And now, at this point, and after Mr. Knepfler himself abandoned the reckoning with the past, and submitted a new offer to purchase the additional 76% of the shares, ADN came along and sold them to a third party - the Dayan Group. There was no impediment to negotiating with any third party, and it was clear to everyone - or should have been clear - that these shares were up for sale.
- With this background, we will re-examine Mr. Knafler's claims of breach of obligation with him when the company advanced the transaction with the Dayan Group:
- Knefler refers to clause 3.2 of the agreement, according to which "as of the closing date, the purchaser will have veto rights in relation to the [French company's] activity, in relation to decisions relating to the sale and/or transfer of the property companies."
However, the right of veto is contingent on the completion of the transaction. This is the obvious meaning of the term as of the closing date. After all, there is no logic that this term should be equivalent to the date of the conclusion of the agreement, since there is no reason to grant veto rights to someone who paid a modest advance at the expense of the consideration at the time of the conclusion.
- The fact that 8 percent of the shares that were supposed to go to Mr. Knafler in accordance with the agreement were sold does not constitute a breach. This was not the case when Mr. Knapfler himself chose to reopen the agreements for discussion. This opening, as noted, could not have been unilateral. The eight percent issue was put to the test, and Mr. Knepfler himself was willing to pay for them separately as part of the new deal he proposed.
- More than that. The significance of Mr. Knepfler's delay in completing the consideration in respect of the original transaction, and its opening for discussion, sounded like a reopening of the distribution of the income stream from the assets in France. It is not at all clear that at the end of the calculation the parties would have agreed on the same share of his share of the cash flow in accordance with the original transaction.
At the same time, there is substance to Mr. Knepler's claims in this matter, since he was ostensibly supposed to receive a dominant share of the cash flow even if the additional eight percent of the French company's shares are deducted from the picture. And here a clash arose between the Dayan Group's share of the cash flows, following the sale of the remaining shares to it. Still, the picture in this matter is not unequivocal when the issue has not been clarified between the parties within the 30-day period allocated for accounting between them.
- Knafler claims that the original agreement with him was cancelled in a manner that was not in accordance with the outline set forth therein. As you may recall, clause 7.3 of the agreement stipulates that cancellation will be possible after 14 days' advance notice.
However, this matter cannot give rise to the personal liability of the officers who received legal advice on the basis of which they took action to cancel the agreement. In any case, we must take into account the fact that Mr. Knepler also admitted that the agreement between the parties remained open. After all, ADN approved the agreement according to which the parties will have thirty days to settle with respect to the component of the balance of the consideration. And this calculation was not made.