A: Because I said it was a long relationship, that's how we built it, that's how we looked at it, background noise of the first year is background noise. That's what I talked to the CEO of that company, and we both agreed on it. I sat down with Nir and we agreed on it."
Udi, then CEO of Danan, p. 382, 16-20.
See also:
"Q: [...] And this was reflected in the fact that you actually agreed to postpone entry to [...]Exclusivity [...] In fact, your decision is a conscious and agreed-upon decision to say that we are bowing our heads, this is what Lehavot demands, this is what we will do. I understand right?
A: You understand it right, but you simplify it. It was done after a lot of discussions, and over time and after thinking that if we don't do it, then we're going to collide with the flames and we're not going to be forces against them. And we wanted this thing to work. We had already invested a lot and wanted it to work, so we agreed to accept the criticism, thinking it was constructive criticism, and to work at the pace they ask for, even though the contract is about something else."
Navot, pp. 273, 13-25.
- Lehavot lifted the burden of convincing that the change in the date of the transition to the second stage, a change of several months that was initially mentioned, was carried out by consent.
- Notes:
- In the summaries of the case, it was claimed that Lehavot tried to delay the transition to the second stage of the agreement while setting conditions that were not included in the original agreement, such as the sale of a minimum number of systems and the exclusion of distributors. No reference was found in real time to support this claim.
- Danan's claim in its summaries that it considered itself prepared in terms of manpower for the initial entry into the agreement as well as for the second stage, does not change the conclusion regarding the existence of an agreement regarding the postponement of the start of the second stage. Therefore, for the purpose of this matter, there is no need to examine whether the aforesaid claim of Danan is consistent with other claims or evidence , and it should be noted in summary that there is a real doubt about this (for the question of readiness, see, for example, pp. 269, s. 19 - p. 271, s. 9; compare: p. 246, s. 13-15, p. 254, s. 10-12; p. 329, s. 26 - p. 330, s. 2; according to Lahavot, the difficulty in moving to the second stage due to problems with the service, See, for example, the testimony of Lehavot's customer service manager, who was in regular contact with a variety of parties in order to implement the agreement, pp. 174, 9-13; The witness was not cross-examined in this matter. Contrary to some of the elements in the flames, it was not claimed against this witness that she did not want an agreement (pp. 262, 26-27; p. 263, 13-15)).
Exclusion of distributors
- Clause 2.8 of the agreement stipulates that in the second stage, Danan Lehavot will receive "the exclusive rights to market and distribute the products and to provide services in connection with the products in the distribution area" to Lehavot customers or new customers, "subject to the other provisions of this agreement and the full and accurate fulfillment of all of [Danan's] obligations under the agreement."
It was clarified that exclusivity relates only to the distribution area (Israel) and only to products that were included in the definition of "products" in the agreement.
- In the agreement It was noted that Danan Shalhavot is known to market and distribute systems in the distribution area that are not included in the definition of the products, and it intends to do the same for other products that are not included in the definition and are not a substitute or upgrade of the products. Danan declared that she would have no claim, claim or demand against Lehavot in this regard.
Danan also confirmed in the agreement that Shalhavot is aware that Shalhavot sells the products to distributors and customers outside the distribution area, and that it has no ability to monitor whether these products will eventually be sold in the distribution area. Lehavot, for its part, undertook to make every effort to ensure that other distributors would not market the products in Danan's distribution area and would not provide them with service, and that it would accept the commitment of the other distributors to do so (paragraph 2.9).
- By the term "distributors", the parties referred to companies engaged in the provision of services in the field of fire to end customers. These entities are engaged in the sale of a range of products and services required by an end customer (such as a certain restaurant), including a hood extinguishing system, smoke detectors, fire extinguishers, a reporting system, and more (p. 82, paras. 20-22). In this way, the distributors also offer flame products.
- The "Products" were defined in the Agreement (in clause 1.5) as products listed in Appendix A[1] "And as updated or changed, from time to time, by [Flames]."
- According to the agreement, in the first stage, Danan will provide services (only) for the products to Lehavot's customers; No exclusivity was granted. It was agreed that throughout this stage, Lehavot is also entitled to market all of its products by itself or through distributors other than Danan. As for the second stage, the intention and conclusion was to give Danan exclusivity in distributing the products as they were defined, which were in fact flame systems in the field of hoods and buses.
- In light of the existence of products and services that are not included in the agreement, Lehavot was determined to remain in contact with other distributors. Danan, it sometimes seems, was of the opinion that starting from the second stage, Lahavot should not have other distributors (Navot, p. 266, para. 10, "There are no distributors here, there is an exclusivity contract here"). However, this was not stated in the agreement, and Danan knew this; Udi testified that he knew that Lehavot was afraid of the reaction of other distributors, Because they will stop purchasing products from it that are not in the agreement, such as fire extinguishers, for example, and meetings have been scheduled in which the distributors will be told that "we are not threatening them in the areas of buses and kitchens. There will be no situation in which I take a client for them" (p. 372, paras. 15-27; and see also Ronen's testimony, p. 203, s. 27 - p. 204, s. 4).
- Lehavot claims that distributors raised claims against Danan's conduct in the first stage, in which it provided services only for the products in the agreement. The matter was mainly related to the field of hoods. The Argument Regarding the Distributors' Complaints Supported by evidence. For a general background in the matter, see Testimony of Ilan, pp. 82, 20, 83 s. 4, p. 84, 3-12; For a description of the conduct towards which the distributors complained, see, for example, Shai, pp. 43, 23 - pp. 44, 5, pp. 65, 22-14; Ilan, pp. 100, 22-28; Gilo, p. 173, s. 23 - p. 174, s. 6, p. 188, s. 18-28, p. 189, s. 3-7; See a correspondence from July 2016, in which claims received from distributors regarding the conduct were raised, When The answer here is an apology, Statement that things were done by mistake and in contravention of the guidelines and that procedures will be clarified (M/64, M/65).
See also: "[The distributors - T.A.] They said, 'Tell me, what are you doing? You come to serve your system and you step on us here, take our customers" (Gilo, p. 173, paras. 1-2) "Shouts from distributors who come and say - we will get you out of here if you continue" (Gilo, p. 187, paras. 25-26).
- There were distributors who refused to receive service from Danan for products they sold to end customers. Opposition to direct purchases from Danan, a move intended for the second stage, came up at a meeting held in September 2016. In the summary of that meeting (M/71), it was noted, among other things, that "distributors who express objection will be able to temporarily place an order and invoice with Flames."
Against the backdrop of the difficulty with distributors, an exception for some of them has been formulated. Correspondence from the beginning of December 2016 mentions the intention to hold meetings with distributors who are excluded at this stage. Udi (Danan) wrote to Lehavot (Dudi Gabbay, manager of the field of hoods and movers in flames during the relevant period; Dudi): "In my understanding, apart from the distributors with whom we are supposed to meet together (13 distributors), all the works have to be done through Danan" (M/89).
- In a letter dated December 29, 2016, on the eve of the transition to the second stage, Dudi wrote that following meetings held with the large distributors to explain the process of transferring the hood activity in Israel to Danan, some of the distributors "vetoed the move and are not willing to move to activity with [Danan] and are interested in continuing to work with Lehavot as it was in the past. Orders will be sent to Lahavot and invoices will be sent to customers from Lahavot, the contact person for this purpose will be Gila" (M/88 and M/92)[2]. In the accompanying email, Dudi wished Shabbat Shalom "and good luck" (M/87). The meetings with the distributors were coordinated (see M/71).
The response from Danan, an email dated December 30, 2016 (M/87), which opened with thanks to my uncle, mentioned only "important clarifications for veto cases." The same clarifications referred to the fact that Danan would approve the pricing of the work with the distributor, that the components that were installed and supplied to the warehouse for this purpose would be credited, how the coordination and operation would be carried out, and that the matter would be examined quarterly (M/87).
- correspondence following the entry into the second stage (early 2017) also refers to this matter as an agreed upon process (correspondence that began with a request from Lehavot regarding an order that was closed directly with one of the excluded distributors and difficulty in coordinating execution with Danan); Danan describes the dealings with the excluded distributors as "an interim solution that we created", and Lahavot responds that this is a "very bad default" from the point of view of the distributors, "it is just before the cessation of their activity" (M/113).
- On this issue as well, the testimonies corroborate Scripture.
Navot, who indeed saw this matter as a "bending of the hand" on the part of Lehavot, confirmed that Danan gave her consent to the exclusion while making a number of clarifications, even though he believed in retrospect that it was a mistake.