the Company, or upon request of the Company at any time, Employee further agrees to destroy such records maintained by him/her on his/her own computer equipment.

ARTICLE X

MISCELLANEOUS

10.1Notice.  Any and all notices, consents, documents or communications provided for in this Agreement shall be given in writing and shall be personally delivered, mailed by registered or certified mail (return receipt requested), sent by courier (confirmed by receipt), or telefaxed (confirmed by telefax confirmation) and addressed as follows (or to such other address as the addressed party may have substituted by notice pursuant to this Paragraph 10.1):

To the Company:School Specialty, Inc.

W6316 Design Drive

P.O. Box 1579

Appleton WI  54912-1579

Attention:  Mr. David Vander Zanden

Fax: 1-920-882-5863

With a copy to:Joseph F. Franzoi IV, Esq.

Franzoi & Franzoi, S.C.

514 Racine Street

Menasha, WI  54952

Fax:  (920) 725-0998

 To Employee:Thomas Slagle

1340 Kimmer Court

Lake Forest, IL 60045-3669

Such notice, consent, document or communication shall be deemed given upon personal delivery or receipt at the address of the party stated above or at any other address specified by such party to the other party in writing, except that if delivery is refused or cannot be made for any reason, then such notice shall be deemed given on the third day after it is sent.

10.2Entire Agreement; Amendment; Waiver. This Agreement (including any documents referred to herein) sets forth the entire understanding of the parties hereto with respect to the subject matter contemplated hereby. Any and all previous agreements and understandings between or among the Parties regarding the subject matter hereof, whether written or oral, are superseded by this Agreement.  This Agreement shall not be amended or modified except by a written instrument duly executed by each of the parties hereto. Any extension or waiver by any party of any provision hereto shall be valid only if set forth in an instrument in writing signed on behalf of such party.

10.3Headings.  The headings of sections and paragraphs of this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any of its provisions.

10.4Attorneys' Fees; Expenses.  Each party hereto shall bear and pay all of the respective fees, expenses and disbursements of their agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement, and its enforcement; provided, however, that should Employee be determined to have breached the terms of Articles IV, Article V, Article VI, Article VII or Article VIII above, Employee shall be obligated to pay the reasonable attorneys' fees and costs incurred by the Company as a result of such breach and the Company's enforcement of the foregoing Articles.

10.5Injunctive Relief.  The Parties agree that damages will be an inadequate remedy for breaches of this Agreement and in addition to damages and any other available relief, a court shall be empowered to grant injunctive relief.

10.6Waiver of Breach.  The waiver by either party of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party.

10.7Severability.  If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and, to the extent allowed by law, such invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the Parties expressed therein.

10.8.Consideration.  Execution of this Agreement is a condition of Employee's employment with the Company and Employee's employment by the Company constitutes the consideration for Employee's undertakings hereunder.

10.9Governing Law.  This Agreement shall in all respects be construed according to the laws of the State of  Wisconsin without regard to its conflict of laws principles. 

IN WITNESS WHEREOF, the Parties hereto have cause this Agreement to be duly executed as of the date first written above.
EMPLOYEE:

By: /s/ Thomas M. Slagle

Date: 03/15/2007

 

SCHOOL SPECIALTY, INC.:

By: /s/ David. J. Vander Zanden

       

Title: CEO

Date: 03/15/2007

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