Document:

Exhibit
10.6

 

LOAN AGREEMENT

 

 

between

 

 

BANK HAPOALIM B.M.

 

 

and

 

 

NESSTECH ADVANCED TECHNOLOGIES (1999) LTD.

 

 

dated

 

 

JULY 29,
1999

 

 

INDEX

 

	
  Clause

  	
   

  	
  Headings

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Interpretation

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Definitions

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Availability
  and Disbursement of the Loan

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Linkage and Interest

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Payment of Interest

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Repayment of the Loan

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Default Interest

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Increased Costs

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Prepayment

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Time, Place and Manner of
  Payment

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Collaterals

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Conditions Precedent

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Representations and
  Warranties

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Undertakings

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Events of Default

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Unlawfulness, Substitute Basis

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Set Off and
  Application of Payments

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  The Borrower’s Duty to Notify

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Compensation for Broken Funding

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Remedies and Waivers

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Assignment 

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Administration of the Loan

  	
  24

  

 

2

 

	
  Clause

  	
   

  	
  Headings

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Disclosure of Information

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Expenses

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Additional Provisions

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Notices

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Governing Law and Jurisdiction

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Currency Indemnity

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  Severability

  	
  27

  

 

3

 

This Loan Agreement is
dated as of the 29 day of July, 1999 and made between:

 

BANK
HAPOALIM B.M

 

(“The Bank”)

 

and

 

NESSTECH
ADVANCED TECHNOLOGIES (1999) LTD. ( 51- 279744-0)

 

a company duly established and
existing under the laws of the State of Israel (“the Borrower”).

 

Whereas the
Borrower has requested the Bank to grant it a loan in a total sum equivalent to
$ 31,500,000 ( Thirty One Million and Five Hundred Thousand Dollars) according
to the terms and conditions of this Agreement in order to participate in
financing the acquisition of 87.4% of the outstanding share capital of the
Company comprising 60% of the credit which will be borrowed by the Borrower
other than the capital contribution stated in Clause 12 (d) below.

 

Whereas the
Bank is prepared to accede to the Borrower’s request upon the conditions
hereinafter set forth.

 

Now, therefore,
it is hereby agreed and declared between the parties as follows:

 

1.                                     Interpretation

 

1.01                           This
Agreement forms an integral part of the Borrower’s applications to open an
account and the general conditions for operating an account which have been
signed by the Borrower in the Bank (“the
Applications to Open an A-account”).

 

1.02                           Unless
otherwise agreed the Borrower’s obligations in this Agreement are in addition
to those contained in the Application to open an account and nothing in this
Agreement shall derogate from any of the Banks rights under the Applications to
open an account.

 

1.03                           In the
case of any contradiction between this Agreement and the Application to open an
account and \ or the provisions of the Deed of Pledge the provisions of this
Agreement shall prevail. In addition, in the event that the Application to Open
an Account refers to a matter which this Agreement refers to (even not in a
case of contradiction) then the terms of this Agreement shall prevail
concerning such subject matter.

 

4

 

1.04                           The
Preamble to this Agreement constitutes an inseparable part thereof.

 

1.05                           Clause
headings and the table of contents are inserted for convenience of reference
only and shall be ignored in the interpretation of this Agreement.

 

1.06                           In
this Agreement, unless the context otherwise requires:

 

(a)                                  reference
to Clauses and Annexes are to be construed as reference to the clauses of, and
annexes to, this Agreement and references to this Agreement include its
Annexes; and

 

(b)                                 words
importing the plural shall include the singular and vice versa.

 

2.                                      Definitions

 

In this Agreement, the following
words and expressions shall bear the following meanings unless the context
otherwise requires:-

 

“Bank” means
- Bank Hapoalim B.M and any of its branches or offices existing on the date
hereof and or to be subsequently opened, whenever they may be, its
successors, assignees, or attorneys in fact;

 

“Banking Day” means
- a day on which dealings in Dollar deposits are carried on in the London
Interbank Eurodollar market and (if payment is required to be made on such day)
on which banks are open for business in London and in Israel.

 

“Bank’s Books”_shall
be construed so as to include any book, record, statement of account, and copy
of any statement of account, loan agreement, deed of undertaking, customers’
bill, card index, page, film, any means of storage and retrieval of data for
purpose of electronic computers and any other means of storage and retrieval of
data;

 

“Bond Rate” means
- the arithmetic mean of the gross yield to maturity (rounded upwards, if
necessary, to four decimal places) as published by the Tel-Aviv Stock Exchange
Ltd. (“TASE”), of at least 6 (six) series of fixed rate bonds issued by the
State of Israel and listed on the TASE, and having a remaining period until
maturity of 18 - 41 months except for the first period of 12 months of the Loan
from the Disbursement Date on which the said bonds will have remaining period
until maturity of 12 months, denominated in NIS and fully linked to the Israeli
consumer price index, in each of the 5 (five) trading dates of the TASE
immediately preceding the beginning of the relevant rate period.

 

“The Closing
Date” means - July 29 1999 or any other date as shall be
agreed upon;

 

“The Company” means
- Advanced Technology Ltd

 

5

 

Deed of Pledge means
- an undertaking of
the Borrower pursuant to which the Borrower shall create pledges and charges
described in clause 11 hereof

 

“Disbursement
Date” means - a Banking Day upon which the disbursement
of the Loan will be made and which is the Closing Date.

 

“Dollars and
“$” mean - the lawful currency of the United
States of America.

 

“Encumbrance” - includes any
mortgage, pledge, lien, charge, assignment, hypothecation, security interest,
title retention, preferential right or trust arrangement or other agreement or
arrangement the effect of any of which is the creation of security;

 

“Event of
Default” means - any of the events or circumstances
described in Clause 15;

 

“Fixed Linked
Rate” means - the rate of interest which is applied by the Bank at
the time of your notification to reflect its wholesale rate interest for
credits linked to the Israeli consumer price index, before application of any
margin for the purpose of determining the rate of interest to be charged by the
Bank in respect of Cost of Living Index based loans to its customers in amounts
similar to the amount of the relevant credit and for similar periods for such
credit.

 

“Indebtedness” means
- any obligation for the payment or repayment of money, whether as principal or
as surety and whether present or future, actual or
contingent;

 

Interest means
- for Loan B
-LIBOR plus the Margin.

 

for Loan A and
Loan C - (1) Bond Rate plus the Margin,

or

(2) Fixed
Linked Rate plus the Margin

 

The Interest for loans granted on a
Bond Rate basis will be computed on the last Banking Day of the Interest Period
which ends at the end of the first year from the Disbursement Date and on the
last Banking Day every 2 (two) years after such date (the “Computation Date”)
as follows: one month before the end of the relevant Computation Date the
Borrower will notify the Bank if he wishes the Interest to be on the Bond Rate
basis or the Fixed Linked Rate basis. If the Borrower chooses the Fixed Linked
Rate basis, the rate of interest applicable for the Loan from the relevant
Computation Date until the end of the duration will be the Fixed Linked Rate
plus the Margin. If the Borrower chooses the Bond Rate basis, the Interest
which will be applicable for the next 2 (two) years period from the relevant
Computation Date will be the Bond Rate plus the Margin.

 

If the Borrower does not notify
the Bank which rate basis he has chosen then the Interest for the following two
year period will be the Bond Rate basis plus the
Margin.

 

6

 

“Interest
Period” Each Interest Period shall be as follows:

 

for Loan A and C - a period of
12 (twelve) months duration.

 

for Loan B - a period of six
months duration.

 

all commencing and including the
Disbursement Date, Provided, however, that if any Interest Period would
otherwise end on a day which is not a Banking Day, the termination thereof shall
be postponed to the next day which is a Banking Day, unless such Banking Day
falls in the next calendar month, in which case such Interest Period shall end
on the immediately preceding day which is a Banking Day.

 

“LIBOR”, means
the rate of interest (expressed as any annual rate) determined by the Bank to
be the arithmetic meaning (rounded up, if necessary to the nearest whole
multiple of 1/8%) of the (i) rates for Dollar deposits offered to the Bank for
the respective Interest Period which appears on the FRBD page of the Reuters
Screen for Dollars as of 11:00 a.m. London time, two Banking Days prior to the
commencement of the respective Interest Period, or (ii) if Clause (i) above is
inapplicable, the rates of interest communicated to, and at the request of, the
Bank, by or on behalf of the principal London offices of the Reference Banks or
any two of them, as being the rates at which they would offer to the Bank
deposits in Dollars in the London Interbank Eurodollar Market, for the
respective Interest Period as of 11:00 a.m. London time two Banking Days prior
to the commencement of that respective Interest Period, or (iii) if Clauses (i)
and (ii) are inapplicable the rates of interest communicated to and at the
request of, the Bank, by at least two other banks in London Interbank
Eurodollar Market, at the rates at which such banks would offer the Bank a
deposit in the Dollars for the respective Interest Period as of 11:00 a.m.
London time, two Banking Days prior to the commencement of that respective
Interest Period.

 

Loan A - NIS
68,070,750

 

Loan B - $
10,800,000

 

Loan C - NIS
17,327,100

 

“Loan” means
- the
principal amount outstanding hereunder at any time of Loan A, Loan B and Loan C

 

“Margin” means
- for Loan A and -C -

 

(1)                                  1.5%
p.a. for the first 12 months from the Disbursement Date and 1.75% p. a. for the
rest of the duration

 

(2)                                  On
Fixed Linked Rate basis 1.25% p.a.

 

for Loan B - 1.25% p. a.

 

7

 

“NIS” -
means New Israeli Shekel

 

“Reference
Bank” means Barclays Bank PLC, National Westminster Bank PLC and
Bankers Trust Company (in its name or as Deutsche Bank).

 

“The Purchase
Agreement” means an agreement signed on July 8 1999 between the
Borrower and Tadiran Ltd. pursuant to which the Borrower purchased the Shares.

 

“Security
Documents” means - this Agreement, the Deed of Pledge and any other
documents as may have been executed according to this Agreement to secure all
or any part of the Loan, Interest thereon and other moneys from time to time
owing by the Borrower pursuant to this Agreement;

 

“The Shares” means
- 12,570,725 ordinary shares of the Company purchased by the Borrower under the
Purchase Agreement, which shares constitute 87.4% of the issued and outstanding
share capital of the Company.

 

“Taxes” includes
all present and future income and other taxes, levies, imposts, deductions,
charges and withholdings whatsoever, together with interest thereon and
penalties with respect thereto, if any, and any payment of principal, interest,
charges, fees or other amounts made on or in respect thereof and “Tax,
“Taxation” and similar words shall be construed accordingly.

 

3.                                      Availability
and disbursement of the Loan

 

3.01                           Provided
the obligations and conditions set forth in Clause 12 have been fulfilled, the
Bank shall make the Loan available to the Borrower on the Closing Date in one
tranche provided, always, that the Borrower shall have given the Bank a request
for disbursement in the form of Schedule ”A” attached hereto, at least
three (3) Banking Days prior thereto. The Loans which will be granted in NIS
will be made available only between the 25th day of the month till the 15th day
of the following month. The Loan shall be made available to the Borrower by
crediting the Borrower’s account with the Central Branch of the Bank with the
amount mentioned in the preamble;

 

The Bank
shall not be required to grant the Loan unless the Closing Date shall be on or
before July 29, 1999

 

3.02                           The
Borrower declares and warrants that all the proceeds of the Loan will be
utilised for the purchase of the Shares, said sum includes also expenses paid
in connection with the Purchase Agreement.

 

8

 

4.                                      Linkage and Interest

 

4.01                           Loan
A, Loan C and the payments of Interest of the said loans shall be linked to the
Consumer Price Index  (as hereinafter
defined) in accordance with the following provisions;

 

4.02                           For
the purpose of the linkage provisions under this Clause 4 the following terms
shall have the following meanings:

 

a)                    The
“Consumer Price Index” - or the “Index” shall mean - the consumer price index
(also known as the cost of living index), which includes fruit and vegetables
and which is published by the Central Bureau of Statistics (hereinafter - “the
Bureau”), or that same index even if it is published by any other government
institution or including any official index replacing same irrespective of
whether it is based on the same data on which the existing index is based or
not. If another index replaces the existing index, the Bureau shall determine
the relation between them, and if the Bureau does not determine the relation between
them with 6 months of the publication of the other index, it shall be
determined by the Bank in consultation with economic experts.

 

b)                   “The
Basic Index” shall mean the last known Index on the Disbursement Date;

 

c)                    The
“New Index” shall mean the last known Index on the Banking Day on which any
payment on account of the principal amount of the Loan and/or Interest on the
Loan (and/or any other linked amounts which the Borrower is required to pay in
respect of the Loan) is actually paid (hereinafter - the, or a, “Payment
Date”).

 

4.03                           In the
event that upon any Payment Date it shall transpire, that the New Index has
risen in comparison to the Basic Index, the Borrower shall make all payments to
the Bank on such Payment Date, whether in respect of the principal of the Loan,
if applicable, Interest, or any other amount payable hereunder, multiplied by
the New Index and divided by the Basic Index.

 

If it transpires that the New
Index has not risen or has fallen in comparison to the Basic Index, the
Borrower shall effect full payment of all such amount payable hereunder at
their stated values, without any reduction.

 

4.04                           In the
event that the last monthly Index which was to have been published before any
Payment Date shall not have been published for any reason whatsoever, then,
notwithstanding any other provision of Clause 4 the “New Index” with respect to
any payment made on such Payment Date shall mean the last published Index prior
thereto. Provided, however, that such “New Index” shall serve as a provisional

 

9

 

Index until the publication of
the proper New Index (or its substitute as stated above).

 

If it
transpires that the New Index, which was published late and after the aforesaid
Payment Date, has risen or fallen in comparison to the Index which served as a
provisional basis for making the aforesaid payments, then the Borrower shall
pay to the Bank or be paid by the Bank, the resulting differences, (as the case
may be) within 2 (two) Banking Days from publication of the New Index.

 

Provided,
however, that if it transpires that such New Index has fallen in comparison to
the Basic Index, then the Basic Index shall serve as the New Index for the
purpose of calculating any such differences.

 

5.                                      Payment of Interest

 

5.01                           The
Borrower shall pay Interest on the outstanding balance of the
principal amount of Loan A and B as of the Disbursement Date on the last day of
each Interest Period of such respective Loan.

 

5.02                           The
Borrower shall pay Interest on the outstanding balance of Loan C
on the payment date of the principal amount of Loan C as stated in
Section 6.01 below (the “Payment Date”) it being understood and agreed
that all Interest accrued during each Interest Period shall be capitalised on
the last day of such Interest Period and as of such date shall also bear
Interest at the rate applicable to the principal amount of Loan C during the
following Interest Periods until the Payment Date.

 

5.03                           Interest
shall accrue from day to day and be calculated on the basis of the actual number
of days elapsed, divided by 360 for Loan B and on Loans A and C on the basis of
the actual number of days elapsed, divided by 365.

 

6.                                      Repayment of the Loan

 

6.01                           The
Borrower shall repay the Loans as follows:

 

Loan “A” - in 8 (eight) consecutive and
equal instalments each in the amount of NIS 8,508,844 on the last day of every
12 months period from the Disbursement Date.

 

Loan “B” - in
one lump sum on July 28, 2004.

 

Loan “C” -in
one lump sum on July 28, 2003.

 

The Bank
shall furnish to the Borrower a repayment schedule of the principal amount
of the Loan as soon as practicable (“the Repayment
Schedule”) which shall be approved by the Borrower.

 

10

 

The Borrower
hereby confirms the Repayment Schedule shall be binding upon it and shall
be deemed to constitute an integral part of this Agreement.

 

7.                                      Default Interest

 

7.01                           In the
event that the Borrower shall not pay any amount due from it hereunder on its
due date, then the Bank in its sole discretion may decide that either of the
following options shall apply: (1) such overdue amount shall carry default
interest from the due date and up to the date of actual payment (as well after
as before judgement) at a rate determined by the Bank to be the highest rate
charged by the Bank for any overdue payments in respect of Index linked credits
extended to its customer, up to 5% (five percent) per annum in excess of the
rate of Interest or (2) such overdue amounts be treated as an unlinked credit from
the due date and date and up to the date of actual payment (as well after as
before judgement) and shall carry default interest as shall be charged by the
Bank, from time to time during such period on excess balances in revolving
debitory accounts (“Default Interest”).

 

7.02                           The
Borrower shall pay Default Interest on sums which are payable on demand under
any of the Security Documents and which shall not have been paid within 5
(five) Banking Days of the date of such demand, unless otherwise stipulated in
any such Security Document, from the due date up to the date of actual payment
(as well after as before judgement).

 

7.03                           Default
Interest shall be due and payable on demand and compounded monthly, calculated
on the basis of actual number of days elapsed divided by 360 for sums which are
due on Dollars and by 365 for sum which are due in NIS.

 

8.                                      Increased Costs

 

If by reason of any change in
law or in its interpretation and/or by reason of compliance with any request
from or requirement of the Bank of Israel, any governmental authority or other
fiscal or monetary authority addressed to all major Israeli banks, after the
date hereof and implemented by the Bank upon its customers:

 

(i)                  the
Bank incurs a cost as a result of its having entered into and/or performing its
obligations under this Agreement and/or maintaining the outstanding balance of
the Loan; or

 

(ii)               the
Bank is unable to obtain the rate of return on its overall capital which it
would have been able to obtain but for its having entered into and/or
performing its obligations and/or maintaining the outstanding balance of the
Loan; or

 

11

 

(iii)            there
is any increase in the cost to the Bank of funding or maintaining all or any or
the outstanding balance of the Loan; or

 

(iv)           to hold
liquid assets to any degree or in any currencies in connection with the Loan
and/or the continued funding of the Loan; and/or

 

(v)              to pay
and/or make provision for any payments whatsoever to the State of Israel and/or
the State Treasury and/or any other competent authority in connection with the
disbursing of the Loan and/or the continued funding of the Loan.

 

then the
Borrower shall, from time to time, within 30 days from demand of the Bank,
promptly pay to the Bank such additional amounts sufficient to indemnify the
Bank against, as the case may be, (1) such cost, (2) such reduction in such
rate of return, (3) such increased cost or (4) and (5) such liability;

 

Without
derogating from the provisions of Clause 8 hereof, the Borrower may, after
receipt of the demand referred to in this clause, notify the Bank that it will
prepay, on the last day of the Interest Period the whole (but not part only of
the outstanding balance of the Loan; whereupon the Borrower shall prepay to the
Bank the outstanding balance of the Loan together with accrued interest thereon
and all other amounts owing to the Bank hereunder

 

9.                                      Prepayment

 

9.01                           Provided
no Event of Default and/or any event which with the lapse of time or giving of
notice or both would constitute an Event of Default, (whether under this
Agreement or under any of the other Security Documents) has occurred and is
continuing, the Borrower may, on the last Banking Day of each Interest Period
in case of a Loan granted in Dollars and on every Computation Date in case of a
Loan which bears Interest on a Bond Rate Basis, upon giving in each case at
least 30 (thirty) days prior written notice to the Bank (which shall be
irrevocable and shall constitute the Borrower’s undertaking to prepay accordingly),
prepay the principal amount of the Loan, in whole or from time to time in part,
(being in each instance not less than the equivalent of US$ 1,000,000.- (One
Million U.S.Dollars) subject always to all the terms and conditions hereinafter
detailed.  Amounts prepaid pursuant to
this Clause may not be reborrowed hereunder.

 

Upon prepayment the Borrower
shall also pay to the Bank all Interest which has accrued on the prepaid amount
up to date of payment and any amount prepaid linked to the Index, in accordance
with the provisions of Clause 4

 

12

 

In case the amount prepaid is in
NIS and the loan prepaid bears Interest on the Fixed Linked Rate basis or which
bears Interest on the Bond Rate Basis and not prepaid in a Computation Date,
then together with the prepaid amount on account of the principal amount of the
Loan, the Borrower shall pay to the Bank an amount equal to the loss of profit
caused to the Bank by reason of such prepayment (hereinafter: “the Loss of Profit”).

 

For the purposes hereof, the
Loss of Profit shall mean the difference between (i) the whole of the amounts
which the Bank would have earned on the prepaid amounts (had such prepayment
not have been effected) by way of linkage to the Index and interest in
accordance with the provisions hereof from the date of prepayment and until the
agreed date of repayment as stipulated in Clause 6.01 and (ii) the Bond Rate
relevant on the date of such prepayment. 
The Bank shall calculate the amount of the Loss of Profit and shall give
the Borrower notice of such amount not later than 7 (seven) days before the
date of prepayment.  The amount so
calculated by the Bank and informed to the Borrower shall be deemed the actual
Loss of Profit and shall be binding on the Borrower, except only for manifest
error.

 

If the Bank shall determine that
there is no such Loss of Profit or that the Bank shall actually gain from any
such prepayment, then the Borrower shall not be required to pay any such
additional amount for Loss of profit and shall not be entitled to receive any
amount from the Bank.

 

9.02                           If the
Borrower notifies the Bank of its intention to p repay any amount under the
provisions of this Agreement but in fact does not pay in accordance with such
notification then the Borrower shall indemnify the Bank against and on demand
pay to the Bank the full amount of any loss or expenses which the Bank shall
certify as sustained or incurred by its as a consequence of not having been
prepaid in accordance with such notification.

 

9.03                           The
Borrower may not prepay the Loan or any part thereof save as expressly provided
in this Agreement.

 

10.                               Time, Place and Manner of
Payment

 

10.01                     All
payments to be paid by the Borrower hereunder shall be made to the Bank free of
any Taxes and without set-off or counterclaim, (without derogating from the
Borrower’s rights to counterclaim), in funds available to the Bank at its
Central Branch or at any other place in Israel nominated by the Bank and not
prohibited for that purpose by any applicable law, provided that 7 (seven) days
prior notice thereof shall have been given to the Borrower by the Bank.

 

13

 

10.02                     In the
event that the Borrower is required under the laws of the State of Israel to
deduct or withhold any amount in respect of income-tax on payments of interest
payable hereunder, then the Borrower shall be entitled to make such deduction
or withholding; provided always that in any such case the Borrower shall
furnish to the Bank forthwith adequate tax receipts in respect of any such
deduction or withholding, in form and substance acceptable to the income tax
authorities, duly completed and signed as required by said authorities, for the
purpose of treating same as a payment on account of income tax payable by the
Bank.

 

In the event that the Borrower
shall not furnish to the Bank tax receipt as aforementioned and/or that the
income tax authorities will not treat any such deduction or withholding as a
payment on account of the Bank’s income tax and/or if the Borrower is required
to make any other deduction or withholding in respect of Taxes, then the
payment of interest under this Agreement shall be increased to such amount as
is necessary to yield and remit to the Bank the principal amount of the Loan
and Interest at the rate specified in this Agreement after provision for
payment of such Tax.  The Borrower shall
at the request of the Bank execute and deliver to the Bank such instruments as
may be necessary or desirable to give full force and effect to such increase in
the rate of Interest.

 

10.03                     All
payments to be paid by the Borrower to the Bank hereunder shall be made only on
a Banking Day, as defined herein.  If
any payment is due on a day which is not a Banking Day, such payment shall be
made on the next succeeding Banking Day unless it would thereby be made in the
next calendar month, in which case such payment will be made on the immediately
preceding Banking Day.

 

10.04                     If any
sum to be paid hereunder shall be paid by the Borrower on a day other than a
Banking Day it shall be considered as having been paid on the next succeeding
Banking Day.

 

11.                               Collaterals

 

To secure the full and punctual
payment of all sums now or hereafter to become due and payable to the Bank from
the Borrower hereunder this Agreement the following collaterals will be given
and/or created by the Borrower and/or its behalf:

 

11.01                     A
first ranking fixed charge over the Shares in the form attached hereto as Annex
B.

 

11.02                     The
Bank hereby gives the Borrower its consent to create the abovementioned
collateral to another banking institution which will participate in financing
the acquisition of the Shares provided that such financial institution will not
realise such collateral without the Bank’s

 

14

 

consent (without such consent
being required from such financial institution if the Bank realises such
collateral) and provided that such financial institution shall sign an
agreement with the Bank in form and substance satisfactory to the Bank
according to which the Bank shall be entitled to 60% of the proceeds which will
be received from the realisation of the collaterals, if they will be realised.

 

11.03                     Mr.
Abraham Wolfson, Mr. Morris Wolfson and Mr. Aharon Wolfson will execute a
guarantee in the Bank favour in the sum of $2,400,000.- (Two Million and Four
Hundred Thousand Dollars) in the form attached hereto as Annex C.

 

11.04                     The
Borrower hereby undertakes to cause the above collaterals to be registered with
the Registrar of Companies in Jerusalem and in any other Registrar office where
such pledges are to be registered according to the applicable law and to submit
to the Bank confirmation of said Registrar that such registration has been
effected within 14 (fourteen) days from the Disbursement Date.  The Borrower shall receive copy of the
Security Documents after they were duly executed.

 

11.05                     Any
and all dividends and other distributions and payments of cash made by the
Company in respect of the Shares or to any shareholder of the Borrower who is
also a shareholder in the Company except for regular salaries paid to Company’s
employees who are shareholders as aforesaid, after deduction of Israeli income
tax, if any, (hereinafter collectively referred as “Payments of Cash”) will also be pledged and charged in favour
of the Bank as required by the Bank to secure any and all of the obligations of
the Borrower hereunder, it is agreed that all such Payments of Cash shall be
held by the Bank until applied in satisfaction of amounts due from the Borrower
hereunder when and as such amounts become due or such Payment in Cash may be
deposited by the Borrower in other financial institution provided such Payment
of Cash has been charged and pledged in favour of the Bank to its full
satisfaction. Until so applied such Payments of Cash shall earn interest if
held at the Bank at a rate normally applied by the Bank at such time and from
time to time on deposits of similar amounts and for similar periods.

 

11.06                     Promptly
after the Borrower shall have repaid the Loan in full and shall have paid and
repaid to the Bank any all of the sums due to the Bank hereunder and under all
other Security Documents, the Bank shall release all pledges created according
to this section

 

12.                               Conditions Precedent

 

The obligation of the Bank to
make the Loan available to the Borrower shall be subject to the condition that
no Event of Default and/or any event which but for the giving of notice or the
lapse of time would constitute such an event has occurred or be continuing and
that on or before the Closing Date the Borrower

 

15

 

shall have delivered to the Bank the
documents set out in this Agreement, and shall have completed all the actions
listed hereunder to the full satisfaction of the Bank:

 

(a)               Certified
true copies of the resolutions of the Board of Directors of the Borrower
authorising the borrowing under this Agreement, and
providing for the persons authorised to sign this Agreement and any document or
instrument hereunder in the name and on behalf of the Borrower, as per the
enclosed form.

 

(b)              The Security
Documents have been duly executed by the Borrower.

 

(c)               The
Borrower shall have established a bank account or accounts with the Central
Branch of the Bank and have submitted to the Bank all of the
documentation required in connection therewith.

 

(d)              The
Borrower shall have received capital contribution in an amount of $ 13,000,000
( Thirteen Million Dollars ) and shall have submitted to the Bank a certificate
of a Director of the Borrower confirming same.

 

(e)               The Bank will
be given an option in the form attached as Annex D.

 

13.                               Representations and
Warranties

 

13.01                     The
Borrower represents and warrants to the Bank in relation to the Borrower that:

 

(a)               the
Borrower is a private limited company duly incorporated and validly existing
under the laws of the State of Israel and has the full power, authority and
legal right to own its assets and conduct its business as it is now being
conducted.

 

(b)              the Borrower
has the full power, authority and legal right to enter into, exercise its
rights and perform its obligations under this Agreement;

 

(c)               all
necessary consents and authorities for the Borrower to enter into and perform
its obligations under this Agreement have been obtained and no further consents
or authorities are necessary;

 

(d)              the
obligations of the Borrower under this Agreement are, and the obligation of the
Borrower under all of the other Security Documents will when executed by the
Borrower be, legal, valid, binding and enforceable against the Borrower in
accordance with their terms.

 

16

 

(e)               the
execution, delivery and performance by the Borrower of the obligations under
this Agreement will not (i) contravene any existing law, regulation or
authorisation to which the Borrower is subject, (ii) result in any breach of or
default under any agreement or other instrument to which the Borrower is a
party or is subject or (iii) contravene any provision of the Borrower’s
Memorandum and Articles of Association or other constituting documents;

 

(f)                 the
Borrower is not in breach of or in default under any other agreement binding on
it or permit granted to it, which breach or default could have a material adverse
effect on its ability to perform its obligations under this Agreement;

 

(g)              no
action, litigation, arbitration or administrative proceeding is current,
pending or threatened against the Borrower which could have a material adverse
effect on its ability to perform its obligations under this Agreement;

 

(h)              no
event has occurred, and is continuing that constitutes, or that the giving of
notice or the lapse of time or both, would constitute an Event of Default.

 

(i)                  no
Encumbrance exists over all or any part of the present or future assets or
revenues of the Borrower, except for encumbrances permitted hereunder or on
assets sold by the Borrower prior to the date hereof.

 

(j)                  The
Borrower has obtained all consents, authorisation, licences or approval of, and
has effected all registration with or declaration to, governmental or public
bodies or authorities or courts in connection with the acquisition of the
Shares,

 

14.                               Undertakings

 

14.01                     The
Borrower undertakes with the Bank that so long as any moneys are owing under
this Agreement it will:

 

(a)               obtain
or cause to be obtained, maintain in full force and effect and comply or cause
to be complied in all material respects with the conditions and restrictions
(if any) imposed in, or in connection with, every consent, authorisation,
licence or approval of governmental or public bodies or authorities or courts
and do, or cause to be done, all other acts and this, which may from time to
time be necessary or desirable under applicable law for the continued due performance
of all its obligations under this Agreement;

 

(b)              prepare
financial statements of the Borrower in accordance with generally accepted
accounting principals and practices in Israel

 

17

 

consistently
applied in respect and to deliver a copy of each of same within 30 (thirty)
days from the date the Company has published its financial annual reports. If
the Company will cease to publish financial reports according to the rules
applied to companies whose shares are traded in the Tel Aviv Stock Exchange
(the “Rules”) then the Borrower shall furnish the Bank such financial reports
according to such Rules.

 

(c)               provide
the Bank with such financial and other information concerning the Borrower, and
its affairs, as the Bank may from time to time require.

 

(d)              it
will use its best efforts as shareholder in the Company that the Company will
declare dividends at such times and in such amounts which shall be sufficient
to cover the current financial obligations of the Borrower in respect of the
Loan.

 

14.02                     The
Borrower undertakes with the Bank that, from the date of this Agreement and so
long as any moneys are owing under this Agreement, without the prior written
consent of the Bank:-

 

(a)               it
will not create, permit or suffer any Encumbrance over all or any part of its
present or future undertakings, assets, rights or revenues except for
Encumbrance created over a specific asset in order to secure only the financing
granted to purchase same.

 

(b)              it
will not merge or consolidate with any other entity.

 

(c)               it
will not disburse any monies to its shareholders on account of dividend,
management fees, grants and/or any other nature.

 

(d)              the
Company will retain in its financial statements the financial ratios as stated
herein:

 

1)         Minimum
amount of Shareholders Equity will be NIS 70,000,000 (Seventy Million New
Israeli Shekel)

 

2)         The
ratio of Shareholders Equity to the Balance Sheet will not be less
than 30%.

 

3)         The
EBITDA will equal not less than NIS 28,000,000.- per annum.

 

4)         The
ratio of the EBITDA to the Revenues will not be less than 9.5.%.

 

For
the Purpose hereof, “EBITDA” shall
mean, for any calendar year, the net income, less interest income and
profits/losses of an extraordinary nature, plus the sum of

 

18

 

interest
expenses, taxes, depreciation, charges of any extraordinary nature,
amortisation and all other non-cash charges as evidenced by the audited
financial statement of the Borrower for such calendar year.

 

5)         So
long as Loan B is not repaid in full - Cash and Short Term Investments will be
not less than $ 18,000,000 (Eighteen Million Dollars) provided however, that in
the event the Company shall take an action or be subject to an action in its
ordinary course of business, the result of which its Cash and Short Term
Investments be less than $ 18,000,000 but more than $ 15,000,000 (in this
Section 5, the “Shortage”) and such Shortage shall continue for a period
of up to three consecutive months, the parties agree, and Borrower is hereby
committed as of the termination of such three months period, to replace the
Shortage with an additional collateral to the full satisfaction of the Bank.

 

All
terms used in this Section shall be interpreted according to generally accepted
accounting principles in practice in the State of Israel from time to time.

 

All
sums denominated in NIS are linked to the Consumer Price Index which basic rate
is the Index published for the month of December 1998.

 

15.                               Events of Default

 

15.01 There shall be an Event of
Default if:

 

(a)                                  The
Borrower fails to pay any sum due from it under this Agreement at the time, and
in the manner stipulated in this Agreement and such failure is not remedied
until 14 (fourteen) days from the due date of the respective sum.

 

(b)                                 the
Borrower commits any breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by it under this Agreement which the Bank
in its own discretion deems material (other than failure to pay any sum when
due).

 

However, if the breach or
failure is capable of being cured, the Borrower shall have cured such breach or
failure within 30 (thirty) days.

 

(c)                                  any
representation or warranty made or deems to be made or repeated pursuant to
this Agreement, by or in respect of the Borrower, or in any application,
request, notice, certificate or statement referred to in or delivered under
this Agreement is or proves to have been incorrect in any material respect;
Provided however, that if the circumstances to

 

19

 

which such representation or
warranty relate can be corrected, so that such representation or warranty shall
become correct again and further provided that such circumstances shall not
affect validity, legality or enforceability of this Agreement, such event shall
not be deemed an Event of Default, if the circumstances shall have been
corrected with 7 (seven) days from the Bank’s notice, but in any event not
later than within 7 (seven) days from the days upon the Borrower has become
aware thereof: as

 

(d)                                 a
creditor attaches or takes possession of, or a distress, execution,
sequestration or other process is levied, or enforced upon or sued out against
any material property of the Borrower, or against a material part of the
undertakings, assets, rights or revenues of the Borrower and is not discharges
within 45 (forty five) days; or

 

(e)                                  the
Borrower suspends payment of its debts, or is unable or admits inability to pay
its debts as they fall due, or commences negotiations with one or more of its
creditors with a view to readjustment or rescheduling of all or part of its
indebtedness, or proposes or enters into any composition or other arrangement
for the benefit of its creditors generally or any class of creditors, or proceedings
are commenced in relation to the Borrower (and if commenced by third party, are
not discharges within 60 (sixty)  days )
under any law, regulation or procedure relating to reconstruction or
readjustment of debts; or

 

(f)                                    the
Borrower takes any action or any legal proceedings are started or other steps
taken for (and if initiated by third party, are not discharged within 60
(sixty) days provided that in that time no legal resolution concerning the
assets of the Borrower was adopted) (i) the Borrower to be adjudicated or found
bankrupt or insolvent (ii) the winding-up or dissolution of the Borrower or
(iii) the appointment of a liquidator whether provisional or otherwise,
administrator, trustee, receiver or similar officer in respect of the Borrower,
and/or in respect of the whole or any material part of its undertakings, assets
rights or revenues; or

 

(g)                                 all or
a material part of the undertakings, assets, rights or revenues of, or shares
or other ownership interests in, the Borrower are seized, nationalised,
expropriated or compulsorily acquired by or under the authority of any
government; or

 

(h)                                 it
becomes unlawful at any time for the Borrower to perform all or any material
obligations under this Agreement; or

 

(i)                                     if the
Borrower has and/or shall have committed a breach of any of its undertakings
and/or obligations under the Purchase Agreement, and/or any of the appendices
thereto and the Bank in its reasonable discretion shall determine that such
breach may have a material adverse effect on the condition of the Borrower
(including in particular any such effect on

 

20

 

the right and title to the
Shares), and/or on the rights of the Bank pursuant hereto and/or under any
other Security Documents.

 

(j)                                     Mr.
Abraham Wolfson, and/or Mr. Morris Wolfson and/or Mr. Aharon Wolfson directly
and\or indirectly cease to have control over the Borrower. For this purpose
“control” means 51% of the voting power in the General Meeting of the Borrower
shareholders.

 

(k)                                  If the
Borrower does not furnish the Bank with periodic financial statements, books of
account and other authorities and materials in relation to the state of its
affairs, within 30 (thirty) days from the date provided for in Clause 13 hereof
or if it is requested to do so and does not comply with any such request within
a period of 30 (thirty) days from such request; or

 

(l)                                     If an
Event of Default exists or occurs under any other agreement for the extension
of credit by the Bank to the Borrower (after giving effect to any applicable
grace period under any such agreement.)

 

15.02                     The
Bank may, without prejudice to any of its other rights, at any time after the
happening of an Event of Default, so long as the same is continuing, by notice
to the Borrower declare that:

 

(a)               the
Loan and all interest accrued and all other sums payable under this Agreement
have become due and payable whereupon the same
shall, immediately or in accordance with such notice, become due and payable;
and/or

 

(b)              the
Loan and all other sums payable under this Agreement shall bear interest at the
rate specified in Clause 6 as if such sums had not been paid on due date,
whereupon interest shall, immediately or in accordance with the terms of such
notice, become due and payable.

 

15.3                           Without
prejudice to any of its other rights upon the happening of an Event of Default,
the Bank shall have a lien on all monies, securities, claims, goods and other
property, assets or rights of the Borrower held by the Bank, until payment in
full of the Loan and all other amounts owing to the Bank hereunder.

 

15.4                           Notwithstanding
anything to the contrary in this Agreement, upon an Event of Default or any
event that may raise a cause of action to the Bank under this Agreement, the
Bank shall have no cause of action whatsoever against any of the individuals
listed in Section 11.03 herein in their capacity as guarantors other than
as provided in Annex C.

 

21

 

16.                               Unlawfulness, Substitute Basis

 

16.01                     This
Agreement has been made in accordance with legal, regulatory, fiscal and
monetary measures currently in force and in accordance with current market
conditions.  If the making or the
continuation of the Loan by the Bank has become impracticable or unlawful or
the Bank is required to reduce the volume of its loans due to any change, after
the date of this Agreement, in any applicable law or governmental regulation or
order or in any requirement of any monetary authority, or in the interpretation
of any of the same, then and in any such event the Bank may give notice to the
Borrower and the Borrower agrees to prepay the full amount then outstanding as
well as interest accrued thereon with 30 (thirty) days or at the expire of the
then current Interest Period whichever comes first.

 

16.02                     (a)                                  If at
any time by reason of changes affecting the Eurodollar Interbank Market, the
Bank is unable, due to circumstances beyond its control, to determine the
Libor, or there shall be no objective possibility for the Bank to refinance itself
in United States Dollars in respect of the then outstanding balance of the
principal amount of the Loan, then and in any such event the Bank shall give
notice to the Borrower to that effect.

 

(b)                                 The
Bank shall then offer the Borrower an alternative basis (the “Substitute
Basis”) for the continuation of the Loan. 
The Substitute Basis may include alternative interest periods,
alternative currencies or alternative rates of interest taking into account the
outstanding balance of the principal amount of the Loan.  The Substitute Basis shall be binding upon
the Borrower and shall take effect in accordance with its terms from the date
specified in the Bank’s notice.

 

(c)                                  If the
Borrower determines that it does not with to continue to borrow the Loan or
under the Substitute Basis it shall so notify the Bank within 10 days of
receipt of the Bank’s notice specifying such Substitute Basis whereupon the
outstanding balance of the principal amount of the Loan coupled with interest
accrued and accruing thereon at a rate prevailing during the last Interest
Period in respect of which the Libor and the rate of the Interest has been
determined shall thereupon become immediately due owing and payable.

 

17.                               Set-Off and
Application of Payments

 

17.01                     The
Borrower hereby irrevocably authorises the Bank to apply any moneys standing to
the credit of any account of the Borrower with the Bank at any of its branches
(including such accounts held by the Borrower jointly or severally with other
parties) in or towards

 

22

 

satisfaction of any sum not paid on its
due date by the Borrower to the Bank under this Agreement.

 

For this purpose the Bank is
authorised to purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such application.  The Bank shall not be obliged to exercise
any right given to it by this Clause. 
The Bank shall notify the Borrower forthwith upon the exercise or
purported exercise of any right of set-off giving full details in relation
thereto.

 

17.02                     All
moneys held or received by the Bank for or on account of the Borrower, whether
hereunder, pursuant to any of the Security Documents or otherwise,
notwithstanding that such monies may have been intended by the Borrower or any
third party to be appropriated for or on account of any other amount, may be
applied by the Bank to any amount owed by the Borrower under this Agreement,
and if so applied, shall be applied in the following manner:

 

(i)                                     first,
in payment to the Bank of all costs, charges or expenses, inter alia, those
incurred by the Bank in enforcing its rights hereunder or under any of the
Security Documents;

 

(ii)                                  secondly,
in or towards Interest/Default Interest owing in respect of the Loan;

 

(iii)                               thirdly,
to prepayment of instalments of principal on account of the Loan in the inverse
order of their maturity;

 

18.                               The Borrower’s Duty to Notify

 

The Borrower hereby undertakes
to notify the Bank immediately:

 

(a)                                  of any
claim of right to any security given or which may be given to the Bank pursuant
hereto or in connection herewith.

 

(b)                                 of any
of the events enumerated in Clause 15 above.

 

(c)                                  of any
change of address.

 

19.                               Compensation for Broken Funding

 

If the Loan or any part thereof
or any interest thereon is for any reason whatsoever repaid, paid or recovered
by the Bank under any security or otherwise, on any day other than the agreed
date of payment, the Borrower shall upon demand pay to the Bank such amount or
amounts as may be necessary to compensate the Bank for any actual loss incurred
by it on account of funds borrowed in order to make, fund or maintain the Loan
with respect to which repayment, payment or recovery is made and or any loss of
profit caused thereby.

 

23

 

20.                               Remedies and Waivers

 

20.01                     No
delay or omission of the Bank in exercising any right, power, privilege or
remedy pursuant to this Agreement or any Security Document shall impair such
right, power, privilege or remedy or be construed as a waiver thereof nor shall
any single or partial exercise of any such right, power, privilege or remedy
preclude any other or further exercise thereof or the exercise of any other
power, right or remedy.

 

20.02                     The
rights and remedies of the Bank provided in the Agreement and each Security
Document are cumulative and not exclusive of any rights or remedies provided by
law.

 

21.                               Assignment

 

The Bank may at any time at its
own discretion and without the Borrower’s consent being required, assign its rights
in relation to the Loan and/or arising from this Agreement, , including the
Securitiy Documents , to any assignee, and any such assignee may also reassign
the said right as aforesaid to any other assignee without any further consent
being required from the Borrower.  Such
assignment may be effected in any way which the Bank or any subsequent assignor
deems fit all provided the Borrower’s rights under this Agreement shall not be
prejudiced as a consequence of such assignment.

 

The Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Bank.

 

22.                               Administration of the Loan

 

The Bank may administer the Loan
or any part thereof by booking same with any of its branches, whether in Israel
or abroad.  The Bank may at any time and
from time to time at its own discretion and without any consent being required
from the Borrower, transfer the administration of the Loan or any part thereof
from one branch of the Bank to another, whether in Israel or abroad without
prejudice to the Borrower as a consequence of such transfer.

 

23.                               Disclosure of
Information

 

Any branch of the Bank
administering the Loan may disclose to the Head Office of the Bank, to any
participants or to a potential participant, to any assignee or to any other
entity who may propose entering into contractual relations with the Bank in
respect of the Loan or any part thereof, or to the Bank of Israel, the Examiner
of Bank, the Controller of Foreign Exchange or any person acting under their
authority or to any other regulatory authority having jurisdiction over the
Bank or over the Head Office of the Bank or to the Head Office of the Bank for
delivery by the latter to any such regulatory authorities, such information
about the Borrower, or the Loan as may be required by such regulatory
authorities or as the branch or the Head Office of the Bank may deem

 

24

 

appropriate in accordance with lawful
requirements and subject to confidentiality

 

24.                           Expenses

 

All of the expenses in stamping
this Agreement, (including any interest and/or fines for late stamping), the
registration of the Security Documents and all and any expenses involved in the
enforcement thereof or in the realisation of the collaterals for the
enforcement thereof, if interference by court is needed, including fees of the
Bank’s advocates, shall be paid by the Borrower to the Bank upon the Bank’s
first demand, together with interest at the maximum rate prevailing at the Bank
from the day of the Bank’s first demand and until payment in full.  Until payment in full the aforesaid expenses
together with the interest thereon, shall be secured by the collaterals mention
in Clause 10 hereof.

 

25.                           Additional Provisions

 

25.01                     The Borrower
hereby confirms that the Bank’s books, accounts and entries shall be prima
facie evidence against the Borrower in all their particulars.

 

25.02                     The
Borrower hereby confirms receipt of the Bank’s notification that according to
the Protection of Privacy Law, 5741-1981:

 

(i)                                     All
the particulars furnished or which may be furnished by the Borrower to the Bank
may be used by the Bank in the normal course of its operations at its own
discretion;

 

(ii)                                  All
the particulars furnished or which may be furnished by the Borrower to the Bank
shall be stored in keeping with the Bank’s requirements from time to time in
data bases of the Bank and/or of suppliers to the Bank from time to time of
computer and data processing and warehousing services;

 

and the Borrower hereby confirms
its agreement thereto.

 

25.03                     From
time to time, as required by the Bank, the Borrower shall allow a
representative of the Bank to peruse during usual working hours, all balance
sheets, books of account, card indexes, ledgers and other papers and documents
in relation to the state of the Borrower’s financial affairs.

 

26                                  Notices

 

26.01                     Each
communication to be made under this agreement shall be made in writing and,
unless otherwise stated, may be made also by telex or facsimile transmission.

 

26.02                     Each
communication or document to be made or delivered by one person to another
pursuant to this Agreement shall (unless that other

 

25

 

party has by fifteen (15) days’ written
notice specified another address) be made or delivered to that party, addressed
as follows:

 

	
  (i)

  	
   

  	
  if to the Borrower at:-

  
	
   

  	
   

  	
  Tel Aviv, Israel 

  
	
   

  	
   

  	
  Fax
  No:                       

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  if to the Bank at:-

  
	
   

  	
   

  	
  Bank Hapoalim B.M Head Office

  
	
   

  	
   

  	
  41 Rothschild Boulevard

  
	
   

  	
   

  	
  Tel-Aviv 66883

  
	
   

  	
   

  	
  Fax
  no.                       

  
	
   

  	
   

  	
  Att:

  

 

and shall be deemed to have been
made or delivered the next Banking Day after dispatch (in the case of any
communication made by telex or any form of facsimile transmission) or (in the
case of any communication made by letter) the next Banking Day after being
physically left at that address.

 

27.                               Governing Law and Jurisdiction

 

(a)                                  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Israel.

 

(b)                                 For
the purpose of this Agreement the Exclusive place of Jurisdiction shall be the
competent courts of law in Tel Aviv-Jaffa. 
The Borrower hereby irrevocably submits to the jurisdiction of courts.

 

28.                               Currency Indemnity

 

The Borrower agrees to indemnify
the Bank against any loss incurred by it as a result of any judgement or order
being given or made for the payment of any amount due under this Agreement and
of such judgement or order being expressed in a currency other than the
currency in which such amount is payable and as a result of any variation
having occurred in the rates of exchange between the date on which any such
amount becomes due under this Agreement and the date of actual payment
thereof.  The foregoing indemnity shall constitute
a separate and independent obligation of the Borrower and shall apply
irrespective of any indulgence granted to the Borrower from time to time and
shall continue in full force and effect notwithstanding any such judgement or
order.

 

26

 

29.                               Severability

 

If at any time any provision of
this Agreement is or becomes invalid, illegal or unenforceable in any respect
under the laws of the State of Israel neither the legality, validity or the
enforceability of the remaining provisions hereof shall in any way be affected
or impaired thereby.

 

In Witness Whereof the
Borrower and the Bank have caused this Agreement to be duly executed and
delivered in Tel Aviv., as of July 29, 1999.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  /s/ Shlomo Ariel

  	
   

  
	
   

  	
  Nesstech
  Advanced Technologies (1999) Ltd.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Leah Landau, /s/ Dvorah
  Alhanati

  	
   

  
	
   

  	
  Bank Hapoalim
  B.M.

  	
   

  

 

27Exhibit
10.7

 

APAR
HOLDING CORP.

EMPLOYEES’
EQUITY PLAN

 

Effective
September 22, 2000

 

Article I

Purpose
and Adoption of the Plan

 

1.01        Purpose.   The Apar Holding Corp. Employees’ Equity
Plan (the “Plan”) was adopted by the Company to assist it in attracting and
retaining highly competent employees, directors, and consultants; to act as an
incentive in motivating selected employees, directors, and consultants of the
Company to achieve long-term corporate objectives; and to allow those
employees, directors, and consultants to share the benefits of future growth in
the value of the Company that they help to create by providing them with the
opportunity to acquire shares of Common Stock.

 

1.02        Adoption
and Term.   The Plan has
been approved by the Board and the stockholders of the Company, effective as of
September 22, 2000 (the “Effective Date”).  This Plan shall remain in effect until September 21, 2010,
or until terminated by action of the Board, whichever occurs sooner.

 

Article II

Definitions

 

For the purposes of this Plan, capitalized terms shall have the
following meanings:

 

2.01        Award.   “Award” means any grant to a Participant of
one or a combination of:  Non-Qualified
Stock Options or Incentive Stock Options described in Article VI.

 

2.02        Award
Agreement.   “Award
Agreement” means a written agreement between the Company and a Participant or a
written notice from the Company to a Participant specifically setting forth the
terms and conditions of an Award granted under the Plan.

 

2.03        Beneficiary.   “Beneficiary” means an individual,
trust, or estate who or which, by a written designation of the Participant
filed with the Company or by operation of law, succeeds to the rights and
obligations of the Participant under the Plan and an Award Agreement upon the
Participant’s death.

 

2.04        Board.   “Board” means the Board of Directors of the
Company.

 

 

2.05        Code.   “Code” means the Internal Revenue
Code of 1986, as amended.  References to
a section of the Code include that section and any comparable
section or sections of any future legislation that amends, supplements, or
supersedes that section.

 

2.06        Common
Stock.   “Common Stock “
means the common stock, par value $0.01 per share, of the Company.

 

2.07        Date
of Grant.   “Date of Grant”
means the date designated by the Board as the date as of which it grants an
Award, which shall not be earlier than the date on which the Board approves the
granting of the Award.

 

2.08        Disability.   “Disability” means a total and
permanent disability that, due to physical or mental illness, injury, or
disease, renders a Participant unable to perform any services for the Company
and, in the opinion of a qualified physician designated by the Board, the
disability will be permanent and continuous during the remainder of the Participant’s
life.

 

2.09        Effective
Date.   “Effective Date”
means September 22, 2000.

 

2.10        Exercise
Price.   “Exercise Price,”
with respect to Options, shall have the meaning set forth in
Section 6.01(b) below.

 

2.11        Fair
Market Value.   “Fair Market
Value” means, as of any applicable date: 
(i) if the Common Stock is listed on a national securities exchange or
is authorized for quotation on the Nasdaq National Market System (“NMS”), the
closing price sales price of the Common Stock on the exchange or NMS, as the
case may be, on that date, or, if no sale of the Common Stock occurred on that
date, on the next preceding date on which there was a reported sale; or (ii) if
none of the above apply, the closing bid price as reported by the Nasdaq
SmallCap Market on that date, or if no price was reported for that date, on the
next preceding date for which a price was reported; or (iii) if none of the
above apply, the last reported bid price published in the “pink sheets” or
displayed on the National Association of Securities Dealers, Inc. (“NASD”),
Electronic Bulletin Board, as the case may be; or (iv) if none of the above
apply, the fair market value of the Common Stock as determined under procedures
established by the Board.

 

2.12        Incentive
Stock Option.   “Incentive
Stock Option” means a stock option within the meaning of Section 422 of
the Code.

 

2.13        Merger.   “Merger” means any merger,
reorganization, consolidation, share exchange, transfer of assets, or other
transaction having a similar effect involving the Company.

 

2.14        Non-Qualified
Stock Option.   “Non-Qualified
Stock Option” means a stock option which is not an Incentive Stock Option.

 

2.15        Option.   “Option” means all Non-Qualified
Stock Options and Incentive Stock Options granted at any time under the Plan.

 

2

 

2.16        Participant.   “Participant” means a person
designated to receive an Award under the Plan in accordance with
Section 5.01 below.

 

2.17        Plan.   “Plan” means the Apar Holding Corp.
Employees’ Equity Plan described in this document and as it may be amended.

 

2.18        Termination
of Employment.   “Termination
of Employment” means the termination of a Participant’s employment with the
Company for any reason, including death, Disability, retirement, or as the
result of the divestiture of the Participant’s employer or any similar
transaction in which the Participant’s employer ceases to be the Company.  Whether entering military or other
government service shall constitute Termination of Employment, or whether a
Termination of Employment shall occur as a result of Disability, shall be
determined in each case by the Board in its sole discretion.  In the case of a director or consultant who
is not an employee of the Company, Termination of Employment shall mean voluntary
or involuntary termination of Board service or the consulting relationship, as
the case may be, for any reason.

 

Article III

Administration

 

3.01        Board.   The Plan shall be administered by
the Board of Directors of the Company. 
The Board shall have exclusive and final authority in each
determination, interpretation, or other action affecting the Plan and its
Participants.  The Board shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose conditions and restrictions on
Awards that it determines appropriate, and to take steps in connection with the
Plan and Awards granted under it that the Board may deem necessary or
advisable.  The Board may, subject to
compliance with applicable legal requirements, delegate its powers and
authority under the Plan as it deems appropriate to designated officers or
employees of the Company.  In addition,
the Board may appoint a committee to exercise any of the authority conferred
upon the Board under this Plan.  In the
event of a delegation of authority or exercise of authority by a committee,
references in the Plan to the Board shall be deemed to refer to the delegate of
the Board or the committee, as the case may be.

 

Article IV

Stock

 

4.01        Number
of Shares Issuable.   The
total number of shares authorized to be issued under the Plan shall be
1,500,000 shares of Company Common Stock. 
The number of shares available for issuance under the Plan shall be
subject to adjustment in accordance with Section 7.07 below.  The shares to be offered under the Plan
shall be authorized and unissued shares of Common Stock, or issued shares of
Common Stock that have been reacquired by the Company.

 

4.02        Shares
Subject to Terminated Awards.   Shares
of Common Stock covered by any unexercised portions of terminated Options
(including canceled or forfeited Options) granted under Article VI may be
subject to new Awards under the Plan.

 

3

 

Article V

Participation

 

5.01        Eligible
Participants.  
Participants in the Plan shall be employees, directors,
and consultants of the Company that the Board, in its sole discretion, may
designate from time to time.  The
Board’s designation of a Participant in any year shall not require the Board to
designate the person to receive Awards in any other year.  The Board shall consider those factors it
deems pertinent in selecting Participants and in determining the types and
amounts of their respective Awards.  No
Participant may receive Awards in respect of more than 500,000 shares of Common
Stock in any calendar year.

 

Article VI

Stock
Options

 

6.01        Option
Awards.

 

(a)           Grant
of Options.   The Board may
grant, to Participants who the Board may select, Options entitling the
Participants to purchase shares of Common Stock from the Company in the amount,
at the price, on the terms, and subject to the conditions, not inconsistent
with the terms of the Plan, that may be established by the Board.  The terms of any Option granted under the
Plan shall be set forth in an Award Agreement.

 

(b)           Exercise
Price of Options.   Subject
to Section 6.01(d) below with respect to certain Incentive Stock Options,
the Exercise Price of each option for purchase of shares of Common Stock under
any Option granted under the Plan shall be determined by the Board and shall be
set forth in the Award Agreement.

 

(c)           Designation
of Options.   Except as
otherwise expressly provided in the Plan, the Board may designate an Option as
an Incentive Stock Option or a Non-Qualified Stock Option at the time the grant
is made; provided, however, that
an Option may be designated as an Incentive Stock Option only if the applicable
Participant is an employee of the Company on the Date of Grant.

 

(d)           Special
Incentive Stock Option Rules.   No
Participant may be granted Incentive Stock Options under the Plan (or any other
plans of the Company) that would result in Incentive Stock Options to purchase
shares of Common Stock with an aggregate Fair Market Value (measured on the
Date of Grant) of more than $100,000 first becoming exercisable by the
Participant in any one calendar year. 
Notwithstanding any other provision of the Plan to the contrary, the
Exercise Price of each Incentive Stock Option shall be equal to or greater than
the Fair Market Value of the Common Stock subject to the Incentive Stock Option
as of the date of the grant of the Incentive Stock Option; provided, however,
that no Incentive Stock Option shall be granted to any person who, at the time
the Option is granted, owns stock (including stock owned by application of the
constructive ownership rules in Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, unless at the time

 

4

 

the Incentive Stock Option is granted the
Option Price is at least 110% of the Fair Market Value of the Common Stock
subject to the Incentive Stock Option and the Incentive Stock Option by its
terms is not exercisable for more than five years from the Date of Grant.

 

(e)           Rights
as a Stockholder.   A
Participant or a transferee of an Option pursuant to Section 7.04 below
shall have no rights as a stockholder with respect to the shares of Common
Stock covered by an Option until that Participant or transferee becomes the
holder of record of the shares, and no adjustment shall be made to the shares
of Common Stock for dividends in cash or other property or distributions of
other rights on the Common Stock for which the record date is prior to the date
on which that Participant or transferee became the holder of record of any of
the shares covered by the Option; provided,
however, that Participants are entitled to share adjustments to
reflect capital changes under Section 7.07.

 

6.02        Terms
of Stock Options.

 

(a)           Conditions
on Exercise.  
An Award Agreement with respect to Options may contain
any waiting periods, vesting dates, exercise dates, and restrictions on
exercise (including, but not limited to, periodic installments) that may be determined
by the Board at the time of grant.

 

(b)           Duration
of Options.   Options shall
terminate after the first to occur of the following events:

 

(i)            expiration of the Option as
provided in the related Award Agreement;

 

(ii)           termination of the
Award as provided in Section 6.02(e), following the applicable
Participant’s Termination of Employment; and

 

(iii)          ten years from the Date
of Grant (five years in certain cases, as described in Section 6.01(d)).

 

(c)           Acceleration
of Exercise Time.   The
Board, in its sole discretion, shall have the right (but shall not in any case
be obligated), exercisable at any time after the Date of Grant, to permit the
exercise of any Option prior to the time the Option would otherwise vest under
the terms of the related Award Agreement.

 

(d)           Extension
of Exercise Time.   In
addition to the extensions permitted under Section 6.02(e) below in the
event of Termination of Employment, the Board, in its sole discretion, shall
have the right (but shall not in any case be obligated), exercisable on or at
any time after the Date of Grant, to permit the exercise of any Option after
its expiration date described in Section 6.02(e), subject, however, to the
limitations described in Section 6.02(b)(iii) above.

 

5

 

(e)           Exercise
of Options Upon Termination of Employment.   Unless an Optionee’s Award Agreement provides otherwise,
the following rules shall govern the treatment of Options upon Termination of
Employment:

 

(i)            Termination of
Options Upon Termination of Employment.

 

(A)          Termination Other
Than Due to Death or Disability.  
In the event of a Participant’s Termination of Employment for any reason
other than death or Disability, the right of the Participant to exercise any
vested Option shall, unless the exercise period is extended by the Board in
accordance with Section 6.02(d) above, terminate upon the earlier of (i)
ninety days after the date of the Termination of Employment and (ii) the date
of expiration of the Option determined pursuant to Sections 6.02(b)(i) or (iii)
above.

 

(B)           Death or Disability.   In the event of a Participant’s Termination
of Employment by reason of death or Disability, the right of the Participant to
exercise any vested Option shall, unless the exercise period is extended by the
Board in accordance with Section 6.02(d) above, terminate upon the earlier
of (i) the first anniversary of the date of the Termination of Employment and
(ii) the date of expiration of the Option determined pursuant to Sections
6.02(b)(i) or (iii) above.

 

(ii)           Termination of
Unvested Options Upon Termination of Employment.   To the extent the right to exercise an
Option, or any portion of an Option, has not vested as of the date of
Termination of Employment, the right shall expire on the date of Termination of
Employment regardless of the reason for the Termination of Employment.

 

6.03        Exercise
Procedures.   Each Option
granted under the Plan shall be exercised by written notice to the Company that
must be received by the officer or employee of the Company designated in the
Award Agreement at or before the close of business on the expiration date of
the Award.  The Exercise Price of shares
purchased upon exercise of an Option granted under the Plan shall be paid in
full in cash by the Participant pursuant to the Award Agreement; provided, however, that the Board may (but
shall not be required to) permit payment to be made by delivery to the Company
of either (a) shares of Common Stock held by the Participant for at least six
months or (b) any combination of cash and Common Stock or (c) any other
consideration that the Board deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise
program under which, if so instructed by a Participant, shares of Common Stock
may be issued directly to the Participant’s broker or dealer upon receipt of an
irrevocable written notice of exercise from the Participant).  In the event that any shares of Common Stock
are transferred to the Company to satisfy all or any part of the Exercise
Price, the part of the Exercise Price deemed to have been satisfied by the
transfer of shares of Common Stock shall be equal to the product derived by
multiplying the Fair Market

 

6

 

Value as of the date of exercise times the number of shares of Common
Stock transferred to the Company.  The
Participant may not transfer to the Company in satisfaction of the Exercise
Price any fractional share of Common Stock. 
Any part of the Exercise Price paid in cash upon the exercise of any
Option shall be added to the general funds of the Company and may be used for
any proper corporate purpose.  Unless
the Board otherwise determines, any shares of Common Stock transferred to the
Company as payment of all or part of the Exercise Price upon the exercise of
any Option shall be held as treasury stock.

 

Article VII

Terms
Applicable to All Awards Granted under the Plan

 

7.01        Plan
Provisions Control Award Terms.   The
terms of the Plan shall govern all Awards granted under the Plan, and the Board
may not grant any Award under the Plan that contains terms that are contrary to
any of the provisions of the Plan.  In
the event any provision of any Award granted under the Plan conflicts with any
term in the Plan as constituted on the Date of Grant of the Award, the term in
the Plan as constituted on the Date of Grant of the Award shall control.  Except as provided in Sections 7.03 and 7.06
below, the terms of any Award granted under the Plan may not be changed after
the Date of Grant of the Award in a manner that would materially decrease the
value of the Award without the express written approval of the Participant.

 

7.02        Award
Agreement.   No person shall
have any rights under any Award granted under the Plan unless and until the
Company and the Participant to whom the Award was granted have executed and
delivered an Award Agreement or the Participant has received and acknowledged
notice of the Award authorized by the Board expressly granting the Award to the
Participant and containing provisions setting forth the terms of the Award.

 

7.03        Modification
of Award After Grant.   No
Award granted under the Plan to a Participant may be modified (unless the
modification does not materially decrease the value of that Award) after its
Date of Grant except by express written agreement between the Company and the
Participant, provided that any change (a) may not be inconsistent with the
terms of the Plan, and (b) shall be approved by the Board.

 

7.04        Limitation
on Transfer.  Except as may
be provided in the applicable Award Agreement, a Participant’s rights and
interest under the Plan may not be assigned or transferred other than by will
or the laws of descent and distribution and, during the lifetime of a
Participant, only the Participant personally (or the Participant’s personal
representative) may exercise rights under the Plan.  The Participant’s Beneficiary may exercise the Participant’s
rights to the extent they are exercisable under the Plan following the death of
the Participant.

 

7.05        Taxes.    The Company shall be entitled,
if the Board deems it necessary or desirable, to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Company regarding any
amount payable and/or shares issuable under the Participant’s Award or
regarding any income recognized upon a disqualifying disposition (i.e., a disposition prior to the
expiration of

 

7

 

the required holding periods) of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment of
cash or issuance of shares upon exercise or vesting of an Award unless
indemnified to its satisfaction against any liability for any taxes.  The amount of the withholding or tax payment
shall be determined by the Board and shall be payable by the Participant in
cash at the time the Board determines; provided,
however, that with the approval of the Board, the Participant may
elect to meet his or her withholding requirement, in whole or in part, by
having withheld from the Award at the appropriate time that number of shares of
Common Stock, rounded up to the next whole share, the Fair Market Value of
which is equal to the amount of withholding taxes due.

 

7.06        Certain
Conditions on Awards.

 

(a)           Covenants.  As a condition for participation in this
Plan, the Participant shall agree and covenant as follows:

 

(i)            Nonsolicitation of Clients.  For a period of twelve (12) months
immediately following the Participant’s Termination of Employment, the
Participant shall not (i) induce or attempt to induce, directly or indirectly,
any Client (as defined below) to cease doing business with the Company, (ii)
induce or attempt to induce, directly or indirectly, any Client or Prospective
Client (as defined below) to not commence doing business with the Company, or
(iii) solicit the business of any Client or Prospective Client.  “Client” means a client of the Company or a
client with which the Company has done business in the one year period ending
on the Participant’s Termination of Employment, and all Affiliates thereof.
“Prospective Client” means any potential client of the Company, which the
Company has either contacted within the one year period ending on the
Participant’s Termination of Employment or has been identified by the Company
as a potential client during such one year period, and all Affiliates
thereof.  “Affiliate” means a person or
entity that controls, is controlled by, or is under common control with, any
Client or Prospective Client.

 

(ii)           Nonsolicitation of Company Employees.   From the Date of Grant and continuing for a
period of twenty-four (24) months immediately following the Participant’s
Termination of Employment, the Participant shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company’s employees
or prospective employees to leave their employment; or take away such
employees, or attempt to solicit, induce, recruit, encourage or take away
employees of the Company, either for the Participant’s own benefit or for any
other person or entity.

 

(b)           Violation of Covenants.   In the event that the Board determines that
the Participant has violated any of the covenants contained in
Section 7.06(a) or any confidentiality, non-competition or other covenants
contained in any appointment letter or other agreement with the Company, then:

 

(i)            all of the
Participant’s unexercised Options and any Non-Vested Shares shall terminate immediately;

 

8

 

(ii)           to the extent that the Participant
has previously exercised a vested Option and/or Non-Vested Shares have become
vested in respect of Common Stock still held by the Participant, then at the
option of the Company, the Participant, upon notice from the Company of the
Participant’s obligations under this Section 7.06(b)(ii), shall either (A)
immediately deliver to the Company an amount in cash equal to the then-Fair
Market Value of such Common Stock less the aggregate Exercise Price and taxes
paid by or on behalf of the Participant with respect to such Option exercise,
or (B) sell such Common Stock to the Company for an amount equal to the
aggregate Exercise Price and taxes paid by or on behalf of the Participant with
respect to such Option exercise; and

 

(iii)          to the extent that the
Participant has previously exercised a vested Option and/or Non-Vested Shares
have become vested in respect of Common Stock of which the Participant has
disposed, the Participant, upon notice from the Company of the Participant’s
obligations under this Section 7.06(b)(iii), shall immediately pay the
Company an amount equal to the amount realized by the Participant upon the
disposition of such Common Stock less the aggregate Exercise Price and taxes
paid by or on behalf of the Participant with respect to such Option exercise.

 

The notice described in subsections (ii) and
(iii) of this Section 7.06(b) may be given at any time within twelve
months after the expiration of the applicable covenant period under
Section 7.06(a).

 

The provisions of this Section 7.06
shall be in addition to any covenants and restrictions contained in any other
agreement between the Company and the Participant.

 

7.07        Adjustments
to Reflect Capital Changes.

 

(a)           Recapitalization.  The number and kind of shares
subject to outstanding Awards, the Exercise Price for the shares, the number
and kind of shares available for Awards subsequently granted under the Plan,
and the maximum number of shares that can be awarded to any Participant in any
calendar year shall be appropriately adjusted to reflect any stock dividend,
stock split, combination or exchange of shares, Merger, consolidation, or other
change in capitalization with a similar substantive effect upon the Plan or the
Awards granted under the Plan.  The
Board shall have the power and sole discretion to determine the amount of the
adjustment to be made in each case.

 

(b)           Merger.  After any Merger in which the
Company is the surviving corporation, each Participant shall, at no additional
cost, be entitled to receive, upon any exercise of an Option or receipt of any
other Award of Common Stock (subject to any required action by stockholders),
the number and class of shares or other securities to which the Participant
would have been entitled pursuant to the terms of the Merger in lieu of the
number of shares of Common Stock receivable or exercisable pursuant to the
Award prior to the Merger if, at the time of the Merger, the Participant had
been the holder of record of a number of shares of Common Stock equal to the
number of shares

 

9

 

of Common Stock receivable or exercisable
pursuant to the Award.  Comparable
rights shall accrue to each Participant in the event of successive Mergers in
which the Company is the surviving corporation.  In the event of a Merger in which the Company is not the
surviving corporation or pursuant to which a majority of the shares which are
of the same class as the shares that are subject to outstanding Options are
exchanged for, or converted into, or otherwise become shares of another
corporation or other consideration, the surviving, continuing, successor, or
purchasing corporation, as the case may be (the “Acquiring Corporation”), will
either assume the Company’s rights and obligations under outstanding Award
Agreements or substitute awards of the Acquiring Corporation’s stock for
outstanding Awards, provided, however, that
if the Acquiring Corporation does not assume or substitute for the outstanding
Awards, the Board shall provide prior to the Merger that any unexercisable
and/or unvested portion of the outstanding Awards shall be immediately
exercisable and vested as of a date prior to the Merger, as the Board so
determines.  The exercise and/or vesting
of any Award that is permitted solely by reason of this paragraph shall be
conditioned upon the consummation of the Merger.  Any Options that are not assumed by the Acquiring Corporation or
not exercised as of the date of the Merger shall terminate as of the effective
date of the Merger.

 

(c)           Options
to Purchase Stock of Acquired Companies. 
After any Merger in which the Company or a Subsidiary is a
surviving corporation, the Board may grant substituted Options under the provisions
of the Plan, pursuant to Section 424 of the Code, replacing old options
granted under a plan of another party to the Merger whose shares of stock to be
issued under the old options may no longer be issued following the Merger.  These provisions shall be applied to the old
options and any appropriate adjustments to the Options shall be determined by
the Board in its sole discretion.  Any
adjustments under this paragraph may provide for the elimination of any fractional
shares that might otherwise become subject to any Options.

 

7.08        Initial
Public Offering.  As a
condition of participation in this Plan, each Participant shall be obligated to
cooperate with the Company and the underwriters in connection with any public
offering of the Company’s securities and any transactions relating to a public
offering, and shall execute and deliver any agreements and documents, including
without limitation, a lock-up agreement, that may be requested by the Company
or the underwriters.  The Participants’
obligations under this Section shall apply to any shares of Common Stock
issued under the Plan as well as to any and all other securities of the Company
or its successor for which Common Stock may be exchanged or into which Common
Stock may be converted.

 

7.09        No
Right to Employment.  No
employee or other person shall have any claim of right to be granted an Award
under the Plan.  Neither the Plan nor
any action taken under it shall be construed as giving any employee any
contractual employment rights with the Company.

 

7.10        Awards
Not Includable for Benefit Purposes. 
Payments received by a Participant pursuant to the provisions of
the Plan shall not be included in the determination of benefits under any
pension, group insurance, or other benefit plan applicable to the Participant

 

10

 

that is maintained by the Company, except as may be provided under the
terms of those plans or determined by the Board.

 

7.11        Governing
Law.  This Plan shall be
interpreted, construed, and enforced and its construction and performance shall
be governed by the internal laws of the Commonwealth of Pennsylvania.

 

7.12        No
Strict Construction.  No
rule of strict construction shall be implied against the Company, the Board, or
any other person in the interpretation of any of the terms of the Plan, any
Award granted under the Plan, or any rule or procedure established by the Board
that relates to the Plan.

 

7.13        Captions.  The captions and
Section headings used in this Plan are for convenience only, do not
constitute a part of the Plan, and shall not be deemed to limit, characterize,
or affect in any way any provision of the Plan, and all provisions of the Plan
shall be construed as if no captions or headings had been used in the Plan.

 

7.14        Severability.  Each part of this Plan is intended to be
several.  If any term, covenant,
condition, or provision of this Plan is determined by a court of competent
jurisdiction to be illegal, invalid, or unenforceable for any reason
whatsoever, that determination shall not affect the legality, validity, or
enforceability of the remaining parts of this Plan, and all remaining parts
shall be legal, valid, and enforceable and have full force and effect as if the
illegal, invalid, and/or unenforceable part had not been included.

 

7.15        Amendment
and Termination.

 

(a)           Amendment.  The Board shall have complete power and
authority to amend the Plan at any time. 
No termination or amendment of the Plan may, without the consent of the
Participant to whom any Award has previously been granted under the Plan,
materially adversely affect the rights of the Participant under that Award.

 

(b)           Termination.  The Board shall have the right and the power
to terminate the Plan at any time.  No
Award shall be granted under the Plan after the termination of the Plan, but
the termination of the Plan shall not affect any Award outstanding at the time
of the termination of the Plan.

 

	
   

  	
   

  	
  APAR HOLDING CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]