o
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2014
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report _____________
|
Title of each class:
|
Name of each exchange on which registered:
|
ORDINARY SHARES, NO PAR VALUE
|
NASDAQ GLOBAL SELECT MARKET
|
o
|
U.S. GAAP
|
x
|
International Financial Reporting Standards as issued by the International Accounting Standards Board
|
o
|
Other
|
ITEM
|
DESCRIPTION
|
Page
|
2
|
||
3
|
||
3
|
||
3
|
||
28
|
||
50
|
||
50
|
||
91
|
||
100
|
||
102
|
||
102
|
||
104
|
||
114
|
||
118
|
||
118
|
||
118
|
||
118
|
||
119
|
||
119
|
||
119
|
||
120
|
||
120
|
||
120
|
||
120
|
||
120
|
||
120
|
||
121
|
||
122
|
||
CERTIFICATIONS
|
||
INDEX TO FINANCIAL STATEMENTS
|
F-1
|
Currency
|
$1.00 as of December 31, 2014
|
1 New Israeli Shekel (NIS)
|
0.25714
|
1 Euro
|
1.21530
|
1 Great British Pound (GBP)
|
1.55867
|
1 Hungarian Forint (HUF)
|
0.00386
|
1 Czech Republic Koruny (CZK)
|
0.04386
|
1 Romanian LEI (RON)
|
0.27124
|
1 Polish Zloty (PLN)
|
0.28467
|
1 Indian Rupee (INR)
|
0.01579
|
1 Crore (10 million INR)
|
157,900
|
MONTH
|
HIGH
|
LOW
|
1 U.S. dollar =NIS
|
1 U.S. dollar =NIS
|
|
October 2014
|
3.793
|
3.644
|
November 2014
|
3.889
|
3.782
|
December 2014
|
3.994
|
3.889
|
January 2015
|
3.998
|
3.899
|
February 2015
|
3.966
|
3.844
|
March 2015
|
4.053
|
3.926
|
April 2015 (through April 12)
|
3.974
|
3.939
|
PERIOD
|
AVERAGE EXCHANGE RATE
|
January 1, 2010 - December 31, 2010
|
3.735 NIS/$1
|
January 1, 2011 - December 31, 2011
|
3.577 NIS/$1
|
January 1, 2012 - December 31, 2012
|
3.857 NIS/$1
|
January 1, 2013 - December 31, 2013
|
3.609 NIS/$1
|
January 1, 2014 - December 31, 2014
|
3.577 NIS/$1
|
ITEM
1.
|
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
ITEM
3.
|
KEY INFORMATION
|
2014
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($'000)
|
||||||||||||||||||||||||
Income revenues and gains
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Revenues from sale of commercial centers
|
51,831 | 201,571 | 8,614 | 67,594 | 3,525 | 4,345 | ||||||||||||||||||
Revenue from hotel operations and management
|
50,658 | 197,007 | 202,791 | 206,746 | 286,548 | 403,822 | ||||||||||||||||||
Total revenues
|
102,489 | 398,578 | 211,405 | 274,340 | 290,073 | 408,167 | ||||||||||||||||||
Gains and other
|
||||||||||||||||||||||||
Rental income from commercial centers
|
29,226 | 113,661 | 129,748 | 147,185 | 111,745 | 98,550 | ||||||||||||||||||
Gain from sale of investees
|
2,906 | 11,301 | ||||||||||||||||||||||
Gains from sale of real estate assets
|
- | - | - | - | - | 198,777 | ||||||||||||||||||
Gains from changes of shareholding in investees
|
- | - | - | 53,875 | - | - | ||||||||||||||||||
Total gains
|
32,132 | 124,962 | 129,748 | 201,060 | 111,745 | 297,327 | ||||||||||||||||||
Total income revenues and gains
|
134,621 | 523,540 | 341,153 | 475,400 | 401,818 | 705,494 | ||||||||||||||||||
Expenses and losses
|
||||||||||||||||||||||||
Commercial centers
|
75,049 | 291,864 | 124,737 | 213,367 | 159,626 | 156,745 | ||||||||||||||||||
Hotel operations and management
|
44,721 | 173,918 | 179,137 | 186,760 | 240,784 | 341,291 | ||||||||||||||||||
General and administrative expenses
|
10,230 | 39,785 | 60,643 | 48,771 | 61,857 | 65,292 | ||||||||||||||||||
Share in losses of associates, net
|
4,450 | 17,298 | 339,030 | 102,127 | 7,568 | 8,275 | ||||||||||||||||||
Financial expenses
|
61,096 | 237,601 | 334,101 | 184,273 | 160,707 | 313,224 | ||||||||||||||||||
Financial income
|
(1,624 | ) | (6,317 | ) | (3,930 | ) | (28,303 | ) | (65,571 | ) | (40,927 | ) | ||||||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
18,368 | 71,432 | 68,407 | 50,229 | (273,020 | ) | 50,531 | |||||||||||||||||
Financial gain from debt restructuring
|
(415,692 | ) | (1,616,628 | ) | ||||||||||||||||||||
Write-down, charges and other expenses, net
|
136,550 | 531,042 | 840,034 | 302,093 | 288,935 | 79,637 | ||||||||||||||||||
(66,852 | ) | (260,005 | ) | 1,942,159 | 1,059,317 | 580,886 | 974,068 | |||||||||||||||||
Profit (loss) before income taxes
|
201,473 | 783,545 | (1,601,006 | ) | (583,917 | ) | (179,068 | ) | (268,574 | ) | ||||||||||||||
Income taxes (tax benefits)
|
(588 | ) | (2,287 | ) | (30,937 | ) | (9,212 | ) | 63,283 | 3,992 | ||||||||||||||
Profit (loss) from continuing operations
|
202,061 | 785,832 | (1,570,069 | ) | (574,705 | ) | (242,351 | ) | (272,566 | ) | ||||||||||||||
Profit(loss) from discontinued operations, net
|
(379 | ) | (1,475 | ) | 5,059 | 90,721 | (4,678 | ) | 346,091 | |||||||||||||||
Profit (loss) for the year
|
201,682 | 784,357 | (1,565,010 | ) | (483,984 | ) | (247,029 | ) | 73,525 | |||||||||||||||
Attributable to:
|
||||||||||||||||||||||||
Equity holders of the Company
|
259,447 | 1,008,999 | (1,155,645 | ) | (315,746 | ) | (264,919 | ) | 61,998 | |||||||||||||||
Non-controlling interest
|
(57,765 | ) | (224,642 | ) | (409,365 | ) | (168,238 | ) | 17,890 | 11,527 | ||||||||||||||
201,682 | 784,357 | (1,565,010 | ) | (483,984 | ) | (247,029 | ) | 73,525 | ||||||||||||||||
Earnings per share - (in NIS)
|
||||||||||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
10.94 | 42.55 | (932.15 | ) | (329.51 | ) | (10.46 | ) | (11.23 | ) | ||||||||||||||
From discontinued operations
|
(0.02 | ) | (0.06 | ) | 3.84 | 75.75 | (0.19 | ) | 13.68 | |||||||||||||||
10.92 | 42.49 | (928.31 | ) | (253.76 | ) | (10.65 | ) | 2.45 | ||||||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
10.94 | 42.55 | (932.15 | ) | (329.51 | ) | (10.46 | ) | (11.23 | ) | ||||||||||||||
From discontinued operations
|
(0.02 | ) | (0.06 | ) | 3.84 | 75.75 | (0.19 | ) | 13.36 | |||||||||||||||
10.92 | 42.49 | (928.31 | ) | (253.76 | ) | (10.65 | ) | 2.13 | ||||||||||||||||
Dividend declared per share
|
0 | 0 | 0 | 0 | 0 | 0 |
2014
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($ '000)
|
||||||||||||||||||||||||
Current Assets
|
125,662 | 488,702 | 694,348 | 1,042,069 | 1,258,227 | 2,123,961 | ||||||||||||||||||
Non-current Assets
|
815,791 | 3,172,611 | 3,870,096 | 5,700,578 | 9,112,840 | 8,578,752 | ||||||||||||||||||
Total
|
941,453 | 3,661,313 | 4,564,444 | 6,742,647 | 10,371,067 | 10,702,713 | ||||||||||||||||||
Current Liabilities
|
92,306 | 358,985 | 4,794,477 | 1,721,661 | 2,226,971 | 2,799,122 | ||||||||||||||||||
Non-current Liabilities
|
665,748 | 2,589,091 | 178,597 | 3,631,878 | 6,605,226 | 5,726,070 | ||||||||||||||||||
Shareholders' equity Attributable to:
|
||||||||||||||||||||||||
Equity holders of the company
|
59,650 | 231,979 | (1,032,637 | ) | 288,630 | 359,630 | 760,740 | |||||||||||||||||
Non-controlling interest
|
123,749 | 481,258 | 624,007 | 1,100,478 | 1,179,240 | 1,416,781 | ||||||||||||||||||
Total
|
941,453 | 3,661,313 | 4,564,444 | 6,742,647 | 10,371,067 | 10,702,713 |
·
|
we could be more vulnerable to general adverse economic and industry conditions;
|
·
|
we may find it more difficult to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;
|
·
|
we will be required to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our debt, reducing the available cash flow to fund other projects;
|
·
|
we may have limited flexibility in planning for, or reacting to, changes in our business and in the industry;
|
·
|
we may have a competitive disadvantage relative to other companies in our business segments with less debt;
|
·
|
we may face difficulties in establishing strategic or other long-term business joint ventures; and
|
·
|
we may not be able to refinance our outstanding indebtedness.
|
·
|
changes in global and national economic conditions, including global or national recession, such as those triggered by the recent economic crisis;
|
·
|
a general or local slowdown in the real property market which may make it difficult to sell a property, such as the recent global slowdown;
|
·
|
political events that may have a material adverse effect on the hotel industry;
|
·
|
competition from other lodging facilities, and oversupply of hotel rooms in a specific location;
|
·
|
material changes in operating expenses, including as a result of changes in real property tax systems or rates or labor laws;
|
·
|
changes in the availability, cost and terms of financing;
|
·
|
the effect of present or future environmental laws;
|
·
|
our ongoing need for capital improvements and refurbishments; and
|
·
|
material changes in governmental rules and policies.
|
·
|
the inability to obtain financing for development at attractive terms or at all;
|
·
|
delays in obtaining zoning (or land classification, as the case may be for each jurisdiction) and other approvals;
|
·
|
the unavailability of materials and labor;
|
·
|
the abilities of subcontractors to complete work competently and on schedule;
|
·
|
the surface and subsurface condition of the land underlying the project;
|
·
|
environmental uncertainties;
|
·
|
extraordinary circumstances or "acts of God"; and
|
·
|
ordinary risks of construction that may hinder or delay the successful completion of a particular project.
|
ITEM 4
.
|
INFORMATION ON THE COMPANY
|
|
·
|
Commercial Centers
- Initiation, construction and sale of commercial centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through PC. In certain circumstances and depending on market conditions, we operate and manage commercial and entertainment centers prior to their sale;
|
|
·
|
Hotels
- Hotel operation and management;
|
|
·
|
Medical Industries
- (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential Projects
- Initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India.
|
Name of Project
|
Location
|
Type
|
Title
|
PC Share %
1
|
Approx. Land Area (m
2
)
|
Approx. Gross Lettable Area (m
2
)
|
Estimated Completion
|
Status
|
Lodz Plaza
|
Lodz, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
62,000
|
35,000
|
2018
|
Planning and development stage
|
Timisoara Plaza
|
Timisoara, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
32,000
|
38,000
|
2017
|
Planning and development stage
|
Belgrade Plaza (Visnjicka)
|
Belgrade, Serbia
|
Commercial and Entertainment Center
|
Land use rights
|
100
|
31,000
|
32,000
|
2017
|
Planning and development stage
|
Casa Radio
|
Bucharest, Romania
|
Mixed Use
|
Leasing for 49 years
|
75
3
|
97,000
|
555,000
2, 4
|
2017 (first phase)
|
Planning and development stage
|
Belgrade Plaza (MUP)
|
Belgrade, Serbia
|
Mixed Use
|
Ownership
|
100
|
9,000
|
63,000
2
|
2017
|
Planning and development stage
|
|
1
|
Directly or indirectly.
|
|
2
|
Gross building area (“GBA”).
|
|
3
|
Other investors in the project include the Government of Romania, which will procure that the project company is granted the necessary development and exploitation rights in relation to the site for a 49-year period in consideration for a 15% interest in the project and an additional developer which holds 10%.
|
|
4
|
The project will consist of a complex with a planned GBA of approximately 467,000 square meters (including parking), and will include a commercial and entertainment center of approximately GLA of 90,000 square meters, with a hypermarket, office buildings of approximately GBA of 127,000 square meters, hotel complex with conference center and a Public Authority Building (“PAB”).
|
Country
|
Estimated cost of completion
|
Percentage Pre-leased *
|
Poland
|
€49.9 million (approximately $.million)
|
-
|
Romania1
|
€253.5million (approximately $million)
|
-
|
Serbia
|
€142.8 million (approximately $million)
|
-
|
Name of Project
|
Location
|
Type
|
Title
|
PC Share %
1
|
Approx. Land Area (m
2
)
|
Approx. Gross Lettable Area (m
2
)
|
Csiki Plaza
|
Miercurea Ciuc, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
36,500
|
14,000
|
Kielce Plaza
|
Kielce, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
25,000
|
33,000
|
Leszno Plaza
|
Leszno, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
18,000
|
16,000
|
Shumen Plaza
|
Shumen, Bulgaria
|
Commercial and Entertainment Center
|
Ownership
|
100
|
26,000
|
20,000
|
Slatina Plaza
|
Slatina, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
24,000
|
17,000
|
Constanta Plaza
|
Constanta,
Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
26,500
|
18,000
|
Pireas Helios Plaza
|
Athens, Greece
|
Commercial and Entertainment Center
|
Ownership
|
100
|
15,000
|
38,000
|
Iasi Plaza
|
Iasi, Romania
|
Mixed Use
|
Ownership
|
100
|
46,500
|
58,000
|
Arena Extension
|
Budapest, Hungary
|
Offices
|
Land use rights
|
100
|
22,000
|
40,000
|
Name and
|
Title
|
Our Share
As of December 31, 2014
|
Approximate Constructed Area
(square feet)
|
Rate of Hotel
|
Total Rooms and description
|
Additional information
|
Radisson Blu Bucharest
Bucharest, Romania
|
Freehold
|
77%
|
900,000
|
Five Star Hotel and ApartHotel
|
424 rooms suites, executive suites and one exclusive royal suite and 294 apartments in a level of 4 and 5 stars
|
The complex of both hotels includes several restaurants, a spa and a world class health academy, casino, shopping area and supermarket services
|
Radisson Blu Astrid Antwerp
Antwerp, Belgium
|
Freehold
|
100%
|
223,000
|
Four Star Deluxe
|
247 rooms including business class suites & 19 new luxury apartments
|
Includes an oceanarium attraction, 18 conference rooms, a bar, a restaurant and a fully equipped health club with a pool
|
Park Inn
Antwerp, Belgium
|
Freehold
|
100%
|
32,250
|
Three star boutique
|
59 rooms going from standard to junior suite with terrace
|
Includes a restaurant, a lounge and a fitness room
|
Name
|
Average Room Rate (Euro)
|
Average Occupancy Rates (%)
|
Revenue Per Available room (RevPar)
|
Radisson Blu Bucharest
Bucharest Romania
|
81.7
|
74%
|
61
|
Radisson Blu Astrid Antwerp
Antwerp, Belgium
|
117
|
78%
|
91
|
Park Inn
Antwerp, Belgium
|
95
|
88%
|
83
|
1.
|
Increase or decrease in the authorized Series D Preferred Shares, or amendment of any of the rights or privileges of the Series D Preferred Shares shall require the approval of the holders of at least 60% of the Series D Preferred Shares;
|
2.
|
With respect to the Series C Preferred Shares, the aforementioned changes will require the approval of at least 70% of the Series C Preferred Shares; and
|
3.
|
With respect to the Series B and B-1 Preferred Shares, the aforementioned changes will require the approval of at least 80% of the Series B and B-1 Preferred Shares, respectively.
|
Name of Project
|
Location
|
Title
|
Share %
|
Approximate Land Area (square meters)
|
|
Łódź
|
Łódź, Poland
|
Ownership/ Perpetual usufruct
|
100
1
|
29,700
|
|
Plaza BAS
|
Green Land
|
Ploiest, Romania
|
Ownership
|
100
1
|
18,400
|
Poiana Brasov
|
Brasov, Romania
|
Ownership
|
100
1
|
73,000
|
|
Pine Tree Glade
|
Brasov, Romania
|
Ownership
|
100
1
|
17,770
|
|
Bangalore Project
|
Bangalore, Karnataka State, India
|
Freehold and Development Rights
|
2, 3,4
|
4
|
|
Kochi
|
Kochi, Kerala State, India
|
Freehold and
Development Rights
|
50
2,3,5
|
166,000
(of which rights to 52,600 obtained so far)
|
1
|
Represents share percentage owned by PC.
|
2
|
For information regarding the EPI Agreement, a joint venture agreement signed with PC in respect to our India operations, see “ - Joint Venture with PC to Develop Mixed-Use Projects in India” above.
|
3
|
For information regarding the rights of Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, in the projects, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman." of our annual report on Form 20-F for the year ended December 31, 2013, which is incorporated herein by reference.
|
4
|
For information regarding the shareholdings of the Bangalore Project, see below under “Bangalore, Karnataka State, India
”
.
|
5
|
For information regarding the allotment of our shares in the Kochi project SPV see "Kochi, Kerala State, India".
|
2014
|
2013
|
2012
|
Convenience Translation in U.S. Dollars for
2014
|
|||||||||||||
Western Europe
|
72,537 | 90,470 | 169,211 | 18,652 | ||||||||||||
Central and Eastern Europe
|
435,355 | 269,896 | 342,784 | 111,945 | ||||||||||||
Other and Allocations
|
15,648 | (19,213 | ) | (36,595 | ) | 4,024 | ||||||||||
Total Revenues
|
523,540 | 341,153 | 475,400 | 134,621 |
2014
|
2013
|
2012
|
Convenience Translation in U.S. Dollars for
2014
|
|||||||||||||
Commercial and Entertainment Centers
|
341,937 | 162,639 | 300,641 | 87,924 | ||||||||||||
Hotels
|
197,007 | 202,791 | 276,703 | 50,657 | ||||||||||||
Medical Companies*
|
92,026 | 74,670 | 286,031 | 23,663 | ||||||||||||
Residential Projects
|
- | - | 1,622 | - | ||||||||||||
Other and Allocations*
|
(107,430 | ) | (98,948 | ) | (389,597 | ) | (27,624 | ) | ||||||||
Total
|
523,540 | 341,153 | 475,400 | 134,620 |
|
·
|
shopping centers which are not in close proximity and which do not draw their clientele from the same population areas are not considered competitive;
|
|
·
|
we believe that large retail centers (known as "power centers"), even if they compete with our centers directly merely by virtue of their proximity to our commercial centers, are at a disadvantage because they do not offer the entertainment facilities that are offered at our commercial centers, and which we consider to be a significant element in the attraction of our patrons. These power centers also lack a wide range of services and common areas; and
|
|
·
|
in the regional cities of our targeted countries, competitive activity is more limited. In these cities, we compete with traditional shopping outlets. These outlets lack the added benefit of the entertainment activities that our centers offer and, accordingly, we believe that they have difficulty competing with us.
|
C.
|
ORGANIZATIONAL STRUCTURE
|
NAME OF COMPANY
|
COUNTRY OF ORGANIZATION
|
DIRECT/INDIRECT OWNERSHIP PERCENTAGE
|
||||
Plaza Centers N.V.
|
The Netherlands
|
44.9 (1) | % | |||
Elscint Holdings & Investment N.V.
|
The Netherlands
|
100 | % | |||
Elbit Medical Technologies Ltd.
|
Israel
|
82.71 (2) | % | |||
Elbit Plaza India Real Estate Holdings Limited
|
Cyprus
|
50 (3)(4) | % | |||
Elbit Ultrasound (Luxemburg) B.V./S.a r.l.
|
The Netherlands and Luxemburg
|
100 | % |
(1)
|
Approximately 43% on a fully diluted basis.
|
(2)
|
Approximately 88% on a fully diluted basis.
|
(3)
|
We hold 47.5% of the shares in EPI directly, and an additional 47.5% through PC. For additional information as to the joint venture signed between us and PC regarding EPI, see “Item 4.B Business Overview - Residential Projects.”
|
(4)
|
For details as to the grant of 5% of EPI’s equity to Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman." of our annual report on Form 20-F for the year ended December 31, 2013, which is incorporated herein by reference.
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
|
·
|
Commercial Centers
- Initiation, construction and sale of commercial centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through Plaza Centers N.V. ("PC"), of which we own approximately 44.9% of its share capital. In certain circumstances and depending on market conditions, we operate and manage commercial centers prior to their sale;
|
|
·
|
Hotels
- Operation and management of hotels primarily in major European cities;
|
|
·
|
Medical Industries
- Through our investee entities, we engage in (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine; and
|
|
·
|
Residential Projects
- Initiation, construction and sale of residential units or plots designated for residential, located primarily in India.
|
|
·
|
On April 2, 2015, our Board approved the appointment of Mr. Doron Moshe as Acting Chief Executive Officer in addition to continuing to serve as our Chief Financial Officer.
|
|
·
|
On February 19, 2015, we announced that the extraordinary general meeting of shareholders of our subsidiary Bucuresti Turism S.A. (in which we hold 77% of the issued share capital), which shares were traded on the RASDAQ market
("BUTU") that took place on February 18, 2015, resolved, amongst other things, that BUTU will not take the necessary legal actions for the shares issued by it to be admitted for trading on a regulated market or to be listed on an alternate trading system. BUTU is the owner of the hotel complex known as the "Radisson Blu" in Bucharest, Romania. On April 14, 2015, we announced that the independent certified expert nominated in accordance with the provisions of the Romanian law and regulations (Ernst & Young Services SRL), has determined the estimated shareholders' equity fair value of BUTU to be Euro 64,630,000 (US$ 78,523,000) resulting in a price per share of Euro 4.50, equivalent to a price per share of RON 20.17. (US$ 4.73). To our knowledge, the maximum amount payable by BUTU to its shareholders who did not vote in favor of the aforementioned resolution to the extent all such shareholders will exercise their right to withdraw from BUTU as a result of the aforementioned resolution, is approximately Euro 14.5 million (approximately US$ 15.2 million), which amount will be financed by BUTU either from its own resources and/or third party loans and/or controlling shareholders loans.
|
|
·
|
On September 29, 2014, we announced that our subsidiary Elbit Fashion Ltd. (“Elbit Fashion”) received from PUNTO FA, S.L (“Punto”) written notice of its intention not to extend the term of the franchise rights granted by Punto to Elbit Fashion for operation of the "Mango" retail stores in Israel under the franchise agreement entered into by the parties on May 3, 2005 (the “Franchise Agreement”) and to terminate the Franchise Agreement. On October 27, 2014, we announced that Elbit Fashion signed a sale agreement (the "Fox Sale Agreement") with Fox-Wisel Ltd. ("Fox") with regards to the sale of the operation and business of "Mango" retail stores in Israel. Under the Fox Sale Agreement, which was consummated on January 5, 2015, Elbit Fashion sold and assigned Fox all business activity, stores, investments in the leased properties, furniture and equipment, inventory and customer loyalty program and any and all rights relating thereto, free and clear of any third party rights, except as explicitly set in the Fox Sale Agreement and net of certain liabilities related to the business activities of Mango for consideration of approximately NIS 37.7 million ($ 9.7 million). Following the consummation of the transaction, Elbit Fashion ceased to operate the "Mango" retail stores activity, and accordingly such activity was classified as discontinued operations in our financial statements.
|
·
|
On September 28, 2014, we announced that BUTU, as borrower, we as a guarantor, certain other subsidiaries of us, as additional obligors, and a leading international European bank, as lender (“Lender”), have entered into an amendment to the facilities agreement between the aforementioned parties entered into on September 16, 2011 (the “Facilities Agreement”) which facilitates the drawdown of the second facility under the Facilities Agreement and that BUTU has consummated such drawdown in the amount of approximately € 9 million ($ 11 million, 42.5 NIS million).
|
|
·
|
On September 2, 2014, Elbit Medical announced that Gamida Cell Ltd., ("Gamida Cell"), and the vast majority of Gamida Cell’s shareholders (including Elbit Medical), completed the execution of the Option and Investment Agreements (the " Novartis Agreements") with Novartis. Under the Novartis Agreements, Novartis invested $35 million in Gamida Cell in exchange for approximately 15% of Gamida Cell’s share capital and an option to purchase the holdings of the other shareholders in Gamida Cell, including Elbit Medical's holdings (the " Novartis Option"). The Novartis Option is exercisable, for a limited period of time, following Gamida Cell achieving certain milestones relating to the development of NiCord (the "Product"). Gamida Cell estimates that these milestones will be met during 2015. In any event, the Novartis Option, if not exercised, will expire in first half of 2016. Upon exercising the Novartis Option, Novartis would pay other shareholders in Gamida Cell (the "Sellers") a cash payment of approximately $165 million, in accordance with the terms of the Novartis Agreements. In addition, the Sellers will be entitled to potential future payments which can reach a total of $435 million, depending on certain development and regulatory milestones and on sales of Gamida Cell's products. Gamida Cell is currently conducting two Phase I/II trials using the Product to treat patients suffering from hematologic malignancies and Sickle Cell Disease. Following completion of the Investment Agreement and as of December 31,2014 Elbit Medical holds approximately 26% of Gamida Cell's share capital and approximately 25% in Gamida Cell in a fully diluted basis. At this point in time, there is no certainty that Novartis will exercise the Novartis Option and/or that the milestones will be achieved and/or the product or any other of Gamida Cell’s products will reach the market and generate earn-out payments from their sales.
|
|
·
|
Effective beginning September 2014, PC completed the disposition of its commercial center, Kragujevac Plaza, in Serbia for approximately € 38.6 million ($ 47 million, NIS 182 million). Following the repayment of a related bank loan of approximately € 28.2 million ($ 34 million, NIS 133 million), PC received net cash from the disposition of approximately € 10.4 million ($ 12.6 million, NIS 49 million). Restricted cash linked to the bank debt and other working capital balances of approximately € 2 million ($ 2.4 million, NIS 9.4 million) were also released following the transaction. As a result of the transaction, a loss of € 0.6 million ($ 0.7 million, NIS 2.8 million) was recorded in the profit and loss statement for the year ended December 31, 2014.
|
|
·
|
In June 2014, PC terminated, following a mutual agreement, its joint venture agreement with an Israeli based company (“Aura”). The seven asset companies held by the joint venture were spilled between PC’s 50.1% subsidiary (“Plaza Bas”) and Aura, where Aura received a full control over three of the asset companies, and Plaza Bas received full control over the remaining four asset companies. The carrying amount of the assets received by Plaza Bas valued at € 9 million,($ 11 million, NIS 42.5 million) and Plaza Bas assumed two bank facilities with principal of € 9.7 million,($ 11.8 million, NIS 46 million. In addition, Aura paid € 0.6 million,($ 0.7 million, NIS 2.8 million) to PC as part of the joint venture termination. PC has performed internal valuation of the assets and liabilities it obtained in full following the termination, and as a result recorded a loss of € 4.1 million ($ 5 million, NIS 19.4 million) from this transaction in the financial statements for the year ended December 31,2014.
|
|
·
|
During 2014, PC completed the sale of two plots in Romania (Targu Mures and Hunedoara) to third party developers for a total consideration of € 4.7 million ($ 5.7 million, NIS 22 million). No profit or loss was recorded as a result of these transactions.
|
|
·
|
On July 6, 2014, we announced that our wholly owned subsidiary entered into a transaction for the sale of 1.7 million shares of PPHE Hotel Group (LSE: PPH) for a net consideration of GBP 6.0 million ($ 9 million, NIS 35 million).
|
·
|
On June 29, 2014, InSightec entered into the
Series D Preferred Share Purchase Agreement
with
York Global Finance II S.à r.l. (an affiliate of York Capital Management, which is a related party of ours) (the “Investor”),
pursuant to which the Investor and certain other investors as well as all the other shareholders of InSightec except for Elbit Medical, invested, in stages during the second half of 2014, an aggregate amount of $59 million in InSightec, reflecting a pre-money valuation of InSightec of $ 200 million (NIS 778 million) (on a fully diluted, as-converted basis), subject to certain adjustments as specified in the InSightec Investment Agreement.
In addition, Elbit Medical has the right to invest up to an additional $ 3.5 million (NIS 14 million) in InSightec by the end of May 31, 2015, and the Investor has the option to purchase any additional Series D Preferred Shares not purchased by Elbit Medical, up to a total investment in the round of $ 62.5 million (NIS 243 million).
For additional information, see note 8 A to our consolidated financial statements for the year ended December 31, 2014 included elsewhere in this report. As of December 31, 2014, Elbit Medical holds approximately 36% (30% on a fully diluted basis) of the issued and outstanding share capital of
InSightec.
|
|
·
|
On June 26, 2014 PC’s unsecured financial creditors approved the Amended PC Plan. On July 9, 2014, the Dutch Court approved the Amended PC Plan. All conditions precedent of the Amended PC Plan were fulfilled by November 30, 2014.
|
|
o
|
Each principal payment under the PC's notes due in the years 2013, 2014 and 2015 pursuant to the original terms of the notes shall be deferred by four and a half years and each principal payment due pursuant to the original terms of the notes in subsequent years (i.e., 2016 and 2017) will be deferred by one year.
|
|
o
|
In the event that PC does not succeed in prepaying an aggregate amount of at least NIS 434 million ($ 111.6 million) of the principal of the notes, excluding linkage differentials before 1 December 2016, then all principal payments under the notes deferred in accordance with above, shall be advanced by one year (i.e., shall become due one year earlier).
|
|
o
|
Accrued interest on the notes up and until December 31, 2013 was added to the principal of the notes. Accordingly, PC issued additional NIS 5.5 million ($ 1.4 million) par value notes to series A holders and NIS 13.3 million ($ 3.4 million) par value notes to series B holders and PLN 2.8 million ($ 0.9 million, NIS 3.4 million) par value to Polish investors. The accrued interest will be paid together with the principal.
|
|
o
|
Following January 1, 2014 (“Effective Date”), interest payments will be paid on their due dates. PC paid to its note holders an amount of € 13.8 million ($ 16.8 million, NIS 65 million) of 2014 interest payments.
|
|
o
|
As from January 1, 2014, the annual interest rate on the notes was increased by 1.5%.
|
|
o
|
PC, its directors and officers and its controlling shareholder were fully released from claims.
|
|
o
|
The net cash flow received by PC following an exit or raising new financial indebtedness (except if taken for the purpose of purchase, investment or development of real estate asset) or refinancing of real estate asset's after the full repayment of the asset’s related debt that was realized or in respect of a loan paid in case of debt recycling (and in case where the exit occurred in the subsidiary – amounts required to repay liabilities to the creditors of that subsidiary) and direct expenses in respect of the asset (any sale and tax costs, as incurred), will be used for repayment of the accumulated interest until that date in all of the series (in case of an exit which is not one of the four shopping centers only 50% of the interest) and 75% of the remaining cash (following the interest payment) will be used for an early repayment of the close principal payments for each of the series (A, B, Polish) each in accordance with its relative share in the deferred debt. Such prepayment will be real repayment and not in bond purchase.
|
|
o
|
An injection of a € 20 million ($ 24.3 million) into PC at a price per-share of € 0.0675, (“Equity Contribution) was executed by PC in the form of the Rights Offering to its shareholders. As part of PC's injection, EUL entered into the Back-Stop Agreement with various affiliates of Davidson Kempner Capital Management LP (“DK”, a related party of
ours
), pursuant to which DK undertook to purchase under the Rights Offering, in lieu of EUL, a portion to be determined by EUL, provided that such portion shall be the higher of
€
3 million ($ 3.6 million) and shall not exceed € 10 million ($ 12 million) or result in DK and its affiliates directly or indirectly holding shares representing 30% or more of the total voting rights in PC, all subject to the terms and conditions therein. Consequently EUL has
purchased 122,847,376 new ordinary shares of PC for the total amount of approximately
€
8.3 million ($ 10 million) and DK purchased 163,803,197 new ordinary shares of PC for an additional amount of
€
11.05 million ($ 13.4 million).
|
|
o
|
PC issued to the noteholders of 13.21% of PC's shares (post Equity Contribution) for payment of par value of shares. Such issuances of shares were distributed among the noteholders pro rata to the relative share of each relevant creditor in the Deferred Debt.
|
|
o
|
Following the Rights Offering and associated placing of shares and the issuance of new ordinary shares to PC's noteholders under the Amended PC Plan, EUL holds 44.9% in PC and DK holds approximately 26.3% of the outstanding shares of PC.
|
|
·
|
On September 18, 2013, our unsecured financial creditors (the holders of our publicly traded Series 1 and Series A to Series G notes and Bank Leumi) approved the Debt Restructuring under Section 350 of the Israeli Companies Law, and on January 1, 2014, the Court approved the Debt Restructuring. On February 20, 2014, following the satisfaction of all conditions required to be satisfied prior to the effectiveness of the Debt Restructuring (other than registration of liens in favor of the trustees of the new series of notes), the Debt Restructuring was consummated and came into effect. In accordance with the terms of the Debt Restructuring, our unsecured financial creditors were issued 508,027,457 ordinary shares, which represented 95% of our share upon effectiveness of the Debt Restructuring on a fully diluted basis (except for certain options issued to our employees and officers) and before the issuance of our ordinary shares to Bank Hapoalim (as detailed below). According to the terms of the Debt Restructuring, the outstanding balance under our unsecured financial debt was extinguished and converted into these ordinary shares and new notes issued by us to our unsecured financial creditors. The aggregate principal amount of the two series of new notes issued pursuant to the Debt Restructuring was equal to NIS 666 million ($ 190.3 million). The principal amount of the first series of new notes("Series H") was equal to NIS 448 million ($ 128.7 million), repayable in a single payment by May 31, 2018. The principal amount of the second series of new notes ("Series I") was equal to NIS 218 million ($ 62.3 million), repayable in a single payment by November 30, 2019. Both series of the new notes bear interest at the rate of 6% per annum and are linked to the Israeli consumer price index, while interest on Series H notes is payable in cash on a semi-annual basis, and interest on the Series I notes will be payable on the final maturity date. In addition, the new notes include mandatory prepayment provisions in the event we pay cash, distribute dividends or make any other distribution within four and half years following the date of issuance thereof, such that we will be obligated to prepay an amount equal to the amount distributed. In addition, the new notes are secured by first ranking and second ranking floating charges that were placed on all of our assets in favor of the Series H and Series I trustees, respectively, and first-ranking and second ranking fixed pledges that were placed on our various holdings and rights in our subsidiaries Elbit Ultrasound (Luxembourg) B.V./S.ar.l (through which we hold a controlling stake in PC) and Elscint Holdings and Investments N.V. (through which we hold our hotels in Belgium and Romania) as well as any amounts which we shall be entitled to receive therefrom (including under all and any shareholders loans advanced by us to those companies, if any). Furthermore, our Articles of Association were amended such that (i) a decision by us to engage in a field of business that is new to us and our subsidiaries and is material to us requires the unanimous approval of all of the members of the Board present and lawfully entitled to vote at the relevant meeting and (ii) in certain events, a person contemplating a purchase of our shares shall be required to offer to acquire ordinary shares representing at least 10% of our voting rights in connection with such purchase. The Series H Notes and the Series I Notes were listed on the TASE, and the New Shares were listed on NASDAQ and the TASE. For a discussion of the approval and consummation of the Debt Restructuring, please see the Forms 6-K we filed on September 18, 2013, January 2, 2014 and February 20, 2014.
|
·
|
On
January
26, 2014 a holder of the our Series B notes ("the Plaintiff") filed an appeal to the Supreme Court, against the ruling of the Tel-Aviv District Court, dated 1 January, 2014 approving the amended plan of arrangement (the "Appeal"). In the Appeal the Plaintiff is seeking, inter alia, to cancel the section which granted release from potential liability and claims to our officers and directors, and also the section which determines the class action that was filed by the Plaintiff shall be stricken; Alternatively, the Plaintiff has requested to cancel the section on the said court ruling which determines the class action shall be stricken against Mr. Mordechai Zisser, who is not included in the release from potential liability and claims provided to our other officers, or that the whole Arrangement shall be canceled. A hearing of the appeal is scheduled to be held on June 11, 2015.
|
|
·
|
In connection with the Debt Restructuring, we issued 16,594,036 ordinary shares to Bank Hapoalim pursuant to the terms set forth in the Refinancing Agreement. Pursuant to the Refinancing Agreement, the outstanding loan amount (approximately $48 million) will be repayable by us on February 20, 2017, and bears interest of LIBOR +3.8% per year, payable quarterly, and an additional 1.3% per year, payable on the final maturity date. In addition, pursuant to the Refinancing Agreement, first-ranking fixed charges were placed on our holdings and other rights in certain of our subsidiaries holding our hotels in Romania and Belgium as collateral securing our debt to Bank Hapoalim under the Refinancing Agreement. Such charges were placed in addition to the existing securities that Bank Hapoalim held under the loan previously received from Bank Hapoalim, i.e., a first ranking pledge over an amount of 86 million shares of PC, representing approximately 13% of PC's outstanding shares. We are subject to certain prepayment obligations in the event of prepayment of the aforementioned new notes or a distribution. For further details regarding the Refinancing Agreement, please see the Form 6-K we filed on November 14, 2013.
|
|
·
|
in 2012, we granted Eastgate Property LLC (“Eastgate”) a warrant to purchase our ordinary shares, as subsequently amended (the “Warrant”). Pursuant to an understanding between us and Eastgate, in connection with the Debt Restructuring, Eastgate exercised the Warrant for 1,924,215 ordinary shares immediately following the consummation of the Debt Restructuring, at which time the Warrant was terminated. For further details regarding the Warrant, please see the Form 6-K we filed on February 20, 2014.
|
|
·
|
Our unsecured debt prior to the entering into effect of the Debt Restructuring included approximately $12.8 million (NIS 50 million) principal amount of bank debt held by Bank Leumi. As of the Closing of the Debt Restructuring, we had outstanding disputes with Bank Leumi with respect to the validity of certain pledges over accounts held by us at Bank Leumi and consequently, whether the debt we owed to Bank Leumi should be classified as unsecured or secured. As a result of this dispute and in connection with the Debt Restructuring, we issued to an escrow agent for the benefit of Bank Leumi approximately NIS 8.0 million (approximately $2.3 million) in principal amount of our Series H Notes, approximately NIS 3.9 million (approximately $1.1 million) in principal amount of our Series I Notes, and 9,090,122 ordinary shares. On July 23, 2014, following the Court’s approval and the closing of the Debt Restructuring, we announced the consummation of a settlement of the dispute (the “Settlement”), under which Bank Leumi received ownership of all marketable securities held in our accounts at Bank Leumi having a fair value of approximately NIS 8.7 million ($ 2.2 million) (based on their then-market price). In addition, our net debt (after offset of the aforementioned marketable securities) to Bank Leumi in the amount of approximately NIS 38 million ($ 9.8 million) was cancelled in exchange for 7,404,119 ordinary shares, NIS 6,507,666 aggregate principal amount of our Series H notes and NIS 3,166,678 aggregate principal amount of Series I notes of us. The balance of 1,686,003 ordinary shares, NIS 1,481,870 aggregate principal amount of Series H notes and NIS 721,089 aggregate principal amount of Series I notes of us retained in escrow under the Debt Restructuring was annulled and delisted from trade in the Tel Aviv Stock Exchange. The Settlement constituted the full settlement of our obligations to Bank Leumi under the Debt Restructuring as well as under the loan agreement entered between the parties on May 5, 2011, and Bank Leumi released all liens registered for its benefit on our assets. The Settlement also included a mutual waiver of claims.
|
|
·
|
On January 13, 2014 PC announced that its subsidiary (in which it holds approximately 70% of its voting power) had reached an agreement to sell its 50% equity stake in the Uj Udvar project in Budapest, Hungary. As a result of the transaction, PC received cash proceeds of € 2.4 million ($ 2.9 million, NIS 11.2 million).
|
|
·
|
In February 2013 we announced that we would temporarily cease making all principal payments due under our Series A and Series B notes and all interest payments due under all of our publicly-traded notes; for a discussion of these announcements please see the Form 6-Ks we filed on February 5, 2013, and February 19, 2013, respectively. In March 2013
we entered into a letter of undertaking (the
“Letter of Undertaking”) with the trustees of our Series 1, C, D, E, F and G note holders
regarding our activities during an interim period, under which,
inter alia
, it was agreed that we and the entities controlled by us (excluding PC)
would not make any payments to our respective creditors, other than under certain circumstances,
we will not dispose and/or undertake to dispose any of our material assets and/or our Controlled Entities, and we will not provide any guarantee and/or security of any kind, to secure our or any third party’s debt. Furthermore we will not make any payments and/or engage in any transactions with the former Controlling Shareholder and/or entities under the control of the former Controlling Shareholder and/or Mr. Mordechai Zisser’s relatives
either directly or indirectly. As indicated above under “-2014”, we have consummated our Debt Restructuring including with respect to the Letter of Undertaking. For a discussion of the Letter of Undertaking, please see the Form 6-K we filed on March 21, 2013. For a discussion of the terms of the Debt Restructuring, please see "-2014" above.
|
|
·
|
In August and November 2012, acting through our wholly owned subsidiary Elbit Imaging Financing Services, Limited Partnership (“Elbit Financing”), we entered into two note structured transactions with two leading global financial institutions (the “Counterparties”). On February 20, 2013, the Counterparties notified us of the early termination of the transactions as a result of the decline in the market price of our outstanding notes and consequent failure to meet the loan-to-value covenants under the agreements governing the transactions.
|
|
·
|
In March 2013, we received a letter from Bank Leumi demanding repayment within ten days of the outstanding balance of approximately $14.1 million due primarily under certain loans made by Bank Leumi to us
pursuant to a refinancing agreement dated May 5, 2011
. Bank Leumi stated that it was taking this action in light of our then-financial condition and our having informed Bank Leumi that we would not pay the principal and the interest due on March 29, 2013. Bank Leumi also informed us that it had placed a freeze on the Leumi Accounts (certain accounts maintained by us with Bank Leumi in which we held cash and trading securities in the amount of approximately NIS 8 million) until the outstanding amounts due are repaid. Bank Leumi also notified us that should such repayment not be made within ten days Bank Leumi was reserving its rights to take all actions necessary in order to protect its rights under the loan agreements including offsetting any amounts in the Leumi accounts against the loans.
Bank Leumi also claimed that it has certain pledges registered in its favor and therefore it is a secured creditor and should not be included in the Debt Restructuring. For a discussion of the settlement agreement with Bank Leumi, please see "-2014" above.
|
|
·
|
On May 29, 2013 PC successfully completed the sale of its 50% interest in an entity which mainly holds interests in an office complex project located in Pune, Maharashtra. The transaction valued the entity at €33.4 million and, as a result, PC received gross cash proceeds of approximately €16.7 million.
|
|
·
|
On June 6, 2013, we received a letter from Bank Hapoalim, demanding repayment within seven days of the outstanding balance of the loan owed to Bank Hapoalim under the March 31, 2011 Facility Agreement, without prejudicing its right under any other loan facility to which we are a party as a guarantor or otherwise. Bank Hapoalim stated that it was taking this action in light of our alleged breaches under the loan, including,
inter alia
, non-payment to Bank Hapoalim on March 31, 2013 of approximately $14.5 million, failure to satisfy certain financial covenants under the loan and adverse change in our financial position. On November 4, 2013, we announced that we and Bank Hapoalim reached general terms of agreement between the parties, and on November 12, 2013, we had announced certain amendments to the said general terms of agreement. On November 26, 2013, our unsecured financial creditors voted on the general terms of agreement to be entered into with Bank Hapoalim. At the Meeting, unsecured financial creditors holding approximately 70.6% of the aggregate voting power that had participated in the meeting voted in favor of the refinancing. On December 29, 2013 we entered into a new facility agreement with Bank Hapoalim based on the aforementioned general terms of agreement, and on February 20, 2014, the transactions under the agreement were consummated. For further discussion of the terms and the closing of the Refinancing Agreement, please see "-2014" above.
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in an entity which holds the interest in a plot of land in Prague. The transaction values the entity at approximately €1.9 million (NIS 9 million). The net cash consideration after deducting a liability to a third party amounted to €1.3 million.
|
|
·
|
On October 31, 2013 the consortium of shareholders of Dream Island, in which PC holds a 43.5% stake, completed the sale of the Dream Island project land to the Hungarian State for approximately €15 million. The proceeds of the transaction were used by the consortium to repay a proportion of a secured bank loan.
|
|
·
|
On November 18, 2013, PC announced that it had filed for reorganization proceedings (preliminary suspension of payments) with the Dutch Court and submitted a restructuring plan to the Dutch Court. Further to that announcement, PC announced that the Dutch Court had granted its application for preliminary suspension of payment proceedings. PC noted further that in order to resolve its liquidity situation it had filed with the Dutch Court a restructuring plan proposed to its creditors. For a discussion of PC’s reorganization proceedings, please see the Forms 6-K we filed on November 14, 2013, November 20, 2013 and November 25, 2013. For a discussion regarding the amendment to the restructuring plan and the consummation of the Amended PC Plan, see “- 2014” above.
|
1.
|
Operating trading properties (mainly commercial centers)
|
2.
|
Undeveloped trading properties
|
2.2
|
Critical assumptions under the comparable method
|
|
·
|
Adjustment in respect of the time of the transaction. Market conditions at the time of the sales transaction of a comparable property may differ from those on the valuation date of the property being valued. Factors that impact market conditions include rapidly appreciating or depreciating property values, changes in tax laws, building restrictions or moratoriums, fluctuations in supply and demand, or any combination or forces working in concert to alter market conditions from one date to another.
|
|
·
|
Adjustment in respect of asking price and condition of payment. The special motivations of the parties to the transaction in many situations can affect the prices paid and even render some transactions as non-market. Examples of special conditions of sale include: a higher price paid by a buyer because the parcel has synergistic, or marriage, value; a lower price paid because a seller was in a hurry to conclude the sale; a financial, business or family relationship between the parties involved in the transaction; unusual tax considerations; lack of exposure of the property in the (open) market; or the prospect of lengthy litigation proceedings.
|
|
·
|
Adjustment in respect of size, shape and surface area. Where the physical characteristics of a comparable property vary from those of the subject property, each of the differences is considered, and the adjustment is made for the impact of each of these differences on value.
|
|
·
|
Adjustment in respect of location. The locations of the comparable sale properties and the subject property are compared to ascertain whether location and the immediate environs are influencing the prices paid. The better location a property is located in, the more it is worth per square meter; and, conversely, the worse location a property is in, the less it is worth per square meter. An adjustment is made to reflect such differences based on the valuator's professional experience. Extreme location differences may indicate that a transaction is not truly comparable and are disqualified.
|
A.
|
Operating Results
|
Year ended December 31 | ||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 2
|
2 0 1 4
|
|||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Revenues and gains
|
||||||||||||||||
Revenues
|
||||||||||||||||
Revenues from sale of commercial centers
|
201,571 | 8,614 | 67,594 | 51,831 | ||||||||||||
Revenues from Hotels operations and management
|
197,007 | 202,791 | 206,746 | 50,658 | ||||||||||||
Total revenues
|
398,578 | 211,405 | 274,340 | 102,489 | ||||||||||||
Gains and other
|
||||||||||||||||
Rental income from Commercial centers
|
113,661 | 129,748 | 147,185 | 29,226 | ||||||||||||
Gain from sale of investees
|
11,301 | - | - | 2,906 | ||||||||||||
Gain from sale of real estate assets
|
- | - | 53,875 | - | ||||||||||||
Total gains
|
124,962 | 129,748 | 201,060 | 32,132 | ||||||||||||
Total revenues and gains
|
523,540 | 341,153 | 475,400 | 134,621 | ||||||||||||
Expenses and losses
|
||||||||||||||||
Commercial centers
|
291,864 | 124,737 | 213,367 | 75,049 | ||||||||||||
Hotels operations and management
|
173,918 | 179,137 | 186,760 | 44,721 | ||||||||||||
General and administrative expenses
|
39,785 | 60,643 | 48,771 | 10,230 | ||||||||||||
Share in losses of associates, net
|
17,298 | 339,030 | 102,127 | 4,450 | ||||||||||||
Financial expenses
|
237,601 | 334,101 | 184,273 | 61,096 | ||||||||||||
Financial income
|
(6,317 | ) | (3,930 | ) | (28,303 | ) | (1,624 | ) | ||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
71,432 | 68,407 | 50,229 | 18,368 | ||||||||||||
Financial gain from debt restructuring
|
(1,616,628 | ) | - | - | (415,692 | ) | ||||||||||
Write-down, charges and other expenses, net
|
531,042 | 840,034 | 302,093 | 136,550 | ||||||||||||
(260,005 | ) | 1,942,159 | 1,059,317 | (66,852 | ) | |||||||||||
Profit (loss) before income taxes
|
783,545 | (1,601,006 | ) | (583,917 | ) | 201,473 | ||||||||||
Tax benefit
|
(2,287 | ) | (30,937 | ) | (9,212 | ) | (588 | ) | ||||||||
Profit (loss) from continuing operations
|
785,832 | (1,570,069 | ) | (574,705 | ) | 202,061 | ||||||||||
Profit (loss) from discontinued
operations, net
|
(1,475 | ) | 5,059 | 90,721 | (379 | ) | ||||||||||
Profit (loss) for the year
|
784,357 | (1,565,010 | ) | (483,984 | ) | 201,682 |
Year ended December 31 | ||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 2
|
2 0 1 4
|
|||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Attributable to:
|
||||||||||||||||
Equity holders of the Company
|
1,008,999 | (1,155,645 | ) | (315,746 | ) | 259,447 | ||||||||||
Non-controlling interest
|
(224,642 | ) | (409,365 | ) | (168,238 | ) | (57,765 | ) | ||||||||
784,357 | (1,565,010 | ) | (483,984 | ) | 201,682 | |||||||||||
Profit (loss) from continuing operations
|
||||||||||||||||
Equity holders of the Company
|
1,010,619 | (1,160,429 | ) | (410,021 | ) | 259,861 | ||||||||||
Non-controlling interest
|
(224,787 | ) | (409,640 | ) | (164,684 | ) | (57,801 | ) | ||||||||
785,832 | (1,570,069 | ) | (574,705 | ) | 202,060 | |||||||||||
Profit (loss) from discontinued operation, net
|
||||||||||||||||
Equity holders of the Company
|
(1,620 | ) | 4,785 | 94,275 | (415 | ) | ||||||||||
Non-controlling interest
|
145 | 274 | (3,554 | ) | 37 | |||||||||||
(1,475 | ) | 5,059 | 90,721 | (378 | ) | |||||||||||
Earnings (loss) per share - (in NIS)
|
||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||
From continuing operation
|
42.55 | (932.15 | ) | (329.51 | ) | 10.94 | ||||||||||
From discontinued operations
|
(0.06 | ) | 3.84 | 75.75 | (0.02 | ) | ||||||||||
42.49 | (928.31 | ) | (253.76 | ) | 10.92 | |||||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||
From continuing operation
|
42.55 | (932.15 | ) | (329.51 | ) | 10.94 | ||||||||||
From discontinued operations
|
(0.06 | ) | 3.84 | 75.75 | (0.02 | ) | ||||||||||
42.49 | (928.31 | ) | (253.76 | ) | 10.92 |
|
(i)
|
Revenues from the sale of commercial centers, which increased to NIS 201 million ($52 million), in 2014 compared to NIS 9 million in 2013. In 2014, PC consummated the sale of the Kragujevac Plaza commercial center in Serbia and a few plots in Romania. In 2013 the revenues were attributable to sale of a plot by PC in the Czech Republic.
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 197 million ($51 million) in 2014 compared to NIS 203 million in 2013. The decrease was mainly attributable to a decrease in revenues from our hotel in Romania. The average occupancy rate increase from 74% in 2013 to 76% in 2014 and the average room rate decreased from € 94 in 2013 to € 92 in 2014.
|
|
(iii)
|
Total gains and other in 2014 amounted to NIS 125 million ($32 million), compared to NIS 130 million in 2013. Set forth below is an analysis of our gains and other:
|
|
(iv)
|
Rental income from commercial centers decreased to NIS 114 million ($29 million) in 2014 compared to NIS 130 million in 2013, mainly as a result of selling the Kragujevac Plaza commercial center and the decrease in revenues from the entertainment parks within the commercial centers which were closed during 2013 and 2014. The average occupancy rates in our commercial centers were 84%-99% in 2014, compared to 86%-100% in 2013.
|
|
(v)
|
Gain from a sale of investees increased to NIS 11 million ($3 million) in 2014, compared to nil in 2013, attributable to the closing of Gamida's investment round with Novartis, as described above.
|
|
(i)
|
Expenses of commercial centers increased to NIS 292 million ($75 million) in 2014, compared to NIS 125 million in 2013. The increase is mainly attributable to the sale of Kragujevac Plaza commercial center and plots in Romania in the aggregate amount of NIS 206 million ($53 million), offset by a decrease in PC's general and administrative expenses as a result of efficiency measures taken by PC during 2014.
|
|
(ii)
|
Cost of hotel operations and management decreased to NIS 174 million ($45 million) in 2014, compared to NIS 179 million in 2013. The decrease was mainly attributable to a decrease in revenue from hotel operations.
|
|
(iii)
|
General and administrative expenses decreased to NIS 40 million ($10 million) in 2014, compared to NIS 61 million in 2013. The decrease was mainly attributable to our arrangement costs incurred mainly during 2013, as well as efficiency measures taken to reduce the general and administrative costs in our headquarters during 2014.
|
|
(iv)
|
Share in losses of associates, net decreased to NIS 17 million ($4 million) in 2014, compared to NIS 339 million in 2013. The share in losses in 2014 is mainly attributable to the operation of our medical activity and to operations of PC's commercial center in Riga, Latvia. The losses in 2013 in attributable mainly to write-down of trading properties by our joint-venture entities in India, in addition to the operational losses attributable to the operation of our medical activity offset by the income from PC's commercial centers in Riga.
|
|
(v)
|
Financial expenses decreased to NIS 238 million ($61 million) in 2014, compared to NIS 334 million in 2013. Such amount includes:
|
|
(vi)
|
Financial income increased to NIS 6 million ($2 million) in 2014, compared to NIS 4 million in 2013.
|
|
(vii)
|
Losses from changes in fair value of financial instruments amounted to NIS 71 million ($18 million) in 2014 compared to NIS 68 in 2013. The change in fair value of financial instruments was mainly attributable to the following:
|
|
(i)
|
Loss from changes in fair value of financial instruments (measured at fair value through profit and loss (mainly PC's notes)) amounted to NIS 60 million ($15 million) in 2014 and in 2013; and
|
|
(ii)
|
Loss from change in fair value of derivatives, embedded derivative and marketable securities amounted to NIS 11 million ($3 million) in 2014, compared to NIS 4 million in 2013.
|
(viii)
|
Financial gain from debt restructuring in 2014 amounted to approximately NIS 1,616 million ($416 million). The gain from our restructuring amounted to NIS 1,610 million ($414 million), while PC's net gain from its restructuring amounted to NIS 6 million ($2 million). Such gain reflects the difference between our carrying amount and PC's unsecured financial debts as of the closing of their respective restructuring plans and the fair value of the shares and notes issued by us and PC based on their respective quoted closing prices on the first day thereafter.
|
(ix)
|
Write-down, charges and other expenses, net, decreased to NIS 531 million ($137 million) in 2014, compared to NIS 840 million in 2013. The write down in 2014 was mainly attributable to the write-down in PC's trading property in Eastern Europe and India in the amount of NIS 527 million ($136 million).
|
Segment
|
Hotels
|
Commercial Centers
|
Medical Industries
|
Residential
|
Other and Allocations
|
Total
|
||||||||||||||||||
Revenues
|
197 | 201 | 81 | - | (81 | ) | 398 | |||||||||||||||||
Rental income from commercial centers
|
- | 141 | - | - | (27 | ) | 114 | |||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | - | - | 11 | 11 | ||||||||||||||||||
Total revenues and gains
|
197 | 342 | 81 | - | (97 | ) | 523 | |||||||||||||||||
Costs and expenses
|
174 | 298 | 124 | (6 | ) | (112 | ) | 478 | ||||||||||||||||
Research and development expenses
|
- | - | 58 | - | (58 | ) | - | |||||||||||||||||
Other expenses (income), net
|
(13 | ) | 447 | - | 58 | 26 | 518 | |||||||||||||||||
Segment profit (loss)
|
36 | (403 | ) | (101 | ) | (52 | ) | 47 | (473 | ) | ||||||||||||||
Financial expenses (income), net
|
30 | 43 | (2 | ) | - | (1 | ) | (70 | ) | |||||||||||||||
Share in losses of associates, net
|
- | - | (6 | ) | - | (11 | ) | (17 | ) | |||||||||||||||
Unallocated general and administrative expenses
|
(40 | ) | ||||||||||||||||||||||
Unallocated financial expenses
|
(167 | ) | ||||||||||||||||||||||
Financial income
|
6 | |||||||||||||||||||||||
Financial gain from debt restructuring
|
1,616 | |||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
(71 | ) | ||||||||||||||||||||||
Profit before income taxes
|
784 | |||||||||||||||||||||||
Income taxes
|
2 | |||||||||||||||||||||||
Profit from continuing operations
|
786 | |||||||||||||||||||||||
Loss from discontinued operation
|
(1 | ) | ||||||||||||||||||||||
Loss for the year
|
785 |
|
(i)
|
Revenues from sale of commercial centers decreased to NIS 8 million in 2013 compared to NIS 68 million in 2012. In 2013 the revenues were attributable to sale of a plot by PC in the Czech Republic. In 2012, the revenues were attributable to the sale of plot by PC in Bulgaria.
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 203 million in 2013 compared to NIS 207 million in 2012. The decrease was mainly attributable to a decrease in revenues from our hotel in Romania offset by an increase in the revenues from our hotels in Belgium. The average occupancy rate decreased from 75% in 2012 to 73% in 2013 and the average room rate increased from €91 in 2012 to €95 in 2013.
|
|
(i)
|
Rental income from commercial centers decreased to NIS 130 million in 2013 compared to NIS 147 million in 2012. The decrease was mainly attributable to the closing of a certain location of PC's Fantasy Park operations during 2013, which resulted in a decrease of NIS 18 million in income. PC's commercial centers operations contributed income of NIS 113 million in each of the years 2013 and 2012 attributable to the operations of six operating commercial centers through the years. The average occupancy rate in 2013 was 86% - 100% compared to 80%-98% in 2012.
|
|
(ii)
|
Gain from a sale of real estate assets in 2013 amounted to nil as compared to gain of NIS 54 million attributable to the sale of four Dutch hotels in March 2012.
|
|
(i)
|
Expenses of commercial centers decreased to NIS 125 million in 2013 compared to NIS 213 million in 2012. The expenses in 2012 included an amount of NIS 68 million attributable to the cost of plot which was sold in Bulgaria during 2012 compared to cost of NIS 10 million in 2013.
|
|
(ii)
|
Cost of hotel operations and management decreased to NIS 179 million in 2013 compared to NIS 187 million in 2012, mainly attributable to the decrease in activity as discussed above.
|
|
(iii)
|
General and administrative expenses increased to NIS 61 million in 2013 compared to NIS 49 million in 2012. General and administrative expenses less non-cash expenses amounted to NIS 51 million in 2013 compared to NIS 35 million in 2012. Such increase in 2013 resulted mainly from cost and expenses relating to the process of consummating the Debt Restructuring.
|
|
(iv)
|
Share in losses of associates, net increased to NIS 339 million in 2013 compared to NIS 102 million in 2012. Such losses in 2013 resulted mainly from write down of trading properties by our joint-venture entities in India as well as losses attributable to the operation of our medical activity. The losses in 2012 were mainly from write down of trading property by joint ventures entities of PC operating in Eastern Europe.
|
|
(v)
|
Financial expenses increased to NIS 334 million in 2013 compared to NIS 184 million in 2012. Such amount includes:
|
(a)
|
Interest and CPI-linked borrowings in the amount of NIS 361 million in 2013 compared to NIS 376 million in 2012; The decrease in interest and CPI-linked borrowings in the amount of approximately NIS 15 million was mainly attributable to a repayment of outstanding principal of PC's notes during 2013.
|
(b)
|
Loss from foreign currency translation differences in the amount of NIS 4 million in 2013 compared to NIS 33 million in 2012;
|
(c)
|
Gain from repurchase of notes in the amount of NIS 0 million in 2013 compared to gain of NIS 113 million in 2012; and
|
(d)
|
Financial expenses capitalized to qualified assets in the amount of NIS 31 million in 2013 compared to NIS 112 million in 2012.
|
|
(vii)
|
Financial income decreased to NIS 4 million in 2013 compared to NIS 28 million in 2012. Such decrease was attributable mainly to a decrease in the scope of our deposit and receivable during the year as well as a decrease in the interest rate.
|
|
(viii)
|
Losses from changes in fair value of financial instruments amounted to NIS 68 in 2013 compared to a gain of NIS 50 million in 2012. This decrease was mainly attributable to the following:
|
|
(i)
|
Changes in fair value of financial instruments (mainly PC's notes which are measured at fair value through profit and loss) amounted to NIS 60 million in 2013 compared to a gain of NIS 98 million in 2012; and
|
|
(ii)
|
Loss from change in fair value of derivatives, embedded derivative and marketable securities (mainly swap transactions executed mainly by PC in respect of its notes) amounted to a loss of NIS 8 million in 2013 compared to loss in the amount of NIS 48 million in 2012.
|
|
(ix)
|
Write-down, charges and other expenses, net, increased to NIS 841 million in 2013 compared to NIS 302 million in 2012. The write-down in 2013 was attributable to:
|
i.
|
Write-down and impairment of PC's trading property, advances on account of trading properties and investment property in the amount of NIS 615 million;
|
ii.
|
Write-down of our trading property and advances on account of trading property in India in the total amount of NIS 132 million;
|
iii.
|
Impairment of goodwill related to our hotels business and to our hotels under development in the total amount of NIS 56 million; and
|
iv.
|
Initiation and other expenses, net in the total amount of NIS 38 million.
|
Segment
|
Hotels
|
Commercial Centers
|
Medical Industries
|
Residential
|
Other and Allocations
|
Total
|
||||||||||||||||||
Revenues
|
203 | - | 75 | - | (75 | ) | 211 | |||||||||||||||||
Rental income from commercial centers
|
- | 154 | - | - | (24 | ) | 130 | |||||||||||||||||
Gain from sale of real estate assets
|
- | - | - | - | - | - | ||||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | - | - | - | - | ||||||||||||||||||
Total revenues and gains
|
203 | 162 | 75 | - | (99 | ) | 341 | |||||||||||||||||
Costs and expenses
|
179 | 132 | 73 | 300 | (372 | ) | 312 | |||||||||||||||||
Research and development expenses
|
- | - | 42 | - | (42 | ) | - | |||||||||||||||||
Other expenses (income), net
|
56 | 613 | - | 132 | 31 | 832 | ||||||||||||||||||
Segment profit (loss)
|
(32 | ) | (582 | ) | (40 | ) | (432 | ) | 282 | (803 | ) | |||||||||||||
Financial expenses (income), net
|
(27 | ) | (51 | ) | (1 | ) | - | (1 | ) | (80 | ) | |||||||||||||
Share in losses of associates, net
|
- | - | 1 | - | (340 | ) | (339 | ) | ||||||||||||||||
Unallocated general and administrative expenses
|
(61 | ) | ||||||||||||||||||||||
Unallocated financial expenses
|
(254 | ) | ||||||||||||||||||||||
Financial income
|
4 | |||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
(68 | ) | ||||||||||||||||||||||
Loss before income taxes
|
(1,601 | ) | ||||||||||||||||||||||
Income taxes
|
31 | |||||||||||||||||||||||
Profit from continuing operations
|
(1,570 | ) | ||||||||||||||||||||||
Profit from discontinued operation
|
5 | |||||||||||||||||||||||
Loss for the year
|
(1,565 | ) |
B.
|
Liquidity and Capital Resources
|
|
·
|
509,713,459 (before adjustment pursuant to the Reverse Split) ordinary shares were issued to our unsecured financial creditors;
|
|
·
|
We issued NIS 448 million aggregate principal amount of Series H notes and NIS 218 million aggregate principal amount of Series I notes;
|
|
·
|
We refinanced our loan to Bank Hapoalim in the amount of $48 million; and
|
|
·
|
Each principal payment under the notes due in the years 2013, 2014 and 2015 pursuant to the original terms of the notes shall be deferred by exactly four and a half years and each principal payment due pursuant to the original terms of the notes in subsequent years (i.e., 2016 and 2017) will be deferred by exactly one year.
|
|
·
|
Following January 1, 2014 (“Effective Date”), interest payments will be paid on their due dates. PC paid to the holders of the unsecured debt an amount of EUR 13.8 million of 2014 interest payments.
|
|
·
|
As from January 1, 2014, the annual interest rate of the unsecured debt was be increased by 1.5%.
|
|
·
|
The net cash flow received by PC following an exit or raising new financial indebtedness (except if taken for the purpose of purchase, investment or development of real estate asset) or refinancing of real estate asset's after the full repayment of the asset’s related debt that was realized or in respect of a loan paid in case of debt recycling (and in case where the exit occurred in the subsidiary – amounts required to repay liabilities to the creditors of that subsidiary) and direct expenses in respect of the asset (any sale and tax costs, as incurred), will be used for repayment of the accumulated interest till that date in all of the series (in case of an exit which is not one of certain four shopping centers held by PC, only 50% of the interest) and 75% of the remaining cash (following the interest payment) will be used for an early repayment of the close principal payments for each of the series (A, B, Polish) each in accordance with its relative share in the deferred debt. Such prepayment will be real repayment and not in bond purchase.
|
|
·
|
An injection of EUR 20 million into PC at a price per-share of EUR 0.0675 was executed by PC in the form of Rights Offering to its shareholders out of which we participated to the extent of EUR 8.3 million.
|
(i)
|
Equity investments in our commercial centers, our hotels and our residential projects, which are constructed by our wholly owned and jointly-controlled subsidiaries or joint ventures (special purpose entities that are formed for the construction of our real estate projects (a “Project Company”)). We generally finance approximately 35%-50% of such projects through equity investments in the Project Companies, while the remaining amounts are generally financed through a credit facility secured by a mortgage on the project constructed by the respective Project Company, registered in favor of the financial institution that provides such financing. The equity investments in the Project Companies are typically provided by us (and our partners, if any) through shareholder loans that are subordinated to the credit facilities provided to the Project Company;
|
(ii)
|
Interest and principal payments on our notes and loans;
|
(iii)
|
Payment of general and administrative expenses.
|
|
·
|
On October 27, 2014 Elbit Fashion signed a sale agreement (the "Sale Agreement") with Fox-Wisel Ltd. ("Fox") with regards to the sale of the operation and business of "Mango" retail stores in Israel. Under the Sale Agreement, Elbit Fashion sold and assigned Fox all business activity, stores, investments in the leased properties, furniture and equipment, inventory and customer loyalty program and any and all rights relating thereto, free and clear of any third party rights, except as explicitly set in the Sale Agreement and net of certain liabilities related to the business activities of Mango. On January 5, 2015 Elbit Fashion have completed the sale of the operation and business of "Mango" retail stores in Israel from Elbit Fashion to Fox (the “Closing”), for consideration of approximately NIS 37.7 million, Following the Closing and consummation of the transaction, Elbit Fashion has ceased to operate the "Mango" retail stores activity.
|
|
·
|
Effective beginning September 2014, PC completed the disposal of its commercial center, Kragujevac Plaza in Serbia for approximately Euro 38.6 million (NIS 181 million).Following the repayment of related bank loan of approximately Euro 28.2 million (NIS 132 million), PC received net cash from the disposal of approximately Euro 10.4 million (NIS 49 million). Restricted cash linked to the bank debt and other working capital balances of approximately Euro 2 million (approximately NIS 9.4 million) were also released following the transaction.
|
|
·
|
During 2014 PC completed the selling of two plots in Romania (Targu Mures and Hunedoara) to a third party developers for a total consideration of EUR 4.7 million (approximately NIS 22 million).
|
|
·
|
On September 22, 2014 Bucuresti as borrower, we as a guarantor, certain other subsidiaries of us as additional obligors and a leading international European bank, as lender (“Lender”), have entered into an amendment to the facilities agreement for a second drawdown of approximately Euro 9 million (“Tranche B Facility”). The proceeds of the Tranche B Facility were used in their entirety to repay shareholders loans of BUTU to us.
|
|
·
|
In July 2014 we sold 1.7 million shares of Park Plaza Hotels Limited for a net consideration of GBP 6.0 million (approximately NIS 35 million);
|
|
·
|
In December 2013 the consortium of shareholders of Uj Udvar, in which PC indirectly holds a 35% stake, completed the sale of the Uj Udvar project to a private investor for consideration of EUR 2.4 million.
|
|
·
|
On October 31, 2013 the consortium of shareholders of Dream Island, in which PC holds a 43.5% stake, has completed the sale of the Dream Island project land to the Hungarian State for approximately EUR 17 million. The proceeds of the transaction were used by the consortium to repay a proportion of the secured bank loan.
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in a vehicle which holds the interest in the Prague 3 project (“Prague 3”), a logistics and commercial center in the third district of Prague. The transaction values the asset at approximately EUR 11 million (NIS 53 million) and, as a result, further to related bank financing and other adjustments to the statement of financial position, PC has received cash proceeds of net EUR 7.6 million.
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in an entity which holds the interest in plot of land in Prague. The transaction values the asset at approximately EUR 1.9 million (NIS 9 million).The net cash consideration after deducting a liability to third party amounted to EUR 1.3 million.
|
|
·
|
On May 29, 2013 PC completed the sale of its 50% interest in an Investee which mainly holds interests in an office complex project located in Pune, India. The total transaction value was EUR 33.4 million and, PC has received gross cash proceeds of approximately EUR 16.7 million in line with its holding.
|
|
·
|
In June 2012, a fire event occurred at the Koregaon Plaza shopping center in Pune, India, which resulted in a temporary close-down of the shopping center. PC's subsidiary maintains comprehensive general liability and property insurance, including business interruption insurance. During 2013 PC received an amount of NIS 32 million from the insurance company.
|
|
·
|
On December 6, 2012, InSightec completed its issuance of Series C preferred shares for an aggregate amount of $30.9 million, which included $27.6 million invested by GE and $3.9 million invested by other investors. According to the terms of the transaction, GE and we converted all the existing shareholders loans that had been granted to InSightec into InSightec's series B-1 preferred shares in accordance with the terms of those loans. The transaction reflected a post-money valuation of InSightec of approximately $105.9 million (or pre-money valuation of $75 million and following the conversion of the loans as described above). As part of such transaction, and a series of agreements between InSightec and GE (more fully discussed in this Item 5 “Operating and Financial Review and Prospects- “Overview”)”) GE and InSightec signed the Cooperation Agreement that regulates the commercial relationship between the parties, including, among other things, with respect to product exclusivity, cooperation with respect to the development and sale of the parties' complementary products, distribution, marketing and sales, intellectual property rights and licenses, sale terms and conditions, and similar items. Under the Cooperation Agreement, InSightec is prohibited from developing systems that would be compatible with MRI systems manufactured by companies other than GE for a defined time period.
|
|
·
|
In August 2012 we entered into a NIS 75 million note structured transaction with a certain financial institution pursuant to which we purchased a NIS denominated zero-coupon credit linked note due to mature on October 2, 2013 (the "CLN") from the other party. The CLN referenced a portfolio of our notes (having a market value of NIS 75 million). The note portfolio was purchased by us under our note repurchase program that was announced on May 23, 2011 and in
the framework of the transaction we sold the note portfolio to other party. In consideration, the other party paid us the market value of the note portfolio and arranged for the issuance of the CLN at an issue price of NIS 37.5 million.
|
|
·
|
On February 20, 2013, the other parties notified us of the early termination of the transactions as a result of the decline in the market price of our outstanding Notes and consequent failure to meet the loan-to-value covenants under the agreements governing the transactions. Under the terms of the transactions, upon the early termination of the transactions as a result of a decline in the market price of the notes the financial institutions are permitted to sell the notes held by each of them as of the date of termination, and use the proceeds of the sales to redeem the respective credit-linked notes, either execute a cash settlement or physical settlement thereof and deliver to us the proceeds of the sale of the notes or the remainder of the notes not sold, in excess of the early termination amounts, which shall be retained by the financial institutions. The early termination amounts consist of the principal and interest (at the agreed-upon internal rate of return) under the respective credit-linked notes and unwind costs which are due to the financial institutions under the transactions. The sale of notes held by the financial institutions covered the termination amounts. The amounts of cash or notes to be returned to us will depend on the prices at which the notes are sold by the financial institutions. As discussed above in Item 5 “Operating and Financial Review and Prospects", in June 2012 the EPN Group sold 47 of the shopping centers it held to BRE DDR Retail Holdings LLC for a purchase price of $1.43 billion. The total proceeds from the transaction, including cash and other net working capital items less property level financing which was repaid by the EPN Group or assumed by the buyer at closing (in the amount of approximately $928 million), amounted to approximately $530 million. The remaining two shopping centers were sold in July 2012 for $41.0 million.
|
|
·
|
On February 23, 2012, InSightec and InSightec’s wholly owned subsidiary concluded a series of agreements with GEHC pursuant to which GEHC will provide financing to InSightec in the form of convertible notes up to a total of $13,750,000, bearing interest at a rate of 6% per annum or a rate equivalent to the interest applicable to the financing provided by us and Elbit Medical. The convertible notes will be due and payable by October 1, 2016, and will be convertible into Series B-1 Preferred Shares of InSightec, In addition, we and Elbit Medical entered into a series of agreements with InSightec and GEHC pursuant to which, among other things, upon Elbit Medical obtaining the approval of its shareholders the financing granted to InSightec by us and Elbit Medical during 2010 and 2011 will be amended to provide similar loan terms and security mechanisms as set forth in this funding agreement, so that Elbit Medical and us will receive convertible notes convertible on the same terms and up to the same amounts as the GEHC notes. The convertible notes issued to GEHC and Elbit Medical and the note that will be issued to us will be secured, pari passu, by floating charges over the assets of InSightec and its wholly owned subsidiary. As for the conversion of such loans to Series B1 shares of InSightec – see Item 4. “Information on the Company” above.
|
|
·
|
In April 2012, we completed the sale of all our shares in Elbit Trade & Retail Ltd. and all the interests in G.B. Brands, Limited Partnership, which was the franchisee of the Gap
TM
and Banana Republic
TM
brands, to Gottex for a purchase price of approximately NIS 54.3 million (including the payment for the inventory purchased by Gottex and certain working capital items included in the closing initial balance sheet), which amount is subject to adjustment based upon Elbit Trade & Retail Ltd.'s financial statements as of the closing date.
|
|
·
|
In March 2012, we entered into a share purchase agreement with PPHE for the sale of our holdings in certain subsidiaries which own a 50% interest in the following hotels in the Netherlands: the Park Plaza Victoria Amsterdam Hotel, the Park Plaza Utrecht Hotel, the Arthotel Amsterdam and the Park Plaza Airport Hotel. These hotels were jointly owned by us and PPHE and were managed by PPHE. The transaction reflected an asset value of €169 million (for all four hotels. The total net consideration payable to us was €26.5 million. In addition, approximately €58 million (approximately $75 million) of our subsidiaries’ share (50%) of banks loans was assumed by PPHE by virtue of the purchase of those subsidiaries and were eliminated from our consolidated balance sheet. The consideration was paid to us in May 2012 as follows: (i) €23 million in cash; (ii) 700,000 ordinary shares of PPHE, with a market price of approximately €2.0 million, based on the quotation of such shares’ price on the London Stock Exchange as of March 30, 2012; and (iii) an additional payment in the aggregate amount of up €1.5 million that shall be made on the fourth anniversary of the date of transfer and shall be subject to certain adjustments, based on the PPHE shares’ market price, as set forth in the agreement.
|
|
The following table sets forth the components of our cash flows statements for the periods indicated:
|
Year ended December 31,
|
||||||||||||||||
2014
|
2014
|
2013
|
2012
|
|||||||||||||
Convenience
translation in $ thousands
|
NIS
Thousands
|
NIS
Thousands
|
NIS
Thousands
|
|||||||||||||
Net cash provided by (used in) operating activities
|
72,293 | 281,135 | (16,873 | ) | (315,789 | ) | ||||||||||
Net cash provided by investing activities
|
10,067 | 39,150 | 354,517 | 1,455,511 | ||||||||||||
Net cash used in financing activities
|
(75,731 | ) | (294,518 | ) | (544,674 | ) | (1,152,882 | ) | ||||||||
Increase (decrease) in cash and cash equivalents
|
6,629 | 25,767 | (207,030 | ) | (13,160 | ) |
|
(i)
|
Cash flow from operating activities in 2014 included positive cash flow resulting from proceeds from sale of trading properties in an amount of NIS 214 million ($55 million) mostly from the sale of Kragujevac Plaza in Serbia.
|
|
(ii)
|
Cash flow from operating activities in 2013 included negative cash flow resulting from the cost of purchase of trading properties in an amount of NIS 11 million, mostly regarding the development of the Koregaon park in India.
|
|
(iii)
|
Cash flow from operating activities in 2012 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 80 million. Most of the acquisitions and investments in trading properties in 2012 were: India (Koregaon Park project) and Serbia (Krugajevac project).
|
|
(iv)
|
Cash flows from operating activities in 2014, 2013 and 2012 also included the proceeds from operations of our commercial centers, hotels and retail and image guided segments (which are included as cash flow from discontinued operations) less operating expenses of those segments (including research and development expenses, sales and marketing and general and administrative expenses attributable directly to those segments) as well as general and administrative expenses of our headquarters.
|
|
(i)
|
Proceeds from sale of property, plant and equipment, mainly PC’s aircraft amounted to NIS 7 million ($2 million).
|
|
(ii)
|
Purchase of property, plant and equipment and other assets in the amount of NIS 5 million ($1 million) mainly attributable to our hotel segment.
|
|
(iii)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 47 million (approximately $12 million).
|
|
(i)
|
Proceeds from sale of investment property in the Czech Republic in an amount of NIS 37.6 million.
|
|
(ii)
|
Proceeds from realization of joint ventures entities (Kharadi in India, Dream island and Uj Udvar in Hungary) in an amount of NIS 96 million.
|
|
(iii)
|
Proceeds from realization of long term deposits and loans in an amount of NIS 45 million, mainly attributable to PC's operations.
|
|
(iv)
|
Proceeds from sale of available for sale marketable securities net of purchase of available for sale marketable securities amounted to NIS 51 million.
|
|
(v)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 15 million mainly attributable to our hotel segment.
|
|
(vi)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 140 million.
|
|
(i)
|
Proceeds from sale of a Joint venture holding U.S. real estate properties (which are classified as discontinued operations) in an amount of NIS 874 million.
|
|
(ii)
|
Proceeds from realization of our Joint venture holding hotels in the Netherlands in the total amount of NIS 114 million.
|
|
(iii)
|
Proceeds from realization of long term deposits and loans in an amount of NIS 276 million, mainly attributable to the sale of the long term structures by PC.
|
|
(iv)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 12 million.
|
|
(v)
|
Investments in associates and other companies in an amount of NIS 27, mainly attributable to investment of the Group in InSightec.
|
(vi)
|
Proceeds from interest received from deposits in the amount of NIS 38 million.
|
(vii)
|
Proceeds from sale of available for sale marketable securities net of purchase of available for sale marketable securities amounted to NIS 73 million.
|
(viii)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 80 million.
|
|
(i)
|
Proceeds from transaction with non-controlling interests, net in an amount of NIS 55 million ($14 million) which is attributed to a rights issuance by PC as part of Amended PC Plan.
|
|
(ii)
|
Interest paid in cash by us in the amount of NIS 154 million ($39 million) on our borrowings (mainly notes issued by us and by PC and loans provided to our hotels and commercial centers).
|
|
(iii)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 205 million ($53 million), mainly attributable repayment of PC notes and repayments of loans provided to our operating commercial centers and our hotels.
|
|
(iv)
|
Proceeds from short-term credit in the amount of NIS 7 million ($2 million).
|
|
(i)
|
Proceeds from re-issuance of our notes in an amount of NIS 76 million.
|
|
(ii)
|
Interest paid in cash by us in the amount of NIS 98 million on our borrowings (mainly notes issued by PC and loans provided to our hotels and commercial centers).
|
|
(iii)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 420 million, mainly attributable repayment of PC notes and repayments of loans provided to our operating commercial centers and our hotels.
|
|
(iv)
|
Purchase of a derivative in the amount of NIS 8 million.
|
|
(v)
|
Repayment of short-term credit in the amount of NIS 86 million.
|
|
(i)
|
Proceeds from re-issuance of our notes to financial institutions in an amount of NIS 58 million.
|
|
(ii)
|
Repurchase of notes by us and PC in the amount of NIS 184 million.
|
|
(iii)
|
Interest paid in cash by us in the amount of NIS 347 million on our borrowings (mainly notes issued by us and PC and loans provided to our hotels and commercial centers).
|
|
(iv)
|
Repayment of borrowings, net of proceeds from loans in the amount of NIS 642 million, mainly attributable to the repayment of notes by us and by PC and repayments of loans provided to our operating commercial centers and our hotels.
|
|
(v)
|
Proceeds from selling derivatives in the amount of NIS 62 million.
|
|
(vi)
|
Proceeds from short-term credit in the amount of NIS 194 million, mainly attributable to new loans raised by PC during 2012 in order to finance the construction of its trading property.
|
|
(vii)
|
Repayment of short-term credit in the amount of NIS 242 million.
|
|
(viii)
|
Net cash flow used in discontinued financing activities amounted to NIS 52 million mainly attributable to repayment of loans attributable to our U.S. real estate properties.
|
2014
|
2013
|
2012
|
||||||||||||||||||||||
NIS million
|
%
|
NIS million
|
%
|
NIS million
|
%
|
|||||||||||||||||||
Current assets
|
489 | 13 | % | 694 | 15 | % | 1,042 | 15 | % | |||||||||||||||
Current liabilities
|
359 | 10 | % | 4,794 | 105 | % | 1,722 | 26 | % | |||||||||||||||
Non-current assets
|
3,173 | 87 | % | 3,870 | 85 | % | 5,700 | 85 | % | |||||||||||||||
Non-current liabilities
|
2,589 | 71 | % | 179 | 4 | % | 3,632 | 54 | % | |||||||||||||||
Shareholders’ equity (Deficiency):
|
||||||||||||||||||||||||
Attributable to our equity holders
|
232 | 6 | % | (1,033 | ) | (23 | )% | 289 | 4 | % | ||||||||||||||
Non-controlling interest
|
481 | 13 | % | 624 | 14 | % | 1,100 | 16 | % |
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
EI
|
Series H Notes issued to the public as part of the debt Arrangement
|
NIS 418 million (approximately $107 million)
|
NIS 447 million (approximately $115 million)
|
6% per annum, linked to the Israeli CPI.
|
●
One installment on May 31, 2018.
●
Interest payable by semi-annual installments commencing December 1, 2013.
|
Principal Security and Covenants
|
·
First ranking floating charge granted by the Company, over all the Company's assets
·
First ranking fixed pledges granted by each of the Company and our wholly owned subsidiary Elscint Holding and Investment NV ("EH"), which is holding, indirectly, our Romanian and Belgium hotels), over the current and future shares of EH and all rights associated therewith
.
·
First ranking fixed pledges granted by each of the Company and EH over all intercompany receivables and shareholders loans provided or that will be provided by us to EH.
·
First ranking fixed pledges granted by each of the Company and our wholly owned subsidiary EUL, which is holding our shares at PC, over the current and future shares of EUL and all rights associated therewith.
·
First ranking fixed pledges granted by each of the Company and EUL over all intercompany receivables and shareholders loans that may be provided by us to EUL.
·
Negative Pledge by each of the Company, EH and EUL, while with respect to EH the Negative Pledge shall apply to all its current and future assets and with respect to EUL the Negative Pledge applies to EUL's share in PC that have not already been pledged to Bank Hapoalim B.M. ("Bank Hapoalim"), including all rights associated therewith.
·
Corporate guaranty by each of EH and EUL, by which each of them guarantees the Company's obligations to the Series H and Series I Trustees.
It should be noted that the collaterals securing the Series I Notes are subordinated to the collaterals securing the Series H Notes and that all the Noteholders’ pledges are subordinated to the pledges granted to Bank Hapoalim or any successor thereof. It should be noted, further, that those pledges are recorded in Israel, the Netherlands and Luxemburg, where applicable. The pledges include exemptions allowing the disposition of the pledged assets so long as the Company is not in default under the Notes nor Material Adverse Event (as defined under the Notes) shall have been occurred.
|
||||
Other Information
|
Events of default include, among other things, the occurrence of event of default under the Notes or an event that would entitle the Trustees under the Notes or the Noteholders to accelerate and redeem the Notes, as well as cross default with the other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
EI
|
Series I public notes issued to the Public as part of the debt Arrangement
|
NIS 218 million
|
NIS 231 million
|
6% per annum, linked to the Israeli CPI.
|
Principal and accrued interest is paid in one installment on December 1, 2019.
|
Principal Security and Covenants
|
Second ranking floating charge over all the Company's assets
·
Second ranking fixed pledges granted by each of the Company and EH over the current and future shares of EH and all rights associated therewith.
·
Second ranking fixed pledges granted by each of the Company and EH over all intercompany receivables and shareholders loans provided or that will be provided by us to EH
.
·
Second ranking fixed pledges granted by each of the Company and EUL over the current and future shares of EUL and all rights associated therewith.
·
Second ranking fixed pledges granted by each of the Company and EUL over all intercompany receivables and shareholders loans that may be provided by us to EUL.
·
Negative Pledge by each of the Company, EH and EUL, while with respect to EH the Negative Pledge shall apply to all its current and future assets and with respect to EUL the Negative Pledge applies to EUL's share in PC that have not already been pledged to Bank Hapoalim B.M. ("Bank Hapoalim"), including all rights associated therewith.
·
Corporate guaranty by each of EH and EUL, by which each of them guarantees the Company's obligations to the Series H and Series I Trustees.
It should be noted that the collaterals securing the Series I Notes are subordinated to the collaterals securing the Series H Notes and that all the Noteholders’ pledges are subordinated to the pledges granted to Bank Hapoalim or any successor thereof. It should be noted, further, that those pledges are recorded in Israel, the Netherlands and Luxemburg, where applicable. The pledges include exemptions allowing the disposition of the pledged assets so long as the Company is not in default under the Notes nor Material Adverse Event (as defined under the Notes) shall have been occurred.
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among other things, the occurrence of an event of default under the Notes or an event that would entitle the Trustees under the Notes or the Noteholders to accelerate and redeem the Notes, as well as cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
EI
|
Bank Hapoalim B.M.
|
$47.8 million
|
$189 million
|
LIBOR + 5.1
|
One installment on February 20, 2017 subject to certain early mandatory prepayment as described below.
The loan bears interest of LIBOR + 3.8% (to be paid on a quarterly basis) per annum plus an additional 1.3% which shall accrue and be paid in a single installment on the maturity date of the loan principal.
|
Principal Security and Covenants
|
On February 20, 2014 we consummated a Refinancing Agreement with Bank Hapoalim that cancelled and replaced the previous loan agreement. Pursuant to the loan agreement, we have provided Bank Hapaolim the following pledges:
·
We have agreed that the existing collateral securing the then outstanding loan, namely, a first ranking pledge over 86 million shares of Plaza Centers which represent approximately 13% of Plaza's share capital, shall secure also the new loans under the Refinancing Agreement.
·
a pledge that has been granted by BEA Hotels N.V. ("BEA Hotels") over all the issued and outstanding share capital of our wholly owned indirect subsidiary, Astrid Hotel Holding B.V. ("AHH", which indirectly holds the Radisson Blu Astrid hotel and the Park Inn hotel in Antwerp, Belgium) and a pledge over any proceeds that my become due to it under shareholders loans provided by it to AHH.
·
a pledge that has been granted by BEA Hotels over 99% of the issued and outstanding share capital of our wholly owned indirect subsidiary, Bea Hotels Eastern Europe B.V. ("BHEE", indirectly holds the Radisson Blu Bucharest hotel in Bucharest, Romania), and a pledge over any proceeds that my become due to it under shareholders loans provided by it to BHEE.
·
a pledge that has been granted by BEA Hotels over any proceeds that my become due to it under shareholders loans provided by it to Astridplaza N.V. ("Astridplaza")
.
·
a pledge that has been granted by the Company over any proceeds that my become due to it under shareholders loans provided by it to Astridplaza
.
In addition, BEA Hotels, AHH and BHEE had executed certain direct undertakings in favor of Bank Hapoalim,
inter alia
, not to engage in any other business or to incur any further indebtedness not in the ordinary course of their business or as allowed under such undertakings, not to change the holdings structure, to assume certain reporting obligations etc., all as set forth in such undertakings.
The loan agreement contains a covenant that the ratio between the outstanding amount of the loan to the value of the pledges assets ("LTV") will not exceed 85% (or 75% following the sale of the Belgium and Romanian hotels).
|
||||
Additional information in respect of Mandatory provision
|
·
In the case of the sale of all of the rights or the sale of the control of BHEE or Bucaresti Turism SA ("BUTU") or BUTU's rights in the Radisson Blu hotel in Bucharest, the Company will undertake to prepay the Bank an amount of US$32 million; in the case of the sale of part of those rights, after which the Company retains control over the asset – a proportionate share of such amount. The balance of the net cash flow from the sale (if any) will be used by the Company for their on-going operations.
·
In the case of the sale of all of the rights or the sale of the control over AHH or Astridplaza that holds the hotels in Belgium, the Company will undertake to prepay the Bank an amount of US$5 million; in the case of the sale of part of the rights in the hotels in Belgium, after which the Company retains control of the assets – a proportionate share of such amount. The balance of the net cash flow from the sale (if any) will be used by the Company for their on-going operations.
·
In the case of a sale of Plaza Centers' shares which are held by the Company – the Company will undertake that the full net cash flow attributed to the shares held by the Company and pledged to the Bank will be used to prepay the loan to the Bank.
·
If and in the event that the Company shall prepay its debt to the Noteholders, in whole or any part thereof, from the Company's internal sources (i.e., other than from a raising of capital and/or alternative debt), then the Company shall prepay the Bank an amount equal to the amount paid to the Noteholders on such date multiplied by the ratio between the Company's debt to the Bank and the Company's total debt to the Bank and to the Noteholders as of such date.
·
In the case of a distribution as defined in the Israeli Companies Law, including payment of a dividend in any manner to the Company's shareholders, the Company shall prepay the Bank an amount equal to the amount paid to the shareholders on such date multiplied by the ratio between the Company's debt to the Bank and the total debt of the Company to the Bank and to the Noteholders as of such date.
In addition, Bank Hapoalim has been allotted shares constituting 3% of the Company's issued and outstanding share capital on a fully diluted basis immediately after the consummation of the Debt Restructuring.
|
Borrower
|
Lender
|
Adjusted Original Amount following debt restructuring
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
PC
|
Series A Notes issued to the public
|
NIS 302 million (approximately $77.65 million)
Interest payments accrued and not paid until the end of 2013 were added to the principal and will be paid together with it.
|
NIS 251.6 million* (approximately $64.7 million)
**Adjusted par value of Notes NIS 289.5 million
|
●
6% per annum, linked to the Israeli CPI.
|
●
The Principal Balance of the Notes shall be called for repayment in five (5) equal payments to be paid as follows: on December 31, 2017, on July 1, and December 31, 2018 and on July 1, 2019 and 2020
●
Notwithstanding the above, in the event that PC did not repay the Notes by December 1, 2016 the Principal of the Notes for the Three Series’ in a total amount of at least NIS 434,000,000 excluding linkage differentials, and including repayment of the Principal of Notes (Series A) in a total of at least NIS 92,032,137 (excluding linkage differentials) then the repayment dates of the Unpaid Principal Balance of the Notes (Series A) shall be automatically advanced by one year in relation with the repayment dates
●
The interest shall be paid in biannual payments on July 1
st
and December 31
st
of each of the years between 2015 and 2019 and on July 1, 2020, each payment for the interest accrued in the six months ending on the date preceding each payment date as stated and subject to prepayment and deferral of payments
|
Principal Security and Covenants
|
Negative pledge on all of the real estate assets of the Company and its subsidiaries.
"
Net asset value" coverage ratio - In case the up-to-date and adjusted "net asset value" coverage ratio against debt is lower than 118% ("Minimal Coverage Ratio") in two consecutive examination dates after the first examination date (in which a decline under the minimal coverage ratio was created) then cause for immediate prepayment will be created. In the period in which the coverage ratio declined below the minimal coverage ratio for the first time and as long as did not revert to the minimal ratio, the Company and the subsidiaries are not allowed to dispose of real estate assets or perform new investments in new real estate assets except for the investment of money in existing projects, limited to a ratio of no more than 20% of the construction cost approved by the lending bank, and subject to the foregoing LTC ratios.
The "net asset value" coverage ratio is the ratio between: (a) the value of all assets including balances of cash and cash equivalents deducting preceding / specific bank debts, and (b) the Group’s debts that are not preceding / specific and/or debts subordinate to the debts included in the restructuring.
In the event that the Coverage Ratio is lower than the Minimum Coverage Ratio, then as from the first Examination Date on which a breach of the Coverage Ratio covenant has been established and for as long as the breach is continuing, the Company shall not perform any of the following: (a) a sale, directly or indirectly, of a Real Estate Asset owned by the Company or a Subsidiary, with the exception that it shall be permitted to transfer Real Estate Assets in performance of an obligation to do so that was entered into prior to the said Examination Date, (b) investments in new Real Estate Assets; or (c) an investments that regards an existing project of the Company or of a Subsidiary, unless it does not exceed a level of 20% of the construction cost of such project (as approved by the lending bank of these projects) and the LTC Ratio of the project remains equal to or greater than the Minimum LTC Ratio.
|
||||
Other Information
|
The Notes have been registered for trade on the TASE.
Prepayments – PC is allowed at any time to prepay any debt balance at the adjusted par value of the note, but it will have to execute prepayment upon disposal, raising new financial debt or refinancing of assets (see Item 5 - "Operating and Financial Review and Prospects").
The Notes are not registered under the Securities Act.
|
Borrower
|
Lender
|
Adjusted Original Amount
Following debt restructuring
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
PC
|
Series B Notes issued to the public
|
NIS 610.1 million (approximately $156.9 million)
Interest payments accrued and not paid until the end of 2013 were added to the principal and will be paid together with it.
|
NIS 455.3 million* (approximately 117.1 million)
**Adjusted par value of Notes NIS 289.5 million
|
6.9% per annum, linked to the
Israeli CPI
|
The Unpaid Principal Balance of the Notes shall be called for repayment in two (2) equal payments to be paid on July 1, 2018 and July 1, 2019 (with the first payment being performed on July 1, 2018 and the final payment being performed on July 1, 2019).
Notwithstanding the above, in the event where the Company did not pay, by December 1, 2016 the Principal of the Notes for the Three Series’ in a total amount of at least NIS 434,000,000 excluding linkage differentials and including repayment of principal of Notes (Series B) in a total amount of at least NIS 305,000,000 (excluding linkage differentials), then the repayment dates of the Unpaid Principal Balance of the Notes (Series B) shall be automatically advanced by one year in relation with the repayment dates
The interest shall be paid for the Unpaid Principal Balance in biannual payments on July 1
st
and December 31
st
of each of the years between 2015 and 2018 and on July 1, 2019, each payment for the interest accrued in the six months ending on the date preceding each payment date as stated, and subject to prepayment and deferral of payments.
|
Principal Security and Covenants
|
Negative pledge on all of the real estate assets of the Company and its subsidiaries.
"
Net asset value" coverage ratio - In case the up-to-date and adjusted "net asset value" coverage ratio against debt is lower than 118% ("Minimal Coverage Ratio") in two consecutive examination dates after the first examination date (in which a decline under the minimal coverage ratio was created) then cause for immediate prepayment will be created. In the period in which the coverage ratio declined below the minimal coverage ratio for the first time and as long as did not revert to the minimal ratio, the Company and the subsidiaries are not allowed to dispose of real estate assets or perform new investments in new real estate assets except for the investment of money in existing projects, limited to a ratio of no more than 20% of the construction cost approved by the lending bank, and subject to the foregoing LTC ratios.
The "net asset value" coverage ratio is the ratio between: (a) the value of all assets including balances of cash and cash equivalents deducting preceding / specific bank debts, and (b) the Group’s debts that are not preceding / specific and/or debts subordinate to the debts included in the restructuring.
In the event that the Coverage Ratio is lower than the Minimum Coverage Ratio, then as from the first Examination Date on which a breach of the Coverage Ratio covenant has been established and for as long as the breach is continuing, the Company shall not perform any of the following: (a) a sale, directly or indirectly, of a Real Estate Asset owned by the Company or a Subsidiary, with the exception that it shall be permitted to transfer Real Estate Assets in performance of an obligation to do so that was entered into prior to the said Examination Date, (b) investments in new Real Estate Assets; or (c) an investments that regards an existing project of the Company or of a Subsidiary, unless it does not exceed a level of 20% of the construction cost of such project (as approved by the lending bank of these projects) and the LTC Ratio of the project remains equal to or greater than the Minimum LTC Ratio.
|
||||
Other Information
|
The Notes have been registered for trade on the TASE.
Prepayments – PC is allowed at any time to prepay any debt balance at the adjusted par value of the note, but it will have to execute prepayment upon disposal, raising new financial debt or refinancing of assets (see Item 5 - "Operating and Financial Review and Prospects").
The Notes are not registered under the Securities Act.
|
Borrower
|
Lender
|
Adjusted Original Amount
Following debt restructuring
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
PC
|
Private note issuance to Polish institutional investors
|
PLN 62.76 million
Interest payments accrued and not paid until the end of 2013 were added to the principal and will be paid together with it.
|
PLN 56.5 million
|
6 Month WIBOR + 6%
|
Three years maturity, with balloon payment at the end of the maturity period.
Interest payable by semi-annual installments commencing May 2011 through November 2013.
|
Principal Security and Covenants
|
·
Certain circumstances shall be deemed events of default giving the note holders the right to demand early redemption, which include, inter alia, the following covenants (in addition to the abovementioned covenant under debt restructuring):
·
Breach of the Cash Position as a result of the payment of dividends or the buy-back program falling below €50 million. “Cash Position” means the sum of cash and cash equivalent of: cash, short and long interest bearing deposits with banks or other financial institutions, available for the sale of marketable securities, and restricted cash, calculated based on the consolidated financial statements.
·
Breach of financial ratios – the Net Capitalization Ratio exceeds 70%; "Net Capitalization Ratio" is the Net Debt divided by the Equity plus the Net Debt, as calculated by PC's auditor; “Net Debt” mean PC's total debt under: loans and borrowings, lease agreements, notes, other debt securities and other interest bearing or discounted financial instruments in issue, less related hedge derivatives, cash and cash equivalents, short and long-term interest bearing deposits with banks or other financial institutions, available for sale marketable securities and restricted cash, calculated based on the consolidated financial statements.
·
Breach of Minimum Coverage Ratio – a breach of the Minimum Coverage Ratio has occurred and continued throughout a period comprising two (2) consecutives Examination Dates following the first Examination Date on which such breach has been established;
·
Incurrence of Financial Indebtedness by PC - PC incurred new Financial Indebtedness, unless certain conditions are met
·
Breach of PC’s negative pledge
·
Establishment of encumbrances by Subsidiaries – a Subsidiary created any Encumbrance on any of its assets, unless the relevant Encumbrance meets one of the conditions detailed under restructuring plan
·
Occurrence of Non-Permitted Disposal - the Issuer:
(a) procured or permitted the occurrence of an Exercise Event with respect to any Real Estate Asset of the Group where the Net Cash Flow resulting from such Disposal was not used for Mandatory Prepayment upon Exercise Event in accordance with Clause 8 above; or
(b) performed or permitted a Disposition, directly or indirectly, or a refinancing of the Shopping Malls, where the cumulative Net Cash Flow resulting from such Disposition or refinancing amounted to less than EUR 70 million. If the Disposition or the refinancing occurs only with respect to some but not all of the Shopping Malls, then such Disposition or refinancing shall constitute an Event of Default unless the Net Asset Value of the Unsold Shopping Malls plus the aggregate Net Cash Flows received from the intended Disposition or refinancing and from any previous Disposition or refinancing of a Shopping Mall amounts to at least EUR 70 million;
·
Occurrence of Non-Permitted Investment - PC made an investment in new or existing Real Estate Assets of the Group where following such investment the Cash Reserve was less than the Minimum Cash Reserve or the Coverage Ratio was less than the Minimum Coverage Ratio;
·
Exclusion from trading or listing of PC’s shares;
·
Failure to repay material debt – PC fails to repay any matured and undisputable debt in the amount of at least €100 million within 30 days of its maturity;
·
Distributions to the shareholders by PC – PC made a Distribution, despite the fact that (i) less than 75% of the outstanding balance of the nominal value of the Plan Debt Securities as per the Plan Amendment Date has been repaid or the Coverage Ratio on the last Examination Date prior to such Distribution was less than 150% following such Distribution, or (ii) no Majority consented to the proposed Distribution. Notwithstanding the aforesaid, in the event an Additional Capital Injection occurs, then after one year following the date of the Additional Capital Injection, no restrictions other than those under the applicable law shall apply to dividend distributions in an aggregate amount up to 50% of such Additional Capital Injection.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Koregaon Park
|
AXIS, SBH (India)
|
INR 2,040 million - credit facility
|
INR 1,699 million
|
Base rate+3.25%
|
Maturity of the loan is in the first quarter of 2021.
|
Principal Security and Covenants
|
Assignment of all rights under insurance proceeds.
|
||||
Other Information
|
Corporate guarantee of PC on part of loan, totaling EUR 14.2 million.
Pledge on assets of the project company.
|
Borrower
|
Lender
|
Facility amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Liberec Plaza
|
MKB BANK Zrt., ERSTE Bank AG
|
€25 million
|
€20.5 million
|
3 months Euribor+ 1.5% per annum
|
Repayment schedule:
EUR 200,000 p.a. principal payments. Maturity is at 31 October, 2018.
|
Principal Security and Covenants
|
Registered first ranking mortgage and purchase option right on the real estate;
Assignment of all rights under relevant valid insurance policies;
Share pledge agreement;
First ranking pledges on the borrowers’ accounts;
Prompt collection right to debit any of the bank accounts of the borrower;
Maintain Debt Service Cover Ratio of 1.15 (in place but waiver for full term);
Loan to Value ratio of 80% (in place but waiver for full term); and
Corporate guarantee of PC for Debt Service.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount *
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
A: Valley View
B: Primavera Tower
|
A: OTP Bank Nyrt.
B: MKB Bank Zrt
|
A: €8.2 million
B: €1.5 million
|
A: €8.2 million
B: €1.5 million
|
A:Euribor + 6% p.a.
B: Euribor + 4.5% p.a.
|
A: Expired. Only interest payments. Negotiations ongoing.
B: Expired March 31, 2012. Only interest payments. Approval to sell project for EUR 240,000 and the rest will be written down by the bank.
|
Principal Security and Covenants
|
First ranking mortgage on the properties.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Suwalki Plaza
|
ING Bank Slaski S.A
|
€33.5 million
|
€30.0 million
|
3 months Euribor + 1.65% per annum
|
Expires December 29, 2020. Quarterly payments with fixed principal amounts and balloon payment at maturity.
|
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurance, guaranties and agreements.
Maintain a debt service cover ratio of 1.2.
Loan to value ratio of 0.7.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Zgorzelec Plaza
|
Bank Zachodni WBK S.A.
|
€22.3 million
|
€22.0 million
|
3 months Euribor + 2.75% per annum for
|
Expired June 30, 2014. Negotiations about extension ongoing.
|
Principal Security and Covenants
|
A first ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Maintain a debt service cover ratio of 1.15.
Loan to value ratio of 0.75.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Torun Plaza
|
Bank PEKAO S.A
|
€50.1 million
|
€47.0 million
|
3 months Euribor + 3% per annum
|
Expires December 31, 2017. Quarterly payments with fixed principal amounts and balloon payment at the end.
|
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Maintain a debt service cover ratio of 1.25.
Loan to value ratio of 0.7.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2014
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV
|
Bank Hapoalim
|
€24.4 million
|
€15.0 million
|
Euribor + 1.75%
|
Semi-annual principal repayment of €625,000 to be paid commencing December 31, 2007 and ending on December 31, 2016.
€12,500,000 to be paid at the end of the term.
Interest is payable on a semi-annual basis.
|
Principal Security and Covenants
|
First ranking pledge on Astrid Plaza shares
.
First ranking mortgage over Astrid Plaza's real estate.
A mortgage mandate over Astrid Plaza's real estate which was converted into a mortgage.
First ranking pledge on a reserve fund of €1 million, which is blocked on a deposit account.
Required to maintain a debt service cover ratio and minimum revenue per available room (RevPar).
|
||||
Other Information
|
We guaranty Astrid Plaza's undertakings under the loan agreement. The guaranty is unlimited in amount.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV, for the Park Inn Hotel
|
Fortis Bank
|
€7.5 million
|
€5.3 million
|
2.436%-
2.963%
|
Repayment over a 15 year period.
|
Principal Security and Covenants
|
A first ranking mortgage on the Park Inn hotel and its assets.
Subordination of loan granted by us to the borrower and undertaking not to reduce such loan below a given amount.
Compliance with certain financial and operational covenants.
Undertaking to maintain an equity/asset ratio.
We have furnished the bank with a guarantee up to the amount of €1.37 million.
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
|
·
|
In the framework of the transactions for the sale of our holdings in certain subsidiaries or projects, or the realization and sale of certain business activities, we have undertaken to indemnify the respective purchasers for any losses and costs incurred in connection with the sale transactions. The indemnifications usually include: (i) Indemnifications in respect of integrity of title on the assets and/or the shares sold (i.e.: that the assets and/or the shares sold are owned by us and are free from any encumbrances and/or mortgage and the like). Such indemnifications generally survived indefinitely and are capped to the purchase price in each respective transaction. (ii) Indemnifications in respect of other representations and warranties included in the sales agreements (such as: development of the project, responsibility to defects in the development project, tax matters, employees and others). Such indemnifications are limited in time and are generally caped to certain percentages of the purchase price.
|
|
·
|
As part of a lease agreement executed in July 2007 between us and the Israel Land Administration for a long-term lease of land in Tiberius, Israel, we had undertaken to finalize the construction until July 2013. We have provided the Israel Land Administration with two bank guarantees in the aggregate amount of NIS 14 million linked to the increase in the Israeli consumer price index in order to secure our undertakings included in the lease agreement. As a security for the guarantees, we pledged deposits in the same amount. In accordance with the terms of the lease agreement, in the event either of the parties does not comply with the terms of the agreement, the agreement can be terminated by the other party.
|
|
·
|
A former subsidiary of PC incorporated in Prague ("Bestes"), which was sold in June 2006 is a party to an agreement with a third party ("Lessee"), for the lease of commercial areas in a center constructed on property owned by it, for a period of 30 years, with an option to extend the lease period by an additional 30 years, in consideration for €6.9 million (approximately $8.5 million), which has been fully paid. According to the lease agreement, the Lessee has the right to terminate the lease, subject to fulfillment of certain conditions set forth in the agreement. As part of the agreement for the sale of Bestes to Klepierre in June 2006, it was agreed that PC will remain liable to Klepierre in case the Lessee terminates its contract. PC’s management is of the opinion that this commitment will not result in any material amount due to be paid by it.
|
|
·
|
On November 21, 2010, Elbit Medical's shareholders approved the assignment of our indemnification obligations in favor of Gamida and its affiliated parties to Elbit Medical, without a right of reimbursement from us. Elbit Medical also undertook to indemnify Gamida and Teva Pharmaceutical Industries Ltd., as the shareholders of the joint venture Gamida Cell - Teva Joint Venture Ltd. for damages on certain matters. These indemnification undertakings of Elbit Medical replaced similar undertaking formerly made by us to these parties.
|
|
·
|
As required under the lease agreement for our new executive offices, in 2013 we provided bank guarantees to secure our compliance with the terms of the agreement in the total amount of approximately NIS 0.6 million.
|
|
·
|
We have guaranteed certain of our Project Companies’ obligations under the loans agreements with third parties up to an aggregate amount of NIS 419 million. In addition, PC is a guarantor to obligations under loan agreements of its project companies with third parties up to an aggregate amount of NIS 169 million.
|
|
·
|
We have undertaken to provide guarantees for the benefit of the Israeli tax authority to secure Elbit Fashion's payment of customs duties and VAT, which are paid by way of direct debit authorization by Elbit Fashion, in the event that a debit authorization is rejected.
|
|
·
|
We have undertaken to provide bank guarantees and corporate guarantees for the benefit of the Israeli Customs Authority in the framework of a dispute between Elbit Trade and Retail Ltd. (which was sold to Gottex) and Elbit Fashion and the Customs Authority regarding customs duties charged with respect to the importation of the Mango and GAP brands to Israel. The Customs Authority had agreed that the collection of the disputed Customs charges will be put on hold until the resolution of the Company's motion, subject to the deposition of the aforementioned guarantees.
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
Payments due by Period
(in NIS thousands)
|
||||||||||||||||||||
Contractual Obligations as of December 31, 2014
|
Total
|
Less than 1
Year
|
2-3 Years
|
4-5 Years
|
After 5 Years
|
|||||||||||||||
Long-Term Debt
(1)
|
3,345,408 | 345,745 | 1,566,644 | 1,306,931 | 126,088 | |||||||||||||||
Total
|
3,345,408 | 345,745 | 1,566,644 | 1,306,931 | 126,088 |
(1)
|
Long term debt includes interest that we will pay from January 1, 2015 through the loan maturity dates. Part of our loans bear variable interest rates and the interest presented in this table is based on the LIBOR rates known as of December 31, 2014. Actual payments of such interest (as presented in our financial statements) are significantly dependent upon the LIBOR rate prevailing as of the date of payment of such interest. For additional information in respect of the long term debt, see “Item 5.B. Liquidity and Capital Resources - Other Loans."
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
NAME
|
AGE
|
POSITION
|
||
Ron Hadassi
|
50
|
Chairman of the Board of Directors and Director
|
||
Alon Bachar
|
45
|
Director
|
||
Zvi Tropp
(1) (2)
|
75
|
External Director
|
||
Eliezer Avraham Brender
(1)
|
37
|
Director
|
||
Shlomi Kelsi
(1)
(2)
|
43
|
Director
|
||
Elina Frenkel Ronen
(1) (2)
|
41
|
External Director
|
||
Yoav Kfir
(1)
|
42
|
Director
|
||
Boaz Lifschitz
|
46
|
Director
|
||
Nadav Livni
|
41
|
Director
|
||
Ran Shtarkman
(3)
|
47
|
CEO of PC and former Co-Chief Executive Officer of the Company until 2012
|
||
Doron Moshe
|
44
|
Acting Chief Executive Officer and Chief Financial Officer
|
||
Zvi Maayan
(4)
|
48
|
General Counsel
|
(1)
|
Member of the audit committee
|
(2)
|
Member of the compensation committee
|
(3)
|
Mr. Shtarkman has served us notice of his resignation, to enter into effect July 1, 2015
|
(4)
|
Mr. Maayan has served us notice of his resignation, to enter into effect July 1, 2015
|
B.
|
COMPENSATION OF DIRECTORS AND OFFICERS
|
Name and Principal Position
(1)
|
Salary Cost (NIS Thousands)
(2)
|
Consultancy Fees (NIS Thousands)
|
Bonus (NIS Thousands)
(3)
|
Equity-Based
Compensation
(NIS Thousands)
(4)
|
Total (NIS Thousands)
|
|||||||||||||||
Ron Hadassi
Chairman of the Board and former acting CEO
(5)
|
516 | 770 | - | 715 | 2,001 | |||||||||||||||
Shimon Yitzhaki
Former Chairman of the Board
(6)
|
2,398 | - | - | 101 | 2,499 | |||||||||||||||
Ran Shtarkman
CEO of Plaza Centers N.V.
|
2,557 | - | 93 | 2,650 | ||||||||||||||||
Yaron Carmon
CEO of Elbit Fashion Ltd.
(7)
|
1,196 | - | 702 | - | 1,898 | |||||||||||||||
Doron Moshe
CFO and Acting CEO
|
1,176 | - | - | 150 | 1,326 |
(1)
|
Unless otherwise indicated herein, all Covered Executives are employed on a full-time (100%) basis. The positions of the Covered Executives in this table represent their position as of the date of this filling.
|
(2)
|
Salary cost includes the Covered Executive's gross salary plus payment of social benefits made by the Company on behalf of such Covered Executive. Such benefits may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (
e.g.,
Managers' Life Insurance Policy), education funds (referred to in Hebrew as “
keren hishtalmut
”), pension, severance, risk insurances (
e.g.,
life, or work disability insurance), payments for social security and tax gross-up payments, vacation, car, medical insurances and benefits, convalescence or recreation pay and other benefits and perquisites consistent with the Company’s policies.
|
(3)
|
Represents annual bonuses granted to the Covered Executives based on formulas set forth in their respective employment agreements.
|
(4)
|
Represents the equity-based compensation expenses recorded in the Company's consolidated financial statements for the year ended December 31, 2014 based on the options’ grant date fair value in accordance with accounting guidance for equity-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 2R to our consolidated financial statements included in this annual report on Form 20-F for the year ended December 31, 2014.
|
(5)
|
Mr. Hadassi devoted 90% of his business hours to the affairs of the Company during 2014.
|
(6)
|
Mr. Yitzhaki devoted 90% of his business hours to the Company. He ceased service as an office holder on February 20, 2014.
A significant part of Mr. Yizhaki's cost during 2014 represent notice period that Mr. Yitzhaki was entitled to in accordance with the term of his employment agreement.
|
(7)
|
Mr. Carmon was an office holder under the Companies Law, but not an executive officer as such term is defined in 17 CFR Section 240.3b-7.
|
|
·
|
A fixed cash fee of NIS 80,000 per month (the “Fixed Compensation”), reflecting a scope of 90% of Mr. Hadassi’s business hours (based on a rate of NIS 89,000 per a full-time position).
|
|
·
|
Additional payments, benefits and expenses, including a company car and related expenses, income tax and VAT in the total amount of 50% of the Fixed Compensation, including any applicable taxes deriving from the Fixed Compensation and benefits. Notwithstanding the foregoing, any amounts of VAT refundable to (or subject to offset by) the Company shall be in addition to the Fixed Compensation and such 50% addition.
|
|
·
|
An annual cash bonus, to be determined by the Compensation Committee and Board of Directors in accordance with the Company’s Compensation Policy, which shall in no event exceed an amount equal to the Fixed Compensation payable for 3.5 months of continued service. Mr. Hadassi shall not be entitled to a bonus or other variable compensation due to his success in meeting personal targets or discretionary bonuses.
|
|
·
|
Options exercisable in to 5,703,793 ordinary shares, no par value, of the Company, constituting approximately1.0% of the Company's issued and outstanding share capital on a fully diluted basis with a vesting period of 3 years, subject to Mr. Hadassi’s continued service with the Company.
|
|
·
|
These compensation terms shall be in effect until March 21, 2017, and shall be subject to annual review by the Compensation Committee, which shall determine if such terms require updating pursuant to the Company’s requirements and business. Any modification or extension of such terms shall be made pursuant to the requisite corporate approvals and subject to Mr. Hadassi’s annual re-election as a Director and continued appointment as Chairman.
|
|
·
|
Mr. Hadassi shall be entitled to a period of notice prior to termination of his rights to receive the aforementioned compensation, calculated as follows: If notice of such termination is delivered during Mr. Hadassi’s first year of service – one month’s notice; during Mr. Hadassi’s second year of service – one and a half months’ notice; during Mr. Hadassi’s third year of service and thereafter – two months’ notice.
|
|
·
|
Mr. Hadassi may be entitled to receive a retirement bonus up to an amount equal to the Fixed Compensation payable for 4 months of continued service, calculated as follows: If notice of termination of Mr. Hadassi’s right to receive the aforementioned compensation is delivered during Mr. Hadassi’s first year of service – an amount equal to the Fixed Compensation payable for 2 months of continued service; If notice of termination is delivered during Mr. Hadassi’s second year of service – an amount equal to the Fixed Compensation payable for 3 months of continued service; If notice of termination is delivered during Mr. Hadassi’s third year of service and thereafter – an amount equal to the Fixed Compensation payable for 4 months of continued service.
|
|
·
|
Mr. Hadassi shall be covered under the Company's Directors and Officers Liability insurance policies and the Company's indemnification undertaking shall remain valid and binding and shall not be changed, cancelled or nullified by virtue of the aforementioned engagement.
|
|
·
|
It was clarified that Mr. Ron Hadassi shall be entitled to no further compensation for his services as our Acting Chief Executive Officer.
|
C.
|
BOARD PRACTICES
|
D.
|
EMPLOYEES
|
E.
|
SHARE OWNERSHIP
|
1
|
Not including options to purchase 95,063 of our ordinary shares, the grant of which was approved for the Chairman of our Board, but which have not been awarded to our Chairman as of the date hereof. For further detail, see below under “Incentive Plan for the Chairman of our Board, Mr. Ron Hadassi”.
|
A.
|
MAJOR SHAREHOLDERS
|
Name and Address
|
Number of Shares Beneficially Owned
|
Approximate Percentage of Shares
|
||||||
York Capital Management Global Advisers LLC and/or certain funds and/or accounts managed by it or its affiliates
(1)
|
5,447,850 | 19.7 | % | |||||
Davidson Kempner Capital Management LP and/or certain funds and/or accounts managed by it or its affiliates
(2)
|
3,943,584 | 14.3 | % | |||||
All officers and directors as a group
|
14,895 | (3) | 0.02 | % |
(1)
|
Based on information received from the shareholders on March 10, 2015.
|
(2)
|
Based on information received from the shareholders on March 26, 2015.
|
(3)
|
Includes options to purchase ordinary shares that were vested on March 10, 2015 or that were scheduled to vest within the following 60 days, but does not include options to purchase 95,063 of our ordinary shares, the grant of which was approved for the Chairman of our Board, but which have not been awarded to our Chairman as of the date hereof. For further detail, see Item 6E. above under “Incentive Plan for the Chairman of our Board, Mr. Ron Hadassi”.
|
B.
|
RELATED PARTY TRANSACTIONS
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
B.
|
SIGNIFICANT CHANGES
|
A.
|
OFFER AND LISTING DETAILS
|
NASDAQ
|
TASE
|
|||||||||||||||
Year Ended December 31,
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||||||||||
2014
|
26.4 | 1.25 | 26.48 | 1.21 | ||||||||||||
2013
|
70 | 13.8 | 68.2 | 14.6 | ||||||||||||
2012
|
66.4 | 36 | 64.6 | 34.8 | ||||||||||||
2011
|
279.4 | 39.6 | 254.8 | 38.6 | ||||||||||||
2010
|
495.2 | 241 | 501.6 | 247.4 |
NASDAQ
|
TASE
|
|||||||||||||||
Financial Quarter
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||||||||||
2015
|
||||||||||||||||
Q1
|
2.14 | 1.29 | 2.09 | 1.32 | ||||||||||||
Q2 (through April 12, 2015)
|
1.5 | 1.22 | 1.46 | 1.21 | ||||||||||||
2014
|
||||||||||||||||
Q1
|
26.40 | 3.20 | 26.48 | 3.42 | ||||||||||||
Q2
|
4.69 | 3.40 | 4.68 | 3.38 | ||||||||||||
Q3
|
4.40 | 2.97 | 4.38 | 2.94 | ||||||||||||
Q4
|
3.00 | 1.25 | 2.93 | 1.21 | ||||||||||||
2013
|
||||||||||||||||
Q1
|
70 | 28.6 | 68.2 | 30.6 | ||||||||||||
Q2
|
48.4 | 40.2 | 48 | 40.2 | ||||||||||||
Q3
|
42.4 | 20.4 | 40.8 | 20.4 | ||||||||||||
Q4
|
25.6 | 13.8 | 24.4 | 14.6 | ||||||||||||
NASDAQ
|
TASE
|
|||||||||||||||
Month
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||||||||||
April 2015 (through April 28)
|
1.5 | 1.22 | 1.46 | 1.21 | ||||||||||||
March 2015
|
1.76 | 1.29 | 1.73 | 1.30 | ||||||||||||
February 2015
|
1.81 | 1.67 | 1.73 | 1.64 | ||||||||||||
January 2015
|
2.14 | 1.73 | 2.09 | 1.65 | ||||||||||||
December 2014
|
1.91 | 1.25 | 1.92 | 1.21 | ||||||||||||
November 2014
|
2.60 | 1.95 | 2.54 | 1.95 | ||||||||||||
October 2014
|
3.00 | 2.54 | 2.93 | 2.50 |
B.
|
PLAN OF DISTRIBUTION
|
C.
|
MARKETS
|
D.
|
SELLING SHAREHOLDERS
|
E.
|
DILUTION
|
F.
|
EXPENSES OF THE ISSUE
|
A.
|
SHARE CAPITAL
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
·
|
the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;
|
|
·
|
some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
|
|
·
|
the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.
|
|
·
|
refrain from any conflict of interest between the performance of his duties for the company and the performance of his other duties or his personal affairs
|
|
·
|
refrain from any activity that is competitive with the company;
|
|
·
|
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and
|
|
·
|
disclose to the company any information or documents relating to a company’s affairs which the director or officer has received due to his position as such.
|
(i)
|
A breach of the duty of care
vis-a-vis
us or
vis-a-vis
another person;
|
|
(ii)
|
A breach of the duty of loyalty
vis-a-vis
us, provided that the director or officer acted in good faith and had reasonable basis to believe that the act would not harm us;
|
(iii)
|
A monetary obligation imposed on him in favor of another person;
|
|
(iv)
|
Reasonable litigation expenses, including attorney fees, incurred by the director or officer as a result of an administrative enforcement proceeding instituted against him. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 1968, as amended (the "Securities Law") and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees; or
|
|
(v)
|
Any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our directors or officers.
|
|
(i)
|
Any financial liability he incurs or imposed on him in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court, provided that any undertaking to indemnify be restricted to events that, in the opinion of the board of directors, are anticipated in light of our actual activity at the time of granting the undertaking to indemnify and be limited to a sum or measurement determined by the board of directors to be reasonable under the circumstances;
|
|
(ii)
|
Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he was ordered to pay by a court, within the framework of proceedings filed against him by or on behalf of us, or by a third party, or in a criminal proceeding in which he was acquitted, or in a criminal proceeding in which he was convicted of a felony which does not require a criminal intent; and
|
|
(iii)
|
Reasonable litigation expenses, including legal fees he incurs due to an investigation or proceeding conducted against him by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offense which does not require criminal intent, within the meaning of the relevant terms in the Companies Law or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law, and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees.
|
|
(i)
|
a breach of the duty of loyalty to the company, unless, with respect to insurance coverage or indemnification, the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;
|
|
(ii)
|
an intentional or reckless breach of the duty of care;
|
|
(iii)
|
an act done with the intention of unduly deriving a personal profit; or
|
|
(iv)
|
a fine imposed on the officer or director.
|
C.
|
MATERIAL CONTRACTS
|
D.
|
EXCHANGE CONTROLS
|
E.
|
TAXATION
|
|
·
|
an individual citizen or resident of the United States for U.S. federal income tax purposes;
|
|
·
|
a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any political subdivision thereof or the District of Columbia;
|
|
·
|
an estate, the income of which may be included in the gross income for U.S. federal income tax purposes regardless of its source; or
|
|
·
|
a trust if, in general, (i) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
G.
|
STATEMENT BY EXPERTS
|
H.
|
DOCUMENTS ON DISPLAY
|
I.
|
SUBSIDIARY INFORMATION
|
Functional currency
|
Linkage currency
|
Change in the
exchange rate (%)
|
Profit (loss)
|
||||||||
(in NIS thousands)
|
|||||||||||
Financial assets
|
|||||||||||
Cash and deposits
|
NIS
|
Euro
|
+10 | % | 3,940 | ||||||
Cash and deposits
|
NIS
|
U.S. dollar
|
+10 | % | 1,014 | ||||||
Cash and deposits
|
Euro
|
PLN
|
+10 | % | 1,354 | ||||||
Cash and deposits
|
Euro
|
RON
|
+10 | % | 1,041 | ||||||
Cash and deposits
|
Euro
|
U.S. dollar
|
+10 | % | 729 | ||||||
Total
|
8,078 | ||||||||||
Financial Liabilities
|
|||||||||||
Loans at amortized cost
|
NIS
|
U.S. dollar
|
+10 | % | (18,329 | ) | |||||
Loans at amortized cost
|
Euro
|
PLN
|
+10 | % | (6,249 | ) | |||||
Notes at amortized cost
|
Euro
|
NIS
|
+10 | % | (70,697 | ) | |||||
Loans at amortized cost
|
RON
|
Euro
|
+10 | % | (29,499 | ) | |||||
Total
|
(124,774 | ) |
Profit (loss)
|
||||
NIS thousands
|
||||
Deposits linked to the Euro
|
359 | |||
Loans linked to the U.S. dollar
|
(3,666 | ) | ||
Loans linked to the Euro
|
(13,584 | ) | ||
Loans linked to the INR
|
(2,085 | ) | ||
Notes linked to the PLN
|
(1,250 | ) | ||
(20,595 | ) |
|
a)
|
Financial instruments included in current assets -
(cash and cash equivalents, deposits and marketable securities, trade receivables, other current assets and assets related to discontinued operations) - due to their nature, their fair values approximate to those presented in the balance sheet.
|
|
b)
|
Financial instruments included in non-current assets
- the fair value of loans and deposits which bear variable interest rate is an approximation to those presented in the balance sheet.
|
|
c)
|
Financial instruments included in current liabilities -
(short-term credit, suppliers, other current liabilities and liabilities related to discontinued operations) - due to their nature, their fair values approximate to those presented in the balance sheet. The fair value of derivatives (mainly swap transactions) is done mainly by relying on valuations performed by third party experts, which take into account the expected future cash flow based on the terms and maturity of each contract using market interest rates for a similar instrument prevailing at the measurement date.
|
|
d)
|
Financial instruments included in long-term liabilities
- The fair value of the traded liabilities (notes) is determined according to closing prices as of December 31, 2014 quoted on the Tel Aviv and Warsaw Stock Exchanges, multiplied by the quantity of the marketable financial instrument issued as of that date. The fair value of non-traded liabilities at a fixed interest rate is determined according to the present value of future cash flows, discounted at a rate which reflects, in our estimation, the level of risk embedded in the financial instrument. The fair value of liabilities which carried variable interest rate is approximately the amounts presented in the balance sheet.
|
As of December 31, 2014
|
||||||||
Book Value
|
Fair Value
|
|||||||
Long- term loans at fixed interest rate
|
(322,675 | ) | (322,675 | ) | ||||
Debentures
|
(1,341,535 | ) | (1,217,671 | ) | ||||
(1,664,210 | ) | (1,540,346 | ) |
Services Rendered
|
2013 Fees
|
2014 Fees
|
||||||
Audit (a)
|
$ | 586,901 | $ | 547,088 | ||||
Audit-related (b)
|
$ | 49,970 | - | |||||
Tax (c)
|
$ | 58,957 | $ | 79,571 | ||||
All other fees (d)
|
- | - | ||||||
Total
|
$ | 708,286 | 626,659 |
Page
|
|
|
|
Report of independent registered public accounting firm
|
2
|
Condensed Financial Statements:
|
|
Balance sheets
|
3-4
|
Statements of income
|
5
|
Statements of cash flows
|
6-7
|
Notes to the condensed financial statements
|
8-10
|
1.1
|
Amended and Restated Memorandum of Association (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
1.2
|
Amended and Restated Articles of Association (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
2.1
|
Form of ordinary share certificate
(incorporated by reference to Exhibit 3.3 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
4.1
|
Summary of the letter of undertaking dated March 21, 2013 among the Company and the trustees of the Company’s Series 1, C, D, E, F and G note holders (incorporated by reference to Exhibit 99.1 of our Report on Form 6-K filed on March 21, 2013).
|
4.3
|
English translation of Deed of Trust dated January 31, 2008, between Plaza Centers N.V. and Reznik Paz Nevo, as amended on February 17, 2008 (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 30, 2008).
|
4.4
|
English translation of Employees, Directors and Offices Incentive Plan of 2006, as amended (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 26, 2009).
|
4.7
|
Agreement of Purchase and Sale, dated as of January 10, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.10 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.8
|
First Amendment to Agreement of Purchase and Sale, dated as of January 24, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.11 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.10
|
English translation of the Plan of Arrangement as approved by the Tel-Aviv Jaffa District Court on January 1, 2014 (incorporated by reference to Exhibit 4.10 of our Annual Report on Form 20-F filed on April 30, 2014).
|
4.11
|
English translation of the Company’s compensation policy for officers and directors, adopted on August 14, 2014 (incorporated by reference to Exhibit 99.2 of our Report on Form 6-K filed on July 11, 2014).
|
4.12
|
Restructuring Plan of Plaza Centers N.V as approved by the District Court of Amsterdam in the Netherlands on July 10, 2014.
|
4.13
|
Series D Preferred Share Purchase Agreement, dated as of June 26, 2014, among certain purchasers and InSightec, as amended on September 7, 2014 and on December 15, 2014.
|
4.14
|
Compensation Plan for the Chairman of our Board (incorporated by reference to Exhibit 99.2 of our Report on Form 6-K filed on July 11, 2014).
|
Terms of Consultancy Agreement with our director Boaz Lifschitz (incorporated by reference to Exhibit 99.2 of our Report on Form 6-K filed on July 11, 2014).
|
|
8.1
|
List of subsidiaries (incorporated by reference to Exhibit 8.1 of our Annual Report on Form 20-F filed on April 30, 2014).
|
12.1
|
Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification of the principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
15.1
|
Annual Consolidated Financial Statements as of December 31, 2014 for the years ended December 31, 2014, 2013 and 2012 (incorporated by reference to Exhibit 99.1 of our Report on Form 6-K filed on March 30, 2015).
|
15.2
|
Annual Condensed Financial Statements as of December 31, 2014 for the years ended December 31, 2014, 2013 and 2012.
|
Elbit Imaging Ltd.
|
|||
|
By:
|
/s/ Ron Hadassi | |
Name: | Ron Hadassi | ||
Title: | Chairman of the Board of Directors | ||
3
|
||||
3
|
||||
3
|
||||
4
|
||||
5
|
||||
5
|
||||
17
|
||||
17
|
||||
17
|
||||
23
|
||||
25
|
||||
25
|
||||
25
|
||||
29
|
Annex
|
1
|
Example calculation Coverage Ratio
|
|||
Annex
|
2
|
Revised Payment Schedule of Notes
|
|||
Annex
|
3
|
Series A Notes (original Hebrew execution version and English translation)
|
|||
Annex
|
4
|
Series B Notes (original Hebrew execution version and English translation)
|
|||
Annex
|
5
|
Polish Bond Terms
|
|||
Annex
|
6
|
Israeli Mutual Waiver of Claims (Hebrew version and English translation)
|
1.
|
|
1.1.
|
|
1.1.1.
|
The Company (www.plazacenters.com) is a leading emerging markets developer of shopping and entertainment centres in central and eastern Europe. It focuses on constructing new shopping and entertainment centres and, where there is significant redevelopment potential, redeveloping existing centres in capital cities and important regional centres. The Company’s shares are admitted to the premium listing segment of the Official List of the UK Listing Authority and to trading on the main market for listed securities of the London Stock Exchange plc and, as of 19 October 2007, on the Warsaw Stock Exchange (LSE:”PLAZ”, WSE: “PLZ/PLAZACNTR”). The Company is an indirect subsidiary of Elbit Imaging Ltd., an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and on the NASDAQ Global Market in the United States.
|
1.2.
|
|
1.2.1.
|
The Company has been faced with challenging market conditions for some years. Adverse market conditions have primarily been caused by the underlying economic situation in many of the countries in which the Company operates, combined with the lack of transactional liquidity in the investment markets for assets such as those owned by the Company and the on-going lack of traditional bank financing available to real estate developers and investors.
|
1.2.2.
|
Although the Company’s management team has made considerable progress in re-positioning the Company’s business model to ensure that it is focused on the deleveraging of its balance sheet and the recycling of capital, primarily through the disposal of its non-core assets, the Company has not been able to complete these transactions within a timeframe that will enable it to meet its short term obligations towards Bondholders (as defined herein). As a result, the Company is faced with significant liquidity problems.
|
1.2.3.
|
Notwithstanding the liquidity issues, the Company continues to have a strong balance sheet, with a significant positive current net asset value, and owns assets and development opportunities that offer significant potential to deliver returns over the medium to long term.
|
1.2.4.
|
Accordingly, the Company believes that, on a going concern basis, it retains substantial value for its stakeholders and will be able to repay its creditors in full, while the Company is certain that a forced liquidation would cause creditors and shareholders to incur significant losses.
|
1.3.
|
|
1.3.1.
|
The Plan is addressed to, and only binds the ordinary unsecured creditors of the Company.
|
1.3.2.
|
The purpose of the Plan is to provide the Company with the ability to preserve value for its creditors by giving it time to resolve its liquidity situation and thereby avoiding a liquidation scenario. This will primarily be achieved through a deferral of payment obligations. Apart from the proposed payment deferral, the terms of the Plan do not require Noteholders to take a loss on the par value of their outstanding exposures.
|
1.3.3.
|
Under the proposed terms of the Plan the principal payments under the Notes will be deferred by a period of 1 – 4,5 years, depending on the circumstances, as set forth in section 3.1 below.
|
1.3.4.
|
The Company shall use a certain portion (at least 75%, subject to adjustments) of the Net Cash Flow that it receives from Dispositions of Real Estate Assets or new financings (including re-financing) in certain events to make early prepayments on the Notes and will be entitled to make further or other early prepayments on the Notes at any time without incurring a penalty.
|
1.3.5.
|
As compensation for the deferral the Noteholders will receive an additional 1.5% annual interest payable on the Notes. In addition, they will receive Company shares representing effectively ca. 13.21% of the outstanding share capital and the voting rights in the Company (post such issuance and post Capital Injection).
|
1.3.6.
|
Under the proposed terms of the Plan, Guarantee Claims (as defined below) will be deferred for a period of four years and will only be enforceable after the collateral granted as security for the underlying loan has been realized. The amount of the Guarantee Claim will be reduced to the extent that the collateral is sold at a price below 90% of the fair market value as determined by a reputable appraiser. It is expected that creditors of Guarantee Claims will effectively be repaid in full with priority from the proceeds of the collateral provided for the underlying loans.
|
1.3.7.
|
Claims of all other ordinary unsecured creditors will be deferred for a period of four years.
|
1.3.8.
|
In order to further strengthen the position of the creditors, the Company shall raise additional capital in the amount of approximately EUR 20 million by means of a rights issue.
|
1.3.9.
|
The Plan includes “negative pledge”, “no new Financial Indebtedness” and “Coverage Ratio” covenants (subject to certain exceptions) in favour of all creditors bound by this Plan and
certain limitations on “Distributions” (including dividends). In addition, the Plan includes certain financial covenants with respect to the realization of certain Real Estate Assets of the Group and with respect to the purchase and development of Real Estate Assets.
|
1.3.10.
|
The Plan includes a mutual “waiver from claims” provision, in favour of the Company, the shareholders of the Company, and their respective directors and officers, the Noteholders and the Israeli Trustees, and other affiliated parties, as detailed below.
|
1.3.11.
|
The Company is confident that, upon implementation of the Plan, the long term viability of the Company will be secured and the Company will be able to repay its creditors in full in accordance with the terms of the Plan.
|
2.
|
DEFINE
D TERMS AND INTERPRETATION
|
2.1. | Defined Terms |
2.1.1.
|
In this Plan, the following words and expressions have, unless the context otherwise requires, the meanings set out below:
|
Additional Capital Injection
|
A capital injection into the Company after the Amendment Date either against issuance of Shares or in the form of Subordinated Debt, in an accumulated amount of at least EUR 20 million, which is in addition to and beyond the Capital Injection.
|
|||
Additional Israeli Notes
|
The additional Israeli Notes issued to Israeli Noteholders in satisfaction of unpaid interest accrued on the Israeli Notes until 31 December 2013 in accordance with clause 3.1.4.
|
|||
Additional Shares
|
The additional Shares to be issued to the Israeli Trustees in accordance with section 3.2.
|
|||
Amendment Date
|
The Amendment Date is the date on which the amendment of the Original Terms of the Notes enters into effect as set by the Company in accordance with section 3.1.16. It is hereby clarified that in any event the Amendment Date will occur after 5 the Effective Date as defined below.
|
Annex
|
An annex to this Plan.
|
|||
Asset Value
|
The value of the Company’s rights in all assets held directly by the Company or indirectly through Subsidiaries or affiliated companies (in such case, the value of the relevant asset shall be multiplied by the effective holding percentage of the Company in the Subsidiary or the affiliated company which holds the relevant asset, as the case may be), all of which in accordance with the most up-to-date valuations as available to the Company on the date of determination of the Asset Value, and if and to the extent at such date, in the opinion of the Company’s management, a devaluation occurs (with respect to the up-to-date valuation) with regard to any such asset, the value of the asset will be updated accordingly. For the purpose of calculating the Asset Value, the value of the Casa Radio project in Romania (a mixed use retail, leisure and office project comprising GBA 555,000 sqm including parking spaces) shall be: (i) EUR 50 million; or (ii) the fire sale value appraised on a distressed basis, in the event that: (a) an investor or a partner has entered into a participation (directly or indirectly) entitling him to at least 20% of the economic interest in the Casa Radio project or (b) a binding arrangement is reached with the relevant Romanian authorities with respect to the timetable for executing the Casa Radio project or an agreement is reached on the extension of the term of the lease of the land that is used for the Casa Radio project or (c) the Group has entered into a debt finance agreement for the project in an amount of no less than EUR 25 million; or (iii) the value based on an up-to-date valuation on a non-distressed basis in the event that nine (9) months have lapsed since an investor or a partner has entered into a participation (directly or indirectly) entitling him to at least 20% of the economic interest in the Casa Radio project or the Group has entered into a debt finance agreement for the project in an amount of no less than EUR 25 million.
|
The Asset Value as defined above is only relevant for the purpose of calculating the Coverage Ratio.
|
||||
Business Day
|
A day which is a business day on which banks conduct regular operations in the Netherlands, Israel and Poland.
|
|||
Capital Injection
|
A capital injection into the Company of at least EUR 20 million minus the aggregate nominal value of the Noteholder Shares and the Additional Shares, by means of a rights issue.
|
|||
Cash Reserve
|
The aggregate balance of all cash and cash equivalents (that may be included in the Company’s consolidated financial statements under the items cash and cash equivalents and under the items short term deposits, financial assets held for trading or long term deposits of the Group (“additional Cash Value”, provided that such Additional Cash Value can be converted into cash immediately and without limitation on its use by the Group).
|
|||
Commencement Date
|
18 November 2013, being the date on which the preliminary suspension of payment proceedings of the Company commenced.
|
|||
Company
|
Plaza Centers N.V.
|
|||
Coverage Ratio
|
Is equal to (A) – (B) / (D) × 100%, where (A) is equal to the Asset Value plus the cash and cash equivalents; (B) is equal to the liabilities of the Group owed to banks that are secured by an Encumbrance over any rights or assets of the Group or structurally or otherwise rank in priority ahead of the Plan Claims; and (D) is equal to the aggregate amount of remaining Plan Claims plus all other liabilities of the Group that rank pari passu with the Plan Claims and that are not Subordinated Debt. An example of the calculation of the Coverage Ratio is attached as
Annex 1
.
|
DBC
|
The Dutch Bankruptcy Code (
Faillissementswet
).
|
|||
Deferred Debt Ratio
|
Series A – 21.23%, Series B – 70.44%, Polish Bonds – 8.33%. In the event, that the one of series of Notes has been repaid in full prior to the full repayment of the other series of Notes, then as of such date, the Deferred Debt Ratio, shall be divided pro-rata between the remaining series of Notes based on the aforesaid ratios.
|
|||
Disposition
|
Sale, lease, assignment, grant, transfer, encumbrance or any other disposal of assets, rights, property, or any part thereof.
|
|||
Distribution
|
A distribution of dividend to the Company’s shareholders and/or any other dividend-like distribution to the Company’s shareholders, including share repurchase.
|
|||
Effective Date
|
The date on which the Plan becomes effective and binding on all Plan Creditors, being the date on which the confirmation decision (
homologatiebeslissing
) of the Amsterdam District Court becomes irrevocable (
in kracht van gewijsde gegaan
);
|
|||
Elbit
|
Elbit Ultrasound (Luxembourg) B.V./S.à.r.l. together with Elbit Imaging Ltd.
|
|||
Encumbrance
|
Any pledge, charge, assignment by way of pledge or any other form of security.
|
|||
Examination Date
|
The date of approval of the Company’s consolidated audited annual financial statements or its consolidated reviewed quarterly financial statements, as the case may be.
|
|||
Exercise Event
|
Any of the following events: (i) a Disposition of a Real Estate Asset of the Company or a Subsidiary, (ii) the incurrence of any new Financial Indebtedness by the Company or a Subsidiary but excluding new Financial Indebtedness incurred for the purpose of purchase of, investment in or development of a Real Estate Asset, or (iii) the refinancing of a Real Estate Asset, but excluding a refinancing for the purpose of an investment in or the development of a Real Estate Asset.
|
Financial Indebtedness
|
A debt that is owed to a financial creditor of the Company or a Subsidiary, including debts owed under guarantees that have been granted and/or which the Company and/or a Subsidiary will grant, but excluding:
|
||||
(i)
|
guarantees and/or undertakings granted in connection with completion and performance of a project regarding the construction or development of a Real Estate Asset (cost overrun guarantees);
|
||||
(ii)
|
guarantees granted in the ordinary course of business in a cumulative amount which shall not exceed EUR 200,000-;
|
||||
(iii)
|
loans granted directly to the Company by one or more of its shareholders, provided that: (a) the interest rate of the loan is not higher than the lowest interest rate due under the Notes, (b) in the event the loan is not repaid within a period of six (6) months, it shall become Subordinated Debt; and (c) the lenders are not permitted to call for an immediate repayment of the loan or to demand the Company’s liquidation in connection with such loan; and
|
||||
(iv)
|
Subordinated Debt.
|
||||
First Interest Payment Date
|
The date after 12 calendar days have lapsed from the First Record Date or such other the date as the Tel Aviv Stock Exchange may determine.
|
||||
First Record Date
|
The first Trading Day following the day on which the Noteholder Shares and the Additional Israeli Notes have been issued.
|
||||
Group
|
The Company together with all Subsidiaries.
|
||||
Guarantee Claim
|
Any claim of a Plan Creditor against the Company guaranteeing or otherwise securing one or more claims that such Plan Creditor has against a Subsidiary or third party.
|
Guarantee Creditor
|
A Plan Creditor with a Guarantee Claim.
|
||||
Israeli Noteholders
|
Series A Noteholders and Series B Noteholders.
|
||||
Israeli Notes
|
Series A Notes and Series B Notes.
|
||||
Israeli Trustees
|
The Series A Trustee and the Series B Trustee jointly.
|
||||
Koregaon Park Project
|
The project known as Koregaon Park Plaza located in Pune, India.
|
||||
London Stock Exchange
|
London Stock Exchange, plc.
|
||||
LTC Ratio
|
The amount of the loan used to finance the relevant project, divided by the cost of the project as estimated on the date of the granting of the loan, multiplied by 100% (“loan to cost”). For the purpose of calculating the LTC Ratio, the “cost of the project” shall include the construction cost of the project, including the entire construction, planning, and development costs, as well as the cost of the land.
|
||||
Majority
|
Any of the Plan Creditors whose remaining Plan Claims aggregate more than 67% of the total Plan Claims held by the Plan Creditors that have voted at a particular meeting convened for the purpose of voting on a particular matter.
|
||||
Minimum Cash Reserve
|
Shall mean:
|
||||
(i)
|
the amount estimated by the Company’s management required to pay all administrative and general expenses and interest payments to the Noteholders falling due in the following six (6) months, minus sums of proceeds from transactions that have already been signed (by the Company or a Subsidiary) and closed and that to the expectation of the Company’s management have a high probability of being received during the following six (6) months; or
|
(ii)
|
in the event an Additional Capital Injection has occurred: an amount calculated in accordance with sub-section (i) above whereby the aforesaid period of six (6) months is reduced to three (3) months.
|
||||
After repayment or prepayment of an aggregate amount of at least NIS 434,000,000
1
of the principal of the Notes, excluding linkage differentials, the Minimum Cash Reserve as calculated under sub-sections (i) or (ii) above (as applicable) shall be reduced by 50%.
|
|||||
Minimum Coverage Ratio
|
A Coverage Ratio equal to (i) 118%, or (ii) 115% in the event that an Additional Capital Injection occurs or (iii) 120% in the event any of the following circumstances occur in relation to the Casa Radio project: (a) a third party investor or partner has entered into a participation (directly or indirectly) entitling him to at least 20% of the interest in the Casa Radio project; or (b) a binding arrangement with the relevant Romanian authorities has been reached with respect to the timetable for executing the Casa Radio project, or an agreement has been reached on the extension of the lease period for the land that is used for the Casa Radio project; or (c) the Company has entered into a debt finance agreement for the project in amount of at least EUR 25 million.
|
||||
Minimum LTC Ratio
|
The minimum LTC Ratio shall be:
|
||||
(i)
|
50% or,
|
||||
(ii)
|
40% in the event that a partner enters, directly or indirectly, the relevant existing project against a cash or cash equivalent investment (but excluding against offsetting debt) and is entitled, directly or indirectly, to at least 20% of the rights in the project.
|
Net Asset Value of the
Unsold Shopping Malls
|
The amount equal to the value of the Unsold Shopping Malls based on the most recent valuation in the Company’s possession minus the balance of the Financial Indebtedness of the Subsidiaries holding (the rights to) the relevant Unsold Shopping Malls. In the event of a sale of part of the rights in one of the said malls, then the value of the unsold rights in the said mall shall be added to the Net Asset Value of the Unsold Shopping Malls, for the purpose of calculating the Coverage Ratio.
|
||
Net Cash Flow
|
The net proceeds in cash actually received by the Company, as the result of an Exercise Event that occurred after 15 May 2014. For the avoidance of doubt: net proceeds means the proceeds actually received by the Company, after deducting: (1) the full debt amount that has to be repaid to banks as a result of the Exercise Event, (2) the full debt amounts repaid to the banks in case of a refinancing, (3) in case the relevant Exercise Event occurred in a Subsidiary – the sums required for repaying the existing undertakings towards the creditors of that Subsidiary due to such Exercise Event; and (4) all direct expenses related to the asset, such as fees, and direct sale expenses to third parties, brokerage expenses, loan expenses and tax expenses (as the case may be) but excluding overhead and costs of the Group’s officers and employees.
|
||
NIS
|
New Israeli Shekel.
|
||
Noteholder Shares
|
The Shares issued to the Noteholders in accordance with clause 3.2.
|
||
Noteholders
|
Series A Noteholders, Series B Noteholders and Polish Noteholders.
|
||
Notes
|
The Series A Notes, the Series B Notes and the Polish Bonds, jointly;
|
Original Terms of the Notes
|
The original terms and conditions of the Series A Trust Deed, the Series B Trust Deed, and the Polish Bond Terms as those applied before being amended and restated pursuant to this Plan.
|
||
Other Claims
|
All unsecured non-preferred claims against the Company other than claims arising out of Notes or Guarantee Claims.
|
||
Other Creditors
|
All creditors with Other Claims.
|
||
Outstanding Notes Debt
|
The Unpaid Principal Balance of the Notes plus the accrued and unpaid interest due pursuant to the terms of the Notes outstanding at any relevant time in respect of the Notes.
|
||
Plan
|
This restructuring plan (
akkoord
) including all Annexes.
|
||
Plan Claims
|
All unsecured non-preferred claims against the Company that are subject to this Plan pursuant to Article 273 DBC.
|
||
Plan Creditors
|
All creditors with Plan Claims.
|
||
Polish Bond Terms
|
The original terms and conditions of the series A bonds with a nominal value of PLN 100,000 per bond and total nominal value of PLN 60,000,000 issued by the Company on 16 November 2010 under Polish law with ISIN: NL0009524107, as set forth in the offering memorandum dated 16 November 2010, and subsequently amended and restated pursuant to this Plan.
|
||
Polish Bonds
|
All notes issued and outstanding pursuant to the Polish Bond Terms.
|
||
Polish Bonds Deferred Interest
|
The interest accrued and not yet paid for the principal of the Polish Bonds until December 31, 2013. As per December 31, 2013, the Polish Bonds Deferred Interest amounts to PLN 2,764,997, which amounts to EUR 665,574.71 using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
Polish Noteholders
|
Plan Creditors that are holders of Polish Bonds;
|
||
Real Estate Asset
|
Rights in lands or in real estate projects of various types (such as: residential, malls and mixed-use projects of commercial and residential property) as well as rights in an entity holding any of the aforesaid assets.
|
||
Series A Deferred Interest
|
The interest accrued and not yet paid on the principal of the Series A Notes until December 31, 2013, linked to the Israeli consumer index pursuant to the Series A Trust Deed. As per December 31, 2013, the Series A Deferred Interest amounts to NIS 6,652,927, which amounts to EUR 1,389,500.21, using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
||
Series A Noteholders
|
Holders of Series A Notes.
|
||
Series A Notes
|
All notes issued and outstanding pursuant to the Series A Trust Deed;
|
||
Series A Trust Deed
|
The Trust Deed dated 4 July 2007 by and between the Company and Hermetic Trust (1975) Ltd. as trustee to the Series A Noteholders, as amended by Amendments No. 1 and 2. to that Trust Deed dated 31 January 2008 and March 10, 2014, respectively as subsequently amended and restated pursuant to this Plan.
|
||
Series A Trustee
|
Hermetic Trust (1975) Ltd.
|
||
Series B Deferred Interest
|
The interest accrued and not yet paid on the principal of the Series B Notes until December 31, 2013, linked to the Israeli consumer index pursuant to the Series B Trust Deed. As per December 31, 2013, the Series B Deferred Interest amounts to NIS 16,055,758, which amounts to EUR 3,353,332.92, using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
Series B Noteholders
|
Holders of Series B Notes.
|
||
Series B Notes
|
All notes issued and outstanding pursuant to the Series B Trust Deed;
|
||
Series B Trust Deed
|
The trust deed dated 31 January 2008 by and between the Company and Reznik Paz Nevo Trust Ltd. as trustee as amended by Amendment No. 1 to that trust deed dated 17 February 2008, and March 10, 2014, as subsequently amended and restated pursuant to this Plan.
|
||
Series B Trustee
|
Reznik Paz Nevo Trust Ltd.
|
||
Shares
|
Ordinary shares in the Company of EUR 0.01 par value each.
|
||
Shopping Malls
|
The four shopping malls (directly or indirectly) held by Subsidiaries of the Company known as Torun Plaza and Suwalki Plaza located in Poland, Kragujevac Plaza in Serbia, and Riga Plaza in Latvia.
|
||
Subordinated Debt
|
Means debt that is subordinated to the Plan Claims. Debt shall be considered to be subordinated to the Plan Claims if such debt may not be repaid, before the Plan Claims have been satisfied in full, and shall also be a subordinated debt in case of liquidation.
|
||
Subsidiary
|
All corporations, limited liability companies, partnerships, joint ventures, joint stock companies and other entities in which the Company holds, directly or indirectly, at least 50% of the capital or the rights (as the case may be) or an entity controlled, directly or indirectly, by the Company.
|
||
Suspension of Payment Proceedings
|
The preliminary suspension of payment proceedings (
voorlopige surseance van betaling
) applicable to the Company.
|
TASE
|
Tel Aviv Stock Exchange Ltd.
|
||
Terms of the Notes
|
The terms and conditions set forth in the Series A Trust Deed, the Series B Trust Deed and the Polish Bond Terms.
|
||
Trading Day
|
A day on which trading occurs on the TASE.
|
||
Trust Deeds
|
The Series A Trust Deed and the Series B Trust Deed.
|
||
Unpaid Principal Balance of the Notes
|
The Unpaid Principal Balance of the Series A Notes, the Unpaid Principal Balance of the Series B Notes, and the Unpaid Principal of the Polish Bonds, jointly, all expressed in euro’s using the exchange rate as published by the European Central Bank at the relevant time. As of December 31, 2013, the aggregate Unpaid Principal Balance of the Notes amounts to EUR 205,804,336.91, using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
||
Unpaid Principal Balance of the Polish Bonds
|
The outstanding balance, as it may be from time to time, of the nominal value of the unpaid Polish Bonds plus, for the purpose of this definition, the Polish Bonds Deferred Interest. As of December 31, 2013, this balance amounts to PLN 62,764,997 (including the Polish Bonds Deferred Interest) which amounts to EUR 15.108.441,13 using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
||
Unpaid Principal Balance of the Series A Notes
|
The outstanding balance, as it may be from time to time, of the nominal value of the unpaid Series A Notes (which as of January 1, 2014 will also include the Series A Deferred Interest), all of which is linked to the Israeli consumer index as set forth in the Series A Trust Deed. As of December 31, 2013, this balance amounts to NIS 302,338,505 (including the Series A Deferred Interest), which amounts to EUR 63,145,051.17, using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
2.2.
|
Unpaid Principal Balance of the Series B Notes
|
The outstanding balance, as it may be from time to time, of the nominal value of the unpaid Series B Notes (which as of January 1, 2014 will also include the Series B Deferred Interest), all of which is linked to the Israeli consumer index as set forth in the Series B Trust Deed. As of December 31, 2013, this balance amounts to NIS 610,713,444 (including the Series B Deferred Interest), which amounts to EUR 127,550,844.61, using the exchange rate per close of business on 31 December 2013 as published by the European Central Bank.
|
|
Unsold Shopping Malls
|
The remaining (rights in any) Shopping Malls at any time (or any part thereof) that have not yet been sold.
|
2.2.1.
|
For purposes of this Plan, unless otherwise provided herein:
|
|
(i)
|
whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural;
|
|
(ii)
|
the Annexes form a binding and integral part of this Plan and any reference to this Plan shall include a reference to the Annexes.
|
|
3.
|
||
3.1.
|
||
As of the Amendment Date the Original Terms of the Notes shall be amended as follows:
|
||
Deferral of principal payments
|
||
3.1.1.
|
Each principal payment under the Notes due in the years 2013, 2014 and 2015 pursuant to the Original Terms of the Notes shall be deferred by exactly four and a half (4,5) years and each principal payment due pursuant to the Original Terms of the Notes in subsequent years (i.e., 2016 and 2017) will be deferred by exactly one (1) year.
|
|
3.1.2.
|
In the event that the Company does not succeed in prepaying an aggregate amount of at least NIS 434,000,000
2
of the principal of the Notes, excluding linkage differentials within a period of two years from the Amendment Date or before 1 December 2016 (whichever is earlier), then all principal payments under the Notes deferred in accordance with clause 3.1.1. above, shall be advanced by one (1) year (i.e., shall become due one (1) year earlier).
|
3.1.3.
|
The revised payment schedules under the Notes are attached as
Annex 2
.
|
Interest payments
|
|
3.1.4.
|
All unpaid interest accrued on the Israeli Notes until and including 31 December 2013 shall be paid by the Company by issuing shortly following the Amendment Date such additional number of Series A Notes to the Series A Noteholders and such additional number of Series B Notes to the Series B Noteholders (Additional Israeli Notes) that the total notional amount of the Additional Israeli Notes increased with the linkage differential accrued until and including December 31, 2013, is at least equal to the amount of unpaid interest accrued until and including 31 December 2013. The Additional Israeli Notes shall be issued in satisfaction of the unpaid interest accrued until said date for no further consideration.
|
3.1.5.
|
All unpaid interest accrued on the Polish Bonds until and including 31 December 2013 shall be paid on the earlier of (i) the early redemption date, (ii) the call option redemption date or (iii) the redemption date as defined in the Polish Bond Terms together with all annually compounded interest calculated as from the Amendment Date with the same interest periods and rates as applicable to the principal due under the Polish Bonds.
|
3.1.6.
|
On the First Interest Payment Date, the Company shall make an interest payment to the Noteholders in an amount that is equal to the higher of: (i) EUR 11.6 million, or (ii) the accrued and unpaid interest on the Notes as of January 1 2014 until the last day prior to the First Interest Payment Date. If the amount of EUR 11.6 million is the higher, then this amount will be divided among and paid to the Noteholders as follows: Series A – EUR 2.50 million, Series B – EUR 8.17 million, Polish Bonds – EUR 0.93 million. These amounts shall first be applied towards payment of unpaid interest accrued on the Notes as of 1 January 2014 until the First Interest Payment Date. Any remainder shall be an advance on and be set-off against future interest payments.
|
3.1.7.
|
The amount to be paid to the Israeli Noteholders in accordance with section 3.1.6 above, shall be deposited in a trust account or with a nominee company prior to the Amendment Date as stipulated in the Trust Deeds.
|
3.1.8.
|
All interest accrued on the Notes after the First Interest Payment Date shall be paid on the ordinary (bi-annual) interest payment dates in accordance with the Terms of the Notes.
|
Interest rate
|
||||
3.1.9.
|
Effective from 1 January 2014, the interest rate applicable to the Notes shall increase by 1.5% per annum.
|
|||
Discretionary Early Prepayments of the Notes
|
||||
3.1.10.
|
The Company shall be allowed to make early prepayments on any part of the Outstanding Notes Debt without any penalty becoming due.
|
|||
Mandatory Early Prepayment of the Notes
|
||||
(I)
|
Calculating the Mandatory Prepayment Amount
|
|||
3.1.11.
|
Upon the Occurrence of an Exercise Event as a result of which a positive Net Cash Flow is generated, the Company shall make an early prepayment of the Outstanding Notes Debt, in a total amount that is equal to the Mandatory Prepayment Amount (as defined below), which will include the following amounts and be calculated as follows:
|
|||
(a)
|
“Interest Prepayment Amount” - the amount of interest on the Unpaid Principal Balance of the Notes that has accrued in the given interest period (until the early repayment date) but has not yet fallen due, plus any applicable linkage differentials on such interest; and
|
|||
(b)
|
“Principal Prepayment Amount” - 75% of
the Balance of the Net Cash Flow (as defined below).
|
|||
|
However, in the event an Additional Capital Injection occurs and 50% or 60% of the Unpaid Principal Balance of the Notes outstanding on the Amendment Date has already been repaid
3
, the aforesaid 75% ratio will be decreased to 60% or 50%, respectively.
|
|||
|
The Interest Prepayment Amount and the Principal Prepayment Amount, are hereinafter collectively referred to as the: “
Mandatory Prepayment Amount
”.
|
|||
(II)
|
Balance of the Net Cash Flow
|
|||
|
“Balance of the Net Cash Flow” shall mean: the balance (if any) of the Net Cash Flow generated as a result of an Exercise Event, after deducting: (1) 100% (or less, at the Company’s discretion) of the Interest Prepayment Amount - in case the Exercise Event is related to the Shopping Malls; or (2) 50% (or less, at the Company’s discretion) of the Interest Prepayment Amount in case the Exercise Event is unrelated to the Shopping Malls, provided, that such balance is positive.
|
(III)
|
The Use of the Amounts under the Mandatory Early Prepayment
|
|||
The Interest Prepayment Amount shall be used for the prepayment of interest that has accrued on the Notes in the given interest period but not yet fallen due. The Principal Prepayment Amount shall be used for the prepayment of the Unpaid Principal Balance of the Notes to be allocated among the Noteholders in proportion to the Deferred Debt Ratio, and shall be applied towards repayment of the first principal payments falling due in accordance with the Terms of the Notes.
|
||||
(IV)
|
Minimum Prepayment Amount
|
|||
Any early prepayment under this section 3.1.11 shall be made only in case the Mandatory Prepayment Amount is higher than EUR 2 million. In the event, the Mandatory Prepayment Amount is not higher than EUR 2 million (“
Minimum Amount
”) it will be paid together with a future Mandatory Early Prepayment if and when the sum exceeds the Minimum Amount.
|
||||
(V)
|
Timing of Mandatory Early Prepayment
|
|||
Mandatory Early Prepayment shall be performed, if required, within a calendar quarter following the date on which Company has received the Net Cash Flow, and no more than once in each calendar quarter.
|
||||
Notwithstanding the aforesaid, in case the receipt of Net Cash Flow triggering the Early Mandatory Prepayment provisions in this section 3.1.11 occurs during the period that begins on May 15, 2014 and ends on the Amendment Date, then such Early Prepayment shall be made on the First Interest Payment Date.
|
||||
(VI)
|
Receipt of Net Cash Flow by a Subsidiary
|
|||
In the event that the Net Cash Flow from the relevant Exercise Event is received by a Subsidiary, the Company will perform any action reasonably required in order to procure that the Net Cash Flow is transferred from the relevant Subsidiary to the Company no later than 14 days following receipt of the proceeds by the Subsidiary, unless such transfer is not possible within the said timeframe due to legal and/or other regulatory limitations or due to other limitations which are not under the Company’s or the Subsidiary’s control. In case such limitations exist, the Company shall act to remove the relevant limitations and transfer the relevant Net Cash Flow to the Company on the date on which such limitation is removed and during that period the Subsidiary will not use the relevant Net Cash Flow and this amount will be deposited in solid bank deposit. Sums which were not transferred from the relevant Subsidiary to the Company within 14 days following receipt of the proceeds by the Subsidiary, due to limitations which are not under the Company’s or the Subsidiary’s control, shall only be used, once transferred to the Company, for repayment of principal.
|
(VII)
|
Mandatory Early Prepayment of the Outstanding Notes Debt under this section 3.1.11 shall not be made by way of purchase of the Notes.
|
|||
(VIII)
|
Notwithstanding the aforesaid, the Mandatory Early Prepayment obligation shall not apply to any proceeds from Koregaon Park Project.
|
|||
Restrictions on Issuance of Additional Notes
|
||||
3.1.12.
|
The Company undertakes not to issue any additional Notes other than as expressly provided for in this Plan.
|
|||
Issuance of additional Securities
|
||||
3.1.13.
|
Subject to the terms of this Plan and the Terms of the Notes, the Company shall be entitled to issue, at any point in time, without the need to obtain any approval of the Noteholders or the Israeli Trustees, other notes or other series of notes or other securities of any kind or type whatsoever, and on such terms as the Company shall deem fit.
|
|||
Restrictions on Amendments to the Terms of the Notes
|
||||
3.1.14.
|
The Company shall not be entitled to amend the Terms of the Notes, with the exception of purely technical changes, unless such amendment is approved under the terms of the relevant series and the applicable law and the Company also obtains the approval of the Noteholders of all other series of notes issued by the Company by ordinary majority.
|
|||
Amendment of the Original Terms of the Notes
|
||||
3.1.15.
|
The amendment of the Original Terms of the Notes shall enter into effect on The Amendment Date. Before the amendment of the Original Terms of the Notes pursuant to this Plan becomes effective, the Company shall do all that is necessary to procure that by no later than 30 November 2014:
|
|||
(i)
|
a Capital Injection has occurred;
|
|||
(ii)
|
the Shares of the Company have been listed on the Tel Aviv Stock Exchange;
|
(iii)
|
a pre-ruling from the Israeli tax authority is received on the tax implications for the Israeli Note Holders resulting from the amendment of the Original Terms of the Notes.
|
|||
(iv)
|
the Israeli Trustees have received signed undertakings from the Subsidiaries as set forth in section 3.5.14 below
4
.
|
|||
(v)
|
the amount of interest to be paid to the Israeli Noteholders on the First Interest Payment Date pursuant to section 3.1.6 of this Plan, has been deposited in a Trust Account or with the Nominee Company as defined and stipulated in the Trust Deeds;
|
|||
(vi)
|
an amount of NIS 25,000 has been deposited with each of the Israeli Trustees as required under section 4c of the Trust Deeds.
|
|||
3.1.16.
|
The Company shall set a date that lies within a period of 10 Trading Days after completion of the actions set forth in section 3.1.15 above, on which date the amendment of the Original Terms of the Notes pursuant to this Plan shall take effect (the Amendment Date).
|
|||
3.1.17.
|
As of the Amendment Date the Original Terms of the Notes shall be amended and restated as set forth in
Annex 3
(Series A Trust Deed),
Annex 4
(Series B Trust Deed) and
Annex 5
(Polish Bond Terms).
|
|||
3.1.18.
|
During the period between the Effective Date and the Amendment Date (assuming the Effective Date will occur before the Amendment Date) (i) the Original Terms of the Notes shall remain in effect, albeit that Noteholders shall not be entitled to demand payment or enforce any claims under the Notes, unless and to the extent expressly provided otherwise in this Plan, and (ii) the Company shall do nothing that is forbidden under the terms of this Plan.
|
|||
3.1.19.
|
If the Company has failed to procure that all of the actions set forth in section 3.1.15 are completed before 30 November 2014, or fails to procure that the Additional Israeli Notes and the Noteholder Shares are issued in accordance with the terms of this Plan within 10 Trading Days following the Amendment Date, this Plan shall cease to be effective and the Original Terms of the Notes shall return to full force and effect.
|
|||
3.1.20.
|
The Terms of the Notes should be interpreted in conjunction with the terms of the Plan. In the event of a conflict between the terms of the Plan and the Terms of the Notes, the Terms of the Notes shall prevail.
|
Capital Injection and Issuance of Shares to Noteholders
|
||||
Capital Injection by means of rights issue
|
||||
3.2.1.
|
The Company shall procure that a Capital Injection occurs after the Effective Date and before 30 November 2014 by means of a rights issue.
|
|||
Issue of Noteholder Shares
|
||||
3.2.2.
|
Following the Amendment Date the Company shall issue new Shares representing on a aggregate basis (post issuance) 13.2106% of the Company’s Shares issued and outstanding following the Capital Injection, to the Noteholders recorded as such on the Amendment Date (with the exception of a Subsidiary that holds Notes) at nominal value (EUR 0.01).
|
|||
3.2.3.
|
The Noteholder Shares shall be allocated among the Noteholders recorded as such on the Amendment Date as follows: Series A - 2.8660%; Series B –9.2197%; Polish Bonds –1.1249%. Noteholders shall not be entitled to fractional shares and the number of shares to be allocated to each Bondholder shall be rounded down to the nearest integer.
|
|||
3.2.4.
|
The Company shall procure that the Noteholder Shares and the Additional Israeli Notes are listed for trade on the TASE, as soon as practicable after issuance.
|
|||
Payment of nominal value by issue of Additional Shares
|
||||
3.2.5.
|
Simultaneously with the issue of the Noteholder Shares to the Noteholders, the Company shall issue Additional Shares to the Israeli Trustees.
|
|||
3.2.6.
|
The number of Additional Shares to be issued shall be equal to:
|
|||
(N × EUR 0.01) / (S – EUR 0.01) rounded down to the nearest integer
|
||||
where:
|
||||
N = the number of Noteholder Shares to be issued
|
||||
S = the subscription price of the rights issue for the Capital Injection expressed in euro’s using the exchange rate (if applicable) as published by the ECB on the date that Elbit deposits the purchase price for the Additional Shares as stipulated below.
|
3.2.7.
|
The Additional Shares shall be allocated among the Israeli Trustees as follows:
|
|||
Series A Trustee: (A + P) / T
|
||||
Series B Trustee: B / T
|
||||
Where
|
||||
A = the number of Noteholder Shares allocated to the Series A Noteholders
|
||||
B = the number of Noteholder Shares allocated to the Series B Noteholders
|
||||
P = the number of Noteholder Shares allocated to the Polish Noteholders
|
||||
T = the total number of Noteholder Shares.
|
||||
3.2.8.
|
The Israeli Trustees shall, and are hereby instructed to, sell the Additional Shares to be received by each of them to Elbit at a purchase price per Share that is equal to the subscription price of the rights issue for the Capital Injection.
|
|||
3.2.9.
|
Elbit shall deposit the purchase price (the “
Purchase Price
”) for the Additional Shares allocated to each of the Israeli Trustees in an account designated by them, before the Noteholder Shares and the Additional Shares are issued.
|
|||
3.2.10.
|
The Series A Trustee shall, and is hereby instructed to, use the Purchase Price received by it to pay the nominal capital contribution of EUR 0.01 per share that is due to the Company for the issue of Noteholder Shares to the Series A Noteholders and the Polish Bondholders and for the issue of Additional Shares allocated to the Series A Trustee.
|
|||
3.2.11.
|
The Series B Trustee shall, and is hereby instructed, to use the Purchase Price received by it to pay the nominal capital contribution of EUR 0.01 per share that is due to the Company for the issue of Noteholder Shares to the Series B Noteholders and for the issue of Additional Shares allocated to the Series B Trustee.
|
|||
3.2.12.
|
Simultaneously with the payment of the nominal contribution due to the Company for the issue of the Noteholder Shares and the Additional Shares, the Israeli Trustees shall, and are instructed to, transfer the Additional Shares held by each of them to Elbit.
|
|||
3.2.13.
|
The Noteholders hereby release the Israeli Trustees from and waive any (potential) liability in connection with the issue, sale and transfer of the Additional Shares and the application of the Purchase Price towards payment of the nominal capital contribution for the Noteholder Shares and Additional Shares as set out above.
|
Terms Applicable to Guarantee Creditors
|
||
3.3.1.
|
Guarantee Creditors shall not exercise their rights under any Guarantee Claim for a period of four (4) years from the Effective Date. After said four (4) year period, a Guarantee Creditor is allowed to enforce its Guarantee Claim provided that:
|
|
(i)
|
all collateral granted as security for the underlying guaranteed obligation has been realised; and
|
|
(ii)
|
without prejudice to any further limitation contained in the relevant guarantee or undertaking, if the actual proceeds are lower than 90% of the fair market value of the realized collateral, the remaining Guarantee Claim shall be reduced by the difference between 90% of the fair market value of the collateral as determined by an external appraiser (to be agreed between the relevant Guarantee Creditor and the Company and failing such agreement the President of the District Court of Amsterdam) within a period of not more than three months prior to the sale of the asset on the one hand and the actual proceeds realized by the relevant Guarantee Creditor on the other hand.
|
|
Terms Applicable to Other Creditors
|
||
3.4.1.
|
All Other Claims will be deferred by a period of four (4) years as of the Effective Date.
|
|
Terms Applicable to all Plan Creditors
|
||
Coverage Ratio covenant
|
||
3.5.1.
|
In the event that the Coverage Ratio is lower than the Minimum Coverage Ratio, then as from the first Examination Date on which a breach of the Coverage Ratio covenant has been established and for as long as the breach is continuing, the Company shall not perform any of the following: (a) a sale, directly or indirectly, of a Real Estate Asset owned by the Company or a Subsidiary, with the exception that it shall be permitted to transfer Real Estate Assets in performance of an obligation to do so that was entered into prior to the said Examination Date, (b) investments in new Real Estate Assets; or (c) an investment that regards an existing project of the Company or of a Subsidiary, unless it does not exceed a level of 20% of the construction cost of such project (as approved by the lending bank of these projects) and the LTC Ratio of the project remains equal to or greater than the Minimum LTC Ratio.
|
|
3.5.2.
|
The Coverage Ratio will be examined four (4) times per year on the approval date of the Company’s consolidated audited annual financial statements and of its consolidated reviewed quarterly financial statements and the Company shall report on compliance with this covenant on each Examination Date.
|
3.5.3.
|
If a breach of the Minimum Coverage Ratio covenant has occurred and continued throughout a period comprising two (2) consecutives Examination Dates following the first Examination Date on which such breach has been established, then such breach shall constitute an event of default under the Trust Deeds and Polish Bond Terms, and the group of (i) Series A Noteholders, (ii) Series B Noteholders, (iii) Polish Bondholders, and (iv) Guarantee and Other Creditors shall, each as a separate group acting by Majority vote, be entitled to declare by written notice to the Company that all or a part of their respective (remaining) Plan Claims become immediately due and payable.
|
|
Limitations on Incurring new Financial Indebtedness by the Company and the Subsidiaries
|
||
3.5.4.
|
The Company undertakes not to incur any new Financial Indebtedness (including by way of refinancing an existing Financial Indebtedness with new Financial Indebtedness) until the Outstanding Notes Debt has been repaid in full, except in any of the following events:
|
|
(i)
|
the new Financial Indebtedness is incurred for the purpose of investing in the development of a Real Estate Asset, provided that: (a) the LTC Ratio of the investment is not less than the Minimum LTC Ratio; (b) the new Financial Indebtedness is incurred by the Subsidiary that owns the Real Estate Asset or, if the Financial Indebtedness is incurred by a different Subsidiary, any Encumbrance created as security for such new Financial Indebtedness is permitted under section 3.5.7(i) below; and (c) following such investment the Cash Reserve is not less than the Minimum Cash Reserve;
|
|
(ii)
|
the new Financial Indebtedness is incurred by a Subsidiary for the purpose of purchasing a new Real Estate Asset by such Subsidiary, provided that following such purchase the Cash Reserve is not less than the Minimum Cash Reserve.
|
|
(iii)
|
at least 75% of the Net Cash Flow resulting from the incurrence of new Financial Indebtedness is used to for a Mandatory Early Prepayment of the Notes under section 3.1.11 above. It shall be clarified that, subject to the terms of this Plan, the Group may also refinance existing Financial Indebtedness if this does not generate Net Cash Flow.
|
|
3.5.5.
|
Notwithstanding the aforesaid, in the event that an Additional Capital Injection occurs then the restrictions under section 3.5.4 shall not apply to investments in an aggregate amount less than or equal to the amount of the Additional Capital Injection.
|
Negative Pledge on Real Estate Assets of the Company
|
||
3.5.6.
|
The Company undertakes that until the Outstanding Notes Debt has been repaid in full, it shall not create any Encumbrance on any of the Real Estate Assets, held, directly or indirectly, by the Company except in the event that the Encumbrance is created over the Company’s interests in a Subsidiary as additional security for Financial Indebtedness incurred by such Subsidiary which is secured by Encumbrances on assets owned by that Subsidiary as permitted by the terms of this Plan.
|
|
Negative Pledge on the Real Estate Assets of Subsidiaries
|
||
3.5.7.
|
The Subsidiaries shall undertake that until the Outstanding Notes Debt has been repaid in full, none of them will create any Encumbrance on any Real Estate Assets except in the event that:
|
|
(i)
|
the Subsidiary creates an Encumbrance over a Real Estate Asset owned by such Subsidiary exclusively as security for new Financial Indebtedness incurred for the purpose of purchasing, investing in or developing such Real Estate Asset; Notwithstanding the aforesaid, Subsidiaries shall be entitled to create an Encumbrance on land as security for Financial Indebtedness incurred for the purpose of investing in and developing, but not for purchasing, a Real Estate Asset held by a different Group company (hereinafter: a
“Cross Pledge”
), provided the total value of the lands owned by the Group charged with Cross Pledges after the Commencement Date does not exceed EUR 35 million, calculated on the basis of book value (the
“Sum of Cross Pledges”
). When calculating the Sum of Cross Pledges, lands that were charged with Cross Pledges created prior to the Commencement Date or created solely for the purpose of refinancing an existing Financial Indebtedness shall be excluded.
|
|
(ii)
|
the Encumbrance is created over an asset as security for new Financial Indebtedness that replaces existing Financial Indebtedness and such asset was already encumbered prior to the refinancing. For the avoidance of doubt, any Net Cash Flow generated from such refinancing, shall be subject to the Mandatory Early Prepayment provision in section 3.1.11 above;
|
|
(iii)
|
the Encumbrance is created over interests in a Subsidiary as additional security for Financial Indebtedness incurred by such Subsidiary which is secured by Encumbrances on assets owned by that Subsidiary as permitted by sub-section (i) above, or
|
|
(iv)
|
the Encumbrance is created as security for New Financial Indebtedness that is incurred for purposes other than the purchase of and/or investment in and development of a Real Estate Asset, provided that at least 75% of the Net Cash Flow generated from such new Financial Indebtedness is used for Mandatory Early Prepayment in accordance with section 3.1.11 above.
|
Permitted Disposals
|
|
3.5.8.
|
The Company and the Subsidiaries shall not procure or permit the occurrence of an Exercise Event with respect to any Real Estate Asset of the Group unless the Net Cash Flow resulting from such Disposal is used for Mandatory Early Prepayment in accordance with section 3.1.11 above.
|
3.5.9.
|
The Company and the Subsidiaries shall not perform or permit a Disposition, directly or indirectly, or a refinancing of the Shopping Malls, unless the cumulative Net Cash Flow resulting from such Disposition or refinancing amounts to at least EUR 70 million. If the Disposition or the refinancing occurs only with respect to some but not all of the Shopping Malls, then such Disposition or refinancing shall not be permitted unless the Net Asset Value of the Unsold Shopping Malls plus the aggregate Net Cash Flows received from the intended Disposition or refinancing and from any previous Disposition or refinancing of a Shopping Mall amounts to at least EUR 70 million.
|
Permitted Investments
|
|
3.5.10.
|
The Company agrees that an investment in new or existing Real Estate Assets of the Group shall only be permitted provided following such investment the Cash Reserve is not less than the Minimum Cash Reserve and the Coverage Ratio not less than the Minimum Coverage Ratio.
|
3.5.11.
|
In the event the Coverage Ratio is lower than the Minimum Coverage Ratio, investments in existing projects of the Company or of Subsidiaries shall only be permitted if the investment does not exceed a level of 20% of the construction cost of such project (as approved by the lending bank of these projects) and the LTC Ratio of the project remains equal to or greater than the Minimum LTC Ratio in accordance with section 3.5.1(c) above.
|
No Distributions
|
|
3.5.12.
|
The Company shall not make any Distributions, unless (i) at least 75% of the Unpaid Principal Balance of the Notes as per the Amendment Date has been repaid
5
and the Coverage Ratio on the last Examination Date prior to such Distribution is not less than 150% following such Distribution, or (ii) a Majority of the Plan Creditors consents to the proposed Distribution.
|
5
For the purpose of this examination, the repayment of Notes sold by a Subsidiary of the Company after the Amendment Date shall not be considered as repaid Notes.
|
3.5.13.
|
Notwithstanding the aforesaid, in the event an Additional Capital Injection occurs, then after one year following the date of the Additional Capital Injection, no restrictions other than those under the applicable law shall apply to dividend distributions in an aggregate amount up to 50% of such Additional Capital Injection.
|
Undertakings of Subsidiaries
|
|
3.5.14.
|
Each of the Subsidiaries shall undertake (subject to the Plan becoming effective and the amendment of the Original Terms of the Notes pursuant to this Plan entering into effect) to act in accordance with and to be bound by and to comply with the obligations and undertakings set forth in sections 3.1.11(VI), 3.5.1, 3.5.4, 3.5.7, 3.5.8, 3.5.9 and 3.5.11 of this Plan and shall issue such undertaking no later than 4 June 2014.
|
Waiver of Claims
|
|
3.5.15.
|
Each Plan Creditor hereby releases, to the extent permitted by law, the Company and all other companies of the Group, the current and former directors and officers of the Group, all direct and indirect shareholders of the Group (and their respective directors, officers, employees, agents, counsels or anyone acting on their behalf), from any and all liability under any applicable law other than with respect to claims or demands regarding which the grounds are fraud or malice or other ground for which a release is not permitted by law.
|
3.5.16.
|
Without derogating from the aforesaid, full and binding mutual waiver of claims with respect to the Series A Noteholders and the Series B Noteholders, will enter into effect on the Amendment Date, attached as
Annex 6
to this Plan.
|
Miscellaneous
|
|
The Company shall as from the Effective Date publish its annual reviewed consolidated financial statements to the public, no later than three (3) calendar months following the end of the calendar year. In addition, as of the Effective Date and until the Outstanding Notes Debt has been repaid in full, the Company undertakes to publish reviewed consolidated financial statements on a quarterly basis, no later than two (2) months following the end of each of the first three (3) calendar quarters of each year. The Company shall include, within the quarterly and annual financial statements, a detailed report regarding its compliance with the undertakings under sections 3.5.1, 3.5.4, 3.5.6, 3.5.7, 3.5.8, 3.5.9, 3.5.10. 3.5.11 and 3.5.12 of this Plan and the performance of Mandatory Early Prepayments under section 3.1.11 of this Plan.
|
3.6.1.
|
The Company will use reasonable endeavours to ensure that the general and administrative expenses, based on the Company’s current level of operations, does not exceed an amount of EUR 7.5 million per year.
|
3.6.2.
|
Each Plan Creditor shall provide all cooperation and take all such further actions as may be required to give effect to, execute and implement this Plan and the debt restructuring contemplated thereby.
|
3.6.3.
|
This Plan will not be binding and will not create any rights or obligations and no rights can be derived or inferred from the Plan before the Effective Date.
|
3.6.4.
|
Any notice or request made to the Company in connection with this Plan shall be made in writing and made by courier or certified mail to:
|
Plaza Centers N.V.
Prins Hendrikkade 48-S
1012 AC Amsterdam
The Netherlands
Attention: Mr. Uzi Eli
Email: uzi.eli@plazacenters.com.
|
|
In each case with copy (which shall not constitute notice hereunder) to:
|
|
RESOR N.V.
PO Box 75965
1070 AZ Amsterdam
The Netherlands
Attention: Mr. N.W.A. Tollenaar
Email: nico.tollenaar@resor.nl
|
|
3.6.5.
|
This Plan, as well as all rights and obligations arising out of or in connection with this Plan, shall be governed by the laws of the Netherlands, without prejudice to the fact that the Series A Trust Deed, the Series B Trust Deed and the Polish Bond Terms are and shall continue to be governed by Israeli and Polish law respectively.
|
3.6.6.
|
The Court of Amsterdam, the Netherlands shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan, without prejudice to the fact that any dispute arising from the Series A Trust Deed, the Series B Trust Deed and the Polish Bond Terms is and shall remain subject to the (exclusive) jurisdiction of the Israeli and Polish courts, as applicable.
|
1
|
||
1.1
|
Definitions
|
1
|
1.2
|
Other Defined Terms
|
7
|
1.3
|
Other Interpretive Matters
|
8
|
8
|
||
2.1
|
Purchase and Issuance of the Series D Preferred Shares
|
8
|
2.2
|
Closing
|
9
|
11
|
||
3.1
|
Conditions to the Closing
|
11
|
16
|
||
4.1
|
Affirmative Covenants
|
16
|
4.2
|
Securities Filings
|
16
|
17
|
||
5.1
|
Corporate Existence and Power
|
17
|
5.2
|
Corporate Authorization and Validity
|
17
|
5.3
|
Non-Contravention
|
17
|
5.4
|
Consents
|
18
|
5.5
|
Finder’s Fees
|
18
|
5.6
|
Capitalization
|
18
|
5.7
|
Validity of Shares; Issuance
|
19
|
5.8
|
Financial Statements
|
19
|
5.9
|
Assets
|
20
|
5.10
|
Intellectual Property
|
20
|
5.11
|
Subsidiaries
|
22
|
5.12
|
Litigation; Disputes
|
22
|
5.13
|
Compliance with Laws
|
22
|
5.14
|
Absence of Undisclosed Liabilities
|
23
|
5.15
|
Taxes
|
23
|
5.16
|
Employees
|
24
|
5.17
|
Approved Enterprise; Office of Chief Scientist
|
26
|
5.18
|
Material Contracts
|
26
|
5.19
|
Insurance
|
28
|
5.20
|
Transactions with Related Parties
|
28
|
5.21
|
Improper Payments
|
28
|
5.22
|
Sanctions Matters
|
28
|
5.23
|
Governmental Permits; Compliance
|
29
|
5.24
|
Product Liabilities
|
31
|
5.25
|
Warranties
|
32
|
5.26
|
Environmental Matters
|
32
|
32
|
||
6.1
|
Notices
|
32
|
6.2
|
Amendments; Waivers
|
33
|
6.3
|
Expenses
|
33
|
6.4
|
Remedies
|
33
|
6.5
|
Purchaser Investment Representations
|
33
|
6.6
|
Survival of Agreement
|
35
|
6.7
|
Successors and Assigns
|
35
|
6.8
|
Governing Law
|
35
|
6.9
|
Severability
|
35
|
6.10
|
Aggregation
|
36
|
6.11
|
Counterparts; Effectiveness
|
36
|
6.12
|
Captions
|
36
|
6.13
|
Construction
|
36
|
6.14
|
Entire Agreement
|
36
|
6.15
|
No Third Party Beneficiaries
|
36
|
6.16
|
Indemnification
|
37
|
6.17
|
Payment Set Aside
|
38
|
1.1
|
Definitions
. For the purposes of this Agreement, the following terms have the meanings set forth below (such meanings to be applicable to both the singular and plural forms of the terms defined):
|
|
(a)
|
Liens for Taxes which are not yet due and payable or which are expressly permitted pursuant to the terms hereof;
|
|
(b)
|
Liens arising in connection with worker’s compensation, unemployment insurance, old age pensions which are not overdue or are being contested in good faith by appropriate proceedings diligently pursued, provided that in the case of any such contest any proceedings commenced for the enforcement of such liens shall have been duly suspended and such provision for the payment of such liens has been made on the books of the Company as may be required by GAAP;
|
|
(c)
|
Liens and pledges with respect to hardware, machines, equipment (including development, manufacturing, testing and packing equipment and machinery) and such other supporting equipment, if procured under customary third party financial leasing schemes subject to first ranking specific charge and pledge to secure the procurement;
|
|
(d)
|
Liens of up to $100,000 in favor of an Israeli bank in connection with the issuance of a bank Guarantee of up to US $100,000 for the lease of Company’s US offices and liens in an amount of 1,000,000 NIS in connection with the issuance of a bank Guarantee of up to US $600,000 for the lease of the Company’s Israeli offices; and
|
|
(e)
|
Liens existing on the date hereof and listed on
Section 1.1
of the Disclosure Schedule.
|
1.2
|
Other Defined Terms
. The following terms are defined in this Agreement in the Sections set forth below:
|
Term
|
Section
|
Actual 2014 and 2015 Revenues
|
2.4
|
Additional Shares
|
2.4
|
Adjustment Amount
|
2.4
|
Agreement
|
Preamble
|
Certificates of Approval
|
5.17
|
Closing
|
2.2
|
Company
|
Preamble
|
Data Subject
|
5.13(d)
|
Disclosed Contracts
|
5.18(b)
|
Disclosure Schedule
|
5.3
|
EI
|
1.1
|
ET
|
1.1
|
Employees
|
5.16(a)
|
Existing Shareholders
FDA
|
2.1
5.23(b)
|
Financial Statements
|
5.8
|
GE Parent
|
1.1
|
GO
|
2.1
|
Governmental Permits
|
5.23(a)
|
HIPAA
|
5.13(b)
|
HITECH
|
5.13(b)
|
Indemnitees
|
6.16
|
Investment Center Certificates of Approval
|
5.17
|
Liabilities
|
6.16
|
Memorandum of Association
|
5.1
|
OCS Certificates of Approval
|
5.17
|
Personal Data
|
5.13(c)
|
Privacy Commitments
|
5.13(b)
|
Purchaser
|
Preamble
|
Purchaser Required Majority
|
3.1(a)xvi
|
Reduced PPS
|
2.4
|
Subsequent Closing
Subsequent Investment Option Period
|
2.3
2.1
|
Subsequent Investor
Subsequent Purchased Shares
|
2.1
2.3
|
SSA
|
5.23(c)
|
Tax
|
5.15
|
U.S. Economic Sanctions
|
5.22(a)
|
1.3
|
Other Interpretive Matters
. In this Agreement and each other Transaction Document to which the Purchaser(s) and one or more of the Company or any of its Subsidiaries are the sole parties thereto, unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Transaction Document, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually; (iii) reference to any gender includes each other gender; (iv) reference to any agreement (including this Agreement and the Schedules hereto), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof (and without giving effect to any amendment or modification that would not be permitted in accordance with the terms hereof); (v) reference to any applicable law means such applicable law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any particular provision of any applicable law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (vi) reference to any Article, Section or Exhibit means such Article or Section hereof or such Exhibit hereto; (vii) “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; (viii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (ix) relative to the determining of any period of time, “from” means “from and including” and “to” and “through” mean “to and including”; (x) “or,” “either” and “any” are not exclusive; (xi) references to any Subsidiary of a Person shall be given effect only at such times as such Person has one or more Subsidiaries, and references to “consolidated” and “consolidating” financial statements shall be given effect only at such time as, such Person has one or more Subsidiaries; and (xii) references to “$” or “dollars” shall mean United States dollars.
|
2.1
|
Purchase of Series D Preferred Shares
. At the Closing, the Purchaser agrees to purchase, subject to the terms and conditions set forth herein, and the Company agrees to sell and issue to the Purchaser, 19,333,212 Series D Preferred Shares, at the Series D Purchase Price, for aggregate consideration of $37,500,000. The sale and purchase of up to an additional 12,888,808 Series D Preferred Shares (the “
Subsequent Purchased Shares
”), in consideration for up to US$25,000,000, at the Series D Purchase Price, by existing shareholders of the Company that have a right to participate in this investment pursuant to Section 7.6 of the Articles (the “
Existing Shareholder
s”) and/or Shanghai Go Capital Group Hengtong Investment Limited (“
GO
”) (each a “
Subsequent Investor
”) and/or the Purchaser, shall take place at one or more Subsequent Closings (as defined below) pursuant to the terms of Section
2.3 below. The Series D Preferred Shares shall be issued at the Series D Purchase Price and in accordance with the breakdown provided in
Schedule 1
attached hereto, as may be updated from time to time by the Company in order to reflect the investment by any Subsequent Investors, and reflecting a pre-money, as-converted and fully-diluted valuation of US$200,000,000, as set forth in the capitalization table attached hereto as
Schedule 2.1
, showing the authorized and issued share capital of the Company and all outstanding subscriptions, options and warrants immediately following the Closing and the Subsequent Closing. Schedule 2.1 reflects each Purchaser’s percentage of the Company's Fully Diluted Number of Shares and of the Company’s issued and outstanding shares, on an as converted basis, in each case immediately following each Closing.
|
2.2
|
Closing
. Subject to the satisfaction or waiver of the conditions set forth in
Section 3.1
, the closing (the “
Closing
”) of the issuance and purchase of the Shares shall take place (i) via an electronic closing in which separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, will be first delivered by a facsimile or electronic mail exchange of signature pages, with originals to follow addressed to each applicable party’s counsel or (ii) if a physical closing is agreed by the Company and the Purchaser, at the offices of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., One Azrieli Center, Tel Aviv, Israel, or at such other place as may be mutually agreeable to the Company and the Purchaser. The Closing shall take place five (5) Business Days after satisfaction or waiver of all conditions to Closing or on such other date as may be mutually agreeable to the Company and the Purchaser, provided that such satisfaction or waiver is within 60 days following the execution of this Agreement. At the Closing, (i) the Company shall deliver each of the documents and certificates to be delivered by the Company as described in
Section 3
, and (ii) the Purchaser shall deliver each of the documents to be delivered by the Purchaser as described in
Section 3
.
|
2.3
|
Subsequent Closing
.
|
|
(a)
|
Following the date hereof, but in any event not later than promptly following the Closing, the Company will notify GO and the Existing Shareholders in writing in a form approved by the Purchaser that each has an opportunity to purchase a portion of the Subsequent Purchased Shares as follows:
|
|
(i)
|
GO will have the option to purchase 6,444,404 Series D Preferred Shares, at the Series D Purchase Price, for an aggregate consideration of $12,500,000; and
|
|
(ii)
|
the Existing Shareholders will have the option to purchase up to 6,444,404 Series D Preferred Shares, at the Series D Purchase Price, for an aggregate consideration of up to $12,500,000.
|
|
Each of GO and the Existing Shareholders will be required to notify the Company of its election to purchase the Series D Preferred Shares offered to them within forty five (45) days of the Closing (the "
Subsequent Investment Option Period
"). Each of the Existing Shareholders may extend
the
Subsequent Investment Option Period, by written notice to the Company, by additional forty five (45) day period if necessary to raise capital to invest at the Subsequent Closing.
If GO does not notify the Company within such forty five (45) day period of its election purchase all of the Series D Preferred Shares offered to it or the Existing Shareholders does not notify the Company within such forty five (45) day period (or the extended ninety (90) days period, if applicable) of its election purchase any portion of the Series D Preferred Shares offered to it, GO or the Existing Shareholders, as applicable, will be deemed to have elected not to exercise and to waive such right. In the event the Subsequent Investors together elect to purchase Subsequent Purchased Shares for an aggregate consideration of less than $25,000,000, York will have the right, but not the obligation, to purchase any shortfall so that the aggregate consideration payable for Subsequent Purchased Shares purchased by the Subsequent Investors and York is up to $25,000,000, provided that if the Subsequent Investors together elect to purchase Subsequent Purchased Shares for an aggregate consideration of less than $12,500,000 York will be obligated to purchase at least such number of Subsequent Purchased Shares so that the aggregate consideration payable for Subsequent Purchased Shares purchased by the Subsequent Investors and/or York is at least $12,500,000.
|
|
(b)
|
The purchase and sale of the Subsequent Purchased Shares pursuant to Section 2.3(a) shall take place remotely via the exchange of documents and signatures, at such time and place as the Company and the applicable Subsequent Investors mutually agree upon orally or in writing and in no event later than fifteen (15) days following the end of the Subsequent Investment Option Period (the "
Subsequent Closing
"). The Subsequent Closing shall be subject to the same conditions as the Closing,
mutatis mutandis
, provided that each Subsequent Investor (other than the Purchaser) shall have previously executed and delivered a counterpart of this Agreement which shall include an updated Schedule 1 and the Seventh Amended and Restated Securityholders Agreement (if such Subsequent Investor is not already a party thereto). Following the Subsequent Closing, each Subsequent Investor shall be considered a "Purchaser" hereunder.
|
2.4
|
Issuance of Additional Shares in the Event of Valuation Adjustment
. In the event the Company's aggregate revenues, determined in accordance with GAAP, for fiscal years 2014 and 2015 as reflected in the Company's annual audited financial statements for such fiscal years (the “
Actual 2014 and 2015 Revenues
”) are less than $60,000,000 , the Series D Purchase Price will be adjusted and the Purchaser(s) shall be issued additional Series D Preferred Shares as follows:
|
|
(a)
|
The Series D Purchase Price shall be reduced to equal the product of the Series D Purchase Price multiplied by a factor equal to one minus the Adjustment Amount. The result shall be referred to as the “
Reduced PPS
”.
|
|
(b)
|
For purposes hereof, the “
Adjustment Amount
” means (a) $60,000,000 minus Actual 2014 and 2015 Revenues, divided by (b) $60,000,000,
provided
that such amount will not be greater than 0.08.
|
|
(c)
|
The Purchaser(s) shall be issued additional Series D Preferred Shares (the “
Additional Shares
”) in an amount equal to the difference between (i) the number of Series D Preferred Shares issued in the relevant Closing; and (ii) the number of Series D Preferred Shares that would have been issued if the Reduced PPS had been applicable at such Closing.
|
|
(d)
|
Within seven (7) days of the delivery of the Company's audited financial statements for the fiscal year 2015 pursuant to the Seventh Amended and Restated Securityholders Agreement, the Company shall provide a notice to the Purchaser(s) specifying the Actual 2014 and 2015 Revenues and the number of Additional Shares, if any, that the Company will issue to each Purchaser pursuant to this Section. Once the Purchaser(s) shall become entitled to be issued the Additional Shares pursuant to this Section, the Company shall take all required actions to effect such issuance of the Additional Shares to the Purchaser(s) as promptly as possible and in any event no later than seven (7) days following such notice.
|
3.1
|
Conditions to the Closing
.
|
|
(a)
|
The obligation of the Purchaser(s) to effect the purchase of the Series D Preferred Shares pursuant to the terms hereunder at the Closing is subject to the fulfillment as of the Closing of the following conditions to the Purchaser’s satisfaction, in its sole discretion:
|
|
(i)
|
Representations, Warranties and Covenants
. The representations and warranties contained in
Section 5
hereof shall be true and correct at and as of the Closing (both immediately prior to and immediately after giving effect to the transactions contemplated by the Transaction Documents) as though then made, the Company shall have performed all of the covenants required to be performed by it hereunder and under the other documents, agreements and instruments executed in connection herewith that are to be complied with or performed by the Company on or prior to the Closing.
|
|
(ii)
|
Amendment of Articles of Association and Memorandum of Association
. The Company shall have made all corporate proceedings required in connection with adoption of the New Articles and the amendment of the Memorandum of Association in accordance with the terms and conditions of this Agreement and the change of the authorized share capital of the Company (whether or not issued) so that, among other things, at the Closing the Articles shall have been replaced with the New Articles as set forth in
Exhibit A.2
attached hereto.
|
|
(iii)
|
Board of Directors
. On or before the Closing, the following persons shall have been duly appointed to serve on the Board of Directors pursuant to Article 23.4(f) of the New Articles effective as of Closing: (i) Robert Sigal; and (ii) Morry Blumenfeld.
|
|
(iv)
|
No Actions
. No injunction or order of any Governmental Authority will be in effect, and there shall be no actual or threatened litigation or claims that would reasonably be expected to materially adversely affect the Closing, the purchase and issuance of the Series D Preferred Shares or the transactions contemplated by this Agreement.
|
|
(v)
|
Proceedings
. All corporate and other proceedings taken or required to be taken by the Company in connection with the transactions contemplated hereby to be consummated at or prior to the Closing and all documents incident thereto shall be satisfactory in form and substance to the Purchaser Required Majority (as defined below).
|
|
(vi)
|
No Material Adverse Effect
. Since March 31, 2014, there shall have been no Material Adverse Effect.
|
|
(vii)
|
Securities Law Compliance; Consents and Approvals
. The Company shall have made all filings, if any, under all applicable federal and state securities laws necessary to consummate the issuance of the Series D Preferred Shares pursuant to this Agreement and all consents, waivers, permits, approvals (or transfers) and other actions of Governmental Authorities and other third parties required by Applicable Law or contract for the issuance of the Series D Preferred Shares pursuant to this Agreement shall have been obtained including but not limited to the Office of the Chief Scientist, the Investment Center of the Ministry of Industry, Trade and Labor, and the Company shall have delivered to the Purchaser copies of all applicable or necessary consents, approvals, authorization and waivers in connection with the Series D Purchase and the transactions contemplated in connection therewith. To the extent necessary, the Purchaser shall execute and deliver to the Company an undertaking in customary form if required by the Office of the Chief Scientist in connection with the aforementioned filling.
|
|
(viii)
|
Execution of Transaction Documents
. The Purchaser shall have delivered to the Company duly executed copies of each Transaction Document to which it is a party, and the Company shall have delivered to the Purchaser duly executed copies of each Transaction Document to which the Company is a party.
|
|
(ix)
|
Opinion of the Company’s Counsel
. The Purchaser shall have received from Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., counsel for the Company, an opinion with respect to the matters set forth in
Exhibit C
attached hereto, which shall be addressed to the Purchaser, dated the date of the Closing and in form and substance satisfactory to the Purchaser.
|
|
(x)
|
Completion of Due Diligence
. Satisfactory completion of a customary due diligence review of the Company and InSightec Inc., including reviews of intellectual property, technology, financial, legal, operational, commercial, environmental, health and safety, quality, regulatory and other matters including access to any due diligence materials that have been prepared for investors to date, with sufficient access to the Company and its personnel to conduct the due diligence.
|
|
(xi)
|
Compliance with Applicable Laws
. The issuance of the Series D Preferred Shares by the Company hereunder shall not be prohibited by any Applicable Law and shall not subject the Purchaser to any penalty, liability or, in the Purchaser’s sole judgment, other onerous condition under or pursuant to any Applicable Law, and the issuance of the Series D Preferred Shares hereunder by the Company in accordance with the terms thereof shall be permitted by laws, rules and regulations of the jurisdictions and governmental authorities and agencies to which the Purchaser is subject.
|
|
(xii)
|
Insurance and Indemnification Agreements for Directors
. The Company shall execute and deliver indemnification agreements (in the same form executed for all of the Company's directors) to each of the new directors specified in Section 3.1(a)(iii) and any director designated by York prior to the Closing, and the Company shall include such new directors within the coverage of its directors' and officers' insurance policy. The Company shall bring for the approval of the Company's board of directors a resolution to increase the maximum indemnification amount to the Company's Office Holders under the indemnification agreements such it shall not exceed the higher of an aggregate indemnification amount of US $10 million or US $2 million for an Office Holder.
|
|
(xiii)
|
Cooperation Agreement Amendment. The Company shall have delivered to the Purchaser a copy of an amendment to that certain Technology, Co-Operation and Distribution Agreement between GE Healthcare and the Company, dated October 17, 2012, in the form attached hereto as
Exhibit D
,
duly executed by GE Healthcare and the Company.
|
|
(xiv)
|
Closing Purchaser Documents
. The Company shall have delivered to the Purchaser all of the following documents:
|
|
(A)
|
Share Certificates
: A share certificate evidencing the Series D Preferred Shares to be purchased by the Purchaser, issued in the name of the Purchaser or its nominee;
|
|
(B)
|
Officer's Certificate
: An Officer’s Certificate, dated the date of the Closing, stating that the conditions specified in
Sections 3.1(a)(i)
through
3.1(a)(vii)
, inclusive, have been fully satisfied (assuming for this purpose that all documents which must be satisfactory to the Purchaser are in fact satisfactory to the Purchaser);
|
|
(C)
|
Board Resolutions
: Certified copies of the resolutions duly adopted by the Company’s board of directors authorizing the execution, delivery and performance of each of the Transaction Documents, the issuance and sale of the Series D Preferred Shares and the consummation of all other transactions contemplated by this Agreement;
|
|
(D)
|
Secretary's Certificate
: A certificate of the secretary of the Company certifying the names and the signatures of the directors and officers of the Company authorized to sign this Agreement, the share certificates representing the Series D Preferred Shares and each of the Transaction Documents;
|
|
(E)
|
Shareholders Resolutions
: Certified copies of (1) the resolutions of the shareholders of the Company (a) adopting the New Articles and (b) by which the authorized share capital of the Company was changed as described in the New Articles, and (c) by which the Memorandum of Association of the Company was amended to reflect such change of share capital set forth in such resolutions, together with a duly completed notice(s) of such changes to the Israeli Registrar of Companies, and (2) a copy of the New Articles of the Company as in effect at the Closing;
|
|
(F)
|
Notice of Issuance of Series D Preferred Shares to the Purchaser
: The Company shall have delivered to the Purchaser a duly completed and certified notice of the Series D Preferred Shares issuance to the Israeli Registrar of Companies, in form and substance acceptable for immediate filing with the Israeli Registrar of Companies, which filing shall be made by the Company within five (5) Business Days after the Closing;
|
|
(G)
|
Consents
: The Company shall have delivered to the Purchaser copies of all third party and governmental consents, approvals and filings required in connection with the consummation of the transactions hereunder, including from the Investment Center of the Israel Ministry of Industry and Trade and the filing to the Office of the Chief Scientist; and
|
|
(H)
|
Waiver
: To the extent not provided for by the resolutions referred to in paragraph (E) above or in the Seventh Amended and Restated Securityholders Agreement, a waiver or consent executed by all of the shareholders of the Company entitled to rights of first offer and/or preemptive rights in the Company under which they consent to: (1) the waiver of such rights of first offer and/or preemptive rights in regard to the transactions contemplated herein; (2) the provisions of the Seventh Amended and Restated Securityholders Agreement (to the extent any such shareholder has not executed the Seventh Amended and Restated Securityholders Agreement); and (3) the provisions of the New Articles. With regard to any incorporated shareholder, such waiver shall be accompanied by a signatory-rights certificate issued by such shareholder’s general counsel confirming authority to sign the same, unless such waiver is already included in any of the Transaction Documents to which such shareholder is a party.
|
|
(xv)
|
Schedules 2.1
. Schedules 2.1shall have been updated and be current as of the Closing date.
|
|
(xvi)
|
Investment Center Approval
. The Company will have received the approval of the Investment Centre of the Israeli Ministry of Industry, Trade and Labor to the Transaction.
|
|
(xvii)
|
Waiver
. Any condition specified in this
Section 3.1
may be waived if consented to by Purchasers holding a majority of the Series D Preferred Shares (aggregating for such purpose Series D Preferred Shares already issued with shares proposed to be issued in the applicable Closing, provided that the Purchasers participated in that Closing) (the "
Purchaser Required Majority
").
|
|
(b)
|
The obligation of the Company to consummate the Closing is subject to the fulfillment as of the Closing of the following conditions to the Company’s satisfaction in its sole discretion:
|
|
(i)
|
Representations, Warranties and Covenants
. The representations and warranties contained in
Section 6.5
hereof shall be true and correct at and as of the Closing (both immediately prior to and immediately after giving effect to the transactions contemplated by the Transaction Documents) as though then made, and the Purchaser shall have performed all of the covenants required to be performed by it hereunder and under the other documents, agreements and instruments executed in connection herewith that are to be complied with or performed by it on or prior to the Closing;
|
|
(ii)
|
Securities Law Compliance; Consents and Approvals
. All consents, waivers, permits, approvals (or transfers) and other actions of Governmental Authorities and other third parties required by Applicable Law or contract for the issuance of the Series D Preferred Shares pursuant to this Agreement shall have been obtained including but not limited to the Office of the Chief Scientist, the Investment Center of the Ministry of Industry, Trade and Labor, and the Purchaser shall have received copies of all applicable or necessary consents, approvals, fillings, authorization and waivers in connection with the Series D Purchase and the transactions contemplated in connection therewith;
|
|
(iii)
|
Execution of Transaction Documents
. The Purchaser shall have delivered to the Company duly executed copies of each Transaction Document to which it is a party;
|
|
(iv)
|
No Actions
. No injunction or order of any Governmental Authority will be in effect, and there shall be no actual or threatened litigation or claims that would reasonably be expected to materially adversely affect the Closing, the purchase and issuance of the Series D Preferred Shares or the transactions contemplated by this Agreement;
|
|
(v)
|
Payment of Purchase Price
. Payment by the Purchaser (and with respect to each Subsequent Closing, payment by the respective Subsequent Investor) of the Series D Purchase Price for the Shares (and Subsequent Purchased Shares, as applicable), by wire transfer of immediately available funds to an account designated by the Company;
|
|
(vi)
|
Registrar Documents
. The Company shall have received from the Purchaser all documents that may be required by the Israeli Registrar of Companies, which may include a notarized certificate of incorporation, certificates of good standing, and any equivalent document regarding the Purchaser.
|
|
(vii)
|
York, and as a condition to the applicable Subsequent Closing, Go-Capital, shall have executed an undertaking in customary form, in which the Purchaser undertakes to comply with the Law for the Encouragement of Industrial Research and Development, 1984 as amended or supplemented from time to time and all regulations promulgated thereunder.
|
4.1
|
Affirmative Covenants
. The Company covenants that it shall:
|
|
(i)
|
use the proceeds from the issuance and sale of the Series D Preferred Shares solely for working capital to support the growth of the business and operations of the Company including, without limitation, research and development of its products. Unless otherwise approved by the Board of Directors of the Company, none of the proceeds from the transactions contemplated hereby will be used for the payment of any Dividends or other distributions to any Affiliate or holder of capital of the Company, to fund changes in compensation for current or former directors, or to fund changes in compensation for officers or employees of the Company, except annual year-end performance-based compensation adjustments consistent with the on-going operating budget;
|
|
(ii)
|
submit the New Articles and the amendments to the Memorandum of Association to the Israeli Registrar of Companies not later than four Business Days following the Closing.
|
|
(iii)
|
pay within 10 days following the Closing the debt to the OCS specified in Section 5.17(b) of the Discloser Schedule.
|
4.2
|
Securities Filings
. The Company shall make all filings and reports, if any, relating to the offer, sale and issuance of the Series D Preferred Shares required under applicable securities laws of the states of the United States or the State of Israel following the Closing.
|
4.3
|
Compliance with Laws Covenant
. Section 3.08 of the Seventh Amended and Restated Securityholders Agreement (the “
Compliance Covenant
”) is hereby incorporated into this Agreement,
mutatis mutandis
, such that the Compliance Covenant will take effect as of the date of this Agreement notwithstanding the fact that the Seventh Amended and Restated Securityholders Agreement will not be executed until a later time; provided that upon the due execution of the Seventh Amended and Restated Securityholders Agreement by all parties thereto, this
Section 4.3
shall terminate and be of no further force and effect and all rights and obligations under the Compliance Covenant shall thereafter be only under the Seventh Amended and Restated Securityholders Agreement. For the avoidance of doubt, references in the Compliance Covenant to “the date hereof” shall be read as referring to the date of this Agreement and not the date of the Seventh Amended and Restated Securityholders Agreement.
|
5.1
|
Corporate Existence and Power
. The Company and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all corporate power and authority and all material authorizations from Governmental Authorities required to carry on its business. The Company has furnished to the Purchaser a true and complete copy of the Company’s memorandum of association, as currently in effect (its “
Memorandum of Association
”), and a true and complete copy of the Company’s Amended and Restated Articles of Association, as currently in effect, in both cases, certified by its corporate secretary.
|
5.2
|
Corporate Authorization and Validity
. The execution, delivery and performance by the Company of each of the Transaction Documents to which it is or will be a party and any other instruments and agreements to be executed and delivered by the Company as contemplated thereby are within its corporate powers and, other than approval of the Company’s shareholders, which shall be obtained prior to the Closing, have been duly authorized by all necessary corporate action on its part and no other corporate action on the part of the Company or its shareholders is necessary to authorize the execution, delivery and performance of each Transaction Document and such other instruments and agreements by the Company and the consummation of the transactions contemplated hereby and thereby, including the issuance of any Subsequent Purchased Shares in the Subsequent Closing. Each of the Transaction Documents to which it is or will be a party has been or shall have been duly executed and delivered by the Company and constitutes or will constitute a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms.
|
5.3
|
Non-Contravention
. Subject to the receipt of the consents listed in
Sections 5.3
and
5.4
of the disclosure schedule (the “
Disclosure Schedule
”) attached hereto, the execution, delivery and performance by the Company of the Transaction Documents to which it is or will be a party do not and will not:
|
|
(i)
|
contravene or conflict with the Company’s organizational documents,
|
|
(ii)
|
assuming compliance with the matters referred to in
Section 5.4
below, contravene or conflict with any Applicable Law, or
|
|
(iii)
|
contravene or conflict with, constitute a default under, accelerate any obligations under or give rise to any right of termination, loss of benefit or other adverse action under, any material Contract or other material agreement of the Company or any of its Subsidiaries by which any of the assets of the Company or any of its Subsidiaries are or may be bound or any license, permit or other authorization.
|
5.4
|
Consents
. The execution, delivery and performance by the Company of the Transaction Documents to which it is or will be a party require no action by or in respect of, or consent or approval of, or filing with, any Governmental Authority or any other Person other than consents, approvals or filings listed on
Section 5.4
of the Disclosure Schedule.
|
5.5
|
Finder’s Fees
. No broker, finder or other intermediary or representative acting on behalf of the Company is entitled to any fee or commission from any party in connection with this Agreement, except as described on Section 5.5 of the Disclosure Schedule.
|
5.6
|
Capitalization
. As of the date of this Agreement, the authorized share capital of the Company consists solely of: (i) 29,000,000 Series C Preferred Shares, of which 27,519,390 Series C Preferred Shares are issued and outstanding; (ii) 33,000,000 Series B-1 Preferred Shares, of which 32,201,524 Series B-1 Preferred Shares are issued and outstanding; (iii) 15,000,000 Series B Preferred Shares, of which 14,037,888 Series B Preferred Shares are issued and outstanding; and (iv)110,000,000 Ordinary Shares, of which 15,257,512 Ordinary Shares are issued and outstanding. Immediately after the Closing, the authorized and issued share capital of the Company and all outstanding subscriptions, options and warrants shall be as stated in
Schedule 2.1
. The Company has reserved sufficient Series D Preferred Shares that may be issued in accordance with this Agreement and the New Articles, including any Additional Shares to be issued in the Subsequent Closing.
Section 5.6
of the Disclosure Schedule sets forth the aggregate number of authorized but unissued Ordinary Shares of the Company subject to outstanding options. Except as set forth on
Section 5.6
of the Disclosure Schedule, there are no outstanding securities convertible into or exchangeable for Ordinary Shares or for shares of capital stock of any Subsidiary of the Company and there are no outstanding options, rights, preemptive or otherwise, or similar right or other right, contract, agreement, commitment or understanding of any kind or warrants to purchase or to subscribe for any shares of such stock or other securities of the Company or any Subsidiary of the Company, or obligating the Company or any of its Subsidiaries to issue any additional shares of capital stock or to redeem, repurchase or otherwise acquire any shares of its capital stock. The issued and outstanding ordinary shares of the Company are held by the shareholders listed, and in the amounts set forth, on
Section 5.6
of the Disclosure Schedule.
|
5.7
|
Validity of Shares; Issuance
. Each of the Series D Preferred Shares, when issued, allotted and paid for at the Closing in accordance with this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and free of any preemptive rights or Liens, will have the rights, preferences, privileges and restrictions set forth in the New Articles and will be duly registered in the name of the Purchaser, in the Company’s register of shareholders. All outstanding Ordinary Shares of the Company and each of its Subsidiaries are validly issued, fully paid and nonassessable, and free of any Liens, and are issued in compliance with all applicable federal and state securities laws.
|
5.8
|
Financial Statements
. The Company has previously made available to the Purchaser accurate and complete copies of the Company’s audited consolidated financial statements (including a balance sheet, income statement, statement of cash flows and statement of operations) as of and for the period ended December 31, 2013 and its unaudited consolidated financial statements (including a balance sheet, income statement, statement of cash flows and statement of operations) as of and for the three months ended March 31, 2014 (together, all such financial statements are referred to as the “
Financial Statements
”). The Financial Statements (including the related notes, where applicable) fairly present in all material respects the results of the consolidated operations and consolidated financial condition and cash flows of the Company for the respective fiscal periods or as of the respective dates therein set forth and the changes in their financial condition for the periods indicated; each of such statements (including the related notes, where applicable) comply with applicable accounting requirements and each of such statements (including the related notes, where applicable) are true and accurate and has been prepared in accordance with GAAP consistently applied during the periods involved; except, in all cases, that the unaudited consolidated financial statements were or are subject to normal and recurring year-end adjustments that are not expected to be material in amount. As at such dates of the Financial Statements the Company has no liabilities, debts or obligations, whether accrued, absolute or contingent that are required to be stated in the Financial Statements other than liabilities reflected or reserved against in the Financial Statements. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP. The books and records of the Company have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements. The books of account, ledgers, order books, records and documents of the Company and its Subsidiaries accurately and completely reflect all material information relating to the business of the Company and its Subsidiaries, the location of their respective assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company and its Subsidiaries. There are no special purpose vehicles created for the purpose of accruing off-balance sheet liabilities, claims, or obligations of any nature, whether absolute, contingent, anticipated, or otherwise, whether due or to become due, that are not disclosed or provided for in the Financial Statements and which are required by GAAP to be so disclosed or provided for. The Financial Statements are not affected by any materially unusual or non-recurring items. The Financial Statements: (i) make full provision for depreciation of the fixed assets of the Company having regard to their original cost and estimated life; (ii) make due provision for any bad or doubtful debts; (iii) make full provision for severance pay, vacation pay and all other relevant social benefits due to employees; (iv) set out correctly all such reserves or provisions for Taxes as are necessary on the basis of the rates of such Taxes now in force to cover all Taxes (present and future) in respect of any transaction occurring prior to the date of the Financial Statements, liable to be assessed on the Company for which the Company is accountable up to such date; and (v) fully disclose all assets of the Company.
|
5.9
|
Assets
. The Company and its Subsidiaries have good, valid and marketable title to all properties and assets owned by them, including, without limitation, all properties and assets included in the Financial Statements (except for leased or licensed assets and for properties or assets reflected in such Financial Statements which have been sold or otherwise disposed of in the ordinary course of business), free and clear of all Liens except Permitted Liens. Such properties or assets are sufficient for the conduct of the Company’s business as currently conducted. All personal property of the Company and its Subsidiaries is in good operating condition and repair and is suitable and adequate for the uses for which it is intended or is being used. The Company and its Subsidiaries own, or have a valid leasehold interest in, all assets necessary for the conduct of their businesses as presently conducted.
|
5.10
|
Intellectual Property
. The Company and its Subsidiaries own exclusively (or jointly, as described in the Disclosure Schedule), licenses, uses, or has the right to use under valid licenses, sublicenses, agreements, or permissions all Intellectual Property Rights currently used by them or developed by them in the conduct of their business or as their business is contemplated to be conducted, free and clear of all Liens. No such Intellectual Property Right requires the payment of a royalty to any third party other than as set forth in
Section 5.10(a)
of the Disclosure Schedule. To the Company’s Knowledge, the Company and its Subsidiaries either (i) own, license, use, or have the right to use under valid licenses, sublicenses, agreements, or permissions all material Intellectual Property Rights or (ii) shall be able to obtain or acquire rights to use all of the Intellectual Property Rights required for their business as currently conducted . Other than as set forth in
Section 5.10(a)
of the Disclosure Schedule, the Company is unaware of any Intellectual Property Right required for the Company’s or any of its Subsidiaries’ business as currently conducted or, the use of which by the Company or such Subsidiary requires or would require the payment of a royalty to a third party (other than royalties to the Office of the Chief Scientist pursuant to applicable law). The registered Intellectual Property Rights owned by the Company (whether exclusively or jointly, as described in the Disclosure Schedule) are described in
Section 5.10(b)
of the Disclosure Schedule, including a full list of all registrations and applications for registrations of Intellectual Property and Rights renewals thereof, the applicable jurisdiction, registration number (or application number) and date issued (or date submitted). The Company has not received notice or allegation that any product or service offered or Intellectual Property Right used by the Company or any of its Subsidiaries has infringed or infringes any rights or patents or other Intellectual Property Right of any other person and to the Knowledge of the Company, no third party has asserted any claim regarding the use of, or challenging or questioning the Company’s or any of its Subsidiaries’ right or title in, any of such Intellectual Property Rights.
Section 5.10(c)
of the Disclosure Schedule contains a complete and accurate list of all licenses granted by the Company or any of its Subsidiaries to any third party with respect to any Intellectual Property Rights and all licenses and other rights granted by any third party to the Company or any of its Subsidiaries with respect to any Intellectual Property Rights, in each case identifying the subject Intellectual Property Rights. No written claim of invalidity of any patents included in the Intellectual Property Rights has been made by any Person, and no proceedings are pending or, to the Knowledge of the Company, threatened that challenge the validity, ownership, or use of any of the Company’s Intellectual Property Rights. To the Knowledge of the Company, no written claim of invalidity of any patents included in the Intellectual Property Rights licensed to the Company has been made by any Person and no proceedings are pending or, to the Knowledge of the Company, threatened that challenge the validity, ownership, or use of any the Intellectual Property Rights licensed to the Company. The Company does not have any obligation to convey any ownership interest in, or any obligation to grant any license of rights to, its Intellectual Property Rights to any Person other than as set forth in
Annex B in Section 5.10(b)
of the Disclosure Schedule. Other than as set forth in Annex B in
Section 5.10(b)
of the Disclosure Schedule, no Person other than the Company presently has any ownership interest in or license rights to the Company’s Intellectual Property Rights. The transactions contemplated by this Agreement shall have no material effect on the Company’s right, title and interest in and to its Intellectual Property Rights. The Company and each of its Subsidiaries has taken and is taking such action to maintain and protect each item of Intellectual Property Right that it owns or uses, which actions are reasonable and customary in the industry in which the Company or such Subsidiary operates. All the confidential information of the Company and each of its Subsidiaries is being and has been continuously maintained in confidence by the Company or such Subsidiary, by taking reasonable precautions to protect and prevent its disclosure to unauthorized parties. All Intellectual Property Rights that have been developed or are currently being developed on behalf of the Company or any of its Subsidiaries by any current or former employee or independent contractor of the Company or such Subsidiary or other third party is or shall be the sole property of the Company or such Subsidiary. Except as set forth in
Section 5.10(b)
of the Disclosure Schedule, all current employees, consultants and independent contractors of the Company who had developed or are developing Intellectual Property Rights as aforesaid, have executed written contracts with the Company that assign to the Company all Intellectual Property Rights developed by such employee, consultant or independent contractor (including their alleged right to receive consideration, compensation, remuneration or benefits for their contribution to Company Intellectual Property), and each such person with access to confidential information or trade secrets of the Company have entered into a non-disclosure and proprietary rights assignment agreement (which would include a non-solicitation provision) with the Company. Other than as set forth in
Section 5.10(b)
of the Disclosure Schedule, there are no restrictions on the ability of the Company to sell, offer to sell, license, lease, transfer, import, use, reproduce, distribute, modify or otherwise exploit any of its Intellectual Property Rights other than legal requirements relating to the export or reexport of Intellectual Property Rights or otherwise requiring a license set forth in
Section 5.10(d)
of the Disclosure Schedule. Other than as set forth in
Section 5.10(e)
of the Disclosure Schedule. Except as set forth in
Section 5.10(e)
of the Disclosure Schedule, the Company has not (i) incorporated any Open Source License into, or combined software used by the Company pursuant to an Open Source License with, the Company's Intellectual Property Rights or products or services; (ii) distributed software subject to Open Source License in conjunction with any Company Intellectual Property Rights or Company products or services; or (iii) used software subject to Open Source License; in such a way that, with respect to clause (i), (ii), or (iii), creates, or purports to create obligations for the Company with respect to any Company Intellectual Property Rights or grants, or purport to grant, to any third party, any rights or immunities under any Company Intellectual Property Rights (including using any software subject to Open Source License that require, as a condition of use, modification or distribution of such Open Source License software that Company Intellectual Property Rights incorporated into, derived from or distributed with such Open Source License software be (1) disclosed or distributed in source code form, (2) be licensed for the purpose of making derivative works, or (3) be redistributable at no charge). The Company has not received any notice that any o current employee, consultant or independent contractor of the Company: (i) has been or is in material violation of any term or covenant of any employment contract, patent disclosure agreement, invention assignment agreement, nondisclosure agreement, noncompetition agreement or any other Contract with any other party by virtue of such employee’s, consultant’s or independent contractor’s being employed by, or performing services for, the Company or using trade secrets or proprietary information of others without permission; or (ii) has developed any technology, software or other copyrightable, patentable or otherwise proprietary work for the Company or during a period of time during which they were working for the Company that is subject to any Contract (other than any Contract to which the Company is a party) under which such employee, consultant or independent contractor has assigned or otherwise granted to any third party any rights (including Intellectual Property) in or to such technology, software or other copyrightable, patentable or otherwise proprietary work. Except as provided in Schedule 5.10(f) of the Disclosure Schedule, all current Israeli Employees of the Company engaged in the research and development of the Company Intellectual Property Rights have expressly and irrevocably waived the right to receive compensation in connection with “Service Inventions” under Section 134 of the Israeli Patent Law-1967 or any other similar provision under any Applicable Law of any applicable jurisdiction, and waived any and all Moral Rights as applicable, with respect to the Company Intellectual Property Rights. To the Company's knowledge, neither the employment of any employee of the Company, nor the use by the Company of the services of any consultant or independent contractor subjects the Company to any Liability to any third party for improperly soliciting such employee, consultant or independent contractor to work for the Company, whether such Liability is based on contractual or other legal obligations to such third party. Other than as set forth in Section 5.10(a) and Section 5.17 of the Disclosure Schedule, no government funding, facilities of a university, college, other educational institution or research center or funding from third parties (other than OCS Grants, BIRD, FP-7) was used in the development of the Company-Owned IP Rights. No current or former employee, consultant or independent contractor of the Company who was involved in, or who contributed to, the creation or development of any Company Intellectual Property Rights has performed services for the government, for the government-owned institution or branch including without limitation, for a university, college or other educational institution or for a research center during a period of time during which such employee, consultant or independent contractor was also performing services for the Company.
|
5.11
|
Subsidiaries
. Except for (i) InSightec Inc., a Delaware corporation, in which the Company owns all of the outstanding capital stock and rights to acquire capital stock, and (ii) InSightec Japan Y.K., a Japanese corporation, in which the Company owns all of the outstanding capital stock and rights to acquire capital stock, the Company does not directly or indirectly own any outstanding capital stock or other ownership interest in any other corporation, partnership, limited liability company, association, joint venture or other business entity.
|
5.12
|
Litigation; Disputes
. Except as disclosed on
Section 5.12
of the Disclosure Schedule, there is no action, suit, investigation, order, claim or proceeding pending or, to the best of the Company’s Knowledge, threatened against or affecting the Company or any of its Subsidiaries before any Governmental Authority which, if adversely determined or resolved, may reasonably be expected to result in any material liability or loss to the Company or such Subsidiary or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. Without limiting the foregoing, neither the Company nor any of its Subsidiaries has been given notice by a Governmental Authority of, any actual or potential violation by the Company or its Subsidiaries of the Foreign Corrupt Practices Act, 15 U.S.C. 78dd et seq., or any other United States or foreign laws concerning corrupt payments, nor, to the Knowledge of the Company, is the Company or any of its Subsidiaries currently being, or has been, investigated by any Governmental Authority with respect to, any actual or potential violation by the Company or its Subsidiaries of the Foreign Corrupt Practices Act, 15 U.S.C. 78dd et seq., or any other United States or foreign laws concerning corrupt payments.
|
5.13
|
Compliance with Laws
.
|
|
(a)
|
Neither the Company nor any of its Subsidiaries has violated or infringed, and does not violate or infringe, in any material respect any Applicable Law (including all laws regulating the manufacture or sale of medical devices, or employee rights and benefit plans, health or safety, or environmental protection) or any order, writ, injunction or decree of any Governmental Authority.
|
|
(b)
|
Without limiting
Section 5.13(a)
, except as set forth on
Section 5.13
of the Disclosure Schedule, the Company and its Subsidiaries have operated their business in compliance with all requirements relating to medical records and medical information privacy promulgated by the Joint Commission on Accreditation of Healthcare Organizations and all contractual requirements that regulate or limit the maintenance, use or transmission of medical records, patient information or other personal information made available to or collected by the Company and its Subsidiaries in connection with the operation of their business and comply with all confidentiality, security and other protective measures required by Applicable Laws and contractual requirements and have implemented all such measures required by the Standards for Privacy of Individually Identifiable Health Information, Security Standards and Standards for Electronic Transactions and Code Sets promulgated under the Health Insurance Portability and Accountability Act of 1996 (“
HIPAA
”). With respect to privacy and security commitments for personally identifiable information maintained by the Company and its Subsidiaries (the “
Privacy Commitments
”), the Company and its Subsidiaries are in compliance with the Privacy Commitments, and the Privacy Commitments have not been rejected by any applicable certification organization which have reviewed such Privacy Commitments or to which any such Privacy Commitment has been submitted. The transactions contemplated by this Agreement will not violate any of the Privacy Commitments. Neither the Company nor any of its Subsidiaries has received any inquiries from the Federal Trade Commission or any other Governmental Authority regarding the Privacy Commitments, nor have there been any lawsuits, claims, suits, proceedings, notices of violation or investigations from any party regarding the Privacy Commitments. Except as set forth on
Section 5.13
of the Disclosure Schedule, the Company and its Subsidiaries have entered into “business associate” agreements with all of its applicable customers and suppliers in accordance with Applicable Law. Without limiting the foregoing, the Company and its Subsidiaries comply with the privacy and security requirements of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health (“
HITECH
”) Act (Pub. L. No. 111-5).
|
|
(c)
|
Except as set forth on
Section 5.13(c)
of the Disclosure Schedule, all non-public information relating to an identified or identifiable natural or legal Person (“
Personal Data
”) has been collected, maintained, used, transmitted and disclosed at all times in compliance with (i) Applicable Laws, (ii) the requirements of contracts to which the Company or any its Subsidiaries is a party, including but not limited to HIPAA “business associate agreements,” and (iii) policies and practices of Company relating to Personal Data, or if any gap was identified a process and plan to close it in place.
|
|
(d)
|
Except as set forth on
Section 5.13
of the Disclosure Schedule, when the Company has changed its policies or practices relating to Personal Data, the Company has, to the extent required by the applicable policy in effect prior to the change, provided notice to the affected Person about whom the Personal Data relates (“
Data Subject
”) prior to using the Personal Data relating to them in a manner inconsistent with the policy or practice previously communicated to the Data Subject.
|
5.14
|
Absence of Undisclosed Liabilities
. Except as set forth on the Financial Statements or incurred in the ordinary course of business consistent with past practice, the Company has no Indebtedness or liability, whether accrued, fixed or contingent, other than liabilities expressly disclosed in this Agreement.
|
5.15
|
Taxes
. (i) Each of the Company and its Subsidiaries has paid all taxes, including, without limitation, income taxes, estimated taxes, excise taxes, sales taxes, value added taxes, use taxes, gross receipts taxes, franchise taxes, national insurance taxes, employment and payroll related taxes, property taxes and import duties, whether or not measured in whole or in part by net income (hereinafter, “
Taxes
” or, individually, a “
Tax
”) which have come due and are required to be paid by it through the date hereof, and all deficiencies or other additions to Tax, interest and penalties owed by it in connection with any such Taxes; (ii) each of the Company and its Subsidiaries has timely submitted or caused to be submitted all returns for Taxes that it is required to submit on and through the date hereof (including all applicable extensions), and all such Tax returns are accurate and complete in all material respects; (iii) with respect to all Tax returns of the Company and its Subsidiaries, (a) there is no unassessed Tax deficiency proposed or, to the Knowledge of the Company, threatened against the Company or its Subsidiaries and (b) no audit is in progress with respect to any return for Taxes, no extension of time is in force with respect to any date on which any return for Taxes was or is to be submitted and no waiver or agreement is in force for the extension of time for the assessment or payment of any Tax; (iv) all provisions for Tax liabilities of the Company and its Subsidiaries have been made consistent with GAAP consistently applied, and all liabilities for Taxes of the Company and its Subsidiaries attributable to periods prior to or ending on the date hereof have been adequately provided for; (v) there are no liens for Taxes on the assets of the Company or its Subsidiaries; (vi) all monies required to be withheld by the Company (including from employees for income Taxes and social security and other payroll Taxes) have been collected or withheld, and either paid to the respective taxing authorities, set aside in accounts for such purpose, or accrued, reserved against and entered upon the books of the Company; (vii) to the best Knowledge of the Company, there are no circumstances which will or may, whether by lapse of time or the issue of any notice of assessment or otherwise, give rise to any dispute with any relevant taxation authority in relation to the Company’s or its Subsidiaries’ liability or accountability for taxation under currently enacted statutes and regulations, any claim made by any of them, any relief, deduction, or allowance afforded to any such company, or in relation to the status or character of the Company or its Subsidiaries under or for the purpose of any provision of any legislation relating to taxation; (viii) the Company has duly collected all amounts on account of any sales transfer taxes or VAT, including goods and services, harmonized sales and provincial or territorial sales taxes, required by law to be collected by it, and has duly and timely remitted to the appropriate governmental authority any such amounts required by law to be remitted by it; (ix) the Company has not refunded or deducted any input VAT that it was not so entitled to deduct or refund; (x) any related party transactions subject to Section 85A of the Israeli Income Tax Ordinance conducted by the Company have been on an arms-length basis in accordance with Section 85A of the Ordinance; (xi) the Company does not and has never performed and was not part of any action or transaction that is classified as a "reportable transaction" under section 131(g) of the Israeli Income Tax Ordinance and the regulations promulgated thereunder; and (xii) all the agreements that the Company has signed with the Israeli Tax Authority and all the rulings and decisions received by the Company from the Israeli Tax Authority are detailed in Section 5.15 of the Disclosure Schedule..
|
5.16
|
Employees
.
|
|
(a)
|
A list of all the directors, officers, employees and consultants (excluding those receiving less than $100,000 per year, lawyers and accountants) of the Company and its Subsidiaries (the “
Employees
”) is set forth on
Section 5.16(a)
of the Disclosure Schedule. The Company has provided to the Purchaser a schedule of benefits payable or which the Company is bound to provide (whether now or in the future) to each Employee, including salary, bonuses, accrued severance pay, vacation days entitlement (to the extent in excess of that provided by Applicable Law) and accrued vacation days, recuperation pay, sick pay entitlement (to the extent in excess of that provided by Applicable Law), accrued sick days and start date.
|
|
(b)
|
A list of all the directors, officers, employees and consultants entitled to a notice period of more than 30 days (exclude) upon termination of employment with the Company - of the Company and its Subsidiaries is set forth on
Section 5.16(b)
of the Disclosure Schedule.
|
|
(c)
|
The Company has made available to the Purchaser true copies of its employment agreements and complete copies of its consultancy agreements (including agreements between the Company or its Subsidiaries and any such Employee concerning intellectual property, confidentiality and non-competition) under which the Employees or consultants are engaged.
|
|
(d)
|
There are no agreements or arrangements for the payment of any pensions, allowances, lump sums or other like benefits on retirement or on death or termination or during periods of sickness or disablement for the benefit of any Employee or former employee or consultant of the Company or its Subsidiaries or for the benefit of the dependents of any such person in operation at the date hereof except as described in
Section 5.16(d)
of the Disclosure Schedule. The Company and its Subsidiaries have fulfilled all of their obligations under the law to the Employees.
|
|
(e)
|
Section 5.16(e)
of the Disclosure Schedule sets forth the collective agreements and extension orders that apply to all or any of the Employees except for extension orders of common application to all employees in Israel. Except for the collective agreements and extension orders set forth in
Section 5.16(e)
of the Disclosure Schedule and for extension orders of common application to all employees in Israel the Company is not a party or subject to any collective bargaining agreement with any labor union or any local or subdivision thereof. There is no current union organizing activity among any of the Employees or any union representative petition pending or threatened. No labor union has requested the Company or, to the Company’s knowledge, has sought to represent any of the employees, representatives or agents of the Company or the Subsidiaries. The Company is not a party to any pending or, to the Knowledge of the Company, threatened, labor dispute, including any strike, work stoppage or work slowdown. There are no claims pending, or to the Knowledge of the Company, threatened to be brought, before any Governmental Authority by any Employee for compensation, pending severance benefits, vacation time or pay, pension benefits, claims for employment discrimination, harassment, unfair labor practices, grievances, wrongful discharge, work related injuries or otherwise, except as specified in
Section 5.16(e)
of the Disclosure Schedule.
|
|
(f)
|
There are no customs, customary practices and unwritten entitlements regarding the Employees that are material (individually or in the aggregate) and could reasonably be deemed to be binding on the Company.
|
|
(g)
|
Each of the Company and each Subsidiary have entered into agreements regarding works for hire, confidential information and no solicitation of customers and employees with each employee or consultant to the Company, except as set forth in Section 5.16(g) of the Disclosure Schedule.
|
|
(h)
|
Section 5.16(h)
of the Disclosure Schedule contains a true and complete copy of all restricted share, stock option or similar plans approved by the Company or its Subsidiaries.
Section 5.16(h)
of the Disclosure Schedule sets forth in tabular form the name of each equity incentive plan currently in existence or authorized by the Board of Directors, setting forth the following: name of plan, date approved by the Board of Directors, number of shares authorized for issuance under the plan, number of grants outstanding, exercised and available for future grant, a schedule naming each optionee and each grant specifying date of grant and exercise price, a schedule of any grants approved but not yet documented, and the vesting provisions of each grant including vesting start date. Copies of each plan and grant documentation have been made available to the Purchaser.
|
|
(i)
|
The Company has good labor relations, and to the Company’s knowledge (i) there are no facts indicating that the consummation of the transactions contemplated hereunder will have a material adverse effect on the labor relations of the Company, and (ii) no Company Employees or consultants have provided the Company with written notice regarding their intention to terminate their employment or engagement with the Company.
|
5.17
|
Approved Enterprise; Office of Chief Scientist
. The Company has been granted the status of an approved enterprise by the Investment Center of the Israel Ministry of Industry and Trade pursuant to the Certificates of Approval referred to in
Section 5.17
of the Disclosure Schedule (the “
Investment Center Certificates of Approval
”). The Company has received funding for purposes of research and development from the Office of the Chief Scientist of the Israel Ministry of Industry and Trade pursuant to the Certificates of Approval referred to in
Section 5.17
of the Disclosure Schedule (the “
OCS Certificates of Approval
”, and together with the Investment Center Certificates of Approval, the “
Certificates of Approval
”). The Certificates of Approval are in full force and effect, have not been revoked or modified and the Company is in compliance with all material terms thereof. To the Company's Knowledge, subject to the receipt of the Investment Center approval, the consummation of the Transaction will not have any adverse effect on the Certificates of Approval. Except as set forth on
Section 5.17
of the Disclosure Schedule, neither the Company nor any Subsidiary has received any other grants, incentives and subsidies, or submitted applications therefor from the government of the State of Israel or any agency thereof, or from any foreign governmental or administrative agency.
|
5.18
|
Material Contracts
.
|
|
(a)
|
Except as set forth in
Section 5.18
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any written or oral:
|
|
(i)
|
Contract or agreement (other than sales or service contracts made in the ordinary course of business, including extended warranties and other than contracts and agreements subject to disclosure under clause (ii) below) material to the business of the Company and its Subsidiaries or any Contract not made in the ordinary course of business that involves obligations of, or payments to, the Company in excess of $25,000;
|
|
(ii)
|
consulting agreement or Contract for the employment of any officer, employee or other person on a full-time, part-time or consulting basis (other than those delivered to such Purchaser in accordance with
Section 5.16
above and excluding at-will employees receiving less than $100,000 per year) that involves obligations of the Company in excess of $25,000 per year;
|
|
(iii)
|
agreement, mortgage, indenture, loan or credit agreement, security agreement, guaranty or indemnity or other agreement or instrument relating to the borrowing or lending of money or extension of credit or providing for the mortgaging or pledging of, or otherwise placing a lien or security interest on, any assets or properties of the Company or any of its Subsidiaries, that involves obligations of the Company in excess of $25,000 per year;
|
|
(iv)
|
option, warrant or other Contract for the purchase of any debt or equity security of any corporation, or for the issuance of any debt or equity security, or the conversion of any obligation, instrument or security into debt or equity securities, of the Company or any of its Subsidiaries;
|
|
(v)
|
agreement under which it has granted any Person any registration rights;
|
|
(vi)
|
settlement agreement of any administrative or judicial proceedings within the past five years;
|
|
(vii)
|
intellectual property (including trademark) licensing agreement; or
|
|
(viii)
|
Contract or agreement limiting the ability of the Company or any of its Subsidiaries to engage in any line of business or to compete with any person or entity.
|
|
(b)
|
Neither the Company nor any of its Subsidiaries is in material breach of or in default under any of the Contracts, obligations or commitments set forth in
Section 5.18
of the Disclosure Schedule (collectively, the “
Disclosed Contracts
”), and no event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default. All of the Disclosed Contracts are valid, binding and enforceable in accordance with their respective terms. Except as set forth in
Section 5.18
of the Disclosure Schedule, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (i) violate, or conflict with, or result in a breach of any provision of or constitute a default (or an event which, with the giving of notice, the passage of time or otherwise would constitute a default) under, or entitle any party (with the giving of notice, the passage of time or otherwise) to terminate, accelerate or call a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms or conditions of any Disclosed Contract or (ii) require the consent of any party (other than the Company or any of its Subsidiaries) to any Disclosed Contract. The Company has furnished the Purchaser with a true and complete copy of all Disclosed Contracts set forth in
Section 5.18
of the Disclosure Schedule, and with accurate descriptions of all oral Disclosed Contracts set forth in
Section 5.18
of the Disclosure Schedule.
|
5.19
|
Insurance
. Neither the Company nor any of its Subsidiaries is in default with respect to its obligations under any insurance policy maintained by it, and neither the Company nor any of its Subsidiaries has been denied insurance coverage. The insurance coverage of the Company is customary for prudent corporations of similar size engaged in similar lines of business. Except as set forth on
Section 5.19
of the Disclosure Schedule, the Company does not have any self-insurance or co-insurance programs, and the reserves set forth on the Financial Statements are adequate to cover all anticipated liabilities with respect to any such self-insurance or co-insurance programs.
|
5.20
|
Transactions with Related Parties
.
|
|
(a)
|
Except as set forth in
Section 5.20
of the Disclosure Schedule, there are no outstanding notes payable to, accounts receivable from or advances by the Company or any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries is otherwise a creditor of, any shareholder or former shareholder of the Company or any relative or affiliate of any shareholder or former shareholder of the Company. Except for as set forth in
Section 5.20
of the Disclosure Schedule, since December 31, 2013, neither the Company nor any of its Subsidiaries has incurred any obligation or liability to, or become a creditor of any shareholder or former shareholder of the Company or any relative or affiliate of any shareholder or former shareholder of the Company.
|
|
(b)
|
Since December 31, 2013, the Company has neither declared any Dividends nor paid any dividends to any shareholder or former shareholder of the Company or any relative of any shareholder or former shareholder of the Company.
|
5.21
|
Improper Payments
. (a) Neither the Company nor any director, officer, employee, agent or representative of the Company nor any other third party acting on behalf of the Company, has offered, made, paid or received, directly or indirectly, any bribes, kickbacks or other similar payments or transfers of value in connection with obtaining or retaining business or to secure an improper advantage, (b) no director, officer, employee, agent or representative of the Company has been an official of any government or of any agency thereof, an official of a political party or a candidate for political office in any country outside of the United States, (c) the Company has complied with the Foreign Corrupt Practices Act, 15 U.S.C. 78dd et seq and all other applicable anti-corruption laws, (d) the internal accounting controls of the Company are adequate to detect any of the improper payments referenced in clause (c) above, and (e) the books and records of the Company accurately and fairly reflect the nature of the transactions and disposition of the assets reflected therein, in accordance with 15 U.S.C. 78m(b)(2).
|
5.22
|
Sanctions Matters
.
|
|
(a)
|
The Company and each of its Subsidiaries has been and is in compliance with all Applicable Laws related to economic sanctions, including United States economic sanctions implemented (unilaterally or multilaterally) under statutory authority or Executive Order for, among others, foreign policy reasons and involving, inter alia, the blocking of assets and the prohibition on commerce, including trade and investment (collectively, “
U.S. Economic Sanctions
”).
|
|
(b)
|
To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has, on its own behalf or in acting on behalf of any other Person, directly or indirectly, engaged in any transactions, or otherwise dealt with, any Person (i) organized, domiciled or located in, or that is a national of, Bahrain, Cuba, Iran, Lebanon, Liberia, Libya, North Korea, Oman, Qatar, Republic of Yemen, Sudan, Syria or Angola (including any Governmental Authority within any such country) or (ii) targeted by U.S. Economic Sanctions, including any Person that appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Controls of the United States Department of the Treasury.
|
5.23
|
Governmental Permits; Compliance
.
|
|
(a)
|
The Company and its Subsidiaries own, hold or possess all licenses, franchises, permits, privileges, variances, immunities, approvals, clearances and other authorizations from Governmental Authorities that are necessary to entitle them to own or lease, operate and use their properties and assets and to carry on and conduct their business substantially as conducted (collectively, the “
Governmental Permits
”).
Section 5.23(a)
of the Disclosure Schedule sets forth a list and brief description of each Governmental Permit. All of the Governmental Permits are valid and in full force and effect and all information submitted to the applicable Governmental Authority in order to obtain each Governmental Permit was true, accurate and complete when submitted. The Company and its Subsidiaries have fulfilled and performed their respective obligations under each of the Governmental Permits, and no event has occurred or condition or state of facts exists that constitutes or, after notice or lapse of time or both, would constitute a breach or default under any such Governmental Permit or that permits or, after notice or lapse of time or both, would permit revocation, termination, or nonrenewal of any such Governmental Permit, or that might adversely affect the rights of the Company or its Subsidiaries under any such Governmental Permit. No notice of deficiency, cancellation, default or of any dispute concerning any Governmental Permit, or of any event, condition or state of facts described in the preceding clause, has been received by or is Known to the Company. No proceeding is pending or threatened to revoke, terminate or amend any Governmental Permit. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in a modification, impairment, revocation, suspension or limitation of any Governmental Permit or any breach, default or forfeiture of any rights thereunder. No Governmental Permit requires the consent, approval or act of, or the making of any filing with, any Governmental Authority in order to remain in full force and effect after the execution and delivery of this Agreement. Complete and correct copies of all of the Governmental Permits and any supporting documents have heretofore been delivered to the Purchaser.
|
|
(b)
|
Without limiting the foregoing, the Company and its Subsidiaries are in compliance with all Applicable Laws administered or issued by the U.S. Food and Drug Administration (“
FDA
”) or any other Medical Product Regulatory Authority. There are no facts that furnish any reasonable basis for any Form FDA-483 inspectional observations or warning or untitled letters from the FDA, or other similar communications from the FDA or any other Medical Product Regulatory Authority; and there have been no warning or untitled letters, recalls, field notifications, alerts or seizures requested or threatened relating to the products of the Company and its Subsidiaries. The products of the Company and its Subsidiaries, where required, are being manufactured in compliance with the Quality System Regulation and marketed under valid 510(k) or Pre-Market Approval Applications exclusively owned by the Company and its Subsidiaries, and promoted in compliance with all Applicable Laws. There is no reason to believe that the FDA or any other Medical Product Regulatory Authority is or may consider limiting, suspending or revoking any such clearances or approvals or changing the marketing classification or labeling of any such products. There has been no false or misleading information or significant omission in any product application or product-related submission or report made by the Company or any of its Subsidiaries to the FDA or any other Medical Product Regulatory Authority. The Company and its Subsidiaries are in compliance with all Applicable Laws relating to the conduct of clinical trials, including the clinical trial reporting and disclosure requirements of 42 U.S.C. Section 282(j).
|
|
(c)
|
None of the Company, any of its Subsidiaries or any Affiliate of the Company or any of its Subsidiaries, nor the officers, directors, employees, agents, or individuals with direct or indirect ownership interests (or any combination thereof) of 5% or more (as those terms are defined in 42 C.F.R. § 1001.1001) in the Company, any of its Subsidiaries or any of its Affiliates: (i) have engaged in any activities that are prohibited under, or are cause for civil or criminal penalties or mandatory or permissive exclusion from, any Federal Health Care Program under Sections 1128, 1128A, 1128B or 1877 of the Social Security Act (“
SSA
”), Section 3729 of Title 31 of the United States Code, or related state or local statutes, including knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for, or to induce, the purchase, lease or order, or the arranging for or recommending of the purchase, lease or order, of any good, facility, item, or service for which payment may be made in whole or in part under any such program; (ii) have had a civil monetary penalty assessed against them under Section 1128A of the SSA; (iii) have been excluded from participation under any Federal Health Care Program under Section 1128 of the SSA; or (iv) have been convicted (as defined in 42 C.F.R. § 1001.2) of any of the categories of offenses described in Sections 1128(a) or 1128(b)(1), (b)(2) or (b)(3) of the SSA.
|
|
(d)
|
The Company and its Subsidiaries are not currently, nor have they been in the past: (i) under investigation by the Department of Justice, the Office of the Inspector General of the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services, any state Attorney General, state Medicaid Agency or the FDA for promotional or fraud and abuse or related issues; (ii) excluded from participation under any Federal Health Care Program under Section 1128 of the SSA; (iii) employing or contracting with Persons excluded from participation in any Federal Health Care Program; or (iv) suspended or debarred from contracting with the federal government. The Company and its Subsidiaries have not engaged in any activity constituting fraud or abuse under any Applicable Laws relating to healthcare insurance or reimbursement, and no payments of either cash or other consideration to any Person by or on behalf of the Company or any of its Subsidiaries have been made in violation of any Applicable Laws.
|
|
(e)
|
Neither the use of the Company’s or any of its Subsidiaries’ products nor the provision of services by the Company or any of its Subsidiaries have been determined by any audits by any Governmental Authority or its agents to have been improperly reimbursed.
|
5.24
|
Product Liabilities
.
|
|
(a)
|
Except as set forth in
Section 5.24(a)
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has received any claim for or based upon breach of product warranty (other than warranty service and repair claims in the ordinary course of business not material in amount or significance), strict liability in tort, negligent manufacture of product, negligent provision of services or any product complaint, adverse event report, or any other similar allegation of liability, including or resulting in product recalls, arising from the materials, design, testing, manufacture, packaging, labeling (including instructions for use) or sale of its products or from the provision of services; and, to the best Knowledge of the Company, there is no basis for any such claim. The products sold or delivered or services rendered by the Company and its Subsidiaries comply with all contractual requirements, warranties or covenants applicable thereto and are not subject to any term, condition, guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale for such products and services, copies of which have previously been delivered or made available to the Purchaser.
|
|
(b)
|
Section 5.24(b)
of the Disclosure Schedule contains a list of all product recalls, market withdrawals, product corrections, and product removals conducted by the Company and its Subsidiaries since January 1, 2010.
|
|
(c)
|
Section 5.24(c)
of the Disclosure Schedule contains a list of products of the Company and its Subsidiaries in development and planned introductions. The product and service, engineering, development, manufacturing and quality control processes that have been and are being followed by the Company and its Subsidiaries are designed to produce products and services that (i) are consistent with the claims made about them in the sales brochures of the Company and its Subsidiaries and other statements made about them by or on behalf of the Company and its Subsidiaries, (ii) otherwise meet the reasonable expectations of customers of the Company and its Subsidiaries, (iii) comply with Applicable Law and (iv) avoid claims of the type described in
Section 5.24(a)
and
5.13
.
|
|
(d)
|
Except as set forth in
Section 5.24(d)
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has made any sales to customers that are contingent upon (i) providing future enhancements of existing products, (ii) adding features not currently available on existing products or (iii) otherwise enhancing the performance of existing products (other than beta or similar arrangements pursuant to which customers of the Company from time to time test or evaluate products).
|
5.25
|
Warranties
.
Section 5.25
of the Disclosure Schedule sets forth (a) a specimen copy of the form of written warranties covering products sold and services provided by the Company and its Subsidiaries which have not yet expired and (b) a summary of the warranty expense incurred by the Company and its Subsidiaries during each of its last three (3) fiscal years. The reserve for liabilities with respect to warranty claims contained in the consolidated balance sheet of the Company as of December 31, 2013 fairly reflects in all material respects the amount required in accordance with generally accepted accounting principles to be shown thereon as of such date. Since December 31, 2013, there have been no claims against the Company or any of its Subsidiaries alleging any defects in the Company’s and its Subsidiaries’ services or products or alleging any failure of the Company’s and its Subsidiaries’ products to meet specifications. The Company’s liability for breach of warranty is limited to repair or replacement of nonconforming parts, including labor related to such repairs or replacements.
|
5.26
|
Environmental Matters
. The operations of the business of the Company and the Subsidiaries comply and have complied with all applicable Environmental Laws. The Company has obtained all environmental, health and safety governmental permits necessary for the operation of the business of the Company and the Subsidiaries or the use and operation by the Company or the Subsidiaries of the property leased by the Company and the Subsidiaries as currently conducted, used and operated, all such governmental permits are in full force and effect. The Company and the Subsidiaries are and have been in compliance with all material terms and conditions of such governmental permits, there is no action or proceeding pending, alleged in writing or to the Knowledge of the Company threatened against the Company or the Subsidiaries to revoke or modify such governmental permits, and neither the execution or delivery of this Agreement nor compliance by the Company with any of the provisions herein will result in the termination or revocation of any governmental permit issued to the Company pursuant to any Environmental Law with respect to the operation of its business.
|
6.1
|
Notices
. All notices and communications to be given or made under this Agreement shall be in writing and delivered by hand-delivery, registered first class mail (return receipt requested), facsimile, air courier guaranteeing overnight delivery or shall be by e-mail, addressed as set forth on the signature pages hereof, or to such other Person or address as a party may designate by notice. Each such notice or other communication shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answer back or receipt confirmed by return e-mail from the recipient. Such notices and communications shall be sent to the Company and the Purchaser at the following addresses.
|
|
if to InSightec Ltd.:
|
|
Nahum Het 5
|
|
Tirat Carmel Israel
|
|
Attention: Kobi Vortman
|
|
Email: kobiv@insightec.com_
|
|
Facsimile: 04-8131322
|
|
if to
York
:
|
|
York Capital Management
|
|
767 Fifth Avenue
|
|
New York, NY 10153, U.S.A
|
|
Attention: General Counsel
|
|
Email: RSwanson@yorkcapital.com
Facsimile: +1 (212) 300-1301
|
6.2
|
Amendments; Waivers
. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended and the Company may take any action herein or therein prohibited, or omit to perform any act herein or therein required to be performed by it, only if the Company has obtained the written consent of the Purchaser Required Majority. No other course of dealing between the Company and the Purchaser(s) or any delay in exercising any rights hereunder shall operate as a waiver.
|
6.3
|
Expenses
. The Company shall pay all reasonable costs and expenses of York incurred in connection with the transactions contemplated by this Agreement in an amount up to US$100,000, plus VAT.
|
6.4
|
Remedies
. The Purchaser(s) shall have all rights and remedies set forth in this Agreement and the rights of the Series D Preferred Shares, as applicable (as set forth in the New Articles and the other Transaction Documents). Unless expressly specified otherwise in writing, no remedy hereunder or thereunder conferred is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereunder or now or hereafter existing at law or in equity or by statute or otherwise. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.
|
6.5
|
Purchaser Investment Representations
. Each Purchaser represents that:
|
|
(a)
|
Purchase For Own Account
. the Purchaser is acquiring the Series D Preferred Shares purchased hereunder for its own account with the present intention of holding such securities for purposes of investment, and that it has no intention of selling such securities in a public distribution in violation of the United States securities laws or any applicable state securities laws.
|
|
(b)
|
Organization; Authority
. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate power and authority to enter into and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of the Series D Preferred Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally.
|
|
(c)
|
Purchaser Status
. The Purchaser is an “accredited investor” as defined in Rule 501(a) under the Securities Act, or is not a “U.S. Person” as such term is defined in Regulation S promulgated under the Securities Act.
|
|
(d)
|
Experience
. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Series D Preferred Shares hereunder and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of such investment and, at the present time, is able to afford a complete loss of such investment.
|
|
(e)
|
Independent Investment Decision
. The Purchaser has independently evaluated the merits of its decision to purchase the Series D Preferred Shares es hereunder pursuant to this Agreement, and the Purchaser confirms that it has not relied on the advice of any other Purchaser’s business and/or legal counsel in making such decision.
|
|
(f)
|
Restricted Securities
. The Purchaser (acknowledges that the Series D Preferred Shares are “restricted securities” as defined in Rule 144 under the Securities Act.
|
|
(g)
|
Legend
. Each certificate or instrument representing Series D Preferred Shares or Ordinary Shares issued upon conversion thereof shall be imprinted with two legends in substantially the following forms:
|
6.6
|
Survival of Agreement
. All representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement, regardless of any investigation made by the Purchaser or on their behalf.
|
6.7
|
Successors and Assigns
. All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether or not so expressed; provided that the Company shall not be permitted to assign its rights or obligations under this Agreement and the ability of the Purchaser to assign shall be subject to the restrictions on transfer set forth in the New Articles and the Seventh Amended and Restated Securityholders Agreement. Subject to compliance with the foregoing by the Purchaser seeking to make an assignment, and whether or not any express assignment has been made, the provisions of this Agreement which are for the Purchaser's benefit as a purchaser or holder of Series D Preferred Shares or Ordinary Shares issued upon conversion thereof are also for the benefit of, and enforceable by, any permitted subsequent holder of such Series D Preferred Shares or Ordinary Shares issued upon conversion thereof. Except as otherwise expressly provided herein, nothing expressed in or implied from this Agreement is intended to give, or shall be construed to give, any Person, other than the parties hereto and their permitted successors and assigns, any benefit or legal or equitable right, remedy or claim under or by virtue of this Agreement or any such other document.
|
6.8
|
Governing Law
. This Agreement and all disputes, controversies or claims arising out of or relating to this Agreement or a breach thereof shall be governed by the laws of the State of Israel without reference to the principles of conflicts of law that would apply the law of another state.
|
6.9
|
Severability
. If application of any one or more of the provisions of any Transaction Document shall be unlawful under Applicable Law, then the parties will attempt in good faith to make such alternative arrangements as may be legally permissible and which carry out as nearly as practicable the terms of such Transaction Document. Should any portion of any Transaction Document be deemed unenforceable by a court of competent jurisdiction, the remaining portion thereof shall remain unaffected and be interpreted as if such unenforceable portions were initially deleted.
|
6.10
|
Aggregation
. For purposes of this Agreement, all holdings of Series D Preferred Shares by Persons who are Affiliates of each other shall be aggregated for purposes of meeting any threshold tests under this Agreement.
|
6.11
|
Counterparts; Effectiveness
. Each Transaction Document may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures to each were upon the same instrument. This Agreement and each Transaction Document shall become effective when each party thereto shall have received a counterpart thereof signed by each other party thereto.
|
6.12
|
Captions
. The captions in any Transaction Document are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.
|
6.13
|
Construction
. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. The parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached shall not detract from or mitigate the fact that such party is in breach of the first representation, warranty, or covenant.
|
6.14
|
Entire Agreement
. This Agreement, the other Transaction Documents (and any other agreements contemplated hereby or thereby) and any agreements executed and delivered simultaneously herewith and expressly referring to this Agreement constitute the entire agreement among the parties with respect to the subject matter of any Transaction Document and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof or thereof. No representation, warranty, inducement, promise or understanding not set forth in any Transaction Document and any agreements executed and delivered simultaneously herewith and expressly referring to this Agreement has been made or relied upon by any party to any Transaction Document. The Transaction Documents are not intended to confer upon any person other than the parties any rights or remedies thereunder. The Annexes, Schedules and Exhibits to any Transaction Document are and shall be deemed to be a part of such Transaction Document.
|
6.15
|
No Third Party Beneficiaries
. All parties agree that there are no third party beneficiaries to this Agreement.
|
6.16
|
Indemnification
. In consideration of the execution and delivery of this Agreement by the Purchaser(s) and purchase of the Series D Preferred Shares hereunder and in addition to all of the Company’s other obligations under this Agreement and in addition to all other rights and remedies available at law or in equity, the Company and each of its Subsidiaries shall defend, protect and indemnify the Purchaser(s) and all of their respective officers, directors, shareholders, partners, affiliates, employees, agents, representatives, successors and assigns (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the “
Indemnitees
”), and save and hold each of them harmless from and against, and pay on behalf of or reimburse such party on demand as and when incurred, any and all actions, causes of action, suits, claims, losses (including direct and indirect damages and diminutions in value of the Series D Preferred Shares purchased pursuant to this Agreement, but excluding consequential damages), costs, penalties, fees, liabilities and damages and reasonable out-of-pocket expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), including reasonable attorneys’ fees and disbursements, interest and penalties and all amounts paid in investigation, defense or settlement of any of the foregoing and claims relating to any of the foregoing (the “
Liabilities
”), incurred by any Indemnitee as a result of, or arising out of, or relating to any of the following:
|
|
(a)
|
any breach or non-performance by the Company of this Agreement, any other Transaction Document (other than the New Articles) or any document delivered pursuant to this Agreement;
|
|
(b)
|
any breach of any of the representations and warranties of the Company contained in this Agreement, any other Transaction Document or any falsity of any certificate or other instrument furnished or to be furnished by the Company hereunder or under any other Transaction Document;
|
|
(c)
|
third party claims against any Indemnitee relating to any activities, action or inaction by the Company or its Affiliates and their respective officers, directors, shareholders, partners, affiliates, employees, agents, representatives, successors and assigns except in each case to the extent any such Liabilities are caused by the particular Indemnitee’s gross negligence or willful misconduct;
the breach, non-performance, or enforcement of the New Articles, including, without limitation, the terms of the Series D Preferred Shares (as set forth in the New Articles).
|
|
(x)
|
make any payments under clauses (a) or (b) to each Purchaser for Liabilities in amounts in excess of the aggregate purchase price paid by each Purchaser for all Series D Preferred Shares purchased by such Purchaser hereunder, plus reasonable attorneys’ fees and disbursements and all amounts paid in investigation, defense or settlement of any such action by such Purchaser, and
|
|
(y)
|
make payments for Liabilities under clause (c) to the extent such Liabilities consist of the diminutions in value of the Preferred Shares purchased by Indemnitees.
|
6.17
|
Payment Set Aside
. To the extent that the Company makes a payment or payments any Purchaser hereunder or under the terms of the Series D Preferred Shares (as set forth in the New Articles) or such Purchaser enforces its rights or exercises its right of setoff hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
|
INSIGHTEC LTD.
|
|||
By:
|
|||
Name: | |||
Its: | |||
YORK GLOBAL FINANCE II S.À R.L.
|
|||
By:
|
|||
Name: | |||
Its: |
Name
|
Purchase Price
(US$)
|
No. of Purchased Preferred D Shares
|
||||||
York Global Finance II S.À R.L
|
$ | 37,500,000 | 19,333,212 | |||||
Subsequent Investors (to be updated in accordance with the terms of the Agreement)
|
up to
$25,000,000
|
up to
12,888,808
|
||||||
TOTAL
|
Up to $62,500,000
|
Up to 32,222,020
|
1.
|
I have reviewed this annual report on Form 20-F of Elbit Imaging Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the resistant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
/s/ Doron Moshe
Name: Doron Moshe
Title: Acting Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 20-F of Elbit Imaging Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the resistant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
/s/ Doron Moshe
Name: Doron Moshe
Title: Chief Financial Officer
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
/s/ Doron Moshe
Name: Doron Moshe
Title: Acting Chief Executive Officer and
Chief Financial Officer
|
Page
|
|
2
|
|
Condensed Financial Statements:
|
|
3-4
|
|
5
|
|
6-7
|
|
8-11
|
|
December 31
|
||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 4
|
||||||||||||||
Convenience translation
(note 2D)
|
||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
95,086 | 120,483 | 24,450 | |||||||||||||
Short-term deposits and investments
|
777 | 11,603 | 200 | |||||||||||||
Other receivables
|
1,716 | 9,319 | 441 | |||||||||||||
Assets related to discontinued operations
|
33,437 | - | 8,598 | |||||||||||||
131,016 | 141,405 | 33,689 | ||||||||||||||
Non-Current Assets
|
||||||||||||||||
Deposits, loans and other long-term balances
|
16,355 | 16,069 | 4,205 | |||||||||||||
Loans and investments in subsidiaries, associates and joint venture
|
3 | 894,983 | 1,668,989 | 230,132 | ||||||||||||
Property, plant and equipment
|
1,962 | 5,542 | 504 | |||||||||||||
Deferred expenses
|
- | 94 | - | |||||||||||||
913,300 | 1,690,694 | 234,841 | ||||||||||||||
1,044,316 | 1,832,099 | 268,530 |
December 31
|
|||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 4
|
|||||||||||
Convenience translation
(note 2D)
|
|||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
|||||||||||
Current Liabilities
|
|||||||||||||
Short-term credits
|
- | 2,639,286 | - | ||||||||||
Payables and other credit balances
|
29,289 | 196,240 | 7,531 | ||||||||||
29,289 | 2,835,526 | 7,531 | |||||||||||
Non-Current Liabilities
|
|||||||||||||
Borrowings
|
755,538 | - | 194,276 | ||||||||||
Other liabilities
|
27,434 | 29,213 | 7,054 | ||||||||||
782,972 | 29,213 | 201,330 | |||||||||||
Commitments, Contingencies, Liens and Collaterals
|
|||||||||||||
Shareholders' Equity
|
|||||||||||||
Share capital and share premium
|
1,055,056 | 927,228 | 255,332 | ||||||||||
Reserves
|
(755,872 | ) | (704,519 | ) | (178,401 | ) | |||||||
Retained earnings
|
(67,129 | ) | (1,086,828 | ) | (17,262 | ) | |||||||
Treasury stock
|
- | (168,521 | ) | - | |||||||||
232,055 | (1,032,640 | ) | 59,669 | ||||||||||
1,044,316 | 1,832,099 | 268,530 |
Doron Moshe
Chief Financial Officer
|
Zvi Tropp
Chairman of the audit committee
|
Ron Hadassi
Chairman of the board and Acting Chief Executive Officer
|
Year ended December 31
|
|||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 2
|
2 0 1 4
|
||||||||||||||
Convenience translation
(Note 2D)
|
|||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
Revenues from providing management services
|
461 | 1,965 | 30,379 | 119 | |||||||||||||
General and administrative expenses
|
(37,315 | ) | (58,964 | ) | (50,749 | ) | (9,595 | ) | |||||||||
Financial expenses, net
|
(97,619 | ) | (119,187 | ) | (141,637 | ) | (25,101 | ) | |||||||||
Financial gain from debt restructuring
|
1,791,644 | - | - | 460,695 | |||||||||||||
Initiation expenses
|
(168 | ) | (438 | ) | (1,114 | ) | (43 | ) | |||||||||
Other income (expense)
|
(5,020 | ) | 2,460 | (34,808 | ) | (1,291 | ) | ||||||||||
Profit (loss) before income taxes
|
1,651,983 | (174,164 | ) | (197,929 | ) | 424,784 | |||||||||||
Income tax expenses
|
- | 6,298 | 3,500 | - | |||||||||||||
1,651,983 | (180,462 | ) | (201,429 | ) | 424,784 | ||||||||||||
Company's share in results of investee companies
|
(641,801 | ) | (982,900 | ) | (121,034 | ) | (165,030 | ) | |||||||||
Profit (loss) from continuing operations
|
1,010,182 | (1,163,362 | ) | (322,463 | ) | 259,754 | |||||||||||
Profit (loss) from discontinued
operations, net
|
(1,175 | ) | 7,717 | 6,717 | (302 | ) | |||||||||||
Profit (loss) for the year
|
1,009,007 | (1,155,645 | ) | (315,746 | ) | 259,452 |
Year ended December 31
|
||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 2
|
2 0 1 4
|
|||||||||||||
Convenience translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||||||
Profit (loss) for the year from continued operations
|
1,010,182 | (1,163,362 | ) | (322,463 | ) | 259,452 | ||||||||||
Income tax expenses (tax benefit) recognized in profit and loss
|
- | 6,298 | 3,500 | - | ||||||||||||
Finance expenses recognized in profit and loss
|
97,619 | 119,187 | 141,637 | 24,311 | ||||||||||||
Financial gain from debt restructuring
|
(1,791,644 | ) | - | - | (460,695 | ) | ||||||||||
Income tax paid in cash
|
- | (8,000 | ) | - | - | |||||||||||
Depreciation and amortization
|
3,636 | 3,825 | 10,350 | 935 | ||||||||||||
Share in losses of associates, net
|
641,801 | 982,900 | 121,034 | 166,211 | ||||||||||||
Stock based compensation expenses
|
3,147 | (11,335 | ) | 14,848 | 809 | |||||||||||
Other
|
(4,209 | ) | 1,286 | 62 | (1,082 | ) | ||||||||||
Receivables and other debit balances
|
8,595 | 2,580 | 19,228 | 2,121 | ||||||||||||
Trading property
|
- | - | (12,793 | ) | - | |||||||||||
Payables and other credit balances
|
(6,910 | ) | 81,511 | 21,025 | 1,405 | |||||||||||
Net cash provided by (used in) operating activities of continued operations
|
(37,783 | ) | 14,890 | (3,572 | ) | (6,533 | ) | |||||||||
Net cash provided by (used in) discontinued operating activities
|
- | - | - | - | ||||||||||||
Net cash provided by (used in) operating activities
|
(37,783 | ) | 14,890 | (3,572 | ) | (6,533 | ) |
Year ended December 31
|
||||||||||||||||
2 0 1 4
|
2 0 1 3
|
2 0 1 2
|
2 0 1 4
|
|||||||||||||
Convenience translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||
Purchase of property plant and equipment, investment property and other assets
|
(22 | ) | (984 | ) | (1,751 | ) | (6 | ) | ||||||||
Proceeds from realization of investments in subsidiaries and associates
|
6,954 | 169,698 | - | 1,789 | ||||||||||||
Investments and loans to subsidiaries and associates
|
27,598 | (59,242 | ) | 198,272 | 7,096 | |||||||||||
Proceed from realization of (investment in) long-term deposits and long-term loans
|
(711 | ) | 100 | 9,461 | (183 | ) | ||||||||||
Interest received in cash
|
3,098 | 2,697 | 5,945 | 797 | ||||||||||||
Short-term deposits and marketable securities, net
|
5,678 | 34,081 | 74,236 | 1,460 | ||||||||||||
Net cash provided by continued investing activities
|
42,595 | 146,350 | 286,163 | 10,953 | ||||||||||||
Net cash provided by discontinued investing activities
|
- | - | 36,529 | - | ||||||||||||
Net cash provided by investing activities
|
42,595 | 146,350 | 322,692 | 10,953 | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||
Interest paid in cash
|
(33,075 | ) | (20,911 | ) | (177,217 | ) | (11,686 | ) | ||||||||
Repayment of long-term borrowings
|
- | - | (329,220 | ) | - | |||||||||||
Repayment of short-term credit
|
- | (54,840 | ) | (133 | ) | - | ||||||||||
Net cash used in financing activities
|
(33,075 | ) | (75,751 | ) | (506,570 | ) | (11,686 | ) | ||||||||
Increase (decrease) in cash and cash equivalents
|
(28,263 | ) | 85,489 | (187,450 | ) | (7,266 | ) | |||||||||
Cash and cash equivalents at the beginning of the year
|
120,483 | 30,637 | 217,642 | 30,980 | ||||||||||||
Net effect on cash due to currency exchange rate changes
|
2,866 | 4,357 | 445 | 736 | ||||||||||||
Cash and cash equivalents at the end of the year
|
95,086 | 120,483 | 30,637 | 24,450 |
NOTE 1 -
|
GENERAL
|
A.
|
Elbit Imaging Ltd. ("the Company") was incorporated in Israel. The Company's registered office is at 5 Kinneret Street Bney-Brak, Israel. The Company's shares are registered for trade on the Tel Aviv Stock Exchange and in the United States on the NASDAQ Global Select Market.
|
B.
|
The Group engages, directly and through its investee companies, in Israel and abroad, mainly in the following areas:
|
·
|
Commercial centers
- initiation, construction, and sale of commercial centers and other mixed-use property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India. In certain circumstances and depending on market conditions, the Group operates and manages commercial centers prior to their sale.
|
·
|
Hotels
- hotels operation and management, primarily in major European cities.
|
·
|
Medical industries and devices
- (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment, and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine.
|
·
|
Residential projects
- initiation, construction and sale of residential units or plots designated for residential located primarily in India.
|
|
Fashion apparel
- distribution and marketing of fashion apparel and accessories in Israel. On October 27, 2014 Elbit Fashion signed a sale agreement with Fox-Wisel Ltd. with regard to the sale of the operation and business of "Mango" retail stores in Israel (See note 23 of the annual consolidated financial statements). The transaction was closed on January, 5 2015.
Accordingly this operation is classified in these financial statements as discontinued operations.
|
·
|
During 2012, the Company finalized a transaction to sale all its investments in commercial centers in the US (see note 23 of the annual consolidated financial statements) and lost control over its holding in a subsidiary that operates in the medical industry (see note 23 of the annual consolidated financial statements). Accordingly, these operations are presented in these financial statements as discontinued operations.
|
NOTE 1 -
|
GENERAL (CONT.)
|
C.
|
Financial position:
|
D.
|
Definitions:
|
The Company | - |
Elbit Imaging
|
Elscint | - |
A formerly 100% subsidiary of the Company, merged with the Company in 2010.
|
Group | - |
The Company and its Investees
|
Investees | - |
Subsidiaries, joint ventures and associates
|
PC | - |
Plaza Centers N.V. (“PC”) Group, a material subsidiary operating mainly in the field of commercial centers and is traded in the Main Board of the London Stock Exchange, the Warsaw Stock Exchange and Tel Aviv Stock Exchange. As of December 31, 2014 the Company holds 44.9% in Plaza Centers. For Plaza Centers Plan of Arrangement see note 3B of the annual consolidated financial statements.
|
Elbit Medical | - |
Elbit Medical Technologies Ltd., a public Israeli company traded on the Tel Aviv Stock Exchange. As for December 31, 2014, the Company holds 82.71% of Elbit Medical on a fully diluted basis.
|
Related parties | - |
As defined in International Accounting Standard ("IAS") no. 24. For details see note 21 of the annual consolidated financial statements
|
NOTE 2 -
|
SIGNIFICANT ACCOUNTING POLICIES
|
A.
|
Statement of compliance:
|
B.
|
Basis for preparation:
|
C.
|
Presentation of the income statements:
|
D.
|
Convenience translation:
|
NOTE 3 -
|
LOANS AND INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE
|
A.
|
As part of the EPI transaction (as described in note 9B of the annual consolidated financial statements) PC has provided the Company with an advance on account of the Kochi project which as of December 31, 2014 amounted to Euro 4.5 million.in order to secure the advance granted by PC the Company provided PC with a guarantee, which shall be exercised in the event the Company fails to transfer all its rights in the Kochi Island to EPI (or alternatively to transfer 50% of the said rights to PC). The guarantee expired in August 2013. The Company and PC are negotiating in order to reach an amicable solution to this matter.
|