o
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
N/A
|
ISRAEL
|
(Translation of Registrant’s
name into English)
|
(Jurisdiction of incorporation
or organization)
|
Title of each class
|
Name of each exchange on which registered
|
|
Ordinary Shares, NIS 3.00 nominal value per share
|
NASDAQ Stock Market LLC
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
x
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued by
the International Accounting Standards Board
o
|
Other
o
|
Table of Contents
|
|||
8 | |||
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
8
|
||
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE |
8
|
||
ITEM 3. KEY INFORMATION |
8
|
||
A.
|
SELECTED FINANCIAL DATA
|
8
|
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
11
|
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
11
|
|
D.
|
RISK FACTORS
|
11
|
|
ITEM 4. INFORMATION ON THE COMPANY |
30
|
||
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
30
|
|
B.
|
BUSINESS OVERVIEW
|
36
|
|
C.
|
ORGANIZATIONAL STRUCTURE
|
45
|
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
45
|
|
ITEM 4A. UNRESOLVED STAFF COMMENTS |
46
|
||
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
46
|
||
A.
|
OPERATING RESULTS
|
46
|
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
65
|
|
C.
|
RESEARCH AND DEVELOPMENT
|
68
|
|
D.
|
TREND INFORMATION
|
70
|
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
73
|
|
F.
|
CONTRACTUAL OBLIGATIONS
|
74
|
|
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
75
|
||
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
75
|
|
B.
|
COMPENSATION
|
77
|
|
C.
|
BOARD PRACTICES
|
78
|
|
D. |
EMPLOYEES
|
82
|
|
E.
|
SHARE OWNERSHIP
|
83
|
|
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
84
|
||
A.
|
MAJOR SHAREHOLDERS
|
84
|
|
B.
|
RELATED PARTY TRANSACTIONS
|
85
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
86
|
|
ITEM 8. FINANCIAL INFORMATION |
86
|
||
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
86
|
|
B.
|
SIGNIFICANT CHANGES
|
87
|
|
ITEM 9. THE OFFER AND LISTING |
87
|
||
A.
|
OFFER AND LISTING DETAILS
|
87
|
|
B.
|
PLAN OF DISTRIBUTION
|
89
|
|
C.
|
MARKETS
|
89
|
|
D.
|
SELLING SHAREHOLDERS
|
89
|
|
E.
|
DILUTION
|
89
|
|
F.
|
EXPENSES OF THE ISSUE
|
89
|
|
ITEM 10. ADDITIONAL INFORMATION |
90
|
||
A.
|
SHARE CAPITAL
|
90
|
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
90
|
|
C.
|
MATERIAL CONTRACTS
|
98
|
|
D.
|
EXCHANGE CONTROLS
|
100
|
|
E.
|
TAXATION AND GOVERNMENT PROGRAMS
|
100 | |
F.
|
DIVIDENDS AND PAYING AGENTS
|
104
|
|
G.
|
STATEMENT BY EXPERTS
|
104
|
|
H.
|
DOCUMENTS ON DISPLAY
|
104
|
|
I.
|
SUBSIDIARY INFORMATION
|
105
|
|
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
105
|
||
ITEM 12. DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES | 108 | ||
108
|
|||
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
108
|
||
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 108 | ||
ITEM 15T. CONTROLS AND PROCEDURES |
109
|
||
ITEM 16. [RESERVED] |
110
|
||
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT. |
110
|
||
ITEM 16B. CODE OF ETHICS. |
110
|
||
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES. | 110 |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
KEY INFORMATION
|
|
A.
|
SELECTED FINANCIAL DATA
|
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Statement of Income Data:
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Products
|
31,140 | 25,415 | 20,038 | 30,645 | 15,821 | |||||||||||||||
Services
|
54,778 | 48,448 | 45,287 | 46,010 | 35,806 | |||||||||||||||
Total Revenues
|
85,918 | 73,863 | 65,325 | 76,655 | 51,627 | |||||||||||||||
Cost of revenues:
|
||||||||||||||||||||
Products
|
18,283 | 14,175 | 10,774 | 16,392 | 9,414 | |||||||||||||||
Services
|
37,249 | 31,264 | 26,645 | 29,869 | 23,034 | |||||||||||||||
Amortization of intangible assets
|
1,498 | 978 | 976 | 980 | 277 | |||||||||||||||
Total Cost of Revenues
|
57,030 | 46,417 | 38,395 | 47,241 | 32,725 | |||||||||||||||
Gross profit
|
28,888 | 27,446 | 26,930 | 29,414 | 18,902 | |||||||||||||||
Operating Expenses:
|
||||||||||||||||||||
Research and development, net
|
3,082 | 2,532 | 2,817 | 2,511 | 1,675 | |||||||||||||||
Selling, general and administrative
expenses
|
20,382 | 16,503 | 15,037 | 15,245 | 11,143 | |||||||||||||||
Amortization of intangible assets
|
1,821 | 1,774 | 1,942 | 2,365 | 1,841 | |||||||||||||||
Impairment of intangible asset
|
6,216 | - | 2,959 | - | 36 | |||||||||||||||
Total operating income (loss)
|
(2,613 | ) | 6,637 | 4,175 | 9,293 | 4,207 | ||||||||||||||
Financial expenses, net
|
1,779 | 1,976 | 2,070 | 4,054 | 2,814 | |||||||||||||||
Other income (expenses)
|
77 | 21 | 16 | 22 | (12 | ) | ||||||||||||||
Income (loss) before
tax on income
|
(4,469 | ) | 4,640 | 2,089 | 5,261 | 1,381 | ||||||||||||||
Taxes on income
|
2,383 | 1,524 | 887 | 640 | 353 | |||||||||||||||
Income after taxes on income
|
(6,852 | ) | 3,116 | 1,202 | 4,621 | 1,028 | ||||||||||||||
Equity in losses of affiliate
|
1,634 | 1,158 | 677 | - | - | |||||||||||||||
Net income (loss)
|
(8,486 | ) | 1,958 | 525 | 4,621 | 1,028 | ||||||||||||||
Net income attributable to non-controlling interest
|
41 | 828 | 2,632 | 2,248 | 1,366 | |||||||||||||||
Net income (loss) attributable to Pointer Telocation Ltd. Shareholders
|
(8,527 | ) | 1,130 | (2,107 | ) | 2,373 | (338 | ) | ||||||||||||
Basic net earnings (loss) per share attributable to Pointer Telocation Ltd. shareholders
|
(1.78 | ) | 0.24 | (0.44 | ) | 0.51 | (0.08 | ) | ||||||||||||
Diluted net earnings (loss) per share attributable to Pointer Telocation Ltd. shareholders
|
(1.79 | ) | 0.22 | (0.47 | ) | 0.50 | (0.08 | ) | ||||||||||||
Basic weighted average number of shares
outstanding (in thousands)
|
4,789 | 4,768 | 4,753 | 4,679 | 4,271 | |||||||||||||||
Diluted weighted average number of shares
outstanding (in thousands)
|
4,789 | 4,834 | 4,753 | 4,679 | 4,310 | |||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Total assets
|
89,338 | 103,430 | 96,973 | 102,599 | 100,236 | |||||||||||||||
Net assets (liabilities) of continuing operations
|
26,594 | 36,868 | 33,809 | 35,815 | 32,203 | |||||||||||||||
Working capital (deficit)
|
(14,928 | ) | (15,093 | ) | (12,206 | ) | (7,867 | ) | (15,327 | ) | ||||||||||
Shareholders’ equity
|
31,801 | 43,646 | 41,479 | 41,187 | 35,270 | |||||||||||||||
Pointer Telocation Ltd. shareholders
|
26,594 | 36,868 | 33,809 | 35,815 | 32,203 | |||||||||||||||
Non controlling interest
|
5,207 | 6,778 | 7,670 | 5,372 | 3,067 | |||||||||||||||
Share capital
|
3,353 | 3,280 | 3,266 | 3,266 | 3,139 | |||||||||||||||
Additional paid-in capital
|
119,147 | 118,512 | 118,348 | 118,015 | 116,910 |
Year Ended December 31, | ||||||||||||
2011
|
2010
|
2009
|
||||||||||
Revenues
|
||||||||||||
Products
|
36 | 34 | 31 | |||||||||
Services
|
64 | 66 | 69 | |||||||||
Total Revenues
|
100 | 100 | 100 | |||||||||
Cost of Revenues:
|
||||||||||||
Products
|
21 | 19 | 16 | |||||||||
Services
|
43 | 43 | 41 | |||||||||
Amortization of intangible
|
2 | 1 | 1 | |||||||||
Total Cost of Revenues
|
66 | 63 | 58 | |||||||||
Gross profit
|
34 | 37 | 42 | |||||||||
Operating Expenses:
|
||||||||||||
Research and development costs, net
|
4 | 3 | 4 | |||||||||
Selling, general and administrative
expenses
|
24 | 22 | 23 | |||||||||
Total operating Expenses
|
28 | 25 | 27 | |||||||||
Amortization of intangible assets and Impairment of long lived assets
|
9 | 2 | 8 | |||||||||
Operating income (loss)
|
(3 | ) | 9 | 7 | ||||||||
Financial expenses
|
2 | 3 | 3 | |||||||||
Other income (expenses)
|
- | - | - | |||||||||
Income (loss) before
tax on income
|
(5 | ) | 6 | 3 | ||||||||
Taxes on income
|
3 | 2 | 1 | |||||||||
Income (loss) after tax
|
(8 | ) | 4 | 2 | ||||||||
Equity in losses of affiliate
|
2 | 1 | 1 | |||||||||
Net income (loss) attributable to non-controlling interest
|
(10 | ) | 1 | 4 | ||||||||
Net income (loss) attributable to Pointer Telocation Ltd. Shareholders)
|
(10 | ) | 2 | (3 | ) |
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
|
D.
|
RISK FACTORS
|
|
·
|
reduced control over delivery schedules, quality assurance, manufacturing yields and cost
|
|
·
|
reduced manufacturing flexibility due to last moment quantity changes;
|
|
·
|
transportation delays;
|
|
·
|
political and economic disruptions;
|
|
·
|
the imposition of tariffs and export controls on such products;
|
|
·
|
work stoppages;
|
|
·
|
changes in government policies;
|
|
·
|
the loss of molds and tooling in the event of a dispute with a manufacturer; and
|
|
·
|
the loss of time, when attempting to switch from one assembly-manufacturer to another, thereby disrupting deliveries to customers.
|
|
·
|
longer sales cycles, especially upon entry into a new geographic market;
|
|
·
|
foreign exchange controls and licenses;
|
|
·
|
trade restrictions;
|
|
·
|
changes in tariffs;
|
|
·
|
currency fluctuations;
|
|
·
|
economic or political instability;
|
|
·
|
international tax aspects;
|
|
·
|
regulation requirements; and
|
|
·
|
greater difficulty in safeguarding intellectual property.
|
|
·
|
the laws of certain foreign countries may not protect our proprietary rights to the extent that they are protected by the laws of the United States;
|
|
·
|
unauthorized third parties may attempt to copy or obtain and use the technology that we regard as proprietary;
|
|
·
|
if a competitor were to infringe on our proprietary rights, enforcing our rights may be time consuming and costly, diverting management’s attention and our resources;
|
|
·
|
measures like entering into non-disclosure agreements afford only limited protection; and
|
|
·
|
our competitors may independently develop or patent technologies that are substantially equivalent or superior to our technology, duplicate our technologies or design around our intellectual property rights.
|
·
|
accepting vehicle location and recovery technology as a preferred security product; and
|
·
|
with respect to insurance companies in Argentina, deciding to purchase or lease SVR services products from us directly.
|
|
·
|
changes in the global financial markets and U.S. and Israeli stock markets relating to turbulence
amid stock market volatility, tightening of credit markets, concerns of inflation and deflation, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and general liquidity concerns;
|
|
·
|
macro changes and changes in market share in the markets in which we provide services and products;
|
|
·
|
announcements of technological innovations or new products by us or our competitors;
|
|
·
|
developments or disputes concerning patents or proprietary rights;
|
|
·
|
publicity regarding actual or potential results relating to services rendered by us or our competitors;
|
|
·
|
regulatory development in the United States, Israel and other countries;
|
|
·
|
events or announcements relating to our collaborative relationship with others;
|
|
·
|
economic, political and other external factors;
|
|
·
|
period-to-period fluctuations in our operating results; and
|
|
·
|
substantial sales by significant shareholders of our ordinary shares which are currently or are in the process of being registered.
|
|
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
B.
|
BUSINESS OVERVIEW
|
|
(i)
|
Asset tracking products
|
|
(ii)
|
Stolen vehicle retrieval, or SVR, products
|
|
·
|
End units for installation in vehicles
- We offer an end unit with input and output capabilities, which may be installed in a vehicle or on any asset that may be mobilized from one location to another. The end unit’s inputs are connected to sensors that may be installed in the vehicle or on the asset. Data from these inputs may be transmitted to the CCC. The CCC may send commands to the end unit activating certain outputs. Installation and de-installation of end units in vehicles or on assets may be performed by either employees or subcontractors of the operator, usually in designated installation centers. Assets may include cargo or equipment that might not have an independent source of energy, such as (but not limited to) containers, field equipment, construction equipment, trailers and various cargo.
|
|
·
|
Command & Control Center -
The CCC includes databases and software modules required for the execution of certain operations by the operator, as well as monitors on which the data collected from the end units is displayed and analyzed in order to determine the location of the vehicle. The CCC connects to the end units via radio frequency or cellular communications and commands can be transmitted to the end units from the CCC using either a commercial paging system or cellular networks.
|
|
·
|
Communication Infrastructure
- Communication is accomplished by either the cellular network in each territory of operation or radio frequency infrastructure with base stations. These stations are dispersed throughout a specific territory and are connected to an existing communications infrastructure. Each base station is equipped with antennae which receives the end-unit’s signal and measures the angle from which the signal arrived for the purpose of locating the vehicle. These measurements, together with additional data received from the end units, are then converted into digital data and sent to the CCC. The location of the vehicle is established by either triangulation measurements from several base stations installed by the operator or by means of a GPS device in the vehicle.
|
|
(iii)
|
Fleet management application products
|
|
(i)
|
Asset tracking services
|
|
(ii)
|
SVR services
|
|
(iii)
|
Fleet management services
|
|
(iv)
|
Roadside assistance services
|
|
(v)
|
Car sharing services
|
|
(vi)
|
Emergency home repair and other services
|
|
·
|
a business license to render towing and retrieval/extrication services under the Control of Commodities and Services (Vehicle Towing and Extrication) Order, 5734-1974, which is valid until December 31, 2012;
|
|
·
|
a license for the operation of mobile garages under the Control of Commodities and Services (Vehicle Garages and Factories) Order, 5730-1970, which is valid until December 31, 2012; and
|
|
·
|
a license to rent self-drive vehicles under the Control of Commodities and Services (Tour Transport, Special Transport and Vehicle Rental) Order, 5745-1995, which is valid until December 31, 2012.
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
|||||||||||||||||||
Services:
|
54,778 | 64 | 48,448 | 66 | 45,287 | 69 | ||||||||||||||||||
Products:
|
31,140 | 36 | 25,415 | 34 | 20,038 | 31 | ||||||||||||||||||
Total:
|
85,918 | 100 | 73,863 | 100 | 65,325 | 100 |
2011
|
2010
|
2009
|
||||||||||||||||||||||
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
|||||||||||||||||||
Israel
|
61,498 | 72 | 53,574 | 73 | 50,604 | 77 | ||||||||||||||||||
Latin America
|
12,856 | 15 | 11,483 | 16 | 6,325 | 10 | ||||||||||||||||||
Europe
|
10,275 | 12 | 7,553 | 10 | 7,376 | 11 | ||||||||||||||||||
Other
|
1,289 | 1 | 1,253 | 1 | 1,020 | 2 | ||||||||||||||||||
Total
|
85,918 | 100 | 73,863 | 100 | 65,325 | 100 |
|
C.
|
ORGANIZATIONAL STRUCTURE
|
NAME OF SUBSIDIARY
|
JURISDICTION OF INCORPORATION
|
|
Pointer Localización y Asistencia S.A. (1)
|
Argentina
|
|
Shagrir System Ltd. (2)
|
Israel
|
|
Pointer Recuperacion Mexico S.A. (3)
|
Mexico
|
|
S.C. Pointer S.R.L. (4)
|
Romania
|
|
Pointer do Brazil Commercial S.A.(5)
|
Brazil
|
|
Pointer Telocation Inc. (6)
|
USA
|
|
Car2go Ltd. (7)
|
Israel | |
T.M.C Systems (2011) Ltd. (8)
|
Israel | |
T.M.C. Technologies Systems, L.P. (9)
|
Israel |
(1)
|
We hold 88% of the issued and outstanding shares of Pointer Argentina.
|
(2)
|
We hold 54.48% of the issued and outstanding shares of Shagrir.
|
(3)
|
We hold 74% of the issued and outstanding shares of Pointer Mexico.
|
(4)
|
Shagrir holds 65% of the issued and outstanding shares of S.C. Pointer S.R.L.
|
(5)
|
We hold 48% of the issued and outstanding shares of Pointer do Brazil Commercial S.A.
|
(6)
|
We hold 100% of the issued and outstanding shares of Pointer Telocation Inc.
|
(7)
|
Shagrir holds 58.46% of the issued and outstanding shares of Car2go Ltd.
|
(8)
|
Shagrir holds 51% of the issued and outstanding shares of T.M.C Systems (2011) Ltd.
|
(9)
|
Shagrir holds a 50.99% partnership interest in T.M.C. Technologies Systems, LP.
|
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
UNRESOLVED STAFF COMMENTS
|
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
|
A.
|
OPERATING RESULTS
|
|
·
|
Continuing the growth, revenues and profitability of our products and services by the subsidiaries;
|
|
·
|
Enhancing the introduction and recognition of our new products, including the products of our Cellocator segment, into the markets;
|
|
·
|
Penetrating new markets, mainly in Latin America and Europe, through the products of our Cellocator segment, and strengthening our presence in existing markets by proposing a full scope of services;
|
|
·
|
Succeeding in selling diversified products in territories in which we already conduct activities, mainly in Latin America and Europe;
|
|
·
|
penetrating new territories; and
|
|
·
|
Achieving operating profitability of our Pointer segment affiliates by increasing the number of subscribers using our technology and expanding the services generated by roadside assistance, emergency home repair services and car sharing.
|
|
(a)
|
Tangible and Intangibles
Long-Lived Assets
|
|
(b)
|
Goodwill impairment test
|
2009
|
2010
|
2011
|
||||||||||
(in thousands of U.S.Dollars)
|
||||||||||||
Cellocator segment revenues
|
24,199 | 23,533 | 15,380 | |||||||||
Pointer segment revenues
|
68,709 | 58,627 | 54,187 | |||||||||
Intersegment adjustment
|
(6,990 | ) | (8,297 | ) | (4,242 | ) | ||||||
Total revenue
|
(5,366 | ) | 73,863 | 65,325 | ||||||||
Cellocator Segment operating profit (loss)
|
1,520 | 2,839 | (3,144 | ) | ||||||||
Pointer segments operating profit
|
2,512 | 3,898 | 7,043 | |||||||||
Inter-segments adjustment
|
241 | (100 | ) | 276 | ||||||||
Total operating profit (loss)
|
(2,613 | ) | 6,637 | 4,175 |
MONTH
|
LOW
1 U.S. Dollar =
|
HIGH
1 U.S. Dollar =
|
September 2011
|
3.574
|
3.725
|
October 2011
|
3.602
|
3.763
|
November 2011
|
3.650
|
3.800
|
December 2011
|
3.727
|
3.821
|
January 2012
|
3.733
|
3.854
|
February 2012
|
3.700
|
3.803
|
Period
|
Exchange Rate
|
January 1, 2007 – December 31, 2007
|
4.1081 NIS/$1
|
January 1, 2008 – December 31, 2008
|
3.5878 NIS/$1
|
January 1, 2009 – December 31, 2009
|
3.9326 NIS/$1
|
January 1, 2010 – December 31, 2010
|
3.7330 NIS/$1
|
January 1, 2011 – December 31, 2011
|
3.5781 NIS/$1
|
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
|
C.
|
RESEARCH AND DEVELOPMENT
|
|
D.
|
TREND INFORMATION
|
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
|
F.
|
CONTRACTUAL OBLIGATIONS
|
Contractual Obligations
December 31, 2011 (in thousands USD)
|
Less
than 1
Year
|
1-3
Years
|
3-5
Years
|
More
than 5
Year
|
Total
|
||||||||||||||||||
Short term debt and other current liabilities
|
1 | 13,208 | - | - | - | 13,208 | |||||||||||||||||
Long-term loans
|
2 | - | 7,732 | - | 926 | 8,658 | |||||||||||||||||
Accrued severance pay
|
3 | - | - | - | 1,152 | 1,152 | |||||||||||||||||
Management fees to DBSI
|
4 | 52 | - | - | - | 52 | |||||||||||||||||
Operating lease obligations
|
5 | 1,947 | 3,575 | 4 | - | 5,526 | |||||||||||||||||
Royalties to BIRD
|
6 | - | - | - | 2,396 | 2,396 | |||||||||||||||||
Total contractual obligations
|
15,207 | 11,307 | 4 | 4,474 | 30,992 |
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
Name
|
Age
|
Position with Company
|
Yossi Ben Shalom
|
56
|
Chairman of the Board of Directors
|
David Mahlab
|
55
|
President and CEO
|
Gil Oren
|
60
|
External Director
|
Zvi Rutenberg
|
56
|
External Director
|
Barak Dotan
|
44
|
Director
|
Alicia Rotbard
|
66
|
Director
|
Yoel Rosenthal
|
57
|
Director
|
Dudy Marcus
|
38
|
Chief Technology Officer
|
Israel Ronn
|
55
|
General Manager, Cellocator Segment
|
Zvi Fried
|
47
|
Chief Financial Officer
|
|
B.
|
COMPENSATION
|
|
C.
|
BOARD PRACTICES
|
|
·
|
an employment relationship;
|
|
·
|
a business or professional relationship maintained on a regular basis;
|
|
·
|
control; and
|
|
·
|
service as an office holder.
|
|
·
|
the majority of shares voted at the meeting, including at least one-third of the shares held by non-controlling shareholders voted at the meeting, vote in favor of election of the director; or
|
|
·
|
the total number of shares held by non-controlling shareholders voted against the election of the director does not exceed one percent of the aggregate voting rights in the company.
|
D.
|
EMPLOYEES
|
Israel
|
Other
|
Total
|
||||||||||
2011
|
||||||||||||
Sales and Marketing
|
124 | 40 | 164 | |||||||||
Administration
|
44 | 22 | 66 | |||||||||
Research and Development
|
24 | - | 24 | |||||||||
Other
|
376 | 64 | 440 | |||||||||
Total
|
568 | 126 | 694 | |||||||||
2010
|
||||||||||||
Sales and Marketing
|
105 | 32 | 137 | |||||||||
Administration
|
46 | 26 | 72 | |||||||||
Research and Development
|
27 | - | 27 | |||||||||
Other
|
401 | 75 | 476 | |||||||||
Total
|
579 | 133 | 712 | |||||||||
2009
|
||||||||||||
Sales and Marketing
|
93 | 29 | 122 | |||||||||
Administration
|
38 | 24 | 62 | |||||||||
Research and Development
|
21 | 1 | 22 | |||||||||
Other
|
341 | 67 | 408 | |||||||||
Total
|
493 | 121 | 614 |
E.
|
SHARE OWNERSHIP
|
Name
|
Title/Office
|
As a % of Outstanding Ordinary Shares Beneficially Owned
(1)
|
Number of Ordinary Shares Beneficially Owned
|
|||
Yossi Ben Shalom
|
Chairman of Board of Directors
|
37.84%
|
1,839,691
(2)
|
|||
David Mahlab
|
President and CEO
|
*
|
*
|
|||
Gil Oren
|
External Director
|
*
|
*
|
|||
Zvi Rutenberg
|
External Director
|
*
|
*
|
|||
Barak Dotan
|
Director
|
37.84%
|
1,839,691
(2)
|
|||
Alicia Rotbard
|
Director
|
*
|
*
|
|||
Yoel Rosenthal
|
Director
|
*
|
*
|
|||
Zvi Fried
|
Chief Financial Officer
|
*
|
*
|
|||
Dudy Markus
|
Chief Technology Officer
|
*
|
*
|
|||
Israel Ronn
|
General Manager of the Cellocator segment
|
*
|
*
|
|||
All directors and officers as a group
|
37.84%
|
1,839,691
|
(1)
|
The percentage of outstanding ordinary shares beneficially owned is based on 4,861,524 shares outstanding as of March 22, 2012. The number of shares beneficially owned by a person includes ordinary shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 22, 2012.
|
(2)
|
As office holders of DBSI Investment Ltd., Messrs. Yossi Ben Shalom and Barak Dotan may be considered to be the beneficial holders of the 37.84%
of
our issued and outstanding shares held by DBSI Investment Ltd.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
|
A.
|
MAJOR SHAREHOLDERS
|
Number of Ordinary Shares Beneficially Owned
*
|
Percent of Outstanding Ordinary Shares Beneficially Owned*
|
Name of Beneficial Owner
|
||
1,839,691
|
37.84%
|
DBSI Investment Ltd.
(1)
|
||
701,592
|
14.43%
|
Eurocom Holdings (1979) Ltd.
|
*
|
The percentage of outstanding ordinary shares beneficially owned is based on 4,861,524 shares outstanding as of March 22, 2012. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The number of shares beneficially owned by a person includes ordinary shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 22, 2012. Such shares issuable pursuant to such options or warrants are deemed outstanding for computing the percentage ownership of the person holding such options but not deemed outstanding for the purposes of computing the percentage ownership of any other person. To our knowledge, the persons named in this table have sole voting and investment power with respect to all ordinary shares shown as owned by them
.
|
|
(1)
|
As office holders of DBSI Investment Ltd., Messrs. Barak Dotan and Yossi Ben Shalom may be considered to be the beneficial holders of the 37.84% of our outstanding shares held by DBSI.
|
|
B.
|
RELATED PARTY TRANSACTIONS
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
FINANCIAL INFORMATION
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
|
B.
|
SIGNIFICANT CHANGES
|
THE OFFER AND LISTING
|
|
A.
|
OFFER AND LISTING DETAILS
|
Period
|
High
|
Low
|
||||||
Last 6 calendar months
|
||||||||
February 2012
|
3.12 | 2.85 | ||||||
January 2012
|
4.00 | 3.17 | ||||||
December 2011
|
4.35 | 3.2 | ||||||
November 2011
|
4.5 | 3.9 | ||||||
October 2011
|
4.74 | 4.01 | ||||||
September 2011
|
4.38 | 3.71 | ||||||
Financial quarters during the past two years
|
||||||||
Fourth Quarter 2011
|
4.74 | 3.20 | ||||||
Third Quarter 2011
|
5.00 | 3.71 | ||||||
Second Quarter 2011
|
6.42 | 4.43 | ||||||
First Quarter 2011
|
6.25 | 4.80 | ||||||
Fourth Quarter 2010
|
7.09 | 6.04 | ||||||
Third Quarter 2010
|
7.46 | 6.24 | ||||||
Second Quarter 2010
|
7.70 | 5.72 | ||||||
First Quarter 2010
|
7.52 | 6.41 | ||||||
Five most recent full financial years
|
||||||||
2011
|
6.42 | 3.20 | ||||||
2010
|
7.70 | 5.72 | ||||||
2009
|
7.00 | 2.73 | ||||||
2008
|
7.20 | 2.70 | ||||||
2007
|
14.53 | 6.00 |
Period
|
High
|
Low
|
||||||
Last 6 calendar months
|
||||||||
February 2012
|
11 | 10 | ||||||
January 2012
|
15 | 12 | ||||||
December 2011
|
14 | 13 | ||||||
November2011
|
16 | 14 | ||||||
October 2011
|
17 | 15 | ||||||
September 2011
|
16 | 13 | ||||||
Financial quarters during the past two years
|
||||||||
Fourth Quarter 2011
|
17 | 13 | ||||||
Third Quarter 2011
|
18 | 13 | ||||||
Second Quarter 2011
|
22 | 15 | ||||||
First Quarter 2011
|
23 | 18 | ||||||
Fourth Quarter 2010
|
26 | 22 | ||||||
Third Quarter 2010
|
29 | 25 | ||||||
Second Quarter 2010
|
30 | 22 | ||||||
First Quarter 2010
|
30 | 24 | ||||||
Five most recent full financial years
|
||||||||
2011
|
23 | 13 | ||||||
2010
|
30 | 22 | ||||||
2009
|
27 | 11 | ||||||
2008
|
27 | 11 | ||||||
2007
|
58 | 23 |
|
B.
|
PLAN OF DISTRIBUTION
|
|
C.
|
MARKETS
|
|
D.
|
SELLING SHAREHOLDERS
|
|
E.
|
DILUTION
|
|
F.
|
EXPENSES OF THE ISSUE
|
ADDITIONAL INFORMATION
|
|
A.
|
SHARE CAPITAL
|
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
·
|
amendments to our Articles (other than modifications of shareholders rights as mentioned above);
|
|
·
|
appointment or termination of our auditors;
|
|
·
|
appointment and dismissal of directors;
|
|
·
|
approval of interested party acts and transactions requiring general meeting approval as provided in sections 255 and 268 to 275 of the Israeli Companies Law;
|
|
·
|
increase or reduction of our authorized share capital or the rights of shareholders or a class of shareholders- Sections 286 and 287 of the Israeli Companies Law;
|
|
·
|
any merger as provided in section 320 of the Israeli Companies Law; and
|
|
·
|
the exercise of the board of directors’ powers by a general meeting, if the board of directors is unable to exercise its powers and the exercise of any of its powers is vital for our proper management, as provided in section 52(a) of the Israeli Companies Law.
|
|
·
|
any amendment to the Articles of Association;
|
|
·
|
an increase of the company’s authorized share capital;
|
|
·
|
a merger; or
|
|
·
|
approval of interested party transactions that require shareholder approval as provided in sections 255 and 268 to 275 of the Israeli Companies Law.
|
|
·
|
Distribution of annual and quarterly reports to shareholders – Under Israeli law we are not required to distribute annual and quarterly reports directly to shareholders and the generally accepted business practice in Israel is not to distribute such reports to shareholders. We do however make our audited financial statements available to our shareholders prior to our annual general meeting and file quarterly financial results with the Securities Exchange Commission on Form 6-K.
|
|
·
|
Quorum – Under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting.
|
|
·
|
Approval of Related Party Transactions – All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions, set forth in sections 268 to 275 of the Israeli Companies Law, and the Regulations promulgated thereunder, which require audit committee approval and shareholder approval, as well as board approval, for specified transactions, rather than those approvals under the NASDAQ Listing Rules, which require approval by the audit committee or other independent body of our board. Provided that our executive officers do not serve on our board, Israeli law does not require nor do we engage in the recommendation to, or determination by, independent members of our board of the compensation of our executive officers. See also
Item 10B– Additional Information
–
Memorandum and Articles of Association– "The Israeli Companies Law", for further information on the approval of related party transactions.
|
|
·
|
Shareholder Approval – We seek shareholder approval for all corporate action requiring such approval in accordance with the requirements of the Israeli Companies Law, rather than the requirements for seeking shareholder approval under NASDAQ Listing Rule 5635.
|
|
·
|
Independence of Directors – A majority of our board of directors is not comprised of independent directors as defined in Rule 5605 of the NASDAQ Listing Rules. Our board contains two independent directors in accordance with the provisions contained in Sections 239-249 of the Israeli Companies Law. Israeli law does not require nor do our independent directors conduct, regularly scheduled meetings at which only they are present.
|
|
·
|
Nomination of our Directors – With the exception of our independent directors, our directors are elected for terms of one year or until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to our shareholders are generally made by our directors. Israeli law does not require the adoption of and our board has not adopted a formal written charter or board resolution addressing the nomination process and related matters.
|
|
·
|
Audit Committee- Our audit committee does not comply with all of the requirements of NASDAQ Listing Rule 5605. Rather, our audit committee complies with all of the requirements under Israeli law. Israeli law does not require and our board has not adopted a formal written audit committee charter.
|
|
C.
|
MATERIAL CONTRACTS
|
By the end of 2008, Shagrir repaid all of these loans, other than the amounts owed to Bank Hapoalim, by means of available funds and through additional loans from Bank Hapoalim in NIS currency and at an interest rate of 2.1%-7.39%. As a result, as of December 31, 2011, Shagrir has in the aggregate approximately $16.3 million in outstanding loans to Bank Hapoalim. For further information, see
Note 11
of our consolidated financial statements.
|
In order to finance our acquisition of Cellocator on September 18, 2007, Pointer received loan and credit facilities in the amount of $7 million from Bank Hapoalim, of which approximately $3 million remains outstanding as of December 31, 2011. The credit facility matures on 2013 and interest is payable at a determined rate above the London Interbank Offered Rate, or Libor. For further information, see
Note 11a
of our consolidated financial statements. For additional Information see
Item 9C – Acquisition of Cellocator Ltd
.
|
For further information regarding these loans, including related financial covenants, see
Note 11c
and
11d
to our consolidated financial statements.
|
For Information regarding our real property leases, please see
Item 4―
Information on the Company–Property, Plants and Equipment
.
|
|
D.
|
EXCHANGE CONTROLS
|
|
E. TAXATION AND GOVERNMENT PROGRAMS
|
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
|
G.
|
STATEMENT BY EXPERTS
|
|
H.
|
DOCUMENTS ON DISPLAY
|
|
I.
|
SUBSIDIARY INFORMATION
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
|
Expected Maturity Dates
|
|||||||||||||||||||
Interest |
2012
|
2013
|
2014
|
2015
|
2016 and thereafter
|
||||||||||||||
In Thousands
|
|||||||||||||||||||
ASSETS:
|
|||||||||||||||||||
Cash - in U.S. Dollars
|
19 | ||||||||||||||||||
Cash- in NIS
|
1,088 | ||||||||||||||||||
Cash- In other currency:
|
484 | ||||||||||||||||||
LIABILITIES:
|
|||||||||||||||||||
Short-term bank credit in, or linked to, dollars
|
3-4 | 1,901 | |||||||||||||||||
Short-term bank credit in, or linked to, dollars
|
LIBOR + 4.25
|
500 | |||||||||||||||||
Long-term loans (including current maturities) In U.S. Dollars:
|
LIBOR +2
|
800 | 800 | 600 | |||||||||||||||
In NIS
|
4 - 7.39 | 6,036 | 3,222 | 1,445 | |||||||||||||||
In NIS linked to CPI
|
2.1-5.48 | 2,610 | 470 | ||||||||||||||||
In NIS - Prime + 0.95% variable interest
|
4.45 | 1,342 | 1,210 |
DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
CONTROLS AND PROCEDURES
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
|
|
(c)
|
Attestation report of the registered public accounting firm.
|
|
(d)
|
Changes in Internal Control over Financial Reporting.
|
[RESERVED]
|
AUDIT COMMITTEE FINANCIAL EXPERT.
|
CODE OF ETHICS.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
USD in thousands
|
||||||||
2011
|
2010
|
|||||||
Audit Fees(1)
|
252 | 282 | ||||||
Audit-Related Fees(2)
|
6 | 4 | ||||||
Tax Fees(3)
|
17 | 25 | ||||||
All Other Fees
|
44 | 7 |
(1) Audit fees consist of fees for professional services rendered for the audit of the Company’s consolidated financial statements and review of financial statements and services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements.
|
(2) Audit-related fees are fees principally for services not provided in Audit Fees.
|
(3) Tax services fees consist of compliance fees for the preparation of original and amended tax returns, claims for refunds and tax payments.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER ANDAFFILIATED PURCHASERS
|
CHANGE IN THE REGISTRANT'S CERTIFYING ACCOUNTANT
|
CORPORATE GOVERNANCE
|
|
·
|
Under Israeli law we are not required to distribute annual and quarterly reports directly to shareholders, but we do however make our audited financial statements available to our shareholders prior to our annual general meeting and file quarterly financial results with the Securities Exchange Commission on Form 6-K.
|
|
·
|
As opposed to Rule 5620(c) of the NASDAQ Listing Rules, which sets forth a required quorum for a shareholders meeting, under Israeli law a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles, consistent with the Israeli Companies Law, provide that the quorum requirements for an adjourned meeting are the presence of a minimum of two shareholders present in person holding 25% of the voting power of the company.
|
|
·
|
All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions set forth in the Israeli Companies Law, and are not subject to the review process set forth in Rule 5630 of the NASDAQ Listing Rules. For a detailed discussion please see Item 10.B “Additional Information – NASDAQ Listing Rules and Home Country Practices".
|
·
|
We seek shareholder approval for all corporate action requiring such approval in accordance with the requirements of the Israeli Companies Law rather than under the requirements of the NASDAQ Listing Rules, including (but not limited to) the appointment or termination of auditors, appointment and dismissal of directors, approval of interested party acts and transactions requiring general meeting approval as discussed above and a merger.
|
·
|
A majority of our board of directors is not comprised of independent directors as defined in the NASDAQ Listing Rules, but our board of directors contains two external directors in accordance with the Israeli Companies Law. Israeli law does not require, nor do our external directors conduct, regularly scheduled meetings at which only they are present. In addition, with the exception of our external directors, our directors are elected for terms of one year or until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to our shareholders are also generally made by our directors. Israeli law does not require the adoption of and our board has not adopted a formal written charter or board resolution addressing the nomination process and related matters. Compensation of our directors and other officers is determined in accordance with Israeli law.
|
·
|
Our audit committee does not comply with all the requirements of Rule 5605 of the NASDAQ Marketplace Rules. Rather, our audit committee complies with all of the requirements under Israeli law. Israeli law does not require and our board has not adopted a formal written audit committee charter. For further information please see
Item 6 “Directors, Senior Management and Employees – Board Practices"
.
|
FINANCIAL STATEMENTS
|
1.1
|
Memorandum of Association incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form F-1, filed with the Commission on June 10, 1994 (registration number 33-76576).
|
1.2
|
Amended and Restated Articles of Association of the Registrant.
|
2.1
|
Form of Convertible Debenture due September 18, 2010 of the Registrant incorporated herein by reference to Exhibit 2.1 to Registrant's filed with the Commission on March 31, 2009.
|
4.2
|
Registration Rights Agreement among the Company and the Investors as defined therein, dated April 2, 2007, incorporated herein by reference to Registrant’s Report of Foreign Issuer on Form 6-K, filed with the Commission on April 3, 2007.
|
4.3
|
Form of Ordinary Share Purchase Warrant issued to the investor parties to the Securities Purchase Agreement, dated April 2, 2007, incorporated herein by reference to Registrant’s Report of Foreign Issuer on Form 6-K, filed with the Commission on April 3, 2007.
|
4.4
|
English Translation of Hebrew Language Order Form and Warrant issued in Israeli Private Placement in January 2007, incorporated herein by reference to Exhibit 4.5 to Registrant's Form 20F/A, filed with the Commission on July 31, 2007.
|
4.5
|
Letter Agreement, by and among Pointer (Eden Telecom Group) Ltd. and Bank Hapoalim Ltd., dated November 16, 2004, incorporated herein by reference to Exhibit 4.18 to Registrant's Form 20-F, filed with the Commission on June 30, 2005.
|
4.6
|
Management Services Agreement, by and among Shagrir Systems Ltd., Gandyr Investments Ltd., Egged Holdings Ltd. and other lenders therein, dated November 16, 2004, incorporated herein by reference to Exhibit 4.13 to Registrant's Form 20-F, filed with the Commission on June 30, 2005.
|
4.7
|
English Summary of Purchase Agreement by and among Shagrir Systems Ltd., K.S. Operation Centers for Vehicles Ltd. and Shimon Barzilay dated October 11, 2011, as amended by an amendment dated January 1, 2012.
|
12.1
|
Certification by Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification by Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certification by the Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
14.1
|
Consent of Kost, Forer, Gabbay & Kasierer Certified Public Accountants (Israel).
|
14.2
|
Consent of Grant Thornton Argentina S.C. Certified Public Accountants (Argentina).
|
14.3
|
Consent of Salles, Sainz – Grant Thornton, S.C. Certified Public Accountants (Mexico).
|
14.4
|
Consent of Baker Tilly Brasil Certified Public Accountants (Brazil).
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5
|
|
F-6 - F-7
|
|
F-8 - F-10
|
|
F-11 - F-52
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 67067, Israel
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
March 29, 2012
|
A Member of Ernst & Young Global
|
December 31
,
|
||||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 1,468 | $ | 2,233 | ||||
Restricted cash
|
123 | 133 | ||||||
Trade receivables (net of allowance for doubtful accounts of $ 1,383 and $ 1,439 at December 31, 2011 and 2010, respectively)
|
14,427 | 13,914 | ||||||
Other accounts receivable and prepaid expenses (Note 3)
|
1,946 | 2,982 | ||||||
Inventories (Note 4)
|
4,467 | 3,739 | ||||||
Total current assets
|
22,431 | 23,001 | ||||||
LONG-TERM ASSETS:
|
||||||||
Long-term accounts receivable
|
805 | 832 | ||||||
Severance pay fund
|
7,474 | 7,624 | ||||||
Property and equipment, net (Note 5)
|
10,839 | 11,255 | ||||||
Investment in affiliate (Note 6)
|
266 | 295 | ||||||
Other intangible assets, net (Note 7)
|
3,030 | 6,497 | ||||||
Goodwill (Note 8)
|
44,493 | 53,926 | ||||||
Total long-term assets
|
66,907 | 80,429 | ||||||
Total assets
|
$ | 89,338 | $ | 103,430 |
Year ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Revenues (Note 19c):
|
||||||||||||
Products
|
$ | 31,140 | $ | 25,415 | $ | 20,038 | ||||||
Services
|
54,778 | 48,448 | 45,287 | |||||||||
Total
revenues
|
85,918 | 73,863 | 65,325 | |||||||||
Cost of revenues:
|
||||||||||||
Products
|
18,283 | 14,175 | 10,774 | |||||||||
Services
|
37,249 | 31,264 | 26,645 | |||||||||
Amortization and impairment of intangible assets (Note 1b)
|
1,498 | 978 | 976 | |||||||||
Total cost of revenues
|
57,030 | 46,417 | 38,395 | |||||||||
Gross profit
|
28,888 | 27,446 | 26,930 | |||||||||
Operating expenses:
|
||||||||||||
Research and development
|
3,082 | 2,532 | 2,817 | |||||||||
Selling and marketing
|
8,932 | 7,441 | 6,249 | |||||||||
General and administrative
|
11,450 | 9,062 | 8,788 | |||||||||
Amortization of intangible assets
|
1,821 | 1,774 | 1,942 | |||||||||
Impairment of goodwill and intangible asset
|
6,216 | - | 2,959 | |||||||||
Total operating expenses
|
31,501 | 20,809 | 22,755 | |||||||||
Operating income (loss)
|
(2,613 | ) | 6,637 | 4,175 | ||||||||
Financial expenses, net (Note 20a)
|
1,779 | 1,976 | 2,070 | |||||||||
Other expenses, net (Note 20b)
|
77 | 21 | 16 | |||||||||
Income (loss) before taxes on income
|
(4,469 | ) | 4,640 | 2,089 | ||||||||
Taxes on income (Note 17)
|
2,383 | 1,524 | 887 | |||||||||
Income (loss) after taxes on income
|
(6,852 | ) | 3,116 | 1,202 | ||||||||
Equity in losses of affiliate
|
1,634 | 1,158 | 677 | |||||||||
Net income (loss)
|
(8,486 | ) | 1,958 | 525 | ||||||||
Less - net income attributable to non-controlling interest
|
(41 | ) | (828 | ) | (2,632 | ) | ||||||
Net income (loss) attributable to Pointer Telocation Ltd's shareholders
|
$ | (8,527 | ) | $ | 1,130 | $ | (2,107 | ) | ||||
Earnings per share attributable to Pointer Telocation Ltd's shareholders:
|
||||||||||||
Basic net earnings (loss) per share (Note 16)
|
$ | (1.78 | ) | $ | 0.24 | $ | (0.44 | ) | ||||
Diluted net earnings (loss) per share (Note 16)
|
$ | (1.79 | ) | $ | 0.22 | $ | (0.47 | ) |
Pointer Telocation Ltd's Shareholders
|
||||||||||||||||||||||||||||||||
Number
of
|
Share
|
Additional paid-in
|
Accumulated other comprehensive
|
Accumulated
|
Non-
controlling
|
Comprehensive
|
Total
|
|||||||||||||||||||||||||
shares
|
capital
|
capital
|
income
|
deficit
|
interest
|
income
|
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2009
|
4,752,931 | $ | 3,266 | $ | 118,015 | $ | 1,773 | $ | (87,239 | ) | $ | 5,372 | $ | 41,187 | ||||||||||||||||||
Stock-based compensation expenses
|
- | - | 333 | - | - | 32 | 365 | |||||||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | (871 | ) | (871 | ) | |||||||||||||||||||||||
Non-controlling interest recorded as a result of business combination (see Note 1h)
|
- | - | - | - | - | 256 | 256 | |||||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | (167 | ) | - | 249 | $ | 82 | 82 | ||||||||||||||||||||||
Realized losses on derivatives
designated as cash flow hedges
|
- | - | - | (78 | ) | - | - | (78 | ) | (78 | ) | |||||||||||||||||||||
Unrealized gains on derivatives
designated as cash flow hedges
|
- | - | - | 13 | - | - | 13 | 13 | ||||||||||||||||||||||||
Net income
|
- | - | - | - | (2,107 | ) | 2,632 | 525 | 525 | |||||||||||||||||||||||
Total comprehensive income
|
$ | 542 | ||||||||||||||||||||||||||||||
Balance as of December 31, 2009
|
4,752,931 | 3,266 | 118,348 | 1,541 | (89,346 | ) | 7,670 | 41,479 | ||||||||||||||||||||||||
Issuance of shares in respect of Stock-based compensation
|
18,250 | 14 | 43 | - | - | - | 57 | |||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | 121 | - | - | - | 121 | |||||||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | (2,250 | ) | (2,250 | ) | |||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | 1,598 | - | 530 | $ | 2,128 | 2,128 | |||||||||||||||||||||||
Realized gains on derivatives
designated as cash flow hedges
|
- | - | - | 29 | - | - | 29 | 29 | ||||||||||||||||||||||||
Unrealized gains on derivatives
designated as cash flow hedges
|
- | - | - | 124 | - | - | 124 | 124 | ||||||||||||||||||||||||
Net income
|
- | - | - | - | 1,130 | 828 | 1,958 | 1,958 | ||||||||||||||||||||||||
Total comprehensive income
|
$ | 4,239 | ||||||||||||||||||||||||||||||
Balance as of December 31, 2010
|
4,771,181 | 3,280 | 118,512 | 3,292 | (88,216 | ) | 6,778 | 43,646 | ||||||||||||||||||||||||
Issuance of shares in respect of Stock-based compensation
|
88,843 | 73 | 208 | - | - | - | - | 281 | ||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | 515 | - | - | - | - | 515 | ||||||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | (1,595 | ) | - | (1,595 | ) | ||||||||||||||||||||||
Exercise of options in subsidiary
|
- | - | (88 | ) | - | - | 88 | - | - | |||||||||||||||||||||||
Sale of subsidiary (Note 1j)
|
- | - | - | - | - | 426 | - | 426 | ||||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | (2,074 | ) | - | (531 | ) | (2,605 | ) | (2,605 | ) | ||||||||||||||||||||
Realized losses on derivatives
designated as cash flow hedges
|
- | - | - | (219 | ) | - | - | (219 | ) | (219 | ) | |||||||||||||||||||||
Unrealized losses on derivatives
designated as cash flow hedges
|
- | - | - | (162 | ) | - | - | (162 | ) | (162 | ) | |||||||||||||||||||||
Net loss
|
- | - | - | - | (8,527 | ) | 41 | (8,486 | ) | (8,486 | ) | |||||||||||||||||||||
Total comprehensive loss
|
$ | (11,472 | ) | |||||||||||||||||||||||||||||
Balance as of December 31, 2011
|
4,860,024 | $ | 3,353 | $ | 119,147 | $ | 837 | $ | (96,743 | ) | $ | 5,207 | $ | 31,801 |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Accumulated unrealized gain on derivative instruments
|
$ | (213 | ) | $ | 168 | |||
Accumulated foreign currency translation differences
|
1,050 | 3,124 | ||||||
Accumulated other comprehensive income
|
$ | 837 | $ | 3,292 |
Year ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash flows from operating activities
:
|
||||||||||||
Net income (loss)
|
$ | (8,486 | ) | $ | 1,958 | $ | 525 | |||||
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation, amortization and impairment
|
12,710 | 5,568 | 8,252 | |||||||||
Accrued interest and exchange rate changes of debenture and long-term loans
|
135 | 178 | (85 | ) | ||||||||
Accrued severance pay, net
|
487 | (364 | ) | (400 | ) | |||||||
Gain from sale of property and equipment, net
|
(95 | ) | (93 | ) | (377 | ) | ||||||
Equity in losses of affiliate
|
1,634 | 1,158 | 677 | |||||||||
Amortization of stock-based compensation
|
515 | 121 | 367 | |||||||||
Impairment loss of loan to minority shareholder in subsidiary (Note 1j)
|
489 | - | - | |||||||||
Decrease (increase) in restricted cash
|
10 | (133 | ) | - | ||||||||
Decrease (increase) in trade receivables, net
|
(1,462 | ) | (1,618 | ) | 1,995 | |||||||
Decrease (increase) in other accounts receivable and prepaid expenses
|
373 | (436 | ) | (308 | ) | |||||||
Decrease (increase) in inventories
|
(1,035 | ) | (1,964 | ) | 128 | |||||||
Write-off of inventories
|
304 | 185 | 124 | |||||||||
Deferred income taxes
|
170 | 1,322 | 773 | |||||||||
Increase in long-term accounts receivable
|
(177 | ) | (212 | ) | (493 | ) | ||||||
Increase (decrease) in trade payables
|
452 | 981 | (413 | ) | ||||||||
Increase (decrease) in other accounts payable and accrued expenses
|
2,457 | (127 | ) | 461 | ||||||||
Net cash provided by operating activities
|
8,481 | 6,524 | 11,226 | |||||||||
Cash flows from investing activities
:
|
||||||||||||
Decrease in other accounts receivable
|
- | - | 279 | |||||||||
Purchase of property and equipment
|
(4,445 | ) | (4,481 | ) | (3,442 | ) | ||||||
Proceeds from sale of property and equipment
|
1,050 | 641 | 1,215 | |||||||||
Investments in affiliates
|
(1,740 | ) | (1,490 | ) | (640 | ) | ||||||
Acquisition of subsidiary (a)
|
- | - | (38 | ) | ||||||||
Proceeds from sale of subsidiaries (b)
|
39 | - | - | |||||||||
Net cash used in investing activities
|
(5,096 | ) | (5,330 | ) | (2,626 | ) |
Year ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Receipt of long-term loans from banks
|
8,384 | 5,090 | - | |||||||||
Repayment of long-term loans from banks
|
(8,937 | ) | (7,016 | ) | (6,027 | ) | ||||||
Repayment of long-term loans from others
|
(1,071 | ) | (1,122 | ) | (32 | ) | ||||||
Dividend paid to non-controlling interest
|
(1,594 | ) | (2,250 | ) | (871 | ) | ||||||
Proceeds from issuance of shares and exercise of warrants, net
|
281 | 57 | - | |||||||||
Short-term bank credit, net
|
(1,002 | ) | 2,656 | (983 | ) | |||||||
Net cash used in financing activities
|
(3,939 | ) | (2,585 | ) | (7,913 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(211 | ) | 415 | (186 | ) | |||||||
Increase (decrease) in cash and cash equivalents
|
(765 | ) | (976 | ) | 501 | |||||||
Cash and cash equivalents at the beginning of the year
|
2,233 | 3,209 | 2,708 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 1,468 | $ | 2,233 | $ | 3,209 |
Year ended December 31,
|
|||||||||||||
2011
|
2010
|
2009
|
|||||||||||
(b)
|
Proceeds from sale of investments in previously consolidated subsidiaries:
|
||||||||||||
The subsidiaries' assets and liabilities at date of sale:
|
|||||||||||||
Working capital (excluding cash and cash equivalents)
|
$ | 32 | $ | - | $ | - | |||||||
Non-controlling interests
|
426 | - | - | ||||||||||
Loss from sale of subsidiaries
|
(110 | ) | - | - | |||||||||
Receivables for sale of investments in subsidiaries
|
(309 | ) | - | - | |||||||||
$ | 39 | $ | - | $ | - | ||||||||
(c)
|
Non-cash investing activity:
|
||||||||||||
Purchase of property and equipment
|
$ | 309 | $ | 45 | $ | 221 | |||||||
(d)
|
Supplemental disclosure of cash flow activity:
|
||||||||||||
Cash paid during the year for:
|
|||||||||||||
Interest
|
$ | 1,456 | $ | 1,462 | $ | 1,958 | |||||||
Income taxes
|
$ | - | $ | 40 | $ | 87 |
NOTE 1:-
|
GENERAL
|
|
a.
|
Pointer Telocation Ltd. ("the Company") was incorporated in Israel and commenced operations in July 1991. The Company conducts its operations through two main segments. Through its Cellocator segment, the Company designs, develops and produces leading mobile resource management products, including asset tracking, fleet management, and security products, for sale to third party operators providing mobile resource management services and to our Pointer segment. Through its Pointer segment, the Company acts as an operator by bundling its products together with a range of services, including stolen vehicle retrieval services and fleet management services, and also provides road-side assistance services in Israel for sale to insurance companies, fleets and individual customers.
|
|
b.
|
In 2011, the changes in the economic conditions and forecasted results of the Company's Cellocator segment led the Company to test the implied value of the Cellocator segment’s goodwill in accordance with ASC 350 "Intangibles - Goodwill and Others". As a result of the impairment test, the Company determined that the implied value attributable to Cellocator goodwill and development technology intangible assets should be lower by $6,216 and $520, respectively. These amounts were recorded in the 2011 Consolidated Statement of Operation under the captions "Impairment of goodwill and intangible asset" and "Amortization and impairment of intangible assets", respectively. See also notes 2g and 2i.
|
|
c.
|
The Company holds 55.99% of the share capital of Shagrir Systems Ltd. ("Shagrir"). Shagrir is engaged in the field of road side assistance, towing services and stolen vehicle recovery in Israel. (See note 2q)
|
|
d.
|
In July 2008, Shagrir incorporated a Romanian company, S.C. Pointer S.R.L. ("Pointer Romania"), to provide road-side assistance and towing services in Romania. Shagrir holds 50% of the share capital of Pointer Romania. On January 1, 2012, Shagrir signed an agreement with the Romanian shareholder, pursuant to which he transferred to Shagrir 15% of the issued share capital of the Romanian subsidiary. As a result, Shagrir holds 65% of the share capital of Pointer Romania
|
|
e.
|
The Company holds 88% of the share capital of Pointer Localization Y Asistencia SA's (formerly: Tracsat S.A.) ("Pointer Argentina"). Pointer Argentina is the operator of the Company's systems and products that provide stolen vehicle recovery services in Buenos Aires, Argentina.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
f.
|
The Company holds 74% of the share capital of Pointer Recuperacion de Mexico S.A. de C.V. ("Pointer Mexico"), the remaining 26% of the share capital being held by local Mexican partners. Pointer Mexico provides location, tracking and stolen vehicle recovery services to its customers in Mexico as well as distributing the Company's products.
|
|
g.
|
In August 2008 the Company incorporated a company in Brazil by the name of Pointer do Brazil S.A. ("Pointer Brazil"). As of December 31, 2011, the Company holds 48% of the share capital in Pointer Brazil, with an option to acquire an additional 4%. The option will expire in August 2013. Pointer Brazil will provide location, tracking and recovery of stolen vehicles services to its customers in Brazil. Currently, the affiliate has no significant revenues. The Company recorded equity in losses of Pointer Brazil in the amount of $1,600 and $1,200 in 2011 and 2010, respectively.
|
|
h.
|
In October 2008, the Company established a wholly-owned subsidiary in the United States, Pointer Telocation Inc. Currently, the subsidiary has no significant revenues.
|
|
i.
|
On May 15, 2009, the Company's subsidiary Shagrir acquired ownership of 51% of the ordinary shares of Car2go Ltd., which is engaged in car sharing and motor vehicle rental.
|
|
j.
|
On June 28, 2010, Shagrir, together with an Israel resident (hereinafter the "minority shareholder") entered into an agreement for the establishment of an Israeli company named Rider from the Shagrir Group Ltd. ("Rider") for providing outsourcing services to insurance companies and others. The minority shareholder holds 33% and serves as Rider's CEO.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
k.
|
In November 2011, Shagrir, together with T.M.C Transportation Ltd. ("TMC"), signed an agreement for the establishment of a limited partnership, TMC Systems, LP ("the partnership"). The Company will hold 51% of the partnership's capital. The activities of TMC will be transferred to the partnership. The partnership commenced its activity
on January 1, 2012.
|
|
l.
|
On October 11, 2011, Shagrir entered into an agreement to acquire the activities of K.S
Operation Centers
for Vehicles Ltd. ("K.S") in consideration for an aggregate amount of NIS 12 million (as amended by an amendment dated January 1, 2012)
.
Shagrir consummated the transaction in January 2012
.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
a.
|
Use of estimates:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
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:
|
%
|
||
Installed products
|
20-33
|
|
Computers and electronic equipment
|
10 - 33 (mainly 33)
|
|
Office furniture and equipment
|
6 - 15
|
|
Motor vehicles
|
15 - 20 (mainly 20)
|
|
Network installation
|
10 - 33
|
|
Buildings
|
6.67
|
|
Leasehold improvements
|
Over the term of the lease including the option term
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
g.
|
Goodwill:
|
|
h.
|
Identifiable intangible assets:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
i.
|
Impairment of long-lived assets:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
j.
|
Provision for warranty:
|
Year ended
December 31,
|
||||||||
2011
|
2010
|
|||||||
Balance, beginning of the year
|
$ | 604 | $ | 462 | ||||
Warranties issued during the year
|
548 | 492 | ||||||
Settlements made during the year
|
(278 | ) | (260 | ) | ||||
Expirations
|
(150 | ) | (113 | ) | ||||
Foreign currency translation adjustment
|
(34 | ) | 23 | |||||
Balance end of year
|
$ | 690 | $ | 604 |
|
k.
|
Revenue recognition:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
l.
|
Research and development costs:
|
|
m.
|
Advertising expenses:
|
|
n.
|
Deferred income taxes:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
o.
|
Basic and diluted net earnings (loss) per share:
|
|
p.
|
Accounting for stock-based compensation:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
q.
|
Data related to options to purchase the Company shares:
|
|
1.
|
The fair value of the Company's stock options granted to employees and directors for the years ended December 31, 2011, 2010 and 2009 was estimated using the Black-Scholes-Merton option-pricing model, with the following weighted average assumptions:
|
Year ended
December 31,
|
||||||
2011
|
2010
|
2009
|
||||
Risk free interest rate
|
2%
|
1.13%
|
1.73%
|
|||
Dividend yield
|
0%
|
0%
|
0%
|
|||
Expected volatility
|
75%
|
76%
|
80%
|
|||
Expected term (in years)
|
5
|
5
|
3.9
|
|||
Forfeiture rate
|
2%
|
6%
|
10%
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
2.
|
Data related to options to purchase Shagrir shares:
|
|
r.
|
Severance pay:
|
|
s.
|
Concentrations of credit risk:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
t.
|
Fair value measurements:
|
|
Level 1 -
|
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
|
|
Level 2 -
|
Significant other observable inputs based on market data obtained from sources independent of the reporting entity;
|
|
Level 3 -
|
Unobservable inputs which are supported by little or no market activity (for example cash flow modeling inputs based on assumptions).
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
u.
|
Derivatives and hedging activities:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
v.
|
Equity affiliates
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
w.
|
Impact of recently issued Accounting Standards still not effective for the Company:
|
NOTE 3:-
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Government authorities
|
$ | 200 | $ | 824 | ||||
Employees
|
91 | 94 | ||||||
Prepaid expenses
|
1,258 | 1,427 | ||||||
Former subsidiary's CEO (1)
|
171 | 282 | ||||||
Foreign currency derivatives
|
- | 168 | ||||||
Others
|
226 | 187 | ||||||
$ | 1,946 | $ | 2,982 |
|
(1)
|
The balance as of December 31, 2011 in the amount of $ 171 is receivable from Nehoray, Rider's CEO, in accordance to the loan sold (see note 1i)
|
NOTE 4:-
|
INVENTORIES
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Raw materials
|
$ | 2,637 | $ | 2,002 | ||||
Work in process
|
24 | 46 | ||||||
Finished goods
|
1,806 | 1,691 | ||||||
$ | 4,467 | $ | 3,739 |
NOTE 5:-
|
PROPERTY AND EQUIPMENT
|
|
a.
|
Composition:
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Cost:
|
||||||||
Installed products
|
$ | 5,111 | $ | 4,409 | ||||
Computers and electronic equipment
|
6,252 | 6,222 | ||||||
Office furniture and equipment
|
1,009 | 927 | ||||||
Motor vehicles
|
12,243 | 11,863 | ||||||
Network installation
|
4,164 | 4,736 | ||||||
Buildings
|
499 | 537 | ||||||
Leasehold improvements
|
1,273 | 1,237 | ||||||
30,551 | 29,931 | |||||||
Accumulated depreciation:
|
||||||||
Installed products
|
4,170 | 3,333 | ||||||
Computers and electronic equipment
|
5,241 | 5,312 | ||||||
Office furniture and equipment
|
577 | 545 | ||||||
Motor vehicles
|
5,142 | 4,844 | ||||||
Network installation
|
3,837 | 4,015 | ||||||
Buildings
|
35 | 27 | ||||||
Leasehold improvements
|
710 | 600 | ||||||
19,712 | 18,676 | |||||||
Depreciated cost
|
$ | 10,839 | $ | 11,255 |
|
b.
|
Depreciation expenses for the years ended December 31, 2011, 2010 and 2009 were $ 3,174, $ 2,815 and $ 2,377, respectively.
|
NOTE 6:-
|
INVESTMENT IN AFFILIATE
|
|
a.
|
In August 2008 the Company incorporated a company in Brazil by the name of Pointer do Brazil S.A. ("Pointer Brazil"). As of December 31, 2011, the Company holds 48% of the share capital in Pointer Brazil, with an option to acquire an additional 4%. The option will expire in August 2013.
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Invested in equity
|
$ | 3,830 | $ | 2,090 | ||||
Accumulated net loss
|
3,564 | 1,795 | ||||||
Total investment in affiliate
|
$ | 266 | $ | 295 |
|
b.
|
As of December 31, 2011, Pointer Brazil's total assets and liabilities are $ 4,121 and $ 2,844, respectively. The net loss for the year 2011 is $3,145.
|
NOTE 7:-
|
OTHER INTANGIBLE ASSETS, NET
|
|
a.
|
Other intangible assets, net:
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Cost:
|
||||||||
Patents
|
$ | 639 | $ | 639 | ||||
Developed technology
|
4,890 | 4,890 | ||||||
Customer related intangible
|
15,321 | 16,265 | ||||||
Brand name
|
4,462 | 4,630 | ||||||
25,312 | 26,424 | |||||||
Accumulated amortization:
|
||||||||
Patents
|
639 | 639 | ||||||
Developed technology (see note 2i)
|
4,708 | 3,211 | ||||||
Customer related intangible
|
13,745 | 13,231 | ||||||
Brand name
|
3,190 | 2,846 | ||||||
22,282 | 19,927 | |||||||
Amortized cost
|
$ | 3,030 | $ | 6,497 |
|
b.
|
Amortization and impairment expenses for the years ended December 31, 2011, 2010 and 2009 were $ 3,319, $ 2,753 and $ 5,879, respectively.
|
NOTE 7:-
|
OTHER INTANGIBLE ASSETS, NET (Cont.)
|
|
c.
|
Estimated amortization expenses for the years ending:
|
December 31,
|
||||
2012
|
$ | 1,901 | ||
2013
|
472 | |||
2014
|
226 | |||
2015
|
221 | |||
2016
|
210 | |||
$ | 3,030 |
NOTE 8:-
|
GOODWILL
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Goodwill, beginning of the year
|
$ | 53,926 | $ | 51,220 | ||||
Additions in respect of acquisitions
|
- | - | ||||||
Impairment of Goodwill (see note 2g)
|
(6,216 | ) | - | |||||
Foreign currency translation adjustments
|
(3,217 | ) | 2,706 | |||||
Goodwill, end of year
|
$ | 44,493 | $ | 53,926 |
NOTE 9:-
|
SHORT-TERM BANK CREDIT AND CURRENT MATURITIES OF LONG-TERM LOANS FROM BANKS, SHAREHOLDERS AND OTHERS
|
Interest rate
|
December 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||
%
|
|||||||||||
Short-term bank credit and loans:
|
|||||||||||
In USD
|
3 - 4
|
3 - 4
|
$ | 1,901 | $ | 3,435 | |||||
In, or linked to, dollars
|
LIBOR + 4.25
|
500 | - | ||||||||
In Mexican Pesos
|
14.6
|
- | 35 | ||||||||
2,401 | 3,470 | ||||||||||
Current maturities of long-term loans from banks, shareholders and others:
|
|||||||||||
In, or linked to, dollars
|
LIBOR + 2
|
LIBOR + 2
|
800 | 800 | |||||||
In, or linked to, dollars (see Note 12d)
|
4.4
|
4.4
|
- | 1,013 | |||||||
In NIS linked to CPI
|
2.1-5.48
|
2.1-5.48
|
2,610 | 2,545 | |||||||
In NIS
|
4-7.39
|
4 - 7.39
|
6,036 | 4,653 | |||||||
In NIS - variable interest
|
4.45
|
4.45
|
1,343 | 628 | |||||||
In EURO
|
8-16
|
8-16
|
18 | 61 | |||||||
10,807 | 9,700 | ||||||||||
$ | 13,208 | $ | 13,170 | ||||||||
Unutilized credit lines
|
$ | 4,207 | $ | 3,222 |
NOTE 10:-
|
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Employees and payroll accruals
|
$ | 4,256 | $ | 4,597 | ||||
Government authorities
|
1,027 | 836 | ||||||
Provision for warranty
|
463 | 428 | ||||||
Accrued expenses
|
1,283 | 1,138 | ||||||
Related party
|
52 | 52 | ||||||
Foreign currency derivatives
|
213 | - | ||||||
Others
|
146 | 3 | ||||||
$ | 7,440 | $ | 7,054 |
NOTE 11:-
|
LONG-TERM LOANS FROM BANKS
|
|
a.
|
Composition:
|
Interest rate
|
December 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||
%
|
|||||||||||
In, or linked to, dollars (see c below )
|
LIBOR + 2
|
LIBOR + 2
|
$ | 2,200 | $ | 3,000 | |||||
In NIS linked to CPI
|
2.1-5.48
|
2.1-5.48
|
3,081 | 5,309 | |||||||
In NIS - Prime + 0.95% variable interest
|
4.45
|
4.45
|
2,552 | 1,972 | |||||||
In NIS
|
4 - 7.39
|
4 - 7.39
|
10,704 | 9,938 | |||||||
18,537 | 20,219 | ||||||||||
Less - current maturities
|
10,789 | 8,627 | |||||||||
Less - discount
|
33 | 66 | |||||||||
$ | 7,715 | $ | 11,526 |
|
b.
|
As of December 31, 2011, the aggregate annual maturities of the long-term loans are as follows:
|
2012 (current maturities)
|
$ | 10,789 | ||
2013
|
5,703 | |||
2014
|
2,045 | |||
$ | 18,537 |
|
c.
|
In respect of the bank loans provided to the Company for the purpose of funding the 2007 acquisition transaction, pursuant to which the Company acquired the activities and assets of Cellocator Ltd. ("Cellocator"), the Company is required to meet certain financial covenants as follows:
|
|
1.
|
The ratio of the shareholders equity to the total consolidated assets will not be less than 20% and the shareholders equity will not be less than $ 20,000, starting December 31, 2007.
|
|
2.
|
The ratio of the Company and its subsidiaries' debt (debt to banks, convertible debenture and loans from others that are not subordinated to the bank less cash) to the annual EBITDA will not exceed 5 in 2008, 4.5 in 2009 and 4 in 2010 and thereafter.
|
|
3.
|
The ratio of Pointer Telocation Ltd.'s debt (debt to banks, convertible debenture and loans from others was not subordinated to the bank less cash) to the annual EBITDA will not exceed 4 in 2008, 3.5 in 2009 and 2.5 in 2010 and thereafter.
|
NOTE 11:-
|
LONG-TERM LOANS FROM BANKS (Cont.)
|
|
d.
|
Under the credit facility (in respect of the loans denominated in NIS) from the bank, Shagrir is required to meet financial covenants.
|
|
1.
|
The ratio of the debt to the bank to the annual EBITDA will not exceed 5.5.
|
|
2.
|
The ratio of the annual EBITDA to the current maturities (the loan principal plus interest) of long-term loans from the bank will not be less than 1, at any time.
|
|
3.
|
The shareholders' equity, including loans from shareholders, will not be less than NIS 50 million, at any time
|
|
4.
|
Shagrir shall not declare any distribution of dividends without the prior written consent of the bank. Shagrir received such consent from the bank prior to its dividend distribution in March and December 2010.
|
NOTE 12:-
|
LONG-TERM LOANS FROM SHAREHOLDERS AND OTHERS
|
|
a.
|
Long-term loans from shareholders and others - composition:
|
Interest rate
|
December 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||
%
|
|||||||||||
In NIS linked to CPI (see c1 below)
|
4
|
4
|
$ | 157 | $ | 159 | |||||
In Euro (see c2 below)
|
8-16
|
8-16
|
32 | 86 | |||||||
In U.S. dollars (see d below)
|
4.4
|
4.4
|
- | 1,013 | |||||||
Linked to Euro (see c3 below)
|
2
|
2
|
35 | 35 | |||||||
In U.S. dollars (see c4 below)
|
-
|
-
|
737 | 737 | |||||||
961 | 2,030 | ||||||||||
Less - current maturities
|
18 | 1,073 | |||||||||
$ | 943 | $ | 957 |
NOTE 12:-
|
LONG-TERM LOANS FROM SHAREHOLDERS AND OTHERS (Cont.)
|
|
b.
|
As of December 31, 2011, the aggregate annual maturities of the long-term loans from shareholders and others are as follow:
|
2012 (current maturities)
|
$ | 18 | ||
2013
|
16 | |||
2014
|
- | |||
2015
|
- | |||
2016
|
- | |||
Thereafter
|
927 | |||
$ | 961 |
|
c.
|
1.
|
During 2008-2009, Shagrir's subsidiary received loan in an amount of $ 140 from its other non-controlling shareholders. The loan bears an annual interest rate of 4% and is linked to the Israeli CPI. According to the purchase agreement the loans will be repaid only after Shagrir's subsidiary will repay in full the loan it received from Shagrir. As of December 31, 2011, the balance of the loan is $ 157.
|
|
2.
|
During August and October 2008, and March 2010, Pointer Romania signed a vehicle capital lease agreement. The liability bears an annual interest rate of 8-16%. The loan will be repaid in 36 equal monthly payments.
|
|
3.
|
In September 2008, Pointer Romania received a loan of EURO 25,000 from its Romanian shareholder. The loan bears an annual interest rate of 2%.
|
|
4.
|
Pointer Mexico received a loan of $ 737 from its Mexican local partner in 2005 and 2004. No maturity date was set for the loan and it is not expected to be repaid before January 1, 2013.
|
|
d.
|
As part of the acquisition of Cellocator the Company issued a non-tradable debenture with a fair value of $ 1,951 convertible into 160,000 of the Company's ordinary shares. The debenture bears annual interest at the LIBOR, to be accrued until the date of repayment. In September 2010, the Company repaid approximately $ 1,000 and signed an amendment to the convertible loan agreement pursuant to which the remaining amount of $ 1,000 will bear a fixed interest at an annual rate of 4.4%. The debenture was paid in full in September 2011.
|
NOTE 13:-
|
OTHER LONG-TERM LIABILITIES
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Provision for warranty
|
$ | 226 | $ | 177 | ||||
Deferred taxes
|
2,471 | 263 | ||||||
Deferred revenues
|
198 | 402 | ||||||
$ | 2,895 | $ | 842 |
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
a.
|
Charges:
|
|
1.
|
As collateral for its liabilities, the Company has recorded floating charges on all of its assets, including the intellectual property and equipment, in favor of banks.
|
|
2.
|
Shagrir recorded a first priority charge on all of its assets in favor of banks. Following the acquisition by Shagrir of Shagrir Towing Services Ltd, a second priority charge on all of Shagrir's assets was registered in the name of Shagrir Towing Services Ltd. and Shagrir (1985) Ltd. the sellers in this acquisition. This second prior charge was removed in September 2008. Following Shagrir's agreement with the Gandyr group dated November 15, 2004, a third priority charge was recorded on all of Shagrir's assets and a third priority fixed charge over the Company's rights to proceeds from several customers of Shagrir. The third priority charge was removed following the repayment of the loans to the Gandyr group in 2009.
|
|
b.
|
Collateral:
|
|
1.
|
To secure Shagrir's obligations for providing services to several of its customers, Shagrir provided such customers with a bank guarantee in the amount of about $ 2,446, in effect between January 2011 and January 2016.
|
|
2.
|
The Company obtained bank guarantees in the amount of $ 100 in favor of its lessor and customs.
|
|
3.
|
As of December 31, 2011 and 2010, the use of $ 123 and $ 133, respectively, has been restricted following B.C.R.A. (Central Bank of Argentina) regulations, until the company completes the registration with local authorities of certain capital contributions.
|
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
c.
|
Royalties:
|
|
d.
|
Lease commitments:
|
2012
|
$ | 1,947 | ||
2013
|
1,625 | |||
2014
|
1,238 | |||
2015
|
712 | |||
2016
|
4 | |||
$ | 5,526 |
|
e.
|
Litigation:
|
|
1.
|
As of December 31, 2011, several claims were filed against Shagrir, mainly by customers. The claims are in an amount aggregating to approximately $ 170. The substance of the claims is the malfunction of Shagrir's products, which occurred during the ordinary course of business. Shagrir's management, based on the opinion of its legal counsel, is of the opinion that no material costs will arise to Shagrir in respect to these claims.
|
|
2.
|
On November 15, 2011, a motion was filed in Israeli court for approval of a class action suit against T.M.C. Transportation Ltd. ("TMC Ltd."), the company with whom Shagrir formed the partnership TMC Technologies Systems LP, and the credit card company Isracard Ltd., ("Isracard"), for an amount of NIS 6.7 million. The claim involves the allegation that Isracard collected additional fees, on its behalf and on behalf of TMC Ltd., from unknowing passengers who paid taxi fares by credit card using TMC Ltd.'s system, in contravention of applicable law regulating taxi fares, which prohibit collection from a passenger of any fares exceeding that displayed on the taxi meter. The respondents reject the claim amount and argue that actual amounts collected for the use of credit cards total no more than a few thousand NIS.
|
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
f.
|
Commitments:
|
|
1.
|
On March 2, 2010, Pointer Argentina signed an amended contract with a significant insurance company. According to the terms of the agreement, Pointer Argentina has committed to obtaining a monthly recovery rate of 75% of the quantity of stolen automobiles when the number of end-users for that period exceeds 2,000. The percentage shall be measured annually, with the first review in April 2011 and then yearly reviews. If the degree of effectiveness required in the agreement is not achieved, Pointer Argentina shall pay the customer for each dollar below 75% of the total cost of the stolen vehicles.
|
|
As Pointer Argentina achieved the required effectiveness percentage as of December 31, 2011, no reserve has been accrued.
|
|
2.
|
The Company and DBSI Investment Ltd. ("DBSI"), an equity owner in the Company (see Note 18), have entered into a management services agreement pursuant to which DBSI shall provide management services in consideration of annual management fees of $ 180 for a period of three years commencing on August 1, 2011.
|
|
3.
|
During 1998, the Company entered into an agreement with Shagrir for the supply of the services and equipment required to set up reception bases to be positioned throughout Israel. An addendum to the agreement was entered into in 2004 (the "First Addendum"). The agreement was for a period of 10 years with an option to extend it by an additional 10 years. During 2008, the Company and Shagrir entered into a second addendum to the agreement that extended the agreement by a period of 5 years, until 2013.
|
|
4.
|
Shagrir entered into a management services agreement with its shareholders, pursuant to which the shareholders will grant management services to Shagrir, in consideration of NIS 1,000 per year linked to CPI. This amount is split between the Company (NIS 120) and the other shareholders of Shagrir.
|
|
5.
|
Under the credit facility from the Bank, Shagrir and the Company are required to meet financial covenants (see Note 11c and 11d).
|
NOTE 15:-
|
EQUITY
|
|
a.
|
Ordinary shares:
|
|
b.
|
Issued and outstanding share capital:
|
|
1.
|
In January 2007, the Company completed a round of financing for the aggregate amount of $ 4,675, out of which, an amount of $ 2,586 was received as of December 31, 2006, in consideration for 425,000 of the Company's ordinary shares at a price per share of $ 11.0. Under the terms of the investment agreements, the investors were issued warrants to purchase up to 212,500 ordinary shares of the Company, with an exercise price of $ 13.0 per share. As of December 31, 2011 the warrants expired.
|
|
2.
|
On April 2, 2007, the Company entered into and consummated a share purchase agreement with a group of United States institutional investors for the purchase of 805,000 of the Company's ordinary shares for an aggregate price of approximately $ 8,500. Pursuant to the transaction, the investors were also issued warrants to purchase 402,500 of the Company's ordinary shares, such that for each one share purchased, the investors were entitled to a warrant to purchase half a share. The warrants are exercisable into ordinary shares, at an exercise price per share of $ 12.6 and will be exercisable for a period of five years.
|
|
3.
|
On July 18, 2008, the Company consummated a private placement of 140,056 of its ordinary shares to DBSI Investments Ltd., our principal shareholder, for an aggregate price of $ 1,000.
|
|
c.
|
Options:
|
|
1.
|
The Company grants, under the 2003 Employee share option plan, options to its employees, directors and service providers. The options are granted for a period of five years and usually have a vesting period of up to four years.
|
NOTE 15:-
|
EQUITY (Cont.)
|
|
2.
|
A summary of employee option activity under the Company's Stock Option Plans as of December 31, 2011 and changes during the year ended December 31, 2011 are as follows:
|
Number of options
|
Weighted-average exercise price
|
Weighted- average remaining contractual term
(in years)
|
Aggregate intrinsic value (in thousands)
|
|||||||||||||
Outstanding at
January 1, 2011
|
168,500 | $ | 3.49 | |||||||||||||
Granted
|
256,984 | $ | 6.91 | |||||||||||||
Exercised
|
(88,468 | ) | $ | 3.14 | ||||||||||||
Forfeited
|
(16,000 | ) | $ | 4.46 | ||||||||||||
Outstanding at December 31, 2011
|
321,016 | $ | 6.28 | 3.50 | $ | 14 | ||||||||||
Exercisable at December 31, 2011
|
56,532 | $ | 3.68 | 0.91 | $ | 13 | ||||||||||
Vested and expected to vest at December 31, 2011
|
319,016 | $ | 6.30 | 3.52 | $ | 14 |
NOTE 15:-
|
EQUITY (Cont.)
|
|
3.
|
A summary of the status of the Company's employee stock options as of December 31, 2011, 2010 and 2009, and changes during the years then ended, are as follows:
|
Year ended December 31,
|
||||||||||||||||||||||||
2011
|
2010
|
2009
|
||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
average
|
average
|
average
|
||||||||||||||||||||||
Amount
|
exercise
|
Amount
|
exercise
|
Amount
|
exercise
|
|||||||||||||||||||
of options
|
price
|
of options
|
price
|
of options
|
price
|
|||||||||||||||||||
Options outstanding at beginning of year
|
168,500 | $ | 3.49 | 189,125 | $ | 3.45 | 218,245 | $ | 8.99 | |||||||||||||||
Granted
|
256,984 | $ | 6.91 | 3,000 | $ | 7.00 | 15,000 | $ | 3.14 | |||||||||||||||
Exercised
|
(88,468 | ) | $ | 3.14 | (18,250 | ) | $ | 3.14 | - | $ | ||||||||||||||
Forfeited
|
(16,000 | ) | $ | 4.46 | (5,375 | ) | $ | 5.30 | (44,120 | ) | $ | 7.58 | ||||||||||||
Options outstanding at end of year
|
321,016 | $ | 6.28 | 168,500 | $ | 3.49 | 189,125 | $ | 3.45 | |||||||||||||||
Options exercisable at end of year
|
56,532 | $ | 3.68 | 131,125 | $ | 3.45 | 112,063 | $ | 3.48 |
Options outstanding
|
Options exercisable
|
|||||||||||||||||||
Range of exercise price
|
Number outstanding at
December 31, 2011
|
Weighted average remaining contractual life
|
Weighted average exercise price
|
Number exercisable at
December 31, 2011
|
Weighted average exercise price
|
|||||||||||||||
Years
|
||||||||||||||||||||
3.14
|
52,032 | 0.86 | $ | 3.14 | 46,532 | $ | 3.14 | |||||||||||||
4.80
|
10,000 | 4.67 | $ | 4.80 | - | $ | - | |||||||||||||
5.71-6.91
|
9,000 | 1.22 | $ | 6.11 | 9,000 | $ | 6.11 | |||||||||||||
7.00
|
249,984 | 4.09 | $ | 7.00 | 1,000 | $ | 7.00 | |||||||||||||
321,016 | 3.50 | $ | 6.28 | 56,532 | $ | 3.68 |
|
4.
|
On February 25, 2009, the Board of Directors resolved to issue to the Company's employees options convertible to 15,000 of the Company's ordinary shares, pursuant to the 2003 Employee Share Option Plan, which will vest in four equal annual installments over a period of four years, commencing as of the date of the grant, at an exercise price of $ 3.14 per share.
|
NOTE 15:-
|
EQUITY (Cont.)
|
|
5.
|
On February 25, 2009, the Board of Directors resolved to modify the price of 166,750 options granted to the Company's employees with the exercise price of 7.01-11.24 between the period of May 2005 and December 2007, convertible to 166,750 of the Company's ordinary shares, pursuant to the 2003 Employee Share Option Plan, at an exercise price of $ 3.14 per share
|
|
6.
|
On March 24, 2010, the Board of Directors resolved to extend the exercise period of 40,000 options granted to the former Chief Executive Officer of the Company, by eighteen months until November 23, 2011. The exercise price of the options is $ 3.14 per share. As a result, the company recorded an additional amortization of stock compensation in the amount of $ 23.
|
|
7.
|
On October 13, 2010, the Board of Directors resolved to issue to one of our directors options exercisable to 3,000 of the company's ordinary shares, pursuant to the plan, which will vest in three equal annual installments over a period of three years, commencing as of date of the grant, at an exercise price of $ 7.00 per share.
|
|
8.
|
In January 2011, the Board of Directors appointed the Company's new Chief Executive Officer (CEO) effective as of February 1, 2011. Under the terms of his employment, the new CEO was granted 246,984 options at an exercise price of $7.00, in accordance with our 2003 option plan, which will vest over a three year period, according to the vesting dates as stipulated in the employment agreement, commencing upon the effective date of his employment. The new CEO will also be entitled to an annual performance bonus of up to one year's salary which will be calculated in accordance with certain fixed criteria relating to the company's growth and profitability in the year preceding payment of the bonus.
|
|
9.
|
On August 31, 2011, the Board of Directors resolved to issue to the Company's Chief Financial Officer, options exercisable to 10,000 of the company's ordinary shares, pursuant to the plan, which will vest in four equal annual installments over a period of four years, commencing as of date of the grant, at an exercise price of $ 4.80 per share.
|
|
d.
|
Dividends:
|
NOTE 16:-
|
NET EARNINGS (LOSS) PER SHARE
|
Year ended
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic net earnings per share - Net income (loss)
|
$ | (8,527 | ) | $ | 1,130 | $ | (2,107 | ) | ||||
Effect of diluting securities
|
(33 | ) | (69 | ) | (106 | ) | ||||||
Numerator for diluted net earnings per share - Net income (loss)
|
$ | (8,560 | ) | $ | 1,061 | $ | (2,213 | ) | ||||
Denominator:
|
||||||||||||
Denominator for basic net earnings per share - weighted-average number of shares outstanding (in thousands)
|
4,789 | 4,768 | 4,753 | |||||||||
Effect of diluting securities (in thousands)
|
- | 66 | - | |||||||||
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises (in thousands)
|
4,789 | 4,834 | 4,753 | |||||||||
Basic net earnings (loss) per share
|
$ | (1.78 | ) | $ | 0.24 | $ | (0.44 | ) | ||||
Diluted net earnings (loss) per share
|
$ | (1.79 | ) | $ | 0.22 | $ | (0.47 | ) |
NOTE 17:-
|
INCOME TAXES
|
|
a.
|
Measurement of taxable income under the Income Tax (Inflationary Adjustments) Law, 1985 ("the Law"):
|
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
b.
|
Tax benefits under the Law for the Encouragement of Industry (Taxation), 1969:
|
|
c.
|
The Law for the Encouragement of Capital Investments, 1959 ("the Law"):
|
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
d.
|
Tax rates applicable to the income of the Company:
|
|
e.
|
Income (loss) before taxes on income:
|
Year ended
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Domestic
|
$ | (2,556 | ) | $ | 6,681 | $ | 3,989 | |||||
Foreign
|
(1,913 | ) | (2,041 | ) | (1,900 | ) | ||||||
$ | (4,469 | ) | $ | 4,640 | $ | 2,089 |
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
f.
|
Deferred taxes:
|
|
1.
|
Provided in respect of the following:
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Reserves and accruals
|
$ | 544 | $ | 382 | ||||
Carryforward tax losses
|
27,089 | 20,824 | ||||||
Other temporary differences
|
1,821 | 1,950 | ||||||
Total deferred tax assets before valuation allowance
|
$ | 29,454 | $ | 23,156 | ||||
Valuation allowance (3)
|
(26,786 | ) | (18,639 | ) | ||||
Net deferred tax assets
|
$ | 2,668 | $ | 4,517 | ||||
Goodwill
|
(4,906 | ) | (4,664 | ) | ||||
Other temporary differences
|
(233 | ) | (116 | ) | ||||
Total deferred tax liabilities
|
$ | (5,139 | ) | $ | (4,780 | ) | ||
Total deferred tax assets (Liabilities)
|
$ | (2,471 | ) | $ | (263 | ) | ||
Domestic
|
$ | (2,471 | ) | $ | (263 | ) | ||
Foreign
|
- | - | ||||||
$ | (2,471 | ) | $ | (263 | ) |
|
2.
|
Deferred taxes are included in the consolidated balance sheets, as follows:
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Long-term Liabilities
|
$ | (2,471 | ) | $ | (263 | ) | ||
$ | (2,471 | ) | $ | (263 | ) |
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
3.
|
The Company and its subsidiaries (except Shagrir) have provided valuation allowances in respect of deferred tax assets resulting from tax losses carryforward and other temporary differences. Since the Company and its subsidiaries (except for Shagrir) have a history of losses, it is more likely than not that the deferred taxes regarding the losses carryforward and other temporary differences will not be realized in the foreseeable future.
|
|
4.
|
Reconciling items between the statutory tax rate of the Company and the effective tax rate:
|
Year ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Income (loss) before taxes, as reported in the consolidated statements of operations
|
$ | (4,469 | ) | $ | 4,640 | $ | 2,089 | |||||
Statutory tax rate
|
24 | % | 25 | % | 26 | % | ||||||
Theoretical tax expenses on the above amount at the Israeli statutory tax rate
|
$ | (1,072 | ) | $ | 1,160 | $ | 543 | |||||
Tax adjustment in respect of different tax rates in subsidiaries and changes in tax rates
|
1,064 | (83 | ) | (833 | ) | |||||||
Operating carryforward losses for which a valuation allowance was provided
|
2,219 | 576 | 1,159 | |||||||||
Realization of carryforward tax losses for which a valuation allowance was provided and change in valuation allowance in respect of deferred taxes
|
- | (78 | ) | (551 | ) | |||||||
Nondeductible expenses and other
|
172 | (51 | ) | 569 | ||||||||
$ | 2,383 | $ | 1,524 | $ | 887 |
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
g.
|
Carryforward tax losses and deductions:
|
|
h.
|
Final tax assessments:
|
|
i.
|
Taxes on income (tax benefit) included in the consolidated statements of operations:
|
Year ended
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Current
|
$ | 5 | $ | (61 | ) | $ | 107 | |||||
Deferred
|
2,378 | 1,585 | 780 | |||||||||
$ | 2,383 | $ | 1,524 | $ | 887 | |||||||
Domestic
|
$ | 2,378 | $ | 1,585 | $ | 780 | ||||||
Foreign
|
5 | (61 | ) | 107 | ||||||||
$ | 2,383 | $ | 1,524 | $ | 887 |
NOTE 18:-
|
BALANCES AND TRANSACTIONS WITH RELATED PARTIES
|
|
a.
|
Balances with related parties:
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Other accounts payable and accrued expenses:
|
||||||||
DBSI (see Note 14f(2))
|
$ | 52 | $ | 52 |
|
b.
|
Transactions with related parties:
|
Year ended
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Sales to affiliate (see Note 1g)
|
$ | 1,611 | $ | 410 | $ | - | ||||||
Management fees to DBSI (see Note 14f(2))
|
$ | 180 | $ | 180 | $ | 180 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION
|
|
a.
|
General:
|
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
b.
|
The following presents segment results of operations for the year ended December 31, 2011:
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 24,199 | $ | 68,709 | $ | 92,908 | ||||||
Intersegments revenues
|
(6,990 | ) | - | (6,990 | ) | |||||||
Revenues from external customers
|
$ | 17,209 | $ | 68,709 | $ | 85,918 | ||||||
Segments operating profit (loss)
|
$ | (5,366 | ) | $ | 2,512 | $ | (2,854 | ) | ||||
Segments assets
|
$ | 16,780 | $ | 74,146 | $ | 90,926 | ||||||
Depreciation, amortization and impairment expenses
|
$ | 8,224 | $ | 4,486 | $ | 12,710 | ||||||
Expenditures for assets
|
$ | 247 | $ | 4,198 | $ | 4,445 |
Segments operating income
|
$ | (2,854 | ) | |
Intercompany losses on intersegment sales
|
241 | |||
Operating income
|
$ | (2,613 | ) | |
Segments assets
|
$ | 90,926 | ||
Intercompany elimination
|
(1,588 | ) | ||
Total assets
|
$ | 89,338 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 23,533 | $ | 58,627 | $ | 82,160 | ||||||
Intersegments revenues
|
(8,297 | ) | - | (8,297 | ) | |||||||
Revenues from external customers
|
$ | 15,236 | $ | 58,627 | $ | 73,863 | ||||||
Segments operating profit
|
$ | 2,839 | $ | 3,898 | $ | 6,737 | ||||||
Segments assets
|
$ | 25,163 | $ | 80,112 | $ | 105,275 | ||||||
Depreciation and amortization expenses
|
$ | 1,360 | $ | 4,208 | $ | 5,568 | ||||||
Expenditures for assets
|
$ | 471 | $ | 4,010 | $ | 4,481 |
Segments operating income
|
$ | 6,737 | ||
Intercompany income on intersegment sales
|
(100 | ) | ||
Operating income
|
$ | 6,637 | ||
Segments assets
|
$ | 105,275 | ||
Intercompany elimination
|
(1,845 | ) | ||
Total assets
|
$ | 103,430 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 15,380 | $ | 54,187 | $ | 69,567 | ||||||
Intersegments revenues
|
(4,242 | ) | - | (4,242 | ) | |||||||
Revenues from external customers
|
$ | 11,138 | $ | 54,187 | $ | 65,325 | ||||||
Segments operating profit (loss)
|
$ | (3,144 | ) | $ | 7,043 | $ | 3,899 | |||||
Segments assets
|
$ | 24,799 | $ | 73,922 | $ | 98,721 | ||||||
Depreciation and amortization expenses
|
$ | 4,503 | $ | 3,751 | $ | 8,254 | ||||||
Expenditures for assets
|
$ | 117 | $ | 3,325 | $ | 3,442 |
Segments operating income
|
$ | 3,899 | ||
Intercompany income on intersegment sales
|
276 | |||
Operating income
|
$ | 4,175 | ||
Segments assets
|
$ | 98,721 | ||
Intercompany elimination
|
(1,748 | ) | ||
Total assets
|
$ | 96,973 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
c.
|
Summary information about geographical areas:
|
Year ended
December 31,
|
|||||||||||||
2011
|
2010
|
2009
|
|||||||||||
1. |
Revenues *):
|
||||||||||||
Israel
|
$ | 61,498 | $ | 53,574 | $ | 50,604 | |||||||
Latin America
|
12,856 | 11,483 | 6,325 | ||||||||||
Europe
|
10,275 | 7,553 | 7,376 | ||||||||||
Other
|
1,289 | 1,253 | 1,020 | ||||||||||
$ | 85,918 | $ | 73,863 | $ | 65,325 |
|
*)
|
Revenues are attributed to geographic areas based on the location of the end-customers.
|
December 31,
|
|||||||||||||
2011
|
2010
|
2009
|
|||||||||||
2. |
Long-lived assets:
|
||||||||||||
Israel
|
$ | 56,735 | $ | 70,166 | $ | 68,129 | |||||||
Argentina
|
1,179 | 1,356 | 1,371 | ||||||||||
Mexico
|
445 | 156 | 143 | ||||||||||
Other
|
3 | - | - | ||||||||||
$ | 58,362 | $ | 71,678 | $ | 69,643 |
|
d.
|
In 2011, 2010 and 2009, none of our customer accounted above 10% of the Company's revenues.
|
NOTE 20:-
|
SELECTED STATEMENTS OF OPERATIONS DATA
|
Year ended
December 31,
|
|||||||||||||
2011
|
2010
|
2009
|
|||||||||||
a. |
Financial expenses, net:
|
||||||||||||
Income:
|
|||||||||||||
Interest on short-term bank deposits
|
$ | 15 | $ | 39 | $ | 7 | |||||||
Other
|
14 | 38 | 27 | ||||||||||
29 | 77 | 34 | |||||||||||
Expenses:
|
|||||||||||||
Bank charges and interest expenses
|
1,620 | 1,566 | 1,709 | ||||||||||
Foreign currency transaction adjustments
|
93 | 191 | (78 | ) | |||||||||
Interest on long-term loans to others
|
64 | 282 | 414 | ||||||||||
Amortization of discount on long-term loans
|
- | - | - | ||||||||||
Interest on debenture
|
31 | (6 | ) | 39 | |||||||||
Change in fair value of foreign currency forward contracts
|
- | 20 | 20 | ||||||||||
Other
|
- | - | - | ||||||||||
1,808 | 2,053 | 2,104 | |||||||||||
$ | 1,779 | $ | 1,976 | $ | 2,070 | ||||||||
b. |
Other expenses, net:
|
||||||||||||
Capital loss (gain)
|
$ | (33 | ) | $ | 21 | $ | 16 | ||||||
Loss from sale of subsidiaries
|
110 | - | - | ||||||||||
$ | 77 | $ | 21 | $ | 16 |
NOTE 21
:-
|
SUBSEQUENT EVENTS
|
1.
|
We have audited the balance sheet of POINTER DO BRASIL S.A.. ("the Company") as of 31
st
. December 2011, and the related statements of income, of changes in shareholders’ equity accounts and of cash flows for the years then ended, accompanied by explanatory notes, expressed in US Dollars. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
|
2.
|
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provide a reasonable basis for our opinion.
|
3.
|
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the company as of 31
st
. December 2011, the results of its operations, the changes in shareholders’ equity accounts and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
|
2011
|
2010
(Unaudited)
|
|||||||
Revenues – Services Rendered
|
3,802 | 311 | ||||||
Cost of Services Rendered
|
(3,833 | ) | (405 | ) | ||||
Gross profit
|
(31 | ) | (94 | ) | ||||
OPERATING EXPENSES:
|
||||||||
Selling and marketing
|
(994 | ) | (685 | ) | ||||
General and administrative
|
(2,065 | ) | (1,174 | ) | ||||
OPERATING LOSS
|
(3,090 | ) | (1,953 | ) | ||||
Financial expenses, net
|
(55 | ) | (42 | ) | ||||
Loss before taxes on income
|
(3,145 | ) | (1,995 | ) | ||||
Taxes on income
|
- | - | ||||||
LOSS FOR THE YEAR
|
(3,145 | ) | (1,995 | ) |
Share capital
|
Accumulated other comprehensive income
|
Retained earnings
|
Total
|
|||||||||||||
Balance as of January 1, 2010 (unaudited)
|
1,378 | (110 | ) | (1,217 | ) | 51 | ||||||||||
Issuance of shares
|
2,952 | - | - | 2,952 | ||||||||||||
Foreign currency translation adjustments
|
- | (40 | ) | - | (40 | ) | ||||||||||
Net loss
|
- | - | (1,995 | ) | (1,995 | ) | ||||||||||
Balance as of December 31, 2010 (unaudited)
|
4,330 | (150 | ) | (3,212 | ) | 968 | ||||||||||
Issuance of shares
|
2,937 | - | - | 2,937 | ||||||||||||
Foreign currency translation adjustments
|
- | 517 | - | 517 | ||||||||||||
Net loss
|
- | - | (3,145 | ) | (3,145 | ) | ||||||||||
Balance as of December 31, 2011
|
7,267 | 367 | (6,357 | ) | 1,277 |
2011
|
2010
(unaudited)
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
(3,145 | ) | (1,995 | ) | ||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
332 | 122 | ||||||
Decrease (increase) in trade receivables, net
|
(432 | ) | (112 | ) | ||||
Increase in other accounts receivable and prepaid expenses
|
(102 | ) | (215 | ) | ||||
Decrease (increase) in inventories
|
(609 | ) | (248 | ) | ||||
Increase (decrease) in trade payables
|
1,324 | 287 | ||||||
Increase (decrease) in other accounts payable and accrued expenses
|
733 | 94 | ||||||
Decrease (increase) in other long term liabilities
|
(25 | ) | 37 | |||||
Net cash used in operating activities
|
(1,924 | ) | (2,030 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property and equipment
|
(2,068 | ) | (803 | ) | ||||
Net cash used in investing activities
|
(2,068 | ) | (803 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Receipt of long-term loans from banks
|
472 | 210 | ||||||
Repayment of long-term loans from banks
|
(45 | ) | (36 | ) | ||||
Proceeds from issuance of shares
|
3,609 | 2,866 | ||||||
Net cash provided by financing activities
|
4,036 | 3,040 | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(41 | ) | 17 | |||||
Increase in cash and cash equivalents
|
3 | 223 | ||||||
Cash and cash equivalents at the beginning of the year
|
333 | 110 | ||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
|
336 | 333 |
Cash paid during the year for:
|
||||||||
Interest
|
21 | 10 |
1.
|
GENERAL
|
2.
|
SIGNIFICANT ACCOUNTING PRACTICES
|
a.
|
Use of estimates:
|
b.
|
Financial statements in U.S. Dollars:
|
c.
|
Cash equivalents:
|
d.
|
Inventories:
|
e.
|
Allowance for doubtful accounts
|
f.
|
Property and equipment:
|
%
|
|||
Computers and software
|
20-33 | ||
Office furniture and equipment
|
20 | ||
Motor vehicles
|
20 | ||
Installed products
|
20 | ||
Leasehold improvements
|
20 |
g.
|
Revenue recognition:
|
h.
|
Deferred income taxes:
|
3.
|
TRADE RECEIVABLES
|
31
st
. December,
|
||||||||
2011
|
2010
|
|||||||
Accounts receivable
|
702 | 118 | ||||||
Allowance for doubtful accounts
|
(211 | ) | - | |||||
Total trade receivables
|
491 | 118 |
4.
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
31
ST
. DECEMBER
|
||||||||
2011
|
2010
|
|||||||
Prepaid expenses
|
162 | 23 | ||||||
Taxes receivable
|
11 | 203 | ||||||
Advances to suppliers
|
85 | - | ||||||
Employees
|
- | 16 | ||||||
258 | 242 |
5.
|
FIXED ASSETS
|
31
st
. December
|
|||||||||||||||||||
2011
|
2010
|
||||||||||||||||||
Acquisition cost
|
Accumulated
depreciation
|
Net
|
Net
|
Annual
depreciation
rate %
|
|||||||||||||||
Computers and SW
|
705 | (160 | ) | 545 | 413 | 20-33 | |||||||||||||
Office furniture and equipment
|
46 | (15 | ) | 31 | 52 | 20 | |||||||||||||
Motor vehicles
|
43 | (16 | ) | 27 | 40 | 20 | |||||||||||||
Installed products
|
1,858 | (210 | ) | 1,648 | 282 | 20 | |||||||||||||
2,652 | (401 | ) | 2,251 | 787 |
6.
|
OTHER CURRENT LIABILITIES
|
31
st
. December
|
||||||||
2011
|
2010
|
|||||||
Payroll accruals
|
387 | 136 | ||||||
Deferred revenue
|
22 | 31 | ||||||
Installation, commission expenses and other accrued expenses
|
377 | 35 | ||||||
Total other current liabilities
|
786 | 202 |
7.
|
SHAREHOLDER´S EQUITY
|
a.
|
Ordinary shares:
|
b.
|
Issued and outstanding share capital as at 31 December 2011:
|
Shareholder
|
Subscribed Shares
|
Thousands of US$ equivalent
|
||||||
Bracco do Brasil Empreendimentos e Participações Ltda.
|
7.680.000 | 3,774 | ||||||
Pointer Telocation Ltd.
|
7.320.000 | 3,493 | ||||||
Total
|
15.000.000 | 7,267 |
8.
|
INCOME TAXES
|
9.
|
DEFERRED TAX
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Deferred tax assets:
|
||||||||
NOLs at the tax rate
|
1,401 | 884 | ||||||
Other temporary differences
|
53 | - | ||||||
Gross deferred tax asset before valuation allowance
|
1,454 | 884 | ||||||
Valuation allowance
|
(1,454 | ) | (884 | ) | ||||
Net deferred tax assets
|
- | - |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Loss before taxes, as reported in the consolidated statements of operations
|
(3,145 | ) | (1,995 | ) | ||||
Statutory tax rate
|
34 | % | 34 | % | ||||
Theoretical tax expenses on the above amount at the Brazilian statutory tax rate
|
(1,069 | ) | (678 | ) | ||||
Operating carryforward losses for which a valuation allowance was provided
|
1,069 | 678 | ||||||
- | - |
1.
|
COMPANY NAME
|
2.
|
INTERPRETATION
|
|
(a)
|
In these Articles, the following terms shall bear the meanings set forth below, unless inconsistent with the subject or context.
|
|
(b)
|
Defined terms used herein, but not defined, shall have the meaning given them in the Companies Law.
|
|
(c)
|
Unless the subject or the context otherwise requires: words and expressions importing the masculine gender shall include the feminine gender; and words and expressions importing persons shall include bodies corporate.
|
3.
|
PUBLIC COMPANY; LIMITED LIABILITY AND COMPANY OBJECTIVES
|
|
(a)
|
The Company is a Public Company, as such term is defined in the Companies Law.
|
|
(b)
|
The liability of the Company’s Shareholders is limited and, accordingly, the liability of each Shareholder for the Company’s obligations shall be limited to the payment of the nominal value of the shares held by such Shareholder, subject to the provisions of these Articles and the Companies Law.
|
|
(c)
|
The Company's objectives are to carry on any business and
perform any act which is not prohibited by law. The Company may also make contributions of reasonable sums to worthy purposes even if such contributions are not made on the basis of business considerations
|
4.
|
SHARE CAPITAL
|
|
(a)
|
The authorized share capital of the Company is twenty four million New Israeli Shekels (NIS 24,000,000) divided into 8,000,000 Ordinary Shares, par value NIS 3.00 per share.
|
|
(b)
|
The Ordinary Shares all rank
pari passu
in all respects.
|
5.
|
INCREASE OF AUTHORIZED SHARE CAPITAL
|
|
(a)
|
The Company may, from time to time, by resolution of its shareholders, whether or not all the shares then authorized have been issued and whether or not all the shares theretofore issued have been called up for payment, increase its authorized share capital by the creation of new shares. Any such increase shall be in such amount and shall be divided into shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution shall provide.
|
|
(b)
|
Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increased as aforesaid shall be subject to all the provisions of these Articles which are applicable to shares of the same class included in the existing share capital.
|
6.
|
SPECIAL RIGHTS; MODIFICATION OF RIGHTS
|
|
(a)
|
Subject to the provisions of these Articles, and without prejudice to any special rights previously conferred upon the holders of existing shares in the Company, the Company may, from time to time, by resolution of its shareholders, provide for shares with such preferred or deferred rights or rights of redemption or other special rights and/or such restrictions, whether in regard to liquidation, dividends, voting, repayment of share capital or otherwise, as may be stipulated in such resolution provided that any resolution with respect to the issuance of shares will be made only by the Board of Directors.
|
|
(b)
|
(i)
|
If at any time the share capital is divided into different classes of shares, the rights attached to any class, unless otherwise provided by these Articles, may be modified or abrogated by the Company, by the adoption of a resolution passed at a separate General Meeting of the holders of the shares of such class.
|
|
(ii)
|
The provisions of these Articles relating to General Meetings shall, mutatis mutandis, apply to any separate General Meeting of the holders of the shares of a particular class.
|
|
(iii)
|
Unless otherwise provided by these Articles, the enlargement of an authorized class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 6(b), to modify or abrogate the rights attached to previously issued shares of such class or of any other class.
|
7.
|
CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL
|
|
(a)
|
The Company may, from time to time, by resolution of its shareholders (subject, however, to the provisions of Article 6(b) hereof and to applicable law):
|
|
(i)
|
consolidate and divide all or part of its issued or un-issued authorized share capital into shares of a per share nominal value which is larger than the per share nominal value of its existing shares;
|
|
(ii)
|
subdivide its shares (issued or un-issued) or any of them, into shares of smaller nominal value;
|
|
(iii)
|
cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so canceled; or
|
|
(iv)
|
reduce its share capital in any manner, subject to any consent required by law.
|
|
(b)
|
With respect to any consolidation of issued shares into shares of a larger nominal value per share, and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in connection with any such consolidation or other action which could result in fractional shares, may, without limiting its aforesaid power:
|
|
(i)
|
determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger nominal value per share;
|
|
(ii)
|
allot, in contemplation of or subsequent to such consolidation or other action, shares or fractional shares sufficient to preclude or remove fractional share holdings;
|
|
(iii)
|
redeem, in the case of redeemable preference shares, and subject to applicable law, such shares or fractional shares sufficient to preclude or remove fractional share holdings; and/or
|
|
(iv)
|
cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to pay the transferors thereof the fair value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of substitution, for the purposes of implementing the provisions of this sub-Article 7(b)(iv).
|
8.
|
ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES
|
|
(a)
|
Share Certificates shall be issued under the corporate seal of the Company and shall bear the signature of one Director, or of any other person or persons so authorized by the Board of Directors.
|
|
(b)
|
Each shareholder shall be entitled to one or several numbered certificates for all the shares of any class registered in his name, each for one or more of such shares. Each certificate shall specify the serial numbers of the shares represented thereby and may also specify the amount paid up thereon.
|
|
(c)
|
A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Shareholder Register in respect of such co-ownership.
|
|
(d)
|
A share certificate which has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board of Directors in its discretion deems fit.
|
9.
|
REGISTERED HOLDER
|
10.
|
ALLOTMENT OF SHARES
|
11.
|
PAYMENT IN INSTALLMENTS
|
12.
|
CALLS ON SHARES
|
|
(a)
|
The Board of Directors may, from time to time, as it, in its discretion, deems fit, make calls for payment upon shareholders in respect of any sum which has not been paid up in respect of shares held by such shareholders and which is not pursuant to the terms of allotment or issue of such shares or otherwise, payable at a fixed time, and each shareholder shall pay the amount of every call so made upon him or her (and of each installment thereof if the same is payable in installments), to the Company at the time(s) and place(s) designated by the Board of Directors, as any such time(s) may be thereafter extended or place(s) changed. Unless otherwise stipulated in the resolution of the Board of Directors (and in the notice hereafter referred to), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.
|
|
(b)
|
Notice of any call for payment by a shareholder shall be given in writing to such shareholder not less than fourteen (14) days prior to the time of payment fixed in such notice, and shall specify the time and place of payment. Prior to the time for any such payment fixed in a notice of a call given to a shareholder, the Board of Directors may in its absolute discretion, by notice in writing to such member, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment. In the event of a call payable in installments, only one notice thereof need be given.
|
|
(c)
|
If pursuant to the terms of allotment or issue of a share or otherwise, an amount is made payable at a fixed time (whether on account of such share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board of Directors and for which notice was given in accordance with paragraphs (a) and (b) of this Article 12, and the provisions of these Articles with regard to calls (and the non-payment thereof) shall be applicable to such amount (and the non-payment thereof).
|
|
(d)
|
Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable thereon.
|
|
(e)
|
Any amount called for payment which is not paid when due shall bear interest from the date fixed for payment until actual payment thereof, at such rate (not exceeding the then prevailing debitory rate charged by leading commercial banks in Israel), and payable at such time(s) as the Board of Directors may prescribe.
|
|
(f)
|
Upon the allotment of shares, the Board of Directors may provide for differences among the allottees of such shares as to the amounts and times for payment of calls in respect of such shares.
|
13.
|
PREPAYMENT
|
14.
|
FORFEITURE AND SURRENDER
|
|
(a)
|
If any shareholder fails to pay an amount payable by virtue of a call, or interest thereon as provided for in accordance herewith, on or before the day fixed for payment of the same, the Board of Directors may at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, resolve to forfeit all or any of the shares in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorney’s fees and costs of legal proceedings, shall be added to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of, the amount payable to the Company in respect of such call.
|
|
(b)
|
Upon the adoption of a resolution as to the forfeiture of a shareholder’s share, the Board of Directors shall cause notice thereof to be given to such shareholder, which notice shall state that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than fourteen (14) days after the date such notice is given and which may be extended by the Board of Directors), such shares shall be ipso facto forfeited, provided, however, that, prior to such date, the Board of Directors may nullify such resolution of forfeiture, but no such nullification shall stop the Board of Directors from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.
|
|
(c)
|
Without derogating from Articles 54 and 59 hereof, whenever shares are forfeited as herein provided, all dividends, if any, theretofore declared in respect thereof and not actually paid shall be deemed to have been forfeited at the same time.
|
|
(d)
|
The Company, by resolution of the Board of Directors, may accept the voluntary surrender of any share not fully paid for.
|
|
(e)
|
Any share forfeited or surrendered as provided herein, shall become the property of the Company, and the same, subject to the provisions of these Articles, may be sold, re-allotted or otherwise disposed of as the Board of Directors deems fit.
|
|
(f)
|
Any shareholder whose shares have been forfeited or surrendered shall cease to be a shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article 12(e) above, and the Board of Directors, in its discretion, may, but shall not be obligated to, enforce the payment of such moneys, or any part thereof. In the event of such forfeiture or surrender, the Company, by resolution of the Board of Directors, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the shareholder in question (but not yet due) in respect of all shares owned by such shareholder, solely or jointly with another.
|
|
(g)
|
The Board of Directors may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems fit, but no such nullification shall stop the Board of Directors from re-exercising its powers of forfeiture pursuant to this Article 14.
|
15.
|
LIEN
|
|
(a)
|
Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts, liabilities and engagements to the Company arising from any amount payable by such shareholder in respect of any unpaid or partly paid share, whether or not such debt, liability or engagement has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such transfer.
|
|
(b)
|
The Board of Directors may cause the Company to sell a share subject to such a lien when the debt, liability or engagement giving rise to such lien has matured, in such manner as the Board of Directors deems fit, but no such sale shall be made unless such debt, liability or engagement has not been satisfied within fourteen (14) days after written notice of the intention to sell shall have been served on such shareholder, his executors or administrators.
|
|
(c)
|
The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts, liabilities or engagements of such member in respect of such share (whether or not the same have matured), and the residue (if any) shall be paid to the shareholder, his executors, administrators or assigns.
|
16.
|
SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN
|
17.
|
REDEEMABLE SHARES
|
18.
|
REGISTRATION OF TRANSFER
|
|
(a)
|
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the Board of Directors) has been submitted to the Company (or its transfer agent), together with the share certificate(s) and such other evidence of title as the Board of Directors may reasonably require. Until the transferee has been registered in the Shareholder Register (or with the transfer agent) in respect of the shares so transferred, the Company may continue to regard the transferor as the owner thereof. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer.
|
|
(b)
|
The Board of Directors may, in its discretion to the extent it deems necessary, close the Shareholder Register for registrations of transfers of shares during any year for a period determined by the Board of Directors, and no registrations of transfers of shares shall be made by the Company during any such period during which the Shareholder Register is so closed.
|
19.
|
RECORD DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION
|
20.
|
DECEDENTS’ SHARES
|
|
(a)
|
In case of death of a registered holder of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article 20(b) have been effectively invoked.
|
|
(b)
|
Any person becoming entitled to a share in consequence of the death of any shareholder, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board of Directors may reasonably deem sufficient), shall be registered as a shareholder in respect of such share, or may, subject to the regulations as to transfer herein contained, transfer such share.
|
21.
|
RECEIVERS AND LIQUIDATORS
|
|
(a)
|
The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceeding with respect to a shareholder or its properties, as being entitled to the shares registered in the name of such member.
|
|
(b)
|
Such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder and such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings with respect to a shareholder or its properties, upon producing such evidence as the Board of Directors may deem sufficient as to his authority to act in such capacity or under this Article, shall with the consent of the Board of Directors (which the Board of Directors may grant or refuse in its absolute discretion), be registered as a shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.
|
22.
|
ANNUAL GENERAL MEETING
|
|
(a)
|
An Annual General Meeting shall be held once in every calendar year at such time (within a period of not more than fifteen (15) months after the last preceding Annual General Meeting) and at such place, either within or without the State of Israel, as may be determined by the Board of Directors.
|
|
(b)
|
Subject to the provisions of these Articles, the function of the Annual General Meeting shall be to elect the members of the Board of Directors; to receive the financial statements; to appoint the Company’s auditors and to transact any other business which under these Articles or the Companies Law are to be transacted at a General Meeting.
|
23.
|
EXTRAORDINARY GENERAL MEETINGS
|
24.
|
NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE
|
|
(a)
|
Not less than twenty-one (21) days’ prior notice, or thirty-five (35) days’ prior notice to the extent required under regulations promulgated under the Companies Law, shall be given of every General Meeting. Each such notice shall specify the place and the day and hour of the meeting and the general nature of each item to be acted upon thereat, said notice to be given to all members who would be entitled to attend and vote at such meeting. Anything therein to the contrary notwithstanding, with the consent of all members entitled to vote thereon, a resolution may be proposed and passed at such meeting although a lesser notice than hereinabove prescribed has been given.
|
|
(b)
|
The accidental omission to give notice of a meeting to any member, or the non-receipt of notice sent to such member, shall not invalidate the proceedings at such meeting.
|
|
(c)
|
Notwithstanding anything to the contrary in this Article 24, and subject to any applicable stock exchange rules or regulations, notice of general meetings does not have to be delivered to shareholders, and notice by the Company of a General Meeting which is published in two daily newspapers in Israel shall be deemed to have been duly given on the date of such publication to any shareholder whose address as listed in the Register of Shareholders (or as designated in writing for the receipt of notices and other documents) is located in the State of Israel, and notice by the Company of a General Meeting which is publicized on the United States Securities and Exchange Commission's EDGAR Database or similar publication via the internet shall be deemed to have been duly given on the date of such publication to any shareholder whose address as registered in the Register of Shareholders (or as designated in writing for the receipt of notices and other documents) is located outside of Israel.
|
25.
|
MANNER OF MEETING
|
|
(a)
|
participate in the business for which the meeting has been convened;
|
|
(b)
|
hear all persons who speak (whether by the use of microphones, loudspeakers audio-visual communications equipment or otherwise) in the principal meeting place and any satellite meeting place(s); and
|
|
(c)
|
be heard by all other persons so present in the same way.
|
26.
|
QUORUM
|
|
(a)
|
No business shall be transacted at a General Meeting, or at any adjournment thereof, unless the quorum required under these Articles for such General Meeting or such adjourned meeting, as the case may be, is present when the meeting proceeds to business.
|
|
(b)
|
In the absence of contrary provisions in these Articles, two or more shareholders (not in default in payment of any sum referred to in Article 32(a) hereof), present in person or by proxy and holding shares conferring in the aggregate the minimum amount of voting power of the Company required by the Companies Law to constitute a quorum at General Meetings, shall constitute a quorum.
|
|
(c)
|
If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon requisition under Sections 64 or 65 of the Companies Law, shall be dissolved, but in any other case it shall be adjourned to the same day in the next week, at the same time and place, or to such day and at such time and place as the Chairman may determine. No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called.
|
|
(d)
|
The Board of Directors may determine, in its discretion, the matters that may be voted upon at the meeting by proxy or written ballot in addition to the matters listed in Section 87(a) to the Companies Law.
|
27.
|
CHAIRMAN
|
28.
|
ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS
|
|
(a)
|
A resolution shall be deemed adopted if approved by the holders of a majority of the voting power represented at the meeting in person or by proxy or by written ballot and voting thereon.
|
|
(b)
|
Every question submitted to a General Meeting shall be decided by a show of hands, but the Chairman of the Meeting may determine that a resolution shall be decided by a written ballot. A written ballot may be implemented before the proposed resolution is voted upon or immediately after the declaration by the Chairman of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot.
|
|
(c)
|
A declaration by the Chairman of the meeting that a resolution has been carried unanimously, or carried by a particular majority, or lost, and an entry to that effect in the minute book of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.
|
|
(d)
|
Notwithstanding any of the other provisions of these Articles, any resolution to consummate a Merger, as defined in Section 1 of the Law, shall require the approval of the holders of at least a majority of the voting power of the Company. For the avoidance of doubt, any amendment to this Article 28(d) shall require the approval of the holders of at least a majority of the voting power of the Company.
|
29.
|
RESOLUTIONS IN WRITING
|
30.
|
POWER TO ADJOURN
|
|
(a)
|
The Chairman of a General Meeting at which a quorum is present may, with the consent of the holders of a majority of the voting power represented in person or by proxy and voting on the question of adjournment (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called.
|
|
(b)
|
It shall not be necessary to give notice of an adjournment, whether pursuant to Article 26(c) or Article 30(a), unless the meeting is adjourned for twenty-one (21) days or more in which event notice thereof shall be given in the manner required for the meeting as originally called.
|
31.
|
VOTING POWER
|
32.
|
VOTING RIGHTS
|
|
(a)
|
No shareholder shall be entitled to vote at any General Meeting (or be counted as a part of the quorum thereat), unless all calls and other sums then payable by him in respect of his shares in the Company have been paid.
|
|
(b)
|
A company or other corporate body being a shareholder of the Company may duly authorize any person to be its representative at any meeting of the Company or to execute or deliver a proxy on its behalf. Any person so authorized shall be entitled to exercise on behalf of such shareholder all the power which the latter could have exercised if it were an individual shareholder. Upon the request of the Chairman of the meeting, written evidence of such authorization (in form acceptable to the Chairman) shall be delivered to him.
|
|
(c)
|
Any shareholder entitled to vote may vote either in person or by proxy (who need not be a shareholder of the Company), or, if the shareholder is a company or other corporate body, by a representative authorized pursuant to Article 32(b).
|
|
(d)
|
If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s). For the purpose of this Article 32(d), seniority shall be determined by the order of registration of the joint holders in the Shareholder Register.
|
33.
|
INSTRUMENT OF APPOINTMENTS
|
|
(a)
|
An instrument appointing a proxy shall be in writing and shall be substantially in the following form:
|
|
or in any usual or common form or in such other form as may be approved by the Board of Directors. Such proxy shall be duly signed by the appointor or such person’s duly authorized attorney or, if such appointor is a company or other corporate body, under its common seal or stamp or the hand of its duly authorized agent(s) or attorney(s).
|
|
(b)
|
The instrument appointing a proxy (and the power of attorney or other authority, if any, under which such instrument has been signed) shall either be presented to the Chairman at the meeting at which the person named in the instrument proposes to vote or be delivered to the Company (at its Registered Office, at its principal place of business, or at the offices of its registrar or transfer agent, or at such place as the Board of Directors may specify) not less than two (2) hours before the time fixed for such meeting, except that the instrument shall be delivered seventy-two (72) hours before the time fixed for the meeting. Notwithstanding the above, the Chairman shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to accept any and all instruments of proxy received prior to the beginning of a General Meeting.
|
34.
|
EFFECT OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF APPOINTMENT
|
|
(a)
|
A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the prior death or bankruptcy of the appointing member (or of his attorney-in-fact, if any, who signed such instrument), or the transfer of the share in respect of which the vote is cast, unless written notice of such matters shall have been received by the Company or by the Chairman of such meeting prior to such vote being cast.
|
|
(b)
|
An instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the Chairman, subsequent to receipt by the Company of such instrument, of written notice signed by the person signing such instrument or by the member appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed) or of an instrument appointing a different proxy (and such other documents, if any, required under Article 33(b) for such new appointment), provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery of the instrument revoked thereby as referred to in Article 33(b) hereof, or (ii) if the appointing shareholder is present in person at the meeting for which such instrument of proxy was delivered, upon receipt by the Chairman of such meeting of written notice from such member of the revocation of such appointment, or if and when such shareholder votes at such meeting. A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or vote of the appointing shareholder at a meeting for which it was rendered, unless such instrument of appointment was deemed revoked in accordance with the foregoing provisions of this Article 34(b) at or prior to the time such vote was cast.
|
35.
|
POWERS OF BOARD OF DIRECTORS
|
|
(a)
|
General
. The management of the business of the Company shall be vested in the Board of Directors, which may exercise all such powers and do all such acts and things as the Company is authorized to exercise and do, and are not by these Articles or by law required to be exercised or done by the Company by action of its shareholders at a General Meeting. The authority conferred on the Board of Directors by this Article 35 shall be subject to the provisions of the Companies Law, these Articles and any regulation or resolution consistent with these Articles adopted from time to time by the Company by action of its shareholders at a General Meeting, provided, however, that no such regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board of Directors which would have been valid if such regulation or resolution had not been adopted.
|
|
(b)
|
Borrowing Power
. The Board of Directors may from time to time, at its discretion, cause the Company to borrow or secure the payment of any sum or sums of money for the purposes of the Company, and may secure or provide for the repayment of such sum or sums in such manner, at such times and upon such terms and conditions as it deems fit, and, in particular, by the issuance of bonds, perpetual or redeemable debentures, debenture stock, or any mortgages, charges, or other securities on the undertaking or the whole or any part of the property of the Company, both present and future, including its uncalled or called but unpaid capital for the time being.
|
|
(c)
|
Reserves
. The Board of Directors may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its absolute discretion, shall deem fit, including without limitation, capitalization and distribution of bonus shares, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or redesignate any reserve or cancel the same or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.
|
36.
|
EXERCISE OF POWERS OF BOARD OF DIRECTORS
|
|
(a)
|
A meeting of the Board of Directors at which a quorum is present shall be competent to exercise all the authorities, powers and discretion vested in or exercisable by the Board of Directors, whether in person or by any other means by which the Directors may hear each other simultaneously.
|
|
(b)
|
A resolution proposed at any meeting of the Board of Directors shall be deemed adopted if approved by a majority of the Directors present when such resolution is put to a vote and voting thereon.
|
|
(c)
|
The Board of Directors may adopt resolutions without holding a meeting of the Board of Directors, provided that all of the Directors then in office and lawfully entitled to vote thereon shall have agreed to vote on the matters underlying such resolutions without convening a meeting of the Board of Directors. If the Board of Directors adopts resolutions as set forth in the immediately preceding sentence, minutes including such resolutions, including a resolution to vote on such matters without convening a meeting of the Board of Directors, shall be prepared and the Chairman of the Board of Directors (or in his or her absence the Co-Chairman) will sign such minutes.
|
37.
|
DELEGATION OF POWERS
|
|
(a)
|
The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees, each consisting of one or more persons (who are Directors), and it may from time to time revoke such delegation or alter the composition of any such committee. Any Committee so formed (in these Articles referred to as a “Committee of the Board of Directors”), shall, in the exercise of the powers so delegated, conform to any regulations imposed on it by the Board of Directors. The meetings and proceedings of any such Committee of the Board of Directors shall, mutatis mutandis, be governed by the provisions herein contained for regulating the meetings of the Board of Directors, so far as not superseded by any regulations adopted by the Board of Directors under this Article. Unless otherwise expressly provided by the Board of Directors in delegating powers to a Committee of the Board of Directors, such Committee shall not be empowered to further delegate such powers.
|
|
(b)
|
Without derogating from the provisions of Article 50, the Board of Directors may from time to time appoint a Secretary to the Company, as well as officers, agents, employees and independent contractors, as the Board of Directors deems fit, and may terminate the service of any such person. The Board of Directors may, subject to the provisions of the Companies Law, determine the powers and duties, as well as the salaries and emoluments, of all such persons, and may require security in such cases and in such amounts as it deems fit.
|
|
(c)
|
The Board of Directors may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or attorneys of the Company at law or in fact for such purpose(s) and with such powers, authorities and discretions, and for such period and subject to such conditions, as it deems fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board of Directors deems fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretion vested in him.
|
38.
|
NUMBER OF DIRECTORS
|
39.
|
ELECTION AND REMOVAL OF DIRECTORS
|
|
(a)
|
Directors shall be elected at the Annual General Meeting or an Extraordinary Meeting of the Company by the vote of the holders of a majority of the voting power represented at such meeting in person or by proxy and voting on the election of directors.
|
|
(b)
|
Nominations for the election of Directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by a shareholder, one or more, holding at least 1% of the outstanding voting power in the Company. However, and without limitation of Sections 63 or 64 of the Companies Law, any such shareholder may nominate one or more persons for election as Directors at a General Meeting only if a written notice of such shareholder’s intent to make such nomination or nominations has been given to the Secretary of the Company not later than (i) with respect to an election to be held at an Annual General Meeting of shareholders, ninety (90) days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a Extraordinary General Meeting of shareholders for the election of Directors, at least ninety (90) days prior to the date of such meeting. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; and (d) the consent of each nominee to serve as a Director of the Company if so elected and a declaration signed by each of the nominees declaring that there is no limitation under the Companies Law for the appointment of such a nominee and that all the information that is required under the Companies Law to provided to the Company in connection with such an appointment has been provided. The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
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(c)
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The General Meeting may, by a vote of the majority holders of the voting power represented at the meeting, remove any Director(s) from office, and elect Directors instead of Directors so removed or fill any Vacancy (as defined in Article 41), however created, in the Board of Directors unless such Vacancy was filled by the Board of Directors under Article 41.
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(d)
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In the event of any contradiction between the provisions of this Article 39 and the provisions of the Companies Law relating to the election and term of External Directors, the applicable provisions of the Companies Law shall govern, and the External Directors shall be elected and hold office in accordance with the provisions of the Companies Law.
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40.
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QUALIFICATION OF DIRECTORS
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41.
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CONTINUING DIRECTORS IN THE EVENT OF VACANCIES
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(a)
|
In the event that one or more vacancies is created in the Board of Directors, including without limitation, a situation in which the number of Directors is less than the minimum number permitted under Article 38 (a ‘‘Vacancy’’), the continuing Directors may continue to act in every matter, and, may appoint Directors to temporarily fill any such Vacancy, provided, however, that if the number of Directors is less than two (2), they may only act in (i) an emergency; or (ii) to fill the office of director which has become vacant; or (iii) in order to call a General Meeting of the Company for the purpose of electing Directors to fill any or all Vacancies, so that at least two (2) Directors are in office as a result of said meeting. Notwithstanding the foregoing, in the event of Vacancy of an External Director, the Company shall call a General Meeting to elect a new External Director or take such other action as required under the Companies Law.
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(b)
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As long as the number of Directors is less than the maximum number of Directors permitted under Article 38, the continuing directors may appoint additional Directors, up to the
maximum number permitted under Article 38, to hold office until the next Annual General Meeting following such appointment by the continuing Directors.
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42.
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VACATION OF OFFICE
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(a)
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The office of a Director shall be vacated, ipso facto, upon his or her death, or if he or she be found lunatic or become of unsound mind, or if he or she becomes bankrupt, or if he is found by a court guilty of any of the felonies listed in Section 226 of the Companies Law.
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(b)
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The office of a Director may also be vacated by the written resignation of the Director. Such resignation shall become effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later. Such written resignation shall include the reasons that lead the Director to resign from his office.
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43.
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REMUNERATION OF DIRECTORS
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44.
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CONFLICT OF INTEREST
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45.
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ALTERNATE DIRECTORS
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46.
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MEETINGS
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(a)
|
The Board of Directors may meet and adjourn its meetings and otherwise regulate such meetings and proceedings as the Directors think fit.
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(b)
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Any Director may at any time, and the Secretary, upon the request of such Director, shall, convene a meetings of the Board of Directors, but not less than two (2) days’ notice shall be given of any meetings so convened. Notice of any such meeting shall be given to all the Directors and may be given orally, by telephone, in writing or by mail, email or facsimile. Notwithstanding anything to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required hereby may be waived by such Director, and a meeting shall be deemed to have been duly convened notwithstanding such defective notice if such failure or defect is waived prior to action being taken at such meeting, by all Directors entitled to participate at such meeting to whom notice was not duly given as aforesaid.
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47.
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RESOLUTIONS IN WRITING
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48. |
QUORUM
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49.
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CHAIRMAN OF THE BOARD OF DIRECTORS
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50.
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VALIDITY OF ACTS DESPITE DEFECTS
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51.
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CHIEF EXECUTIVE OFFICER AND PRESIDENT
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52.
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MINUTES
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(a)
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Minutes of each General Meeting and of each meeting of the Board of Directors or of any Committee of the Board of Directors shall be recorded and duly entered in books provided for that purpose, and shall be held by the Company at its principal place of office or its Registered Office or such other place as shall have been determined by the Board of Directors. Such minutes shall, in all events, set forth the names of the persons present at the meeting and all resolutions adopted thereat.
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(b)
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Any minutes as aforesaid, if purporting to be signed by the chairman of the meeting or by the chairman of the next succeeding meeting, shall constitute prima facie evidence of the matters recorded therein.
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53.
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DECLARATION OF DIVIDENDS
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54.
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FUNDS AVAILABLE FOR PAYMENT OF DIVIDEND
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55.
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AMOUNT PAYABLE BY WAY OF DIVIDENDS
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56.
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INTEREST
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57.
|
PAYMENT IN SPECIE
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58.
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IMPLEMENTATION OF POWERS UNDER ARTICLE 57
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59.
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DIVIDEND ON UNPAID SHARES
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60.
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RETENTION OF DIVIDENDS
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|
(a)
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The Board of Directors may retain any dividend or other monies payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.
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(b)
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The Board of Directors may retain any dividend or other monies payable or property distributable in respect of a share in respect of which any person is, under Article 20 or 21, entitled to become a member, or which any person, is, under said Articles, entitled to transfer, until such person shall become a member in respect of such share or shall transfer the same.
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61.
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UNCLAIMED DIVIDENDS
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62.
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MECHANICS OF PAYMENT
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63.
|
RECEIPT FROM A JOINT HOLDER
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64.
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BOOKS OF ACCOUNT
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65.
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AUDIT
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66.
|
AUDITORS
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67.
|
BRANCH REGISTERS
|
68.
|
INDEMNITY, INSURANCE AND EXEMPTION
|
|
(a)
|
Exemption From Liability. Subject to the provisions of the Companies Law, the Company may exempt an Office Holder in advance from all or part of such Office Holder’s responsibility or liability for damages caused to the Company due to any breach of such Office Holder’s duty of care towards the Company to the maximum extent permitted by law. Notwithstanding, the Company shall not exempt a director in advance from its responsibility or liability towards the Company due to a breach of such director’s duty of care in distribution. |
(b)
|
Indemnification
.
|
|
(i)
|
Subject to the provisions of the Companies Law and the Securities Law, the Company may indemnify an Office Holder to the fullest extent permitted by the Companies Law and the Securities Law, with respect to the following liabilities, expenses and payments, provided that such liabilities, expenses and payments were incurred by such Office Holder in such Office Holder’s capacity as an Office Holder of the Company: |
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(A)
|
a financial obligation imposed on an Office Holder in favor of another person by a court judgment, including a compromise judgment or an arbitrator’s award approved by a court of law;
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(B)
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reasonable litigation expenses, including legal fees, incurred by an Office Holder as a result of criminal inquiry or an investigation or proceeding instituted against such Office Holder by a competent authority, which inquiry or investigation or proceeding has ended without the filing of an indictment and without an imposition of financial liability in lieu of a criminal proceeding, or has ended in the imposition of a financial obligation in lieu of a criminal proceeding without the filing of an indictment for an offense that does not require proof of mens rea or in connection with financial sanction (the phrases ‘‘proceeding that has ended without the filing of an indictment’’ and ‘‘financial obligation in lieu of a criminal proceeding’’ shall have the meanings ascribed to such phrases in Section 260(a)(1a) of the Companies Law);
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(C)
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expenses, including reasonable litigation expenses and legal fees, incurred by an Office Holder as a result of a proceeding instituted against such Office Holder in relation to (1) infringements that may impose financial sanction pursuant to the provisions of Chapter H’3 under the Securities Law or (2) administrative infringements pursuant to the provisions of Chapter H’4 under the Securities Law or (3) infringements pursuant to the provisions of Chapter I’1 under the Securities Law;
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(D)
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reasonable legal expenses, including attorney’s fees, which the Office Holder incurred or with which the Office Holder was charged by a court of law, in a proceeding brought against the Office Holder, by the Company or on its behalf or by another person, or in a criminal prosecution in which the Office Holder was acquitted, or in a criminal prosecution in which the Office Holder was convicted of an offense that does not require proof of mens rea (criminal intent); and
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(E)
|
payments to an injured party of infringement under Section 52ND(a)(1)(a) of the Securities Law.
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(ii)
|
Subject to the provisions of the Companies Law and the Securities Law, the Company may undertake to indemnify an Office Holder in advance with respect to (i) financial obligations as specified in Article 68(b)(i)(A), provided, that the undertaking is limited to categories of events which, in the opinion of the Board of Directors can be foreseen, based on the Company’s actual activities at the time the undertaking to indemnify is given, and in amounts set by the Board of Directors as reasonable, and (ii) expenses, fees and payments as specified in Sub-Sections 68(b)(i)(B), (C), (D) and (E). Subject to the provisions of the Companies Law and the Securities Law, the Company may also undertake to indemnify an Office Holder retroactively for expenses, fees and payments as specified in Section 68(b).
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(c)
|
Insurance
.
|
(i)
|
Subject to the provisions of the Companies Law and the Securities Law, the Company may enter into a contract to insure an Office Holder for all or part of the liability that may be imposed on such Office Holder in connection with an act performed by such Office Holder in such Office Holder’s capacity as an Office Holder of the Company, with respect to each of the following:
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(A)
|
breach of his duty of care to the Company or to another person;
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|
(B)
|
breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds to assume that the action in question would not prejudice the interests of the Company;
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|
(C)
|
a financial obligation imposed on him in favor of another person; and
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(ii)
|
Subject to the provisions of the Companies Law and the Securities Law, the Company may also enter into a contract to insure an Office Holder for (A) expenses, including reasonable litigation expenses and legal fees, incurred by the Office Holder as a result of a proceeding instituted against such Office Holder in relation to (1) infringements that may impose financial sanction pursuant to the provisions of Chapter H’3 under the Securities Law or (2) administrative infringements pursuant to the provisions of Chapter H’4 under the Securities Law or (3) infringements pursuant to the provisions of Chapter I’1 under the Securities Law and (B) payments made to the injured parties of such infringement under Section 52ND(a)(1)(a) of the Securities Law.
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(d) |
(i)
|
The Company shall not indemnify, exculpate or insure any Office Holder under any of the following circumstances:
|
(A)
|
a breach of duty of loyalty, except, with respect to indemnification and insurance, to the extent that the Office Holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the Company;
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|
(B)
|
a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the Office Holder;
|
|
(C)
|
an act or omission committed with intent to derive illegal personal benefit; or
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|
(D)
|
a fine, civil fine, financial sanction or levied against the Office Holder.
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(ii)
|
The company shall not indemnify or insure any Office Holder for a proceeding instituted against such Office Holder pursuant to the provisions of Chapter H'3, H'4, and I'1 under the Securities Law, except as permitted under these Articles of Association.
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(e)
|
Any amendment to the Companies Law and the Securities Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to this Article 68 shall be prospective in effect, and shall not affect the Company’s obligation or ability to indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by the Companies Law and the Securities Law.
|
(f)
|
The provisions of this Article 68 are not intended, and shall not be interpreted so as to restrict the Company, in any manner in respect of the procurement of insurance and/or indemnification and/or exculpation, in favor of any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder ("Person"), in accordance with the provisions of the law
.
|
69
.
|
WINDING UP
|
70
.
|
RIGHTS OF SIGNATURE, STAMP, AND SEAL
|
|
(a)
|
The Board of Directors shall be entitled to authorize any person or persons (who need not be Directors) to act and sign on behalf of the Company, and the acts and signature of such person (s) on behalf of the Company shall bind the Company insofar as such person (s) acted and signed within the scope of his or their authority.
|
|
(b)
|
The Board of Directors may provide for a seal. If the Board of Directors so provides, it shall also provide for the safe custody thereof. Such seal shall not be used except by the authority of the Board of Directors and in the presence of the person (s) authorized to sign on behalf of the Company, who shall sign every instrument to which such seal is affixed.
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71.
|
NOTICES
|
|
(a)
|
Any written notice or other document may be served by the Company upon any shareholder either personally or by sending it by prepaid mail (airmail if sent internationally) addressed to such member at his address as described in the Shareholder Register. Any written notice or other document may be served by any shareholder upon the Company by tendering the same in person to the Secretary or the General Manager or Chief Executive Officer of the Company at the principal office of the Company or by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at it Registered Address. Any such notice or other document shall be deemed to have been served two (2) business days after it has been posted (seven (7) business days if posted internationally), or when actually tendered in person, to such shareholder (or to the Secretary or the General Manager), whichever is earlier. Notice sent by email or facsimile shall be deemed to have been served two business days after the notice is sent to the addressee, or when in fact received, whichever is earlier, notwithstanding that if it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article 71(a).
|
|
(b)
|
All notices to be given to the shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the Shareholder Register, and any notice so given shall be sufficient notice to the holders of such share.
|
|
(c)
|
If requested by the Company, each shareholder shall provide the Company with the shareholder’s full street and mailing address, as well, if available with facsimile number and email address. Any shareholder whose address is not set out in the Shareholder Register, and who shall not have designated in writing delivered to the Company an address for the receipt of notices, shall not be entitled to receive any notice from the Company.
|
Description:
|
Purchase Agreement pursuant to which Shagrir Systems Ltd. (the "Purchaser") will purchase the operations and property of K.S. Operation Centers for Vehicles Ltd. ("KS") and Shimon Barzilay (the "Owner" and together with KS, the "Sellers").
The Sellers own and operate bodywork garages.
|
Consideration:
|
NIS 12,000,000 (the "Consideration").
At closing, NIS 9,000,000 shall be paid to KS, and NIS 3,000,000 shall be paid directly to the Owner in consideration for goodwill.
|
Commercial Terms
|
The Purchaser shall acquire the Sellers' three (3) garages, including fixed assets, intellectual property, goodwill, agreements, inventory, materials, and applicable licenses and permits, and shall assume substantially all of the liabilities of KS (collectively, the "Assets").
The Purchaser shall also obtain the right to repayment of loans extended to certain KS employees in an aggregate amount of NIS 104,189.
|
3. |
The Purchaser shall indemnify the Sellers for any direct damage or loss the Sellers incur related to the following:
|
|
a.
Breach of any of the Purchaser's representations.
|
||
b.
Demand or claim of a competent authority for any action, omission and/or obligation in connection with the Assets which arose after the Closing Date.
|
||
c.
Demand of a competent authority in connection with a claim by any of KS's employees, whether such employee continued employment with the Purchaser or whether such employee's employment was terminated by KS at the Closing Date, which claim relates to the rights of said employee resulting from such employee's employment by the Purchaser.
|
||
Non-Competition
|
The Sellers undertake not to engage in the same activities as those sold to the Purchaser under the Agreement for a period of forty-eight months following the Closing Date. The non-competition provision excludes the Owner's activities related to the operation of a dealership and service centers for Subaru vehicles.
For a period of forty-eight months following the Closing Date, the Sellers may not solicit either the customers, employees or suppliers of KS for engaging in, or competing with, the activities sold to the Purchaser under the Agreement.
|
Name of subsidiary
|
Jurisdiction of incorporation
|
Pointer Localizacion Y Asistencia S.A.
|
Argentina
|
Shagrir Systems Ltd.
|
Israel
|
Pointer Recuperacion de Mexico, SA de CV
|
Mexico
|
S.C. Pointer S.R.L.
|
Romania
|
Pointer do Brazil Commercial S.A.
|
Brazil
|
Pointer Telocation Inc.
|
USA
|
Car2go Ltd.
|
Israel
|
T.M.C. Technologies Systems, LP
|
Israel
|
/s/ David Mahlab
David Mahlab
Chief Executive Officer
|
/s/ Zvi Fried
Zvi Fried
Chief Financial and Principal Accounting Officer
|
March 29, 2012 |
/s/ David Mahlab
David Mahlab
Chief Executive Officer
|
March 29, 2012
|
/s/ Zvi Fried
Zvi Fried
Chief Financial and Principal Accounting Officer
|
/s/ Kost, Forer, Gabbay & Kasierer
A Member of Ernst & Young Global
|
/s/ SALLES, SAINZ – GRANT THORNTON, S.C.
By Rogelio Avalos, CPA
|
São Paulo, 28th. March 2012
/s/ BAKER TILLY BRASIL
By RICARDO JULIO RODIL
Accountant - CRC-1SP111444/O-1
BAKER TILLY BRASIL
AUDITORES INDEPENDENTES S/S
CRC-2SP016754/O-1
|
|