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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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N/A
(Translation of Registrant’s
name into English)
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Israel
(Jurisdiction of incorporation
or organization)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Ordinary Shares,
par-value NIS 0.13 each
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The Nasdaq Global Market
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Large Accelerated filer
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·
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Digital Video and Streaming Based Products and Services or Video Technologies Business (collectively, "Video Solutions Business"
) – development, marketing and sale of high quality equipment for a wide range of professional video applications in the broadband IPTV, broadcast, government, enterprise and post-production markets.
|
|
·
|
Fixed Income Real-Estate
– investments in fixed-income real estate assets.
|
Year Ended December 31,
|
||||||||||||||||||||
Consolidated Statement of Operations Data:
|
2005
|
2006
|
2007
|
2008
|
2009
|
|||||||||||||||
(U.S. dollars in thousands, except per share data)
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Video solutions
|
$ | 19,343 | $ | 17,977 | $ | 22,977 | $ | 19,901 | $ | 13,149 | ||||||||||
Fixed income real estate
|
- | - | - | - | 272 | |||||||||||||||
Total revenues
|
$ | 19,343 | $ | 17,977 | $ | 22,977 | $ | 19,901 | $ | 13,421 | ||||||||||
Costs and expenses:
|
||||||||||||||||||||
Cost of video solutions operations
|
7,808 | 7,716 | 11,387 | 9,754 | 6,537 | |||||||||||||||
Research and development, net
|
4,001 | 4,208 | 5,362 | 6,375 | 3,725 | |||||||||||||||
Selling and marketing, net
|
8,798 | 8,288 | 7,895 | 8,964 | 5,763 | |||||||||||||||
General and administrative
|
1,892 | 2,134 | 2,276 | 2,931 | 2,601 | |||||||||||||||
Cost of real estate operation | 125 | |||||||||||||||||||
Total costs and expenses
|
22,499 | 22,346 | 26,920 | 28,024 | 18,751 | |||||||||||||||
Operating loss
|
(3,156 | ) | (4,369 | ) | (3,943 | ) | (8,123 | ) | (5,330 | ) | ||||||||||
Other income (expenses), net
|
(622 | ) | (171 | ) | (327 | ) | 218 | - | ||||||||||||
Financial income (loss), net
|
1,583 | 1,405 | (31 | ) | 270 | 617 | ||||||||||||||
Net (loss) income before tax
|
(2,195 | ) | (3,135 | ) | (4,301 | ) | (7,635 | ) | (4,713 | ) | ||||||||||
Provision for income tax
|
(73 | ) | - | |||||||||||||||||
Net (loss) income after income tax
|
(2,195 | ) | (3,135 | ) | (4,374 | ) | (7,635 | ) | (4,713 | ) | ||||||||||
Equity in losses of affiliated companies and gain from sale of investment in affiliated company
|
- | - | (2,769 | ) | (1,930 | ) | 4,773 | |||||||||||||
Net income (loss) from continuing operations
|
$ | (2,195 | ) | $ | (3,135 | ) | $ | (7,143 | ) | (9,565 | ) | 60 | ||||||||
Income (loss) related to discontinued operations (1)
|
(1,250 | ) | 15 | (30 | ) | 20 | - | |||||||||||||
Net income (loss)
|
$ | (3,445 | ) | $ | (3,120 | ) | $ | (7,173 | ) | (9,545 | ) | 60 | ||||||||
Net (loss) income per share from continuing operations:
|
||||||||||||||||||||
Basic
|
$ | (0.17 | ) | $ | (0.23 | ) | $ | (0.53 | ) | $ | (0.63 | ) | $ | 0.00 | ||||||
Diluted
|
$ | (0.17 | ) | $ | (0.23 | ) | $ | (0.53 | ) | $ | (0.63 | ) | $ | 0.00 | ||||||
Basic and diluted earnings per share from discontinued operations
|
$ | (0.09 | ) | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||
Net income (loss) per share
|
||||||||||||||||||||
Basic and diluted
|
$ | (0.26 | ) | $ | (0.23 | ) | $ | (0.53 | ) | $ | (0.63 | ) | $ | 0.00 | ||||||
Weighted average shares used in computing net income (loss) per share (in thousands):
|
||||||||||||||||||||
Basic
|
13,188 | 13,431 | 13,602 | 15,159 | 16,534 | |||||||||||||||
Diluted
|
13,188 | 13,431 | 13,602 | 15,159 | 16,540 |
December 31,
|
||||||||||||||||||||
Consolidated Balance Sheet Data:
|
2005
|
2006
|
2007
|
2008
|
2009
|
|||||||||||||||
(U.S. dollars in thousands)
|
||||||||||||||||||||
Cash, cash equivalents and short term investment in marketable securities net
|
$ | 18,199 | $ | 40,695 | $ | 18,387 | $ | 11,386 | $ | 28,651 | ||||||||||
Working capital
|
16,383 | 40,342 | 20,098 | 9,610 | 29,254 | |||||||||||||||
Long term investment in marketable securities
|
26,742 | 2,207 | - | - | - | |||||||||||||||
Total assets
|
58,346 | 60,974 | 51,932 | 47,306 | 63,350 | |||||||||||||||
Long term loans and capital lease obligations, including current maturities
|
- | - | - | - | 18,262 | |||||||||||||||
Capital Stock
|
118,508 | 119,720 | 120,706 | 126,142 | 126,299 | |||||||||||||||
Total shareholders’ equity
|
$ | 44,836 | $ | 44,494 | $ | 39,164 | $ | 35,011 | $ | 35,238 |
v
|
The timing of purchases of our products by system integrators and other large customers;
|
v
|
The rate of acceptance of new products we introduce;
|
v
|
The loss of major customers;
|
v
|
Product introductions and other actions taken by our competitors;
|
v
|
Market acceptance of IPTV video services;
|
v
|
Changing networking standards in the video solutions industry and our ability to anticipate and react to such changes in a timely manner;
|
v
|
Changes in sales and distribution environments and costs;
|
v
|
Fluctuations in manufacturing yields and delays in product shipments;
|
v
|
The purchase or failure to purchase fixed-income real-estate assets;
|
v
|
Changes in the availability, cost and terms of financing;
|
v
|
The ongoing need for capital improvements;
|
v
|
Personnel changes;
|
v
|
Changes in foreign exchange rates;
|
v
|
General economic conditions, particularly in those countries or regions where we sell our products; and
|
v
|
Fluctuations in foreign exchange rates between the USD and other currencies relevant to the location of our real estate properties
|
v
|
The entering into new businesses;
|
v
|
The announcement of new products, services or service enhancements by us or our competitors;
|
v
|
Quarterly variations in our results of operations or in our competitors’ results of operations;
|
v
|
Changes in earnings estimates or recommendations by securities analysts;
|
v
|
Perceptions of the video solutions and networking industry’s relative strength or weakness;
|
v
|
Developments in our industry and change in demand for our products;
|
v
|
General market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors;
|
v
|
Seizure of a substantial business opportunity by our competitors or us;
|
v
|
Availability of funding resources for the acquisition of new real estate assets;
|
v
|
Fluctuations in foreign exchange rates between the USD and other currencies relevant to the location of our real estate properties; and
|
v
|
Changes in interest rates.
|
v
|
Additional operating expenses without additional revenues;
|
v
|
Potential dilutive issuances of equity securities;
|
v
|
The incurrence of debt and contingent liabilities;
|
v
|
Amortization of goodwill and other intangibles;
|
v
|
Research and development write-offs;
|
v
|
Impairment charges; and
|
v
|
Other acquisition-related expenses.
|
v
|
H.264 SD, H.264 HD, MPEG I/II, MXF, AAC, Flash, streaming servers and HD video encoding tools provided by technological partners;
|
v
|
Encoding and Decoding S/W’s provided by Main concept;
|
v
|
Various modules, which are integrated in our systems, both for the MGW2000, MGW200/400, MGW Flash, MGW5100, MGW 1100, MGW HD and the MGW1000 including: Encoding module by Ateme S.A., Switches supplied by PTI (Performance Technologies Inc.), Interface by Intel Corporation, Hosts supplied by Kontron AG, backplane boards by Kaparel Corporation Pentium, CPU modules supplied by Kontron and Compact Pci platforms supplied by EPS (Israel) TECH 1992 Ltd., Elma Electronic Israel Ltd and Dan-el Technologies Ltd.;
|
v
|
Digital Signal Processing, or DSP, compression techniques, manufactured by Equator Inc. and TI, which are used in our MGW X100 product line and Movie Maker 400 products;
|
v
|
Video compression chips manufactured by Fujitsu, Magnum and NEL;
|
v
|
Audio Analog to Digital Converters (A/D), Digital to Analog Converters (D/A) and decompression chips manufactured by Crystal Semiconductor Corporation, or Crystal, a subsidiary of Cirrus Logic, which are included in our encoders and decoders;
|
v
|
Freescale, Inc.’s DSPs, which are included in our decoders and encoders;
|
v
|
A video decoding chip manufactured by IBM Corp;
|
v
|
SDI interface chips manufactured by Gennum Corporation;
|
v
|
Microprocessor and PCI bridge devices from Intel that are used in our MediaPump and MovieMaker boards;
|
v
|
A video processing chipset from Gennum, which is used in our MM2X0s;
|
v
|
Programmable devices by Altera Corporation and Xilinx Inc., which are used in all our product lines; and
|
v
|
Servers provided by EIM Systems & Components (1999) Ltd, Intel and IBM.
|
|
·
|
failure to pursue other beneficial opportunities as a result of the focus of management of each of the companies on the sale, without realizing any of the anticipated benefits of the sale;
|
|
·
|
the market price of our ordinary shares may decline to the extent that the current market price reflects a market assumption that the sale will be completed;
|
|
·
|
we may experience negative reactions to the termination of the sale from licensors, collaborators, suppliers, customers or other strategic partners; and
|
|
·
|
our costs incurred related to the sale, such as legal and accounting fees, must be paid even if the sale is not completed.
|
·
|
We may experience difficulties in finding suitable real-estate properties for investment, either at all or at viable prices;
|
·
|
We may be unable to proceed with the acquisition of fixed income properties because we cannot obtain financing on favourable terms. We may require substantial up-front expenditures for property acquisition. Accordingly, we may require substantial amounts of cash and financing from banks and other capital resources (such as institutional investors and/or the public) for our fixed income real estate operations. We cannot be certain that such external financing would be available on favourable terms or on a timely basis or at all;
|
·
|
We may have difficulties leasing real-estate properties. The fixed income real-estate sector relies on the presence of tenants in the real-estate assets. The failure of a tenant to renew its lease, the termination of a tenant’s lease, or the bankruptcy or economic decline of a tenant can have a material adverse effect on the economic performance of the real-estate asset. There can be no assurance that if a tenant were to fail to renew its lease, we would be able to replace such tenant in a timely manner or that we could do so without incurring material additional costs;
|
·
|
The ability to collect rents depends on the solvency of the tenants. Tenants may be in default or not pay on time, or we may need to reduce the amount of rents invoiced by lease incentives, to align lease payments with the financial situation of some tenants. In all these cases, tenant insolvency may hurt our operational results;
|
·
|
Real estate properties in general are relatively illiquid. Such illiquidity may affect the ability to dispose of or liquidate part of real-estate assets in a timely fashion and at satisfactory prices in response to changes in the economic environment, the real estate market or other conditions; and
|
·
|
Properties could suffer physical damage caused by fire or other causes, resulting in losses which may not be fully compensated by insurance. In addition, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, terrorism or acts of war that may be uninsurable or are not economically insurable. Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war, also might result in insurance proceeds being insufficient to repair or replace a property if it is damaged or destroyed. Under such circumstances, the insurance proceeds may be inadequate to restore the economic position with respect to the affected properties. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in the affected property as well as anticipated profits from that property. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future.
|
v
|
The judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the judgment;
|
v
|
The judgment can no longer be appealed;
|
v
|
The obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and
|
v
|
The judgment is executory in the state in which it was given.
|
v
|
The judgment was obtained by fraud;
|
v
|
There was no due process;
|
v
|
The judgment was rendered by a court not competent to render it according to the laws of private international law in Israel;
|
v
|
The judgment is at variance with another judgment that was given in the same matter between the same parties and which is still valid; or
|
v
|
At the time the action was brought in the foreign court a suit in the same matter and between the same parties was pending before a court or tribunal in Israel.
|
|
·
|
Digital Video and Streaming Based Products and Services or Video Technologies Business (collectively, "
Video Solutions Business"
)
– development, marketing and sale of high quality equipment for a wide range of professional video applications in the broadband IPTV, broadcast, government, enterprise and post-production markets.
|
|
·
|
Fixed Income Real-Estate
– investments in fixed-income real estate assets.
|
v
|
H.264 SD, , H.264 HD, MPEG I/II, MXF, AAC, Flash, streaming servers and HD video encoding tools provided by technological partners;
|
v
|
Encoding and Decoding S/W’s provided by Main concept;
|
v
|
Various modules, which are integrated in our systems, both for the MGW2000, MGW200/400, MGW Flash, MGW5100, MGW 1100, MGW HD and the MGW1000 including: Encoding module by Ateme, Switches supplied by PTI (Performance Technologies Inc.), Interface by Intel, Hosts supplied by Kontron, backplane boards by Kaparel Corporation Pentium, CPU modules supplied by Kontron and Compact Pci platforms supplied by EPS (Israel) TECH 1992 Ltd., Elma Electronic Israel Ltd and Dan-el Technologies Ltd;
|
v
|
Digital Signal Processing, or DSP, compression techniques, manufactured by Equator Inc. and TI, which are used in our MGW X100 product line and Movie Maker 400 products;
|
v
|
Video compression chips manufactured by Fujitsu, Magnum and NEL;
|
v
|
Audio Analog to Digital Converters (A/D), Digital to Analog Converters (D/A) and decompression chips manufactured by Crystal Semiconductor Corporation, or Crystal, a subsidiary of Cirrus Logic, which are included in our encoders and decoders;
|
v
|
Freescale, Inc.’s DSPs, which are included in our decoders and encoders;
|
v
|
A video decoding chip manufactured by IBM;
|
v
|
SDI interface chips manufactured by Gennum;
|
v
|
Microprocessor and PCI bridge devices from Intel that are used in our MediaPump and MovieMaker boards;
|
v
|
A video processing chipset from Gennum, which is used in our MM2X0s;
|
v
|
Programmable devices by Altera and Xilinx, which are used in all our product lines; and
|
v
|
Servers provided by EIM Systems & Components (1999) Ltd, Intel and IBM.
|
·
|
purchase of real estate mainly in Central and Western Europe, North America and Israel.
|
·
|
developing and improving existing real estate;
|
·
|
maximize the leasing of existing properties to commercial users;
|
·
|
increase and develop unused building rights in our existing properties; and
|
·
|
acquire additional commercial real estate and fixed-income assets in light of market conditions, while diversifying our real estate property base.
|
|
·
|
Digital Video and Streaming Based Products and Services or Video Technologies Business (collectively, "
Video Solutions Business"
) – development, marketing and sale of high quality equipment for a wide range of professional video applications in the broadband IPTV, broadcast, government, enterprise and post-production markets.
|
|
·
|
Fixed Income Real-Estate
– investments in fixed-income real estate assets.
|
Year Ended December 31,
|
||||||||||||
Product Line
|
2007
|
2008
|
2009
|
|||||||||
Video Technology
|
$ | 8,923 | $ | 6,420 | $ | 3,672 | ||||||
IPTV
|
14,054 | 13,481 | 9,477 | |||||||||
Fixed Income Real Estate
|
- | - | 272 | |||||||||
Total
|
$ | 22,977 | $ | 19,901 | $ | 13,421 |
Year Ended December 31,
|
||||||||||||
Region
|
2007
|
2008
|
2009
|
|||||||||
North America
|
47 | % | 54 | % | 56 | % | ||||||
Europe
|
31 | % | 21 | % | 14 | % | ||||||
Eastern Asia
|
15 | % | 21 | % | 25 | % | ||||||
Other countries, including Israel
|
7 | % | 4 | % | 5 | % |
Year Ended December 31
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Revenues
|
||||||||||||
Video solutions
|
100 | 100 | 98 | |||||||||
Fixed income real estate
|
- | - | 2 | |||||||||
Total revenues
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Costs and expenses:
|
||||||||||||
Cost of video solutions operations
|
49.6 | 49 | 48.7 | |||||||||
Research and development, net
|
23.3 | 32 | 27.8 | |||||||||
Selling and marketing, net
|
34.4 | 45 | 42.9 | |||||||||
General and administrative
|
9.9 | 14.8 | 19.4 | |||||||||
Cost of real estate operations
|
- | - | 0 | |||||||||
Real estate depreciation and amortization
|
- | - | 0.1 | |||||||||
Total costs and expenses
|
117.2 | 140.8 | 139.7 | |||||||||
Operating income (loss)
|
(17.2 | ) | (40.8 | ) | (39.7 | ) | ||||||
Other income expenses, net
|
(1.4 | ) | 1.1 | - | ||||||||
Financial income (expenses), net
|
(0.1 | ) | 1.3 | 4.6 | ||||||||
(Loss) before provision for tax
|
(18.7 | ) | (38.4 | ) | (35.1 | ) | ||||||
Provision for tax
|
(0.3 | ) | - | - | ||||||||
Net (loss) after income tax
|
(19 | ) | (38.4 | ) | (35.1 | ) | ||||||
Equity in losses of affiliates and gain from sale
of investment in affiliated company
|
(12.1 | ) | (9.7 | ) | 35.6 | |||||||
Net income (loss) from continuing operations
|
(31.1 | ) | (48.1 | ) | 0 | |||||||
(Loss) Income from Discontinued Operations
|
(0.1 | ) | 0.1 | 0 | ||||||||
Net income (loss)
|
(31.2 | )% | (48 | )% | 0 | % |
v
|
Revenue recognition;
|
v
|
Allowance for doubtful debts;
|
v
|
Inventories valuation;
|
v
|
Impairment long- lived assets;
|
v
|
Accounting for stock-based compensation; and
|
v
|
Contingencies.
|
v
|
Taxes
|
|
·
|
Sale of hardware products ("products") and to a lesser extent from sales of software products – The Video Solutions Business revenues.
|
|
·
|
Fixed income real-estate.
|
Amount of Commitment Expiration Per Period
(USD in thousands)
|
||||||||||||||||||||
Other Commercial Commitments
|
Total
|
Less than 1 year
|
1- 3 years
|
4-5 years
|
After 5 years
|
|||||||||||||||
Lines of Credit
|
395 | -- | 395 | -- | -- | |||||||||||||||
Standby Letters of Credit
|
-- | -- | -- | -- | -- | |||||||||||||||
Guarantees
|
143 | -- | 143 | -- | -- | |||||||||||||||
Standby Repurchase Obligations
|
-- | -- | -- | -- | -- | |||||||||||||||
Other Commercial Commitments
|
-- | -- | -- | -- | -- | |||||||||||||||
Total Commercial Commitments
|
538 | -- | 538 | -- | -- |
Name
|
Age
|
Position
|
||
Alex Hilman
|
57
|
Executive Chairman of the Board of Directors
|
||
Shlomo (Tom) Wyler
(1)
|
58
|
President and Chief Executive Officer
|
||
Amir Philips
|
41
|
Chief Financial Officer
|
||
Yaron Comarov
(5)
|
44
|
Vice President of Operations
|
||
Michael Chorpash
(5)
|
45
|
President and Vice President of Sales, Optibase Inc
|
||
Ehud Ardel
(5)
|
41
|
Vice President of Research and Development
|
||
Nir Shalev
(5)
|
41
|
Vice President of Marketing
|
||
Yaron Yunger
|
39
|
Vice President of International Sales and Technical Support
|
||
Dana Tamir-Tavor
(2)
|
60
|
Director
|
||
Orli Garti Seroussi
(1)(2)(3) (4)
|
49
|
Director
|
||
Itzhak Wulkan
(3) (2) (4)
|
58
|
Director
|
||
Danny Lustiger
|
42
|
Director
|
|
·
|
On February 12, 2009, Mr. Eli Sharon resigned from his position as our Vice President Research and Development.
|
|
·
|
On October 1, 2009, Mr. Udi Shani resigned from his position as our Executive Vice President of International Sales and Technical Support.
|
|
·
|
On October 1, 2009, Mr. Yossi Aloni resigned from his position as President of Optibase Inc and Vice President of Marketing.
|
|
·
|
On September 1, 2009,
Shlomo (Tom) Wyler
resigned from his position as Executive Chairman of the Board of Directors.
|
|
·
|
On September 1, 2009, Alex Hilman was appointed as the Executive Chairman of the Board of Directors.
|
|
·
|
On October 28, 2009, Danny Lustiger was appointed as a director of the Company by our Board of Directors.
|
(1)
|
Member of the investment committee
|
(2)
|
Member of the audit committee
|
(3)
|
Member of the compensation committee
|
(4)
|
External Director
|
(5)
|
Following the signing of the asset purchase agreement between the Company, Optibase Inc. and Optibase Technologies Ltd. on March 16, 2010, the Company terminated the employment of such officers, subject to the remainder of their early notice period. For further information, see Item 10.C "Material Contracts".
|
v
|
A breach of the duty of care vis-a-vis us or vis-a-vis another person;
|
v
|
A breach of the fiduciary duty vis-a-vis us, provided that the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;
|
v
|
A monetary obligation imposed on him or her in favor of another person; or
|
v
|
Any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our director or officer.
|
v
|
Any financial liability he or she incurs or imposed on him or her in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court.
|
v
|
Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he or she was ordered to pay by a court, within the framework of proceedings filed against him or her by or on behalf of Optibase, or by a third party, or in a criminal proceeding in which he or she was acquitted, or in a criminal proceeding in which he or she was convicted of a felony which does not require a finding of criminal intent.
|
v
|
Reasonable litigation expenses, including legal fees he or she incurs due to an investigation or proceeding conducted against him or her by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him or her and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offence which does not require criminal intent, within the meaning of the relevant terms in the Companies Law.
|
v
|
Any other obligation or expense in respect of which it is permitted or will be permitted under law to indemnify a director or officer of Optibase.
|
v
|
a breach of the fiduciary duty, except for a breach of the fiduciary duty vis-à-vis the company with respect to indemnification and insurance if the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm the company;
|
v
|
an intentional or reckless breach of the duty of care, except for if such breach was made in negligence;
|
v
|
an act done with the intention of unduly deriving a personal profit; or
|
v
|
a fine imposed on the directors or officers.
|
|
(i)
|
the director holds an academic degree in one of these areas: economics, business administration, accounting, law or public administration;
|
|
(ii)
|
the director holds an academic degree or has other higher education, all in the main business sector of the company or in a relevant area for the board position; or
|
|
(iii)
|
the director has at least five years’ experience in one or more of the following or an aggregate five years’ experience in at least two or more of these: (a) senior management position in a corporation of significant business scope; (b) senior public office or senior position in the public sector; or (c) senior position in the main business sector of the company.
|
|
(i)
|
accounting issues and accounting control issues characteristic to the segment in which the company operates and to companies of the size and complexity of the company;
|
|
(ii)
|
the functions of the external auditor and the obligations imposed on such auditor;
|
|
(iii)
|
preparation of financial reports and their approval in accordance with the companies law and the securities law.
|
|
(i)
|
the majority of shares voted for the election includes at least one-third of the shares of non-controlling shareholders voted at the meeting; or
|
|
(ii)
|
the total number of shares of non-controlling shareholders voted against the election of the external director does not exceed one percent of the aggregate voting rights of the company.
|
December 31,
|
||||||||||||||||||||||||
Division
|
2007
|
2008
|
2009
|
|||||||||||||||||||||
US
|
Israel
|
US
|
Israel
|
US
|
Israel
|
|||||||||||||||||||
Research & Development
|
- | 48 | - | 39 | - | 29 | ||||||||||||||||||
Sales and Technical Marketing
|
8 | 23 | (1) | 12 | 19 | (2) | 10 | 16 | (3) | |||||||||||||||
Marketing
|
2 | 7 | 3 | 7 | 1 | 6 | ||||||||||||||||||
Operations
|
3 | 24 | - | 19 | - | 17 | ||||||||||||||||||
General and Administrative, Finance and Human Resources
|
3 | 14 | 3 | 12 | 2 | 13 | ||||||||||||||||||
Total
|
16 | 116 | 18 | 96 | 13 | 81 | ||||||||||||||||||
132 | 114 | 94 |
(1)
|
This number includes 8 employees in Asia.
|
(2)
|
This number includes 8 employees in Asia.
|
(3)
|
This number includes 8 employees in Asia.
|
Plan
|
Number of options outstanding
|
Number of options
reserved for issuance
|
||||||
1999 Plans
|
939,600 | 2,039,115 | ||||||
2001 Non-statutory share option plan
|
52,000 | 391,060 | ||||||
Total options
|
991,600 |
2,430,175
|
Plan
|
Number of shares outstanding
|
Number of shares
reserved for issuance
|
||||||
2006 Israeli Incentive Compensation Plan
|
14,000 | 112,450 | ||||||
Total shares
|
14,000 | 112,450 |
Name of Beneficial Owner
|
No. Of Ordinary Shares
Beneficially Owned
(1)
|
Percentage of Ordinary Shares Beneficially Owned
|
||||||
Shlomo (Tom) Wyler
(2)
|
7,089,934 | 42.62 | ||||||
Arthur Mayer – Sommer
(3)
|
1,200,000 | 7.26 | ||||||
Prescott Group Capital Management, L.L.C.
(4)
|
2,006,698 | 12.13 | ||||||
Shareholding of all directors and officers as a group (12 persons)
(5)
|
7,363,708 | 43.71 |
(1)
|
Number of shares and percentage ownership is based on 16,536,708 ordinary shares outstanding as of June 21, 2010. Such number excludes: (i) 347,573 ordinary shares held by us or for our benefit, and (ii) 14,000 ordinary shares granted under our 2006 Plan held by a trustee for the benefit of the grantees thereunder, both have no voting or equity rights as of the date hereof or within 60 days thereafter. Beneficial ownership is determined in accordance with rules of the SEC and includes voting and investment power with respect to such shares. Shares subject to options that are currently exercisable or exercisable within 60 days of June 21, 2010 are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not deemed to be outstanding and to be beneficially owned for the purpose of computing the percentage ownership of any other person. All information with respect to the beneficial ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise indicated below, we believe that persons named in the table have sole voting and sole investment power with respect to all the shares shown as beneficially owned, subject to community property laws, where applicable. The shares beneficially owned by the directors include the ordinary shares owned by their family members to which such directors disclaim beneficial ownership.
|
(2)
|
Mr. Shlomo (Tom) Wyler currently serves as a President, Chief Executive Officer and a member in our Board of Directors. The information is based on Amendment No. 10 to Schedule 13D filed by Mr. Wyler on September 10, 2009. Includes 6,983,934 ordinary shares and 100,000 ordinary shares issuable upon exercise of option exercisable within 60 days of June 21, 2010 with an exercise price of $6 per option and expiration date of December 2011 and 6,000 ordinary shares held by a trustee for the benefit of Mr. Shlomo (Tom) Wyler under our 2006 Plan.
|
(3)
|
To our knowledge, the information is accurate as of June 21, 2010 and is based on the website of NASDAQ online whose address is www.nasdaq.net.
|
(4)
|
The information is accurate as of December 31, 2009 and based on Amendment No. 2 to Schedule 13G filed with the SEC by, among others, Prescott Group Capital Management, L.L.C. ("Prescott Capital") on February 12, 2010. The number of shares consists of 2,006,098 ordinary shares of the Company purchased by Prescott Group Aggressive Small Cap, L.P., an Oklahoma limited partnership ("Prescott Small Cap"), Prescott Group Aggressive Small Cap II, L.P., an Oklahoma limited partnership ("Prescott Small Cap II" and together with Prescott Small Cap, the "Small Cap Funds") through the account of Prescott Group Aggressive Small Cap Master Fund, G.P., an Oklahoma general partnership ("Prescott Master Fund"), of which the Small Cap Funds are general partners. Prescott Capital serves as the general partner of the Small Cap Funds and may direct the Small Cap Funds, the general partners of Prescott Master Fund, to direct the vote and disposition of the 2,006,098 ordinary shares of the Company held by the Prescott Master Fund. As the principal of Prescott Capital, Mr. Frohlich may direct the vote and disposition of the 2,006,098 ordinary shares of the Company held by Prescott Master Fund.
|
(5)
|
Includes 7,052,708 ordinary shares and 311,000 ordinary shares issuable upon exercise of options exercisable within 60 days of June 21, 2010. Excludes 14,000 ordinary shares held by a trustee for the benefit of our directors and executive officers under our 2006 Plan, which have not vested on June 21, 2010 or within 60 days thereafter and do not acquire any voting or equity rights.
|
Beneficial Owner –
|
Date of filing
|
No. Of Shares
Beneficially Held
|
||||
Shlomo (Tom) Wyler
|
June 25, 2008
|
5,218,739 | ||||
Shlomo (Tom) Wyler
|
August 14, 2008
|
6,761,448 | ||||
Shlomo (Tom) Wyler
|
August 13, 2009
|
7,285,934 | * |
Beneficial Owner –
|
Date of filing
|
No. Of Shares Beneficially Held
|
||||
MKM Longboat Capital Advisors LLP |
June 27, 2007
|
715,300 | ||||
February 11,
2008
|
1,346,418 | |||||
February 2,
2009
|
- |
Beneficial Owner –
|
Date of filing
|
No. Of Shares Beneficially Held
|
||||
Prescott Group Capital Management, L.L.C.
|
February 14,
2008
|
1,362,192 | ||||
January 6,
2009
|
2,004,698 | |||||
February 12,
2010
|
2,006,098 |
Nasdaq
|
|||||||||
Year
|
High
|
Low
|
|||||||
2005
|
$ | 6.69 | $ | 4.49 | |||||
2006
|
$ | 5.01 | $ | 2.62 | |||||
2007
|
$ | 4.52 | $ | 2.52 | |||||
2008
|
$ | 2.73 | $ | 0.74 | |||||
2009
|
$ | 1.50 | $ | 0.93 | |||||
2008
|
High
|
Low
|
|||||||
First Quarter
|
$ | 2.73 | $ | 1.61 | |||||
Second Quarter
|
$ | 2.2 | $ | 1.59 | |||||
Third Quarter
|
$ | 1.83 | $ | 1.14 | |||||
Fourth Quarter
|
$ | 1.34 | $ | 0.74 | |||||
2009
|
High
|
Low
|
|||||||
First Quarter
|
$ | 1.29 | $ | 0.93 | |||||
Second Quarter
|
$ | 1.50 | $ | 1.02 | |||||
Third Quarter
|
$ | 1.35 | $ | 1.05 | |||||
Fourth Quarter
|
$ | 1.45 | $ | 1.13 | |||||
2010
|
|||||||||
First Quarter
|
$ | 1.43 | $ | 1.20 | |||||
Second Quarter (until June 21, 2010)
|
$ | 1.55 | $ | 1.35 | |||||
Most Recent Six Months
|
High
|
Low
|
|||||||
December 2009
|
$ | 1.45 | $ | 1.27 | |||||
January 2010
|
$ | 1.38 | $ | 1.22 | |||||
February 2010
|
$ | 1.25 | $ | 1.2 | |||||
March 2010
|
$ | 1.43 | $ | 1.22 | |||||
April 2010
|
$ | 1.55 | $ | 1.37 | |||||
May 2010
|
$ | 1.49 | $ | 1.35 | |||||
June 2010 (until June 21, 2010)
|
$ | 1.43 | $ | 1.39 |
v
|
the avoidance of any conflict of interest between the director’s or officer’s position with the company and any other position he or she fulfills or with his or her personal affairs;
|
v
|
the avoidance of any act in competition with the company’s business;
|
v
|
the avoidance of exploiting any of the company’s business opportunities in order to gain a personal advantage for himself or for others; and
|
v
|
the disclosure to the company of any information and documentation relating to the company’s affairs obtained by the director or officer due to his or her position with the company.
|
v
|
deduction of purchase of know-how and patents and/or right to use a patent over an eight-year period ;
|
v
|
the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies and an industrial holding company;
|
v
|
Accelerated depreciation rates on equipment and buildings; and
|
v
|
Expenses related to a public offering on recognized stock markets, are deductible in equal amounts over three years
|
v
|
Extension of the benefit period up to ten years.
|
v
|
An additional period of reduced corporate tax liability at rates ranging between 10% and 25%, depending on the level of foreign (i.e., non-Israeli) ownership of our shares. Those tax rates and the related levels of foreign investment are as set forth in the following table:
|
Rate of
Reduced Tax
|
Reduced Tax
Period
|
Tax Exemption
Period
|
Percent of
Foreign Ownership
|
|||
25
|
1 years
|
6 years
|
0-25%
|
|||
25
|
4 years
|
6 years
|
25-48.99%
|
|||
20
|
4 years
|
6 years
|
49-73.99%
|
|||
15
|
4 years
|
6 years
|
74-89.99%
|
|||
10
|
4 years
|
6 years
|
90-100%
|
Rate of
Reduced Tax
|
Reduced Tax
Period
|
Tax Exemption
Period
|
Percent of
Foreign Ownership
|
|||
25
|
0 years
|
10 years
|
0-25%
|
|||
25
|
0 years
|
10 years
|
25-48.99%
|
|||
20
|
0 years
|
10 years
|
49-73.99%
|
|||
15
|
0 years
|
10 years
|
74-89.99%
|
|||
10
|
0 years
|
10 years
|
90-100%
|
Rate of
Reduced Tax
|
Reduced Tax
Period
|
Tax Exemption
Period
|
Percent of
Foreign Ownership
|
|||
25
|
5 years
|
2 years
|
0-25%
|
|||
25
|
8 years
|
2 years
|
25-48.99%
|
|||
20
|
8 years
|
2 years
|
49-73.99%
|
|||
15
|
8 years
|
2 years
|
74-89.99%
|
|||
10
|
8 years
|
2 years
|
90-100%
|
v
|
The twelve years limitation period for reduced tax rate of 15% on dividend from the Approved Enterprise will not apply.
|
v
|
Similar to the currently available alternative route, exemption from corporate tax on undistributed income for a period of two to ten years, depending on the geographic location of the Benefited Enterprise within Israel, and a reduced corporate tax rate of 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in each year. Benefits may be granted for a term of seven to ten years, depending on the level of foreign investment in the company. If the company pays a dividend out of income derived from the Benefited Enterprise during the tax exemption period, such income will be subject to corporate tax at the applicable rate (10%-25%) in respect of the gross amount of the dividend that we may distribute. The company is required to withhold tax at the source at a rate of 15% from any dividends distributed from income derived from the Benefited Enterprise; and
|
v
|
A special tax route, which enables companies owning facilities in certain geographical locations in Israel to pay corporate tax at the rate of 11.5% on income of the Benefited Enterprise. The benefits period is ten years. Upon payment of dividends, the company is required to withhold tax at source at a rate of 15% for Israeli residents and at a rate of 4% for foreign residents.
|
v
|
broker-dealers,
|
v
|
financial institutions,
|
v
|
certain insurance companies,
|
v
|
investors liable for alternative minimum tax,
|
v
|
tax-exempt organizations,
|
v
|
non-resident aliens of the U.S. or taxpayers whose functional currency is not the U.S. dollar,
|
v
|
persons who hold the ordinary shares through partnerships or other pass-through entities,
|
v
|
investors that actually or constructively own 10 percent or more of our voting shares, and
|
v
|
investors holding ordinary shares as part of a straddle or a hedging or conversion transaction.
|
v
|
an individual who is a citizen or, a resident of the United States for U.S. federal income tax purposes;
|
v
|
a partnership, corporation or other entity created or organized in or under the laws of the United States or any political subdivision thereof;
|
v
|
an estate whose income is subject to U.S. federal income tax regardless of its source;
|
v
|
a trust if: (a) a court within the United States is able to exercise primary supervision over administration of the trust, and (b) one or more United States persons have the authority to control all substantial decisions of the trust; or
|
v
|
a trust, if the trust were in existence and qualified as a "United States person," within the meaning of the Code, on August 20, 1996 under the law as then in effect and elected to continue to be so treated.
|
—
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions;
|
|
—
|
provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
|
—
|
provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
|
2008
|
2009
|
|||||||
Audit fees
(1)
|
95 | 95 | ||||||
Audit-related fees
(2)
|
100 | -- | ||||||
Tax fees
(3)
|
49 | -- | ||||||
All other fees
(4)
|
-- | -- | ||||||
Total
|
244 | 95 |
(1)
|
Audit fees consist of fees billed for the annual audit services engagement and other audit services, which are those services that only the external auditor can reasonably provide, and include the group audit; statutory audits; comfort letters and consents; attest services; and assistance with and review of documents filed with the SEC.
|
(2)
|
Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements or that are traditionally performed by the external auditor, and include consultations concerning financial accounting and reporting standards; internal control reviews of new systems, programs and projects; review of security controls and operational effectiveness of systems; review of plans and control for shared service centers, due diligence related to acquisitions; accounting assistance and audits in connection with proposed or completed acquisitions; and employee benefit plan audits.
|
(3)
|
Tax fees include fees billed for tax compliance services, including the preparation of original and amended tax returns and claims for refund; tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from taxing authority; tax planning services; and expatriate tax planning and services.
|
(4)
|
All other fees include fees billed for training; forensic accounting; data security reviews; treasury control reviews and process improvement and advice; and environmental, sustainability and corporate social responsibility advisory services.
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3 - F-4
|
Consolidated Statements of Operations
|
F-5
|
Statements of Changes in Shareholders’ Equity
|
F-6
|
Consolidated Statements of Cash Flows
|
F-7 - F-8
|
Notes to Consolidated Financial Statements
|
F-9 - F-34
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5
|
|
F-6
|
|
F-7 - F-8
|
|
F-9 - F-36
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 67067, Israel
|
|
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com/il
|
Tel-Aviv, Israel
|
/s/ KOST FORER GABBAY & KASIERER
KOST FORER GABBAY & KASIERER
|
June 30, 2010
|
A Member of Ernst & Young Global
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 11,386 | $ | 28,651 | ||||
Trade receivables (net of allowance for doubtful accounts of $ 355 and $ 414 at December 31, 2008 and 2009, respectively) (Note 16b)
|
3,241 | 2,338 | ||||||
Other accounts receivable and prepaid expenses (Note 4)
|
690 | 4,492 | ||||||
Inventories (Note 5)
|
4,373 | 2,356 | ||||||
Total
current assets
|
19,690 | 37,837 | ||||||
INVESTMENTS IN COMPANIES (Note 6)
|
24,614 | 700 | ||||||
LONG-TERM INVESTMENTS:
|
||||||||
Long-term lease deposits (Note 10a)
|
309 | 233 | ||||||
Severance pay fund
|
1,465 | 1,230 | ||||||
Total
long-term investments
|
1,774 | 1,463 | ||||||
PROPERTY, EQUIPMENT AND OTHER ASSETS, NET (Note 7)
|
||||||||
Property and equipment, net
|
1,228 | 636 | ||||||
Real Estate Property, net
|
- | 22,080 | ||||||
Other assets, net
|
- | 634 | ||||||
Total
property, equipment and other assets
|
1,228 | 23,350 | ||||||
Total
assets
|
$ | 47,306 | $ | 63,350 |
December 31,
|
||||||||
2008
|
2009
|
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of long term loan (Note 9)
|
$ | - | $ | 365 | ||||
Trade payables
|
2,276 | 1,095 | ||||||
Deferred revenues
|
884 | 709 | ||||||
Other accounts payable and accrued expenses (Note 8)
|
6,920 | 6,315 | ||||||
Total
current liabilities
|
10,080 | 8,484 | ||||||
ACCRUED SEVERANCE PAY
|
2,215 | 1,731 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES (Note 10)
|
||||||||
LONG TERM LOAN, NET OF CURRENT MATURITIES (Note 9)
|
- | 17,897 | ||||||
SHAREHOLDERS' EQUITY (Note 13):
|
||||||||
Share capital -
|
||||||||
Ordinary Shares of NIS 0.13 par value -
Authorized: 30,000,000 shares at December 31, 2008 and 2009; Issued: 16,914,281 shares at December 31, 2008 and 2009; Outstanding: 16,522,058 and 16,536,708 shares at December 31, 2008 and 2009, respectively
|
650 | 650 | ||||||
Additional paid-in capital
|
125,492 | 125,649 | ||||||
Treasury shares (392,223 and 377,573 shares at December 31, 2008 and 2009, respectively)
|
(1,306 | ) | (1,208 | ) | ||||
Accumulated other comprehensive loss
|
- | (54 | ) | |||||
Accumulated deficit
|
(89,825 | ) | (89,799 | ) | ||||
Total
shareholders' equity
|
35,011 | 35,238 | ||||||
Total
liabilities and shareholders' equity
|
$ | 47,306 | $ | 63,350 |
June 30, 2010
|
/s/ Shlomo (Tom) Wyler |
/s/ Amir Philips
|
||
Date of approval of the
|
Tom Wyler
|
Amir Philips
|
||
financial statements
|
President and Chief Executive Officer.
|
Chief Financial Officer
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Revenues:
|
||||||||||||
Video solutions
|
$ | 22,977 | $ | 19,901 | $ | 13,149 | ||||||
Fixed income real estate
|
- | - | 272 | |||||||||
Total revenues
|
22,977 | 19,901 | 13,421 | |||||||||
Costs and expenses:
|
||||||||||||
Cost of video solutions operations
|
11,387 | 9,754 | 6,537 | |||||||||
Research and development, net (Note 16a)
|
5,362 | 6,375 | 3,725 | |||||||||
Selling and marketing
|
7,895 | 8,964 | 5,763 | |||||||||
General and administrative
|
2,276 | 2,931 | 2,601 | |||||||||
Cost of real estate operations
|
- | - | 125 | |||||||||
Total
costs and expenses
|
26,920 | 28,024 | 18,751 | |||||||||
Operating loss
|
(3,943 | ) | (8,123 | ) | (5,330 | ) | ||||||
Other income (expenses), net (Note 11)
|
(327 | ) | 218 | - | ||||||||
Financial income (expenses), net (Note 16c)
|
(31 | ) | 270 | 617 | ||||||||
Loss before taxes on income
|
(4,301 | ) | (7,635 | ) | (4,713 | ) | ||||||
Taxes on income
|
73 | - | - | |||||||||
Loss after taxes on income
|
(4,374 | ) | (7,635 | ) | (4,713 | ) | ||||||
Gain from sale of investment in affiliated company and equity in losses of affiliated companies, net
|
(2,769 | ) | (1,930 | ) | 4,773 | |||||||
Net income (loss) from continuing operations
|
(7,143 | ) | (9,565 | ) | 60 | |||||||
Income (loss) from discontinued operations
|
(30 | ) | 20 | - | ||||||||
Net income (loss)
|
$ | (7,173 | ) | $ | (9,545 | ) | $ | 60 | ||||
Basic and diluted income (loss) per share from continuing operations
|
$ | (0.53 | ) | $ | (0.63 | ) | $ | 0.00 | ||||
Basic and diluted income (loss) per share from discontinued operations
|
$ | (0.00 | ) | $ | 0.00 | $ | 0.00 | |||||
Basic and diluted income (loss) per share
|
$ | (0.53 | ) | $ | (0.63 | ) | $ | 0.00 | ||||
Weighted average number of shares used in computing basic and diluted net income (loss) per share (in thousands):
|
||||||||||||
Basic
|
13,602 | 15,159 | 16,534 | |||||||||
Diluted
|
13,602 | 15,159 | 16,540 |
Ordinary
shares
|
Additional
paid-in
capital
|
Treasury
shares
|
Accumulated
other comprehensive income (loss)
|
Accumulated
deficit
|
Total
comprehensive
loss
|
Total
shareholders'
equity
|
||||||||||||||||||||||
Balance as of January 1, 2007
|
$ | 539 | $ | 119,181 | $ | (2,278 | ) | $ | (339 | ) | $ | (72,609 | ) | $ | 44,494 | |||||||||||||
Exercise of employees stock options
|
2 | 223 | - | - | - | 225 | ||||||||||||||||||||||
Stock-based compensation related to options and unvested shares granted to employees
|
- | 1,013 | - | - | 1,013 | |||||||||||||||||||||||
Issuance of treasury shares upon vesting of unvested shares
|
- | (252 | ) | 500 | - | (248 | ) | - | ||||||||||||||||||||
Other comprehensive loss:
|
||||||||||||||||||||||||||||
Unrealized gain on available-for-sale marketable securities, net
|
- | - | - | 605 | - | $ | 605 | 605 | ||||||||||||||||||||
Net loss
|
- | - | - | - | (7,173 | ) | (7,173 | ) | (7,173 | ) | ||||||||||||||||||
Total comprehensive loss
|
$ | (6,568 | ) | |||||||||||||||||||||||||
Balance as of December 31, 2007
|
541 | 120,165 | (1,778 | ) | 266 | (80,030 | ) | 39,164 | ||||||||||||||||||||
Issuance of ordinary shares in a private placement (see Note 13a)
|
109 | 4,891 | - | - | - | 5,000 | ||||||||||||||||||||||
Stock-based compensation related to options and unvested shares granted to employees
|
- | 658 | - | - | - | 658 | ||||||||||||||||||||||
Issuance of treasury shares upon vesting of unvested shares
|
- | (222 | ) | 472 | - | (250 | ) | - | ||||||||||||||||||||
Other comprehensive loss:
|
||||||||||||||||||||||||||||
Unrealized gain on available-for-sale marketable securities, net
|
- | - | - | (266 | ) | - | $ | (266 | ) | (266 | ) | |||||||||||||||||
Net loss
|
- | - | - | - | (9,545 | ) | (9,545 | ) | (9,545 | ) | ||||||||||||||||||
Total comprehensive loss
|
$ | (9,811 | ) | |||||||||||||||||||||||||
Balance as of December 31, 2008
|
650 | 125,492 | (1,306 | ) | - | (89,825 | ) | 35,011 | ||||||||||||||||||||
Stock-based compensation related to options and unvested shares granted to employees
|
- | 221 | - | - | - | 221 | ||||||||||||||||||||||
Issuance of treasury shares upon vesting of unvested shares
|
- | (64 | ) | 98 | - | (34 | ) | - | ||||||||||||||||||||
Other comprehensive loss:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | (54 | ) | - | $ | (54 | ) | (54 | ) | |||||||||||||||||
Net income
|
- | - | - | - | 60 | 60 | 60 | |||||||||||||||||||||
Total comprehensive income
|
$ | 6 | ||||||||||||||||||||||||||
Balance as of December 31, 2009
|
$ | 650 | $ | 125,649 | $ | (1,208 | ) | $ | (54 | ) | $ | (89,799 | ) | $ | 35,238 |
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$ | (7,173 | ) | $ | (9,545 | ) | $ | 60 | ||||
Adjustments required to reconcile net income (loss) to net cash used in operating activities:
|
||||||||||||
Depreciation and amortization
|
1,244 | 1,090 | 1,047 | |||||||||
Impairment of an affiliated company
|
325 | - | - | |||||||||
Gain from sale of investment in affiliated company and equity in losses of an affiliated companies, net
|
2,769 | 1,930 |
(4,773
|
) | ||||||||
Accrued interest and amortization of premium and discount on available-for-sale marketable securities, net
|
(192 | ) | - | - | ||||||||
Realized gain on sale of available-for-sale marketable securities
|
(210 | ) | (274 | ) | - | |||||||
Impairment of available-for-sale marketable securities
|
582 | - | - | |||||||||
Loss on sale of property and equipment
|
2 | - | 8 | |||||||||
Accrued severance pay, net
|
163 | (180 | ) | (249 | ) | |||||||
Compensation related to options and restricted shares granted to employees and directors
|
1,013 | 658 | 221 | |||||||||
Decrease in trade receivables, net
|
491 | 812 | 903 | |||||||||
Decrease (increase) in other accounts receivable and prepaid expenses
|
(715 | ) | 797 | (3,801 | ) | |||||||
Decrease (increase) in inventories
|
(1,507 | ) | 713 | 1,939 | ||||||||
Increase (decrease) in trade payables
|
990 | (477 | ) | (1,182 | ) | |||||||
Decrease in deferred costs
|
500 | - | - | |||||||||
Increase (decrease) in deferred revenues
|
(1,313 | ) | 494 | (175 | ) | |||||||
Increase (decrease) in accrued expenses and other accounts payable
|
(964 | ) | 870 | (605 | ) | |||||||
Gain on sale of intangible assets
|
- | (218 | ) | - | ||||||||
Net cash provided by discontinued operations
|
121 | 43 | - | |||||||||
Net cash used in operating activities
|
(3,874 | ) | (3,287 | ) | (6,607 | ) | ||||||
Cash flows from investing activities:
|
||||||||||||
Proceeds from sale of property and equipment
|
41 | - | 1 | |||||||||
Purchase of property and equipment
|
(945 | ) | (393 | ) | (276 | ) | ||||||
Proceeds from redemption of available-for-sale marketable securities
|
36,173 | 8,482 | - | |||||||||
Proceeds from sale of intangible assets
|
- | 218 | - | |||||||||
Investment in long-term lease deposits
|
(5 | ) | 9 | 76 | ||||||||
Investment in affiliated companies
|
(20,382 | ) | (8,556 | ) | - | |||||||
Investment in other assets
|
- | - | (659 | ) | ||||||||
Investment in real estate property
|
- | - | (22,282 | ) | ||||||||
Proceeds from sale of an affiliated company
|
- | - | 28,691 | |||||||||
Net cash provided by (used in) investing activities
|
14,882 | (240 | ) | 5,551 | ||||||||
Cash flows from financing activities:
|
||||||||||||
Short-term bank credit
|
(3,002 | ) | (634 | ) | - | |||||||
Proceeds from exercise of stock options
|
225 | - | - | |||||||||
Issuance of ordinary shares in a private placement
|
- | 5,000 | - | |||||||||
Proceeds from bank loan
|
- | - | 18,353 | |||||||||
Net cash provided by (used in) financing activities
|
(2,777 | ) | 4,366 | 18,353 | ||||||||
Exchange differences on balances of cash and cash equivalents
|
- | - | (32 | ) | ||||||||
Increase in cash and cash equivalents
|
8,231 | 839 | 17,265 | |||||||||
Cash and cash equivalents at the beginning of the year
|
2,316 | 10,547 | 11,386 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 10,547 | $ | 11,386 | $ | 28,651 |
Year ended December 31,
|
|||||||||||||
2007
|
2008
|
2009
|
|||||||||||
Supplemental disclosure of cash flow activities:
|
|||||||||||||
(a)
|
Non-cash transactions:
|
||||||||||||
Reclassification of inventories into property and equipment
|
$ | 333 | $ | 235 | $ | 77 | |||||||
(b)
|
Cash paid during the year for:
|
||||||||||||
Interest
|
$ | 386 | $ | 49 | $ | 26 |
NOTE 1:-
|
GENERAL
|
a.
|
Optibase Ltd. ("the Company") was incorporated and commenced operations in 1990.
|
b.
|
Discontinued operations:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
a.
|
Use of estimates:
|
b.
|
Financial statements in U.S. dollars:
|
c.
|
Principles of consolidation:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
d.
|
Cash equivalents:
|
e.
|
Inventories:
|
f.
|
Property and equipment:
|
%
|
|
Computers and peripheral equipment
|
20 – 33
|
Office furniture and equipment
|
6 – 20
|
Motor vehicles
|
15
|
Building
|
35
|
Leasehold improvements
|
The shorter of the useful life or term of the lease
|
g.
|
Long-lived assets including intangible assets:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
h.
|
Investments in affiliated companies:
|
i.
|
Revenue recognition:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
j.
|
Research and development costs:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
k.
|
Income taxes:
|
l.
|
Royalty-bearing grants:
|
m.
|
Non-royalty-bearing grants:
|
n.
|
Concentrations of credit risk:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
o.
|
Basic and diluted net earnings (losses) per share:
|
p.
|
Accounting for stock-based compensation:
|
December 31,
|
||||||
2007
|
2008
|
2009
|
||||
Dividend yield
|
0%
|
0%
|
0%
|
|||
Volatility
|
58%
|
58%
|
60%
|
|||
Risk free interest
|
4.6%
|
3% - 4.6%
|
2.36% - 3.69%
|
|||
Expected term (years)
|
4.6
|
4.6
|
4.75
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
q.
|
Severance pay:
|
r.
|
Employee benefit plan:
|
s.
|
Fair value measurements:
|
t.
|
Treasury Shares:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
u.
|
Fair value of financial instruments:
|
Level 1-
|
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
Level 2-
|
Include other inputs that are directly or indirectly observable in the marketplace.
|
Level 3-
|
Unobservable inputs which are supported by little or no market activity.
|
v.
|
Business Combinations:
|
w.
|
Impact of recently issued accounting standards:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 3:-
|
BUSINESS COMBINATION
|
NOTE 3:-
|
BUSINESS COMBINATION (Cont.)
|
Cash paid
|
$ | 22,828 | ||
Land
|
2,818 | |||
Building
|
19,354 | |||
Intangible assets
|
656 | |||
Total purchase price
|
$ | 22,828 |
Year ended
December 31,
|
Year ended
December 31,
|
|||||||
2008
|
2009
|
|||||||
Technology net revenues (audited)
|
$ | 19,901 | $ | 13,149 | ||||
Real estate net revenues (unaudited)
|
1,608 | 1,530 | ||||||
$ | 21,509 | $ | 14,679 | |||||
Technology net income (loss) (audited)
|
$ | (9,545 | ) | $ | 212 | |||
Real estate net income (unaudited)
|
505 | 426 | ||||||
$ | (9,040 | ) | $ | 638 | ||||
Technology Basic and diluted net earnings (loss) per share
|
$ | (0.63 | ) | $ | 0.01 | |||
Real estate Basic and diluted net earnings per share
|
0.03 | 0.03 | ||||||
$ | (0.60 | ) | $ | 0.04 |
NOTE 4:-
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Government authorities
|
$ | 455 | $ | 228 | ||||
Prepaid expenses
|
85 | 151 | ||||||
Short-term deposit (1)
|
- | 3,750 | ||||||
Interest receivable
|
5 | 131 | ||||||
Others
|
145 | 232 | ||||||
$ | 690 | $ | 4,492 |
|
(1)
|
Short-term deposit was paid by the Company to a third-party in connection with potential transaction to acquire interest in an office building in the U.S.A. Subsequent to December 31, 2009, this transaction was terminated and the Company received the deposit from the third party.
|
NOTE 5:-
|
INVENTORIES
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Raw materials and components
|
$ | 1,707 | $ | 1,035 | ||||
Work in progress
|
324 | 149 | ||||||
Finished goods
|
2,342 | 1,172 | ||||||
$ | 4,373 | $ | 2,356 |
NOTE 6:-
|
INVESTMENTS IN COMPANIES
|
|
a.
|
The Company holds on a fully diluted basis approximately 4.34% of Mobixell Network, Inc. equity. The investment is treated on the basis of the cost method. As of December 31, 2008 and 2009, the investment's balance amounts to $ 700.
|
|
b.
|
The Company holds approximately 32% on a fully diluted basis, of V.Box Communication Ltd. ("V. Box"), a privately held Company. The Company recorded impairment losses in the amount of $ 325 in the year ended December 31, 2007, which are included in the statement of operations under other expenses (income), net. Through December 31, 2007, the Company has impaired the investment and the balance of the investment was $ 0. Optibase did not invest additional amounts in 2008 and 2009.
|
|
c.
|
In January 2007, the Company purchased 3,035,223 Ordinary shares of Scopus, representing approximately 23% of Scopus then issued share capital, from Koor Corporate Venture Capital and Koor Industries Ltd. at an aggregate purchase price of approximately $ 15,935. In August 2007, the Company has completed a tender offer process and purchased on the market additional 690,000 Ordinary shares of Scopus, representing approximately 5% of Scopus then issued share capital, at an aggregate purchase price of $ 3,968.
In January 2008, the Company purchased additional 1,380,000 Ordinary shares of Scopus, bringing its aggregated investment to approximately 37% of Scopus then issued share capital. The consideration of the purchase amounted to approximately $ 8,556.
|
NOTE 6:-
|
INVESTMENTS IN COMPANIES (Cont.)
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Current assets
|
$ | 62,275 | $ | - | ||||
Non current assets
|
$ | 4,620 | $ | - | ||||
Current liabilities
|
$ | (20,117 | ) | $ | - | |||
Non current liabilities
|
$ | (1,921 | ) | $ | - |
Year ended December 31,
|
||||||||
2008
|
2009
|
|||||||
Revenues
|
$ | 75,654 | $ | - | ||||
Gross profit
|
$ | 37,113 | $ | - | ||||
Net Income
|
$ | 346 | $ | - |
NOTE 7:-
|
PROPERTY, EQUIPMENT AND OTHER ASSETS, NET
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Cost:
|
||||||||
Computers and peripheral equipment
|
$ | 11,783 | $ | 11,985 | ||||
Office furniture and equipment
|
357 | 363 | ||||||
Motor vehicles
|
5 | - | ||||||
Leasehold improvements
|
852 | 796 | ||||||
12,997 | 13,144 | |||||||
Accumulated depreciation
|
11,769 | 12,508 | ||||||
Depreciated cost *)
|
$ | 1,228 | $ | 636 | ||||
Cost (See Note 3 for more details):
|
||||||||
Land
|
$ | - | $ | 2,818 | ||||
Real estate property
|
- | 19,354 | ||||||
- | 22,172 | |||||||
Accumulated depreciation
|
- | 92 | ||||||
Depreciated cost
|
$ | - | $ | 22,080 | ||||
Acquired intangible assets, net **
|
$ | - | $ | 634 |
|
*)
|
Depreciation expenses amounted to $ 1,244, $ 1,090 and $ 933 for the years ended December 31, 2007, 2008 and 2009, respectively.
|
|
**)
|
Amortization expenses amounted to $ 22 for the year ended December 31, 2009. See further details with regards to the other assets in Note 3.
|
Year
|
Estimated amortization expenses
|
|||
2010
|
$ | 130 | ||
2011
|
130 | |||
2012
|
130 | |||
2013
|
130 | |||
2014
|
104 |
NOTE 8:-
|
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Employees and payroll accruals
|
$ | 1,998 | $ | 1,119 | ||||
Royalties (see Note 10b)
|
1,906 | 2,046 | ||||||
Accrued expenses
|
2,204 | 2,035 | ||||||
Government authorities
|
812 | 1,115 | ||||||
$ | 6,920 | $ | 6,315 |
NOTE 9:-
|
SHORT-TERM BANK CREDIT LINE AND LONG TERM LOAN
|
Year ended December 31,
|
||||
2011
|
$ | 365 | ||
2012
|
365 | |||
2013
|
365 | |||
2014
|
365 | |||
2015
|
365 | |||
2016 and thereafter
|
16,072 | |||
$ | 17,897 |
NOTE 10:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
a.
|
Lease commitments:
|
b.
|
Royalty commitments:
|
c.
|
Guarantees:
|
d.
|
Assets pledged as collateral:
|
NOTE 10:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
e
.
|
Legal claim and
contingent liabilities:
|
NOTE 11:-
|
OTHER INCOME (EXPENSES), NET
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Impairment losses of V.Box
|
$ | (325 | ) | $ | - | $ | - | |||||
Sale of Intangible Assets
|
- | 218 | - | |||||||||
Other expenses
|
(2 | ) | - | - | ||||||||
$ | (327 | ) | $ | 218 | $ | - |
NOTE 12:-
|
TAXES ON INCOME
|
a.
|
Measurement of taxable income under the Income Tax (Inflationary Adjustments) Law, 1985:
|
NOTE 12:-
|
TAXES ON INCOME (Cont.)
|
b.
|
Corporate tax rates
:
|
c.
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 ("the law"):
|
NOTE 12:-
|
TAXES ON INCOME (Cont.)
|
d.
|
Tax assessments:
|
e.
|
Tax benefits under the Law for the Encouragement of Industry (Taxation), 1969:
|
f.
|
Deferred income taxes:
|
December 31,
|
||||||||
2008
|
2009
|
|||||||
Operating loss carry forward
|
$ | 19,870 | $ | 17,969 | ||||
Reserves and allowances
|
8,912 | 7,205 | ||||||
Net deferred tax asset before valuation allowance
|
28,782 | 25,174 | ||||||
Valuation allowance
|
(28,637 | ) | (25,029 | ) | ||||
Net deferred tax asset
|
$ | 145 | $ | 145 |
NOTE 12:-
|
TAXES ON INCOME (Cont.)
|
g.
|
Net operating losses carryforward:
|
h.
|
Reconciliation of the theoretical tax expenses to the actual tax expenses:
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Loss before taxes as reported
|
$ | (4,301 | ) | $ | (7,635 | ) | $ | (4,713 | ) | |||
Theoretical tax benefit computed at the statutory rate (29%, 27% and 26% for the years 2007, 2008 and 2009, respectively)
|
$ | (1,247 | ) | $ | (2,061 | ) | $ | (1,225 | ) | |||
Tax adjustments in respect of currency translation
|
(71 | ) | 203 | 17 | ||||||||
Income and other items for which a valuation allowance was provided
|
895 | 1,623 | 1,270 | |||||||||
Current adjustment of ASC 740-10
|
73 | (73 | ) | - | ||||||||
Settlement of prior years tax assessments
|
- | 73 | - | |||||||||
Other non-deductible expenses
|
423 | 235 | (62 | ) | ||||||||
Income tax expense
|
$ | 73 | $ | - | $ | - |
NOTE 12:-
|
TAXES ON INCOME (Cont.)
|
i.
|
Loss before taxes on income consists of the following:
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Domestic
|
$ | (4,135 | ) | $ | (8,655 | ) | $ | (4,745 | ) | |||
Foreign
|
(166 | ) | 1,020 | 32 | ||||||||
$ | (4,301 | ) | $ | (7,635 | ) | $ | (4,713 | ) |
j.
|
On January 1, 2007, the Company adopted the provisions of ASC Topic 740-10, "Income Taxes", previously referred to as FIN 48.. Prior to 2007, the Company used the provisions of ASC 450 "Contingencies" (previously: FAS 5, "Accounting for Contingencies") to determine tax contingencies. As of January 1, 2007 there was no effect on the Company's shareholders equity upon the Company's adoption of ASC Topic 740-10.
|
2008
|
2009
|
|||||||
Balance at the beginning of the year
|
$ | 218 | $ | 145 | ||||
Reduction related to settlements of tax matters
|
(73 | ) | - | |||||
Additions related to tax positions taken during the year
|
- | - | ||||||
Balance at the end of the year
|
$ | 145 | $ | 145 |
NOTE 13:-
|
SHAREHOLDERS' EQUITY
|
a.
|
General:
|
1.
|
The Ordinary shares of the Company are traded on the NASDAQ Global Market since April 1999.
|
2.
|
On June 25, 2008, following the receipt of the approval of the Company's shareholders on June 18, 2008, the Company had completed a private issuance of 2,816,901 ordinary shares of the Company to, the Company's President, Chief Executive Officer and then Executive Chairman of the Board of Directors, in consideration for $5,000.
|
NOTE 13:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
b.
|
Stock options:
|
Year ended December 31
|
||||||||||||||||||||||||
2007
|
2008
|
2009
|
||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
Average
|
average
|
Average
|
||||||||||||||||||||||
Amount
|
Exercise
price
|
Amount
|
exercise
price
|
Amount
|
Exercise
price
|
|||||||||||||||||||
Outstanding at the beginning of the year
|
2,209,922 | $ | 5.66 | 1,955,126 | $ | 4.19 | 1,506,687 | $ | 4.05 | |||||||||||||||
Granted
|
210,000 | $ | 3.72 | 32,500 | $ | 1.95 | 200,000 | $ | 1.26 | |||||||||||||||
Exercised
|
(86,892 | ) | $ | 2.55 | - | $ | - | - | $ | - | ||||||||||||||
Forfeited
|
(377,904 | ) | $ | 13 | 480,939 | $ | 4.39 | (588,214 | ) | $ | 3.23 | |||||||||||||
Outstanding at the end of the year
|
1,955,126 | $ | 4.19 | 1,506,687 | $ | 4.05 | 1,118,473 | $ | 3.99 | |||||||||||||||
Exercisable options at the end of the year
|
1,725,942 | $ | 4.08 | 1,432,447 | $ | 4.08 | 907,895 | $ | 4.60 | |||||||||||||||
Options vested and expected to vest at end of year
|
1,490,907 | $ | 3.94 | 1,420,878 | $ | 2.89 | ||||||||||||||||||
Weighted average fair value of options granted during the year
|
$ | 1.94 | $ | 0.98 | $ | 1.308 |
NOTE 13:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
c.
|
Nonvested shares:
|
Nonvested shares
|
Shares
|
Weighted average grant date fair value
|
||||||
Non-vested at January 1, 2008
|
76,650 | $ | 3.48 | |||||
Granted
|
20,000 | $ | 2.01 | |||||
Vested
|
(61,900 | ) | $ | 3.44 | ||||
Forfeited
|
(9,000 | ) | $ | 3.38 | ||||
Non-vested at December 31, 2008
|
25,750 | $ | 2.46 | |||||
Granted
|
20,000 | $ | 1.05 | |||||
Vested
|
(14,750 | ) | $ | 2.63 | ||||
Forfeited
|
(1,000 | ) | $ | 4.03 | ||||
Non-vested at December 31, 2009
|
30,000 | $ | 1.39 |
NOTE 13:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
d.
|
The total equity-based compensation expense related to all of the Company's equity-based awards, recognized for the years ended December 31, 2008 and 2009, was comprised as follows:
|
Year ended December 31,
|
||||||||
2008
|
2009
|
|||||||
Cost of goods sold
|
$ | 80 | $ | 16 | ||||
Research and development
|
60 | 18 | ||||||
Selling and marketing
|
272 | 108 | ||||||
General and administrative
|
246 | 79 | ||||||
Total equity-based compensation expense before taxes
|
$ | 658 | $ | 221 |
NOTE 14: -
|
SEGMENT REPORTING
|
a.
|
The Company's segment information has been prepared in accordance with ASC Topic 280, “Segment Reporting”. Operating segments are defined as components of an enterprise engaging in business activities about which separate financial information is available that is evaluated regularly by the Company's chief operating decision-maker in deciding how to allocate resources and assess performance. The Company's chief operating decision-maker is the chief executive officer, who evaluates our performance and allocates resources based on segment revenues and operating profit.
|
Year ended December 31, 2009
|
||||||||||||
Video Solutions
|
Fixed Income Real Estate
|
Total
|
||||||||||
Revenues from external customers
|
$ | 13,149 | $ | 272 | $ | 13,421 | ||||||
Operating (loss)
|
$ | (5,216 | ) | $ | (114 | ) | $ | (5,330 | ) | |||
Financial expenses, net
|
617 | |||||||||||
Equity in losses and gain from sale of investment in affiliated company
|
$ | 4,773 | $ | 4,773 | ||||||||
Income before taxes on income
|
$ | 60 | ||||||||||
Depreciation and amortization
|
$ | 933 | $ | 114 | $ | 1,047 | ||||||
Segment assets
|
$ | 40,226 | $ | 23,224 | $ | 63,350 |
NOTE 14: -
|
SEGMENT REPORTING (Cont.)
|
Year ended December 31,
|
||||||||||||||||||||
2007
|
2008
|
2009
|
||||||||||||||||||
Total
|
Total
|
Long-
lived
|
Total
|
Long-
Lived
|
||||||||||||||||
revenues*)
|
revenues*)
|
assets
|
revenues*)
|
Assets
|
||||||||||||||||
Israel
|
$ | 1,186 | $ | 444 | $ | 1,433 | $ | 474 | $ | 848 | ||||||||||
North America
|
10,813 | 10,756 | 104 | 7,399 | 21 | |||||||||||||||
Europe
|
7,228 | 4,246 | - | 1,883 | ||||||||||||||||
Far East (excluding Japan)
|
3,309 | 3,848 | - | 3,153 | - | |||||||||||||||
Japan
|
167 | 275 | - | 119 | - | |||||||||||||||
Fixed income from real estate in Europe
|
- | - | - | 272 | 22,714 | |||||||||||||||
Other
|
274 | 332 | - | 121 | - | |||||||||||||||
$ | 22,977 | $ | 19,901 | $ | 1,537 | $ | 13,421 | $ | 23,583 |
b.
|
Total revenues from external customers per product line are divided as follows:
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Video technologies
|
$ | 8,923 | $ | 6,420 | $ | 3,672 | ||||||
IPTV
|
14,054 | 13,481 | 9,477 | |||||||||
Fixed Income Real Estate
|
- | - | 272 | |||||||||
$ | 22,977 | $ | 19,901 | $ | 13,421 |
NOTE 15:-
|
RELATED PARTY TRANSACTIONS
-
|
December 31,
|
||||||||||
2008
|
2009 | |||||||||
a. |
Balances with related party:
|
|||||||||
Trade receivables:
|
||||||||||
V. Box
|
$ | 65 | $ | 64 |
NOTE 15:-
|
RELATED PARTY TRANSACTIONS
(Cont.)
|
Year ended December 31,
|
||||||||||||||
2007
|
2008
|
2009
|
||||||||||||
b. |
Revenues from related party:
|
|||||||||||||
V. Box
|
$ | 9 | $ | 11 | $ | 8 | ||||||||
Scopus
|
$ | - | $ | 23 | $ | - | ||||||||
c. |
Sublease and IT services payment received from related party:
|
|||||||||||||
V. Box
|
$ | 92 | $ | 125 | $ | 22 | ||||||||
d. |
Purchases from related party:
|
|||||||||||||
Scopus
|
$ | 99 | $ | 102 | $ | - | ||||||||
V. Box
|
$ | 213 | $ | 107 | $ | 31 | ||||||||
e. |
General and administrative from related party:
|
|||||||||||||
Scopus
|
$ | - | $ | 300 | $ | - |
NOTE 16:-
|
SELECTED STATEMENT OF OPERATIONS DATA
|
a.
|
Research and development, net:
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Total research and development costs
|
$ | 7,143 | $ | 7,498 | $ | 5,020 | ||||||
Less - grants and participation
|
(1,781 | ) | (1,123 | ) | (1,295 | ) | ||||||
$ | 5,362 | $ | 6,375 | $ | 3,725 |
b.
|
Allowance for doubtful accounts:
|
Balance at beginning of year
|
$ | 313 | $ | 367 | $ | 355 | ||||||
Increase during the year
|
56 | 159 | 172 | |||||||||
Write-off of bad debts
|
(2 | ) | (171 | ) | (113 | ) | ||||||
Balance at the end of year
|
$ | 367 | $ | 355 | $ | 414 |
NOTE 16:-
|
SELECTED STATEMENT OF OPERATIONS DATA (Cont.)
|
c.
|
Financial income (expenses):
|
Year ended December 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Financial income:
|
||||||||||||
Interest
|
$ | 804 | $ | 214 | $ | 423 | ||||||
Foreign currency translation adjustments
|
- | - | 257 | |||||||||
Realized gains on sale of available-for-sale marketable securities
|
733 | 349 | - | |||||||||
1,537 | 563 | 680 | ||||||||||
Financial expenses:
|
||||||||||||
Interest
|
(359 | ) | (79 | ) | (63 | ) | ||||||
Foreign currency translation adjustments
|
(104 | ) | (139 | ) | - | |||||||
Realized losses on sale of available-for-sale marketable securities
|
(523 | ) | (75 | ) | - | |||||||
Impairment of marketable securities
|
(582 | ) | - | - | ||||||||
(1,568 | ) | (293 | ) | (63 | ) | |||||||
$ | (31 | ) | $ | 270 | $ | 617 |
NOTE 17:-
|
SUBSEQUENT EVENTS (UNAUDITED)
|
|
a.
|
On March 1, 2010, the Company’s subsidiary in Luxembourg entered into an Option Agreement with a Cypriot company, Chessell Holdings Limited, with respect to the commercial building acquired by the Company in October 2009, in Rümlang, Switzerland. Through its beneficial owner, Chessell Holdings, introduced Optibase to the Rumlang property and facilitated Optibase’s acquisition and financing of the property. Under the Option Agreement, the Company granted Chessell Holdings an option to purchase twenty percent (20%) of the share capital of the Company. Chessell Holdings undertook to pay a purchase price for the option of CHF 315. The exercise price under the Option Agreement is calculated based on Optibase’s acquisition costs for the Rumlang Property plus interest and an adjustment for proceeds that are distributed to the Company’s shareholders. The shares that would be issued to Chessell Holdings upon exercise of the option will not have voting rights and would be subject to transfer restrictions in favor of Optibase.
|
|
b.
|
On January 2010, Mobixell networks had acquired a company and paid part of the acquisition costs with newly issued shares. As a result, the Company’s holding in Mobixell on a fully diluted basis had decreased from 4.34% to 3.71%.
|
NOTE 17:-
|
SUBSEQUENT EVENTS (UNAUDITED) (Cont.)
|
|
c.
|
On March 16, 2010, the Company signed an Assets Purchase Agreement (APA) with a wholly owned subsidiary of VITEC Multimedia ("Vitec") pursuant to which Optibase Ltd. and its subsidiary Optibase Inc. (collectively, "Optibase") will sell their entire video business to Vitec (the "Business" and the "Transaction", respectively). Under the terms of the transaction, which was approved by the Board of Directors of both companies, in consideration for the sale of the Business, Vitec will pay the Company an aggregate amount of $ 8,000 in cash of which $ 1,000 will be deposited in escrow for a 2-year period as a security, inter alia, for breach or material inaccuracy relating to Optibase's representations and warranties. In addition, Optibase and Vitec agreed on an earn-out mechanism pursuant to which 45% of Vitec's revenues deriving from the Business exceeding $ 14,000 in the year following the closing of the Transaction will be paid to Optibase. Consummation of the Transaction is subject to the fulfillment of certain conditions precedent standard for transactions of this nature. Closing of the Transaction is expected to occur on June 30, 2010, after the release of this annual report. Upon signing of the Transaction, Vitec deposited US $500 in escrow to be paid to Optibase if closing does not take place within a specific period of time from signing, subject to certain limited circumstances, principally relating to non fulfillment of certain closing conditions by Optibase, in which case, such funds will be returned to Vitec. After closing of the transaction, the company will reclassify its entire revenues and expenses for the years 2008 and 2009 as discontinues operation.
|
|
d.
|
On February 2, 2010, Mazal 485 LLC, a company whose beneficial interest is jointly owned by the Company and by Gilmore USA LLC ("Mazal"), filed a lawsuit against SL Green Realty Corp. and several of its subsidiaries ("SL Green") regarding the Purchase Agreement for interests in 485 Lexington Avenue. On January 7, 2010, the Company received a notice from the seller of 485 Lexington Avenue stating that the Purchase Agreement is terminated. The lawsuit alleges that SL Green breached material terms of the Purchase Agreement and breached its covenant of good faith and fair dealing toward Mazal 485 LLC. The lawsuit seeks specific performance to enforce SL Green's obligations under the Purchase Agreement and an abatement of the purchase price to compensate Mazal 485 LLC for damages incurred as a result of SL Green’s breaches. On March 16, 2010, SL Green filed a motion for an order dismissing Mazal's claims, which was heard on June 2, 2010. On June 23, 2010, SL Green's motion to dismiss Mazal's request for performance of the sale-purchase agreement, was granted. The court directed SL Green to answer to Mazal's remaining damage claims, while a conference was set for September 8, 2010. The case now proceeds with discovery on Mazal's remaining claims, seeking damages for failure to perform, which are limited by the Purchase Agreement to Mazal's reasonable out-of-pocket costs and expenses (including reasonable attorney's fees) incurred in connection with the agreement. There is no assurance that the abovementioned legal proceedings will succeed and that the Company will be granted the sought performance of the transaction and/or damages.
|
Date: June 30, 2010
|
OPTIBASE LTD.
|
|
By: |
/s/ Shlomo (Tom) Wyler
|
|
Name: Shlomo (Tom) Wyler
|
||
Title: President and Chief Executive Officer
|
Exhibit Number
|
Description of Document
|
|
1.1
|
Amended and Restated Memorandum of Association of Optibase Ltd. (incorporated by reference to Exhibit 3.1 to the Registrant's Report on Form 6-K dated February 15, 2002).
|
|
1.2
|
Amended and Restated Articles of Association of Optibase Ltd. (incorporated by reference to Exhibit 1.2 to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2008).
|
|
4.1
|
Agreement between Optibase Ltd. and Mr. Shlomo (Tom) Wyler dated May 6, 2008 (incorporated by reference to Exhibit 99.4 to Schedule 13D/A, filed with the Commission by Shlomo (Tom) Wyler on June 25, 2008).
|
|
4.2
|
Agreement between Optibase Ltd. and Harmonic Inc. dated December 22, 2008 (incorporated by reference to Exhibit 99.13 to Schedule 13D/A, filed with the Commission by Shlomo (Tom) Wyler on December 23, 2008).
|
|
4.3*
|
Agreement between Mazal 485 LLC and Green 485 Holdings LLC, a subsidiary of SL Green Realty Corp. dated August 7, 2009.
|
|
4.4*
|
Agreement between Optibase RE 1 SARL and Zublin Immobilien AG dated October 29, 2009.
|
|
4.5*
|
Agreement between Optibase RE 1 SARL and Basler Kantonalbank dated October 28, 2009.
|
|
4.6*
|
Agreement between Optibase RE 1 SARL and Chessell Holdings Limited dated March 1, 2010.
|
|
4.7*
|
Agreement between Optibase Inc. and Optibase Technologies Ltd., a wholly owned subsidiary of S.A. Vitec dated March 16, 2010.
|
|
4.8
|
Form of Letter of Indemnification between Optibase Ltd. and its directors and officers (incorporated by reference to Exhibit 99.3 to Registrant's Report on Form 6-K, filed with the Commission on October 5, 2005).
|
|
4.9
|
Form of Letter of Indemnification between Optibase, Inc. and its directors and officers (incorporated by reference to Exhibit 4.9 to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2002).
|
|
4.10
|
1999 Israel Share Option Plan, as amended (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 1999).
|
|
4.11
|
1999 U.S. Share Option Plan, as amended (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 1999).
|
|
4.12
|
102 Plan (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 1999).
|
|
4.13
|
Employee Stock Purchase Plan (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 1999).
|
|
4.14
|
2001 Non-statutory Share Option Plan as amended and Form Option Agreement (incorporated by reference to Exhibit 10.5 to the Registrant's Annual Report on Form 20-F for the fiscal year ended December 31, 2000, and with respect to an amendment, by reference to Exhibit 99.7 to the Registrant's Report on Form 6-K, filed with the Commission on February 15, 2002).
|
|
4.15
|
2003 Amendment to the 1999 Israel Share Option Plan (incorporated by reference to Exhibit 4.(c).9 to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2003).
|
|
4.16
|
2006 Israeli Incentive Compensation Plan (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on From S-8 (File no. 333-137644)).
|
|
8.1*
|
List of the subsidiaries of the Company.
|
Exhibit Number
|
Description of Document
|
|
11.1
|
Code of Business Conduct and Ethics (incorporated by reference to Exhibit 11 to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2003).
|
|
12.1*
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
12.2*
|
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
13.1*
|
Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
13.2*
|
Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
15.1*
|
Consent of Kost, Forer Gabbay & Kasierer, a member of Ernst & Young Global.
|
|
15.2*
|
Consent of Brightman Almagor Zohar & Co., Certified Public Accountants, a member Firm of Deloitte Touche Tohmatsu.
|
1(A)
|
Description of Land
|
|
1(B)
|
Leases
|
|
1(C)
|
Existing Contracts
|
|
1(D)
|
Telecommunications Contracts
|
|
1(E)
|
Brokerage Agreements
|
|
1(F)
|
Union Agreements
|
|
2(A)
|
Company LLC Agreement
|
|
2(B)
|
Contribution Agreement
|
|
2(C)
|
JV Loan Promissory Note
|
|
2(D)
|
Member Loan Promissory Note
|
|
2(E)
|
Option Agreement
|
|
2(F)
|
Transferor Pledge and Security Agreement
|
|
2(G)
|
Assignment of Limited Liability Company Interest
|
|
2(H)
|
Title Affidavit
|
|
3(A)
|
Transferor’s Wire Instructions
|
|
4(A)(i)
|
Title Exceptions
|
|
8(A)(xxii)
|
Form of 750 Space Lease
|
|
8(A)(xxiii)
|
Form of 750 REA
|
|
8(A)(xxiv)
|
Form of REA Estoppels
|
|
8(A)(xxv)
|
Form of Notice to 750 Third Owner LLC
|
|
8(A)(xxvi)
|
Recognition Agreement
|
|
8(A)(xxix)
|
Indemnity Agreement
|
|
10
|
Form of Tenant Estoppel Certificate
|
|
16(A)(i)
|
Rent Arrearages
|
|
16(A)(ii)
|
Union Employees
|
|
16(A)(vii)
|
Litigation
|
|
16(A)(xvi)
|
Liabilities
|
|
16(A)(xvii)
|
Open Tax Certiorari Proceedings
|
|
16(A)(xviii)
|
Security Deposits
|
|
16(A)(xix)
|
Tenant Billing
|
|
16(A)(xxi)
|
Environmental Violations
|
|
16(A)(xxii)
|
Existing Loan Documents
|
|
By:
|
_______________________
|
|
Name:
|
|
Title:
|
|
By:
|
_______________________
|
|
Name:
|
|
Title:
|
|
By:
|
/s/ Tom Wyler /s/ Amir Philips
|
|
Name: Tom Wyler Amir Philips
|
|
Title: Authorized Signer Authorized Signer
|
|
By:
|
_______________________
|
|
Name:
|
|
Title:
|
|
By:
|
/s/ Abekasis Abraham
Name: Abekasis Abraham
Title: Director
|
|
By:
|
/s/ Arie Kotler
Name: Arie Kotler
Title: Authorized Signer
|
$ 12,200,000.00 | New York, New York |
___________, 2009 |
Notary Public |
$ _________________ 1 | New York, New York |
__________________, 2009 |
DATE:
|
_______________, 2009
|
|
TO:
|
Green 485 Holdings LLC
|
|
ADDRESS:
|
c/o SL Green Realty Corp.
|
|
420 Lexington Avenue
|
||
New York, New York 10170
|
||
ATTN:
|
Andrew S. Levine, Esq.
|
|
FAX:
|
(212) 356-4135
|
|
FROM:
|
Mazal 485 LLC
|
|
ATTN:
|
Julius Schwartz
|
|
ADDRESS:
|
241 West 47th Street
|
|
Suite 11B
|
||
New York, New York 10036
|
||
FAX:
|
[_____________________]
|
I.
GENERAL TERMS:
|
|
Party A:
|
Mazal 485 LLC
|
Party B:
|
Green 485 Holdings LLC
|
Trade Date:
|
_____________, 2009
|
[Note: Insert date of initial closing of the acquisition of the initial 49.5%]
|
|
Effective Date:
|
_____________, 2009
|
Option Style:
|
American
|
Option Type:
|
Call
|
Seller:
|
Party B
|
Buyer:
|
Party A
|
Shares:
|
49.5% membership interest in Green 485 JV LLC, a Delaware limited liability company, held by Party B as of the Trade Date.
|
Number of Options:
|
One
|
Option Entitlement:
|
All of the Shares per Option.
|
Strike Price:
|
Subject to the Strike Price Cap, the fair market value (the
“
Fair Market Value
”)
of the Shares at the Settlement Date, minus the Premium.
|
The Fair Market Value shall be determined by mutual agreement of Party A and Party B and shall be equal to the amount that would be received by the holder of the Shares, based on the fair market value of that certain parcel of real property known as and located at 485 Lexington Avenue, New York, New York (the
“
Property
”),
if the Property were sold to a third party in a bona fide arms-length transaction on customary terms and conditions, and all liabilities of the Issuer and its subsidiaries were satisfied from such sales proceeds and any balance were distributed to the members of the Issuer parties pursuant to the LLC Agreement.
|
If Party A and Party B (collectively, the
“
Parties
”)
are unable to agree upon the Fair Market Value within fifteen (15) days of the Option Notice (as defined herein), then such Fair Market Value shall be determined as follows:
|
|
(a) The Parties shall, by mutual agreement, appoint a qualified appraiser (as defined below). If the Parties cannot agree on a single qualified appraiser, then each of the Parties shall have the right to select a qualified appraiser and shall give written notice to the other of the appraiser so selected. The first party to receive such a notice of selection shall have five (5) days after receipt thereof to give the other party written notice of its selection. If one Party gives a notice of selection and the other fails to timely provide its notice of selection within such five (5) day period (or if a single appraiser is selected), the one qualified appraiser so selected shall be the sole appraiser in making the determination required hereunder, which written determination shall be final and binding and shall be delivered to the Parties no more than thirty (30) days after the delivery of the first notice.
|
|
(b) If the second notice of selection is properly given within the requisite time, the qualified appraisers so selected shall promptly make the determination required hereunder and deliver a written summary of such determination to the Parties within thirty (30) days after the delivery of the first notice of selection. If such two appraisers reach the same determination, their determination shall be final and binding. If the two appraisers reach determinations that are different but the lower determination is not less than ninety percent (90%) of the higher determination, an average of the two shall be final and binding. In all other events, the two appraisers shall promptly select a third qualified appraiser who shall promptly select the determination of one of the two appraisers which it believes is more accurate and deliver a written summary of such determination to the Parties no more than sixty (60) days after the delivery of the first notice of selection, and such determination shall be final and binding on both Parties.
|
Latest Exercise Time:
|
6:00 pm (local time in New York, New York).
|
Expiration Time:
|
6:00 pm (local time in New York, New York).
|
Expiration Date:
|
December 31, 2020;
provided
that if the Option is not exercised by December 31, 2020, the Option may be exercised on December 31, 2022.
|
Multiple Exercise:
|
Not Applicable
|
Automatic Exercise:
|
Not Applicable
|
III.
SETTLEMENT TERMS:
|
|
Physical Settlement:
|
Applicable.
|
The Settlement Price shall be payable to Seller on the Settlement Date by wire transfer to the account of Seller set forth in clause 5 of Section VI below.
|
|
Settlement Currency:
|
USD
|
Settlement Method Election:
|
Not Applicable
|
Settlement Date:
|
The Settlement Date shall be the date set forth as the date for the closing of the purchase of the Shares in the notice from Buyer of its exercise of the Option (the
“
Option Notice
”).
|
Notwithstanding anything to the contrary in Section 3.2 of the Equity Definitions, the Option Notice shall be in writing, and shall set forth the Settlement Date for the closing of the purchase of the Shares, which Settlement Date shall occur no earlier than ten (10) calendar days and no later than ninety (90) calendar days after the delivery of the Option Notice.
|
|
Seller shall not be required to consummate the closing of the purchase of the Shares hereunder unless the JV Loan (as defined in the Purchase Agreement) is paid in full (taking into account the offset of any Nortel Losses (as defined in the Purchase Agreement) and any applicable escrow of the payoff to the JV Loan as set forth in the JV Loan Documents) prior to or simultaneously with the Settlement Date.
|
|
Buyer shall have the right to credit against the Strike Price payable hereunder all amounts (including principal and interest) outstanding under the Green 485 Holdings Loan on the Settlement Date.
|
V.
REPRESENTATIONS AND WARRANTIES:
|
||
Non-Reliance:
|
Applicable
|
|
Agreements and Acknowledgments Regarding Hedging Activities:
|
Not Applicable
|
|
Additional Acknowledgements:
|
Applicable
|
|
Additional Representations:
|
In addition to the representations set forth in the Master Agreement, each party hereto represents and warrants to the other party hereto the following:
|
|
(i) It understands that this Transaction has not been registered under the U.S. Securities Act of 1933 as amended (the
“
Securities Act
”)
or the securities law of any other jurisdiction, and that neither party is obliged to register the Transaction or to assist the other party in complying with any exemption from registration under the Securities Act or state securities laws;
provided, however
,
notwithstanding the foregoing, if this Transaction is not otherwise exempt from the registration requirements of the Securities Act, each party represents with respect to this Transaction:
|
||
(a)
|
it is entering into the Transaction for its own account as principal, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part;
|
|
(b)
|
it acknowledges its understanding that the offer and sale of this Transaction is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) of the Securities Act. In furtherance thereof, each party represents and warrants to the other party that (i) it has the financial ability to bear the economic risk of its investment, including a loss of its entire investment, (ii) it is either (x) an accredited investor as defined in Rule 501 under the Securities Act, or (y) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act, (iii) it has the knowledge and experience of investing in instruments similar to the Transaction and is capable of evaluating the risks and merits of the Transaction and has, or has had an opportunity to request, such information as it deemed necessary to make such evaluation; and
|
(c)
|
it understands that the Transaction has not been registered under the Securities Act or under the securities laws of certain states and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless an exemption for such resale, pledge, assignment or disposition is available and that neither party is obliged to register the Transaction or to assist the other party in complying with any exemption from registration under the Securities Act or state securities laws;
|
|
(ii) Any information that it desires concerning this Transaction or any other matter relevant to its decision to enter into this Transaction is, or has been made, available to it;
|
||
(iii) It is not an investment company required to be registered under the U.S. Investment Company Act of 1940, as amended (the
“
Investment Company Act
”)
pursuant to the exemption available under Section 3(c)(7) of the Investment Company Act or a business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940, as amended.
|
||
(iv) It is an “eligible contract participant” as defined in section 1a(12) of the Commodity Exchange Act as amended;
|
(v) It represents that (i) is not an employee benefit plan (an
“
ERISA Plan
”)
as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“
ERISA
”),
subject to Title 1 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, (ii) it is not a person or entity acting on behalf of an ERISA Plan because less than 25% of all of its equity interests are held by “benefit plan investors” within the meaning of 29 CFR Section 2510.3-101(f)(2), (iii) none of its assets are or will be deemed to be “plan assets” within the meaning of U.S. Department of Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise; (iv) it is not a defined contribution plan; (v) it is not a “governmental plan” within the meaning of ERISA Section 3(32); and (vi) transactions by or with it are not subject to state statutes regulating investments of and fiduciary obligations with respect to governmental plans.
|
VI.
|
MISCELLANEOUS: | |
1.
|
Incorporation of Terms of Master Agreement
.
(a) For the avoidance of doubt, the parties agree that the Master Agreement is incorporated herein by reference, and the parties expressly specify that (i) Second Method and Loss shall apply unless otherwise specified herein; (ii) the Threshold Amount with respect to Party B shall be zero; and with respect to Party A shall not be applicable; (iii) paragraph 2(c) will
not
apply to Transactions; (iv) the replacement of the word “third” in the last line of Section 5(a)(i) with the word “second”; (v) Specified Entity shall mean none with respect to Party A, and shall mean all Affiliates with respect to Party B.
|
|
(b)
|
“Termination Currency” means USD.
|
|
(c)
|
“Credit Support Document”: With respect to Party A, none. With respect to Party B, means the following: the Credit Support Annex, dated as of the date hereof, between Party A and Party B.
|
|
(d)
|
Rights of Set-Off
.
The parties agree to amend Section 6 of the Master Agreement by adding a new Section 6(f), as follows:
|
|
“(f) Upon the occurrence of an Event of Default or Termination Event occurs hereunder with respect to a party (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under this Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) owed to X (or any Affiliate of X) (whether or not matured or contingent and whether or not arising under this Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give prompt notice to the other party of any set-off effected under this Section 6(f).
|
||
Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency at the rate of exchange at which Y would be able, acting in a commercially reasonable manner and in good faith, to purchase the relevant amount of such currency.
|
||
If any obligation is unascertained, Y may in good faith estimate that obligation and set off in respect of the estimate, subject to Y accounting to X when the obligation is ascertained.
|
||
Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”
|
2.
|
Agreement to Deliver Documents
.
On the Trade Date, each party agrees to deliver the following documents, as applicable, unless already delivered to the other party pursuant to the terms of any other agreement between the parties:
|
|
(i) with respect to Seller, a duly executed and acknowledged Assignment of Membership Interest Agreement, between Buyer (or its designee) and Seller, substantially in the form of Annex I hereto, relating to the transfer of the Shares hereunder;
|
||
(ii) with respect to Seller, the Shares, in certificated form, duly issued and executed by the Issuer pursuant to the LLC Agreement, together with undated and blank endorsements;
|
||
(iii) with respect to Seller, certified copies of board resolutions or other similar documents approving the Transaction contemplated by this Confirmation, and evidence of the signing authority and specimen signature of each person executing this Confirmation and any Credit Support Document;
|
||
(iv) with respect to Seller, such other documents and instruments as may be reasonably necessary or desirable to further carry out the purposes of this Transaction as determined by Buyer;
|
||
(v) with respect to Buyer, a duly executed Secured Note in the original principal amount of USD $20,000,000.00, dated on or about the date hereof, by Party A (or its Affiliate) in favor of Party B;
|
||
(vi) the LLC Agreement, duly executed by each such party;
|
||
(vii) any other documentation reasonably requested by Party A; and
|
||
(viii) Tax forms, documents or certificates to be delivered are:
|
Party required to deliver document
|
Form/Document/Certificate
|
Date by which to be delivered
|
|||
Party A
|
An executed U.S. Internal Revenue Service Form W-9 for each of the members or partners of Party A.
|
Upon or prior to the execution and delivery of the Confirmation.
|
|||
Party B
|
An executed U.S. Internal Revenue Service Form W-9 for each of the members or partners of Party B.
|
Upon or prior to the execution and delivery of the Confirmation.
|
8. | Agreements Regarding Bankruptcy Treatment . The parties agree that this Transaction is intended to provide Buyer with the rights set forth in Sections 555 and 560 of title 11 of the United States Code (the “ Bankruptcy Code ”). The parties also intend for this Agreement to be, and agree that this Agreement is: (i) a “swap agreement” within the meaning of Section 101(53B) of the Bankruptcy Code, and specifically including, but not limited to, an “equity swap” and an “option” within the meaning of Section 101(53B)(A)(IV) of the Bankruptcy Code, and (ii) a “securities contract” within the meaning of Section 741 of the Bankruptcy Code. In addition, the parties agree that Buyer is a “financial participant” within the meaning of Section 101(22A) of the Bankruptcy Code as at the time Buyer enters into this Transaction. The parties also agree that the exercise of rights arising under or related to this Agreement are contractual rights arising under common law or by reason of normal business practice for purposes of Section 555 of the Bankruptcy Code. | |
9. | Governing Law; Waiver of Jury Trial : | |
(a) | This Confirmation shall be governed by, and construed in accordance with, the laws of the State of New York (without reference to choice of law doctrine). | |
(b) | EACH PARTY HEREBY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING RELATING TO OR ARISING OUT OF THIS CONFIRMATION OR THIS TRANSACTION. Each party hereby confirms and acknowledges that (i) no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver and (ii) it has been induced to enter into this Confirmation by, among other things, the mutual waivers, confirmations and acknowledgments in this paragraph. | |
10. |
Notices
.
All notices and other communications pursuant or related to this
Confirmation shall be in writing (which shall include, for the avoidance of
doubt, any notices or other communications sent by facsimile transmission, by
electronic mail, or in any other form from time to time approved by the parties)
All notices to Party A shall be delivered to Mazal 485 LLC, 241 West 47
th
Street, Suite 11B, New York, NY 10036, Attn: _________________________,
Facsimile No.: ________________; with a copy to: Greenberg Traurig, LLP,
200 Park Avenue, New York, NY 10166, Attn: Joseph D. Farrell, Esq., Facsimile No.: (212) 805-9304. All notices to Party B shall be delivered to c/o SL Green Realty Corp., 420 Lexington Avenue, New York, NY 10170, Attn: Andrew S. Levine, Esq., Facsimile No.: (212) 356-4135; with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison, LLP, 1285 Avenue of the Americas, New York, NY 10019, Attn: Peter E. Fisch, Esq., Facsimile No.: (212) 492-0424. Notices may be delivered by Party A or Party B by email to the email address, if any, specified above. Any such notice shall be deemed to be delivered upon transmission so long as verbal notice is also delivered telephonically.
|
|
This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. |
Party B hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Party B a facsimile of the fully-executed Confirmation to [____________]. For inquiries regarding this Transaction, please contact [_______________] by telephone at [______________], and email the following email address(es): [________________]. Originals will be provided for your execution upon your request. | ||
Please check this Confirmation carefully and immediately upon receipt, so that errors or discrepancies can be promptly identified and rectified. | ||
We are very pleased to have concluded this Transaction with you. |
Sincerely,
|
|
MAZAL 485 LLC
(Party A)
|
|
By:
|
|
Name:
|
|
Title:
|
|
Confirmed as of the date first above written:
|
|
GREEN 485 HOLDINGS LLC
(Party B)
|
|
By:
|
|
Name:
|
|
Title:
|
ASSIGNOR:
|
|||
GREEN 485 HOLDINGS LLC,
|
|||
a Delaware limited liability company
|
|||
By:
|
|||
Name: Andrew S. Levine
|
|||
Title: Executive Vice President
|
|||
ASSIGNEE:
|
|||
MAZAL 485 LLC,
|
|||
a Delaware limited liability company
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Mazal 485 LLC
|
and
|
Green 485 Holdings LLC
|
(“Party A”)
|
|
(“Party B”)
|
(a)
|
Security Interest for “Obligations”.
The term
“
Obligations
”
as used in this Annex includes the following additional obligations: Not Applicable.
|
||
(b)
|
Credit Support Obligations.
|
||
(i)
|
Delivery Amount, Return Amount and Credit Support Amount.
|
||
(A)
|
“
Delivery Amount
”
shall not be applicable.
|
||
(B)
|
“
Return Amount
”
shall not be applicable.
|
||
(C)
|
“
Credit Support Amount
”
shall mean, for any Valuation Date, the Fair Market Value (as defined below) of the Shares on the Trade Date.
|
||
(ii)
|
Eligible Collateral
.
The following items will qualify as
“
Eligible Collateral
”
for the Party specified:
|
Party A
|
Party B
|
Valuation
Percentage |
|
Cash
|
Not Applicable
|
Not Applicable
|
0%
|
49.5% membership interest in Green 485 JV LLC, a Delaware limited liability company, held by Party B as of the Trade Date (the
“
Shares
”).
|
Not Applicable
|
[X]
|
100%
|
(iii)
|
Other Eligible Support
.
None.
|
||
(iv)
|
Thresholds
.
|
||
|
(1)
|
“
Independent Amount
”
means with respect to Party B: as of any date of determination, the Fair Market Value of the Shares (as defined in the Confirmation to the 1992 ISDA Master Agreement (Multicurrency Cross-Border), dated as of the date hereof (the
“
Confirmation
”)).
|
|
|
(2)
|
“
Threshold
”
means with respect to Party A and Party B: Not Applicable.
|
|
|
(3)
|
“
Minimum Transfer Amount
”
means with respect to Party A and Party B: Not Applicable.
|
|
|
(4)
|
“
Rounding
”
means with respect to Party A and Party B: Not Applicable.
|
(c)
|
Valuation and Timing.
|
||
(i)
|
“
Valuation Agent
”
means Party A.
|
||
(ii)
|
“
Valuation Date
”
means the Trade Date and the Exercise Date.
|
||
(iii)
|
“
Valuation Time
”
means the close of business in the city of the Valuation Agent on the Local Business Day prior to the Valuation Date or date of calculation, as applicable;
provided
that the calculations of Value and Exposure will be made as of approximately the same time on the same date.
|
||
(iv)
|
“
Notification Time
”
means 11:00 a.m., New York time, on a Local Business Day following the Valuation Date.
|
||
(d)
|
Conditions Precedent and Secured Party’s Rights and Remedies.
|
||
The following Termination Event(s) will be a
“
Specified Condition
”
for the party specified (that party being the Affected Party if the Termination Event occurs with respect to that party):
|
|||
Party A
|
Party B
|
|||
Illegality
|
Not Applicable
|
Yes
|
||
Tax Event
|
Not Applicable
|
Yes
|
||
Tax Event Upon Merger
|
Not Applicable
|
Yes
|
||
Credit Event Upon Merger
|
Not Applicable
|
Yes
|
||
Extraordinary Event(s) (as specified in the Confirmation)
|
Not Applicable
|
Yes
|
(e)
|
Substitution.
|
||
Substitution shall only be permitted with the express written consent of Party A.
|
|||
(f)
|
Dispute Resolution.
|
||
The dispute resolution provision of Paragraph 5 shall not be applicable.
|
|||
(g)
|
Holding and Using Posted Collateral.
|
||
(i)
|
Eligibility to Hold Posted Collateral; Custodians.
|
||
|
Party A will be entitled to hold Posted Collateral pursuant to Paragraph 6(b).
|
||
(ii)
|
Use of Posted Collateral.
The provisions of Paragraph 6(c)(i) will not apply; the provisions of Paragraph 6(c)(ii) will apply.
|
||
(h)
|
Distributions and Interest Amount.
|
||
(i)
|
Interest Rate
.
Not Applicable.
|
(ii)
|
Transfer of Interest Amount.
Not Applicable.
|
||
(iii)
|
Alternative to Interest Amount.
The provisions of Paragraph 6(d)(ii) will not apply.
|
||
(i)
|
Additional Representation(s).
Not Applicable.
|
||
(j)
|
Other Eligible Support and Other Posted Support.
|
||
(i)
|
“
Value
”
with respect to Other Eligible Support and Other Posted Support means: Not Applicable.
|
||
(ii)
|
“
Transfer
” with respect to Other Eligible Support and Other Posted Support means: Not Applicable.
|
||
(k)
|
Demands
and
Notices.
|
||
All demands, specifications and notices under this Annex will be made to the following addresses:
|
|||
(m)
|
Other Provisions
.
|
|||
(i)
|
Party A and Party B agree that, notwithstanding anything to the contrary in the recital to this Annex, Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12, (a) the term
“
Secured Party
”
as used in this Annex means only Party A, (b) the term
“
Pledgor
”
as used in this Annex means only Party B, (c) only Party B makes the pledge and grant in Paragraph 2, the acknowledgment in Paragraph 8 as amended by this Paragraph 13 and the representations in Paragraph 9 as amended by this Paragraph 13 and (d) only Party B will be required to make Transfers of Eligible Collateral hereunder. Party A and Party B further agree that, notwithstanding anything to the contrary in the recital to this Annex or Paragraph 7, this Annex will constitute a Credit Support Document only with respect to Party B, and the Events of Default in Paragraph 7 and Specified Conditions in Paragraph 13(d) will only apply to Party B.
|
|||
(ii)
|
The definition of Shares, as this term is used in this Paragraph 13, shall mean the Shares (as defined in the Confirmation), including, without limitation, all dividends, distributions, instruments or other property or proceeds relating thereto. Additionally, Posted Collateral shall include (a) all rights of the Pledgor under the LLC Agreement (as defined in the Confirmation), together with all right, title and interest to all distributions and other proceeds to which Party A is entitled as holder of the Shares; and (b) to the extent not covered by the definition of Posted Collateral under this Annex as amended by this Paragraph 13(m)(iii), all proceeds of the foregoing.
|
|||
(iii)
|
Conditions Precedent
.
No later than the Trade Date in respect of the Transaction, Party B shall have delivered to Party A all documentation necessary to validly Transfer the Shares in forms reasonably acceptable to Party A, which documentation shall include:
|
|||
(1)
|
a duly executed and acknowledged Assignment Agreement (as defined in the Confirmation);
|
(2)
|
the Shares, in certificated form, duly issued and executed by the Issuer (as defined in the Confirmation) pursuant to the LLC Agreement, together with undated and blank endorsements;
|
|||
(3)
|
a copy of the register of the Issuer, duly updated to record the Transfer of the Shares to Party A and the pledge of the Shares by Party B to Party A; and
|
|||
(4)
|
such other documents and instruments as may be reasonably necessary or desirable to further carry out the purposes of the Transaction as determined by Party A.
|
|||
(iv)
|
The definition of (i)
“
Exposure
”
hereunder is amended to delete the definition thereof and replace it with the following: “Exposure shall be equal to the Independent Amount”; and (ii) the definition of
“
Value
”
is hereby amended by deleting clause (i)(B) and replacing it with the following: “Shares, the Fair Market Value of such Shares as defined in the Confirmation.”
|
|||
(v)
|
Paragraph 8 of this Annex is hereby amended by adding the following provisions directly below clause (a)(iv) thereof:
|
|||
(v)
|
The Secured Party may, in its discretion, but shall not be obligated to, sell the Posted Collateral or any part thereof by private sale in such manner and under such circumstances as the Secured Party may deem necessary or advisable. Seller may purchase the Posted Collateral in lieu of effecting any private sale of the Posted Collateral. Without limiting the generality of the foregoing, in any such event, the Secured Party in its discretion (x) may, in accordance with applicable securities laws, proceed to make such private sale, (y) may approach and negotiate with a single possible purchaser to effect such sale, including, without limitation, the Issuer and (z) may restrict such sale to a purchaser who is an accredited investor under the Securities Act of 1933, as amended, and, if required by the Issuer, a qualified purchaser under the Investment Company Act of 1940, as amended, and who will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or sale of such Posted Collateral or any part thereof. In addition, the Secured Party in its reasonable discretion (subject only to applicable requirements of law), may require that any sale hereunder (including a sale at auction) be conducted subject to restrictions:
|
|||
(1)
|
as to the financial sophistication and ability of any Person permitted to bid or purchase at any such sale;
|
|||
(2)
|
as to the content of legends on the Shares sold in such sale, including restrictions on future transfer thereof;
|
|||
(3)
|
as to the representations required to be made by each Person bidding or purchasing at such sale relating to that Person’s access to financial information about the Pledgor and such Person’s intentions as to the holding of the Posted Collateral so sold for investment for its own account and not with a view to the distribution thereof; and
|
(4)
|
as to such other matters as the Secured Party may, in its discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with relevant insolvency or bankruptcy laws and other laws affecting the enforcement of creditors’ rights and the Securities Act of 1933, as amended and all applicable state securities laws.
|
|||
(vi)
|
The Pledgor agrees to the maximum extent permitted by applicable law that following the occurrence and during the continuance of an Event of Default or Termination Event with respect to the Pledgor, it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in force in order to prevent or delay the enforcement of this Agreement, or the absolute sale of the whole or any part of the Posted Collateral or the possession thereof by any purchaser at any sale hereunder, and the Pledgor waives the benefit of all such laws to the extent it lawfully may do so. The Pledgor agrees that it will not interfere with any right, power and remedy of the Secured Party provided for in this Agreement or in the other Credit Support Documents to which the Pledgor is a party or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Secured Party of any one or more of such rights, powers or remedies;
|
|||
(vii)
|
The Pledgor further agrees that a breach of any of the covenants contained herein will cause irreparable injury to the Secured Party, that the Secured Party shall have no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained herein shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants;
|
(viii)
|
TO THE MAXIMUM EXTENT PERMITTED BY LAW, FOLLOWING THE DELIVERY BY PARTY A OF A NOTICE OF AN EVENT OF DEFAULT OR A TERMINATION EVENT WITH RESPECT TO THE PLEDGOR, THE PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE SECURED PARTY AS THE PROXY AND ATTORNEY-IN-FACT OF THE PLEDGOR WITH RESPECT TO THE POSTED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH POSTED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH POSTED COLLATERAL, SUBJECT TO THE LLC AGREEMENT OF THE ISSUER, THE APPOINTMENT OF THE SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH POSTED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF MEMBERS, CALLING SPECIAL MEETINGS OF MEMBERS AND VOTING AT SUCH MEETINGS), IN EACH CASE SUBJECT TO THE LLC AGREEMENT OF THE ISSUER. SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH POSTED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH POSTED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT OF DEFAULT OR A TERMINATION EVENT WITH RESPECT TO THE PLEDGOR; AND
|
|||
(ix)
|
THE APPOINTMENT OF THE SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT IN THIS CLAUSE 8(A) IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS TRANSACTION IS TERMINATED IN ACCORDANCE WITH ITS TERMS. THE APPOINTMENT OF SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT, WITHOUT LIMITATION, TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT THAT THE SECURED PARTY MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION TO PAY OR DISCHARGE TAXES OR LIENS LEVIED OR PLACED UPON OR THREATENED AGAINST THE POSTED COLLATERAL, THE LEGALITY OR VALIDITY THEREOF AND THE AMOUNTS NECESSARY TO DISCHARGE THE SAME TO BE DETERMINED BY THE SECURED PARTY IN ITS SOLE DISCRETION, ANY SUCH PAYMENTS MADE BY THE SECURED PARTY TO BECOME OBLIGATIONS OF THE PLEDGOR TO THE SECURED PARTY, DUE AND PAYABLE IMMEDIATELY WITHOUT DEMAND. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE SECURED PARTY NOR ANY OF ITS RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
|
(vi)
|
Paragraph 9 of this Annex is hereby amended by adding the following representations to the end of clause (iv) thereof:
|
|||
(v)
|
The Pledgor has not performed and will not perform any acts that might prevent the Secured Party from enforcing any of the terms of this Agreement or that might limit the Secured Party in any such enforcement;
|
|||
(vi)
|
all Posted Collateral constituting the Shares has been duly authorized, validly issued, are fully paid and non-assessable; with respect to any Shares that are represented by certificates delivered to the Secured Party or attributed to a securities account, such Shares are Securities as defined in Article 8 of the UCC;
|
|||
(vii)
|
none of the Posted Collateral has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, and there are existing no options, warrants, calls or commitments or liens of any character whatsoever relating to the Posted Collateral which are the Shares (except for any options, warrants, calls or commitments or liens created by or contemplated in this Agreement) or which obligate the Issuer of the Shares included in the Posted Collateral to issue additional membership interests to the Pledgor;
|
|||
(viii)
|
The representations and warranties set forth in this Paragraph 9 shall survive the execution and delivery of this Agreement, and shall be deemed repeated on each Business Day on which Posted Collateral is removed, added or substituted pursuant to the terms hereof; and
|
|||
(vii)
|
Paragraph 10 of this Annex is hereby amended by adding the following clause (d) at the end of clause (c) thereof: “The obligation of the Pledgor to pay expenses as set forth in this Paragraph 10 shall survive the termination of the Agreement and the discharge of the Pledgor’s obligations thereunder.”
|
|||
(viii)
|
Paragraph 11 of this Annex is hereby amended by adding the following clauses at the end of such Paragraph:
|
|||
(g)
|
The Pledgor will maintain, and will cause the Issuer to maintain, complete and accurate books and records with respect to the Posted Collateral. The Pledgor will not intervene with any rights that the Secured Party may have to inspect the books and records of the Issuer.
|
(h)
|
The Pledgor hereby authorizes the Secured Party to file, and if requested will deliver to the Secured Party, all financing statements (including, without limitation, a UCC financing statement in the name of the Pledgor in the UCC jurisdiction) and other documents and other instruments and take such other actions as may from time to time be requested by the Secured Party in order to maintain a first-priority perfected security interest in and control of, the Posted Collateral in any relevant jurisdiction. Any financing statement filed by the Secured Party may be filed in any filing office in any UCC jurisdiction and may (i) describe the Collateral by any description which reasonably approximates the description contained in this Annex and the Confirmation, and (ii) contain any other information required by Part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether the Pledgor is an organization, the type of organization and any organization identification number issued to the Pledgor. The Pledgor also agrees to furnish any such information to the Secured Party promptly upon request. The Pledgor also ratifies its authorization for the Secured Party to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. The Pledgor shall pay all actual and reasonable out-of-pocket third party expenses incurred in connection with such liens and security interest within five (5) Business Days.
|
|||
(i)
|
Except as specifically provided in the Agreement, the Pledgor will not sell, assign, transfer, pledge, dispose or otherwise encumber any of its rights in or to the Posted Collateral, or any unpaid dividends, interest or other distributions or payments with respect to the Posted Collateral or grant a security interest or lien in the Posted Collateral without the prior consent of the Secured Party.
|
|||
(j)
|
The Pledgor will not create, incur, or suffer to exist any lien on the Posted Collateral except the security interest created by this Agreement and any lien created in favor of Party A in the usual course of business. The Pledgor will not authorize the filing of any financing statement or any other document or instrument naming the Pledgor as debtor covering all or any portion of the Posted Collateral other than in favor of the Secured Party. The Pledgor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Secured Party. The Pledgor shall ensure that the Issuer remains duly incorporated and in good standing in the jurisdiction in which it is organized and each jurisdiction in which it conducts its business.
|
|||
(k)
|
The Pledgor shall (a) deliver to the Secured Party the originals of the Assignment Agreement relating to the Shares that constitute Posted Collateral, and (b) hold in trust for the Secured Party upon receipt and immediately thereafter deliver to the Secured Party any other securities and/or instruments constituting Posted Collateral.
|
(1)
|
The Pledgor shall, and will permit the Secured Party to, from time to time cause the Issuer of any uncertificated securities or other types of Eligible Collateral that constitute Posted Collateral not represented by certificates to mark its books and records with the numbers and face amounts of all such uncertificated securities and all rollovers and replacements therefor to reflect the lien of the Secured Party granted pursuant to this Annex. The Pledgor will take any actions necessary to cause the Issuer of any such uncertificated securities to cause the Secured Party to have and retain control over such uncertificated securities.
|
|||
(m)
|
The Pledgor shall not (i) permit or suffer the Issuer to dissolve, merge, liquidate, retire any of the Shares or other instruments or securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets or merge or consolidate with any other entity, or (ii) vote any of the Shares in favor of any of the foregoing.
|
|||
(n)
|
The Pledgor shall, until the Secured Party delivers a notice of an Event of Default or a Termination Event with respect to the Pledgor, be entitled to exercise all voting rights and any other rights relating to any Shares constituting Posted Collateral with the prior written consent of the Secured Party. Upon delivery by the Secured Party of a notice of an Event of Default or a Termination Event with respect to the Pledgor, the Secured Party shall, at all times prior to the termination of this Annex but subject to all of the restrictions and limitations with respect to the Shares under the LLC Agreement of the Issuer, be entitled to exercise (or, if applicable, to direct the Pledgor with respect to its exercise of) all voting rights or other rights relating to Posted Collateral, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any Shares constituting Posted Collateral as if it were the absolute owner thereof.
|
|||
(o)
|
The Pledgor will not interfere with any right, power and remedy of the Secured Party provided for in this Annex or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Secured Party of any one or more of such rights, powers or remedies.
|
|||
(p)
|
The Pledgor shall not (a) change its name as it appears in official filings in the jurisdiction of its incorporation or organization, (b) change the type of entity that it is, (c) change its organization or registration identification number, if any, issued by its jurisdiction of incorporation or other organization, or (d) change its jurisdiction of incorporation or organization, in each case, unless the Secured Party shall have received at least ten (10) days prior written notice of such change and the Secured Party shall have acknowledged in writing that either (1) such change will not adversely affect the validity, perfection or priority of the Secured Party’s security interest in the Posted Collateral, or (2) any action requested by the Secured Party in connection therewith has been completed or taken (including any action to continue the perfection of any liens in favor of the Secured Party in any Posted Collateral).
|
(q)
|
This Agreement and Annex shall remain in full force and effect and continue to be effective should any petition be filed by or against the Pledgor for liquidation or reorganization, should the Pledgor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of the Pledgor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
|
|||
(r)
|
The Pledgor acknowledges that the agreements made by it and the authorizations granted by it hereunder are irrevocable and that the authorizations granted in this Paragraph 13 hereof are powers coupled with an interest until payment in full of all amounts due under this Agreement and Annex.
|
|||
(s)
|
The Secured Party may execute any of its duties hereunder by or through agents or employees and shall be entitled to advice of counsel concerning all matters pertaining to its duties hereunder. Neither the Secured Party, nor any of its respective officers, directors, employees, agents or counsel shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.
|
If to the Pledgor, to:
|
c/o SL Green Realty Corp.
|
|
420 Lexington Avenue
|
||
New York, New York 10170
|
||
Attn: Andrew S. Levine, Esq.
|
||
Facsimile No.: (212) 356-4135
|
||
With a copy to:
|
Paul, Weiss, Rifkind, Wharton & Garrison, LLP
|
|
1285 Avenue of the Americas
|
||
New York, New York 10019
|
||
Attn: Peter E. Fisch, Esq.
|
||
Facsimile No.: (212) 492-0424
|
SECURED PARTY: | |||
MAZAL 485 LLC , a Delaware limited liability company | |||
|
By:
|
||
Name: | |||
Title: |
PLEDGOR: | |||
GREEN 485 HOLDINGS LLC , a Delaware limited liability company | |||
|
By:
|
||
Name: | |||
Title: |
Green 485 JV LLC, the Company referred to in this Agreement, by its signature:
|
||
(i)
|
consents in all respect to the transactions effected by this Agreement,
|
|
(ii)
|
agrees to make all Distributions payable to Pledgor directly to Secured Party, pursuant to instructions to be provided by Secured Party, until Secured Party provides written notice to Green 485 JV LLC to the contrary,
|
|
(iii)
|
agrees to be bound by all of the terms, covenants and provisions of this Agreement, including, without limitation, the right of Secured Party to declare the Debt immediately due and payable in accordance with the provisions hereof.
|
GREEN 485 JV LLC , | |||
a Delaware limited liability company | |||
By: | GREEN 485 HOLDINGS LLC, its managing member | ||
By: | |||
Name: Andrew S. Levine | |||
Title: Executive Vice President |
1.
|
Debt:
|
The term “
Debt
” as used in this Agreement shall mean, collectively, all principal, interest and other sums of a nature whatsoever which may or shall become due and payable under the Loan Documents.
|
|
2.
|
Loan Documents:
|
The term “
Loan Documents
” as used in this Agreement shall mean, collectively, the following documents and instruments executed and delivered in connection with the Loan:
|
|
(A)
|
This Agreement.
|
||
(B)
|
The Note.
|
||
(C)
|
All other documents and instruments of any nature whatsoever executed and delivered in connection with the Loan or otherwise relating thereto.
|
||
3.
|
Material Adverse Effect:
|
The term “
Material Adverse Effect
” as used in this Agreement shall mean a material adverse effect on Pledgor’s ability to perform its obligations under this Agreement.
|
|
4.
|
LLC Agreement:
|
The term “
LLC Agreement
” as used in this Agreement shall mean that certain Amended and Restated Limited Liability Company Agreement of Green 485 JV LLC, dated as of _____________, 2009, among Secured Party, Pledgor and [SLGOP Subsidiary], as the same may hereafter be amended, modified, restated or supplemented in accordance with its terms.
|
|
5.
|
Note:
|
The term “
Note
” as used in this Agreement shall mean that certain Secured Note dated as of the date hereof in the principal sum of $______________ given by the Pledgor to the Secured Party, as the same may be hereafter amended, modified, restated or supplemented in accordance with its terms or by the mutual consent of Secured Party and Pledgor.
|
ASSIGNOR: | |||
GREEN 485 HOLDINGS LLC,
a Delaware limited liability company |
|||
|
By:
|
||
Name: Andrew S. Levine | |||
Title: Executive Vice President |
ASSIGNEE: | |||
MAZAL 485 LLC,
a Delaware limited liability company |
|||
|
By:
|
||
Name: | |||
Title: |
Fr. | 23'500'000.00 | total purchase price. |
Niederglatt, October 29. 2009
|
||
The Selling Party:
|
||
Züblin Immobilien AG
|
||
/s/ Bruno Schefer
|
/s/ Jonathan van Gelder
|
|
Bruno Schefer
|
Jonathan van Gelder
|
|
The Acquiring Party:
|
||
Optibase RE 1 s.a.r.l:
|
||
/s/ Thomas Ziegler
|
||
Thomas Ziegler
|
|
NOTARIAL OFFICES NIEDERGLATT | |
|
Christian Bucher, Assistant to the Notary Public |
|
Stamp: notarized and filed for registration Niederglatt, this 29 th day of October 2009 Notarial Office and Land Registry Niederlatt Christian Bucher, Assistant to the Notary Public |
Basler
Kantonalbank
fair banking
|
|
Copy of letter – return to BKB
Commercial customers
POB
CH-4002 Basel
Phone +41(0)612663333
Fax +41 (0)61
BKB-EasyTrading +41 (0)61 266 31 31
BKB-Lady-Consult +41 (0)61 266 30 00
BKB-Seniorenberatung +41 (0)61 266 33 66
welcome@bkb.ch
www.bkb.ch
Postkonto 40 - 61 - 4
MWST-Nr_ 116 650
|
Optibase RE 1 S.à.r.l.
54, avenue de la Liberté
L-1930 Luxembourg
|
Borrower
|
Optibase RE 1 S.à.r.l.
54, avenue de la Liberté
L-1930 Luxembourg
hereafter referred to as Borrower
|
Creditor
|
Basler Kantonalbank
Spiegelgasse 2
4051 Basel
hereafter referred to as BKB
General limits (covered by mortgage)
|
Amount
|
CHF 18,800,000.00
(eighteen million eight hundred Swiss Francs)
|
Credit purpose
|
Financing of the property at Riedmattstrasse 9 in 8153 Rümlang
|
Use
|
The line of credit is available to the borrower any time alternatively - within the framework of the available limit components within the total limit of CHF 18.8 million.- for the following use variations:
●
in the form of fixed advances in installments of at least CHF 0.5 million, usable within a time period of 1 to maximum 60 months
and/or
●
in the form of a variable mortgage
|
Basler
Kantonalbank
fair banking
|
Conditions
|
Fixed advance payments
|
Interest rate
|
The determination of the interest rate depends on the current situation on the money and capital markets (Reference rate: Libor/Swap), plus a margin of 0.80 % p.a. for all time periods.
The BKB reserves the right to adjust the margin anytime to the changed situation, should the credit standing of the borrower or the quality of the property deteriorate considerably.
Fresh receipts or extensions are dealt with on telephone under consideration of the two-day value position which is usual in money market business. The rates established in that way are net and fixed for the whole time duration. The borrower shall receive a relevant confirmation of the concluded money market business in a separate letter.
|
Calculation of interest
|
International Interest rate (exact days/360)
|
Interest dates
|
For a duration of up to 3 months the charging of interest takes place upon expiry of the period, for periods exceeding that it takes place quarterly.
If the due date for interest or capital happens to fall on a bank holiday, then the next bank working day shall serve as the pay day, unless this happens to fall in the next calendar month, in which case the previous bank working day shall be the pay day. Interests are calculated up to the actual pay date.
|
Re-imbursements
|
Not possible within the agreed time duration. As long as nothing else has been agreed on, fixed installments are due for re-imbursement upon expiry of the period.
●
Variable mortgage
|
Interest rate
|
at the moment: 3.00 % p.a. net
|
Calculation of interest
|
German Interest rate (360/360 days)
|
Change in interest due dates
|
Possible any time with adherence to a three months notice
|
Interest due dates
|
Quarterly, on 31st March, 30th June, 30th September and 31st December respectively.
The BKB reserves the right to set the interest due dates differently any time at its discretion or to determine their number afresh.
|
Re-imbursements
|
Directly possible within the agreed duration with adherence to a three months notice.
|
Basler
Kantonalbank
fair banking
|
Amortization
|
CHF 94,000.00 per quarter / the first time on 31st March 2010
Should one of the three main tenants (Polymed Medical Center, DHL Logistics (Switzerland) AG, Arrow CE International) drop out or cancel his existing tenancy relationship and the rooms cannot be rented out within a time limit of 6 months after cancellation in respect of an advert under similar conditions, the BKB reserves the right to possible adjustment of the amortizations.
Within the scope of the respective amortizations the available limit reduces.
|
Guarantee
|
- 12,500,000.00 registered bond in the 1st rank
- 600,000.00 bearer bond in the 2nd rank
- 500,000.00 bearer bond in the 2nd rank
- 22,200,000.00 registered bond in the 3rd rank
all signed in the land register Rümlang, Sheet No. 1688, land register No. 4778, Plan 40 holding 5.090 m2 with office and commercial buildings on Riedmattstrasse 9 in 8153 Rümlang.
Bond debtors and owners: Optibase RE 1 S.à.r.l.
BKB assumes this title using transfer of ownership as security on a debt on property.
- Pledging of account credit
All credit on the relevant rent account, in the names of the borrower, are pledged to BKB in accordance with the enclosed form „General Pledges”.
- Transfer of all existing and future rent demands with all rent guarantees from the aforementioned property.
In this connection, the borrower commits himself to open/ maintain a rent account at the BKB, through which all rent of the categorized property is taken. BKB has to be informed at least annually without request, the first time on 31-12-2009, about the current rent level of the property. The transfer of the rent demands can be communicated to the tenants in writing through notification letters.
- Transfer of the company capital of Optibase RE 1 S.à.r.l.
|
Basler
Kantonalbank
fair banking
|
|
The disbursement of the credit amount can take place as soon as
|
Disbursement | a) |
all documents necessary for the identification of the borrower without problems in accordance with the VSB-agreement (in conjunction with the banks’ obligation to care) are in the hands of BKB in proper arrangement;
|
b) |
either the bonds listed under the item „Securities“ and recorded in the land register or the relevant interim receipts are in the hands of BKB;
|
|
c) |
all agreements (purchase agreement, all tenancy agreements, credit agreement, transfer of ownership as security on a debt, pledge agreements etc.) legally signed, are in the hands of BKB properly arranged, and
|
|
d) |
personal funds (difference between purchase price and grant plus hand change and other costs) have been realized in the process.
|
|
e) |
the pledging of company capital listed under item „Securities“ can take place due to reasons of time and in exceptional cases also after the disbur
sement of funds, however latest by 31st December 2009.
|
Cancellation
|
The present general limit can be cancelled any time and by mutual agreement with 3 months notice.
The fixed agreed duration of the contract with fixed installments doesn't allow any early cancellation. If the total amount is used in the form of fixed installments by the time of the cancellation, then the cancellation becomes effective only on the due date respectively.
The BKB has the right with regard to this, to declare any time the whole line of credit and the relevant uses, including accrued interest and costs up to the day of the payment, due and payable immediately in the following cases:
- if the borrower is in delay with the payment of a due capital or interest amount by more than 30 days;
- if the borrower is no longer able to fulfill some of his probably existing legally binding obligations towards third parties, and this state of affairs cannot be resolved within 30 days;
- if any prosecution measures are instituted against the borrower (distraint, use of pledged articles, bankruptcy, notice to the judge of over indebtedness, and the like) or if the borrower personally seeks deferment of discounts; in case of considerable change, in the view of BKB, in the participation conditions, dissolution, merger (in which the borrower is not the company continuing to exist), shifting of location, change of legal form or reorganization (in which the substance deteriorates considerably, in the view of BKB), unless such reorganization guarantees enough security, in the view of the BKB;
|
Basler
Kantonalbank
fair banking
|
Basler
Kantonalbank
fair banking
|
Expenses
|
The compensation of BKB is measured according to the respective applicable tariff for the services listed there which are subject to expenses. The borrower is given a copy of it. The BKB reserves the right to make changes any time. Changes are made known to the borrower through circulation channels or other suitable means (e.g. through notice and circulation of relevant leaflets in the business hall of BKB), and are regarded as approved if there is no contradiction within one month.
The BKB can likewise charge separately for expenses (including delivery expenses) as well as extraordinary efforts of other nature than that mentioned in the tariff.
|
Other conditions
|
During the complete duration of the credit relationship, the borrower obliges himself to inform the BKB about essential changes immediately, namely if circumstances which can form reason for a cancellation according to the termination clause emerge or happen.
The borrower confirms that he shall submit his financial statement consisting of the income statement, the balance sheets and the appendix as well as the report of the auditing authority to the BKB within a useful period after conclusion of the financial year, without being asked.
The borrower obliges himself to maintain the building, for which the credit was granted, in good condition and to accomplish all necessary renovation and maintenance work professionally. To this end the borrower grants BKB access to the building any time after prior announcement and in keeping with the rental legal regulations.
Moreover, the borrower obliges himself during the validity of this general credit agreement, neither to further encumber the property serving the BKB as a security or to set up new mortgages on it, nor to lend out empty titles again or in the case of existing lending, to lend out mortgage titles becoming free through amortizations without consent of the BKB.
If the property serving the BKB as security is threatened by the danger of value depreciation, no matter for what reasons, then the BKB is also authorized but not obliged to undertake legal negotiations with the authorities, courts of law, etc, just like the owner himself.
According to article 818 ZGB the basic mortgage also offers security for processing expenses.
With the signature under this contract, the borrower authorizes the BKB to settle possible bills for the land register charges directly by debiting the mentioned rent account to be newly opened.
The BKB is the only credit granting bank and all of the sales of the borrower from the Swiss property on Riedmattstrasse 9 in 8153 Rümlang in respect of rental incomes are processed through the BKB.
The BKB is authorized to make the whole outstanding credit, including interest accrued up to the day of payment, due for immediate repayment any time, if a substantial change in the control relationships (shareholders, shares) emerge with the borrower.
|
Basler
Kantonalbank
fair banking
|
Documents
|
The following documents form an integrated part of these credit agreement and with his legal signature under this agreement the borrower expressly confirms knowledge of the contents of the agreement:
- General terms and conditions
- General mortgage conditions
- Expenses leaflet
- Agreement (Transfer of ownership as security on a debt)
- Cession of rent
- General pledges
|
Place of jurisdiction
|
Swiss law applies. Place of jurisdiction is Basel city. Meanwhile, BKB also has the right to prosecute the borrower in every other responsible court.
|
A s a sign of your agreement with the contents of this credit agreement, would you please send the documents listed hereunder back to us dated and legally signed as soon as possible:
|
|
- Copy of the letter
- General mortgage conditions
- Agreement (Transfer of ownership as security on a debt)
- Cession of rent
- General pledges
|
|
We thank you very much for the confidence shown in us and look forward to further good and pleasant cooperation.
|
With best regards
/s/ Basler Kantonalbank
/s/ Sigrid Müller
Stefan Käsermann Sigrid Müller
Member of Board of Directors Cadre member
|
Basler
Kantonalbank
fair banking
|
Niederglatt, October 29. 2009
(Place and date)
|
Optibase RE 1 S.à.r.l.
/s/ Thomas Ziegler
(Signatures)
(Thomas Ziegler)
|
|
1.4.1.
|
"Purchase Price" means twenty percent (20%) multiplied by the Investment Amount (as defined below), calculated as of the date that the Option is exercised.
|
|
1.4.2.
|
“Investment Amount” means (A) the Transaction Costs (as defined below)
plus
the Transaction Cost Adjustment;
less
(B) the Shareholder Proceeds.
|
|
1.4.3.
|
The "
Transaction Cost Adjustment
" means ten percent of (x) the Transaction Costs
less
(y) any cash amounts distributed or deemed to be distributed as dividends; all as calculated on December 31
st
of each year.
|
|
1.4.4.
|
“Transaction Costs”
means the sum of (A) CHF 4,700,000 (four million and seven hundred thousand Swiss Franks
)
;
plus
(B) the Expenses.
|
|
1.4.5.
|
“Expenses”
means any of the following expenses that have been incurred by Optibase Ltd., Optibase Europe, or the Company as of the date when the option is exercised, as reasonably determined by the Company:
|
|
a.
|
all legal and accounting fees incurred and paid in connection with the Transaction;
|
|
b.
|
all other costs and expenses reasonably incurred in connection with the Transaction;
|
|
1.4.6.
|
“Shareholder Proceeds”
means all proceeds distributed by the Company to Optibase Europe as of the date that the Option is exercised, including without limitation:
|
|
c.
|
any amount actually distributed to Optibase Europe SARL as a dividend (subject to applicable law) from the net cash flows of the Company; and
|
|
d.
|
any amount of any proceeds that are actually distributed to Optibase Europe from: (i) a sale of all or part of the Property, or (ii) a refinancing of the existing mortgage loan on the Property or (iii) a sale of substantially all of the assets of the Company.
|
1.12.
|
Right of First Refusal
.
|
COMPANY
|
INVESTOR
|
||||
OPTIBASE RE 1 SARL
|
CHESSELL HOLDINGS LIMITED
|
||||
By:
|
/s/ Tom Wyler
/s/ Amir Philips
|
By:
|
/s/ David Pavoncelo
|
||
Name:
|
Tom Wyler
Amir Philips
|
Name:
|
David Pavoncelo
|
||
Title:
|
Authorized signers
|
Title:
|
1/3/10
|
||
OPTIBASE EUROPE
|
|||||
OPTIBASE REAL ESTATE EUROPE SARL
|
By:
|
/s/ Eyal Gross
|
|||
Name:
|
Eyal Gross
|
||||
By:
|
/s/ Tom Wyler
/s/ Amir Philips
|
||||
Name
|
Tom Wyler
Amir Philips
|
||||
Title
|
Authorized signers
|
ASSET PURCHASE AGREEMENT
|
1 | |
1. Definitions |
1
|
|
1.1
|
“Acquired Assets”
|
1
|
1.2 | “Adjustment Amount” | 4 |
1.3
|
“Ancillary Agreements”
|
4
|
1.4
|
“Assumed Agreements Schedule”
|
4
|
1.5
|
“Assumed Agreements”
|
5
|
1.6
|
“Assumed Employees”
|
5
|
1.7
|
“Assumed Liabilities”
|
5
|
1.8
|
“Attorney-in-Fact”
|
5
|
1.9
|
“Benefit Plan”
|
5
|
1.10
|
“Business Day”
|
6
|
1.11
|
“Business”
|
6
|
1.12
|
“Claim”
|
6
|
1.13
|
“Closing Date”
|
6
|
1.14
|
“Closing”
|
6
|
1.15
|
“Compensation Agreements”
|
6
|
1.16
|
“Consideration”
|
6
|
1.17
|
"Consortiums"
|
7
|
1.18
|
“Credit Event”
|
7
|
1.19
|
“Current Products”
|
7
|
1.20
|
“Disclosure Schedule”
|
7
|
1.21
|
“Earn-Out”
|
7
|
1.22
|
“Employee”
|
7
|
1.23
|
“Employment Agreement”
|
7
|
1.24
|
“Excluded Liabilities”
|
7
|
1.25
|
“Governmental Body”
|
8
|
1.26
|
“Grant”
|
8
|
1.27
|
“Grants Schedule”
|
8
|
1.28
|
“Indemnified Person”
|
8
|
1.29
|
“Indemnity Escrow Agent”
|
8
|
1.30
|
“Indemnity Escrow Deposit Agreement”
|
8
|
1.31
|
“Indemnify Escrow Deposit”
|
8
|
1.32
|
“Intellectual Property Rights Schedule”
|
8
|
1.33
|
“Intellectual Property Rights”
|
8
|
1.34
|
“Interim Financial Statements”
|
9
|
1.35
|
“Law”
|
9
|
1.36
|
“Liability”
|
9
|
1.37
|
“Lien”
|
9
|
1.38
|
“Location Leases”
|
9
|
1.39
|
“Location”
|
9
|
1.40
|
“Loss” or “Losses”
|
10
|
1.41
|
“Mandatory Severance Accounts”
|
10
|
1.42
|
“Mandatory Severance Accruals”
|
10
|
1.43
|
“Material Adverse Change”
|
10
|
1.44
|
“Material Adverse Effect”
|
10
|
1.45
|
“Ordinary Course of Business”
|
10
|
1.46
|
“Organizational Documents”
|
10
|
1.47
|
“Permit”
|
11
|
1.48
|
“Permits Schedule”
|
11
|
1.49
|
“Required Authorization Schedule”
|
11
|
1.50
|
“Tangible Assets Schedule”
|
11
|
1.51
|
“Tax Returns”
|
11
|
1.52
|
“Taxes”
|
11
|
1.53
|
"Vitec Multimedia"
|
11
|
1.54
|
“Waiver”
|
11
|
1.55
|
“Year-End Financial Statements”
|
12
|
|
12
|
|
2.1
|
Purchase and Sale
|
12
|
2.2
|
Closing Purchase Price
|
12
|
2.3
|
Signing Deposit
|
12
|
2.4
|
Adjustments for Receivables and Payables
|
13
|
2.5
|
Earn-Out
|
14
|
2.6
|
Assumption of Certain Liabilities
|
16
|
2.7
|
Non-Assignable Contracts; Consortium Agreements
|
16
|
2.8
|
Closing; Deliveries
|
16
|
2.9
|
Allocation of Closing Purchase Price
|
17
|
|
18
|
|
3.1
|
Due Incorporation and Qualification of Seller
|
18
|
3.2
|
Authority; Due Authorization; Valid Obligation
.
|
18
|
3.3
|
No Conflicts or Defaults
|
19
|
3.4
|
Government Body Authorizations
|
19
|
3.5
|
Title to Assets
|
20
|
3.6
|
Litigation
|
20
|
3.7
|
Financial Statements; Liabilities
|
20
|
3.8
|
Inventory
|
21
|
3.9
|
Intellectual Property Rights
|
23
|
3.10
|
Employment Matters
|
23
|
|
24
|
|
3.11
|
Agreements
|
24
|
3.12
|
Warranties
|
25
|
3.13
|
Permits; Compliance with Law
|
25
|
3.14
|
Insurance
|
25
|
3.15
|
Suppliers, Customers and End of Life of Components
|
25
|
3.16
|
Grants, Incentives and Subsidies
|
26
|
3.17
|
Brokers
|
26
|
3.18
|
Power of Attorney
|
26
|
3.19
|
Israeli Restrictive Trade Practices Law
|
26
|
3.20
|
Disclosure
|
27
|
4. Representations and Warranties of Purchaser |
22
|
|
4.1
|
Due Incorporation of Purchaser
|
22
|
4.2
|
Knowledge, Sophistication and Experience; Financial Capability
|
22
|
4.3
|
Due Diligence
|
22
|
4.4
|
Business Ability
|
28
|
4.5
|
Authority; Due Authorization; Valid Obligation
|
28
|
4.6
|
Restrictive Trade Practices Law
|
28
|
4.7
|
No Conflicts or Defaults
|
28
|
4.8
|
Authorization
|
29
|
4.9
|
Litigation
|
29
|
4.10
|
Brokers
|
29
|
4.11
|
Disclosure
|
29
|
|
29
|
|
5.1
|
Conduct of the Businesses Prior to Closing
|
28
|
5.2
|
Further Information
|
29
|
5.3
|
Notice of Certain Events
|
29
|
5.4
|
Consents, Waivers and Filings
|
29
|
5.5
|
Employees
|
30
|
5.6
|
Risk of Loss
|
31
|
|
32
|
|
6.1
|
Conditions to the Obligations of Purchaser
|
32
|
6.2
|
Conditions to the Obligations of Seller
|
32
|
|
34
|
|
7.1
|
Confidentiality
|
34
|
7.2
|
Non-Competition
|
34
|
7.3
|
Equitable Relief
|
35
|
|
35
|
|
8.1
|
Further Assurances
|
35
|
8.2
|
Collection
|
36
|
8.3
|
Information
|
36
|
8.4
|
Access to Records
|
36
|
8.5
|
Assistance
|
37
|
8.6
|
Limited Power of Attorney
|
37
|
8.7
|
Line of Business of Purchaser. Performance of Obligations.
|
37
|
|
37
|
|
9.1
|
Survival
|
36
|
9.2
|
Indemnification
|
37
|
9.3
|
Matters Involving Third Parties
|
37
|
9.4
|
Maximum Indemnification
|
37
|
9.5
|
Exclusive Remedy
|
38
|
9.6
|
Determination of Indemnity
|
39
|
|
40
|
|
10.1
|
Termination of Agreement
|
40
|
10.2
|
Effect of Termination
|
41
|
|
41
|
|
11.1
|
Governing Law
|
41
|
11.2
|
Submission to Jurisdiction
|
42
|
11.3
|
Arbitration
|
42
|
|
43
|
|
12.1
|
Press Releases and Public Announcements
|
43
|
12.2
|
Relationship of the Parties
|
43
|
12.3
|
No Benefit to Others
|
43
|
12.4
|
Integration of Terms
|
43
|
12.5
|
Succession and Assignment
|
43
|
12.6
|
Counterparts
|
44
|
12.7
|
Construction
|
44
|
12.8
|
Amendments and Waivers
|
44
|
12.9
|
Transfer Taxes
|
44
|
12.10
|
Expenses
|
45
|
12.11
|
Specific Performance
|
45
|
12.12
Severability and Blue Penciling
|
45
|
12.13
Notices
|
46
|
Exhibit A – Bill of Sale | |
Exhibit B – Notice of General Assignment | |
Form of Affidavit | |
Exhibit C - Trademark Assignment Agreement | |
Annex A – Trademark List | |
Exhibit D - Patent Assignment | |
Annex A – Patents List | |
Exhibit F – Agreement to Use of Names | |
Exhibit G – Signing Deposit Escrow Agreement | |
Exhibit N – Indemnity Escrow Agreement
|
|
Exhibit I – Other Transfer Documents
|
|
Exhibit J – Assumed Agreements
|
|
Exhibit K – Assumed Liabilities
|
|
Exhibit M - Employment Agreement
|
|
Exhibit O – Waiver
|
|
Exhibit P – Certificate of CEO of Seller
|
|
Certificate of CEO of Purchase
|
|
Exhibit Q – Seller’s Extract Board of Directors Resolution
|
|
1.
Authorization to Execute Documents
|
|
2.
Signatory Rights
|
|
Exhibit R - Legal Opinion of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
|
|
1.
Authorization to Execute Documents
|
|
2.
Signatory Rights
|
|
Exhibit U - Legal Opinion of Afik Turgeman.
|
|
Exhibit V – Allocation Schedule
|
|
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to acquire from Seller, substantially all of Seller’s assets related to its video business;
|
NOW, THEREFORE, in consideration of the premises, representations, warranties, and covenants herein contained, the Parties hereby agree as follows:
|
1.1 “Acquired Assets” |
shall mean all of Seller's rights, title and interest in and to all of Seller’s assets related to the Business, wherever held,
excluding the Excluded
Assets, but including all:
|
1.1.1
|
inventories of raw materials, supplies, parts, work-in-progress and goods owned by Seller including those which are located at the Locations or in the process of being shipped to the Locations, or otherwise delivered or in the process of being delivered to Seller, or on consignment with third parties, including those described on the list attached hereto as
Schedule A
;
|
1.1.2
|
any furniture, tools or equipment owned by Seller and which are used in the Business (other than those used by the Seller’s management which is not transferred to Purchaser), or otherwise delivered or in the process of being delivered to Seller, including any license rights to any non-proprietary computer software installed in any such equipment, and further including the assets described as owned by Seller on the Tangible Assets Schedule described on the list attached hereto as
Schedule B
;
|
1.1.3
|
to the full extent transferable under law, rights of Seller under the Assumed Agreements, including the agreements described in the Assumed Agreements Schedule and including all open purchase and sale orders, warranties, contracts, agreements, understandings, equipment leases and related maintenance agreements and licenses (whether of Intellectual Property Rights or otherwise);
|
1.1.4
|
prepaid expenses and similar assets, including those listed or described in the schedule attached hereto as
Schedule C
;
|
1.1.5
|
any receivables;
|
1.1.6
|
Intellectual Property Rights related to the Business, including those described in the Intellectual Rights Schedule, and any rights or licenses held thereby with respect to such Intellectual Property Rights owned by others and including: (i) all licenses and sublicenses granted and obtained with respect to Intellectual Property Rights, and rights thereunder; (ii) all Seller’s all source code of all software developed or licensed by Seller, all electrical scheme, BOMs, manufacturing files, design documents of any kind (software, hardware); (iii) all of Seller's databases related to the Business (technical, commercial and Business specific, accounting and (iv) all rights to protection of interests therein;
|
1.1.7
|
the goodwill of Seller in the Business and the right to use the term “Optibase” and any derivative or variant thereof;
|
1.1.8
|
all Claims or rights (and benefits arising therefrom) relating to the Acquired Assets arising on or after the Closing only, to the full extent legally transferable, including rights under insurance policies applicable to Seller for Claims arising on or after the Closing Date, provided that such Claims specifically relate to the assets listed in this definition of the Acquired Assets;
|
1.1.9
|
originals or true and complete copies of all books and records relating to the Acquired Assets, including, customer and supplier lists, credit files, project files, quotations and bids, plans, specifications and sales literature; and
|
1.1.10
|
Permits and all pending applications therefor or renewals thereof, including the Permits described in the Permit Schedule, all relating to the Business only.
|
|
all as the same exist on the Closing Date.
|
1.3.1
|
A Bill of Sale substantially in the form attached hereto as
Exhibit A
;
|
1.3.2
|
Notice of general assignment substantially in the form attached hereto as
Exhibit B
;
|
1.3.3
|
A Trademark Assignment substantially in the form attached hereto as
Exhibit C
;
|
1.3.4
|
A Patent Assignment substantially in the form attached hereto as
Exhibit D
;
|
1.3.5
|
undertakings of Purchaser to (i) the Investment Center of the Israeli Ministry of Industry and Trade; (ii) the Office of the Chief Scientist (regarding the transfer of privileges and obligations relating to the applicable Grant programs), Israeli Ministry of Industry and Trade; and (iii) the Consortiums supported by the European Commission (regarding the transfer of privileges and obligations relating to the applicable Consortium agreements); all in the forms attached hereto as
Exhibit E
, pursuant to which Purchaser shall undertake to assume the relevant Grant related royalty and other obligations to such Government Bodies with respect to the Business;
|
1.3.6
|
Agreement to use of name substantially in the form attached hereto as
Exhibit F
;
|
1.3.7
|
An Escrow Deposit Agreement (
Exhibit G
); and
|
1.3.8
|
The Signing Deposit Escrow Agreement and confirmation , in the form attached hereto as
Exhibit H;
and
|
1.3.9
|
Such other documents required to effect or perfect the transfer of the Acquired Assets (including pursuant to Israeli law), certain of which are substantially in the form attached hereto as
Exhibit I
.
|
1.5 “Assumed
Agreements”
|
shall mean those agreements, contracts or commitments to which Seller is a party, and which are in full force and effect as of the Closing Date relating to the: (i) Intellectual Property Rights (ii) any lease or conditional sales agreement pursuant to which Seller has licensed or acquired equipment or other personal property; (iii) any sales, lease or service contract or customer purchase order outstanding; (iv) any currently effective supply contract or open purchase order providing for the acquisition of materials, supplies, inventory, equipment or services by Seller; (v) any research and development, distribution, dealership, franchise, OEM, advertising, agency, manufacturer’s or sales representative or similar agreement; and (vi) any outstanding offer, agreement in principle or active ongoing negotiation, the acceptance or consummation of which would result in any of the foregoing; |
1.12 “Claim”
|
shall mean any claim, action, suit, proceeding, investigation or criminal proceeding, at law or in equity, before any national, state or provincial, local or other Governmental Body or other forum; |
1.15 “Compensation
Agreements”
|
shall mean (i) each and every oral or written compensation contract, commitment or understanding between Seller, on the one hand, and any Employee of Seller, on the other, which is not terminable with 30 days or less notice by Seller without cost or other liability to Seller, in any case other than verbal “at-will” employment agreements with any Employee whose gross cost to employer is less than $20,000 per year, and (ii) each and every oral or written consulting agreement, deferred compensation agreement, severance agreement or sales representative or other agency agreement or any covenant not to compete or confidentiality agreement, to which Optibase Ltd. or Optibase Inc. is a party; |
1.22 “Employee"
|
shall mean employees or independent consultants under contract of Seller on the date of this Agreement (all reference herein to Employees shall refer to consultants mutatis mutandis ), all listed in the schedule attached hereto as Exhibit L ; |
1.29 “Indemnity Escrow
Agent”
|
shall mean the escrow agent under the Escrow Deposit Agreement; |
1.33 “Intellectual Property
Rights
|
shall mean with regard to the Business only: (i) all copyrightable works, all copyrights, and all applications, registrations and renewals thereof, (ii) all trade names, fictional business names, trade dress rights, registered and unregistered trademarks and service marks and logos and corporate names, including any internet domain names, and applications therefor, together with all translations, adaptations, derivations and combinations and like intellectual property rightsand all applications, registrations and renewals thereof, (iii) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, divisions, continuations, continuations-in-part, substitutes, extensions, and reexaminations thereof, (iv) all proprietary formulations, know-how, confidential business information, trade secrets, research and development results, compositions, techniques, processes, information technology, technical data, designs, drawings, diagrams, specifications, catalogs, customer and supplier lists and contact information, pricing and cost information, business and marketing plans and proposals, and manufacturing, engineering, quality control, testing, operations, logistical, maintenance and other technical information and technology, (v) all mask works and all applications, registrations and renewals in connection therewith, (vi) all computer software (including data and related documentation), whether purchased, licensed or internally developed, and (vii) all copies and tangible embodiments thereof in whatever form or medium; |
1.35 “Law”
|
shall mean any applicable law, statute, rule, regulation, ordinance and other pronouncement having the effect of law of the State of Israel or any foreign country; |
1.40 “Loss” or “Losses"
|
shall mean any direct liability, Claim, loss, damage, costs or expenses (including reasonable attorneys’ fees and disbursements and the costs of litigation); |
1.41 “Mandatory
Severance Accounts
|
shall mean all amounts paid, withheld or held by Seller to satisfy the Mandatory Severance Accruals whether under Seller’s control or otherwise ; |
1.43 “Material
Adverse
Change”
|
shall have the meaning ascribed to it in § 3.7.3 below; For this purpose, the Parties agree that any effect or effects of more than $100,000 in the aggregate shall be deemed material; |
1.44 “Material
Adverse Effect”
|
shall mean, with regard to the Business, any
circumstance, change or effect that, either individually or in the aggregate with all other circumstances, changes or effects, (a) has a material adverse effect on the Business, Acquired Assets, financial condition or results of operations of Seller with respect to the Business or the conduct of the Business taken as a whole, but excluding (i) effects or changes that are generally applicable to the industries and markets in which the Business operates, (ii) changes in the world financial markets or general economic conditions, or (iii) effects directly or primarily arising out of the execution or delivery of this Agreement or the transactions contemplated hereby or the public announcement thereof; or (b) would have a material adverse effect on the ability of Seller to perform its obligations under this Agreement and the Ancillary Agreements or on the ability of Seller to consummate the transactions contemplated hereby.
For this purpose, the Parties agree that any effect or effects of more than $100,000 in the aggregate shall be deemed material;
|
1.47
“Permit”
|
shall mean any consent, license, certificates, registration, approvals, authorization or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law; |
1.51 “Tax Returns”
|
shall mean all federal, state, foreign, provincial and local tax (including income tax, value added tax and stamp tax) returns, notices, reports and computations; |
2.
|
Basic Tran
sac
tion
|
|
2.1
|
Purchase and Sale
Subject to the terms and conditions of this Agreement, on the Closing Date, Purchaser shall purchase from Seller, and Seller shall sell, convey, assign, transfer and deliver to Purchaser, for the consideration specified below, all of Seller’s rights, titles and interests in and to the Acquired Assets and the Assumed Liabilities. For clarification purposes the Parties acknowledge that the Excluded Assets shall not be sold, assigned or transferred to Purchaser. The Acquired Assets shall be made available to the Purchaser at the relevant Locations at the Closing and Purchaser, at its sole expense, shall remove all Acquired Assets from such Location. The risk of Loss in and to the all of the Acquired Assets shall transfer to the Purchaser at the Closing.
|
|
2.2
|
Closing Purchase Price
|
|
2.2.1
|
As consideration for the purchase of the Acquired Assets and the assumption of the Assumed Liabilities, Purchaser shall transfer at Closing to the Seller, the Consideration plus any applicable VAT. In connection with and in complete fulfillment of any obligation hereunder to pay the Consideration, Purchaser shall transfer portions of the Consideration as follows:
|
|
2.2.1.1
|
to Seller, the sum of the Consideration plus the Adjustment Amount, minus the Indemnity Escrow Deposit.
|
|
2.2.1.2
|
to Indemnity Escrow Agent, the Indemnity Escrow Deposit.
|
|
2.2.2
|
Purchaser shall also transfer the complete fees of the Indemnity Escrow Agent to such escrow agents.
|
|
2.3
|
Signing Deposit
|
|
2.4
|
Adjustments for Receivables and Payables
|
|
2.4.1
|
A = [Accounts Receivables, net of specific doubtful debt] - means all accounts receivable, notes receivable and other current rights to payment of Sellers, or any of its subsidiaries or other affiliates, together with any unpaid interest or fees accrued thereon or other amounts due with respect thereto, and any claim, remedy or other right related to any of the foregoing, including specific claims under the company receivables credit insurance policy];
|
|
2.4.2
|
B = [Other Receivables and Prepaid Expenses] - means all other accounts receivables, advance payments, payments made by Sellers on account of services or goods to be provided to Purchaser or received by Purchaser on or after the Closing, deposits, other current rights to payment of Sellers, or any of its subsidiaries or other affiliates, all together with any unpaid interest, fees or income accrued thereon or other amounts due with respect thereto, and any claim, remedy or other right related to any of the foregoing;
|
|
2.4.3
|
C = [Accounts Payables (other than ordered but unpaid for inventory)] - means all accounts payable owed to third parties with respect to the Business for raw materials or supplies received by or services rendered to Sellers;
|
|
2.4.4
|
D = [Other Payables] - means all other accounts payable owed to third parties with respect to the Business for services rendered to Sellers; and advance payment received by the European Commission on account of agreements to be executed after the Closing.
|
|
2.5
|
Earn-Out
|
|
2.5.1
|
The Consideration shall be adjusted 14 months after the Closing Date by making a calculation of the difference between the Current Product worldwide gross revenues of Purchaser (including any subsidiaries, affiliates, distributors or agents thereof) during the 12 months after the Closing Date and USD14 million and should such number be a positive number, Purchaser shall immediately pay Seller 45% of such difference.
|
|
2.5.2
|
For purposes of this §
2.4, the calculation of revenues deriving from Current Products shall be as stated in the consolidated and audited financial statements (prepared in accordance with relevant generally accepted accounting principles (GAAP) and applicable Law) of Vitec Multimedia and shall include revenues from Current Products which have undergone any changes, amendments or modifications.
|
|
2.5.3
|
Reports:
During the first 12 months after Closing, Purchaser shall deliver to Seller a report every 3 months (within 30 days of the end of the 3 months period) elaborating and detailing the accumulative sales subject to the payments under this Section
2.4 to such date and a final report relating to the entire 12 months period (in this §
2.4, "
Earn-Out Accounting
") within 14 months of Closing. The Earn-Out Accounting shall be accompanied by a letter of the accounting firm making the annual reports of Vitec Multimedia which confirms that such report is properly made and audited, with respect to the final report, pursuant to relevant generally accepted accounting principals (GAAP) and applicable law.
|
|
2.5.4
|
Disputes
. Unless Seller disputes the Earn-Out Accounting pursuant to this §
2.5.4, the Earn-Out Accounting delivered by Purchaser to Seller shall be final, binding and conclusive on the Parties. Notwithstanding anything to the contrary herein, Seller may dispute the Earn-Out accounting only as follows in this §
2.5.4. Seller shall send written notice of the dispute (In this §
2.5.4, “
Earn-Out Dispute Notice
”) to Purchaser within thirty days of receipt of the Earn-Out Accounting. The said thirty days period shall be extended by any period of time in which Purchaser failed to comply with its obligations in accordance with §
8.4 after the 12 months anniversary of the Closing. The Earn-Out Dispute Notice must identify each disputed item on the Earn-Out Accounting, specify the amount of such dispute and set forth, in reasonable detail, the basis for such dispute. In the event of such a dispute, Purchaser and Seller shall attempt in good faith to reconcile their differences, and any resolution by them as to any disputed items shall be final, binding and conclusive on Purchaser and Seller. It is clarified that at such time, any undisputed Earn-Out amounts will be paid by Purchaser to Seller. If any such resolution by Purchaser and Seller leaves in dispute amounts, the net effect of which in the aggregate would not affect the Earn-Out amount to be paid for more than USD40,000, then all such amounts shall be deemed to be resolved in favor of the Earn-Out Accounting delivered by Purchaser. If Purchaser and the Seller are unable to reach a resolution with such effect within thirty days after delivery of the Earn-Out Dispute Notice to Purchaser, then the Seller and Purchaser shall promptly submit any remaining disputed items to any senior partner in one of the top four independent accounting firms of international reputation mutually acceptable to the Seller and Purchaser, and in lack of agreement, one of the firms chosen by the head of the Israeli Bar Association to which any Party may approach (in this §
2.5.4,
“
Earn-Out Independent Accountant
”). If any remaining disputed items are submitted to an Earn-Out Independent Accountant for resolution: (A) Each of the Seller and the Purchaser shall be entitled to furnish the Earn-Out Independent Accountant with its reasoning within 14 days of the first meeting with the Earn-Out Independent Accountant, which shall be held as soon as possible after its nomination, and either Party shall be entitled to then respond once to the reasoning of the other Party within 14 days of receipt of such reasoning. The Earn-Out Independent Accountant shall be entitled to request additional information from either or both parties. Any correspondence with the Earn-Out Independent Accountant shall be in writing with copy to attorneys Doron Afik and Adva Bitan. The Earn-Out Independent Accountant shall make its decision within 14 days following the expiration of the response period set herein by notifying attorneys Doron Afik and Adva Bitan of his decision in writing and with reasoning, failing which, the Earn-Out Independent Accountant shall not be entitled to payment and the matter shall be referred to another arbitrator; (B) the determination by the Earn-Out Independent Accountant, as set forth in a written notice to the Seller and Purchaser, shall be final, binding and conclusive on the Parties; and (C) the fees and disbursements of the Earn-Out Independent Accountant shall be allocated between the Seller and Purchaser in the same proportion that the aggregate amount of the remaining disputed items submitted to the Earn-Out Independent Accountant that is unsuccessfully disputed by each Party (as finally determined by the Earn-Out Independent Accountant) bears to the total amount of all remaining disputed items submitted to the Earn-Out Independent Accountant.
|
|
2.6
|
Assumption of Certain Liabilities
|
|
2.6.1
|
At Closing, Purchaser shall assume and agree to pay, perform and discharge all of the Assumed Liabilities. Purchaser shall not assume or be required to pay, perform or discharge any of the Excluded Liabilities.
|
|
2.6.2
|
Seller shall be responsible for payment, performance and discharge of all Excluded Liabilities.
|
|
2.7
|
Non-Assignable Contracts; Consortium Agreements
|
|
2.7.1
|
Nothing herein shall be construed as requiring or permitting Seller to assign to Purchaser any Assumed Agreement that by its terms cannot be assigned (unless any required consent shall have been obtained). If, notwithstanding the best efforts of the Parties pursuant to §
5.3 below, any such consent to assignment shall not have been obtained, then, within a period of six (6) months following the Closing Date the Parties will use their respective best efforts to obtain such consent. Within said time frame, until such consent shall have been obtained or such restriction shall have been removed, Seller shall, by itself or by its agents, as agreed upon by the Seller and Purchaser and at the expense of Purchaser take all actions (i) in order that the rights and obligations of Seller under any such contract shall be preserved, (ii) for, and to facilitate, the performance of Seller’s obligations under such contract; and (iii) to cause the other party or parties thereto to perform its or their obligations thereunder (which performance shall be for the benefit of Purchaser). If after such six (6) months period following the Closing, the Seller and Purchaser were not able to assign any such agreement that by its terms cannot be assigned, Seller will not be obligated to assign such agreement and shall have no further obligation under this Section
2.7.1.
|
|
2.7.2
|
Notwithstanding anything to the contrary in this Agreement, and subject to the provisions of Section 10.1.2.3, if any required consent to assign a Consortium shall not have been obtained as of the Closing Date, Seller, in its sole discretion may pay the Purchaser the amount of USD 100,000 (one hundred thousand US dollars) for such non-transferable Consortium and such Consortium shall not be assigned to Purchaser under this Agreement.
|
|
2.8
|
Closing; Deliveries
|
|
2.8.1
|
Seller will deliver to Purchaser at Closing:
|
|
2.8.1.1
|
the Ancillary Agreements duly executed by Seller;
|
|
2.8.1.2
|
a certificate of the Chief Executive Officer of Optibase Ltd. substantially in the form attached hereto as
Exhibit P
;
|
|
2.8.1.3
|
General Meeting resolutions and an Extract of the Board of Directors resolutions substantially in the form attached hereto as
Exhibit Q
to approve the execution and consummation of this Agreement by Seller;
|
|
2.8.1.4
|
a legal opinion of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., counsel for Seller, substantially in the form attached hereto as
Exhibit R
, dated the Closing Date; and
|
|
2.8.2
|
Purchaser will deliver to Seller at Closing the following:
|
|
2.8.2.1
|
the Ancillary Agreements, duly executed by Purchaser, where relevant;
|
|
2.8.2.2
|
Board of Directors resolution substantially in the form attached hereto as
Exhibit S
to approve the execution and consummation of this Agreement by Purchaser;
|
|
2.8.2.3
|
An obligation of Vitec Multimedia to guarantee the full performance by Purchaser of this Agreement substantially in the form attached hereto as
Exhibit T
;
|
|
2.8.2.4
|
a legal opinion of Afik Turgeman, counsel for Purchaser substantially in the form attached hereto as
Exhibit U
, dated the Closing Date; and
|
|
2.8.2.5
|
the Consideration, as described in §
2.2 above.
|
|
2.9
|
Allocation of Closing Purchase Price
|
3.
|
Representations and
Warranties
of Seller
|
|
3.1
|
Due Incorporation and Qualification of Seller
|
|
3.1.1
|
Optibase Ltd. is a corporation duly incorporated and validly existing under the laws of the State of Israel, with full power and authority to own, lease and operate its properties, to carry on the Business in the places and in the Ordinary Course of Business and to execute, deliver and perform its obligations under this Agreement and the Ancillary Agreements.
|
|
3.1.2
|
Seller is qualified to do business in each jurisdiction in which the nature of the activities conducted by it or the character of the properties owned or leased by it makes such qualification necessary except where the failure to so qualify would not have a Material Adverse Effect on the Seller.
|
|
3.1.3
|
Neither Optibase Ltd. nor Optibase Inc. has undergone a Credit Event.
|
|
3.1.4
|
Optibase Ltd. is the sole shareholder of Optibase Inc. Optibase Inc. has been duly organized and is validly existing and in good standing under the laws of the State of California, with full power and authority to own, lease and operate its properties and to carry on the Business in the places and in Ordinary Course of Business.
|
|
3.1.5
|
Seller has furnished to Purchaser correct and complete copies of the Organizational Documents of Optibase Ltd. and Optibase Inc.
|
|
3.2
|
Authority; Due Authorization; Valid Obligation
.
|
|
3.2.1
|
Seller has taken all corporate action necessary for the execution and delivery by it of this Agreement and the Ancillary Agreements. Seller has taken, or at Closing will have taken, all corporate action necessary for the consummation of the transactions contemplated hereby and thereby.
|
|
3.2.2
|
This Agreement constitutes, and each of the Ancillary Agreements, when executed and delivered by Seller (to the extent that it is a party thereto), will constitute, the valid and binding obligations of Seller, enforceable against it in accordance with their respective terms, (i) subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally or to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (ii) except as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) except to the extent the indemnification provisions contained therein may be limited by applicable Law.
|
|
3.3
|
No Conflicts or Defaults
|
|
3.4
|
Government Body Authorizations
|
|
3.4.1
|
Attached hereto as
Schedule F
is a list describing any authorization, approval, order, license, permit or consent of, or filing or registration with, any Governmental Body, including (subject to the accuracy §
3.18 below) any filing, notifications or consent under the Israeli Restrictive Trade Practices Law required in connection with the execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements (“
Required Authorization Schedule
”).
|
|
3.4.2
|
Except as set forth on the Required Authorization Schedule, there is no other authorization, approval, order, license, Permit or consent of, or filing or registration with, any Governmental Body, that is required in connection with the execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements and consummation of the transactions contemplated hereby and thereby.
|
|
3.5
|
Title to Assets
|
|
3.6
|
Litigation
|
|
3.7
|
Financial Statements; Liabilities
|
|
3.7.1
|
Attached hereto as
Schedule H
are: (i) unaudited consolidated balance sheets and statements of income as of and for the nine months ended September 30, 2009 for Optibase Ltd. (“
Interim Results
”); and (ii) audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended (a) December 31, 2007; and (b) December 31, 2008 for Optibase Ltd. (together, “
Year-End Financial Statements
”).
|
|
3.7.2
|
All the Interim Results and the Year-End Financial Statements were prepared in accordance with US generally accepted accounting principals (in this §
3.7, “GAAP”) applied on a consistent basis, are reconcilable to the books and records of Optibase Ltd. and present fairly in all material respects the consolidated financial position of Optibase Ltd. as of the dates thereof and the consolidated results of Optibase Ltd.'s operations, cash flows and changes in equity for the periods then ended.
|
|
3.7.3
|
To its knowledge, Seller has no Liability (and there is no basis for any present or future Claim or demand against any of them giving rise to any Liability) that in accordance with GAAP would be required to be reflected on Seller’s balance sheet and are not reflected on the Interim Results. To its knowledge, since September 30, 2009, Seller has not incurred any Liabilities other than those incurred in the Ordinary Course of Business. To its knowledge, all such Liabilities incurred since September 30, 2009 are listed in the schedule attached hereto as
Schedule I
.
|
|
3.7.4
|
Since September 30, 2009 and except as provided for in
Schedule
J
, there has not been: (a) any material adverse change in the Business (including assets, condition (financial or otherwise)) or Business operations of Seller, taken as a whole (“
Material Adverse Change
”); (b) any material change (individually or in the aggregate) in the contingent obligations of Seller with respect to the Business only by way of guaranty, endorsement, indemnity, warranty or otherwise, other than in the Ordinary Course of Business; (c) any damage, destruction or Loss, whether or not covered by insurance, of any Acquired Assets that are (individually or in the aggregate) material to the Acquired Assets; (d) any waiver or compromise by Seller of a valuable right or of a material debt owed to it relating to the Business only; (e) any increases in the compensation of any of the Employees of Seller other than in the Ordinary Course of Business; (f) any entry into or amendment of any employment, consulting, agency, personal services, resulting in an increase compensation or severance agreement or arrangement with any party (other than hiring or dismissals of “at-will” employees in the Ordinary Course of Business); (g) any adoption or implementation of a new Benefit Plan, or any termination or significant change in the terms of (or benefits available under) any existing Benefit Plan, except where such adoption, implementation, termination or change would not have a Material Adverse Effect; (h) any agreement or commitment by Seller to do any of the things described in this §
3.7.3.
|
|
3.7.5
|
The cash portion of the Consideration (exclusive of the Indemnity Escrow Deposit), together with cash in the accounts of Seller, is sufficient to cover for all the Excluded Liabilities.
|
|
3.8
|
Inventory
|
|
3.9
|
Intellectual Property Rights
|
|
3.9.1
|
The schedule attached hereto as
Schedule K
contains a list of all: (i) registered Intellectual Property Rights which are owned, possessed or used by Seller in the Business, or Intellectual Property Rights related to the Business licensed to Seller; (ii) unregistered Intellectual Property Rights material to the Business which are owned, possessed or used by Seller in the Business, or Intellectual Property Rights related to the Business licensed to Seller; and (iii) licenses and other rights (other than disclosure of confidential information pursuant to non disclosure agreements) granted by Seller to any third party (including any rights to indemnification) with respect to any Intellectual Property Rights and all licenses and other rights granted by any third party to Seller with respect to any Intellectual Property Rights (other than “shrink wrap” software licenses for readily available computer software), in each case identifying the subject Intellectual Property Rights and the third party.
|
|
3.9.2
|
Seller has delivered to Purchaser correct and complete copies of all such patents, registrations, applications, licenses, agreements and rights (as amended to date) and has made available to Purchaser correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. Seller owns, or has the right to use pursuant to a valid, legal, binding and enforceable license (which is in full force and effect and has not been breached by Seller or by any other party thereto), all Intellectual Property Rights necessary for or used in the operation of the Business as currently conducted.
|
|
3.9.3
|
With respect to the Intellectual Property Rights owned by Seller, (i) Seller owns and shall convey and deliver to Purchaser at Closing, all right, title, and interest in and to all of such Intellectual Property Rights related to the Business free and clear of all Liens; (ii) such Intellectual Property Rights do not infringe any rights of any third parties; (iii) there have been no Claims against Seller asserting the invalidity, misuse or unenforceability of any of such Intellectual Property Rights; (iv) Seller has not received any notices of any interference, infringement or misappropriation by, or conflict with, any third party with respect to such Intellectual Property Rights or the conduct of the Business; (v) to the Seller's knowledge, such Intellectual Property Rights have not been interfered with, infringed upon or misappropriated by, any other persons; and (vi) the transactions contemplated by this Agreement (including the transfer of the Intellectual Property Rights to Purchaser) will not have any Material Adverse Effect on the Intellectual Property Rights. Without limiting any other provision of this §
3.9 and to Seller's knowledge, the conduct of the Business has not interfered with, infringed upon or misappropriated, and does not interfere with, infringe upon or misappropriate, any Intellectual Property Rights of any other persons, nor would any future conduct as presently contemplated by Seller’s present management interfere with, infringe upon or misappropriate, any of the Intellectual Property Rights of any other persons.
|
|
3.9.4
|
To Seller's knowledge, each employee or consultant of Seller who is, or has been, involved in the development of Intellectual Property Rights related to the Business is bound by an appropriate form of confidentiality and intellectual property assignment agreement, and retains no rights (whether by contract, by operation of law or otherwise) in or to any such Intellectual Property Rights. To the Seller's knowledge, none of the employees of Seller have improperly disclosed any Intellectual Property Rights related to the Business to any person.
|
|
3.9.5
|
Subject to the terms hereof, as of Closing, Purchaser will have the same rights, titles and interest in the Intellectual Property Rights Seller owned or possessed or was entitled to prior to the Closing Date. Any of such Intellectual Property Rights that are, either at the date of this Agreement or immediately prior to Closing, exclusive to Seller shall, upon Closing, be exclusive to Purchaser.
|
|
3.10
|
Employment Matters
|
|
3.10.1
|
The schedule attached hereto as
Schedule L
describes the terms of employment with Seller of all Employees, other than the CEO and CFO of the Seller, including the Mandatory Severance Accruals, Benefit Plans and Compensation Agreements, accrued vacation for each Employee and describes any severance benefits for and the circumstances under which each Employee is or would be entitled to such severance benefits, the amount of severance benefits funding balances or shortfalls, as well as recuperation pay (“
d’mei havra’a
”) balances, illness day balances, fringe benefits including balances in provident or pension funds, “13th and 14th salary,” car, telephone, managers insurance and any profit sharing commission, incentive or discretionary bonus arrangements to which Seller is a part.
|
|
3.10.2
|
Seller has delivered to Purchaser true, complete and correct copies or descriptions of each Benefit Plan applicable to Seller and any amendments thereto.
|
|
3.10.3
|
The accrued obligations, if any, of Seller under all Benefit Plans, including, but not limited to, the Mandatory Severance Accruals, are reflected on the Interim Financial Statements and 2008 Year-End Financial Statements as of their respective dates and on the books of Optibase Ltd. for periods thereafter up to the Closing Date.
|
|
3.10.4
|
Each Benefit Plan and any related trust complies currently, and has complied at all times in the past, both as to form and operation, in all material respects with the terms of such Benefit Plan and with the applicable provisions of applicable Laws, including, but not limited to, the laws of the State of Israel.
|
|
3.10.5
|
Seller is not a party to any union or collective bargaining contracts with respect to any employees and there has not been, nor has Seller received written notice threatening, any representational or organizational activity, strike, slowdown, picketing or work stoppage by any union or other group of employees against Seller. Notwithstanding the aforementioned, Seller is a member of the Manufacturers Association of Israel.
|
|
3.10.6
|
All contributions and all payments and premiums required to have been made to or under any Benefit Plan have been timely and properly made (or otherwise properly accrued if not yet due), and nothing has occurred with respect to the operation of the Benefit Plans that would cause the imposition of any Liability on Purchaser, including penalty or Tax under any applicable Law.
|
|
3.10.7
|
A final calculation of the employment-related rights and benefits of all of the Assumed Employees shall be made as of the Closing, including all amounts due to the Assumed Employees under the Mandatory Severance Accruals, Benefit Plans and Compensation Agreements and any other rights under Law, as if terminated without cause by Seller immediately prior to Closing and such payments will be made in full before Closing.
|
|
3.11
|
Agreements
|
|
3.11.1
|
Each of the Assumed Agreements is legal, valid, binding and enforceable against Seller, and the other parties thereto in accordance with its terms in all material aspects.
|
|
3.11.2
|
Seller has performed in all material respects all obligations required to be performed by it to date under, and is not in default in any material respect in respect of, any of the Assumed Agreements, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default.
|
|
3.11.3
|
To Sellers knowledge, no other party to any Assumed Agreement is in default in respect thereof in any material respect, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default.
|
|
3.11.4
|
Except as set forth on
Exhibit J
, no approval or consent of any third party is required to effect the transfer of any of the Assumed Agreements to Purchaser in accordance with the terms of this Agreement.
|
|
3.12
|
Warranties
|
|
3.12.1
|
The schedule attached hereto as
Schedule M
describes all warranties made by Seller covering or relating to any of the services delivered or the products designed, developed, manufactured, produced, distributed, supplied or sold by Seller in connection with the Business.
|
|
3.12.2
|
To Seller's knowledge, and except as provided for in
Schedule M
, there are no material Losses, Claims, damages, expenses or Liabilities (whether absolute, accrued, contingent or otherwise) of Seller asserted and arising out of or based upon incidents occurring on or prior to the Closing Date with respect to: (i) any product liability or any similar Claim that relates to any of the products designed, developed, manufactured, produced, distributed, supplied or sold by Seller in connection with the Business to others; or (ii) the delivery of faulty services; or (iii) any Claim for the breach of any express or limited product warranty, and Seller has no knowledge of any product or service defects which could give rise to any such Losses, Claims, damages, expenses or Liabilities.
|
|
3.12.3
|
There are no defects in the designs, specifications, or process with respect to any Current Product, except for such defects which would not have a Material Adverse Effect. During the past five years, there has been no material recall, withdrawal, or suspension from the market of any product designed, manufactured, sold, supplied or distributed by Seller.
|
|
3.13
|
Permits; Compliance with Law
|
|
3.13.1
|
The schedule attached hereto as
Schedule N
lists all material Permits held by Seller and its employees relating to the conduct of the Business, including any such Permits relating to protection of the environment or the use or disposal of hazardous materials.
|
|
3.13.2
|
Seller has complied in all material respects with the terms of each the Permits described in the Permit Schedule and any applicable Law. Seller has not received any Claim arising out of the failure to obtain any Permit. To Seller's knowledge, the Business has not been, and is not being, conducted in material violation of any Law including any such Laws relating to protection of the environment or the use or disposal of hazardous materials. None of the Permits will terminate, fail to automatically be assigned to Purchaser or lose effect as a consequence of the transactions contemplated by this Agreement.
|
|
3.14
|
Insurance
|
3.14.1
|
All of the Acquired Assets are adequately insured against loss or damage by theft, fire and all other hazards and risks of a character usually insured against by persons operating similar properties in the localities where such properties are located, under valid and enforceable policies issued by reputable insurance carriers. Set forth on the schedule attached hereto as
Schedule O
is a complete list of insurance policies which Seller maintains relating to the Business. Such policies are in full force and effect and Seller has not received a notice of cancellation relating to any such policies. Neither the execution of this Agreement nor performance of any transaction contemplated hereby shall affect the insured’s rights under such insurance policies and all rights and benefits under such insurance policies are assignable to the name or benefit of Purchaser.
|
|
3.15
|
Suppliers, Customers and End of Life of Components
|
|
3.15.1
|
Set forth on the schedule attached hereto as
Schedule P
is a list of all suppliers (including assemblers or manufacturers of component or finished products) and customers accounting for 5% or more of the annual purchases and sales, respectively, of Seller. To Seller's knowledge, Seller has adequate sources of supply for all Current Products or the components thereof.
Schedule P
includes also a list of End of Life of any component known to Seller. In the opinion of Seller, the relationship of Seller with such suppliers and customers is good and there has been no expression of any intention to terminate or materially modify any of such relationships.
|
|
3.16
|
Grants, Incentives and Subsidies
|
|
Schedule Q
describes all outstanding Grants to Seller, including the aggregate amounts of each Grant, and the aggregate outstanding obligations thereunder of Seller with respect to royalties, or the outstanding amounts to be paid to the Office of the Chief Scientist, Israeli Ministry of Industry and Trade and the composition of such obligations or amount by the product or product family that it relates to. No royalties are due to be paid to the Consortium. Except as provided in
Schedule Q
, there are no pending Grants to Seller.
|
|
3.16.2
|
Seller has made available to Purchaser, prior to the date hereof, correct copies of all applications for Grants submitted by Seller and of all letters of approval, and supplements thereto, granted to Seller, including those approved and appearing in the Grants Schedule. Seller is in material compliance with the terms and conditions of the Grants and has duly fulfilled all the undertakings relating thereto in all material respects. To Seller's knowledge, there is no event or other set of circumstances which might lead to the revocation or material modification of any of the Grants.
|
|
3.17
|
Brokers
|
|
3.18
|
Power of Attorney
|
|
3.19
|
Israeli Restrictive Trade Practices Law
|
|
3.20
|
Disclosure
|
4.
|
Representations
and Warranties
of Purchaser
|
|
4.1
|
Due Incorporation of Purchaser
|
|
4.2
|
Knowledge, Sophistication and Experience; Financial Capability
|
|
4.3
|
Due Diligence
|
|
4.4
|
Business Ability
|
|
4.5
|
Authority; Due Authorization; Valid Obligation
|
|
4.6
|
Restrictive Trade Practices Law
|
|
4.7
|
No Conflicts or Defaults
|
|
4.8
|
Authorization
|
|
4.9
|
Litigation
|
|
4.10
|
Brokers
|
|
4.11
|
Disclosure
|
5.
|
Pre-Closing C
oven
ants
|
|
5.1
|
Conduct of the Businesses Prior to Closing
|
|
5.1.1
|
Following the execution of this Agreement and prior to the Closing Date, Seller shall not, without prior written authorization of Purchaser, take any action that would otherwise be required to be disclosed on §
3.7.3 above or any other action that is outside the Ordinary Course of Business or might prejudice the consummation of the transactions contemplated by this Agreement. Seller shall maintain such insurance as are currently in effect in respect of its assets and the Business until the Closing Date.
|
|
5.1.2
|
Prior to the earlier of the Closing Date and the termination of this Agreement pursuant to §
9.6 below, Seller shall not, directly or indirectly, through any officer, director, employee, agent or otherwise: take any action to offer, solicit, initiate, encourage or assist the submission or acceptance of any proposal, negotiation or offer from any person or entity other than Purchaser relating to the acquisition, sale, or transfer of any of the Acquired Assets or change of control over Seller other than in the Ordinary Course of Business.
|
|
5.2
|
Further Information
|
|
5.3
|
Notice of Certain Events
|
|
5.4
|
Consents, Waivers and Filings
|
|
5.5
|
Employees
|
|
5.5.1
|
Prior to Closing, Purchaser will in good faith offer employment (but may, in the agreement with the Employees, specifically leave it open for its discretion not to hire any such Employees at Closing) to at least 80% of the Employees of the Seller (at Purchaser's complete discretion), provided that the non-hiring of such Employees does not cause Purchaser not to meet the closing condition in section
6.1.2 below, and will offer in good faith employment to additional Employees as required to fulfill the conditions to Closing. Such offers of employment and, with respect to consultants, continuation of services, shall be on terms no less favorable then their current terms of employment or service with the Seller and Purchaseer will employ all such Employees that have accepted employment (such employees and consultants, “
Assumed Employees
”);
provided
,
however
, that each Assumed Employees shall, as a condition precedent to such Employee's employment with Purchaser deliver to Purchaser an executed Waiver and an executed Employment Agreement. It is clarified that the Assumed Employees will be dismissed from Seller prior to the execution of the Waiver and the commencement of their employment with Purchaser. Seller hereby grants permission to Purchaser to contact the Employees with regard to making preliminary offers of employment as aforesaid, with any such employment to be effective subject to Closing taking place, provided such contact is coordinated with Seller.
|
|
5.5.2
|
Any Assumed Employee shall be deemed to have been terminated by Seller at or prior to Closing and rehired by Purchaser and Closing.
|
|
5.5.3
|
Seller shall have fulfilled its obligations under §
3.10.7.
|
|
5.5.4
|
Notwithstanding the foregoing, nothing in this §
5.5 shall be construed as requiring Purchaser to employ any current or former employee of Seller for any specified period of time after Closing, except to the extent otherwise provided in a written employment agreement between any such employee and Purchaser.
|
|
5.6
|
Risk of Loss
|
|
5.6.1
|
Except as otherwise provided for in this §
5.5.4, from the date hereof through the Closing Date, all risk of Loss to the Acquired Assets shall be borne by Seller (other than Loss caused by the acts or negligence of Purchaser or any of its employees, officers, agents or representatives, which Loss or damage shall be the responsibility of Purchaser).
|
|
5.6.2
|
If, before Closing, all or any material portion of the Acquired Assets are (1) taken by eminent domain or are the subject of a pending or contemplated taking which has not been consummated, (2) damaged or destroyed by flood, fire or other casualty, or (3) are otherwise not in the ownership and possession of Seller immediately prior to Closing; Seller shall notify Purchaser promptly in writing of such fact and shall use its best efforts to cure such taking or Loss within 30 days. Subject to §
5.6.3 below, if the fair market value of the Acquired Assets that are the subject of, or are adversely affected by, such taking or loss is adversely affected by such taking or loss and Seller has not notified Purchaser of its intention to cure such taking or Loss within 30 days after its occurrence, Purchaser and Seller shall negotiate in good faith a fair and equitable adjustment to the Consideration and, upon such settlement, consummate the transactions contemplated by this Agreement pursuant to the terms of this Agreement. If no such settlement is reached within 60 days after Seller has notified Purchaser of such taking or casualty, Purchaser may terminate this Agreement pursuant to §
9.6 below.
|
|
5.6.3
|
Any insurance proceeds received by either Purchaser or Seller from the insurance policies described herein on account of such Loss shall be applied to repair or replacement, with any excess amounts due to Purchaser, unless the Parties agree otherwise.
|
6.
|
Closing Conditio
ns
|
|
6.1
|
Conditions to the Obligations of Purchaser
|
|
6.1.1
|
Any authorization, approval, order, license, permit or consent, or filing or registration listed on the Required Authorization Schedule shall have been obtained or made, except for any authorization appearing in the Required Authorization Schedule
as optional
;
|
|
6.1.2
|
At least fifty (50) of the Employees shall have executed and delivered a Waiver and an Employment Agreement; and
|
|
6.1.3
|
No order, injunction or decree shall have been issued and be continuing before a court and no action, suit or proceeding by any governmental authority shall have been instituted or threatened which questions or attacks the validity or legality of the transactions contemplated hereby or seeks to restrain or prevent the consummation of the acquisition of its assets pursuant to this Agreement or the other transactions contemplated hereby;
|
|
6.2
|
Conditions to the Obligations of Seller
|
|
6.2.1
|
All representations and warranties of Purchaser set forth herein shall be true and correct in all material respects as of the Closing Date, with the same effect as if made at and as of the Closing Date and Seller shall have received a certificate signed by the CEO of Vitec Multimedia to such effect;
|
|
6.2.2
|
Purchaser shall have complied in all material respects with its covenants and agreements set forth in this Agreement, except as to those covenants and agreements to be performed or observed after the Closing Date and Seller shall have received a certificate signed by the CEO of Vitec Multimedia to such effect;
|
|
6.2.3
|
Any authorization, approval, order, license, permit or consent, or filing or registration listed on the Required Authorization Schedule shall have been obtained or made; except for any authorization appearing in the Required Authorization Schedule
as optional
;
|
|
6.2.4
|
No order, injunction or decree shall have been issued and be continuing before a court and no action, suit, or proceeding by any governmental authority shall have been instituted or threatened which questions or attacks the validity or legality of the transactions contemplated hereby or seeks to restrain or prevent the consummation of the acquisition of the Acquired Assets pursuant to this Agreement or the other transactions contemplated hereby.
|
|
6.2.5
|
The resolutions of the General Meeting of Optibase Ltd. approving the execution and consummation of this Agreement by Optibase Ltd.
|
7.
|
Confidentiality;
Non-Competition
|
|
7.1
|
Confidentiality
|
|
7.2
|
Non-Competition
|
|
7.2.1
|
Engage in any manner in the design, development, manufacturing, marketing or servicing of, or services relating to (i) the Business or (ii) any other product, product line or services offered, sold, produced or under development by Purchaser’s business unit associated with the Business during such period;
|
|
7.2.2
|
Solicit or attempt to solicit business of any customers of Seller or Purchaser for products or services the same or similar to those offered, sold, produced or under development by Purchaser;
|
|
7.2.3
|
Otherwise divert or attempt to divert from Purchaser any business related to the Business;
|
|
7.2.4
|
Solicit or attempt to solicit for any business endeavor any employee of Purchaser (including the Assumed Employees);
|
|
7.2.5
|
Interfere in any material respect with any business relationship related to the Business between Purchaser and any other person; or
|
|
7.2.6
|
Render any services to, or have any interest as a stockholder, partner, lender or otherwise in, any person which is engaged in activities which, if performed by Seller, would violate this §
7.2 except if such interest amounts to no more than 10% of such person and does not provide the Seller control over such person (as such term is defined under the Securities Law, 1967).
|
|
7.3
|
Equitable Relief
|
8.
|
Post-Closing Co
ve
nants
|
|
8.1
|
Further Assurances
|
|
8.1.1
|
Whenever reasonably requested to do so by Purchaser, on or after the Closing Date, Seller shall, at Purchaser's expense, do, execute, acknowledge and deliver all such acts, assignments, confirmations, consents, other instruments of assignment, transfer and conveyance, and any and all such further instruments and documents, in form reasonably satisfactory to Purchaser and its counsel, as shall be reasonably necessary or advisable to carry out the intent of this Agreement and to vest in Purchaser all right, title and interest in and to the Acquired Assets.
|
|
8.1.2
|
Each of the Parties shall take such further action (including the execution and delivery of such further instruments and documents) following Closing as the other party may reasonably request in order to carry out the purposes of this Agreement. In particular, Purchaser acknowledges that Seller may require, shortly after the Closing Date, some transitional assistance from Purchaser and its personnel (who are former employees of Seller) in respect of winding down Seller’s Business related operations, and Purchaser agrees to instruct and allow such personnel to reasonably assist Seller, after advance coordination with Purchaser.
|
|
8.1.3
|
Seller shall not cause or, to the extent within its control, permit the occurrence of any Credit Event with regard to Seller for the at least 3 months following Closing and shall take actions to cure any Credit Event otherwise caused.
|
|
8.2
|
Collection
|
|
8.3
|
Information
|
|
8.4
|
Access to Records
|
|
8.5
|
Assistance
|
|
8.6
|
Limited Power of Attorney
|
|
8.6.1
|
Seller hereby nominates, constitutes and appoints attorney Doron Afik (in this §
8.6, an “
Attorney-in-Fact
”) with full power of substitution to another attorney and if such attorney is not part of such Attorney-in-Fact’s firm, shall notify Seller, to act as Seller’s true and lawful agent and attorney-in-fact, for it and in its name, place and stead, to take any and all steps in the name and on behalf of Seller necessary or desirable, in the determination of any Attorney-in-Fact to take any and all actions necessary, or desirable in the opinion of such Attorney-in-Fact to fulfill Seller’s obligations under §
8.1.1 and
8.1.2 above, including to take any act required for enforcement or perfection of the transfer of the Acquired Assets to the name of Purchaser or any entity designated by Purchaser;
|
|
8.6.2
|
The Attorney-in-Fact shall have full power and authority to do and perform any and all acts and things requisite for the sole purpose set forth hereinabove as fully for all intents and purposes as Seller might or could do in person.
|
|
8.6.3
|
The limited power of attorney is coupled with an interest and is thus irrevocable.
|
|
8.7
|
Line of Business of Purchaser. Performance of Obligations.
|
9.
|
In
de
mnification; Survival
|
|
9.1
|
Survival
|
|
9.2
|
Indemnification
|
|
9.2.1
|
In the event (i) Seller breaches, or (ii) any third party alleges, in writing under circumstances which Purchaser may reasonably believe may lead to a judicial proceeding against Purchaser and Purchaser makes a written claim for indemnification pursuant to this Section
9 within the survival period set forth in §
9.1 above, then Seller shall indemnify and hold harmless Purchaser, each of Purchaser’s affiliates, and each of their respective successors, assigns, officers, directors, employees and agents against any Loss suffered or incurred by any such Indemnified Person, arising or resulting from or based upon:
|
|
9.2.1.1
|
any breach or material inaccuracy of any representation or warranty of Seller contained
in this Agreement or any of the Ancillary Agreements which survives Closing
;
|
|
9.2.1.2
|
the breach of any covenant of Seller contained in this Agreement or any of the Ancillary Agreements;
|
|
9.2.1.3
|
any Excluded Liability; or
|
|
9.2.1.4
|
Claims made by any Employee in connection with any pre-Closing liabilities of Seller relating to Employees.
|
|
9.2.2
|
In the event (i) Purchaser breaches, or (ii) any third party alleges, in writing under circumstances which Seller may reasonably believe may lead to a judicial proceeding against Seller, and Seller makes a written claim for indemnification pursuant to this Section
9 within the survival period set forth in §
9.1 above, then Purchaser shall indemnify and hold harmless Seller, each of Seller’s affiliates, and each of their respective successors, assigns, officers, directors, employees and agents against any Loss suffered or incurred by any such Indemnified Person, arising or resulting from or based upon:
|
|
9.2.2.1
|
any breach or
material inaccuracy
of any representation or warranty of
Purchaser
contained in this Agreement or any of the Ancillary Agreements which survives Closing
;
|
|
9.2.2.2
|
the breach of any covenant of Purchaser contained in this Agreement or any of the Ancillary Agreements; or
|
|
9.2.2.3
|
any Claim relating to the Acquired Assets or the Assumed Liabilities arising on or after the Closing;
|
|
9.3
|
Matters Involving Third Parties
|
|
9.3.1
|
If any third party shall notify any Party with respect to any matter (in this §
9.3, “
Third Party Claim
”) which may give rise to a Claim for indemnification for Losses under this §
9
, then the Indemnified Person shall promptly notify the other Party
(in this §
9.3, the “
Indemnifying Party
”)
thereof in writing; provided, however, that no delay on the part of the Indemnified Person in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced.
|
|
9.3.2
|
The Indemnifying Party will have the right to defend the Indemnified Person against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Person so long as:
|
|
9.3.2.1
|
The Indemnifying Party notifies the Indemnified Person in writing within 10 Business Days after the Indemnified Person has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Person from and against any Loss the Indemnified Person may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim;
|
|
9.3.2.2
|
The Indemnifying Party provides the Indemnified Person with evidence reasonably acceptable to the Indemnified Person that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder;
|
|
9.3.2.3
|
settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Person, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Person; and
|
|
9.3.2.4
|
The Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.
|
|
9.3.3
|
So long as the Indemnifying Party conducts the defense of the Third Party Claim in accordance with §
9.3.2 above:
|
|
9.3.3.1
|
the Indemnified Person may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim;
|
|
9.3.3.2
|
the Indemnified Person will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably); and
|
|
9.3.3.3
|
The Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Person (not to be withheld unreasonably).
|
|
9.3.4
|
In the event any of the conditions in §
9.3.2 above is or becomes unsatisfied, however:
|
|
9.3.4.1
|
the Indemnified Person may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Person need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith);
|
|
9.3.4.2
|
The Indemnifying Party will reimburse the Indemnified Person promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys’ fees and expenses); and
|
|
9.3.4.3
|
The Indemnifying Party will remain responsible for any Losses the Indemnified Person may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this §
9.
|
|
9.4
|
Maximum Indemnification
|
|
9.5
|
Exclusive Remedy
|
|
9.6
|
Determination of Indemnity
|
10.
|
Termin
ation
|
|
10.1
|
Termination of Agreement
|
|
10.1.1
|
Purchaser may terminate this Agreement
|
|
10.1.1.1
|
if Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Purchaser has notified Seller of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach;
|
|
10.1.1.2
|
if Closing shall not have occurred on or before the lapse of 120 calendar days from the date of this Agreement (or such later date as may be designated by mutual written agreement of the Parties) by reason of the failure of any condition precedent under §
6.1 above (unless the failure results primarily from Purchaser itself breaching any representation, warranty, or covenant contained in this Agreement (including any failure to satisfy any condition to the obligations of Purchaser); or
|
|
10.1.1.3
|
pursuant to §
5.6.2 above.
|
|
10.1.2
|
Seller may terminate this Agreement:
|
|
10.1.2.1
|
if Purchaser has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Seller has notified Purchaser of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach;
|
|
10.1.2.2
|
if Closing shall not have occurred on or before the lapse of 120 calender days from the date of this Agreement (or such later date as may be designated by mutual written agreement of the Parties) by reason of the failure of any condition precedent under §
6.2 above (unless the failure results primarily from Seller itself breaching any representation, warranty, or covenant contained in this Agreement (including any failure to satisfy any condition to the obligations of Seller)); or
|
|
10.1.2.3
|
in its sole discretion if any required consent to assign a Consortium shall not have been obtained as of the Closing Date.
|
|
10.2
|
Effect of Termination
|
11.
|
Dispute R
eso
lution
|
|
11.1
|
Governing Law
|
|
11.2
|
Submission to Jurisdiction
|
|
11.3
|
Arbitration
|
|
11.3.1
|
Arbitration.
|
|
11.3.2
|
Interim Relief.
|
|
11.3.3
|
Arbitral Award.
|
12.
|
Mi
sc
ellaneous
|
|
12.1
|
Press Releases and Public Announcements
|
|
12.2
|
Relationship of the Parties
|
|
12.3
|
No Benefit to Others
|
|
12.4
|
Integration of Terms
|
|
12.5
|
Succession and Assignment
|
|
12.6
|
Counterparts
|
|
12.7
|
Construction
|
|
12.7.1
|
The recitals and schedules hereto consist an integral part hereof. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
|
|
12.7.2
|
The headings in this Agreement and their associated numbers are included for ease of reference only and shall have no legal, constructive or interpretive effect.
|
|
12.7.3
|
The word “
including
” shall mean including without limitation.
|
|
12.7.4
|
The word “
person
” shall mean any legal entity, including an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Body;
|
|
12.7.5
|
This Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
|
|
12.8
|
Amendments and Waivers
|
|
12.9
|
Transfer Taxes
|
|
12.10
|
Expenses
|
|
12.11
|
Specific Performance
|
|
12.12
|
Severability and Blue Penciling
|
|
12.12.1
|
If, and solely to the extent that, any provision of this Agreement shall for any reason be held to be excessively broad, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law. If, and solely to the extent that, any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not affect the validity of the remainder of this Agreement; provided, however, the Parties shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the Parties.
|
|
12.12.2
|
If the final judgment of a court of competent jurisdiction declares that any item or provision hereof is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, or to delete specific words or phrases, and to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.
|
|
12.13
|
Notices
All notices, consents, or other notifications given or made pursuant hereto shall be in writing and shall be deemed duly given or made (i) upon delivery or refusal of such notice if sent by a recognized courier service; (ii) seven Business Days after it is mailed by prepaid registered mail; or (iii) upon delivery to a fax machine capable of confirming receipt, and in each case addressed as follows (or at such other address for a Party as shall be specified in a notice so given):
|
|
Seller:
|
Optibase Ltd.
7 Shenkar St.
P.O. Box 2170
Herzlia, 46120
Israel
Fax: +972-9-970-9222
Attention: CEO, CFO
Optibase Inc.
c/o Optibase Ltd..
7 Shenkar St.
P.O. Box 2170
Herzlia, 46120
Israel
Fax: +972-9-970-9222
Attention: President, CEO, CFO
|
With copy (which shall not constitute a notice) to:
Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
Attention: Adva Bitan, Adv.
One Azrieli Center (Round Building)
Tel Aviv 67021, Israel
Fax: +972 (3) 607.4464
|
|
Purchaser:
|
|
Optibase Technologies Ltd.
|
|
With copy (which shall not constitute a notice) to:
|
/s/ Shlomo (Tom) Wyler | /s/ Amir Philips | /s/ Yaron Comarov | ||
Optibase Ltd.
By:
Shlomo (Tom) Wyler
Title: C.E.O
|
Optibase Ltd.
By:
Amir Philips
Title: C.F.O
|
Optibase Ltd.
By: Yaron Comarov
Title: VP Operations
|
||
/s/
Shlomo (Tom) Wyler
|
/s/
Amir Philips
|
/s/ Philip Wetzel
|
||
Optibase Inc.
By:
Shlomo (Tom) Wyler
Title: Director
|
Optibase Inc.
By:
Amir Philips
Title: Director
|
Optibase Technologies Ltd.
By: Philip Wetzel
Title: CEO
|
WHEREAS,
|
Seller and Purchaser have entered into that certain Asset Purchase Agreement dated as of March 16, 2010 for the sale by Seller, and the purchase by Purchaser, of the Acquired Assets, and for the assumption by Purchaser of the Assumed Liabilities (such agreement, as amended, supplemented or restated from time to time, herein called the “
APA
”). Capitalized terms that are used herein, except as otherwise defined herein, shall be as defined in the APA.
|
WHEREAS,
|
under §
2.2.1.3
of the APA, the Parties agreed to transfer to the Indemnity Escrow Agent, on the Closing Date, cash comprising the Indemnity Escrow Deposit (i.e., USD 1,000,000) plus VAT if applicable.
|
WHEREAS,
|
the Parties desire that the Indemnity Escrow Deposit be deposited by the Indemnity Escrow Agent into an escrow account maintained by the Indemnity Escrow Agent, in accordance with the terms of this Escrow Agreement.
|
WHEREAS,
|
the Parties hereto desire to establish the terms and conditions for the mode of operation for the Indemnity Escrow Agent in connection with the escrowed amount maintained by the Indemnity Escrow Agent.
|
|
1.
|
Establishment of Escrow; Account
|
|
2.
|
Escrow Ledger
|
|
3.
|
Resolution of Demands
|
|
3.1
|
Indemnification Obligations
|
|
3.2
|
Notice of Demands
|
|
3.3
|
Resolution of Demands
|
|
3.3.1
|
Uncontested Demands
. In the event that Seller does not contest, in accordance with § 4.3.2 below, a Notice of Demand within thirty (30) Business Days of receiving such Notice of Demand from the Purchaser, in accordance with §
4.2 above, Purchaser may deliver to the Indemnity Escrow Agent, with a copy to Seller, a written demand by Purchaser (a “
Purchaser Demand
”) stating that a Notice of Demand has been delivered to the Indemnity Escrow Agent, the date of delivery of such Notice of Demand to the Indemnity Escrow Agent, and that no notice of contest has been received from Seller within thirty (30) Business Days of the Purchaser delivering the Notice of Demand to Seller, in accordance with §
4.3.2 below, and further stating the amount of Escrowed Funds to be released to Purchaser in accordance with this §
4.3.1. The Indemnity Escrow Agent shall, as soon as practicable following receipt of such Purchaser Demand, release to Purchaser the amount of Escrowed Funds stipulated in the Purchaser Demand and shall notify Seller of such transfer.
|
|
3.3.2
|
Contested Demands
. In the event Seller gives written notice contesting all or a portion of a Notice of Demand to the Indemnity Escrow Agent and Purchaser (a “
Contested Demand
”) within the thirty day period provided above, which notice shall not be valid unless setting forth the amount contested, such Contested Demand shall be settled in accordance with §
4.4 below. Any portion of a Notice of Demand that is not contested shall be resolved as set forth above in §
4.3.1 above. The Seller shell send a copy of its written notice to the Purchaser, in which it shall set forth in reasonable detail the reason(s) for contesting such Notice of Demand. If notice is received by the Indemnity Escrow Agent that a Notice of Demand will be a Contested Demand by Seller, then the Indemnity Escrow Agent shall hold in the Escrow Account, after what would otherwise be the Final Release Date (as defined below), the amount contested under the Contested Demand (such amount, “
Projected Indemnifiable Amount
”) until the earlier of (i) receipt of a settlement agreement executed by Purchaser and Seller setting forth a resolution of the Contested Demand and an accounting for all Projected Indemnifiable Amounts associated with settling the Contested Demand, which shall set forth the amount of Escrowed Funds to be released to Purchaser and/or Seller as a result of settling such Contested Demand; or (ii) receipt of a written notice from either Purchaser or Seller (a copy of which shall have been delivered to the other Party) attaching a copy of the final award or decision of the arbitrator and an accounting for all Projected Indemnifiable Amounts associated with the Contested Demand, which shall set forth the amount of Escrowed Funds to be released to and/or Seller Purchaser as a result of contesting such Contested Demand (both
4.3.2(i) and
4.3.2(ii) are collectively referred to herein as a “
Purchaser Distribution Notice
”). Upon the Purchaser delivering a Purchaser Distribution Notice to the Indemnity Escrow Agent, the Indemnity Escrow Agent shall, as soon as practicable following ten days after receipt of such Purchaser Distribution Notice, release to Purchaser that amount of the Escrowed Funds specified in the Purchaser Distribution Notice.
|
|
3.4
|
Dispute Resolution
|
|
3.4.1
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to the rules of conflict of laws thereof other than when application of Israeli law would render this Agreement, or any material provision herein, void or unenforceable.
|
|
3.4.2
|
Arbitration
. Any controversy or claim arising out of or relating to this Agreement, including questions of arbitrability, shall be settled solely by arbitration in accordance with this Section
4.4. Any such arbitration shall be conducted in the English language, in Tel Aviv, Israel, by a single arbitrator mutually agreed upon by the relevant Parties who is an attorney, and in the event that the identity of an arbitrator cannot be agreed upon within 15 days following submission to arbitration - by an arbitrator who is an attorney admitted to practice in Israel and appointed by the President of the Israeli Bar Association. The arbitrator shall not be bound by rules of civil procedure or the principals governing admissibility of evidence. The arbitrator shall have the right to order discovery as the arbitrator deem appropriate. This §
4.4 shall be deemed as an Arbitration Agreement.
|
|
3.4.3
|
Payment of Costs
. The Indemnity Escrow Agent and the prevailing party in any dispute will be entitled to an award of attorneys’ fees and costs, including those provided for above, and as between the Purchaser and the Seller, all costs and expenses of the Indemnity Escrow Agent in connection with the subject dispute, will be paid by the losing party, subject in each case to a determination by the court as to which party is the prevailing party and the amount of such fees and costs to be allocated to such party.
|
|
3.4.4
|
Interim Relief
. Notwithstanding anything in this Section
4.4 each Party may seek interim injunctive relief from a court of competent jurisdiction provided that such interim injunction relief shall be until an arbitrator is appointed. The continuance of such interim relief may be determined by the arbitrator. No arbitration pursuant to this Agreement shall be stayed or delayed pending the outcome of any judicial or other proceedings.
|
|
3.4.5
|
Arbitral Award
. The award of the arbitrator shall be issued in a written opinion, which shall set forth the arbitrator’s finding of facts and conclusions, and shall be conclusive and binding upon the Parties. Judgment upon an arbitral award may be entered in any court of competent jurisdiction. The arbitrator shall have the right to order injunctive relief and the payment of attorneys’ fees, costs and other damages.
|
|
3.4.6
|
No Release to Purchaser until Resolution
. Purchaser shall not deliver to the Indemnity Escrow Agent a Purchaser Distribution Notice (as defined below) requesting the Indemnity Escrow Agent to release to Purchaser any of the Escrowed Funds held in the Escrow Account pursuant to a Notice of Demand, and Indemnity Escrow Agent shall not acknowledge such a notice, until such Demand has been resolved in accordance with §
4.3 above.
|
4.
|
Release of Escrowed Funds
The Indemnity Escrow Agent shall, 24 months after Closing Date or, if such date is not a Business Day, on the first business day thereafter (the "Final Release Date"), release the following amount to Seller or its successor pursuant to written wiring instructions received by the Indemnity Escrow Agent from the Seller prior thereto:
|
4.1.
|
the Escrowed Funds, less
|
4.2
|
the aggregate Projected Indemnifiable Amounts (to the extent that the Indemnity Escrow Agent has received copies of all such Notices of Demands in accordance with §
4.2 above; and less
|
4.3
|
all fees and expenses of the Indemnity Escrow Agent incurred to date and anticipated to be incurred in connection with outstanding Notices of Demands; plus the ratable amount of interest on the Projected Indemnifiable Amounts which remains in escrow.
|
|
5.
|
Indemnity Escrow Agent
5.1 Duties; Liabilities
The duties of the Indemnity Escrow Agent shall be entirely administrative and not discretionary. The Indemnity Escrow Agent will incur no liability with respect to any action or inaction taken or suffered by the Indemnity Escrow Agent, except his own willful conduct or bad faith. Purchaser and Seller hereby jointly and individually waive any suit, claim, demand or cause of action of any kind which they may have or may assert against the Indemnity Escrow Agent arising out of or in connection with this Agreement, including without limitation, the acceptance, performance or administration of the Indemnity Escrow Agent’s duties, unless such suit, claim, demand or cause of action is based upon the willful misconduct or bad faith of the Indemnity Escrow Agent. The Indemnity Escrow Agent shall be obligated to act only in accordance with written instructions received by it as provided in this Escrow Agreement and shall not be liable, and shall not be deemed to have acted with willful misconduct or bad faith, as a result of its compliance with the same. The Indemnity Escrow Agent may consult its own legal counsel, in connection with its duties hereunder or as to any other matter relating to this Escrow Agreement, and such reasonable fees and expenses may be charged to, and paid from, the Escrow Account, in respect of any question arising under this Escrow Agreement, and the Indemnity Escrow Agent shall not be liable, and shall not be deemed to have acted with willful misconduct for any action taken or omitted upon advice of such counsel.
|
|
6.
|
Indemnity
|
|
7.
|
Acknowledgment by Indemnity Escrow Agent
|
|
8.
|
Resignation or Removal of Indemnity Escrow Agent; Successor
|
|
8.1.1
|
The Indemnity Escrow Agent may resign as such thirty days after giving written notice of its resignation to the other parties hereto. Similarly, the Indemnity Escrow Agent may be removed and replaced thirty days after receiving written notice of its removal and replacement delivered jointly by Purchaser and Seller, which notice shall not be valid unless it includes the details of the successor escrow agent. In either event, the duties of the Indemnity Escrow Agent shall terminate thirty days after the date of such notice (or as of such earlier date as may be mutually agreeable); and the Indemnity Escrow Agent shall then deliver the balance of the Escrowed Funds then in its possession to a successor escrow agent as shall be appointed within such period (in the event the Indemnity Escrow Agent resigns) by Purchaser and Seller as evidenced by a written notice filed with the Indemnity Escrow Agent.
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8.1.2
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If the Indemnity Escrow Agent resigned and the parties hereto are unable to agree upon a successor escrow agent or shall have failed to appoint a successor prior to the expiration of thirty days following the date of the notice of resignation or removal, then any of the Parties may initiate arbitration in accordance to § 4.4.2 for the appointment of a successor escrow agent or other appropriate relief, any such resulting appointment shall be binding upon all of the parties hereto.
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9.
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Fee
The Indemnity Escrow Agent shall be paid for services hereunder payment in the amount of US$ 3,000 plus VAT per annum (“
Fee
”) and any additional fees and expenses incurred until distribution of the Escrow Funds in full. Subject to §
4.4.3 above, the fees and expenses of the Indemnity Escrow Agent shall be borne by the Seller. If the Indemnity Escrow Agent continues to hold any Projected Indemnifiable Amount in the Escrow Account after the Final Release Date due to the provisions herein, the Indemnity Escrow Agent shall be paid an additional amount of US$ 3,000 plus VAT and US$ 250 to cover banking fees and charges for each additional year or part thereof that the Escrow Agent continues to hold such amounts. The Indemnity Escrow Agent may set off any payment due to it plus interest from distributions otherwise due to the party in debt to the Indemnity Escrow Agent. The Purchaser may choose to pay the Indemnity Escrow Agent any payment due to the Indemnity Escrow Agent by the Seller and set off such payment plus interest from amounts due from Purchaser to Seller.
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10.
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Termination
This Escrow Agreement and the escrow created thereby shall terminate as soon as practicable following (i) delivery of a joint written instruction of Purchaser and Seller terminating this Escrow Agreement, including detailed instructions as to the remaining funds in the escrow, if any; or (ii) the Indemnity Escrow Agent’s delivery or release of all remaining Escrowed Funds pursuant to this Escrow Agreement.
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11.
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Miscellaneous
This Escrow Agreement and the escrow created thereby shall terminate as soon as practicable following (i) delivery of a joint written instruction of Purchaser and Seller terminating this Escrow Agreement, including detailed instructions as to the remaining funds in the escrow, if any; or (ii) the Indemnity Escrow Agent’s delivery or release of all remaining Escrowed Funds pursuant to this Escrow Agreement.
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11.7.1
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The recitals and schedules hereto consist an integral part hereof. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
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11.7.2
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The headings in this Agreement and their associated numbers are included for ease of reference only and shall have no legal, constructive or interpretive effect.
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11.7.3
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The word “
including
” shall mean including without limitation.
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11.7.4
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The word “
person
” shall mean any legal entity, including an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Body;
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11.7.5
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This Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
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11.7.7
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The Parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant.
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11.9.1
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Each of Seller and Purchaser will bear any taxes assessed or arising out of the transactions contemplated by this Agreement as imposed on such party under any law, including stamp tax, if applicable, and fees related to perfection of right under this Agreement.
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11.11.1
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If, and solely to the extent that, any provision of this Agreement shall for any reason be held to be excessively broad, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law. If, and solely to the extent that, any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not affect the validity of the remainder of this Agreement; provided, however, the Seller and the Purchaser shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the parties, with no liability in connection therewith to be imposed on the Indemnity Escrow Agent.
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11.11.2
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If the final judgment of a court of competent jurisdiction declares that any item or provision hereof is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, or to delete specific words or phrases, and to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.
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Indemnity Escrow Agent:
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ADAD Trust Company Ltd.
c/o Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
Azrieli 1
Tel Aviv, Israel
Fax: + 972-3-607-4499
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Seller:
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Optibase Ltd.
7 Shenkar St.
P.O. Box 2170
Herzlia, 46120
Israel
Fax: +972-9-970-9222
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With copy (which shall not constitute a notice) to:
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Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
Attention: Adva Bitan, Adv.
One Azrieli Center (Round Building)
Tel Aviv 67021, Israel
Fax: +972 (3) 607.4464
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Purchaser:
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Optibase Technologies Ltd.
3 Daniel Frisch St.
Tel Aviv, 64731, Israel
c/o Afik Turgeman
Israel
Attention: CEO
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With copy (which shall not constitute a notice) to:
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Afik Turgeman, attorneys at law
Attention: Doron Afik, Esq.
3 Daniel Frisch St.
Tel Aviv, 64731, Israel
Fax: +972 (3) 609.0.609
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ADAD Trust Company Ltd.By:
______________
Title: ______________
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Optibase Ltd.
By: ______________
Title: ______________
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Optibase Technologies Ltd.
By: ______________
Title: ______________
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1.
|
I have reviewed this annual report on Form 20-F of Optibase Ltd.
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
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4.
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The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-115(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
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5.
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The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
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1.
|
I have reviewed this annual report on Form 20-F of Optibase Ltd.
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-115(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
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5.
|
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
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/s/ Shlomo (Tom) Wyler
Name: Shlomo (Tom) Wyler
Title: Chief Executive Officer
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/s/
Amir Philips
Name: Amir Philips
Title: Chief Financial Officer
|
Tel-Aviv, Israel
June 30, 2010
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/s/ Kost Forer Gabbay & Kasierer
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
|