invitation to participate in the pre-qualification stage of an ...

- 4 -8.5. Disqualification of the Pre-Qualification Submissions ................................. 398.6. Issuance of the Tender Documents; Update Statement ................................ 41Appendix A - DefinitionsAppendix B - List of AdvisorsAppendix C – General Specification of the Project’s Scope of Work

- 7 -transportation plan for the development of the Negev andthe Galil), instructing the promotion and execution of theProject by INRC.The Project, set out under approved National InfrastructurePlans no 12/2 (the Akko- Carmiel Rail Line) and 13/6,2 (theHaifa – Bet Shean Rail Line), was planned to serve thegrowing transportation and socio-economic needs of theState of Israel. The Rail Lines shall comprise part of theoverall plan to establish an intercity transportation systemconnecting northern and southern Israel to the center of theState, and are aimed to improve the accessibility from and tosuch parts and encourage immigration of population thereto.1.6.1.2. Akko- Carmiel Rail LineThe Akko Carmiel Rail Line is an electrified 22 Km doubleRail Line linking the cities of Akko and Carmiel. The RailLine is outlined in parallel to existing Highway 85 and shallinclude a tunnel section in Gilon (two single tunnels of 4.6km each) as well as two new train stations, at MoshavAhihud (in the Western Galilee) and at the entrance toCarmiel, and bridging works in the amount of approx. 4,500Sq/m. The Stations and bridging works will be constructedby a third party and are not included within the Project’sscope of work.The Akko Carmiel Rail Line shall include the constructionslab track in the Gilon tunnels and ballast track in the rest ofthe Rail Line; telecommunication systems (fix and mobile);signaling system and tunnel system integration (distributedcontrol for security installations) including smoke and firedetection, ventilation, CCTV, IR Telephone, lighting, publicaddress, energy supply, pumping water system andemergency communication. The Rail Line is designed to becapable of hauling both passenger and freight trains.

- 8 -1.6.1.3. Haifa – Bet Shean Rail LineThe Haifa – Bet Shean Rail Line (also known as the YisraelValley railway) is a single track non-electrified 58 km RailLine, linking Haifa to the Sheikh Hussein Bridge over theJordan River in the Bet She'an Valley. This Rail Line willinclude five (5) new train stations, at Lev Ha’mifratz, KefarYehoshua, Kefar Baruch, Afula and Bet Shean as well asbridging works in the total amount of approx. 35,000 Sq/m.The Stations and bridging works will be constructed by athird party and are not included within the Project’s scope ofwork.In addition, the Haifa – Bet Shean Rail Line works shallinclude ballast track works, telecommunication systems (fixand mobile) and signaling system. The Rail Line is designedto be capable of hauling both passenger and freight trains.General specification of the Project’s scope of work isattached hereto as Appendix C.1.6.1.4. Israel RailwaysParticipants are hereby informed that the Project shall bedelivered to Israel Railways Corporation Ltd. (“IsraelRailways”), a government owned company responsible forthe operation and maintenance of the railway infrastructurein Israel, which shall operate and maintain the Rail Lines.Accordingly, it is expected that Israel Railway shall beinvolved in the management, inspection and delivery of theProject, as shall be further detailed in the Tender Documents.1.6.2. Contract Price and Payment StructureAs part of its proposal for the Tender Selection Stage, the Bidders shallbe required to price a bill of quantities, which shall serve as a basis forthe determination of payments due to the Contractor. In addition, theBidders shall be required to price lump sum payments with respect to

- 9 -specific elements of the works, all as shall be detailed in the TenderDocuments. The Contractor’s proposed bill of quantities, together withits proposed lump sum payments, shall comprise the contract price.The payment terms shall be determined by INRC in the TenderDocuments.1.6.3. Tender Documents – Major HighlightsWithout derogating from the foregoing or from the other provisions ofthis Invitation, Participants are hereby informed that the TenderDocuments are expected to include, inter alia, requirements withrespect to the following issues, which shall apply to the EligibleParticipant, its Members or Major Subcontractor (as applicable), all asshall be defined in the Tender Documents:1.6.3.1. Minimum requirements regarding the possession ofequipment;1.6.3.2. Minimum requirements regarding the number and theprofessional expertise and experience of the engineers andother position holders employed by the Eligible Participant;1.6.3.3. Requirements relating to the tunnel slab track works to beincluded as part of the Project and minimum requirementsregarding the experience and expertise of the entity whichshall be execute such works on behalf of the Contractor.1.6.3.4. Health, safety and environmental requirements, includingthe submission of company policy, statements and plans;1.6.3.5. QA and QC, including management Plan (QAMP), qualitymanager, QC system and document control;1.6.3.6. Schedule management and control;1.6.3.7. Testing and Commissioning plan and expertise;1.6.3.8. Compliance with RAMS;

- 10 -1.6.3.9. Compliance with EN Standards (including EN 13450,EN 13674-1, EN 13230-2, EN 13146,EN 13232)The above requirements shall be mandatory requirements in the TenderSelection Stage.1.6.4. Statutory Availability of the Designated SiteAkko-Carmiel Rail LineAkko-Carmiel Rail Line is statutorily set out within the approvedNational Infrastructure Plan no 12/2.The following are additional updating statutory plan relating to theAkko-Carmiel Rail Line:National Infrastructure Plan no 12 B – relating to the sectionof Akko- Carmiel Rail Line crossing Givat Ahihud, which theCommittee for National Infrastructure has recommended forGovernment approval;National Infrastructure Plan no. 12 C relating to a levelseparation in the Carmiel station, which is currently underdiscussions in the Committee for National Infrastructure.Haifa-Bet Shean Rail LineHaifa-Bet Shean Rail Line is statutorily set out within the approvedNational Infrastructure Plan no. 13/6,2.The following are additional updating statutory plan relating to theHaifa-Ber Shean Rail Line:National Infrastructure Plan no. 13A, relating to the section ofthe Haifa-Bet Shean Rail Line between Bet-Shean andCheikh Hussein Bridge. This plan has been published forpublic comments and is currently under discussions at theCommittee for National Infrastructure;

- 11 -National Infrastructure Plan no. 13B, relating to a levelseparation in Road no 71, Haifa-Bet Shean Rail Line is thesection between Afula-Merhavia. The Plan has been approvedby the Government;National Infrastructure Plan no. 13C, relating to the Yagurinterchange. This plan has been approved by the Government;National Infrastructure Plan no. 13D, relating to Haifa-BetShean Rail Line is the section between the Adashim Riverand Afula. This plan is awaiting for Government approval.2. TENDERING RULES2.1. Governing Law and Jurisdiction2.1.1. The Pre-Qualification Stage shall be governed and construed inaccordance with the provisions of all applicable Laws.2.1.2. The authorized court in the Tel-Aviv-Jaffa district shall have the solejurisdiction over all matters and all disputes arising in connection withthis Pre-Qualification Stage.2.2. Conformity with All Applicable LawsEach Participant is assumed to have obtained legal advice. The Participants andthe Pre-Qualification Submissions shall abide the Laws. Participants shall besubject to any changes in any Laws, should such changes be introduced duringthe Pre-Qualification Stage.2.3. SeverabilityIf any of the provisions of this Invitation is or becomes invalid, illegal orunenforceable against any person, party or under any circumstances, theremainder of the Invitation and the validity, legality and enforceability of suchprovisions to other persons, parties or circumstances, shall not be affected orimpaired in any way thereby. Each provision of the Invitation shall, except asotherwise herein provided, be valid and enforceable to the fullest extentpermitted by Laws and Regulations.

- 12 -2.4. Purchase of the Invitation2.4.1. A copy of this Invitation may be obtained for the payment of twentythousand NIS (20,000 NIS) per copy and the provision of detailsregarding the purchasing Entity to the e-mail address detailed inSection 2.7.2. below.The Pre-qualification documents are available at the INRC offices (atthe address detailed in Section 7.8 below), following prior coordinationwith Adv. Ayelet Diskin at phone no. (972-3) 7355926.No additional payment with respect to the Tender Documents will becharged. Purchasing this Invitation shall include payment for theTender Documents.2.4.2. It is hereby emphasized that the sale or purchase of this Invitation doesnot constitute any recognition of an Entity’s (including a Participant’s)eligibility, qualifications or competence to meet the requirements andterms of this Invitation or the Tender Documents.2.4.3. Without derogating from the provisions of Section 2.10 (Reservation ofRights), in the event that the INRC will not issue the TenderDocuments to the Eligible Participants, the above mentioned chargewill be refunded to the Eligible Participants.2.5. Cost of Participation in the Pre-Qualification StageAny and all costs and expenses incurred by the Entities (including Participants)and anyone on their behalf or connected to their participation in the Pre-Qualification Stage will be borne by such Entities or Participants. Entities orParticipants will not be reimbursed by the Tender Committee or the INRC forany costs or expenses so incurred thereby.2.6. Nomination of an Authorized Representative2.6.1. Each Participant shall nominate an Authorized Representative. TheParticipant's Authorized Representative shall be responsible for allcommunication with the INRC during the Pre-Qualification Stage. TheINRC shall not be responsible for any communication held with or by

- 13 -any other person other than the Participant's AuthorizedRepresentative.2.6.2. All correspondence on behalf of the INRC shall be communicated tothe Participant's Authorized Representative by fax or by mail or by e-mail, according to the details provided by the Participants uponpurchasing this Invitation, according to the provisions of Section 2.4.1above.2.7. Requests for Clarification of this Invitation2.7.1. Participants are responsible for examining, with appropriate care, thisInvitation (including all Appendices), Clarifications and Addendathereto, and for informing themselves with respect to any and allconditions which may in any way affect their participation in the Pre-Qualification Stage, including in the preparation and submission of thePre-Qualification Submissions.2.7.2. Participants may raise questions and request clarifications orinterpretations to this Invitation from the INRC, which shall besubmitted in writing (in the English language) by no later than thedeadline for the submission of requests for clarifications, as set forth inSection 1.5 (Anticipated Schedule). Such requests shall be submittedby email only addressed to:Northrailway@iroads.co.ilParticipants are required to verify receipt of e-mails by the INRC byphone with Adv. Ayelet Diskin: (972-3) 7355926. Although the INRChas no obligation to clarify or interpret this Invitation, the INRC mayissue Clarifications and Addenda, in accordance with the provisions ofSection 2.8 (Clarifications and Addenda). Participants shallacknowledge receipt of any Clarification and/or Addendum in themanner set forth in Section 2.8 (Clarifications and Addenda).2.7.3. The INRC shall not be bound by, and Participants shall not rely on, anyoral interpretation or clarification to this Invitation.

- 18 -agents, or any other persons for whom the Entity or Participant may becontractually or legally responsible or accountable for.INRC and the Tender Committee may publish a new invitation to prequalifyor other proceedings with respect to the Project, which mayinclude other Pre-Qualification Requirements, or require additionalPre-Qualification or mandatory requirements in the Tender Documents.2.11. Advisors to the INRCAppendix "B" of this Invitation contains a list of the advisors to the INRC.Subject to the provisions of any and all applicable Laws, the INRC may exerciseits rights under this Invitation through its advisors.Any entity or person, which has provided, or will provide, services to the INRC,Israel Railways Ltd or any relevant authority in relation to the Project or anypart thereof, including the advisors listed in Appendix "B", shall not bepermitted to render services or participate in any other manner in the Pre-Qualification Stage or the Tender Selection Stage, other than as advisors to theINRC, without the prior written approval of the INRC.In the event that a conflict of interest occurs with respect to an Entity or Person,who has provided services to INRC, Israel Railways Ltd. or any relevantauthority in relation such entity may be prohibited from rendering services orparticipating in any other manner in the Pre-Qualification Stage or the TenderSelection Stage, other than as advisors to the INRC, without the prior writtenapproval of the INRC, or such relevant authority.The INRC shall be entitled to disqualify Participants whose PrequalificationSubmission does not comply with the provisions of this Section.2.12. Intellectual Property RightsThe Invitation documents and any and all intellectual property rights therein areexclusively owned by INRC and are supplied to the Participants solely for thepurpose of participation in the Pre-Qualification Stage.

- 19 -3. GENERAL PROVISIONS RELATING TO PARTICIPANTS3.1. The ParticipantA Participant shall mean a single Entity or a joint venture which shall submit aPre-Qualification Submission ("Participant").In the event that the Participant is a joint venture, such joint venture the will beheld by the Members who submitted, through the Participant, the Pre-Qualification Submission, and were approved by the INRC in the Pre-Qualification Stage, in accordance with the Holdings detailed in this Pre-Qualification Submission.3.2. Members of the Participant3.2.1. Members of a Participant shall mean each of the Entities which possessHoldings in the Participant (“Member”). Each Member shall complywith all of the following requirements:3.2.1.1. A Member of a Participant must be duly organized andvalidly existing under the laws of the jurisdiction in whichsuch a Member was organized;3.2.1.2. A Member of a Participant (including Interested Parties inthe Member, directors or managers thereof, includingindividuals), shall not be residents or nationals of a hostilestate which does not have diplomatic relations with theState or of a state which does not have full trade relationswith the State.3.2.2. The Participant shall detail within its Pre-Qualification Submissionthe holdings of each of its Members in the means of Control, thevoting rights or of any other interests of the Participant (“theHoldings”).3.3. Major Subcontractors:3.3.1. Major Subcontractors are those Entities, which are designated toexecute a significant part of the works, or are designated to provide

- 20 -significant services or goods, required for the Project, each of whichcomplies with the following: ("Major Subcontractor"):3.3.1.1. A Major Subcontractor must be duly organized andvalidly existing under the laws of the jurisdiction in whichsuch a Major Subcontractor was organized;3.3.1.2. A Major Subcontractor (including Interested Parties,directors or managers thereof, including individuals),shall not be residents or nationals of a hostile state whichdoes not have diplomatic relations with the State or of astate which does not have full trade relations with theState.3.4. Registration in Relevant Statutory Registry and Possession of all RelevantLicensesAll Participants and any Major Sub-Contractors thereof are required to ascertaintheir conformity with any Laws and Regulations requiring registration in anyrelevant statutory registry and are required to hold all the relevant and necessarylicenses. All Eligible Participants (or Members thereof) will be required toprovide a valid certificate or statement pursuant to the Public EntitiesTransactions (Enforcement of Bookkeeping and Payment of Taxes) Law, 1976,as shall be detailed in the Tender Documents.3.5. Participation in One Pre-Qualification Submission3.5.1. General3.5.1.1. Each Participant may submit only one Pre-QualificationSubmission.3.5.1.2. Each Member may participate in only one Participant.3.5.1.3. Each Major Subcontractor may participate in only onePre-Qualification Submission3.5.2. For the purpose of the provisions of Section 3.5.1 (General), thefollowing will apply:

- 23 -It is hereby clarified that if any any rolling stock were supplied as partof a Railway Project, the supply of rolling stock shall not be takeninto account when determining the total amount of the demonstratedproject for the purpose of this Professional Pre-QualificationRequirements.4.2. Ballast Track Works ExperienceThe Participant is required to demonstrate that it has experience, obtained duringthe period between 1.1.2002 until the Pre-Qualification Submission Date, in theConstruction of ballast tracks for railway superstructure in the total aggregatelength of at least one hundred (100) km.The ballast track works experience may be demonstrated through one or moreprojects, provided however that the length of ballast tracks constructed undereach such project shall be at least fifteen (15) km.In the event of a Joint Venture, the Pre-Qualification Requirement under thisSection 4.2 (Ballast Track Works Experience) shall be demonstrated by one ofthe Members whose Holdings in the Participant are at least thirty percent (30%).4.3. Railway Facilities Experience4.3.1. The Participant is required to demonstrate that it has experience,obtained during the period between 1.1.2002 until the Pre-QualificationSubmission Date, in the execution of Railway Facilities Works in thetotal aggregated amount of at least twenty million (20,000,000) EURO.4.3.2. In the event of a Joint Venture the Pre-Qualification Requirementunder this Section 4.3 (Railway Facilities Experience) shall bedemonstrated by one of the Members whose Holdings in theParticipant are at least thirty percent (30%).4.3.3. For the purpose of this section 4.3:4.3.3.1. “Railway Facilities Works” shall mean works for theconstruction of railway work bases, ballast store yards railwaydepot, stations or operational sites, or any other works of asimilar nature which shall be approved in advance by the INRC

- 24 -as Railway Facilities Works; provided however that thedemonstrated works include earthworks, infrastructure andtrack works.4.3.3.2. The Railway Facilities Works experience may be demonstratedthrough one or more projects, provided however that theamount of each such demonstrated project shall be at least fivemillion (5,000,000) EURO.4.4. Telecommunication ExperienceThe Participant is required to demonstrate that either it or one of its MajorSubcontractors has experience, obtained during the period between 1.1.2002until the Pre-Qualification Submission Date in the delivery and installation oftelecommunication systems in the total aggregated amount of at least twentymillion (20,000,000) EURO.In the event of a Joint Venture this Pre-Qualification Requirement shall bedemonstrated by either one of the Members of the Participant or a MajorSubcontractor of the Participant.The telecommunication experience may be demonstrated through one or moreprojects, provided however that the minimum amount of each such project shallbe at least three million (3,000,000) EURO.4.5. Tunnel Systems Installation and Integration Experience4.5.1. The Participant is required to demonstrate that either it or one of itsMajor Subcontractors has experience, obtained during the periodbetween 1.1.2002 until the Pre-Qualification Submission Date inthe installation and Integration of Tunnel Systems in the totalaggregated amount of at least ten million (10,000,000) EURO.In the event of a Joint Venture this Pre-Qualification Requirementshall be demonstrated by either one of the Members of theParticipant or a Major Subcontractor of the Participant.4.5.2. For the purpose of this Section 4.5:4.5.2.1. Tunnel Systems shall mean: at least six (6) of thefollowing systems: electric power supply,

- 25 -ventilation, communication systems, low voltagesystems, smoke and fire detection systems,emergency announcement system, lightning or watersystems;4.5.2.2. Integration shall mean: interface management of therelevant Tunnel Systems, the testing andcommissioning thereof and their handover anddelivery to the client.The Tunnel System Integration experience may be demonstrated through one ormore projects, provided however that the amount of each such demonstratedproject shall be at least two million (2,000,000) EURO.4.6. Standards4.6.1. The Participant is duly certified to all the following sandards:4.6.1.1. ISO 9001:2008;4.6.1.2. ISO 14001 or an equivalent accredited Standard, as shall beapproved in advance by the INRC;4.6.1.3. OHSAS 18001 or an equivalent accredited Standard, as shallbe approved in advance by the INRC.4.6.2. In the event of a joint venture the Pre-Qualification Requirementunder this Section 4.6 (Standards) shall be demonstrated by one of theMembers of the Participant whose Holdings in the Participant are atleast thirty percent (30%), provided however that such Member iscertified to all standards detailed in Sections 4.6.1.1 – 4.6.1.3 above.4.7. For the purpose of the Professional Pre-Qualification Requirements the followingshall apply:4.7.1. “Construction” shall mean the commencement execution andcompletion of the demonstrated project or work (as applicable), by thedemonstrating entity, as a main contractor, during the applicableperiod. For the purpose of this definition completion shall mean thedelivery of the demonstrated project or work (as applicable) or thecommencement of the project’s operation in accordance with its

- 26 -intended use. In this respect, the Participant, Member, Major Sub-Contractor or Related Entity (as applicable) is required to demonstratethat it is directly accountable for the execution of the demonstratedproject or work (as applicable), and has borne all the risks related tothe execution thereof, including the engagement and coordinationwith all subcontractors.4.7.2. For the purpose of compliance with the Professional Pre-QualificationRequirements, the Participant or a Member (as applicable) may seekto rely on the professional experience of an entity which exercisescontrol over the Participant or such a Member, or an entity Controlledby the Participant or such a Member (as applicable) (hereinafter:“Related Entity”), provided that that the Related Entity duly signsPre-Qualification Form C.4.7.3. In the event that the demonstrated project or work (as applicable) wasexecuted by the Participant, Member, Major Sub-Contractor orRelated Entity (as applicable) as a subcontractor, then only the part ofthe works which were constructed directly by the demonstrating entityshall be taken into account for the purpose of the relevant ProfessionalPre-Qualification Requirement.4.7.4. In the event that the demonstrated project or work (as applicable) wasconstructed by the Participant, Member, Major Sub-Contractor orRelated Entity (as applicable) as part of a joint venture, then thefollowing shall apply:4.7.4.1. Each Participant, Member, Major Sub-contractor or RelatedEntity (as applicable) was jointly and severally responsiblefor the execution of the applicable project or work (asapplicable); and4.7.4.2. The Participant, Member, Major Sub-contractor or RelatedEntity (as applicable) was the holder of at least thirtypercent (30%) of any Means of Control in the entity whichconstructed the demonstrated project or work (asapplicable).

- 27 -4.7.5. The Tender Documents will include a requirement that each Entitywhich demonstrated compliance with a Professional Pre-Qualification Requirement shall be the entity responsible for theperformance of the respective works in the Project, as shall be furtherdetailed in the Tender Documents.4.7.6. For the removal of doubt, Participant may demonstrate the sameproject for the purpose of more than one Professional Pre-Qualification Requirement, provided however that such projectcomplies with all the conditions of each relevant Professional Pre-Qualification Requirement.5. FINANCIAL PRE-QUALIFICATION REQUIREMENTS5.1. Financial Pre-Qualification Requirements - General ProvisionsIn order to qualify as a Participant in this Pre-Qualification Stage, eachParticipant is required to meet the financial pre-qualification requirements setforth in Sections 5.2 (Turnover), 5.3 (Operating Cash Flow) and 5.4 (Equity)(hereinafter: “the Financial Pre-Qualification Requirements”).5.1.1. For the purpose of compliance with the Financial Pre-QualificationRequirements, the Participant or a Member may seek to rely on itsParent Company, provided that the Parent Company duly signs theletter of guarantee in the form of Pre-Qualification Form “M”.5.1.2. A Member which relies on a Parent Company as set forth in Section5.1.1 above must rely on such Parent Company for the purpose ofcompliance with all Financial Pre-Qualification Requirements.5.1.3. In the event that the Parent Company is also a Member of theParticipant; for the purpose of determining compliance with allFinancial Pre-Qualification Requirements, the Holdings of such ParentCompany in the Participant will be deemed to include all Holdings ofthe Member seeking to rely on such Parent Company, i.e. such ParentCompany data will be examined with respect to the aggregatedHoldings of the Parent Company in the Participant (in its capacity as a

- 28 -Member), together with the Holdings of the Member seeking to rely onsuch Parent Company.5.1.4. It is hereby clarified that the Turnover, Average Operating Cash Flowor Equity of a Participant which is a joint venture, shall be calculatedbased on the respective Financial Statements of its Members inaccordance with the provisions of Section 5.2 (Turnover), 5.3(Operating Cash Flow) and 5.4 (Equity) herein below, even if theirmost recent available Financial Statements relate to fiscal years whichare not parallel.5.2. Turnover5.2.1. A Participant is required to have an average annual turnover("Turnover") of at least fifty million (50,000,000) EUR (or theequivalent thereof) during the last three (3) fiscal years, based on itsmost recent available Financial Statements (for the removal of doubt,which is not earlier than 2008).The Participant’s average Turnover shall be calculated in thefollowing manner:Average Turnover = (TO t + TO (t-1) +TO (t-2) ) / 3Where:TO - the Turnovert – the year of the most recent available Financial Statement.5.2.2. In the event of a Joint Venture: the Participant's Turnover will becalculated according to the Turnover of its Members, based on theirrespective Financial Statements of the relevant fiscal years, pro-rata totheir Holdings in the Participant.The Turnover of each Member shall be calculated in the followingmanner:5.2.2.1. For a Member whose Holdings in the Participant are lessthan ten percent (10%):Average Turnover = Zero (0)

- 29 -5.2.2.2. For a Member whose Holdings in the Participant are equal toten percent (10%) or more:Average Turnover = (TO t + TO (t-1) +TO (t-2) ) / 3Where:TO - the Turnovert – the year of the most recent available FinancialStatement.5.3. Operating Cash FlowThe Participant (and in the event of a Joint Venture: each Member thereof) isrequired to demonstrate one of the following:5.3.1. The average annual cash flow from operating activities during the lastthree (3) fiscal years, based on its most recent available FinancialStatements (for the removal of doubt, which is not earlier than 2008)(“Average Operating Cash Flow”) of the Participant (or the Memberthereof, as applicable) is not negative. For the purpose of this Pre-Qualification Requirement, the Average Operating Cash Flow of theParticipant (or the Member thereof, as applicable) shall be calculated inthe following manner:Average Operating Cash Flow = (3*CF t + 2*CF (t-1) + CF (t-2) )/6Where:CF - annual Operating Cash Flowt - the year of the most recent available Financial Statement.Or:5.3.2. The ratio between the absolute value of the Average Operating CashFlow of the Participant (and in the event of a Joint Venture: of eachMember thereof) during the last three (3) fiscal years, based on its mostrecent available Financial Statements (for the removal of doubt, whichis not earlier than 2008) and its equity at the last day of the fiscal year

- 30 -(of the most recent available Financial Statement) is lower than twentyfivepercent (25%), so that:|(3*CF t + 2*CF (t-1) + CF (t-2) )|/6 / E < 25%Where:|x| - x in absolute valuesCF - annual Operating Cash FlowE - the equity at the last day of the fiscal year of the most recentavailable Financial Statementt - the year of the most recent available Financial Statement.5.4. EquityThe Participant should demonstrate that each of its Members has, for every onepercent (1%) of its Holdings in the Participant, equity of at least one hundredand fifty thousand (150,000) EUR, for the last day of the fiscal year, based on itsmost recent available Financial Statements.6. PRE-QUALIFICATION SUBMISSION6.1. Pre-Qualification Submission LetterEach Participant shall attach to its Pre-Qualification Submission the Pre-Qualification Submission Letter as provided in Form "A", duly completed andsigned.6.2. Description of the Participant, Members and the Major Subcontractors6.2.1. In order to demonstrate compliance with the provisions of Sections 3.1(The Participant), 3.2 (Members of the Participant) and 3.3 (MajorSubcontractors), each Participant shall submit Forms "B", "C", "D" and"E" duly completed and signed.6.2.2. Without derogating from the generality of the foregoing:6.2.2.1. The Holdings of each Member in the Participant shall bespecified in Form "B".

- 31 -6.2.2.2. The identity of the Participant’s Major Sub-Contractorsshall be detailed in Form “D”.6.3. Receipt of PurchaseEach Participant shall include in its Pre-Qualification Submission a copy of thereceipt of the purchase of the Invitation by the Participant or any one of itsMembers.6.4. Demonstration of Professional Pre-Qualification Requirements6.4.1. In order to demonstrate compliance with the Professional Pre-Qualification Requirements, Forms “F-K” shall be duly completed andsigned by the Participant, Member, Major Sub-Contractor or RelatedEntity (as applicable).6.4.2. In the event that the Professional Pre-Qualification requirements setforth in Sections 4.4 (Telecommunication Experience) or 4.5 (TunnelSystem Integration Experience) are demonstrated by a Major Sub-Contractor then Form “E” shall be duly signed by the said Major Sub-Contractor.6.5. Demonstration of Financial Pre-Qualification RequirementsIn order to demonstrate compliance with the Financial Pre-QualificationRequirements, the following shall apply:6.5.1. The chief executive officer or chief financial officer of the Participantor of the Members (as applicable) shall duly complete and sign Form"L".6.5.2. In addition, the Participant shall submit a complete copy of three (3) ofthe Participant (or each of its Members, as applicable) most recentavailable Financial Statements (for the removal of doubt, which is notearlier than 2008), duly prepared and presented in accordance with oneof the following:6.5.2.1. Israeli GAAP (including, with respect to the cash flowstatements, Standard No. 51 of the Institute of CertifiedPublic Accountants in Israel); or

- 32 -6.5.2.2. US GAAP (including, with respect to the cash flowstatements, FAS (Financial Accounting Standards) No.95); or6.5.2.3. International GAAP (including, with respect to the cashflow statements, IAS (International AccountingStandards) IAS No. 7 and IFRS updates);Participant (or Member, as applicable) presenting Financial Statementswhich are based on different accounting principles than those listed insub-Sections 6.5.2.1- 6.5.2.3 above, are required to submit a specificrequest to the INRC to approve submission of such FinancialStatements, at least thirty (30) days prior to the Pre-QualificationSubmission Date; the INRC will consider each request on a case bycase basis and may issue an Addendum as a result thereof.6.5.3. Without derogating from Section 6.5.2 above, the Financial Statementsmust include balance sheet, profit and loss, cash flow, and auditor’sreport and notes.6.5.4. The Financial Statements will be provided either in English or inHebrew, but not in any other language.6.5.5. In the event of reliance by a Member on a Parent Company, therelevant Financial Statements of such Parent Company shall beincluded (instead of those of the Member), and the provisions of thisSection 6.5 shall apply with respect thereto.6.5.6. A Member whose Financial Statements do not include cash flowstatements should provide such statements in accordance with one ofthe GAAP versions set out in Section 6.5.2 above (as applicable), dulyexecuted and approved by the Member’s external auditors.6.5.7. Without derogating from the rights of the INRC under the Invitationand under Law, in the event of a contradiction between the FinancialStatements of a Member submitted within the Pre-QualificationSubmission, and the Pre-Qualification Forms or any other document

- 33 -submitted within the Pre-Qualification Submission, the FinancialStatements will prevail.6.5.8. Currencies ConversionAll financial data shall be submitted in EURO terms. In the event thatthe Financial Statements are presented in any currency other thanEURO, the Participant shall be required to complete the Pre-Qualification Forms in EURO, in accordance with the followingprovisions:(a) Turnover and Operating Cash Flow. The Turnover and theOperating Cash Flow will be converted to EURO according to thefollowing average exchange rates of the relevant fiscal year:2008Average*2009Average*2010Average*2011Average*EURO1 US$ 0.6823 0.7191 0.7537 0.71881 NIS 0.1902 0.1829 0.2019 0.20091 GBP 1.2680 1.1227 1.1652 1.1522(b) Equity. The Equity will be converted to EUR according to theexchange rates on the last day of the last fiscal year of theapplicable Financial Statement:31/12/2010 31/12/20111 US$ 0.7491 0.77381 NIS 0.2111 0.20251 GBP 1.1593 1.1931* Exchange Rates Sources. The source for the exchange rates detailed insub-Sections (a) and (b) above is the Bank of Israel

- 34 -(c) Conversion of Other Currencies. Members whose financial datais presented in currencies other than NIS/US$/€/GBP/ (theexchange rates specified above), are required to submit a specificrequest to the INRC for other currency conversions to EUR, at leastthirty (30) days prior to the Pre-Qualification Submission Date.Such a request shall contain all the relevant information, includingexchange rate tables and a reference to the source thereof. TheINRC will consider each request on a case by case basis and mayissue an Addendum as a result thereof.(d) Conversion rates for fiscal years which are not January toDecember. A Member whose financial data in the FinancialStatements is provided for fiscal years which are not parallel to theabove specified calendar years, are required to submit a specificrequest to the INRC for applicable conversions rates to EUR, atleast thirty (30) days prior to the Pre-Qualification SubmissionDate. Such a request shall contain all the relevant information,including exchange rate tables and a reference to the sourcethereof. The INRC will consider each request on a case by casebasis and may issue an Addendum as a result thereof.7. METHOD OF SUBMISSIONThe Pre-Qualification Submission shall be submitted in accordance with thefollowing provisions:7.1. Compliance with the Requirements of the InvitationParticipants shall prepare their Pre-Qualification Submissions in strictconformity with the requirements of this Invitation. Participants shall answer allparts relevant to the Pre-Qualification Submission in an accurate and detailedmanner, disclosing all the information requested, as well as any additionalinformation or data required to clarify, substantiate and, in general, support thePre-Qualification Submission submitted by the Participant.

- 36 -7.5. Authorization of Signatures by an AttorneyAdjacent to every signature (excluding signatures in initials only) of theParticipants, their Members, Major Subcontractors, Parent Companies andRelated Entities (if applicable) within the Pre-Qualification Submission, thereshall be a confirmation by an attorney that the signatory is authorized to commitsuch Entity in relation to the document on which such signatures appear.7.6. Identification of Sensitive InformationWithout derogating from the generality of the provisions of Regulation 21(5) ofthe Regulations (and the discretion granted there under to the INRC),Participants will detail, within the Pre-Qualification Submission Letter, in aclear, complete and legible manner, all information contained in their Pre-Qualification Submissions, which they consider to be of a commerciallysensitive or secret nature.7.7. Number of Pre-Qualification Submission CopiesPre-Qualification Submissions must be submitted, and clearly marked so, as anoriginal and five (5) identical copies (six (6) altogether).Each copy shall include a CD containing a copy of the Pre-QualificationSubmission in original PDF format (i.e. not scanned).In the event of a discrepancy between the original and the other Pre-Qualification Submission documents, and/or the CD, the original shall prevail.7.8. Sealing and Marking of Pre-Qualification SubmissionsParticipants shall seal the original and each of the five (5) copies of the Pre-Qualification Submissions in separate envelopes. The envelopes shall then besealed in an outer envelope or a box, clearly indicating: `Pre-QualificationSubmission for the Akko-Caremiel and Haifa Bet Shean Rail Lines Project’.

- 37 -The envelopes and boxes shall be submitted to the INRC, at the allocated tenderbox to be placed in the INRC offices, at the following address:The Tender Committee29 Yahadut Canada St.Or Yehuda, Israel7.9. Pre-Qualification Submission Date7.9.1. Pre-Qualification Submissions should be submitted at the addressnoted in Section 7.8 (Sealing and Marking of Pre-QualificationSubmissions) by the date designated for such submission, as set forthin Section 1.5 (Anticipated Schedule) ("Pre-QualificationSubmission Date"), no later than 12:00 noon, Israel time.7.9.2. The INRC may, at its sole discretion, extend the Pre-QualificationSubmission Date by issuing an Addendum in accordance with theprovisions of Section 2.8 (Clarifications and Addenda).7.10. Validity of the Pre-Qualification Submissions7.10.1. The Pre-Qualification Submission shall be valid for a period of twelve(12) commencing on the Pre-Qualification Submission Date.7.10.2. The INRC may request Participants, or any of them, to extend thevalidity of their Pre-Qualification Submission for a specified additionalperiod.7.11. Opening of Pre-Qualification SubmissionsThe INRC will leave unopened any and all Pre-Qualification Submissionsreceived after the deadline for submission of the Pre-Qualification Submissionsspecified in Section 7.9 (Pre-Qualification Submission Date). All unopened Pre-Qualification Submissions will be promptly returned to the applicableParticipants.The opening of the Pre-Qualification Submissions shall be documented in aprotocol.

- 38 -8. EXAMINATION OF THE PRE-QUALIFICATION SUBMISSIONS8.1. Examination of the Pre-Qualification Submissions by the INRCThe INRC shall examine the Pre-Qualification Submissions in order todetermine whether each of the Participants meets the requirements of thisInvitation, including all Pre-Qualification Requirements.The Pre-Qualification Submissions will not be graded by the INRC.8.2. Requests for Clarifications of the Pre-Qualification SubmissionsThe INRC may request a Participant to clarify any item contained in its Pre-Qualification Submission and to submit any additional information necessary, inthe opinion of the INRC, for the evaluation of its Pre-Qualification Submission.Participants will comply with the requests of the INRC and will submit allclarification and additional information requested within the time periodstipulated in the request.The requests for clarifications will be in writing, delivered to the Participants bymail, messenger or facsimile. Their receipt should be confirmed by return mail,to the E-mail noted in Section 2.7.2 above, within forty-eight (48) hours ofreceipt.Participants’ responses to the requests for clarifications will form an integral partof their Pre-Qualification Submissions. The said responses will be attached tothe Pre-Qualification Submission, along with copies of the requests forclarifications, and will replace or take precedence over corresponding itemswithin the Pre-Qualification Submission documents that are contradictory.The INRC may exercise its right under this Section 8.2 any number of timesduring the examination of the Pre-Qualification Submissions.8.3. Announcement of Eligible ParticipantsUpon the completion of its examination of the Pre-Qualification Submissions,the INRC will announce those Participants which the INRC deemed tosuccessfully comply with the requirements of this Invitation, including with allPre-Qualification Requirements and which were not disqualified thereby inaccordance with the provisions of Sections 8.4 (Rejection of the Pre-

- 39 -Qualification Submissions) and 8.5 (Disqualification of the Pre-QualificationSubmissions) ("Eligible Participant").Without derogating from the generality of the provisions of Section 2.10(Reservation of Rights), following the publication of the Tender Documents, theEligible Participants will be invited to submit a bid in accordance with theprovisions of the Tender Documents.Participants who will be deemed by the INRC to have failed to meet any one ofthe Pre-Qualification Requirements will not be announced as EligibleParticipants.8.4. Rejection of the Pre-Qualification SubmissionsWithout derogating from the INRC’s rights under the Invitation and under theLaw, the INRC reserves the right:8.4.1. to reject any or all Pre-Qualification Submissions.8.4.2. to reject any Pre-Qualification Submission in the event that the INRCis of the opinion that such Pre-Qualification Submission or any partthereof does not conform to the requirements of the Invitation.8.4.3. to waive minor irregularities or errors in any Pre-QualificationSubmission if it appears to the INRC that such irregularities or errorswere made inadvertently or are of a minor nature.8.5. Disqualification of the Pre-Qualification SubmissionsWithout derogating from the rights of the INRC under the Invitation and underLaw, the INRC will be entitled to disqualify any Participant, or impose anycondition or instruction with respect to its participation in the Pre-QualificationStage and/or the Tender Selection Stage in the following events:8.5.1. Any changes of the Members or their Holdings in the Participant;changes in the Control of a Related Entity or a Parent Companydirectly controlling the Member or in the Control of a Member in aRelated Entity; change of an Entity demonstrating compliance with anyor all of the Pre-Qualification Requirements; or change of the MajorSubcontractors; (for purposes of this Section, Member, Related Entity,

- 40 -an Entity demonstrating compliance with the Pre-QualificationRequirements, or a Major Subcontractor, shall be referred to as a"Participator"), without the prior approval of the INRC;8.5.2. The commencement of bankruptcy, receivership, liquidation orreorganization proceedings against a Participator or any similarsituation, unless such proceedings are discharged within a reasonableperiod of time, as determined by the INRC, or if an interim orpermanent receiver or liquidator is appointed over a Participator, or if aParticipator has become insolvent;8.5.3. The commencement of any voluntary action for the liquidation of anyParticipator, except for the purposes of merger or restructuring onterms approved by the INRC in writing;8.5.4. In the event that any of the Entities required to submit a statementpursuant to Sections 3.2 (Members of the Participant) or 3.3 (MajorSub-Contractors), has been convicted in an Offence, or in the event anycriminal proceedings with respect to an Offence are being conductedagainst such Entity;8.5.5. In the event that any Participator (including Interested Parties therein,directors or managers thereof) is a resident or national of a hostile statewhich does not have diplomatic relations with the State and/or of acountry which does not have full trade relations with the State;8.5.6. Employment or engagement of any Entity as defined under Section2.11 (Advisors to the INRC) by any Participator, directly or indirectly,for the purposes of the Pre-Qualification Stage, without the priorwritten approval of the INRC;8.5.7. In the event of unusual events which materially and adversely affect, tothe INRC judgment, the Participator’s and/or the Participator'sprofessional and/or financial ability to execute the Project; and8.5.8. The submission of any false or misleading information to the INRCThe Participant shall be required to notify the INRC of the existence, during thePre-Qualification Stage, of any of the events described in this Section 8.5, within

- 41 -a reasonable period of time, under the circumstances. The INRC may base itsdecision under this Section 8.5 on the information provided by the Participant aswell as on any other information available to it, and may request the Participantto provide it with additional information, as the INRC deems necessary.8.6. Issuance of the Tender Documents; Update StatementWithout derogating from the generality of the provisions of Section 2.10(Reservation of Rights), it is expected that pursuant to the Tender Documents,each Eligible Participant will be required to include a statement detailing anyand all changes with respect to the Participant, its Members, and, if applicable,its Related Entities, Parent Companies or its Major Subcontractors, which willhave occurred since the date of the Pre-Qualification Submission. It is expectedthat even in the absence of any changes, a statement to that effect will berequired. In addition, pursuant to the Tender Documents Each EligibleParticipant shall be required to submit its Members and Parent Companies (isapplicable) most recent available audited Financial Statements on the BidSubmission Date.The INRC will review the information and, without derogating from its rightsunder Law or under the Tender Documents, shall be entitled to either disqualifyany Eligible Participant in the event that such Eligible Participant will no longermeet the requirements of this Invitation or impose any condition or instructionon its participation in the Tender Selection Stage.

- 42 -APPENDIX ADEFINITIONS"Addenda" Shall have the meaning ascribed thereto in Section 2.8.1(Addenda) of this Invitation.“Average Operating Cash Shall have the meaning ascribed thereto in Section 5.3.1Flow”of this Invitation.INRC Shall have the meaning ascribed thereto in Section 1.1(General Introduction) of this Invitation.“Clarifications” Shall have the meaning ascribed thereto in Section 2.8.1(Addenda) of this Invitation.“Contractor” Shall have the meaning ascribed thereto in Section 1.2(The Selection Process) of this Invitation."Conference" Shall have the meaning ascribed thereto in Section 2.9.1(Conference) of this Invitation.“Construction” Shall have the meaning ascribed thereto in Section 4.7.1of this Invitation."Control"Shall have the meaning ascribed thereto in Section 1 ofthe Banking Law (Licencing) 1968."Eligible Participant" Shall have the meaning ascribed thereto in Section 8.3(Announcement of Eligible Participants) of thisInvitation."Entity" Any corporation, company, voluntary association,partnership, trust or unincorporated association."Financial Statement" Shall mean for each entity its annual audited consolidatedfinancial statement."Financial Pre Qualification Shall have the meaning ascribed thereto in Section 5.1Requirements"(Financial Pre-Qualification Requirements – GeneralProvisions) of this Invitation.

- 43 -Holdings Shall have the meaning ascribed thereto in Section 3.2.2of the Invitation.“Integration”Shall have the meaning ascribed thereto in Section4.5.2.2 of this Invitation."Interested Parties"Shall have the meaning ascribed thereto in TheCommunication (Bezeq and Broadcasting) Law 1982‏.("בעל עניין")‏"Invitation"Shall mean this invitation to pre-qualify for participationin an international tender for the execution of the Akko-Carmiel and Haifa-Bet Shean Rail Lines, including theappendices to this Invitation.“Israel Railways”Shall have the meaning ascribed thereto in Section1.6.1.4 of this Invitation."Law(s)"The various national (or state) laws and legislation,statutes, ordinance, codes, and regulations as enacted bythe State, and any by-laws, codes and regulations andprecedents enacted by the relevant authorities ormunicipalities, as modified, amended, replaced or createdfrom time to time.“Major Sub-Contractor” Shall have the meaning ascribed thereto in Section 3.3.1of this Invitation."Member" Shall have the meaning ascribed thereto in Section 3.2.1(Definition of Members of a Participant) of thisInvitation."Offence"Shall mean a criminal offence, in Israel or abroad, whichconstitutes a felony ‏("עוון")‏ or worse, or another criminaloffence which resulted in prison sentence of at least one(1) year (or longer), and which verdict was given duringthe last seven (7) Years.Parent CompanyAn Entity which exercises Control over a Memberseeking to rely on the financial results thereof for thepurpose of demonstrating the Financial Pre-QualificationRequirements.

- 44 -"Participant" Shall have the meaning ascribed thereto in Section 3.1(the Participant) of this Invitation."Participator" Shall have the meaning ascribed thereto in Section 8.5.1of this Invitation."Pre-QualificationThe Professional Pre-Qualification Requirements and theRequirements"Financial Pre-Qualification Requirements."Pre-Qualification Stage" Shall mean the Pre-Qualification Stage commencingupon the issuance of this Invitation, and ending upon theannouncement of Eligible Participants."Pre-Qualification Submission" The complete written pre qualification submission, andcompleted Forms pursuant to this Invitation, as submittedby a Participant."Pre-Qualification Submission Shall have the meaning ascribed thereto in Section 7.9Date"(Pre-Qualification Submission Date) of this Invitation.“Professional Pre-Qualification Shall have the meaning ascribed thereto in Section 4Requirements”(Professional Pre-Qualification Requirements) of thisInvitation“Project” Shall have the meaning ascribed thereto in Section 1.1(General Introduction) of this Invitation.“Rail Lines”The Akko Carmiel rail line and the Haifa – Bet Shean railline.“Railway Project” Shall have the meaning ascribed thereto in Section 4.1.4of this Invitation“Railway Facilities Works” Shall have the meaning ascribed thereto in Section4.3.3.1 of this Invitation“Related Entity Shall have the meaning ascribed thereto in Section 4.7.2of this Invitation."State"State of Israel."The Tender Committee" Committee appointed by the INRC in order to controland manage the Pre-Qualification Stage.“The Tender Documents” Shall have the meaning ascribed thereto in Section 1.4(The Tender Selection Stage) to this Invitation.

- 45 -“The Tender Selection Stage” Shall have the meaning ascribed thereto in Section 1.4(The Tender Selection Stage) to this Invitation.“Tunnel Systems”Shall have the meaning ascribed thereto in Section4.5.2.1 of this Invitation.“Turnover” Shall have the meaning ascribed thereto in Section 5.2(Turnover) of this Invitation."Year(s)"The twelve (12) months period immediately precedingthe Pre-Qualification Submission Date.

- 46 -APPENDIX BLIST OF ADVISORS1. ROL Road and Transportation Engineering (1986) Ltd., Projectmanagement2. INECO (Spain), Track design3. Touchstone Renard (UK), QA and H&S4. Topaz - Electrical Engineering5. Plancon Architects6. AES – HVAC eng.7. Mr. Meir Roshental, Water supply design8. Mr. Jacob Friedman, Safety consultant9. MNS Ltd., Financial and Economic advisors10. S Engel Engineering, Construction engineering11. Weinstock Zecler & Co., Attorneys-at-Law, Legal Advisors12. Israel Railways

- 47 -Annex C – General Specification of the Project’s Scope of WorkAs detailed in Section 1.6 (Project Information and Scope of Work) of theInvitation, the Project works shall include, inter alia, the construction of railwaysuperstructure, telecommunication systems, energy building construction and tunnelsystems. This Annex C contains a general specification of the principal elements tobe included within the Projects scope of work.1. Construction of the SuperstructureBallast tracks shall be assembled in one of the following constructionmethods, as shall be proposed by the Bidder as part of its proposal:Grid assemblyLong bar assemblyShort bar assembly2. Fixed Communications NetworkThe Contractor shall be required to perform the following tasks: Supply and installation of the necessary equipment, as shall be detailedin the Tender Documents; Testing and commissioning of the necessary equipment responsibilities and undertakings during a warranty periodAll in accordance with the requirements as shall be detailed in the TenderDocuments3. The Signaling SystemThe Signaling system will be delivered and installed by Thales and does notcomprise part of the Projects works. The Contractor will be required tocoordinate its works with Thales in order to assure compliance with therequirements of the Tender Documents and avoid construction delays. Inaddition, the Contractor shall be responsible for the integration of the systemwith other systems included in the project (including during the testing andcommissioning period).

- 48 -4. The Electrification SystemElectrification system shall be installed only in the Akko-Carmiel Rail Line.The system will be executed by Israel Railway, and shall not comprise partof the Contractor’s scope of work. Without derogating from the foregoing, aspart of the Project the Contractor will be responsible for the integration ofthe electrification system with other system included in the Project (includingduring the testing and commissioning period). The Contractor will berequired to coordinate its works with the Israel Railway (or anyone on itsbehalf) to assure compliance with the requirements of the Tender Documentsand avoid construction delays.5. Construction of Work BasesThe Contractor shall be required to implement work bases. Such works shallinclude, inter alia, the following elements:EarthworksRail store slabGrid assembly slabSleeper stock slabWeigh bridge for trucksRoad access and pavementRepair workshopStore yard.UtilitiesOffices6. Tunnel system supply, installation, integration, testing andcommissioning:The works for the supply, installation, integration, testing and commissioningshall include, inter alia:A. Tunnel equipment supply and installation PLC (Programmable Logic Controller) and I/O cards. Communication Card TCP/IP compatible

- 49 -Electrical connectionEmergency batteries or UPS systemConnectors, Copper, Fibre Optic cables and sensors connectionRedundancy Power SupplySwitch TCP/IP connection to main NetworkFire detection and suppression systemVentilation systemWater / pumping systemSecurity systemPA systemLightingIR TelephoneEquipment/control rooms utilitiesB. SCADA software development PLC (Programmable Logic Controller) and I/O cards. Server/Client communications architecture. Graphical User Interface and Data Base design7. Slab track Assembly.Main stages for assembling slab track are stated below:Topographical survey of the network and point compensationVerification of the bed levellingSleeper distributionRail transport in the tunnelAuxiliary track assemblySleeper positioningRail positioning, sleeper squaring, track spiking and clampingLevelling spindle positioning, track alignment and levellingTrack concretingElectrochemical and aluminothermy welding.Stress neutralization of the Welded Rail Bar and last welding

- 50 -8. Construction of Energy buildingAs part of the works, the Contractor shall be required to construct energybuilding in the Gillon east portal and technical rooms in the connectingtunnels.