EXHIBIT 10.13
INVESTMENT CONTRACT
Made and entered into on the 21st day of May 1996
Between
M.G.N. GAS AND PETROLEUM RESOURCES LTD.
a public company registered in Israel for itself
or for a company under its full control
["Magan"]
OF THE FIRST PART:
And
XXX OVERSEAS LTD.
a company incorporated on the island of Jersey
["Xxx"]
OF THE SECOND PART:
And
GAZIT HOLDINGS INC.
a company incorporated in the State of Florida, United States
["Gazit"]
OF THE THIRD PART:
And
EQUITY ONE INC.
a company incorporated in the State of Maryland, United States
["Equity"]
OF THE FOURTH PART:
And
A COMPANY IN FORMATION
represented by Xxx Xxxxxx and Xxxx Xxxxx
["the Other Company"]
OF THE FIFTH PART:
WHEREAS Equity wishes to allot shares and options to Magan in accordance with
the provisions of this Contract; and
WHEREAS Magan wishes to acquire shares and options from Equity in accordance
with the provisions of this Contract; and
WHEREAS Xxx, Magan and Gazit are desirous of regulating the relationship
between them as shareholders in Equity, all in accordance with the
matters set forth in this Contract;
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NOW THEREFORE IT IS DECLARED, AGREED AND STIPULATED BY THE
PARTIES AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATIONS
1.1 In this Contract and in the appendices hereto the following terms will
have the meanings set opposite them, provided that such meaning
reconciles with the content or context:
1.1.1 "DATE OF COMMENCEMENT OF VALIDITY" - the date on which this
Contract will come into force in accordance with the provisions
of Clause 13.7 below, if this Contract comes into force.
1.1.2 "RELATED PARTIES" - Xxxxx, Xxx and Gazit.
1.1.3 "THE MAGAN GROUP" - Magan and/or foreign subsidiaries which are
wholly-owned by Magan, as Magan shall direct.
1.1.4 "THE EQUITY GROUP" - Equity and its subsidiaries, jointly.
1.1.5 "THE OPINION" - an opinion in regard to the value of the shares
of Equity, which was prepared by Giza Economic Counseling and
Financial Management [1988] Ltd. ["Giza"].
1.2 The preamble to this contract and the appendices hereto constitute an
integral part of the Contract.
1.3 The dividing of the contract into clauses and the giving of headings
to the clauses have been done as place-finders and solely for the sake
of convenience, and no use shall be made thereof for purposes of
interpretation.
2. REPRESENTATIONS BY EQUITY
By its signature to this Agreement, Equity declares that:
2.1 Its contracting under this Contract and the implementation of the
provisions hereof fo not conflict with and/or run contrary to Equity's
founding documents, to an agreement to which Equity is a party and/or
to any obligation imposed on Equity, whether pursuant to an agreement
or by operation of law. There is no legal or other bar to Equity's
contracting under this contract.
2.2 The registered capital of Equity is comprised of 10,000,000 ordinary
shares of 1 US dollar par value each 5,000,000 preference shares of
1 US dollar par value each and 5,000,000 Excess shares of 1 US dollar
par value each.
2.3 The issued capital of Equity is 2,258,904 ordinary shares of 1 US
dollar par value each, which are held by the shareholders mentioned in
APPENDIX A to
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this contract, in the quantities set forth in the aforesaid appendix. In
addition Equity has allotted to some of its shareholders options Series
A and Series B. The condition for the exercise of the aforeaid options
and the list of persons who hold such options are set forth in APPENDIX
B to this Contract.
2.4 Entering into this Contract and the implementation of the provisions
hereof will not prejudice Equity's classification as a REIT or its
ability to benefit from being classified as an REIT in the future, in
accordance with the provisions of the law in the United States
prevailing at the date of signing of this Contract, provided that if all
the parties to this Contract do not agree to the contrary, all Equity
shares which are acquired pursuant to this Contract will be held by
Magan's American subsidiary.
2.5 All the data given by Equity to Giza for purposes of preparing the
opinion are data which were checked and verified by Equity and were
found to be correct.
2.6 Equity's Memorandum and Articles of Association are attached to this
Contract as APPENDIX C.
2.7 The consolidated audited financial statements as at December 31, 1996
and the reviewed consolidated statements as at March 31, 1996 of Equity
are attached to this contract as APPENDIX D AND E respectively. These
statements were prepared in accordance with accepted accounting
principals [US GAAP], and they fairly and properly reflect Equity's
assets and liabilities at the dates mentioned therein, and Equity's
business results for the periods mentioned therein. Since the date of
the financial statements there has been no adverse material change in
Equity's state of business.
2.8 APPENDIX F, which is attached to this Contract, properly describes the
real estate assets of the Equity Group.
2.9 APPENDIX G, which is attached to this Contract, describes the material
agreements to which the Equity Group is a party. Apart from the
aforesaid agreements, the Equity Group is not bound by any contract or
obligation likely to be considered as material.
2.10 The charges over the assets of the Equity Group are correctly described
in APPENDIX H which is attached to this Contract. Apart from the
aforesaid charges, no other charges are imposed over the assets of the
Equity Group.
2.11 The pending lawsuits against the Equity Group are described in
APPENDIX I which is attached to this Contract. Apart from the aforesaid
lawsuits, the Equity Group is not a party to any legal proceedings,
and it is not aware of any legal proceedings in which a third party is
due to take action or threatens to take action against the Equity Group.
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2.12 APPENDIX J, which is attached to this Contract, gives details of the
transactions which the Equity Group has made with related parties in
Equity.
2.13 APPENDIX K to this contract gives details of the guarantees which
Equity has given to secure the obligations of other parties.
3. REPRESENTATIONS BY MAGAN
By its signature to this Contract, Magan declares that:
3.1 Its contracting under this contract and the implementation of the
provisions hereof do not conflict with and/or run contrary to Magan's
founding documents, to an agreement to which Magan is a party and/or
to any obligations imposed on Magan, whether pursuant to an agreement
or by operation of law. there is no legal or other bar to Magan's
contracting under this Contract.
3.2 Magan's audit committee and the board of directors of Magan have
approved Magan's entering into this contract and the purchase of the
shares pursuant hereto. Copies of the minutes of the meeting at which
the aforesaid resolutions were passed are attached to this Contract as
APPENDIX L.
3.3 Magan is aware that the other shareholders in Equity and Equity are
likely to be deemed to be controlling shareholders in Magan, within
the definition of this term under the Securities Regulations
[Restrictions in regard to a Conflict of Interest between a Company and
a Controlling Shareholder therein], 5754-1994. Magan has taken all the
steps required for purposes of its contracting under this Contract.
3.4 The effecting of the investment in the share capital of Equity in
accordance with the provisions of this Contract has been approved
pursuant to a personal permit from the Bank of Israel, a copy of which
is attached to this Contract as APPENDIX M.
4. REPRESENTATIONS BY GAZIT AND XXX
By their signatures to this contract, each of the companies Gazit and Xxx
separately declares that:
4.1 The contractual arrangement under this Contract and the implementation
of the provisions hereof are not in conflict with and/or contrary to
its founding documents, to an agreement to which it is party and/or
to any obligation imposed on it, whether pursuant to an agreement or by
operation of law. There is no legal or other bar to its contracting
under this Contract.
4.2 Danbar Resources and Gazit will hold the shares of the Other Company in
such matter that Gazit will hold shares representing 50.86% of the
issued capital of the Other Company, while Danbar Resources will hold
shares representing 49.14% of the issued capital of the Other Company.
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5. ALLOTMENT OF SHARES
5.1 Equity will allot to a subsidiary of Magan (in accordance with Clause
2.4 above) which Magan undertakes to form and establish up to Date of
Commencement of Validity (in this Contract jointly - "Magan"), 1,000,000
ordinary shares of one US dollar par value each ["the Acquired Shares"].
After the allotment of the shares as aforesaid, the shares of Equity
will be held by the shareholders mentioned in APPENDIX N to this
Contract in the quantities mentioned in the aforesaid appendix. The
above-mentioned shares will be alloted in the stages and at the times at
which the consideration in respect thereof is paid, as more fully
described in clause 5.3 below.
5.2 At the time of each allotment, Equity will transfer to Magan a signed
share certificate in the name of Magan, in respect of the Acquired
Shares. Equity will take action to register Magan as the owner of the
Acquired Shares in Equity's shareholders register, and in any other data
base in which such registration is required.
5.3 In consideration for the allotment of the shares as mentioned in Clause
5.1 above, Magan will pay Equity an amount of 24,750,000 [twenty-four
million seven hundred and fifty thousand] US dollars. The aforesaid
amount will be paid by way of a bank transfer to Equity's bank account.
Magan will pay each portion of the consideration mentioned in this
Clause 5.3 where same has been increased at a rate of 9.7% in respect
of each year [or at a pro rata lower rate in respect of portion of a
year] reckoned as from December 10, 1995 until the date of actual
payment. The amount in respect of each share will be reduced by the
amount of the dividend per share which is distributed at any time from
December 10, 1995 until the date of actual payment.
5.4 The amount of the consideration will be paid by Magan in installments
and at the times to be specified by Equity. Magan is granted the right
to anticipate the date of payment of any installment, but not to defer
such date.
Notwithstanding the foregoing, Equity will not be entitled to demand
payment of any such amount until after the Date of Commencement of
Validity. After such date Equity will be entitled to demand payment of
the consideration as aforesaid in one amount or in installments, at any
time. Magan will be obliged to make payment of the consideration in
accordance with Equity's demand within 14 days from the date it receives
a written demand from Equity to do so, provided that Magan will not be
deemed to have breached the provisions of this Contract if it pays an
amount of 8,000,000 (eight million) dollars up to the end of 18 months
from the date this Contract comes into force in accordance with the
provisions of Clause 13.7 below, and in addition an amount of 6,000,000
(six million) dollars up to the end of 30 months from the date this
Contract comes into force.
5.5 At the time of signing of this Contract Magan will give Equity a loan
in an amount of up to 5,000,000 (five million) dollars in accordance
with a
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demand from Equity, bearing interest at a rate of 7% per annum. The
interest in respect of the aforesaid loan will be paid only on the
date of repayment of the aforesaid loan, if this loan is repaid. Should
this Contract come into force in accordance with the contents of Clause
13.7 below, the amount of the loan will be treated as having been
invested from the outset in the purchase of Equity shares, on the date
the loan is given. In such event Equity will allot to Magan that
portion of the allotted shares it is obliged to issue in respect of the
aforesaid payment. Should this Contract be canceled in accordance with
the provisions of Clause 13.7 below, Equity will repay the aforesaid
loan, together with interest accrued thereon, within 30 months from the
date on which Magan instructs it in writing to do so.
6. ALLOTMENT OF OPTIONS
6.1 At the Date of Commencement of Validity, Equity will allot Magan
200,000 options (Series B) in consideration for 1,760,000 (one million
seven hundred and sixty thousand) US dollars, which will be paid by way
of a bank transfer to Equity's bank account. The options (Series B)
which are allotted in accordance with the foregoing will rank pari passu
with the options (Series B) in Equity's capital. The conditions of the
aforesaid options are set forth in Appendix "B" to this Contract.
6.2 On the Date of Commencement of Validity, Equity will issue Magan with
a signed letter of allotment in the name of Magan in respect of the
options allotted as aforesaid.
7. APPOINTMENT OF DIRECTORS
7.1 Xxx, Gazit and the Other Company shall, with effect from the date on
which Magan actually pays Equity the consideration due pursuant to this
Contract on respect of 400,000 of the Acquired Shares and in respect of
the options allotted pursuant to Clause 6.1 above ("THE DETERMINING
DATE"), xxxxx Xxxxx a sole right to vote all their shares in Equity in
connection with the appointment of directors in Equity, at least until
May 2001 ["THE APPOINTMENT PERIOD"]. For purposes of the foregoing Xxx,
Gazit and the Other Company will, at the Determining Date transfer to
Magan a power of attorney in the text attached to this Contract as
APPENDIX "O", pursuant to which Magan, or its ubsidiary, alone will be
entitled to vote the shares of Xxx, Gazit and the Other Company at any
general meeting of shareholders in Equity in connection with the
appointment of directors in Equity.
7.2 the Related Parties will take action to convene a general meeting of
shareholders in Equity on or before June 20, 1996, for purposes of
amending Equity's Articles of Association. The Related Parties will
vote at the aforesaid general meeting in favor of passing a resolution
for the amendment of Equity's Articles of Association in accordance
with the matters set forth in APPENDIX "P" to this Contract.
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7.3 Any prior agreement or accord which applied between the parties prior
to the signing of this Contract, and which relates to the appointment
of directors in Equity, will automatically be canceled on the
Determining Date.
8. ESTABLISHMENT OF NEW CORPORATION
The Related Parties will take steps for the establishment of a new
corporation to be held jointly by Magan and the Other Company, which will be
incorporated in the United States [in this Contract -"THE NEW CORPORATION"].
The rights in the New Corporation will be conferred on Magan and the Other
Company in a manner whereby Magan will have 45% of the rights in the New
Corporation and the Other Company will have 55% of the rights in the New
Corporation. Magan will have the right to appoint 2 members to the board of
directors of the New Corporation, and the Other Company will have the right
to appoint 4 members to the board of directors of the New Corporation.
9. ALLOTMENT OF OPTIONS TO THE NEW CORPORATION
9.1 Magan and the Other Company will, on the Determining Date, grant the
New Corporation an option unlimited in time to oblige them to sell the
New Corporation shares in Equity which are owned by them, in
consideration for the grant of rights in the New Corporation, all in
accordance with the matters specified below:
9.1.1 Magan will grant the New Corporation an option to compel it to
sell up to 900,000 ordinary shares of 1 dollar par value of Equity.
9.1.2 The Other Company will grant the New Corporation an option to
compel it to sell up to 1,100,000 ordinary shares of 1 dollar par
value of Equity.
The aforesaid shares will be transferred against the grant of rights in
the New Corporation.
9.2 The number of shares which will be obtained on the exercise of the
option referred to in Clause 9.1 above will be subject to the
adjustments required in every case of the issue of bonus shares or
a rights issue by Equity, so that following such issue, the
percentage which the exercise shares represent in the total shares
forming part of the issued capital of Equity will not change.
9.3 The New Corporation will be entitled to exercise the otion mentioned in
Clause 9.1 at any time, by sending written notice to a party who has
granted the option, at least 7 days prior to the date intended for
exercise of the option. Should the New Corporation exercise an option
granted to it by any of the parties, it shall be under obligation also to
exercise, concurrently and in the same percentages, the options granted
to it by the other party, in a manner whereby the ratio of the options
exercised which were granted by a party out of the total options given by
that party will be identical in respect of Magan and the Other Company.
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9.4 As security for the fulfillment of their obligations pursuant to Clause
9.1 above, Magan and the Other Company will lodge with a trustee to be
agreed upon by the parties ("THE TRUSTEE") Equity shares and/or options
of Series A or B for the purchase of such shares ("DEPOSIT SHARES") on a
basis that Magan will lodge with the Trustee 900,000 Deposit Shares and
the Other Company will lodge with the Trustee 1,100,000 Deposit Shares
(collectively in this Contract-"THE BLOCKED SHARES").
The parties undertake to deposit with the Trustee, at any time this is
demanded by the New Corporation, amounts which will be sufficient in
exercise the options they have lodged with the Trustee, in the event
that they have lodged such options.
Magan and the Other Company hereby irrevocable instruct the Trustee to
act in respect of the Blocked Shares as follows:
9.4.1 The parties will not be entitled to instruct the Trsutee to sell
the Blocked Shares, in whole or in part, at any time whatsoever,
unless they have received written approvals from Magan and the
Other Company.
9.4.2 Any dividend which is remitted to the Trustee in respect of the
Blocked Shares shall be transfered by him, immediately upon
receipt thereof, to the parties, in a manner whereby the amount
of the dividend in respect of the shares lodged in trust will be
transferred to each party.
9.4.3 In the event that bonus shares are distributed in respect of the
Blocked Shares, the Trustee shall also hold the bonus shares in
trust on behalf of the shareholder who lodged with him the Blocked
Shares in respect of which the bonus shares were received. All the
provisions of this Clause 9.4 shall also correspondingly apply to
any bonus shares which may be distributed as aforesaid.
9.4.4 the Trustee shall not exercise any rights which are offered to him
in connection with the Blocked shares, unless he receives a
written instruction to do so from Magan and the Other Company.
9.4.5 the Trustee shall transfer the Blocked Shares to the New
Corporation, in the event that the New Corporation notifies him
of the exercise of the option conferred on it in accordance with
the provisions of Clauses 9.1 and 9.3 above, provided that the
Trustee is satisfied that the New Corporation has complied with
all the conditions set forth in Clauses 9.1 and 9.3 above in
connection with the exercise of the aforesaid options.
9.5 Should the New Corporation request to sell any quantity of Equity shares
out of the shares which will be transferred to it following the exercise
of the option as aforesaid, or if the Magan Group should wish to sell
any quantity
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of Equity shares, the New Corporation and/or Magan will be required to
cause the entity seeking to purchase the shares from them to offer to
the Other Company to sell such entity 600,000 Equity shares
simultaneously [subject to adjustments in the case of a distribution of
bonus shares, a rights issue or a stock split] ["THE OBLIGATION SHARES"],
on the same conditions as the conditions of purchase of the shares from
the New Corporation and/or the Magan Group. If such entity is not
prepared to purchase all the shares offered by the New Corporation and/or
the Magan Group as well as all the Obligation Shares, the parties will
take steps in order first to sell the Obligation Shares and only
thereafter the shares of the New Corporation and/or the Magan Group.
The New Corporation and/or the Magan Group will act in accordance with
this clause in every case they wish to sell Equity shares, even if, in
previous instances in which they sold such shares, the Other Company
waived its right to sell shares simultaneously in accordance with the
foregoing.
9.6 Should the New Corporation exercise the options mentioned in Clause 9.1
prior to the end of the Appointment Period, the New Corporation will
give Magan, at the time of exercise of the option, an irrevocable power
of attorney in the text prescribed in APPENDIX O to this Contract,
pursuant to which a right will conferred on Magan to vote the aforesaid
shares in favor of the appointment of its candidates as directors of
Equity. The aforesaid power of attorney will remain in force at least
until May 1, 2001.
9.7 Equity will be entitled to object to the exercise of the option referred
to in Clause 9.1 if, in its opinion, such exercise would prejudice
Equity's status as a REIT.
10. GIVING OF LOANS
Xxxxx, Xxx, Equity and Magan wwill be entitled to grant one another loans in
amounts of up to 3,000,000 (three million) dollars, for a period of up to 6
months. A party which receives such loans shall pay interest in respect
thereof at the average rate of debit and credit interest at Bank Leumi le-
Israel B.M. The shares of the parties in Equity shall be given as collateral
security for repayment of any such loan, in a manner that a party will be
entitled to receive a loan in an amount equivalent to the value of Equity's
shares it puts up as collateral, on a basis that the value of such shares
will be determined by multiplying the total number of shares by an amount of
12.38 dollars per share.
11. REGISTRATION RIGHTS
Equity will grant its shareholders "registration rights", all in accordance
with the matters set forth in APPENDIX R to this Contract. The aforesaid
Appendix R gives priority to the Other Company in respect of the sale of
600,000 Equity shares. In the case that this preferential right is
exercised, the number of shares which are subject to the preferential right
in accordance with Clause 9.5 above will be reduced.
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12. GRANT OF PUT OPTION
Gazit and Xxx will take steps for the cancellation of the Put Option granted
to Xx. Xxxxx Xxxxxx to sell to Equity shares of Equity which are owned by
him. Gazit and Xxx will indemnify Equity in respect of any amount Equity is
called upon to pay by virtue of the non-compliance with their obligation to
cancel the aforesaid option.
13. MISCELLANEOUS
13.1 Upon the signing of this Contract, Clauses 5.2, 5.3 and 6 of the
agreement signed on October 17, 1994 between Xxx, Equity, Gazit and
Magan pursuant to which purchased 530,000 Equity shares, will be
canceled. In addition, at the time of signing of this Contract, Clauses
5 and 7 of an agreement dated January 22, 1993 between Xxx, Equity and
Gazit, pursuant to which Xxx purchased 200,000 shares and 60,000
options of Equity, will be canceled.
13.2 The parties will take all the other necessary steps (including the
effecting of payments, bearing of expenses, signing of additional
documents and production of any approval) which may be required for the
inplementation and execution of this Contract in the letter and spirit
hereof.
13.3 Equity will furnish Xxxxx, Xxx, Gazit and the Other Company will all
information and/or any document which may be required and will act to
the best of its ability, in order to assist Magan in complying with
reporting obligations and the other obligations imposed on it by virtue
of it being a public company whose securities are traded on the Tel
Aviv Stock Exchange Ltd. Without derogating from the generality of the
foregoing, Equity will, at its expense, prepare and furnish Magan with
financial statements required by Magan for purposes of consolidating
the data of Equity in Magan's financial statements, all of which will
be done at reasonable times and in a manner which will enable Magan to
comply with its aforesaid obligations fully and punctually.
13.4 The consent of any of the parties to deviate from any condition in this
Contract in a particular instance, or a series of instances, will not
consitute a precedent and no equivalent inference will be drawn from it
in respect of any other instance in the future.
13.5 Should any of the parties fail to enforce, or be late in enforcing, any
of the rights conferred on it pursuant to this Contract and/or
accordingly to law, in a particular instance or series of instances,
this shall not be deemed to be a waiver of the aforesaid right or of
any other rights.
13.6 Notices in connection with this Contract shall be sent by registered
post or facsimile or shall be delivered by hand according to the
addresses of the parties set forth in this Contract [or any other
address in regard to which appropriate written notice is given], and
any such notice shall be deemed to
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have been delivered to its destination at the earlier of the following
times: upon the actual delivery thereof [or its being offered for
delivery to the addressee, in the case of a refusal to accept
delivery], or after the elapse of three [3] business days from the date
on which it was delivered for posting by registered post.
13.7 This Contract will come not force only if and when Magan receives an
amount of at least NIS 20,000,000 as the net consideration in respect
of shares it will issue. Should Magan not receive such amount of
consideration on or before September 30, 1996, this Contract will be
canceled. Notwithstanding the foregoing, the provisions of Clause 5.5
above in regard to the giving of a loan to Equity by Magan and the
repayment of the loan will remain in force even if the provisions of
this Contract are canceled. Magan will do its best to ensure that the
issue of securities is in a manner which makes it possible for this
Contract to come into force in the manner described above.
13.8 The provisions of this Contract shall be deemed to be mutual and
reciprocal provisions.
13.9 The validity of this Agreement is conditional upon its being duly
approved by a general meeting of shareholders of Gazit Inc.
IN WITNESS WHEREOF THE PARTIES HAVE HEREUNTO SIGNED ON
THE DATE FIRST AFOREWRITTEN
(-) (-)
----------------------------- ---------------------------
Magan Gas and Peetroleum Equity One Inc.
Resources Ltd.
(-) (-)
----------------------------- ---------------------------
Gazit Holdings Inc. Xxx Overseas Ltd.
(-)
-----------------------------
The Other Company
Company being formed by
Xxx Xxxxxx and Xxxx Xxxxx
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