STRW 8-K
Strawberry Fields REIT, Inc. (STRW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Securities Registered pursuant to Section 12(b) of the Act:
| Title of each class registered | Trading Symbol(s) | Name of exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1933 (§240.12b-2 of this chapter)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
Item 3.02 Unregistered Sales of Equity Securities.
On September 15, 2026, Strawberry Fields REIT, Inc. (the “Company”) completed an offering of units solely within Israel, pursuant to exemptions from registration contained in Regulation S (17 CFR Sections 230.901, et. seq.). The units consisted of par value NIS1,000 Bonds (Series D) and Warrants (Series 2) and yielded gross proceeds of approximately $17 million. Neither the bonds nor the warrants will be listed for trading on any U.S. stock exchange or market. The terms of the Regulation S offering are set forth in the Shelf Offering Report filed with the Tel Aviv Stock Exchange LTD (the “TASE”), an English translation of which is filed herewith as Exhibit 99.1, and is incorporated herein by reference. The English translation of the Shelf Offering Report is provided for convenience only and the Hebrew version is the binding version.
In connection with the offering and issuance of the bonds, the Company entered into a Deed of Trust dated September 14, 2026, between the Company and Mishmeret Trust Services Company Ltd., a copy of which is filed herewith as Exhibit 10.1, and is incorporated herein by reference
The warrants became exercisable upon their listing on the TASE and will expire on December 30, 2027. Each warrant entitles its holder to purchase one share of Company common stock at an exercise price per share equal to NIS 46. As of September 15, 2026, this was equal to $15.12. Notwithstanding the foregoing, the exercise price shall never be less than the closing price of a share of common stock on The NYSE American on the date prior to the issuance of the warrants. The terms of the warrants are governed by and are completely set forth in the Shelf Offering Report filed herewith as Exhibit 99.1, which is incorporated herein by reference.
The 1,034,940 shares of common stock underlying the warrants are offered and will be sold by the Company pursuant to an effective registration statement on Form S-3 (File No. 333-295065), as well as a prospectus supplement in connection the offering of such shares to be filed with the Securities and Exchange Commission on September 17, 2026.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
Exhibit Name | Filed Herewith | ||
| 5.1 | Opinion of Shapiro Sher Guinot & Sandler, P.A. | * | ||
| 10.1 | Deed of Trust dated September 14, 2026, between the Company and Mishmeret Trust Services Company Ltd. | * | ||
| 23.1 | Consent of Shapiro Sher Guinot & Sandler, P.A. (included in Exhibits 5.1) | * | ||
| 99.1 | Shelf Offering Report | * | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | * |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STRAWBERRY FIELDS REIT, INC. | ||
| Date: | September 17, 2026 | |
| By: | /s/ Moishe Gubin | |
| Moishe Gubin | ||
| Chief Executive Officer and Chairman | ||
Exhibit 5.1
September 17, 2026
Strawberry Fields REIT, Inc.
6101 Nimtz Parkway
South Bend, Indiana 46628
| Re: | Registration Statement on Form S-3 | |
| Commission File No. 333-295065 |
Ladies and Gentlemen:
We have served as Maryland counsel to Strawberry Fields REIT, Inc., a Maryland corporation (the “Company”), in connection with certain matters of Maryland law arising out of the sale and issuance by the Company of up to an aggregate of 1,034,940 shares (the “Warrant Shares”) of the Company’s common stock, $0.0001 par value per share (the “Common Stock”). The Warrant Shares may be issued after the date of this opinion upon the exercise of certain Series 2 Warrants (the “Warrants”) that were issued in an offering outside of the United States pursuant to Regulation S to investors in Israel (the “Warrant Offering”). The offering and sale of the Warrant Shares are covered by the above-referenced Registration Statement, and all amendments thereto (the “Registration Statement”), filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”).
In connection with our representation of the Company, and as a basis for the opinions hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the “Documents”):
(i) The Registration Statement and the form of Prospectus included therein (the “Prospectus”), in the form in which it was filed with the Commission under the Securities Act;
(ii) The Company’s Prospectus, dated April 15, 2026, as supplemented by the Company’s Prospectus Supplement, dated as of September 17, 2026 (the “Prospectus Supplement”), each in the form in which it was filed with the Commission pursuant to Rule 424(b) promulgated under the Securities Act;
(iii) The charter of the Company (the “Charter”), certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);
(iv) The Amended and Restated Bylaws of the Company (the “Bylaws”), certified as of the date hereof by an officer of the Company;
Strawberry Fields REIT, Inc.
Page 2
September 17, 2026
(v) Resolutions adopted by the Board of Directors of the Company (the “Board”), relating to, among other matters, the offering, issuance and sale of the Warrant Shares (the “Resolutions”), certified as of the date hereof by an officer of the Company;
(vi) A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
(vii) A certificate executed by an officer of the Company, dated as of the date hereof; and
(viii) Such other documents and matters as we have deemed necessary or appropriate to express the opinions set forth in this letter, subject to the assumptions, limitations and qualifications stated herein.
In expressing the opinions set forth below, we have assumed the following:
(a) Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
(b) Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
(c) Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.
(d) All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
(e) The Warrant Shares will not be issued or transferred in violation of any restriction or limitation contained in Article VI of the Charter.
(f) Upon the issuance of any Warrant Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter.
Strawberry Fields REIT, Inc.
Page 3
September 17, 2026
Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
2. The issuance of the Warrant Shares has been duly authorized and, when and if issued and delivered upon proper exercise of the Warrants in accordance with the terms of the Warrants and in accordance with the Registration Statement, the Prospectus Supplement and the Resolutions, the Warrant Shares will be validly issued, fully paid and nonassessable.
The foregoing opinions are limited to the laws of the State of Maryland and we do not express any opinion herein concerning federal law or any other state law, or the law of the State of Israel. We express no opinion as to the applicability or effect of any federal, state, or Israeli securities laws, including the securities laws of the State of Maryland, federal or state laws regarding fraudulent transfers or the laws, codes or regulations of any municipality or other jurisdiction. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinions expressed herein are subject to the effect of any judicial decision which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
We express no opinion as to the legality of the issuance of the Warrants or the Warrant Offering, which were issued in an offering outside of the United States pursuant to Regulation S to investors in Israel.
The opinions expressed herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinions expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission as an exhibit to a Current Report on Form 8-K relating to the issuance of the Warrant Shares (the “Current Report”). We hereby consent to the filing of this opinion as an exhibit to the Current Report and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act.
| Very truly yours, | |
| /s/ SHAPIRO SHER GUINOT & SANDLER, P.A. | |
| SHAPIRO SHER GUINOT & SANDLER, P.A. |
Exhibit 10.1
DEED OF TRUST (Series D)
| Section | Subject | Page | ||
| Deed of Trust | 4 | |||
| 1 | Introduction, Definitions and Interpretation | 5 | ||
| 2 | Issuance of Bonds; Terms of Issue; Equal Rank | 12 | ||
| 3 | Purchase of Bonds by the Company and/or an Affiliate and Performing Distributions | 13 | ||
| 4 | Issue of Additional Bonds | 14 | ||
| 5 | Company’s Undertakings | 18 | ||
| 6 | Securing the Bonds, financial obligations, dividend distribution restriction | 32 | ||
| 7 | Early Redemption | 37 | ||
| 8 | Right to Call for Immediate Repayment | 41 | ||
| 9 | Claims and Proceedings by the Trustee | 52 | ||
| 10 | Trust of Proceeds | 54 | ||
| 11 | Authority to Demand Payment to Holders through Trustee | 55 | ||
| 12 | Powers to Delay the Distribution of Funds | 56 | ||
| 13 | Notice of Distribution | 57 | ||
| 14 | Refraining from Payment for a Reason Which is not Dependent on the Company | 57 | ||
| 15 | Receipt by Bondholders and Trustee | 58 | ||
| 16 | Presentation of Bonds to the Trustee; Registration in Connection with Partial Payment | 59 | ||
| 17 | Investment of Funds | 59 | ||
| 18 | Company’s Undertakings vis-a-vis Trustee | 60 | ||
| 19 | Counsel | 63 | ||
| 20 | Other Agreements | 64 | ||
| 21 | Reports on Matters Relating to Trusteeship | 64 | ||
| 22 | Wages and Coverage of Trustee’s Expenses | 66 | ||
| 23 | Special Powers | 66 | ||
| 24 | Trustee’s Power to Engage Agents | 68 | ||
| 2 |
| Section | Subject | Page | ||
| 25 | Indemnification of the Trustee | 68 | ||
| 26 | Notices | 72 | ||
| 27 | Waivers, Compromises, and Changes to the Deed of Trust | 73 | ||
| 28 | Register of Bondholders | 74 | ||
| 29 | Release | 75 | ||
| 30 | Appointment of the Trustee, Roles of the Trustee, Powers of the Trustee and Termination of Trustee’s Office | 75 | ||
| 31 | Bondholders’ Meetings | 78 | ||
| 32 | Applicable Law | 78 | ||
| 33 | Exclusive Jurisdiction | 79 | ||
| 34 | Trustee’s Liability | 79 | ||
| 35 | General | 80 | ||
| 36 | Addresses | 80 | ||
| 37 | Authorization to MAGNA | 80 | ||
| First Addendum of the Deed of Trust – Bond Certificates (Series D) | 82 | |||
| The Terms Listed on the Overleaf | 84 | |||
| 1 | General | 84 | ||
| 2 | The Bonds | 85 | ||
| 3 | Terms of Bonds (Series D) | 85 | ||
| 4 | Payments of Principal and Interest of the Bonds (Series D) | 87 | ||
| 5 | Postponement of Dates | 88 | ||
| 6 | Securing the Bonds | 88 | ||
| 7 | Refraining from Payment for a Reason Which is not Dependent on the Company | 88 | ||
| 8 | Register of Bondholders | 88 | ||
| 9 | Splitting Bond Certificates | 88 | ||
| 10 | Transfer of Bonds | 88 | ||
| 11 | Early Redemption | 89 | ||
| 12 | Purchase of Bonds by the Company and/or an Affiliate | 89 | ||
| 3 |
| Section | Subject | Page | ||
| 13 | Waivers; Compromises, and Changes to the Deed of Trust | 89 | ||
| 14 | Bondholders’ Meetings | 89 | ||
| 15 | Receipt from Bondholders | 89 | ||
| 16 | Right to Call for Immediate Repayment | 89 | ||
| 17 | Notices | 89 | ||
| 18 | Governing Law and Jurisdiction | 89 | ||
| 19 | Order of Priorities | 89 | ||
| Second Addendum of the Deed of Trust - Bondholders’ Meetings | 90 | |||
| Third Addendum to the Deed of Trust - Urgent Representation for Bondholders | 99 | |||
| Appendix 22 - Trustee’s Fee | 103 | |||
| 4 |
Deed of Trust
Entered into and executed in Tel Aviv on September 14, 2026
Between:
Strawberry Fields REIT, Inc (Maryland Company Number: 842336054)
Nimitz Parkway, South Bend, Indiana, 46628-6101
Telephone: +1(574)807-0800
Fax: +1(574)807-0900
(the “Company”)
Of the first part;
and:
Mishmeret Trust Services Ltd.
48 Menachem Beg Road, Tel Aviv
Telephone: 03-6374351
Fax: 03-6374344
(the “Trustee”)
Of the second part;
| Whereas: | On August 4, 2024, the Company published an offering prospectus, which also constitutes the Company’s shelf prospectus dated August 5, 2024, the validity of which was extended by the Israel Securities Authority until August 4, 2027 (the “Prospectus”); |
| Whereas: | The Company intends to publish a shelf offering report, according to which it may, for the first time, offer its Bonds (Series D) to the public; and |
| Whereas: | On August 26 2026, S&P Maalot Ltd. announced the determination of rating ilA+ for the issuance of the Bonds (Series D) of the Company, in a total scope of up to 150 million ILS par value; and |
| Whereas: | The Company declares that as of the signature of this Deed, the Company meets all of the conditions of the rating agency (as the term is defined below) for rating the series of Bonds with the rating set forth above; and |
| Whereas: | The Trustee is a private company limited by shares that is incorporated in Israel under the Companies Law, 5759-1999, whose main purpose is to engage in trusteeship; and |
| 5 |
| Whereas: | The Trustee has declared that there is no impediment under the Securities Law, 5728-1968 or any other law for its engagement with the Company under this Deed of Trust and that it meets the requirements and conditions of eligibility set forth under the Securities Law for the Trustee to serve as a trustee for holders of bonds (Series D); and |
| Whereas: | The Trustee has no personal interest in the Company and the Company has no material interest in the Trustee; and |
| Whereas: | The Company declares that there is no impediment under any law (whether in Israel or abroad) and/or any agreement for the performance of an issue of the Bonds under the terms of this Deed and/or its engagement with the Trustee under this Deed of Trust and has received all of the approvals under any law (in Israel or outside of Israel) and/or any agreement for the execution of the issuance under this Deed; and |
| Whereas: | The Bonds (Series D) will be listed for trade in the stock exchange, as defined below; and |
| Whereas: | The company is incorporated under the laws of the state of Maryland in the United States and its ordinary shares are listed for trading on the New York Stock Exchange (NYSE) and on the Stock Exchange (as defined below); and |
| Whereas: | The Company has requested that the Trustee serve as a trustee for the Holders of the Bonds (Series D) and the Trustee has agreed to sign this Deed of Trust and act as a trustee for the bondholders, all subject to and in accordance with the terms of this Deed of Trust; and |
Therefore it is agreed, declared and stipulated between the Parties as follows:
| 1. | Introduction, Definitions and Interpretation |
| 1.1 | The preamble to this Deed of Trust and the appendices attached hereto constitute integral and substantial parts hereof. |
| 6 |
| 1.2 | The division of this Deed of Trust into sections and the titles of the sections are provided for the sake of convenience and orientation alone, and should not be used for the purpose of interpretation. |
| 1.3 | All of the provisions of this Deed in the plural form shall imply the singular and vice-versa, and all of the provisions in the masculine form shall imply the feminine form and vice-versa, and all of the provisions relating to an individual shall imply a corporation as well, all provided that there is no other explicit provision. |
| 1.4 | In any matter related to the terms of the bonds (Series D) that is not mentioned in this deed, as well as in any case of conflict between the provisions of Israeli law that cannot be conditioned and this deed, the parties shall act in accordance with the provisions of Israeli law that cannot be conditioned. |
In the event of any conflict between the provisions set forth in the Shelf Offering Report (as defined below) in connection with this Deed of Trust and/or the Bonds, the provisions of this Deed of Trust shall take precedence.
| 1.5 | In this Deed of Trust and in the bonds, the following expressions shall have the meanings set forth beside them: |
| 1.5.1 | “Bonds (Series D)” or the “Bonds” - the Bonds (Series D) that are issued by the Company in accordance with the Shelf Offering Report under the Prospectus, as well as additional bonds (Series D) issued by the Company, if any; |
| 1.5.2 | “Person”: any individual, corporation, partnership, joint venture, trust; |
| 1.5.3 | The “Stock Exchange” – the Tel Aviv Stock Exchange Ltd.; |
| 1.5.4 | “Authorized Shareholders” –each of (a) Mr. Moshe Gubin and Mr. Michael Blisko or all their estates, spouses and/or descendants; (b) any trust in favor of any of the individuals listed in clause (a) above only; |
| 7 |
| 1.5.5 | “Shelf Offering Report”: The offering of Bonds (Series D) made through a shelf offering report in accordance with Section 23A of the Securities Law, which will include all the specific details for that offering, including the composition of the offered units, in accordance with legal requirements and the regulations and guidelines of the TASE as they stand at that time; |
| 1.5.6 | “Financial Statements” – consolidated statements of the company’s assets and liabilities, consolidated statements of activities, consolidated statements of changes in net assets, consolidated statements of cash flows and consolidated appendices on investments for a certain fiscal period that are prepared in accordance with U.S. GAAP and as required by any other accounting standard to which the Company may be subject, as it will be in effect from time to time; |
| 1.5.7 | “Rating” – Rating by the rating company, as defined below; |
| 1.5.8 | “Dollar” or “USD” – the United States dollar. |
| 1.5.9 | “Special Resolution” - a resolution passed in a general meeting of Bondholders (Series D), who are present themselves or by their agent whose Bonds represent at least 50% of the balance of the par value of the Bonds (Series D), or in an adjourned meeting attended by the Bondholders (Series D), themselves or by their agent, who hold at least 20% of the balance of the par value as stated, and which is passed (whether in the original meeting or adjourned meeting) with a majority of at least two thirds (2/3) of the balance of the par value of the Bonds (Series D) represented in the vote, excluding abstentions; |
| 1.5.10 | “Ordinary Resolution” – a resolution passed by a simple majority at a general meeting of the bondholders, in which at least two bondholders who together hold at least twenty-five percent (25%) of the remaining outstanding par value balance of the bonds value were present (in person or by proxy) or at an adjourned meeting attended by any number of bondholders (in person or by their proxy); |
| 8 |
| 1.5.11 | “Subsidiary”: Strawberry Fields REIT Ltd., a company incorporated in the British Virgin Islands and is wholly owned directly by the Partnership. |
| 1.5.12 | “Rating Company” or the “Rating Agency” - Standard and Poor’s Maalot Ltd. (“Maalot”) and/or Midroog Ltd. (“Midroog”), or another rating company that is registered under the Regulation of the Activities of Credit Rating Companies, 5714-2014; |
| 1.5.13 | The “Nominee Company” – the nominee company of the Tel Aviv Stock Exchange Ltd or any other nominee company that shall replace it, provided that all the Company’s securities that the Company is required to register with a nominee company in Israel will be registered under its name; |
| 1.5.14 | The “Law” or the “Securities Law” – the Securities Law, 5728-1968 and the regulations thereunder, as they may be from time to time; |
| 1.5.15 | The “Companies Law” – the Companies Law, 5759-1999 and the regulations thereunder, as they may be from time to time; |
| 1.5.16 | “Trading Day” – a day on which transactions are performed in the stock exchange; |
| 1.5.17 | “Business Day” or “Bank Business Day” – any day on which the clearing house of the stock exchange and most of the banks in Israel are open for the performance of transactions; |
| 1.5.18 | “Holder” and/or “Bondholder” – as the term “Holder” and/or “Bondholder” is defined in the Securities Law; |
| 9 |
| 1.5.19 | “Register” – a register of bondholders, as set forth in Section 28 of this Deed; |
| 1.5.20 | “Shares with Voting Rights” – share capital of any corporation or other legal entity at any time, which establishes voting rights in the appointment of directors and in general meetings; |
| 1.5.21 | “Trustee”: Mishmeret Trust Services Ltd. and/or anyone who will serve from time to time as trustee of the bondholders under this Deed; |
| 1.5.22 | “Principal Amount” – the par value amount of the Bonds that are not yet paid; |
| 1.5.23 | The “Group” – the Company and the companies held by it, directly and indirectly; |
| 1.5.24 | “Regulatory Codex” – The Regulatory Codex – Title 5 – Principles of Business Management, Part 2 – Capital, Measurement and Risk Management, Chapter 4 – Management of Investment Assets, as published by the Capital Market, Insurance and Savings Authority in the Ministry of Finance, as updated from time to time; |
| 1.5.25 | “This Deed” or “Deed of Trust” – this Deed of Trust, including the appendices attached hereto and constituting an integral part hereof; |
| 1.5.26 | “The Partnership” – Strawberry Fields Realty LP, a limited partnership incorporated in Delaware, of which the Company is the General Partner; |
| 1.5.27 | “Change of control” - If any person, with the exception of one or more Authorized Shareholders (as defined above), holds or becomes the holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting rights in the Company; however, if the Company becomes a Subsidiary Corporation (as defined below), directly or indirectly, of a holding company, such holding company will not be deemed a person per se, if (a) such holding company owns, directly or indirectly, 100% of the Company’s share capital; and (b) upon completion of such transaction, a person, with the exception of one or more Authorized Shareholders, shall not hold or become the holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting rights of such holding company; |
| 10 |
| 1.5.28 | “Subsidiary Corporation” – with regard to any individual, any corporation, general partnership or limited partnership or other business entity, which: (a) on the effective date, more than 50% of the voting rights of shares with voting rights or other rights (including partnership rights) are entitled to vote (regardless of any particular event) in appointment of directors, managers, or their trustees that are owned or controlled, directly or indirectly, by (1) such individual; (2) such individual and one or more subsidiary corporations of such individual; or (b) on the effective date, holder of control, either directly or indirectly, including joint control; |
| 1.5.29 | “Reporting Corporation” – as defined in the Securities Law, or a corporation traded on a stock exchange outside of Israel, listed in the Second Addendum or Third Addendum of the Securities Law; |
| 1.5.30 | “Bond Certificate” - a certificate of the Bonds in the form attached as the First Addendum to this Deed; |
| 1.5.31 | In this Deed of Trust and the Bonds, the Rating of the Bonds will have the meanings set forth in the table below: |
| “A plus” | Maalot rating of ilA+ or Midroog rating of A1 or another corresponding rating determined by another rating company that rates or will rate the Bonds (Series D). |
| 11 |
| “A” | ilA rated by Maalot or A2 when rated by Midroog or a rating parallel to the aforesaid ratings that will be determined by another rating company that rates or will rate the Bonds (Series D). | |
| “A minus” | ilA- rated by Maalot or A3 when rated by Midroog or a rating parallel to the aforesaid ratings that will be determined by another rating company that rates or will rate the Bonds (Series D). | |
| “BBB Plus” | ilBBB+ rated by Maalot or Baa1 when rated by Midroog or a rating parallel to the aforesaid ratings that will be determined by another rating company that rates or will rate the Bonds (Series D). | |
| “BBB” | ilBBB rated by Maalot or Baa2 when rated by Midroog or a rating parallel to the aforesaid ratings that will be determined by another rating company that rates or will rate the Bonds (Series D). | |
| “BBB Minus” | ilBBB- rated by Maalot or Baa3 when rated by Midroog or a rating parallel to the aforesaid ratings that will be determined by another rating company that rates or will rate the Bonds (Series D). |
| 1.6 | As long as the Bonds are listed for trade on the Stock Exchange, in any event in which the rules and guidelines of the Stock Exchange apply or will apply to any operation under this Deed of Trust, the operation dates as stated and the manner of performance will be determined in accordance with the rules and guidelines of the Stock Exchange. It is clarified that the performance of actions as stated (including if bylaws and guidelines of the Stock Exchange are modified) will not derogate from the agreements of the parties under this Deed. |
| 12 |
| 1.7 | In any event of a conflict between the Deed of Trust and the accompanying documents, the provisions of the Deed of Trust will govern. |
| 1.8 | In the event of termination of the issuance of the Bonds for any reason, the validity of this Deed of Trust will be concluded. |
| 1.9 | The Trustee’s actions are valid even if a defect is discovered in his appointment or eligibility. |
| 1.10 | The Trustee’s signature on the Trust Deed does not constitute an opinion by the Trustee as to the nature of the offered securities or the advisability of investment in these securities. |
| 1.11 | In every place in this Deed where it is stated “subject to any law” (or a similar phrase), it means subject to the provisions of cogent law. |
| 2. | Issuance of Bonds; Terms of Issue; Equal Rank |
| 2.1 | The Company intends to issue the Bonds (Series D) as described in the preamble of this Deed. The Bonds (Series D) that will be issued under the Prospectus through the Shelf Offering Report (if and to the extent issued) will be listed for trade on the Stock Exchange and the Company will act reasonably so that the Bonds (Series D) will be traded on the Stock Exchange until they are fully repaid. |
| 2.2 | The terms of the Bonds (Series D) that are issued under the Prospectus through the Shelf Offering Report will be as follows: |
The Bonds (Series D), offered to the public in consideration for their par value, are registered by name and repayable in four (4) non-equal annual installments, payable on June 30 in each of the years 2027 and 2028, and on December 31 in each of the years 2030 and 2031, such that the first payment on account of principal will constitute 20% of the total par value principal of the Bonds (Series D), the second payment on account of principal will constitute 25% of the total par value principal of the Bonds (Series D), the third payment on account of principal will constitute 20% of the total par value principal of the Bonds (Series D), and the fourth and final payment on account of principal will constitute 35% of the total par value principal of the Bonds (Series D). The Bonds (Series D) shall bear annual interest (unlinked) at a fixed rate of 7.5% (the “Annual Interest Rate”), payable on December 31, 2026, and on June 30 and December 31 of each of the years 2027 through 2031 (inclusive) (the first interest payment shall be made on December 31, 2026 and the last interest payment shall be made on December 31, 2031, together with the final payment of principal), in respect of the six-month period ending on the day preceding the payment date (the “Interest Period”). The rate of interest payable for a particular Interest Period (other than the First Interest Period, as defined below) (namely, the period beginning on the payment date of the previous Interest Period and ending on the day immediately preceding the payment date immediately following its commencement date) shall be calculated as the annual interest rate divided by two. The first interest payment shall be made on December 31, 2026 for the period beginning on the first clearing day after the tender date of the Bonds (Series D) (namely, the date on which the purchaser of the securities was charged the consideration for the offering) and ending on December 30, 2026 (the “First Interest Period”), calculated on the basis of 365 days per year according to the number of days in such period, and the last interest payment shall be made on December 31, 2031.
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The Bonds (Series D) shall not be linked (principal and interest).
Payments on account of principal and/or interest in respect of the Bonds shall be paid to those whose names are registered in the Register on June 18 and December 19 with respect to each relevant period preceding the date of repayment of such payment. Notwithstanding the foregoing, the final payment of principal and interest shall be made against delivery of the bond certificates to the Company at the time of the final payment, namely on December 31, 2031, at the Company’s registered office or at any other place of which it shall give notice, provided that such notice shall be given by the Company no later than five business days before the date set for making the final payment.
| 2.3 | The Company reserves the right to perform early repayment of the Bonds upon the fulfillment of the terms set forth in Section 7 of this Deed. |
| 2.4 | The Bonds (Series D) will all rank pari passu among themselves in connection with the Company’s obligations under the Bonds (Series D), without priority or preference of one over the other. |
| 3. | Purchase of Bonds by the Company and/or an Affiliate and Performing Distributions |
| 3.1 | The Company reserves the right, subject to any law that may not be conditioned, to acquire the Bonds (Series D) at any time and from time to time, without derogating from the obligation to repay the Bonds (Series D) in circulation. The Company will submit an immediate report in connection with the purchase of the Bonds if and as often as required to do so according to the applicable law. If no immediate report is filed, then in the event of a purchase as stated, the Company will notify the Trustee of this in writing. If the Company acquires Bonds (Series D) during trading on the Stock Exchange, the Company will file a request to the clearing house of the Stock Exchange for the withdrawal of the Bond Certificates acquired as stated. |
In the event of a purchase by the Company as stated above, the acquired Bonds (Series D) will expire automatically, will be voided and will be delisted from trade, and the Company may not reissue them. The provisions above will not prejudice the Company’s right to redeem the Bonds (Series D) in advance as stated in Section 7 below.
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| 3.2 | The Controlling Shareholder of the Company (directly or indirectly) and/or its relative (as the term is defined in the Securities Law) and/or a subsidiary of the Company and/or affiliated company and/or associated company of the Company and/or a corporation under the control of any of the above (directly or indirectly) (excluding the Company itself, regarding which the provisions of 3.1 above shall apply) (an “Affiliated Party”) may acquire and/or sell Bonds (Series D) at their discretion (and subject to any law), at any time and from time to time, including by way of an issuance by the Company. In the event of an acquisition and/or sale as stated by a subsidiary of the Company and/or a corporation under its control, the Company will notify the Trustee of this. The Bonds (Series D) that are held as stated by an Affiliated Party will be considered to be an asset belonging to the Affiliated Party, and if they are listed for trade, they will not be delisted from trade on the Stock Exchange and will be transferrable as are the other Bonds (Series D). The Bonds (Series D) that are owned by an Affiliated Party will not grant to the Affiliated Party voting rights in meetings of the Bondholders (Series D) and will not be counted for the purpose of determining a legal quorum required to commence such meetings. Meetings of Holders will take place based on the provisions of the Second Addendum to the Deed of Trust. An Affiliated Party will report to the Company, if required under law to do so, regarding an acquisition of Bonds (Series D), and the Company will provide the Trustee, at its request, with a list of Affiliated Parties and the quantities held thereby on the date requested by the Trustee, based on the reports received as stated from Affiliated Parties. It is clarified that a report on the MAGNA system or the MAYA website, if the Company ceased to be a Reporting Corporation, will be considered to be a report to the Trustee for the purposes of this Section. |
| 3.3 | The provisions of this Section above alone will not obligate the Company, an Affiliated Party or the Bondholders (Series D) to purchase Bonds (Series D) and/or sell the Bonds (Series D) in their possession. |
| 4. | Additional Issuances |
| 4.1 | Extending the series of Bonds (Series D) |
The Company may, from time to time, without requiring the consent of the Trustee and/or the Holders existing at the time, issue additional Bonds (Series D) (whether in a private placement or in the framework of a prospectus and/or by an amendment to a prospectus whether by a shelf offering or by any other means), including to an Affiliated Party (as defined in Section 3.2 above), under the terms that it sees fit (provided that the terms of the additional Bonds issued will be identical to the terms of the Bonds (Series D) in circulation). The Company will apply to the Stock Exchange with a request to list for trade the additional Bonds (Series D) as stated, when they are offered.
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Notwithstanding the above, an additional issuance of Bonds (Series D) will be performed subject to receipt of confirmation of the Stock Exchange and subject to all of the terms set forth below being fulfilled: (a) the Rating of the Bonds (Series D), as the Rating may be at the time, will not be harmed by the additional issuance of the Bonds (Series D) as stated, meaning the Rating before the expansion of the series will not change immediately after its expansion following the aforesaid expansion. For the purpose of this Section, it is clarified that in the event in which the Bonds (Series D) are rated by more than one Rating Company, the ratings test for the purpose of this Section will take place, at any time, based on the lower of the ratings; (b) on the date of the additional issue, in accordance with the most recent financial statements published before the date of the additional issue, and after retroactively taking into account the performance of the additional issue, the Company will meet all the financial undertakings set forth in Section 6.5 below, without taking into account the cure and waiting periods enumerated in connection with the same financial undertakings; and (c) on the date of the additional issue there are no grounds for calling for the immediate payment of the Bonds as set forth in Section 8.1, without taking into account any cure periods or waiting periods.
The Company will provide the Trustee, before the additional issuance is actually carried out and as a condition thereto (and in the event a tender is held for classified investors, no later than the date on which the tender for classified investors takes place), with a written confirmation signed by the CEO or a senior officer in the financial department of the Company regarding (in this subsection: “Confirmation”): (1) the fulfillment of the aforesaid conditions on the date of the Confirmation, excluding the condition in subsection (a) above, for which the Company shall provide the confirmation of the Rating Company as described below; and (2) that on the date of the Confirmation the Company is not in breach of any of its material obligations to the Bondholders (Series D).
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It is clarified that the consideration for the expansion of the series will be transferred directly to the Company, provided that the Company has provided the Trustee with the aforesaid approvals.
In any case of an additional issue as stated, the increase of the series in practice will occur subject to receipt of prior confirmation from the Rating Company whereby the Rating before the expansion of the series will not change downward immediately after its expansion following the aforesaid expansion. Confirmation from the Rating Company will be published in an immediate report before the actual expansion of the series.
This right of the Company will not exempt the Trustee from examining the additional issue as stated, if such an obligation applies to the Trustee under law, and will not derogate from the rights of the Trustee and the Bondholders under this Deed, including their right to call for immediate repayment of the Bonds as stated in Section 8 below.
Subject to the provisions of the Deed of Trust, the Trustee shall act as trustee for the Bonds (Series D) as they will be in circulation from time to time, and this also in the event of a series expansion, and the consent of the Trustee for such service for the expanded series will not be required. The Bonds (Series D) that will be in circulation before the expansion of the series and the additional Bonds (Series D) which will be issued, if at all, as described in this Section above, shall constitute from the date of their issue one series for all purposes, and the Deed of Trust shall also apply to all of the abovementioned additional Bonds (Series D) that the Company will issue. The additional Bonds (Series D) shall not grant the right to payment of principal and/or interest with regard to Bonds (Series D) for which the effective date for such payment occurred before the date of their issue. In the case of such expansion of the series, the applicable tax consequences, including with regard to calculation of the rate of deduction, if required, as set forth in Section 6 of the Shelf Offering Report and in accordance with the provisions of any law as in effect on the date the additional Bonds are issued, shall apply.
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| 4.2 | Without derogating from the generality of the above, the Company reserves the right, subject to any law, to issue an additional series of bonds at any time and from time to time (whether in a private placement or in the framework of a prospectus and/or by an amendment to a prospectus whether by a shelf offering or by any other means), without being required to receive the consent of the Bondholders (Series D) and/or the consent of the Trustee, as applicable, and including to an Affiliated Party (as defined in Section 3.2 above), and/or other securities as the Company sees fit, and this without harming the Company’s repayment obligation under this Deed of Trust. In addition, if the Company issues an additional series of bonds or other securities constituting debt, and such additional series or such securities will not be secured, and so long as they are not secured, the rights of the additional series or other securities constituting debt, as applicable, in liquidation will not be preferred over those of the Bonds (Series D) (in this Section 4.2 alone: the “Additional Issuance”). In the event that the Company issues other bonds of a different series or other debt securities that are secured by collateral and/or liens of any kind, then such other bonds or other debt securities, as applicable, will be prioritized in liquidation over the Bonds (Series D) only with respect to those collateral and/or liens included in such other bonds. For the avoidance of doubt, it is clarified that the provisions of this Section do not prevent the Company from issuing additional bonds of any kind which would be secured by collateral and/or liens of any kind at the Company’s sole discretion. |
Notwithstanding the foregoing, the Additional Issuance shall be subject to obtaining the approval of the Stock Exchange, to the extent that the securities issued in the Additional Issuance will be traded on the Stock Exchange, and to the fulfillment of all of the following conditions: (a) such Additional Issuance shall not adversely affect the Rating of the Bonds (Series D), as such Rating shall be at that time, meaning the Rating in effect immediately prior to the Additional Issuance. The Company shall publish, prior to carrying out the Additional Issuance, confirmation from the Rating Company that the Additional Issuance will not adversely affect the Rating of the Bonds (Series D); (b) as of the date of the Additional Issuance, based on the Company’s latest financial statements published prior to the date of the Additional Issuance, and immediately after giving effect to the Additional Issuance, the Company shall comply with all of the financial covenants set forth in Section 6.5 of this Deed of Trust; (d) no ground for immediate repayment, as set forth in Section 8.1 below, shall have occurred; and (e) the Company is in compliance with all of its material obligations to the Bondholders under this Deed. The Company shall deliver to the Trustee written confirmation from the Company, together with a calculation with respect to the condition set forth in this Section 4.2 above, confirming that all of the foregoing conditions have been satisfied prior to carrying out the Additional Issuance, all in form and substance satisfactory to the Trustee.
Without derogating from the above, the aforesaid rights of the Company will not prevent the Trustee from examining the implications of the additional issue as stated, and will not derogate from the rights of the Trustee and the Bondholders under this Deed, including their right to call for immediate repayment of the Bonds as stated in Section 8 below.
Subject to the provisions of any law, the Company shall notify the Trustee about the Additional Issuance before it is carried out.
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| 5. | Undertakings of the Company |
| 5.1 | The Company hereby undertakes to pay, on the dates prescribed, all amounts of principal and interest, including any additional interest and any default interest, insofar as applicable, payable under the terms of the Bonds (Series D), and to comply with all other terms and obligations imposed upon it under the terms of the Bonds (Series D) and under this Deed. In addition, the Company undertakes to list the Bonds for trade on the Stock Exchange and to act reasonably so that the Bonds continue to be listed for trade on the Stock Exchange until the date of final payment. |
| 5.2 | The Company may not set forth in this Deed provisions pursuant to which collateral provided and/or to be provided by the Company in favor of the holders of the Series D Bonds shall constitute the sole source of repayment of the Series D Bonds, in a manner that would release the Company from its obligations as aforesaid (Non-Recourse). In the event of any conflict between this Section and any other provision of this Deed, this Section shall prevail. |
| 5.3 | Partnership’s Undertaking as Co-Borrower |
Joinder as Co-Borrower: The Partnership hereby joins this Deed of Trust as a co-borrower together with the Company.
Joint and Several Liability: The Partnership hereby undertakes, jointly and severally with the Company, to fulfill all payment obligations of the Company under this Deed of Trust and its appendices, including, but not limited to, principal, interest, default interest, fees, expenses, and any other amount.
Preservation of Trustee’s and Bondholders’ Rights: Nothing in this Section shall derogate in any way from the Company’s obligations towards the Trustee and the bondholders. The Trustee and/or the bondholders shall not be required to approach the Partnership in any matter whatsoever and shall be entitled to approach the Company alone in order to enforce the Company’s obligations under the Deed of Trust, without derogating from their right to approach the Partnership as well at any time.
Signature: The Partnership shall sign this Deed of Trust as a party thereto, and by its signature it confirms its joinder as a co-borrower and its consent to all provisions of this Section and the entire Deed of Trust.
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| 5.4 | Adjustment of the interest rate due to a change in the rating of the Bonds (Series D): |
For the purpose of this Section, it shall be clarified that in the event in which the Bonds (Series D) are rated by more than one rating company, an examination of the rating for the adjustment of the interest rate to the change in the rating, if any such change occurs, will take place based on the lower of the ratings.
The interest rate that the Bonds (Series D) will bear will be adjusted for a change in the Rating of the Bonds (Series D), as set forth below in this Section:
It is clarified that if adjustment of interest is required in accordance with the mechanism described in this Section 5.4 above and below, and based on the mechanism described in Section 5.5 below, in any event, the maximum additional interest rate will not exceed 1.75% above the Annual Interest Rate. (the “Limitation of the Maximum Additional Interest Rate”).
In this regard:
A rating of A, A-, BBB+, BBB, and BBB- – are as defined in the table in Section 1.5.33 above.
“Base Rating” - the Rating determined in the initial issuance of the Bonds or the corresponding equivalent Rating.
“Additional Interest Rate” - additional interest provided to the bondholders at a rate of 0.25% per year for a decrease of each notch in the Rating of the Bonds below the Base Rating, up to a maximum additional interest of 1.5% per year at most (the “Limitation on the Additional Interest Rate”).
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| A. | If the Rating of the Bonds (Series D) by the Rating Company, in the case of replacing a Rating Company, the Company shall transfer to the Trustee a comparison of the rating scale of the outgoing Rating Company and the rating scale of the incoming Rating Company, is updated during any Interest Period, so that the Rating determined for the Bonds (Series D) is lower by one notch or more (the “Reduced Rating”) below the Base Rating, the annual interest rate on the outstanding principal of the Bonds (Series D) will increase by the Additional Interest Rate according to the steps set forth, and this is for the period commencing on the date of publication of the Reduced Rating by the Rating Company until the earlier of (a) repayment in full of the outstanding principal amount of the Bonds (Series D) or (b) the date of the Rating increase pursuant to Section 5.4(5) below. If the interest rate was raised earlier in respect of deviations from financial covenants as stated in Section 5.5 below, then the increase in the interest rate due to a decline in Rating as aforesaid will be limited according to the Limitation of the Maximum Additional Interest Rate. |
| B. | No later than the end of two business days from receipt of a notice from the Rating Company regarding the lowering of the Rating of the Bonds (Series D) to the Reduced Rating as defined above, the Company will publish an immediate report in which the Company states: (1) that the Rating was lowered, the Reduced Rating, the rating report and the date on which the Reduced Rating of the Bonds (Series D) comes into effect (the “Date of Lowering the Rating”); (2) deviation/non-deviation from the financial covenants described in Section 5.4 below based on the most recent financial statements of the Company published before the date of the immediate report, as well as whether a change has occurred to the interest for the deviation / non-deviation from the financial covenants as stated; (3) the precise interest rate that the principal amount balance will bear for the period beginning on the current interest period and until the Date of Lowering the Rating (the interest rate will be calculated based on 365 days per year) (the “Original Interest” and the “Original Interest Period,” respectively); (4) the interest rate that the principal amount balance will bear as of the Date of Lowering the Rating and until the actual next interest payment date, i.e.: the Original Interest in addition to the additional interest rate per year (the interest rate is calculated based on 365 days per year) (the “Updated Interest”), and this subject to the limitation on the maximum interest increase and the Limitation on the Additional Interest Rate (5) the weighted interest rate paid by the Company to the holders of Bonds (Series D) on the upcoming interest payment date, arising from the provisions of subsections (3) and (4) above; (6) the annual interest rate reflected from the weighted interest rate; (7) the annual interest rate and the semiannual interest rate (the semiannual interest rate will be calculated as the annual interest divided by the number of interest payments per year, namely by two) for the following periods. |
| C. | If the date of the commencement of the Rating of the Bonds (Series D) with the Reduced Rating occurs during the days beginning four days before the effective date for payment of any interest and ending on the interest payment date closest to such date (the “Deferral Period”), the Company will pay to the holders of the Bonds (Series D), on the upcoming interest payment date, the Original Interest, before the change, alone, while, if the interest rate was not increased prior thereto due to a deviation from the financial covenants as stated in Section 5.5 below, the interest rate arising from the additional interest at a rate equal to the Additional Interest Rate per year during the Deferral Period (calculated on the basis of 365 days per year), will be paid on the following interest payment date, all subject to the Limitation of the Maximum Additional Interest Rate and the Limitation on the Additional Interest Rate. The Company will announce, in an immediate report, the precise interest rate for payment on the upcoming interest payment date. |
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| D. | In the event of updating the Rating of the Bonds (Series D) by the Rating Company in a manner impacting the interest rate that the Bonds (Series D) will bear as stated in Section 5.4(a) above or Section 5.4(d) below, the Company will inform the Trustee thereof in writing within one business day from the publication of the immediate report as stated. |
| E. | In the event that, after the reduction of the Rating in a manner that impacts the interest rate that the Bonds (Series D) will bear as stated in Section 5.4(a) above, the Rating Company updates the Rating of the Bonds (Series D) upwards, the annual interest that the principal amount will bear on the relevant interest payment date will decrease at the Additional Interest Rate or part thereof, in accordance with the abovementioned levels, for the period in which the Bonds (Series D) were rated with the higher Rating only, meaning from the publication date of the rating report regarding the increase of the Rating, such that the interest rate that the unpaid balance of the principal of the Bonds (Series D) will bear after the update of the Rating upwards to a Rating equal to or higher than the Base Rating will be the Annual Interest Rate, without any addition for the reduction of the Rating as stated in this Section 5.4 (and in any event the interest rate that the Bonds will bear will not be less than the Annual Interest Rate). In such a case, the Company will act in accordance with the provisions of subsections (A) through (C) above, mutatis mutandis, arising from the higher Rating instead of the Reduced Rating. It is clarified that, to the extent the Rating of the Bonds is raised above the Base Rating, such increase shall not affect the interest rate borne by the Bonds at such time. |
| F. | If the Bonds (Series D) cease to be rated at all for a reason dependent on the Company (for example, but not only, due to non-fulfillment of the Company’s obligations vis-a-vis the Rating Company, including due to failure to provide payments and/or reports that the Company has undertaken to provide towards the Rating Company), for a period exceeding 21 trading days before the final payment, the cessation of the Rating will be considered as the maximum Reduced Rating, such that the Additional Interest Rate will amount to 1.5% (even if the interest rate increased in accordance with subsection (A) above prior to such date), even if the interest rate was increased prior thereto due to a deviation from the financial covenants as stated in Section 5.4 below (but subject to the limitation on the maximum interest increase), and the provisions of subsection (b) through (d) above will apply accordingly, without derogating from the provisions of Section 8.1.21 below. For the avoidance of doubt, it shall be clarified that if the Bonds (Series D) cease to be rated, before the final payment, for a reason independent of the Company, the above will not impact the interest rate as stated in Subsection (a) above and the provisions of this Section 5.2 (e) will not apply. |
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| G. | In the case in which the Rating Company is replaced or the Bonds (Series D) cease to be rated by a Rating Company, even if the Bonds (Series D) are rated by several Rating Companies, the Company will publish an immediate report, within one trading day from the date of the change, in which the Company will announce the circumstances of the replacement of the Rating Company or the cessation of the Rating, as applicable. |
| H. | For the avoidance of doubt, it is clarified that: (1) a change in the outlook for the Rating of the Bonds (Series D) will not lead to a change in the interest rate that the Bonds (Series D) will bear as stated in this Section above; and (2) if the Bonds (Series D) are rated by more than one Rating Company and as long as they are rated by more than one Rating Company as stated, subsection (F) above will not apply, other than in a case in which all of the Rating Companies together cease to rate the Bonds (Series D), and the determination of the Rating for the purpose of corresponding the interest rate to the change in the Rating, if such a change occurs, shall be done at any time according to the lowest Rating among them. |
| I. | In the case of a reduction of the Rating, the Company will act in accordance with subsection (B) above. If before the Date of Lowering the Rating, an increase occurs to the interest rate due to a deviation from one or more of the financial covenants based on the mechanism set forth in Section 5.5 below, the change that occurs to the interest for the adjustment mechanism set forth in this Section 5.4 above will be limited according to the Limitation of the Maximum Additional Interest Rate. |
| J. | The Company undertakes to act such that, to the extent that it is in its control, the Bonds (Series D) are rated by at least one Rating Company during the entire duration of the Bonds (Series D), and for the same purpose, the Company undertakes, inter alia, to pay the Rating Company the payments that it has undertaken to pay to the Rating Company, and to provide the Rating Company with the reports and information required thereby in the framework of the engagement between the Company and the Rating Company. In this regard, the non-performance of payments that the Company has undertaken to pay to the Rating Company and the failure to provide the reports and information required by the Rating Company in the framework of the engagement between the Company and the Rating Company will be deemed to be reasons and circumstances that are under the Company’s control. The Company does not undertake to refrain from replacing the Rating Company or to refrain from terminating the engagement therewith during the duration of the Bonds (Series D). In the event in which the Company replaces the Rating Company, even if at the time of replacement it is not the only Rating Company rating the Bonds (Series D), and/or terminates the work of a Rating Company, in the event in which it is not the only Rating Company, the Company undertakes to report the same in an immediate report and to inform the Trustee and the Bondholders thereof, and state the reasons for the change of the Rating Company in its notice, no later than one trading day from the date of the replacement as stated and/or the date of the decision to terminate the work of the Rating Company, whichever is earlier. It is clarified that the provisions above will not derogate from the right of the Company to replace the Rating Company or terminate the work of the Rating Company at any time, in the event in which it is not the only Rating Company, at its exclusive discretion and for any reason that it sees fit. |
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| 5.5 | Adjustment of the interest rate as a result of deviation from financial covenants: |
The interest rate that the Bonds (Series D) will bear will be adjusted due to a deviation from the financial covenants set forth below:
| (1) | Should the financial debt to EBITDA ratio (as defined below) exceed 8 (the “Covenant of Net Financial Debt to EBITDA Ratio”).1 |
For the purpose of this subsection (1) only:
“Financial Debt” – Interest-bearing debt for short and long term from banks and other financial creditors plus interest-bearing debt to the Bondholders of the Bonds issued by the Company, on the basis of the Company’s most recent financial statements.
“EBITDA” – net profit/loss plus interest, taxes, depreciation, amortization and profit or loss from the sale of securities calculated according to the four quarters that ended on the date of the relevant financial statements –according to the Company’s financial statements.
| (2) | Should the ratio of EBITDA to all financing expense payments of the Company decrease below 1.35 (the “EBITDA to Financing Expenses Ratio Covenant”).2 |
For purposes of this subsection (2) only:
“Total financing expense payments of the Company” - (a) The sum of ongoing interest of the company and its subsidiaries in respect of financial debt incurred by them; plus (b) mortgage insurance payments of the Company and its subsidiaries in respect of their assets; all calculated based on the four quarters ending on the relevant financial reporting date, in accordance with the consolidated financial statements of the Company.
| (3) | Should the consolidated equity of the Company (including minority rights) as of the last day on any calendar quarter according to the Company’s financial statements is less than USD 25 million (this amount will not be linked to any linkage base) (in this Section 5.3: the “Equity Covenant”).3 |
1 The net financial debt to EBITDA ratio, based on the Company’s consolidated financial statements as of June 30, 2026, is 5.99, consisting of net financial debt in the amount of US$802.6 million and EBITDA in the amount of US$134.1 million.
2 The EBITDA to Financing Expenses ratio, calculated based on the four quarters ending on the date of the Company’s financial statements as of June 30, 2026, is 2.59, comprising EBITDA in the amount of US$134.1 million and total financing expense payments of the Company in the amount of US$51.7 million.
3 The total equity of the Company as of June 30, 2026, is approximately US$32.6 million.
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The Covenant of Net Financial Debt to EBITDA, the EBITDA to financing expenses covenant and the Equity Covenant shall each be referred to as a “Financial Criterion” and together shall be referred to as the “Financial Covenants.”
It is clarified that if adjustment of interest is required in accordance with the mechanism described in this Section 5.5 above and below, and based on the mechanism described in Section 5.4 above, and pursuant to any other section in this Deed (if any), then in any event, the maximum aggregate rate of the additional interest rate will not exceed the Limitation of the Maximum Additional Interest Rate (as defined in Section 5.4 above). Arrears interest, if applicable in accordance with Section 4(a) of the terms listed on the overleaf, will be added to the said rate and will not constitute part thereof.
In this regard:
The “Additional Interest Rate” - additional interest at a rate of 0.5% per annum for a deviation from any of the Financial Covenants.
The increase of the interest rate will take place only once for each deviation from any of the Financial Covenants, if such a deviation occurs, and the interest rate will not be increased again in the event that the deviation from the relevant Financial Covenant continues (. In this regard, it is clarified that if the deviation from any of the Financial Covenants is remedied and thereafter there is an additional deviation, the aforesaid addition will apply). It shall be emphasized that in the event in which, due to a decrease in the Rating of the Bonds, the annual interest rate is increased in accordance with the provisions of Section 5.4 above, then in any event, the Additional Interest Rate under that Section, together with the Additional Interest Rate under this Section 5.5 for the deviation from the Financial Covenants, will not exceed the Limitation of the Maximum Additional Interest Rate.
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The “Deviation Date” – the publication date of the financial statements that indicate the deviation.
| A. | If the Company deviates from any of the Financial Covenants under the Company’s reviewed or audited Financial Statements (the “Deviation”), the annual interest rate that the unpaid balance of the Bonds (Series D) will bear will be increased by the Additional Interest Rate for the Deviation, above the interest rate as it was at the time before the change, for the period that begins from the Deviation Date and until the earlier of the full repayment of the unpaid principal balance of the Bonds (Series D) or the date of publication of the Company’s Financial Statements whereby the Company does not have a deviation from any of the Financial Covenants, all subject to the Limitation of the Maximum Additional Interest Rate. |
| B. | In the event that a Deviation from any of the Financial Covenants occurs as stated, no later than the end of two business days from the publication of the Company’s Financial Statements indicating a Deviation, the Company will publish an immediate report in which the Company will state: (a) the aforesaid Deviation, specifying the Financial Covenants as of the date of publication of the financial report; (b) the updated Rating of the Bonds (Series D) based on the most recent rating report published before the date of the immediate report and whether there is a change to the interest rate following a change in the Rating, if any; (c) the precise interest rate that the principal amount balance will bear for the period beginning from the current Interest Period and until the Deviation Date (, calculated on the basis of 365 days per year) (the “Original Interest” and the “Original Interest Period”, respectively); (d) the interest rate that the balance of the principal of the Bonds (Series D) will bear as of the Deviation Date and until the upcoming actual interest payment date, namely the Original Interest with the addition of the Additional Interest Rate per year, calculated on the basis of 365 days per year (the “Updated Interest”), subject to the Limitation of the Maximum Additional Interest Rate; (e) the weighted interest rate that is paid by the Company to the Bondholders (Series D) on the upcoming interest payment date, arising from the provisions of subsections (c) and (d) above; (f) the annual interest rate reflected from the weighted interest rate; and (g) the annual interest rate and the semiannual interest rate, where the semiannual interest rate will be calculated as the annual interest divided by the number of interest payments per year, namely by two, for the following periods. Should the Deviation continue after the end of the first quarter in which it occurred, no later than one business day from the date of publication of the Company’s audited or reviewed Financial Statements, as the case may be, indicating that the Deviation continues, the Company shall publish an immediate report in which the details of this Section above shall be displayed, according to the updated interest rate and by reference to the continued Deviation as aforesaid in the definition of the term “Additional Interest Rate”. |
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| C. | If the Deviation Date occurs during the days beginning four days before the effective date for the payment of any interest and ending on the subsequent interest payment date (the “Deferral Period”), the Company will pay the Bondholders (Series D) on the subsequent interest date the Original Interest only, while the interest rate arising from the addition of the interest at a rate equal to the Additional Interest Rate per year during the Deferral Period will be paid on the following interest payment date. The Company will provide notice in an immediate report of the precise interest rate for payment on the following interest payment date. |
| D. | In the event of a deviation from any of the Financial Covenants in a manner that impacts the interest rate that the Bonds (Series D) will bear (as stated in paragraph A or paragraph E), the Company will inform the Trustee thereof in writing within one business day from the date of the publication of the Financial Statements as stated. |
| E. | It is clarified for the avoidance of doubt that in the event that after the Deviation the Company publishes its Financial Statements based on which the Company has not deviated from any of the aforesaid Financial Covenants, the increase in the annual interest rate will be cancelled for the deviation, and due to the continuation of the deviation, to the extent continued and as applicable, from any of the aforesaid Financial Covenants in a manner that the annual interest rate that the Bonds will bear will be reduced at the rate of the interest increase as aforesaid, and this for the period in which the Company has not deviated from any of the Financial Covenants, which shall begin on the date of publication of the Financial Statements indicating non-deviation from the Financial Covenants, so that the interest rate that will be borne by the outstanding balance of the principal of the Bonds (Series D) shall be, if the interest rate has not previously been raised in respect of a decrease in the Rating of the Bonds (Series D) as stated in Section 5.4 above and if there is no deviation from another Financial Covenant, the Annual Interest Rate, without any addition, and in any event the interest rate that the Bonds will bear will not be lower than the Annual Interest Rate, or any other interest rate determined as a result of a decrease in the Rating of the Bonds (Series D) as stated in Section 5.4 above. In such a case, the Company will act in accordance with the provisions of subsections (B) through (D) above, mutatis mutandis, as applicable and with respect to the Company’s non-deviation from the same Financial Covenants. It is clarified that in any case, the interest rate that the Bonds will bear will not be lower than the Annual Interest Rate. |
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| F. | The examination regarding the Company’s non-deviation from the Financial Covenants will be performed on the date of publication of the Financial Statements by the Company and as long as the Bonds (Series D) exist in circulation, with respect to the Financial Statements that the Company is required to publish until the same date. |
The Company will specify as part of the notes to every financial report the existence or non-existence of a deviation from any of the Financial Covenants for the reporting period.
For the avoidance of doubt, it shall be clarified that subject to the above and the Limitation of the Maximum Additional Interest Rate, the additional interest payments as a result of the Reduced Rating as stated in Section 5.4 above and/or as a result of the Company’s non-compliance with any of the financial covenants as stated in this Section 5.5 above are aggregated. Therefore, in the event that a Lowered Rating occurs, while in addition the Company deviates from any of the financial criterion, one or more, the Bondholders (Series D) will be entitled to an increase in the interest rate as stated above, provided that the additional annual interest does not exceed the Limitation of the Maximum Additional Interest Rate.
| 5.6 | Interest Cushion |
| A. | The Company will transfer an amount equal to the amount of the near interest payment of the Bonds, as of that date, but not more than an amount equal to a half-year interest payment (the “Interest Cushion Amount”) to the Trustee by transferring the Interest Cushion Amount from the account in the name of the Issue Coordinator, in which the issue proceeds are held, to a bank account that will be opened by the Trustee under its name in trust for the holders of the Bonds (Series D) only (the “Interest Cushion Account”). The Company will pledge its rights in the Interest Cushion Account for the benefit of the Trustee in any relevant territory as required. Except as set out in subsections B through I below, the Company hereby declares that it has and will have no rights in the Interest Cushion Account. |
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| B. | The signature rights in the Interest Cushion Account will be the Trustee’s only. The funds deposited in the Interest Cushion Account will be managed by the Trustee in accordance with the provisions of Section 17 below. The Trustee will not be liable vis-a-vis the Bondholders (Series D) and/or the Company for any loss incurred due to investments as stated. |
| C. | If on the morning of the fifth (5th) day of every calendar month after the end of each calendar quarter, and if it is not a business day, then on the following business day (the “Cushion Completion Date”), the amount deposited in the Interest Cushion Account is lower than the Interest Cushion Amount, the Company will transfer to the Interest Cushion Account on the Cushion Completion Date (and if that day is not a business day then on the following business day) an amount equal to the amount required for the completion of the amount deposited in the Interest Cushion Account, on the Cushion Completion Date, to the Interest Cushion Amount (together with the amount deposited at that time in the Interest Cushion Account: the “Current Cushion Amount”). |
| D. | To the extent that on the date of payment of principal and/or interest in respect of the Bonds by the Company, the amount deposited in the Interest Cushion Account exceeds the Current Cushion Amount (“the Excess Amount”), the Company shall be entitled to instruct the Trustee to make use of the Excess Amount for making payments of principal and interest amounts that the Company is liable to pay to the Bondholders of Bonds (Series D) under this Deed, and pursuant to the Company’s request, the Trustee will transfer to the Nominee Company for payment on the date on which the payment is to be paid, up to the amount of the relevant payment according to the Company’s notice or up to the amount of the Excess Amount, whichever is lower (and in the case of the transfer of the Excess Amount, subject to receipt of evidence from the Company regarding the transfer of the balance of the amount required for execution of the relevant payment to the Nominee Company). At the final and last redemption date of the Bonds (Series D), the Company may instruct the Trustee to make use of the Current Cushion Amount and the Excess Amount as deposited in the Interest Cushion Account for the purpose of a payment in respect of the Bonds or transfer it to the Company after full repayment of all the Bonds. |
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| E. | It is hereby clarified that if the series of Bonds is increased or an additional interest rate applies as stated in Sections 5.4 and 5.5 above, the Company will deposit in the Interest Cushion Account the funds that will constitute the Interest Cushion Amount in respect of the increase or the updated interest rate within 5 business days from the date of publication of the immediate report regarding the actual increase or the change in the interest rate as aforesaid, as the case may be. |
| F. | It is hereby clarified that the non-deposit of funds in the Interest Cushion Account on any Cushion Completion Date, whether as part of the issuance under this Shelf Offering Report or following the occurrence of events as specified in this Section, shall constitute grounds for calling for immediate repayment of the balance of the Bonds (Series D) in circulation, as stated in subsection 8.1.29 below. |
| G. | For the avoidance of doubt, it is clarified that the Company’s undertaking to transfer the funds to the Interest Cushion Account is not guaranteed by a mechanism that will ensure the performance of this undertaking. In the event that the Company fails to meet its obligation to transfer the funds to the Interest Cushion Account, the Trustee will not be able to prevent the breach of this undertaking, but rather to take the measures at his disposal according to law and the Deed of Trust, to enforce on the Company retroactively the execution of its undertaking. |
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| H. | It is hereby clarified that the Interest Cushion Amount (including the Current Cushion Amount), together with the profits accrued for the same amounts, will be held by the Trustee for the Bondholders of the Bonds (Series D) only. The Company shall not have any rights or claims with respect to these sums, save for (A) the right to issue an instruction in respect of the Excess Amount and/or to provide an instruction in respect of the Current Cushion Amount on the final and last repayment date of the Bonds (Series D), as stated in subsection D above, and (B) determination of the money management policy in the Interest Cushion Account and its implementation at the Company’s sole discretion, provided that the investment will be in investments as detailed in Section 17 below. The Trustee will not be entitled to object to the investment policy and will not be liable to the holders of the Series D Bonds and/or the Company for any damage and/or loss caused by this policy. |
| 5.7 | Expenses Cushion |
Without derogating from the provisions of Section 25 below, from the issue proceeds an amount equal to USD 250 thousand (based on the representative exchange rate of the dollar known on the day before the public tender), will be deposited in a bank account in Israel opened by the Trustee in its name in trust for the holders of the Bonds (Series D) only, which will be used for payment of the reasonable ongoing expenses and reasonable management expenses of the Trustee, in the case in which the Bonds (Series D) are called for immediate repayment (the “Expenses Cushion Amount”). The Expenses Cushion Amount will be held until after the date of the full and final repayment of the Bonds (Series D). After receipt of approval from the senior officer in the financial department at the Company or from the Chief Executive Officer of the Company regarding full repayment of the Bonds (Series D), in a manner satisfactory to the Trustee, any remaining Expenses Cushion Amount, if any, together with all profits accrued thereon, will be transferred to the Company in accordance with the details provided by the Company. In the case in which the Expenses Cushion Amount is not sufficient to cover the expenses of the Trustee in connection with the immediate repayment of the Bonds (Series D), if any such event occurs, the Trustee will act in accordance with the provisions of Section 25 below.
It is hereby clarified that the funds in the Expenses Cushion Account shall be held in trust for the Bondholders only, and the rights of the Company in the Expenses Cushion Account shall not be pledged in favor of the Trustee.
The money management policy in the bank account where the Expenses Cushion Amount will be deposited will be determined and implemented at the sole discretion of the Company, provided that the investment of its funds is in line with those specified in Section 17 below. It is clarified that, except as detailed above, the Company will not have rights in the funds in the Expenses Cushion Account. For the avoidance of doubt, it is emphasized that the Trustee may determine at his absolute discretion that the Expenses Cushion Amount may be deposited in the Interest Cushion Account, and the Company will not have any claim in this regard.
| 5.8 | Controlling Shareholders’ Transactions |
The Company clarifies that as of the date of signing this Deed, its shares are registered with the Securities and Exchange Commission (SEC) in accordance with the U.S. Securities Exchange Act of 1934 (“U.S. Stock Exchange Act”). Various securities of the Company are listed for trading under the U.S. Stock Exchange Act and are listed for trading on the New York Stock Exchange (“NYSE”). Consequently, the Company is subject to the laws and regulations applicable to public companies in the United States in accordance with the securities laws, NYSE rules and regulations applicable to publicly traded companies.
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| 5.9 | Appointment of a Company Representative in Israel |
| 5.9.1 | Until after the full, final and precise repayment of the Bonds (Series D) under the terms of the Deed of Trust vis-a-vis the Bondholders, the Company undertakes that it will have a representative on its behalf in Israel to which legal process can be served on the Company and/or its officers instead of service at the Company’s address overseas set forth in the preamble to this Deed. |
| 5.9.2 | As of the date of signing This Deed, the Company’s representative in Israel is the law office of Fischer & Co (whose address at the time of signing This Deed is 146 Menachem Begin Road, Tel Aviv (the “Company’s Representative in Israel”). |
| 5.9.3 | Service to the Company’s Israel Representative will be considered valid and binding service in connection with any claim and/or demand of the Trustee and/or the Bondholders (Series D) under this Trust Deed. |
| 5.9.4 | The Company will be permitted to replace the Company’s Israel Representative from time to time but only if at the time of the replacement the Company shall report the details of the new Company representative in an immediate report and will deliver a written notice to the Trustee in parallel. |
| 5.9.5 | The Company undertakes that in the event the Company’s representative in Israel is replaced, including in the event of resignation, the Company shall appoint a representative of the Company in Israel within a period not exceeding thirty (30) days. Until a new representative is appointed, as mentioned above, the Company’s address in Israel for the purpose of this Deed of Trust and for the service of court pleadings will be the replaced representative’s address. |
| 5.9.6 | Any breach of this section will constitute a fundamental violation of the terms outlined in the Deed of Trust. |
| 5.9.7 | It is clarified that the funds resulting from the issuance, after deducting the amounts designated to remain in the Interest Cushion Account, will be transferred to the Company upon its request. |
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| 6. | Securing the Bonds, Financial undertakings, dividend distribution restriction |
| 6.1 | The Bonds (Series D) are not secured by collateral, any pledges, or in any other manner. For details regarding the Company’s undertaking to avoid the creation of a general floating charge, see Section 6.4 below. |
| 6.2 | Upon the execution of this Trust Deed, the Subsidiary Company will execute an irrevocable guarantee, without limitation as to amount, to secure the Company’s and the Partnership’s full obligations towards the Trustee and/or the Bondholders (Series D) under this Deed, which shall remain in effect until the complete repayment of the Company’s liabilities under this Trust Deed (the “Subsidiary Guarantee”). The form of the Guarantee as described above is attached as Appendix 6.2 to this Trust Deed. |
Notwithstanding the provisions of Section 6.2 above, the Company may at any time announce by way of an immediate report the expiration of the Subsidiary Guarantee, provided that the Company has obtained the Rating Agency’s prior confirmation that, upon the cancellation of the Subsidiary Guarantee, the Rating will not be downgraded as a result thereof (the “Rating Agency Confirmation”). In such case, as of the date of the Rating Agency Confirmation, the Subsidiary Guarantee shall expire immediately and automatically and as of such date shall be null and void, without the consent of the holders of the Bonds (Series D) and/or the consent of the Trustee being required.
| 6.3 | For the avoidance of doubt, it is clarified that the Trustee is not subject to and will not be subject to an obligation to examine, and in practice the Trustee has not examined and will not examine, the need to provide securities to secure the payments to the Bondholders (Series D). The Trustee was not asked to conduct, and the Trustee did not conduct in practice and will not conduct, financial, accounting or legal due diligence as to the state of the Company’s and/or the Partnership’s business. In its engagement in this Deed of Trust and the Trustee’s consent to serve as a trustee for the Bondholders (Series D), the Trustee does not express an opinion, explicitly or implicitly, as to the ability of the Company to meet its obligations vis-à-vis the Bondholders (Series D) under this Deed. The provisions above will not derogate from the Trustee’s obligations under any law and/or the Deed of Trust, and will not derogate from the Trustee’s obligation (if such an obligation applies to the Trustee under any law) to examine the impact of changes in the Company from the date of the shelf offering report and thereafter, if they may detrimentally impact the Company’s ability to meet its obligations under this Deed of Trust vis-à-vis the Bondholders (Series D). |
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| 6.4 | Undertakings Not to Create Pledges |
| 6.4.1 | The Company and the Subsidiary will not create a general floating charge (or a similar lien in its characteristics according to the law applicable to the Company or the Subsidiary) on all of their direct, existing and future assets and rights for the benefit of any third party to secure their liabilities to any third party, unless they have received prior consent from the Bondholders by a Special Resolution, or unless they have granted, at the same time as making the general floating charge on all of the Company’s and the Subsidiary’s direct, existing and future assets and rights as stated in favor of a third party, a floating charge in favor of the Bondholders in the same rank, and these liens will be pari passu according to the ratio of the debts of the Company or the Subsidiary, as applicable, to each of the parties. |
If such a lien is created, it will be done in coordination with the Trustee and in terms satisfactory to the Trustee, and the Trustee will be given shortly prior to the creation of the lien, duly executed documents creating the lien, documents for registration of the lien, and evidence of their filing with the relevant authorities. In addition, concurrently with the creation of the lien, the following documents shall be delivered to the Trustee:.
(B) certificate from a senior officer in the Company that the lien does not contradict or conflict with any other obligations of the Company
(C) An opinion from local counsel in connection with the creation of such a lien, attesting that it is valid, enforceable and realizable under the relevant law.
| 6.4.2 | For the avoidance of doubt, the foregoing does not restrict (1) the Company and the Subsidiary from creating fixed liens on all or some of their assets; (2) the Company and the Subsidiary from creating floating liens on one or more specific assets of the Company or the Subsidiary, as applicable; or (3) the ability of corporations controlled by the Company and the Subsidiary to create any type of lien (whether fixed or floating) on any assets (including all or most of the assets), with or without any restriction, or to guarantee the liabilities of the Company or the Subsidiary, as applicable, in any way. |
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| 6.4.3 | For the avoidance of doubt, the Trustee is not required to check the possibility and/or necessity of registering the Company’s or the Subsidiary’s liabilities to avoid creating liens or any similar registration in nature and substance outside of Israel, and the Company’s obligation as stated above will be a contractual obligation towards the Trustee and the Bondholders. The Company hereby confirms and declares that, as of the date of this Deed of Trust, it and the Subsidiary have not created or undertook to create or registered floating liens on all of their direct assets and current and future rights for which the undertaking as stated above is given. |
| 6.4.4 | The Group’s companies will be permitted to sell, lease, assign, deliver or transfer their property, in whole or in part, in any manner, to whoever they deem appropriate, without requiring any consent of the Trustee and/or of the bondholders (Series D), as the case may be. The Group’s companies are not required to notify the Trustee of a transfer or sale of any asset of their assets except if what is involved is a sale or a transfer of “Material Asset of the Company” according to the meaning of that term in Section 8.1 below, and in addition they are not required to notify the Trustee regarding the creation of a pledge over their assets, except a general floating charge on the Company’s overall property as stated above. |
| 6.4.5 | It shall be clarified that the Trustee does not have data that would enable it to ensure the Company’s compliance with the undertakings set forth in this Section 6.2 above (and its subsections) and therefore, for the examination of the Company’s compliance with the provisions of this Section 6.2 above, the Trustee will rely on the Company’s reports and the approvals set forth in this Section 6.2 above, and will not be required to ensure the accuracy thereof. |
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| 6.5 | Financial Undertakings |
Until after the full, final and precise repayment of the Bonds under the terms of this Deed of Trust, and the fulfillment of the other obligations of the Company vis-a-vis the Bondholders (Series D) under this Deed of Trust and the terms of the Bonds (Series D), the Company will meet, at all times, each of the financial conditions set forth below:
| (1) | On the last day of each calendar quarter, the consolidated equity of the Company (including minority rights), as set forth in the Company’s financial statements, will not be less than USD 22 million (this amount will not be linked to any linkage base). |
| (2) | On the last day of each calendar quarter, the ratio between Financial Debt and EBITDA (as defined in Section 5.5 above) shall not exceed 10; |
| (3) | On the last day of each calendar quarter, the ratio of EBITDA to financing expenses (as defined in Section 5.5 above) shall not be less than 1.25. |
The examination regarding the Company’s compliance with each of the Financial Covenants contained in subsections (1) to (3) above will be performed as of the date of the publication of the Financial Statements by the Company and on their basis and as long as the Bonds (Series D) exist in circulation, with respect to the quarterly/annual financial statements that the Company is required to publish by the same date (“Date of the Examination”).
The Company will indicate in the notes to its financial statements whether it meets each of the Financial Covenants. Within 10 days from the date of publication of each financial statement, the Company will provide the Trustee with a confirmation from the Company’s senior financial officer, or the Company’s CEO in regard to the Company’s compliance with each of the Financial Covenants, along with an electronic data sheet showing the calculation and all according to the wording to the satisfaction of the trustee.
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The terms used for the Financial Covenants will be calculated and determined in accordance with the rules of the U.S. GAAP applicable to the company at the time of signing the trust deed (“the determining accounting rules”).
If there is a material change in the U.S. GAAP and/or regulatory changes in relation to the accounting rules that determine or if the company adopts an accounting standard voluntarily and the adoption of the standard causes a material change, the above financial standards will be applied according to the financial statements prepared according to the accounting rules that determine, ignoring the aforementioned changes and the company will present to the trustee at the time of transfer a confirmation Compliance with the financial standards as mentioned in this section above, every quarter, a compliance report with the accounting standards applied to the company in accordance with the accounting rules that determine and everything in the wording to the satisfaction of the trustee. In the event of such a change, the company will include in the financial statements, the data on which it based the calculation of the financial benchmarks listed above (pro forma report).
“Substantial change” for the purposes of this section - means a change of at least 5% in the aggregate, in relation to all the standard and regulatory changes that have taken place, between the relevant benchmark as mentioned above, and the date of the financial statement, as calculated according to the accepted accounting rules that will apply to the company at the date of the report, and the benchmark the relevant one, for that date, as calculated according to the accounting rules that determine.
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| 6.6 | Restricting the Distribution of Dividends |
As long as the Company does not breach any of the Financial Covenants noted in Section 6.5 above, no distribution restriction shall hinder the Company. If the Company is in non-compliance with one or more of the Financial Covenants as noted in Section 6.5 above, the Company can make a distribution in an amount that does not exceed the amount required to meet the U.S. legal requirements applicable to REITs. To the extent that the Company ceases to qualify as a REIT, the Company shall not be permitted to make any distribution if it is in breach of one or more of the financial covenants set forth in Section 6.5 above.
In the event of a distribution while the Company is in deviation from one or more of the Financial Covenants as stated in Section 6.5 above, the Company will give the Trustee prior notice of its intention to make a distribution together with a confirmation from the senior financial officer in the Company that the amount of the distribution does not exceed the amount required to meet the U.S. legal requirements applicable to REITs. The Trustee will rely on such confirmation without being required to perform any examination on the subject.
| 7. | Early Redemption |
| 7.1 | Early repayment initiated by the Stock Exchange |
In the event that the Stock Exchange decides to delist the Bonds from trade because the public holdings of the Bonds is less than the amount set forth in the guidelines of the Stock Exchange regarding delisting from trade, the Company will act as follows:
| a) | Within 45 days from the date of the resolution of the stock exchange’s board of directors to delist from trade as stated, the Company will provide notice of an early repayment date in which the Bondholder may redeem them. |
| b) | The early redemption date with respect to the Bonds will occur no earlier than 17 days from the date of the notice’s publication and no later than 45 days from the aforesaid date, but shall not apply in a period between the effective date for the payment of interest and the actual payment date thereof. |
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| c) | On the early redemption date, the Company will redeem the Bonds that the holders thereof request to redeem, in the amount set forth in Section 7.2 below (with respect to the First Period, as defined below). |
| d) | Determination of the early redemption date as stated above will not harm the redemption rights set forth in the Bonds for any of the Bondholders that do not redeem them on the early redemption date as set forth above; however, the Bonds will be delisted from trade in the Stock Exchange, and will be subject to the tax implications that arise as a result. |
Early redemption of the Bonds as stated above will not grant any of the Bondholders that redeems them as stated with the right to an interest payment for the period following the redemption date.
The Company will publish a notice of the early redemption date in an immediate report. The notice as stated will also specify the early redemption consideration amount.
| 7.2 | Early repayment initiated by the Stock Exchange |
The Company may, at its exclusive discretion, call for the early redemption of the Bonds (Series D), at any time after the date which is 60 days from the date of listing for trade on the Stock Exchange, in which case the following provisions will apply, all subject to the instructions of the Securities Authority and the provisions of the bylaws of the Stock Exchange and the guidelines thereunder, as they may be at the relevant date:
Only one partial redemption date may be set in each quarter. Without derogating from the foregoing, at least 30 days shall elapse between two partial redemption dates.
In the event that early redemption is determined in a quarter in which an interest payment is also scheduled, or a date for payment of partial redemption or a date for payment of final redemption, the early redemption will take place on the date scheduled for such payment.
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In this regard, a “quarter” shall mean each of the following periods: January-March, April-June, July-September, October-December.
The minimum amount of each early repayment will not be less than ILS 1 million. Notwithstanding the above, the Company may perform early redemption in a scope of less than ILS 1 million, provided that the scope of the redemptions will not exceed one per year.
Any amount that is paid in early repayment by the Company will be repaid with respect to all of the Bondholders (Series D), pro rata based on the par value of the Bonds (Series D) that are held thereby.
Upon the passing of a resolution by the Company’s board of directors regarding the performance of early redemption as stated above, the Company will publish an immediate report with a copy to the Trustee no less than seventeen (17) days and no more than forty five (45) days before the early redemption date. The early redemption date will not occur during the period between the effective date for payment of interest on the Bonds (Series D) and the actual date for payment of the interest. In the immediate report as stated, the Company will publish the principal amount that will be repaid in the early redemption, as well as the interest that has accrued for the amount of the principal as stated until the early redemption date, in accordance with the provisions below.
Early redemption will not occur for part of a series of Bonds (Series D) if the last redemption amount is less than ILS 3.2 million.
If the Company performs partial early repayment, the Company will pay the interest accrued only for the part redeemed, and not the entire unpaid balance of the Bonds (which are not redeemed on the partial repayment date).
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On the partial early redemption date, if any, the Company will issue an immediate report about: (1) the partial redemption rate in terms of the unpaid balance; (2) the partial redemption rate in terms of the original series; (3) the partial redemption interest rate on the redeemed part; (4) the interest rate that will be paid in partial redemption, calculated with regard to the unpaid balance; (5) update of the partial redemption rates that remain, in terms of the original series; and (6) the effective date for eligibility to receive the early redemption of the principal of the Bonds, which will be twelve (12) days before the date determined for the early redemption.
The amount that will be paid to the Bondholders (Series D) in the event of early redemption to be performed during the period commencing on the date of execution of this Deed and ending on June 30, 2031 (in this Section: the “First Period”) will be the amount that is the higher of the following: (1) the market value of the balance of the Bonds (Series D) available for early redemption, which is determined based on the average closing price of the Bonds (Series D) in thirty (30) trading days before the date on which the board of directors resolves to perform the early redemption, however, if the early redemption date has been determined on a date on which interest is paid, the amount equal to the interest amount paid on the same date for that bond will be reduced from the average unit price as stated; (2) the undertaking value of the Bonds (Series D) available for early redemption in circulation, namely the principal plus the interest borne by the Bonds as of the early redemption date until the actual early redemption date; and (3) the balance of the cash flow of the Bonds (Series D) that are available for early redemption (principal plus the interest borne by the Bonds as of the early redemption date), when discounted based on the yield of government bonds (as defined below) with an addition of 2.5%, calculated on an annual basis. Discount of the Bonds (Series D) available for early redemption will be calculated as of the early redemption date and until the last payment date determined with respect to the Bonds (Series D) available for early redemption.
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The amount payable to the holders of the Bonds (Series D) in the event of an early redemption carried out after the end of the First Period shall be the undertaking value of the Bonds (Series D) outstanding and subject to early redemption, namely principal plus interest, up to the actual early redemption date.
In this regard: “yield of government bonds” shall mean the weighted average of the yield to maturity (gross) in a period of seven business days ending two business days before the date of notice of early redemption, of the two series of government bonds that are not index-linked, with interest at a fixed rate, and whose average life is the closest to the average life of the Bonds on the relevant date, i.e. one series with the closest average life higher than the life of the Bonds (Series D) on the relevant date, and one series with the average life below the Bonds (Series D) on the relevant date, and whose weighting will reflect the average life of the Bonds on the relevant date.
In the case of payment of additional interest following the early redemption, the additional interest will be paid on the par value redeemed in early redemption only.
The Company will provide the Trustee, within five trading days from the date of the board of directors’ resolution, with confirmation signed by the senior officer in the financial field or CEO of the Company regarding calculation of the payment amount. The wording of the confirmation will be to the satisfaction of the Trustee.
| 8. | Right to Call for Immediate Payment |
| 8.1 | Upon the occurrence of one or more of the events listed in this Section below, the provisions of Section 8.2 will apply, as applicable: |
| 8.1.1 | In the event that the Company does not pay any amount owed in connection with the Bonds or the Deed of Trust, for the purpose of this Section, the Company will have a period of seven (7) days to remedy the breach, unless another period is specified in this Deed of Trust. |
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| 8.1.2 | In the event that the Company files a stay of proceedings order or in the event that a stay of proceedings order is given against the Company or if the Company files for an order for commencement of proceedings, as such term is defined in the Insolvency Law, as defined below, or such order is granted, or if the Company files a motion for a settlement or arrangement with creditors of the Company under Section 350 of the Companies Law or according to the Insolvency and Economic Rehabilitation Law, 2018 (“Insolvency Law”) or similar procedure under foreign law with respect to any of the aforesaid orders or applications in this section above (excluding for the purpose of a merger with another company as stated in Section 8.1.17 below and/or a change to the structure of the Company solely or a division that is not prohibited under the terms of this Deed, excluding making arrangements between the Company and its shareholders and/or holders of option warrants (that are exercisable into shares of the Company only), that are not prohibited under the terms of this Deed and will not impact the ability to repay the Bonds (Series D). |
| 8.1.3 | If a request is filed under Section 350 of the Companies Law or in accordance with the provisions of the Insolvency Law against the Company (without its consent) that is not rejected or dismissed within 45 days from the date of its submission or a similar proceeding is performed towards it. It is clarified that for the purpose of this Section 8.1.3, a request under Section 350 of the Companies Law or in accordance with the provisions of the Insolvency Law with respect to the Company will be in accordance with Israeli law or a parallel proceeding in foreign law, parallel to the Israeli proceeding. |
| 8.1.4 | In the event that the Company passes a liquidation resolution (excluding liquidation for as a result of a merger with another company as stated in Section 8.1.17 below) or if a fixed and final liquidation order is given by a court and/or a fixed liquidator is appointed for it or a similar decision is made or a similar functionary is appointed by the Company and/or towards it. It is clarified that for the purpose of this subsection, liquidation proceedings with respect to the Company will be in accordance with Israeli law or a parallel proceeding in foreign law, parallel to the Israeli proceeding. |
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| 8.1.5 | In the event that a temporary liquidation order is given or a temporary liquidator or any similar functionary appointed or any judicial decision of a similar nature is given, and such order or decision as stated is not rejected or dismissed within 45 days from the date on which the order is given or the decision made, as applicable. Notwithstanding the above, the Company will not be given any remedial period with respect to applications or orders that are filed or given, as applicable, by the Company or with its consent. It is clarified that for the purpose of this subsection, liquidation proceedings with respect to the Company will be in accordance with Israeli law or a parallel proceeding in foreign law, parallel to the Israeli proceeding. |
| 8.1.6 | In the event that an application is filed for receivership or to appoint a receiver (temporary or permanent) or any similar functionary appointed for the Company or a material asset of the Company (as defined below), or if an order is given to appoint a temporary receiver or any similar functionary appointed that is not rejected or dismissed within 45 days from the submission or granting, as applicable; or, if an order is given to appoint a fixed receiver for the Company or for a material asset of the Company (as defined below) or a similar order under law applicable to the Company. Notwithstanding the above, the Company will not be given any remedial period with respect to applications or orders that were submitted or granted as applicable by the Company or with its consent. It is clarified that for the purpose of this subsection, receivership proceedings with respect to the Company will be in accordance with Israeli law or a parallel proceeding in foreign law, parallel to the Israeli proceeding. |
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| 8.1.7 | If a attachment is placed on a material asset of the Company (as this term is defined below) or execution actions are performed in connection with a material asset of the Company (as this term is defined below) and the attachment is not removed or the action is not terminated, as applicable, within 45 days from the date on which it is applied or performed, as applicable Notwithstanding the above, the Company will not be given any remedial period with respect to orders or requests that are given or filed, as applicable by the Company or with its consent. It is clarified that for the purpose of this subsection, attachment proceedings or execution proceedings with respect to the Company will be in accordance with Israeli law or a parallel proceeding in foreign law, parallel to the Israeli proceeding. |
| 8.1.8 | If the holders of pledges exercised the liens on a material asset of the Company (as this term is defined below) |
| 8.1.9 | If the Company has ceased, or provided notice of its intent to cease its payments or ceases or has provided notice of its intent to cease to continue its business, as they may be from time to time. |
| 8.1.10 | (A) If a material deterioration occurs in the business of the Company compared to its state on the date of the first issuance of the Bonds (Series D) and there is a real concern that the Company will be unable to pay the Bonds (Series D) on time; or (B) there is a real concern that the Company will be unable to uphold its material undertakings toward the Bondholders. |
| 8.1.11 | If there is a change of control, and the Company does not publish a tender offer for the purchase of all the Bonds, at a price not less than their nominal value, within 45 days of the aforementioned event. |
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| 8.1.12 | If immediate payment is called (and with regard to subsections (2) and (3)) the demand for such immediate repayment was not removed within thirty (30) days from the date on which such immediate repayment was made: (1) another series of bonds that is issued by the Company and listed for trading on any stock exchange; or (2) a debt and/or several cumulative debts of the Company and/or corporations it holds the value of which (or in the aggregate) is USD 100 million at least or its extent (or aggregate extent) exceeds 15% of the total assets of the Company based on the most recent financial statements, whichever is lower, based on the most recent consolidated financial statements of the Company published (whether audited or reviewed), whichever is lower, (provided that if the debts are cumulative, they were immediately repaid simultaneously or close to each other) (the debts described in subsection (2) shall be referred to in this section as the “Other Debt”) or (3) debt and/or aggregate debts of the Company and/or of corporations held by it (including non-recourse debt) the outstanding principal amount of which (or the aggregate outstanding principal amount thereof) exceeds USD 100 million (provided that, if such debts are aggregate debts, they shall have been declared immediately due and payable simultaneously or within a short period of one another). |
For the purpose of subsection (2) above, a loan with no recourse to the Company and/or to the Partnership and/or to the Subsidiary shall not be considered as a different debt as aforesaid. In the event that the covenants set forth above are met, the aforesaid grounds shall apply, as of the same date on which the Company is required to pay the other debt (subject to the curing period set forth above) and not from the date of providing the same debt for early repayment, if these dates do not overlap.
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| 8.1.13 | If the Company does not meet any of its financial obligations stated in Section 6.5 above for two consecutive quarters. |
| 8.1.14 | If the Company has performed a distribution contrary to the distribution limitation provisions, as set forth in Section 6.6 above. |
| 8.1.15 | If the rating of the Bonds (Series D) by the rating company is lowered to a rating that is lower than a rating of BBB minus. In the case of replacing the rating company, the Company will provide the trustee with a comparison of the rating scales of the replaced rating company and the rating scales of the new rating company. |
For the purpose of this section below, it shall be emphasized that in the event that the Bonds (Series D) are rated by more than one rating company, an examination of the rating based on the grounds for calling for immediate repayment above will take place, throughout, based on the lower rating among them.
| 8.1.16 | If the Company sells to another/ others all of its assets or its main assets during one calendar quarter, and the holders of the Bonds (Series D) do not consent in advance to the sale with a decision passed with an ordinary resolution. “Sale to Another” – sale to any third party (including the controlling shareholder of the Company and/or corporations under his control), excluding a sale to corporations that are fully held by the Company; “Main Assets of the Company” – an asset or a number of assets the value of which and/or the aggregate value of which (as applicable) in the most recent financial statements published before the occurrence of the relevant event exceeds 50% of the scope of its assets in the balance sheet of the Company based on the financial statements as stated, unless all the consideration for the sale (a) is invested in the field of activity of the Company, and the investment agreement as aforesaid will be signed within twelve (12) months from the date of the sale, (b) or will be used for early redemption (partial of full) of the Bonds in accordance with the provisions of Section 7.2 above and/or for the purchase Bonds (Series D) (partial or full. With regard to subsections (a) and (b) – on the date of sale, confirmation will be received from the Board of Directors of the Company with regard to the undertaking to make use of the sales consideration for the purposes stated in subsection (a) or (b) above. |
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| 8.1.17 | In the event that a merger was performed (excluding a merger with a company under the Company’s full control that will merge with and into the Company) with the prior consent of the holders of the Bonds (Series D) with a special resolution, unless the absorbing entity undertakes all of the Company’s undertakings vis-à-vis the Bondholders (Series D) and in addition, the Company or absorbing company declared (as applicable) vis-à-vis the holders of the Bonds (Series D), including through the trustee, at least 10 business days before the date of the merger, that there is no reasonable concern following the merger that the absorbing entity will be unable to uphold its obligations vis-à-vis the holders of the Bonds (Series D). The provisions of this section will not derogate from the other grounds for calling immediate repayment granted to the holders of the Bonds in accordance with this section 8.1 above and below. Additionally, as of the period of 30 days before the date of the planned merger and until the merger date, all of the grounds listed in this Section 8.1 above and below will also apply with respect to the absorbing company, as if it were the Company. With respect to the provisions of this Deed that are derived from the financial statements of the Company, an examination will be performed with respect to the financial statements of the absorbing company, as it may be after the merger. In this regard, it should be emphasized that the cause of action in this section shall not apply to a merger between companies fully owned by the Company. |
| 8.1.18 | If trade of the Bonds (Series D) in the Stock Exchange is suspended by the Stock Exchange in accordance with the provisions of the Fourth Part of the bylaws, excluding suspension on grounds of the creation of ambiguities as stated in the Fourth Law of the bylaws of the Stock Exchange and 60 days have transpired from the suspension date during which it was not removed. |
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| 8.1.19 | If the Company is dissolved or terminated for any reason (subject to Section 8.1.17 above). |
| 8.1.20 | If the Company breaches the terms of the Bonds (Series D) or the terms of the Trust Deed with a fundamental breach, including if it is discovered that any of the material representations by the Company in the Bonds and/or Trust Deed is incorrect and/or incomplete, and the Trustee has notified the Company in writing that it is required to remedy the breach, and the Company fails to remedy the breach as stated within 14 days of the date on which the notice was provided. |
| 8.1.21 | If the Bonds (Series D) cease to be rated for a period exceeding 60 consecutive days following reasons and/or circumstances that are under the Company’s control. In this regard, the non-performance of payments that the Company has undertaken to make to the Rating Company and failure to provide information and reports required by the Rating Company in the framework of the engagement between the Company and the Rating Company will be considered reasons and circumstances that are under the control of the Company. It is hereby clarified that insofar as the Bonds (Series D) are rated by more than one Rating Company and as long as they are rated by more than one Rating Company as stated, this Section 8.1.21 shall apply only in the event that all the Rating Companies together stop rating the Bonds (Series D) for a period exceeding 60 consecutive days due to reasons and/or circumstances that are under the Company’s control as detailed above. |
| 8.1.22 | In the event that the Company expands the series of Bonds (Series D), or issues additional series of bonds and/or other securities contrary to the provisions of Section 4 above. |
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| 8.1.23 | If the Company ceases to be a Reporting Corporation. |
| 8.1.24 | If the Company does not publish a financial report that it is required to publish under any law or under the provisions of the Deed of Trust, within 30 days from the deadline on which it was required to publish the same. |
| 8.1.25 | If the Bonds (Series D) are delisted from trade on the Stock Exchange. |
| 8.1.26 | If the Company breaches any of its undertakings to avoid creating pledges as stated in Section 6.4 above. |
| 8.1.27 | If a “going concern” note is recorded in the Company’s financial statements for a period of two consecutive quarters. |
| 8.1.28 | If the Company breaches any of the provisions related to the appointment of a representative for service of court documents. |
| 8.1.29 | If the Company breaches any of its material undertakings to deposit an interest cushion as aforementioned in Section 5.6 above. In this regard, the Company shall have a period of seven (7) days to remedy the breach. |
| 8.1.30 | If the Company breaches any of its material undertakings to deposit an expenses cushion as aforementioned in Section 5.7 above. In this regard, the Company shall have a period of seven (7) days to remedy the breach. |
| 8.1.31 | If the principal activity of the Company is not real estate activity in medical institutions in the United States. |
For the purpose of this Section 8, a “Material Asset of the Company” is an asset or assets in the aggregate, the value of which on the relevant date, based on the most recent consolidated financial statements (audited or reviewed) of the Company published before the same date exceeds 40% of the scope of the assets in the consolidated balance sheet of the Company based on the financial statements as stated.
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| 8.2 | Upon the occurrence of any of the events set forth in Sections 8.1.1 until 8.1.31 inclusive above, the following provisions will apply, as applicable: |
| 8.2.1 | The Trustee will be required to convene a meeting of the holders of Bonds (Series D), that will convene 21 days from the date of the invitation (or a shorter time in accordance with the provisions of Section 8.2.5 below), and the agenda of which will contain a resolution regarding calling for immediate repayment of the entire unpaid balance of the Bonds (Series D) due to the occurrence of any of the events set forth in Sections 8.1.1 through 8.1.31 inclusive above, as applicable. The invitation will state that if the event set forth in Section 8.1 above for which the meeting was convened will be cancelled, terminated or removed by the date for which the meeting was called, the invitation for the meeting of the Bondholders will be cancelled as stated above. |
| 8.2.2 | A resolution of the holders to call for the immediate repayment of the Bonds (Series D) will be passed in a meeting of holders that is attended by holders of at least fifty percent (50%) of the balance of the par value of the Bonds (Series D), by a majority of holders of the balance of the par value of the Bonds represented in the vote, excluding abstentions, or by such majority in a deferred meeting of holders that is attended by holders of at least twenty percent (20%) of the balance as stated. |
| 8.2.3 | In the event that by the date of convening the meeting as stated, none of the events set forth in Sections 8.1.1 through 8.1.31 inclusive above was cancelled, terminated or removed, and the resolution in the meeting of holders of the Bonds (Series D) as stated is passed in the manner required as set forth in Section 8.2.2 above, provided that such resolution made was not annulled in a meeting as stated in Section 8.2.2 (regarding the majority and the required quorum), the Trustee will be required, at the earliest possible date, to call for the immediate repayment of the entire unpaid balance of the Bonds (Series D), provided that the Company was given a written warning of 15 days of its intention to do so. |
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| 8.2.4 | Publication of the invitation for the meeting as stated will be sent by the trustee to the Company for publication, and the invitation for the meeting will constitute prior written consent to the Company of its intent to act to call for immediate repayment of the Bonds as stated. |
| 8.2.5 | The Trustee may, at its discretion, shorten the count of 21 days as stated in Section 8.2.1 above and/or the 15 days of warning mentioned in Section 8.2.3 above and/or not give a notice at all, in the case in which the Trustee is of the opinion that there is a reasonable concern that waiting this period or providing the warning, as applicable, will harm the possibility of calling for immediate payment of the Bonds or harm the rights of holders. |
| 8.2.6 | In the event that any of the subsections of Section 8.1 above provides a period in which the Company may perform an action or make a decision as a result of which the grounds for calling for immediate repayment are terminated, the Trustee or holders may call for immediate repayment as stated in this Section 8 only if the period set forth transpires and the grounds are not terminated; however, the Trustee may shorten the aforesaid period if it feels that the same may materially harm the rights of the holders. |
| 8.2.7 | For the avoidance of doubt, it shall be clarified that the provisions of this Section 8.2 above will not derogate from the authority of the Trustee to call for immediate repayment of the Bonds (Series D) at its discretion and subject to the Deed of Trust. |
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| 8.2.8 | Notwithstanding the provisions of this Section 8.2 above, in the event that the Company asks the Trustee in writing to appoint an urgent representation, it shall act in accordance with the provisions set forth in the Third Schedule to the Deed of Trust. |
| 8.2.9 | For the avoidance of doubt, it is clarified that calling for immediate repayment will take place based on the balance of the par value of the Bonds (Series D) that have not yet been paid, including interest differentials that have accrued on the principal, including arrears interest, if relevant, while the interest is calculated for the period beginning after the last day for which interest was paid and until the actual date of immediate payment (where calculation of the interest for a part of a year will take place based on 365 days per year). |
| 8.2.10 | For the avoidance of doubt, it is clarified that the right to call for immediate repayment as stated above and/or calling for immediate repayment will not derogate from or harm any other or additional remedy available to holders of the Bonds (Series D) or the Trustee under the terms of the Bonds (Series D) and the provisions of this Deed or under law, and failure to call a debt for immediate repayment upon the occurrence of any of the cases set forth in Section 8.1 above will not constitute any waiver of the rights of the holders of the Bonds or the Trustee as stated. |
| 9. | Claims and Proceedings by the Trustee |
| 9.1 | In addition to any provision in this Deed and as an independent right and authority, the Trustee shall be entitled, at any time, at its discretion, and without providing notice, to perform any proceedings, including legal proceedings and motions to receive orders, as it shall see fit and pursuant to any law, for the purpose of realizing and/or defending the rights of the Holders of Bonds (Series D) and in order to enforce the Company’s performance of another of the Company’s undertakings according to the Deed of Trust. The above shall not damage and/or derogate from the rights of the Trustee to begin legal and/or other proceedings even if the Bonds (Series D) were not called for immediate repayment, all for the defense of the Bondholders (Series D) and/or for the purpose of granting any order regarding the matters of the trusteeship and pursuant to the provisions of any law. Notwithstanding the statements of this Section, it is clarified that the right to call for immediate repayment shall only be established in accordance with the provisions of Section 8 above, and not by virtue of this Section. |
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| 9.2 | Pursuant to the provisions of the Deed of Trust, the Trustee is entitled but not obligated to convene a general assembly of the Bondholders (Series D) in order to discuss and/or accept its instruction for any matter relating to the Deed of Trust. |
| 9.3 | Whenever the Trustee shall be obligated according to the terms of the Deed of Trust to perform any action, including commencing proceedings or filing actions according to the request of the Bondholders (Series D), as stated in this Section, the Trustee shall be entitled, at its sole discretion, to delay the performance of any said action until it receives instructions from the general assembly of Bondholders (Series D) in an Ordinary Resolution and/or the instructions of the court how to act, provided that the convening of the assembly or the petition to the court shall be performed on the first possible date. For the removal of doubt it shall be clarified that the Trustee shall not be entitled to delay the performance of actions or proceedings as stated in the event in which the delay may harm the rights of the Bondholders (Series D). |
| 9.4 | The Trustee shall be entitled, pursuant to any Special Resolution as stated above, to waive the undertakings that it shall see fit regarding the existence of those undertakings, entirely or partially, of the Company. |
| 9.5 | The Trustee is entitled, prior to performing any legal proceedings, to convene an assembly of Bondholders (Series D) in order to determine in an Ordinary Resolution which proceedings to take for the realization of their rights under this Deed. Similarly, the Trustee shall be entitled to again convene the assembly of Bondholders (Series D) for the purpose of receiving instructions for any matter relating to the management of the proceedings as stated, provided that the convention of the assembly shall be performed on the first possible date under the provisions of the Second Addendum to the Deed of Trust and the delay of the proceedings shall not harm the rights of the Holders. |
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| 10. | Trust of Proceeds |
All of the funds held from time to time by the Trustee, excluding his wages, expenses and the repayment of any debt therefor, in any manner including but not limited to as a result of calling the Bonds for immediate repayment and/or as a result of the proceedings that it will conduct, if any, against the Company, will be held thereby in trust and shall remain in its possession for the purposes and in the priority as follows: First – the clearance of expenses, payments, levies and undertakings incurred by the Trustee, placed thereon or caused as a result of the actions of managing the trusteeship or in another manner in connection with the terms of the Deed of Trust, including its fees (and under the condition that the Trustee will not receive its fees from both the Company the Bondholders). Second – the payment of any other sum according to the ‘indemnification undertaking’ (as the term is defined in Section 25.1 below); Third – the payment to the Bondholders carried out in installments according to Section 25.4.2 below, first to the holders that bore payments more than their proportionate share and thereafter to holders that bore payments based on their proportionate share, all as set forth in Section 25.4.2 below;
The balance will serve for the purposes within the following priority: (a) first, in order to pay the Holders the arrears interest for the Bonds they are owed according to the Bonds (Series D), if applicable, pari passu, and in a relative manner to the sum of the arrears interest which each of them is owed, without preference or precedence towards any of them; (b) second, in order to pay the Holders of Bonds (Series D) the principal arrears owed to them under the terms of the Bonds, pari passu and in a manner that is relative to the principal sums in arrears to which they are owed, without any preference or priority right regarding any of them; (c) third, in order to pay the Holders of Bonds (Series D) the interest amounts they are owed according to the terms of the Bonds held thereby, pari passu, the due date of which has not yet arrived, and in a manner relative to the sum which each of them is owed, without any preference in connection with the timing of the issuance of Bonds (Series D) by the Company or otherwise; (d) fourth, in order to pay the Holders the principal sums they are owed according to the Bonds held thereby pari passu, whether the time came for the removal of the principal sums or not, in a manner relative to the sums they are owed, without any preference in connection with the timing of the issuance of Bonds (Series D) by the Company or otherwise; and (e) the balance, if any, will be paid by the Trustee to the Company or its successor, as applicable.
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Withholding tax will be deducted from the payments to the Bondholders (Series D), as long as there is an obligation to deduct it according to any law.
It shall be clarified that if the Company must bear any of the expenses but does not do so, the Trustee will act reasonably to receive the sums as stated from the Company, and in the event that it will succeed in receiving them, they will be held thereby in trust and will serve in its possession for the purposes and according to priority as detailed in this Section.
| 11. | Authority to Demand Payment to Holders through Trustee |
The Trustee may direct the Company to transfer to it part of the payment that the Company must pay to the Bondholders, (in this Section: “the Relevant Payment”) for the purpose of financing the proceedings and/or expenses and/or the Trustee’s fee under this Deed of Trust (in this Section: the “Amount of Financing”) as long as the Company did not bear the Amount of Financing and/or deposit with the Trustee in advance the Amount of Financing. The Company shall transfer the Amount of Financing to the Trustee no later than the date of payment of the Relevant Payment. The Company may not refuse to act in accordance with the said notice, and will be deemed as complying with its undertakings toward the Bondholders if it proves that it transferred the entire Amount of Financing to the Trustee, as aforesaid. It is clarified that the Amount of Financing transferred to the Trustee will be deducted from the interest payment only, and it will not be possible to deduct the Amount of Financing from the principal payment. Until no later than four trading days before the effective date for payment of the Relevant Payment from which the Amount of Financing will be deducted, an immediate report will be published stating the Amount of Financing, its purpose and the up-to-date amounts of interest and the interest rates to be paid to the Bondholders in the framework of the Relevant Payment. Additionally, the Company will state in the said immediate report that the Amount of Financing transferred to the Trustee will be considered payment to the Bondholders for all intents and purposes.
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The amount of financing that the Trustee may instruct the Company to transfer to it as stated above in this section, to the extent that the decision of the holders of the matter has not been received previously and / or in the matter (including a decision in connection with the taking of the proceedings and / or the execution of the actions for which the amount of the financing and / or the appointment of representatives and / or advisors to the trustee is required) will be limited to ILS 500,000 (plus VAT) (The “Ceiling Amount”). It is hereby clarified that the Ceiling Amount does not limit the Trustee’s right to receive indemnification from the Company and / or the Bondholders.
The above shall not release the Company from its debt to bear the expense payments and the fees as stated when it is obligated to bear them according to this Deed or by any law. Similarly, the above shall not derogate from the obligation of the Trustee to act reasonably to obtain the sums to which the Holders are entitled from the Company, which will serve to finance the proceedings and/or expenses and/or the fees of the Trustee according to the Deed of Trust.
| 12. | Powers to Delay the Distribution of Funds |
Notwithstanding the statements of Section 10 above, if the financial sum, which will be received as a result of performing the proceedings as stated above and which will be called at any time for a distribution in accordance with Section 10 above, shall be less than ILS 1 million, the Trustee shall not be obligated to distribute it and it shall be entitled to invest the said sum, entirely or partially, in investments permitted according to the Deed of Trust as set forth in Section 17 below, and it shall be entitled to replace these investments from time to time in other permitted investments as it sees fit. If these investments and their profits, together with additional funds that are received by the Trustee for are a sum that is not sufficient to pay the aforesaid amount, the Trustee shall pay them to the Holders in accordance with the set of priorities as stated in Section 10 above. In the event in which up to the earlier of: the closest interest/principle payment date or a reasonable time after receiving the said financial sum, the Trustee shall not be in possession of a sum that is sufficient to pay at least ILS 1 million as stated, the Trustee shall be entitled to distribute the funds in its possession to the Bondholders.
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Notwithstanding the provisions of this Section 12 above, the Bondholders (Series D) shall be entitled, according to a regular decision, to instruct the Trustee to pay them the funds received by the Trustee and called for distribution, as stated in Section 10 above, even if their sums amount to less than ILS 1 million. Notwithstanding the above, the payment of the Trustee’s fees and the Trustee’s expenses shall be paid from the said funds immediately upon reaching their date (and regarding the expenses already paid by the Trustee, the sums shall be returned to the Trustee immediately upon the funds arriving in the Trustee’s possession) even if the funds that the Trustee received are less than ILS 1 million as stated.
| 13. | Notice of Distribution |
The Trustee shall notify the Bondholders (Series D) of the day and place where any payment was performed from among the payments mentioned in Sections 10 and 12 above, in an advance notice of 14 days that shall be sent in the manner set forth in Section 26 below. After the date determined in the notice, the Bondholders (Series C) shall be entitled to interest according to the rate determined in the Bonds, only for the balance of the principle sum (if existing) after deducting the sum that was paid.
| 14. | Refraining from Payment for a Reason Which is not Dependent on the Company |
| 14.1 | Any sum to which a Bondholder (Series D) is entitled and was not paid in practice on the date set forth for its payment for a reason independent of the Company, while the Company was ready and able to pay it in full and on time (the “Impediment”), shall not bear interest from the date set forth for its payment and the Bondholder (Series D) shall only be entitled to those sums to which it was entitled on the date set forth for the repayment of the payment at the expense of the principal and/or the interest and/or the arrears interest, if relevant. |
| 14.2 | The Company shall deposit with the Trustee, on the earliest date possible after the date determined for payment, the sum of the payment that was not paid on time as stated in Section 14.1 above, and shall provide written notice based on the addresses found in its possession, if any, to the Bondholders (Series D) of the said deposit, and the said deposit shall be considered as removing that payment to the Holder and in the event of removing all that is entitled for that Bond, it shall also be considered as redemption of the Bond (Series D) by the Company. The above will not derogate from the obligations of the Company to bear the wages of the Trustee and its expenses, all in accordance with the provisions of this Deed. |
| 14.3 | Any sum held by the Trustee in trust for the Holders shall be deposited by the Trustee in a bank and will be invested thereby, in its name or its order, at its discretion, in investments permitted to it according to Section 17 below. If the Trustee did so, it shall only be obligated to those eligible for those sums for the consideration that it shall receive from realization of the investments, less the expenses connected to the said investment, including for management of the trust account, and less its fees and obligatory payments, and it shall pay to those eligible against the evidence that will be requested thereby to its full satisfaction. After the Trustee receives notice from the Holder of the removal of the impediment as stated, the Trustee will transfer to the Holder all of the funds accumulated for the deposit and derived from the exercise of their investment, less all of the reasonable expenses and trust account management fees and less any tax by law. The payment will be performed against the presentation of that evidence, which shall be accepted by the Trustee, regarding the right of the Holder to receive it. |
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| 14.4 | The Trustee shall hold these funds and shall invest them according to the provisions of Section 17 below until the end of one year from the final date for the repayment of the Bond (Series D), after which the Trustee shall return the accumulated sums in its possession, including their profits, less its expenses and less its fees and other expenses which it expended in accordance with the provisions of this Deed, such as fees of service providers, to the Company, and the Company shall hold these sums in trust for the Bondholders (Series D) entitled to those sums for a period of up to the end of seven (7) years from the final repayment date of the Bonds (Series D). Regarding the funds that will be transferred to it by the Trustee as stated above, the provisions of Subsection 14.3 above shall apply to it mutatis mutandis. Funds that are not demanded from the Company by a Bondholder (Series D) at the end of seven (7) years from the final payment date of the Bonds (Series D) will be transferred to the Company’s ownership after 30 days from providing notice to the aforesaid holders by the Company in writing, based on the addresses listed in its possession, if any, and it may use the remaining funds for any purpose whatsoever. |
| 14.5 | The Company shall provide written confirmation to the Trustee of the return of the sums as stated in Section 14.4 above, and regarding their receipt in trust for the Bondholders (Series D), and it shall indemnify the Trustee for any claim and/or expense and/or damage of any kind that will be caused to it due to and for the transfer of the funds as stated, unless the Trustee acted with negligence (excluding negligence exempted by law as shall be from time to time), with a lack of good faith or with malice. |
| 15. | Receipt by Bondholders and Trustee |
| 15.1 | A signed receipt from the Bondholder (Series D) or a reference from a member of the Stock Exchange regarding the execution of the transfer or the execution of the transfer via the TASE Clearing House for the principal and interest sums paid thereto by the Trustee for the Bonds shall absolutely release the Trustee for all matters related to the execution of payment of the sums denominated in the receipt. |
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| 15.2 | A receipt from the Trustee regarding the deposit of the principal and interest sums in its possession for the benefit of the Bondholders (Series D) as stated shall be considered a receipt from the Bondholders (Series D) for the purpose of the statements of Section 15.1 above, in relation to the release of the Company for all connected to the execution of payment of the sums denominated in the receipt. |
| 15.3 | The sums distributed as stated in Sections 10 and 12 above shall be considered as payment on account of repayment of the Bonds (Series D). |
| 16. | Presentation of Bonds to the Trustee; Registration in Connection with Partial Payment |
| 16.1 | The Trustee may demand from the Bondholders (Series D) to present to the Trustee, upon any interest payment or partial payment of principal and interest, the Certificate of the Bonds (Series D) for which the payments are made. A Bondholder (Series D) will be required to present the Certificate of the Bond as stated, provided that the above will not require the Bondholder (Series D) to bear any payment and/or expense and/or impose on the Bondholder (Series D) any liability and/or debt. |
| 16.2 | The Trustee may record on the certificate of the Bonds (Series D) a note regarding the amounts paid as stated above and the date of their payment. |
| 16.3 | The Trustee may, in any special case at its discretion, waive the presentation of the Certificate of Bonds (Series D) after being provided by the Bondholder (Series D) with an indemnity and/or guarantee sufficient to its satisfaction for damage that may be caused as a result of the non-registration of the note as stated, all as it sees fit. |
| 16.4 | Notwithstanding the above, the Trustee may, at its reasonable discretion, hold records in another manner regarding partial payments as stated. |
| 17. | Investment of Funds |
All of the funds that the Trustee may invest under the Deed of Trust will be invested thereby in Bank Leumi Le Israel B.M. or in Bank Hapoalim Ltd or in another bank in Israel with a rating of no less than AA in its name or for its deposit, in investments according to the Company’s provisions, all subject to the terms of the Deed of Trust, provided that it deposits in bank deposits in NIS, treasury funds issued by the Bank of Israel and/or government bonds issued by the Bank of Israel.
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In the event that it does so, it will only owe to those entitled to the same amounts the consideration received from the exercise of the investments, less its fees and expenses, charges and expenses related to the aforesaid investment and managing the trust accounts, the fees and less the obligatory payments applicable to the trust account, and the Trustee will act in accordance with the provisions of Sections 12 and/or 14 above, as applicable, with the balance of the funds as stated.
| 18. | Company’s Undertakings vis-à-vis Trustee |
The Company hereby undertakes vis-a-vis the Trustee and Bondholders, as long as the Bonds (Series D) have not yet been fully repaid, as follows:
| 18.1 | To maintain and manage the Company’s business and the business of its subsidiaries in an orderly and a proper manner. |
| 18.2 | To notify the Trustee and allow the Trustee to participate in all general meetings (whether annual general meetings or special general meetings) of the Company’s shareholders, including through the use of communication media at the Company’s expense, without granting the Trustee voting rights in such meetings. Notices through the MAGNA or MAYA systems will be deemed sufficient notices for the purpose of summoning the trustee to the general meetings. |
| 18.3 | To provide the Trustee or his authorized representative (of whose appointment the Trustee will notify the Company at the time of his appointment) any information about the Company or entities under its control (including explanations, calculations and documents related to the Company, its business and its business position and information which, according to the reasonable judgment of the Trustee, is required to protect the rights of the Bondholders) within ten (10) business days from the date of the Trustee’s request, and instruct the Company’s accountants and legal advisors to do so, no later than ten (10) business days from the date of the Trustee’s request, as long as, in the Trustee’s reasonable opinion, the information is required by the Trustee and his attorneys for the purpose of exercising and implementing the Trustee’s powers and rights under This Deed. It should be noted that the documents can be delivered by electronic media and/or personally. |
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| 18.4 | To administer and keep account books and regular records in accordance with the provisions of any law applicable to the Company including the generally accepted accounting principles applicable to the Company and to allow the Trustee and/or whoever is appointed in writing by the Trustee for this purpose, to review, at a time agreed upon in advance and at any reasonable time, no later than ten (10) business days from the date of the Trustee’s request, in any register and/or records as stated. It is noted that the documents can be delivered to the trustee by electronic media and/or personally. |
| 18.5 | To notify the Trustee in writing, immediately upon the Company becoming aware thereof and no later than two trading days thereafter, of the occurrence of one or more of the events listed in Section 8.1 above, including its subsections, as well as of the Company’s definite concern that any of the events referred to in Section 8.1 above, including its subsections, may occur. The provisions of this section, including all of its subsections, shall be carried out by the Company without taking into account the cure and waiting periods set forth in Section 8.1 above, to the extent any such periods exist. |
| 18.6 | No later than ten (10) business days from the date of publication of the Company’s annual financial statements, the Company will provide the Trustee with a confirmation signed by the Company’s CEO or the most senior financial officer in the Company, according to which, based on examinations performed during the period commencing on the later of the date of this Deed or the date of the last such confirmation given to the Trustee, and until the date of giving such confirmation, the Company has not breached this Deed, nor has it breached any of the provisions of the Bonds, unless expressly stated otherwise in the confirmation. |
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| 18.7 | If the Company ceases to be a Reporting Corporation, it shall provide any reporting required from a company that is not a Reporting Corporation in accordance with the Regulatory Codex, including instructions regarding investments by institutional investors in non-governmental bonds. Each such report shall be signed by the CEO, or the person holding such a position even if their title is different, and the most senior officer in the field of finance in the Company. In the event of a report being delivered in accordance with the aforementioned, the Company shall deliver a notice to the TASE for publication in the MAYA system according to which the Company has delivered to the Trustee a notice in accordance with this Section and that the holder of the Bonds may receive a copy of it upon presentation of a certificate of ownership. Alternatively, the Company or the Trustee shall establish a dedicated website on which notices to the Bondholders from the Company and/or from the Trustee shall be published. In the event that such a website is established, the Company shall announce the website’s address by means of an immediate report before the Company ceases to be a Reporting Corporation. |
| 18.8 | To deliver to the Trustee, at its request, all the statements, presentations, documents, details and/or additional information that may be reasonably required by the Trustee to protect the rights of the Bondholders, no later than fifteen (15) business days from the date of the Trustee’s request. |
| 18.9 | To deliver to the Trustee a copy of any document or any information provided by the Company to the Bondholders. |
| 18.10 | To provide the Trustee with written notice, signed by a senior officer of the Company or the CEO of the Company, no later than five business days from the date of a written request of the Trustee, of the performance of any payment to the Bondholders under the Deed of Trust and of the balance of the amounts that the Company owes under the Deed of Trust at the same date to the Bondholders after the performance of the aforesaid payment. |
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| 18.11 | To provide the Trustee with copies of notices and invitations provided to the Company, as stated in Section 26 of this Deed. |
| 18.12 | To notify the Trustee in writing of any change to its name or address no later than two trading days from the day of the change. |
| 18.13 | The Trustee will maintain the confidentiality of the information sent to him according to this Section, will not reveal it to anyone else and will not make any use of it, unless the discovery or use thereof is required in order to fulfill the Trustee’s position by law, according to the Deed of Trust or according to a court order. |
| 18.14 | To provide the Trustee, no later than 15 days from the date of the issue of the Bonds (Series D) under the shelf offering report and/or from the expansion of Series D as stated in Section 4.1, a copy true to the original of the bond certificate. |
| 18.15 | The Company agrees that approvals and notices signed by it, which the Company or anyone on its behalf provides to the Trustee in connection with the Bonds, and which are sent to the Trustee as scanned documents via email, may be presented by the Trustee as originals. |
| 19. | Counsel |
| 19.1 | The Company hereby irrevocably appoints the Trustee as its counsel to execute and perform in its name and place all of the technical actions that it must perform under the terms included in this Deed, and to act in its name generally with respect to the technical actions that the Company must perform under this Deed and has not performed, or to perform some of the authorities granted thereto, and to appoint any other person as the Trustee sees fit, and to perform its position under this Deed, subject to the Company having failed to perform the technical actions that it must perform under this Deed within 14 days, as determined by the Trustee from the date of the Trustee’s demand, provided that it acted reasonably. |
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| 19.2 | An appointment under Section 19.1 above shall not obligate the Trustee to perform any action, and the Company hereby exempts the Trustee and its agents in advance in the event in which it does not perform any action, and the Company waives in advance any claim vis-à-vis the Trustee and its agents for any damage caused or that may be caused to the Company directly or indirectly, for this, on the basis of any action that is not performed by the Trustee and its agents as stated above. |
| 20. | Other Agreements |
Subject to the provisions of the law and the limitations imposed on the Trustee by law, the fulfillment of the Trustee’s position under this Deed or its position as a trustee will not prevent it from engaging with the Company in other agreements or performing transactions therewith during the ordinary course of its business, provided that the same does not create a conflict of interests with serving as a trustee for the Bondholders (Series D).
| 21. | Reports on Matters Relating to Trusteeship |
| 21.1 | The Trustee will be required to submit a report regarding the actions performed in accordance with the provisions of Section 35h1 of the Securities Law. |
| 21.2 | The Trustee will prepare, by June 30 of each year, for the previous calendar year, an annual report of the Trustee’s affairs (the “Annual Report”). |
| 21.3 | The Annual Report will include a report of extraordinary events in connection with the trusteeship that occurred during the past year. |
| 21.4 | The Trustee will publish (itself or through the Company at the request of the Trustee) the Annual Report on the MAGNA system. |
| 21.5 | In the event that the Trustee becomes aware of a material breach of this Deed and/or of the terms of the Bonds (Series D) on the part of the Company, based on public publications of the Company or under a notice of the Company to the Trustee under Section 18.5 above, it will notify the Bondholders (Series D) of the breach and the measures that it has taken to prevent or enforce the fulfillment of the Company’s obligations by the Company, as applicable. This obligation will not apply with respect to an event that is published by the Company under law. This obligation of the Trustee is subject to its actual knowledge of the breach event as stated. |
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| 21.6 | The Trustee will update the Company of any report filed under this Section 21 and pass on to it a copy thereof, insofar as this does not prejudice the rights of the Bondholders. |
| 21.7 | The terms of this section above will not derogate from any other or additional reporting obligation imposed on the Trustee under any law. |
| 21.8 | The Trustee must submit a report regarding activity performed under the provisions of Chapter E1 of the Law at the reasonable request of the holders with at least ten percent (10%) of the balance of the par value of the Bonds within a reasonable time from the date of the demand, all subject to the confidentiality obligation borne by the Trustee vis-à-vis the Company as stated in Section 35j(d) of the Law. |
| 21.9 | At the request of holders of more than five percent (5%) of the balance of the par value of the Bonds, the Trustee will transfer to the holders data and details regarding its expenses in connection with the trust. |
| 21.10 | As of the signing date of this Deed, the Trustee is insured under professional liability insurance in the amount of USD 10 million for the period (the “Coverage Amount”). If before the full payment of the Bonds (Series D), the Coverage Amount is less than USD 8 million for any reason, the Trustee will update the Company no later than seven business days from the date on which it was made aware of the aforesaid reduction from the insurer in order to publish an immediate report on the matter. The provisions of this section will apply until the date of entry to force of the Securities Regulations, which will regulate the insurance coverage obligation of the Trustee. After the entry to force of the Regulations as stated, the Trustee will be required to update the Company only in the case in which the Trustee does not meet the Regulation requirements. |
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| 22. | Wages and Coverage of Trustee’s Expenses |
The Company will pay the Trustee its fees as set forth in Appendix 22 of This Deed.
| 23. | Special Powers |
| 23.1 | The Trustee may deposit all of the deeds and documents that indicate, represent and/or set forth its right in connection with the trusteeship at the subject of this Deed, including in connection with any asset that it possesses at the time, in a safe and/or another place determined, with an banker and/or banking company and/or with an attorney. |
| 23.2 | The Trustee may, within the performance of the trusteeship under the Deed of Trust, commission any opinion or the counsel of any attorney, accountant, appraiser, assessor, broker or other expert (the “Consultants”) and act in accordance with their conclusions, whether the opinion or counsel was prepared at the request of the Trustee or the request of the Company and the Trustee will not be responsible for any loss or damage caused as a result of any action or omission performed thereby on the basis of the counsel or opinion as stated, unless determined in an absolute judgment that the Trustee acted negligently (excluding negligence exempt under law as it may be from time to time) and/or in bad faith and/or maliciously. The Company will bear all of the expenses of hiring the Consultants appointed as stated, provided that the Trustee will provide the Company with notice five days in advance of its intent to receive an expert opinion or counsel as stated, provided that the expenses are reasonable and commission such opinion or advice is required for the protection of the debenture rights (Series D) under the Deed of Trust. If the same does not harm the rights of the holders, the Trustee will provide the Company with notice five business days in advance of its intent to receive an expert opinion or counsel as stated. The trustee will also provide the Company reasonable detail as to the need for such an opinion or advice if the same does not harm the rights of the holders. |
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| 23.3 | Any counsel and/or opinion as stated may be provided, sent or received by a letter, telegram, facsimile, email and/or other electronic means of transferring information, and the Trustee will not be responsible for actions performed on the basis of advice and/or an opinion or knowledge transferred via one of the methods mentioned above although it contains errors and/or was not authentic, unless the same errors could have been discovered in a reasonable inspection. |
| 23.4 | Subject to any law, the Trustee will not be required to notify any party of the signature of the Deed of Trust, and will not be permitted to intervene in any manner in the management of the Company’s business or affairs, other than based on the authorities that will be granted to the Trustee in this Deed or as agreed by the Company and the Trustee. The provisions of this Section will not limit the Trustee in actions that it must perform in accordance with the Deed of Trust. |
| 23.5 | The Trustee will use in the trusteeship the powers, authorizations and permissions granted thereto under the Deed of Trust, at its absolute discretion and subject to the other provisions of this Deed. In the event that the Trustee does not, it will not bear liability for any damage and/or loss and/or expense that is caused to the Company and/or the Bondholders and/or that it may bear following any action and/or omission performed by the Trustee, including as a result of mistakes in discretion, unless determined in an absolute judgment that the Trustee acted negligently or in bad faith or maliciously or contrary to the provisions of this Deed, all in accordance with and subject to the provisions of the law. |
| 23.6 | Unless explicitly determined otherwise by Law or the provisions of this Deed, the Trustee is not required to act in a manner which is not expressly detailed in this Deed of Trust so that any information, including about the Company and/or in connection with the Company’s ability to meet its obligations to bondholders comes to his attention, and this is not his role. |
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| 24. | Trustees’ Power to Engage Agents |
The Trustee may, in the framework of managing the trusteeship’s business, if it is deemed necessary to protect the rights of the debenture holders under the Deed of Trust, appoint agent/s that will act in its place, whether an attorney or another person, in order to perform or participate in the performance of special actions that must be performed in connection with the trusteeship (as the term “Special Operations” is defined in Appendix 22 below) and pay reasonable wages to any such agent, and without derogating from the generality of the above, to take legal proceedings. The company will be entitled to object to such appointment for any reasonable reason, including in the case where the sender is a competitor, either directly or indirectly, in the Company’s business. It will be emphasized that the company will convey its reasonable grounds for objection up to 5 business days after the trustee’s notification of the aforementioned appointment of a dispatcher.
It is clarified that the appointment of an agent as stated will not derogate from the liability of the Trustee for its actions and those of its agents. The Company undertakes to bear, in full, the reasonable cost involved in the employment of any such agent appointed by the Trustee, provided that this is possible in the circumstances, and if this does not prejudice the rights of the Bondholders. The Trustee will notify the Company in advance and in writing of its intention to appoint an agent and the costs involved.
Notwithstanding the foregoing, the Company’s objection to the appointment of a particular representative appointed at a meeting of holders shall not delay the commencement of such representative’s engagement, to the extent that such delay may prejudice the rights of the holders.
| 25. | Indemnification of the Trustee |
| 25.1 | The Company and the Bondholders (on the relevant effective date as stated in Section 25.6 below, each for its obligations as stated in Section 25.4 below) hereby undertakes to indemnify the Trustee and all of its officers, employees, agents or an expert that it appoints and/or that are appointed by the Trustee under the provisions of this Deed of Trust and/or under a lawful decision that is passed in a meeting of Bondholders (Series D) under the provisions of this Deed of Trust (the “Parties Eligible for Indemnification”): |
| 25.1.1 | For any damage and/or loss and/or financial charge under a judgment (for which a stay is not granted) or based on a settlement that has ended (if the settlement relates to the Company, and the Company provides its consent to the settlement) the grounds of which are related to actions performed by Parties Eligible for Indemnification or that they are required to perform under the provisions of this Deed and/or under law and/or an instruction of a competent authority and/or any law and/or at the request of the Bondholders (Series D) and/or at the request of the Company and/or for their position under this Deed; and |
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| 25.1.2 | For the fees of the Parties Eligible for Indemnification and the reasonable expenses under the circumstances incurred and/or that will be incurred, and for any damage and/or loss that they sustain due to actions performed by the Parties Eligible for Indemnification or that they are required to perform under the provisions of this Deed, and/or under law and/or an instruction of the competent authority and/or under any law and/or at the request of the Bondholders (Series D) and/or at the request of the Company and/or in connection with use of the powers and authorities provided by virtue of this Deed, and in connection with any legal proceedings, opinion of an attorney and other experts, negotiations, discussions, expenses, insolvency proceedings, collection proceedings, debt arrangements, assessing the state of debt, valuations, claims and demands with respect to any matter and/or item performed and/or that is not performed in any manner with respect to the matter herein and/or their positions under this Deed. |
All provided that:
| 25.1.3 | The Parties Eligible for Indemnification do not demand indemnification in advance regarding any manner that cannot be delayed (without harming their right to retroactive indemnification if and to the extent such right exists); |
| 25.1.4 | It is not determined in a final judicial decision that the Parties Eligible for Indemnification acted in bad faith and that the action was performed other than in the fulfillment of their positions, other than in accordance with the provisions of the law and/or other than under this Deed of Trust; |
| 25.1.5 | It is not determined in a final judicial decision that the Parties Eligible for Indemnification were negligent with negligence that is not exempt under law, as it may be from time to time; |
| 25.1.6 | It is not determined in a final judicial decision that the Parties Eligible for Indemnification acted maliciously; |
The indemnification right under this Section 25.1 will be hereinafter: an “Indemnification Undertaking” or “Indemnification Entitlement”.
It is agreed that in any event in which it is claimed against the Parties Eligible for Indemnification that: (1) they acted in bad faith or other than in the fulfillment of their roles, or not in accordance with the provisions of the law or the Deed of Trust, and/or (2) they were negligent with negligence that is not exempt under law and/or (3) acted maliciously – they will be entitled to indemnification immediately upon their request for payment of the Indemnification Undertaking amount; however, if it is determined in a final judicial decision that they did in fact act as claimed against them as stated above, the Parties Eligible for Indemnification will return the Indemnification Undertaking amounts paid to them.
| 25.2 | Without derogating from the rights to compensation provided to the Trustee under law and subject to the provisions of this Deed and/or the obligations of the Company under this Deed, the Parties Eligible for Indemnification will be entitled to indemnification from the funds received by the Trustee in the proceedings taken regarding the obligations that it has undertaken, with respect to reasonable expenses incurred following the performance of the trusteeship or in connection with such actions, which in their opinion are required to be performed and/or in connection with use of the powers and authorities provided by virtue of this Deed and in connection with all types of legal proceedings, opinions of attorneys and other experts, negotiations, discussions, claims and demands regarding any matter and/or action that is performed and/or not performed in any manner with respect to this, and the Trustee may delay the funds available thereto and paid from them the amounts required in order to pay the indemnification as stated. All of the said amounts will have priority over the rights of the Bondholders (Series D) and subject to the provisions of any law, provided that the Trustee acts in good faith and in accordance with the obligations imposed thereon under any law and under this Deed. For the purpose of this Section, an action of the Trustee that is approved by the Company and/or the Bondholders will be considered an action that is reasonably required. |
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| 25.3 | Without derogating from the Indemnification Undertaking in Section 25.1 above, in the event that the Trustee is required, under the terms of the Deed of Trust and/or under law and/or an instruction of a competent authority and/or any law and/or at the request of the Bondholders (Series D) and/or at the request of the Company and/or to protect the rights of the Bondholders (Series D) to perform any action including but not limited to commencing proceedings or filing cases at the request of the Bondholders (Series D) as stated in this Deed, the Trustee will be required to refrain from taking any such action until it receives, to its satisfaction, a financial deposit to cover the Indemnification Undertaking (the “Financing Cushion”) in the amount required, with first priority from the Company, and in the case in which the Company still has not deposited the entire Financing Cushion on the date required to do so by the Trustee, the Trustee will contact the Bondholders (Series D) that hold the Bonds (Series D) on the effective date (as stated in Section 25.4 below), with a request that they deposit the Financing Cushion amount, each its ‘relative share’ (as this term is defined below). In the event in which the Bondholders (Series D) do not actually deposit the entire “Financing Cushion” amount required, the Trustee will not be subject to the obligation to take any action or relevant proceedings. The provisions above will not exempt the Trustee from taking an urgent action required in order to prevent material detrimental harm to the rights of the Bondholders (Series D). |
The Trustee is authorized to determine the “Financing Cushion” amount and may again create an additional cushion as stated from time to time, in the reasonable amount determined thereby. It shall be clarified that the payment by the holders under this Section will not release the Company from its obligation to bear the aforesaid payment.
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| 25.4 | The Entitlement for Indemnification: |
| 25.4.1 | Shall apply to the Company in any event of: (1) the Indemnification Entitlement is established at the reasonable discretion of the Trustee and/or under any law and/or under the terms of the Deed of Trust or in order to protect rights of the Bondholders (including due to a demand of a holder that is required for the sake of protection as stated); and (2) actions performed and/or required to be performed at the request of the Company, including due to a demand as stated. |
| 25.4.2 | Shall apply to Holders that hold, on the effective date (as stated in Section 25.6 below) in any event of: (1) the Indemnification Entitlement is established at the demand of the Bondholders (excluding entitlement established at the demand of Holders in order to protect the rights of the Bondholders); and (2) non-payment by the Company of the Indemnification Entitlement amount applicable thereto under Section 25.3 above (subject to the provisions of Section 25.6 below). It shall be clarified that the payment in accordance with subsection (2) above will not derogate from the obligation of the Company to bear the Indemnification Entitlement in accordance with the provisions of Section 25.4.1 above. |
| 25.5 | In any event in which the Company does not pay the entire amount required to cover the Indemnification Entitlement and/or does not deposit the entire Financing Cushion amount, as applicable, and/or the Indemnification Undertaking applies to holders under the provisions of Section 25.4.2 above and/or the Holders are called to deposit the Financing Cushion amount under Section 25.3 above, the following provisions shall apply: |
| 25.5.1 | The funds will be collected in the following manner: |
| 25.5.1.1 | First - the amount will be financed from the interest and then from the principal that the Company is required to pay to the Bondholders (Series D) after the date of action. It is clarified that in the event that use is made of the same amounts by the Trustee, since the Company has not paid all of the amounts required to cover the Indemnification Undertakings and/or has not deposited the entire amount of the Financing Cushion, the same amounts will not be considered to have been repaid by the Company on account of the Bonds in favor of the Bondholders; |
| 25.5.1.2 | Second - if, in the Trustee’s opinion, the amounts deposited in the Financing Cushion are insufficient to cover the Indemnification Undertaking, the holders that hold on the Effective Date (as stated in Section 25.6 below) will deposit the missing amount, each in accordance with the relative share (as this is defined), with the Trustee. |
“Relative Share” shall mean: the relative share of the Bonds (Series D) held by the Holder on the relevant effective date as stated in Section 25.3 below of the total nominal value in circulation at the time. It is clarified that calculation of the relative share will remain effective even if after the same date a change occurs to the nominal value of the Bonds held by the Holder.
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It shall be clarified that Bondholders that bear liability to cover expenses as stated in this Section above may bear expenses as stated in this section above in excess of their relative share, and in such a case, the priority will apply to the repayment of the funds in accordance with the provisions of Section 10 of This Deed.
| 25.6 | The effective date for the determination of the obligation of a Holder in an Indemnification Undertaking and/or payment of the Financing Cushion is as follows: |
| 25.6.1 | In any event in which the Indemnification Undertaking and/or payment of the Financing Cushion is required due to an urgent resolution or action required in order to prevent material detrimental harm to the rights of the Bondholders (Series D), without a prior decision of the meeting of Bondholders (Series D) – the effective date for the obligation will occur at the end of the trading day of the day on which the action is taken or the decision is made, and if the same day is not a trading day, on the previous trading day. |
| 25.6.2 | In any event in which the Indemnification Undertaking and/or payment of the Financing Cushion is required based on a resolution of the meeting of Bondholders (Series D) – the effective date for the obligation will be the effective date for participation in the meeting (as this date is determined in the assembly notice) and will also apply to a holder that is not present or participating in a meeting. |
| 25.7 | Payment of any amount imposed on the Company under this Section 25 by the Holders in lieu of the Company will not release the Company from its obligation to bear the aforesaid payment. |
| 25.8 | With regard to the priority of the reimbursement to Holders that bear payments under this Section from the receipts by the Trustee, see Section 10 above. The Trustee will act reasonably to return funds as stated that are paid by the Holders in place of the Company from the Company. |
| 26. | Notices |
| 26.1 | Any notice on behalf of the Company and/or Trustee to the Bondholders will be provided through a report on the MAGNA system of the Securities Authority (the Trustee may instruct the Company and the Company will be required to immediate report on the MAGNA system on behalf of the Trustee, regarding any report in the form provided in writing by the Trustee to the Company),. Any notice that is published or sent as stated will be considered to have been provided to a Bondholder on the date on which it was published as stated. |
| 26.2 | Any notice or demand on behalf of the Trustee to the Company or on behalf of the Company to the Trustee may be provided in a letter sent via registered mail based on the address set forth in the Deed of Trust, or based on another address of which one party shall inform the other in writing (including an email address) or through dispatch via email or an agent, and any notice or demand will be considered to have been received by the Company: (1) in the event of dispatch via registered mail – three business days from the day on which it is sent via mail; (2) in the event of dispatch via email (with telephone verification of its receipt) – one business day from the date on which it is sent; (3) in the event of delivery by courier – upon the delivery by courier to the recipient or its offer for acceptance of the recipient, as applicable. |
| 26.3 | Unless otherwise expressly stated in this Deed, Anywhere in this Deed where Company is required to furnish any information to the Trustee, an immediate report to be published by the Company in MAGNA shall be deemed to be a due delivery to the Trustee of the said information therein. |
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| 27. | Waivers, Compromises, and Changes to the Deed of Trust |
Subject to the provisions of any law, excluding regarding changes or waivers with respect to (1) payment dates under the Bonds (including a technical change to the dates or effective date for payment4); (2) changes in the interest rate5, including interest adjustments arising from non-compliance with financial covenants and/or a change in Rating; (3) undertakings of the Company in connection with the financial covenants and their breach; (4) undertakings of the Company in connection with distributions; (5) provisions related to the expansion of a series; (6) the provisions pertaining to the law applicable to this Deed; (7) the terms of repayment and grounds for calling for immediate repayment; (8) the undertaking regarding non-creation of pledges; (9) the appointment of a representative; and (10) the interest cushion and expenses cushion, the Trustee may, from time to time and at any time when, in its opinion, there will not be harm to the rights of the Bondholders (Series D), waive any breach or non-fulfillment of any of the terms of the Bonds or the non-fulfillment of any of the terms of the Deed of Trust by the Company.
Subject to the provisions of any law and with the prior approval in a Special Resolution, the Trustee may, whether before or after the principal of the Bonds (Series D) is called for payment, settle with the Company in connection with any right or claim of the Bondholders (Series D), waive any right or claim of the Bondholders (Series D) or any of them vis-a-vis the Company under the Deed of Trust and the Bonds (Series D) and agree with the Company to any arrangement of their rights, including waiver of any right or claim of the Bondholders (Series D) vis-a-vis the Company under this Deed.
In the event that the Trustee settles with the Company, waives any right or claim of the Bondholders (Series D) or agrees with the Company to any arrangement of rights of the Bondholders (Series D) after receiving the prior consent of the meeting of Bondholders (Series D) as stated above, the Trustee will be exempt from liability for this action as approved by the general meeting, provided that the Trustee does not breach a fiduciary duty and does not act in bad faith or maliciously or with negligence that is not exempt under law in the implementation of the resolution of the general meeting.
4 Subject to the TASE approval
5 Subject to the TASE approval.
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Without derogating from the provisions above, subject to the provisions of any law, the Company and the Trustee may, whether before or after the principal of the Bonds is called for payment, change the Deed of Trust and its appendices, including a change to the terms of the Bonds, if one of the following is met:
| (a) | If the Trustee is convinced that the change does not harm the rights of the Bondholders under the Deed of Trust (excluding regarding the matters listed in subsections (1) to (12) above in this Section 27), provided that it has notified the Bondholders (Series D) of the same in writing. |
| (b) | The change is approved by a Special Resolution. |
In any event of use of the Trustee’s right under this Section, the Trustee may demand from the Bondholders (Series D) that they provide it or the Company with the Certificates of the Bonds in order to record a note thereon regarding any settlement, waiver, change or amendment as stated, and at the request of the Trustee, the Company will record such a note. In any event of use of the Trustee’s right under this Section, it will inform the Bondholders (Series D) thereof in writing within a reasonable time.
| 28. | Register of Bondholders |
| 28.1 | The Company will keep and manage in its registered offices a register of Bondholders (Series D) in accordance with the Securities Law, which is open for the review of any person. |
| 28.2 | The Company shall not be required to record in the register of holders of the Debentures (Series D) any notice of any express, implied or constructive trust, or any pledge or charge of any kind whatsoever, or any equitable right, claim, set-off or any other right whatsoever, in connection with the Debentures (Series D). The Company shall recognize exclusively the ownership of the person in whose name the Debentures are registered. The legal heirs, estate administrators or executors of the registered holder, and any person who becomes entitled to the Debentures by reason of the bankruptcy of any registered holder (and, if such holder is a corporation, by reason of its liquidation), shall be entitled to be registered as holder upon providing such evidence as, in the opinion of the Company’s directors, is sufficient to prove such person’s right to be registered as the holder of the Debentures. |
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| 29. | Release |
When it is proved to the satisfaction of the Trustee that all of the Bonds (Series D) are paid, redeemed or when the Company deposits sufficient amounts of money in trust with the Trustee which will suffice for the full and final redemption of the Bonds, in accordance with the provisions of this Deed, as well as when it is proved to the satisfaction of the Trustee that all of its fees and all expenditures made by the Trustee and/or its agents in connection with its operation according to the Deed of Trust and according to its provisions are paid to it in full, the Trustee is required, at the Company’s first request, to act upon the monies deposited with it in respect of the Bonds (Series D) whose redemption was not requested, according to the terms stipulated in this Deed.
| 30. | Appointment of the Trustee, the Trustee’s Roles, the Trustee’s Powers, and the Expiry of the Trustee’s Service |
| 30.1 | The Company hereby appoints the Trustee as trustee for the holders of Bonds (Series D) only under the provisions of Section 35b of the Securities Law, including for parties entitled to payments under the Bonds (Series D) that are not paid after the date of payment. |
| 30.2 | The trusteeship for the Bondholders and the roles of the Trustee under the terms of this Deed will enter into force on the date of the allocation of the Bonds by the Company. The term of the Trustee’s appointment will be until the date of the convening of the holders’ meeting in accordance with the provisions of section 35B(a1) of the Securities Law. |
| 30.3 | From the date on which this Deed of Trust takes effect, the Trustee’s roles will be according to all laws and this Deed. |
| 30.4 | The Trustee will act in accordance with the provisions of the Securities Law. |
| 30.5 | The Trustee will represent the Bondholders (Series D) in every matter stemming from the Company’s undertaking to them, and it will be entitled, for this purpose, to take action to exercise the rights given to the holders according to the Securities Law or according to the Deed of Trust. |
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| 30.6 | The Trustee is entitled to initiate any proceeding for the purpose of protecting the rights of the holders in accordance with all laws and what is detailed in this Deed of Trust. |
| 30.7 | The Trustee is entitled to appoint agents as detailed in Section 24 above. |
| 30.8 | The Trustee’s actions are valid even if a defect is discovered in his appointment or eligibility. |
| 30.9 | The Trustee’s signature on this Deed does not constitute an opinion on his part regarding the nature of the offered securities or desirability of investment therein. |
| 30.10 | The Trustee will not be required to notify any party of the signing of this Deed. The Trustee will not interfere in any form whatsoever in the conducting of the Company’s business or affairs and this is not included amongst his roles. Nothing in this section will restrict the Trustee in any action which he must take in accordance with the provisions of this Deed. |
| 30.11 | Subject to the provisions of all laws, the Trustee is not required to act in a manner which is not expressly detailed in this Deed of Trust so that any information, including about the Company and/or in connection with the Company’s ability to meet its obligations to bondholders comes to his attention, and this is not his role. |
| 30.12 | Subject to the provisions of all laws and what is stated in this Deed of Trust, the Trustee undertakes, by his signing this Deed, to maintain in confidentiality all information provided to him by the Company and will not disclose it to another and will not make any use thereof, unless it’s disclosure or use is required for the purpose of fulfilling his role according to the Securities Law, according to the Deed of Trust, or according to a court order. Said duty of confidentiality will apply as well to any agent of the Trustee (including any consultant, counsel, and so forth), Which, prior to receiving information from the Company, will sign a confidentiality letter with the Company in a reasonable and acceptable manner. |
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| 30.13 | The Trustee is entitled to rely, in the framework of his trust, on any written document including a letter of instruction, notice, request, consent or approval, purporting to be signed by or originating from a person or entity which the Trustee believes in good faith was signed by or originated from him. |
| 30.14 | The provisions of the Securities Law will apply to the end of the Trustee’s service. |
| 30.15 | If the Trustee’s service ended, a new trustee will be appointed in his place at a meeting of the holders. |
| 30.16 | Despite the aforesaid, a resolution of the holders on the termination of the trustee’s service and his replacement with another trustee will be done, subject to any law, at a meeting at which holders with 50% of the balance of the par value of the bonds (Series D) present, or at a postponed meeting at which holders with at least 10% of said balance were present, with a majority of over 75% of those present and attending the vote. |
| 30.17 | Subject to the provisions of all laws, the Trustee whose service ended will continue serving in his position until the appointment of another trustee. The Trustee will provide the new trustee with all of the documents and amounts accrued by him in connection with the trust which is the subject of the Date of Trust for Series D, and will sign any documents required for this purpose. Any new trustee will have the same powers, obligations, and authorities, and he will be able to act for all intents and purposes as if he was appointed as trustee in the first place. |
| 30.18 | The Company will publish an immediate report in any event of the resignation of the Trustee and/or the appointment of a different trustee. |
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| 31. | Bondholders’ Meetings |
Series D Bondholders’ meetings will be conducted as stated in the Second Addendum to this Deed. At the Company’s request, the Trustee will provide the Company, within two (2) business days from the date of the convening of each such meeting, the details of all the Bondholders who voted at the meeting, including the amount of Bonds held by each of them, as well as their vote, for, against, abstained, etc., of each such Bondholder. At the Company’s request, a copy of the ballots delivered to the Trustee by the Bondholders will be forwarded for review. The Company will keep this data confidential and will not be allowed to make use of the data except solely for the purpose of monitoring the accuracy of the voting results.
| 32. | Applicable Law |
The only law which applies to this Deed of Trust and its appendices, including the bonds, is Israeli law. In the event of any matter that is omitted from this Deed and in any event of a conflict between the provisions of the law and this Deed of Trust, the parties will act only in accordance with the provisions of Israeli law which cannot be conditioned.
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| 33. | Exclusive Jurisdiction |
The law applicable to this Deed of Trust, including its appendices, is Israeli law only. In the event of a conflict between the provisions of the law and this Deed of Trust, the parties shall act in accordance with the provisions of Israeli law which cannot be conditioned.
The exclusive and sole jurisdiction in connection with this Deed of Trust, including its appendices and the Bond as an appendix thereto, is vested in the competent court in Tel Aviv-Jaffa.
The Company and the Partnership shall not object to any motion by the Trustee and/or a Bondholder that is submitted to an Israeli court for the application of Israeli law in matters of compromise arrangement, debt settlement and/or insolvency, and shall not object if an Israeli court seeks to apply Israeli law in matters of compromise arrangement, debt settlement and/or insolvency in connection with the Company and/or the Partnership, and the Company and/or the Partnership shall not raise arguments against Israeli jurisdiction regarding procedures taken by the Trustee and/or Bondholders as stated above.
| 34. | Trustee’s Liability |
| 34.1 | Notwithstanding what is stated in any law and anywhere in the Deed of Trust, inasmuch as the Trustee acted for the purpose of fulfilling its position in good faith and within a reasonable time, as well as ascertained the facts which a reasonable trustee would have ascertained under the circumstances, it shall not be liable for damage caused, unless it is determined in a final judgment that the Trustee acted with severe negligence. It is clarified that inasmuch as a contradiction is discovered between the provisions of this Section and other provisions in the Deed of Trust, the provisions of this Section shall prevail. |
| 34.2 | If the Trustee acted in good faith and without negligence in accordance with the provisions of Section 35H(d2) or 35H(d3) of the Securities Law, it will not be liable for performing said action. |
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| 35. | General |
Without derogating from the other provisions of this Deed and the Bond, any waiver, extension, concession, silence or refraining from action (a “Waiver”) by the Trustee regarding the non-performance, partial performance or improper performance of any obligation owed to the Trustee under this Deed and the Bond, shall not be deemed a waiver by the Trustee of any right, but rather a limited consent to the specific occasion on which it was given. Without derogating from the other provisions of this Deed and the Bond, any change in the obligations owed to the Trustee, including a Waiver, requires the prior written consent of the Trustee in accordance with the provisions of this Deed. Any other consent, whether oral or by way of waiver and refraining from action or in any other manner that is not in writing, shall not be deemed any consent whatsoever. The Trustee’s rights under this Deed are independent of and not dependent upon one another, and are in addition to any right that exists and/or will exist to the Trustee under any law and/or agreement (including this Deed and the Bond).
| 36. | Addresses |
The Parties’ addresses will be as detailed in the preamble to this Deed, or any other address regarding which appropriate written notice is given to the other party.
| 37. | Authorization to MAGNA |
In accordance with the provisions of the Securities Regulations (Signature and Electronic Reporting), 5763–2003, the Trustee hereby certifies to the entity authorized for the same on behalf of the Company, to electronically report to the Securities Authority regarding this Deed of Trust.
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In witness whereof the Parties have signed:
Mishmeret Trust Services Ltd. |
Strawberry Fields REIT, Inc |
In accordance with and subject to the provisions of Section 5.2 of the Deed of Trust, Strawberry Fields Realty LP hereby joins the Deed of Trust as a co-borrower.
| Strawberry Fields Realty LP |
I the undersigned, Boaz Noiman, Advocate, of the offices of FISCHER & Co., certify that this Deed of Trust was signed by Strawberry Fields REIT, Inc through Mr. Moishe Gubin, whose signature binds the Company in connection with this Deed of Trust.
| Boaz Noiman, Adv. |
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First Addendum
Certificate of Bonds (Series D)
The issuance of a series of Debentures (Series D) in the aggregate principal amount of NIS , registered in the name of the holder, each with a nominal value of NIS 1, bearing a fixed annual interest rate of 7.5% (the “Interest”), and repayable as to principal in four (4) non-equal installments, payable on June 30 in each of the years 2027 and 2028 and on December 31 in each of the years 2030 and 2031. The interest on the Debentures (Series D) shall be paid in semi-annual installments, on December 31, 2026, and on June 30 and December 31 in each of the years 2027 through 2031 (inclusive).
Bond (Series D) Registered by Name
Number 1
Par value ILS __________
Annual interest: fixed at a rate of 7.5%.
The registered owners of the Bonds in this Certificate: the nominee company of the Tel Aviv Stock Exchange Ltd.
| 1. | This certificate indicates that Strawberry Fields REIT, Inc. (the “Company”) will pay any party that is the registered owner of this Bond (the “Holder of the Bond (Series D)”) on the effective date for such payment. The payments will be made on the following dates: |
On June 30, 2027, 20% of the total par value principal of the Bonds (Series D), on June 30, 2028, 25% of the total par value principal of the Bonds (Series D), on December 31, 2030, 20% of the total par value principal of the Bonds (Series D), and on December 31, 2031, 35% of the total par value principal of the Bonds (Series D), all subject to the provisions listed on the overleaf and the Deed of Trust, dated September 14, 2026, between the Company, as one party, and Mishmeret Trust Services Ltd. and/or any party that serves from time to time as trustee of the Bondholders under the Deed of Trust (the “Trustee” and the “Deed of Trust” respectively), as the other party.
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| 2. | This Bond is not linked (principal and interest). |
| 3. | The final payment of principle and the final payment of the interest will be made in exchange for provision of the bond certificates (Series D) to the Company on the date of the final payment (i.e. on December 31, 2031) at the Company’s registered office or in any other place which the Company shall indicate. |
| 4. | All of the Bonds (Series D) shall have an equal security rating between them (Pari Passu) in connection with the Company’s liabilities according to the Bonds (Series D) and without a priority right or preference for one over another. |
| 5. | This Bond (Series D) is issued subject to the terms detailed on the overleaf, the terms detailed in the Deed of Trust, and the Shelf Offering Report. |
Signed by the Company on September 14, 2026
By:
| Authorized Signatory: | Authorized Signatory: |
I, the undersigned, Boaz Noiman, Advocate, certify that this bond certificate was duly signed by Strawberry Fields REIT, Inc. according to its bylaws, by means of Mr. Moishe Gubin, and his signature binds the Company for purposes of this bond.
Boaz Noiman, Adv.
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The Terms Listed on the Overleaf
| 1. | General |
In this Bond (Series D), the following expressions shall have the following meanings and inasmuch as they are not defined below, shall have the meaning given them in the Deed of Trust, unless expressly stipulated otherwise:
“Business Day”
| or a “Bank Business Day” | Any day on which the exchange clearinghouse of most of the banks in Israel are open to carry out transactions. |
| “Principal” - | The unpaid par value of the Bonds (Series D). |
| “Special Resolution” - | a resolution passed in a general meeting of Bondholders (Series D), who are present themselves or by their counsel whose Bonds represent at least 50% of the balance of the par value of the Bonds (Series D), or in an adjourned meeting attended by the Bondholders, themselves or by their counsel, who hold at least 20% of the balance of the par value as stated, and which is passed (whether in the original meeting or adjourned meeting) with a majority of at least two thirds (2/3) of the balance of the par value of the Bonds (Series D) represented in the vote. |
| “Ordinary Resolution” - | A resolution passed by a simple majority at a general meeting of the Bondholders, in which at least two Bondholders who together hold at least twenty-five percent (25%) of the outstanding par value balance of Bonds were present (in person or by their proxy); |
| The “Nominee Company” – | the nominee company of the Tel Aviv Stock Exchange Ltd. or a nominee company that will replace it, provided all the Company’s securities will be registered under its name. |
| “Trading Day” - | A day on which transactions are made in the Tel Aviv Securities Exchange Ltd. |
“Clearing Housing of the Stock Exchange” - The Securities Authority The Tel Aviv Stock Exchange Ltd.
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| 2. | The Bonds |
For details regarding the Bonds (Series D), see Section 2 of the Deed of Trust.
| 3. | Terms of Bonds (Series D) |
| a) | The Bonds (Series D), registered by name, shall each have a par value of ILS 1. The Bonds (Series D) shall be repayable in four (4) non-equal installments, such that the first payment on account of principal will be paid on June 30, 2027 at a rate of 20% of the total par value principal of the Bonds (Series D), the second payment on account of principal will be paid on June 30, 2028 at a rate of 25% of the total par value principal of the Bonds (Series D), the third payment on account of principal will be paid on December 31, 2030 at a rate of 20% of the total par value principal of the Bonds (Series D), and the fourth and final payment on account of principal will be paid on December 31, 2031 at a rate of 35% of the total par value principal of the Bonds (Series D). |
| b) | The unpaid balance of the principal will bear fixed annual interest at a rate of 7.5% (but subject to adjustments in the event of a change in the Rating of the Bonds (Series D)6 and/or deviation from financial covenants as set forth in Sections 5.4 and 5.5, respectively, of the Deed of Trust. |
| c) | The Bonds (Series D) shall not be linked. |
| d) | Interest on the Bonds (Series D) will be paid in semiannual payments, on December 31, 2026, and on June 30 and December 31 of each of the years 2027 through 2031 (inclusive). |
6 It is clarified that if the Bonds (Series D) are rated by more than one reading company, the ratings test for the purpose of adjusting the interest rate to a change in rating (if and inasmuch as there shall be such a change) shall be done, at all times, according to the lower of the ratings.
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| e) | The first payment of principal in respect of the Bonds (Series D) will be on June 30, 2027. The first payment of interest on the Bonds (Series D) will be paid on December 31, 2026 for the period beginning on the first clearing day after the tender date (namely, the date on which the purchaser of the securities was charged the consideration for the offering) and ending on the last day before the date of the first interest payment, namely on December 30, 2026, the “First Interest Period”, which shall be calculated according to the number of days during this period on the basis of 365 days per year. The interest rate which will be paid for a particular Interest Period, other than the First Interest Period, namely the period beginning on the payment day of the prior Interest Period and ending on the last day before the payment date immediately after the commencement date, will be calculated as the yearly interest rate divided by two, meaning 3.75% (the “Semiannual Interest Rate”). The Company will publicize, in the immediate report on the results of the tender, the interest rate for the First Interest Period and the first clearing day. |
| f) | The final payment of principle and the final payment of interest will be made in exchange for delivery of the bond certificates (Series D) to the Company on the date of the final payment, namely on December 31, 2031, at the Company’s registered office or in any other place which the Company shall indicate. Such notice by the Company will be published no later than five (5) business days before the date of the final payment. |
| g) | It is clarified that a person who is not registered in the register on June 18 and December 19 with respect to any relevant period preceding the payment date of that payment shall not be entitled to payment of interest for the Interest Period beginning before such date. |
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| 4. | Payments of Principal and Interest of the Bonds (Series D) |
| (a) | Every payment on account of the principle and/or interest which shall be paid with a delay exceeding seven (7) days from the date stipulated for its payment according to the bond terms, and this for a reason under the Company’s control, shall bear lateness interest as defined below, beginning on the date stipulated for its payment and until the date of actual payment. Regarding this, the rate of interest in arrears shall be addition 3.5% to the interest rate on bonds as stated in section 3(b) above, and all on a yearly basis (the “Arrears Interest”). The Company shall give notice of the rate of Interest which has accrued (inasmuch as it has accrued) on the precise interest rate for the period, including the annual interest plus the arrears interest, as well as the date of payment, in an immediate report and this two (2) trading days before the date of actual payment. |
| (b) | Payment to those who are so entitled will be done by check or bank transfer and/or by means of the Exchange Clearinghouse in favor of the bank account of the bondholders (Series D). If the Company cannot, for any reason whatsoever which is not under the Company’s control, pay any amount to those entitled, the provisions of Section 14 of the Deed of Trust will apply. |
| (c) | A Bondholder (Series D) who so wishes will notify the Company of the details of the bank account to be credited with payments to that Holder according to the Bonds (Series D) as aforesaid, or of a change in the details of said account or its address, as applicable, in a notice which will be sent by registered mail to the Company. The Company shall be required to act in accordance with the notice from the Holder regarding such change after the passing of 15 business days from the date on which the Holder’s notice reached the Company. |
| (d) | If a Bondholder registered in the Register did not timely provide the Company with details regarding its bank account to be credited with the transfer of payments to such Holder according to the Bond, every such payment will be made by check which will be sent by registered mail to its last address registered in the Register. Sending a check to a person so entitled by registered mail as aforesaid will be considered for all intents and purposes as payment of the amount determined therein on the date of its sending by mail, provided that the check is deposited in the bank and actually paid. |
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| 5. | Postponement of Dates |
In any event in which a date for payment on account of principle and/or interests falls on a day which is not a business day, the payment date will be postponed to the first business day thereafter, without additional payment and the “Effective Date” for the purpose of determining entitlement for redemption or interest will not change as a result.
| 6. | Securing the Bonds |
See Section 6 of the Deed of Trust.
| 7. | Refraining from Payment for a Reason Which is not under the Company’s Control |
See Section 14 of the Deed of Trust.
| 8. | Register of Bondholders |
See Section 28 of the Deed of Trust.
| 9. | Splitting Bond Certificates |
| (a) | In respect of the Bonds (Series D) registered in the name of one holder, the holder shall be issued one certificate, or at his request, he shall be issued a number of certificates in a reasonable amount (and the certificates mentioned in this section shall hereinafter be called: the “Certificates”). |
| (b) | Every bond certificate may be split into bond certificates where the sum of all of their par value equals the amount of the par value of the certificate whose splitting is requested, provided that said certificates shall not be issued except in reasonable amounts. The split will be done in exchange for providing that bond certificate together with a written request signed by the registered Holder to the Company at its registered office for the purpose of carrying out the split. All of the costs involved in the split, including taxes and levies, if any shall apply, will be borne by the party requesting the split. |
| 10. | Transfer of Bonds |
The bonds may be transferred and their full par value, as well as in part, provided that it shall be in whole New Israel Shekels. Every bond transfer shall be done by a letter of transfer in an accepted wording, duly signed by a the registered holder or his legal representatives and by the recipient of the transfer orders legal representatives, which shall be provided to the Company at its registered office together with the bond certificates transferred in accordance there with as well as every other proof required by the Company for the purpose of proving the transferor’s right to transfer them. If tax or any other mandatory payment shall apply to the letter of transfer of the bonds, proof of their payment shall be provided to the Company which shall be satisfactory to the Company. The Company’s Articles of Incorporation which apply to the transfer shares which are fully paid and their assignment will apply, mutatis mutandis, as applicable, on the manner of the transfer of the bonds and their assignment. In the event of a transfer of only a portion of the amount of the determinate principle in a bond certificate, it is necessary to first split, according to the provisions of section 9 above, the certificate to a number of certificates as required by the same, in a manner such that the sum of all of the determinate principle amounts therein will be equal to the amount of the determinate principle of said bond certificate. After fulfilling all of these conditions, the transfer shall be registered in the registry, and the Company shall be entitled to require that a notice regarding said transfer be registered on the certificate of the transferred bond which will be provided to the transfer recipient or that he be issued a new bond certificate in its place, and the transferee shall be subject to all of the conditions detailed in the transferred bond certificate such that in a place that it states “the holder” it shall be seen as if it says “the transferee”, and he shall be considered as a “holder” for purposes of the Deed of Trust.
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| 11. | Early Redemption |
Regarding early redemption of the Bonds at the initiative of the Stock Exchange and early redemption at the initiative of the Company, see Section 7 of the Deed of Trust.
| 12. | Purchase of Bonds by the Company and/or an Affiliate |
See Section 3 of the Deed of Trust.
| 13. | Waivers; Compromises, and Changes to the Deed of Trust |
See Section 27 of the Deed of Trust.
| 14. | Bondholders’ Meetings |
The general meetings of Bondholders (Series D) shall be convened and shall be conducted in accordance with what is stated in the Second Addendum of the Deed of Trust.
| 15. | Receipt from Bondholders |
See Section 15 of the Deed of Trust.
| 16. | Right to Call for Immediate Repayment |
See Section 8 of the Deed of Trust.
| 17. | Notices |
See Section 26 of the Deed of Trust.
| 18. | Applicable Law and Judicial Authority |
See Sections 32 and 33 of the Deed of Trust.
| 19. | Order of Priorities |
In the event of a contradiction between this supplement and the Deed of Trust, the Deed of Trust shall prevail.
***
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Second Addendum
Bondholders’ Meetings (Series D)
| 1. | Entitlement to Convening a Meeting |
| 1.1. | The Trustee will convene a meeting of Holders if it sees that the same is necessary or at the request of one or more Bondholders (Series D) who hold at least 5% (five percent) of the balance of the par value of the Bonds. In the event that those requesting the calling of the meeting are Bondholders, the Trustee will be entitled to require indemnification, including in advance, from the requesters for the reasonable expenses involved. |
| 1.2. | It shall be clarified that the indemnification demand by the Trustee shall not detract from the calling of a meeting which was called for the purpose of initiating an action designed to prevent harm to the rights of the bondholders and the indemnification demand shall not derogate from the Company’s obligation to bear the expenses involved in calling the meeting. |
| 1.3. | The Trustee will call a meeting of Bondholders within 21 days from the date on which the request that it be convened is submitted to it, on a date which shall be stipulated in the summons, and provided that the date of convening will not be earlier than seven days and no later than 21 days from the date of the summons; however, the Trustee is entitled to advance the convening of the meeting to at least one day after the summons date if it believes that this is required for the purpose of defending the Holders’ rights; should it do so, the Trustee will explain the reasons for advancing the convening date in the report regarding the meeting summons. |
| 1.4. | If the Trustee did not call a meeting of holders, according to the holder’s request as aforesaid, within 21 days from the date he was requested as aforesaid, the holder is entitled to convened the meeting, and provided that the date of convening will be within 14 days of the end of the period in which the Trustee must call the meeting, and the Trustee will bear the expenses incurred by the holder in connection with convening the meeting. |
| 1.5. | Every meeting of Bondholders (Series D) will take place in Israel, at a place indicated by the Company and/or the Trustee, and the Company will bear the reasonable expenses of convening the meeting. The Trustee may determine that the meeting shall be held by electronic means. |
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| 2. | Meeting Summons and Meeting Agenda |
| 2.1. | A summons to a meeting by the Trustee for the purpose of consultation only with the Bondholders will be published at least one day before the date of its convening (the “Consultation Meeting”). An agenda will not be published for, and no resolutions will be adopted at, a Consultation Meeting. |
| 2.2. | A summons to a meeting which is not a Consultation Meeting will be published in accordance with the provisions of the Securities Law as it shall exist from time to time, at least 7 (seven) days, but no more than 21 days before the convening of the meeting ( “Summons”). |
| 2.3. | The Trustee will determine the agenda at the Bondholders’ meeting. One or more Bondholders (Series D) who hold at least 5% (five percent) of the balance of the par value of the Bonds (Series D) are entitled to request that the Trustee include a topic on the agenda of a Bondholders’ meeting which will be convened in the future, provided that the topic is appropriate in the Trustee’s opinion for discussion at such meeting. |
| 2.4. | The Trustee will be entitled to shorten the date of convening to at least one day after the date of the summons if he saw that delay in convening the meaning constitutes or is likely to constitute injury to the rights of the bondholders. Should he do so, the Trustee will explain the reasons for advanced in the convening of the meeting in the report regarding the meeting summons. |
| 2.5. | The summons shall detail: |
| 2.5.1. | Location where the meeting will be convened; |
| 2.5.2. | The date and time on which the meeting will be convened; |
| 2.5.3. | The legal quorum for commencing the meeting as detailed in section 3 below; |
| 2.5.4. | The effective date for participation in the meeting. |
| 2.5.5. | The topics to be discussed at the meeting and proposed resolutions will be indicated; |
| 2.5.6. | Arrangements regarding written voting; |
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| 3. | The Legal Quorum for Commencing the Meeting and Postponed Meeting |
| 3.1. | A Consultation Meeting will take place with any number of participants. |
| 3.2. | A meeting of bondholders so commence after it is proved that the required legal quorum as stated below for holding the meeting is present. |
| 3.3. | Subject to the presence of the required legal quorum for a meeting convened to adopt Special Resolutions, and subject to the provisions of the Securities Law and the Deed of Trust, the legal quorum for holding a Holders’ meeting is the presence of at least two Bondholders who hold at least 25% (twenty-five percent) of the unpaid balance of the par value of the Bonds in circulation at that time, within half an hour from the time stipulated for opening the meeting. |
| 3.4. | If within half an hour from the time stipulated for the opening of the meeting, a legal quorum is not present, the meeting will be postponed to a different date which shall not be earlier than two business days after the date stipulated for holding the original meeting or one business day, if the Trustee believes that this is required for the purpose of protecting the rights of the bondholders; if the meeting is postponed, the Trustee will explain the reasons for this in the report regarding the postponed-meeting summons. |
| 3.5. | Other than in connection with a meeting which was convened to adopt a resolution that is required to be adopted as a Special Resolution, and subject to the provisions of the Securities Law, if a legal quorum is not present at the postponed Holders’ meeting within half an hour from the time stipulated for its commencement, the quorum shall be legal with any number of participants; if the meeting is convened following a request from Holders, as set forth in Sections 1.2 and 1.3 above - the legal quorum of Bondholders will be one or more holding at least 5% (five percent) of the balance of the par value of the bonds existing in circulation on the effective date for the meeting. |
| 3.6. | Bonds held by a related person (as defined in section 3.2 of the Deed) will not be taken into consideration for the purpose of determining the legal quorum. |
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| 4. | Chairperson |
At every Holders’ meeting, the Trustee or whomever it appoints shall serve as chairperson of that meeting.
| 5. | Adjourned Meeting |
| 5.1. | A meeting which has been opened shall be adjourned at the notice of the Trustee or notice of the chairperson of the meeting, and it may have one or more sessions. |
| 5.2. | In a holders’ meeting which has a legal quorum, the meeting chairperson and/or the Trustee are entitled to decide to hold an additional session which will take place on a different date and location which will be determined by the Trustee ( “Adjourned Meeting”). |
| 5.3. | The Trustee will be responsible for publicizing a notice regarding the date and location on which the Adjourned Meeting will be convened, and provided that said notice shall be given 12 hours at least before the convening of the Adjourned Meeting. |
| 5.4. | At an Adjourned Meeting, only a topic which was on the agenda of the original meeting regarding which no resolution was adopted will be discussed. |
| 5.5. | A holder who was not present at the original meeting will be able to be present for the Adjourned Meeting and vote on the topics which have been presented for vote (and for which the vote has not yet been sealed) and will be presented for voting, subject to the fact that he proves his ownership of bonds which are the subject of the meeting to the one calling the meeting as of the effective date of the meeting is stipulated in summons notice for the meeting. |
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| 6. | Provisions for Special Meetings |
In a meeting of Bondholders the agenda of which contains one of the following, the provisions below will apply regarding the legal quorum in a meeting of Holders or an adjourned meeting, and regarding the majority required for passing the resolutions:
| 6.1. | In a meeting the agenda of which contains calling the Bonds for immediate repayment, the provisions of Section 8.2.2 of the Deed of Trust will apply. |
| 6.2. | In a meeting the agenda of which contains removing the Trustee from its service, the provisions of Section 30 of the Deed of Trust will apply. |
| 6.3. | A change and/or amendment and/or addition to the Deed of Trust - the provisions of Section 27 of the Deed of Trust will apply. |
At a meeting on whose agenda is included a resolution on a topic regarding which it is stipulated in the Deed of Trust or the Bond that it is subject to a Special Resolution, the legal quorum is the presence of Bondholders who own at least fifty percent (50%) of the balance of the Bonds’ par value, or at a postponed meeting, the presence of Bondholders who own at least twenty percent (20%) of the balance of the Bonds’ par value. The required majority for adopting a (Special Resolution, whether at the original meeting or at a postponed meeting) is a majority of two-thirds (2/3) of the balance of the Bonds’ par value represented in the vote.
| 7. | Position Statements |
| 7.1. | The Trustee or the bondholder, one or more, who owns at least 5% (five percent) of the balance of the bonds’ par value (Series D) are entitled to make a written application to the bondholders in a letter which will be attached to the ballot in order to convince them regarding the manner of their vote on one of the topics raised for discussion at that meeting (in this Addendum: “Position Statement”). |
| 7.2. | A holder who wishes to make use of this right will give notice of the same to the Trustee during the session in which it is resolved to bring that same topic to a vote and will provide the Trustee with the Position Statement within 24 hours of the date of that same session. |
| 7.3. | Any meeting which was summoned following a request by shareholders or by the shareholders as detailed in sections 1.1 and 1.3, every holder will be entitled, by means of the Trustee, to publish a Position Statement in relation to the topics which are on the agenda for the meeting.1.21.3 |
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| 7.4. | The Trustee and the Company will be entitled, each one individually, to publish a Position Statement in response to the Position Statement which was sent in accordance with Sections 7.1 and 7.3 above, or in response to another application to the Bondholders. |
| 7.5. | Position Statements will not be published at a Consultation Meeting. |
| 8. | Votes at a Meeting |
| 8.1. | The vote at a meeting of the holders of the Bonds (Series D) will take place in relation to the topics detailed in the summons only. |
| 8.2. | A holder of a Bond (Series D) will be entitled to vote itself, by means of an agent appointed in accordance with this Addendum or by means of a ballot. |
| 8.3. | The meeting chairperson is entitled to determine that votes will be by ballot or by means of vote during the course of the meeting. In the event in which the chairperson determined that the vote will be by means of ballot, the Trustee will ensure that the text of the ballot will be distributed to the Holders, and will determine the date on which the vote is closed by which time the Holders must send the completed and duly signed ballot to the Trustee. The Trustee is entitled to require that a Holder declare, in the framework of the ballot, the existence or absence of a conflict of interest (as defined infra) which he has, in accordance with the Trustee’s judgment. A holder who does not fill out the ballot in full and/or does not prove its entitlement to participate and vote at a meeting according to the provisions of the Second Addendum will be considered as one who has not submitted a ballot and accordingly has chosen not to vote on the topic or topics on the ballot. A fully filled out and duly signed ballot in which the Holder indicated its vote and which reaches the Trustee by the deadline determined for the same will be considered as presence at the meeting for the purpose of establishing the legal quorum at the meeting. Accordingly, the Trustee may, at its discretion and subject to any law, hold voting meetings in which votes are held through ballots and without convening the Holders, and also hold a vote through ballots in a voting meeting (including its adjourned meeting) in which the legal quorum is not present when the meeting is opened, as required to pass the resolution on the agenda, provided that the Trustee receives by the time of closing the voting meeting, which is specified in the notice to convene the meeting or hold the vote, as applicable, ballots from the Holders constituting the legal quorum required for passing the resolution in the original meeting or an adjourned meeting, as applicable. |
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| 8.4. | Unless expressly stipulated otherwise in this Deed, the required majority for adopting any resolution by the general meeting is an ordinary majority of the number of votes represented in the vote and those voting for or against. Additionally, but subject to the provisions above, the Trustee is entitled to decide at his discretion in accordance with the circumstances whether adoption of a resolution requires a majority which is not ordinary. |
| 8.5. | The Trustee will participate in the meeting without the right to vote. The Company may, through its representatives, present matters before the discussion and respond to questions from Holders, if any. Notwithstanding the above, it shall be clarified that the Trustee may, at its sole discretion, resolve that the meetings of Holders, in whole or in part, will take place in the absence of the Company or a representative on its behalf or a related Holder or any other person, without being subject to the obligation to provide grounds. |
| 8.6. | Holders of the Bonds are entitled to participate and vote in every general meeting on their own or by means of representatives. Every vote by Bondholders will be conducted according to the number of votes, such that every Bondholder or its representative will be entitled to one vote in respect of every ILS 1 par value from the total specified principal which has not yet been repaid of the Bonds based on which it is entitled to vote. In the event of joint Holders, only the vote by the one registered first among them in the Register, whether itself or by means of an agent, shall be accepted. |
| 8.7. | A Bondholder or its agent is entitled to vote in respect of a portion of its votes in favor of a particular proposed resolution, and against in respect of another portion, and in respect of another portion to abstain, all as it sees fit. |
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| 9. | Declaration of Adoption of a Resolution |
The declaration by chairperson that a resolution at a holders’ meeting was adopted or rejected, whether unanimously or by some majority, shall be prima facie evidence of what is stated therein.
| 10. | Letter of Appointment |
| 10.1. | A letter appointing an agent will be in writing and will be signed by the appointer or by its authorized representative in writing as required. If the appointer is a corporation, the appointment will be made in writing, signed with the corporation’s seal and the signature of an officer of the corporation or the corporation’s representative who is authorized to do so. A letter of appointment of an agent will be drafted in any common form. An agent is not required to be a Holder. |
| 10.2. | A letter of appointment and the power of attorney or another certificate based on which the letter of appointment is signed, or a certified copy of such power of attorney, will be deposited in the Company’s office prior to the time of the meeting regarding which such power of attorney is granted, unless otherwise stipulated in the notice calling the meeting. |
| 10.3. | A vote cast in accordance with the terms in the document appointing an agent shall be valid even if the grantor passes away beforehand or is declared legally incompetent or the letter of appointment is annulled or the Bond regarding which the vote was cast is transferred, unless prior to the meeting written notice regarding the death, declaration of incompetence, annulment, or transfer, as applicable, is received in the Company’s registered office. |
| 10.4. | Subject to the provisions of Section 10.2 above, every corporation which owns Bonds is entitled by written and duly signed authorization to empower a person as it sees fit to act as its representative at every meeting of Bond owners, and a person thus authorized is entitled to act in the name of the corporation which it represents. |
| 11. | Minutes |
| 11.1. | The Trustee will prepare minutes of the Holders’ meeting and will maintain them in its registered office for a period of seven years from the date of the meeting. The Trustee may prepare minutes of a meeting or parts thereof by way of recording. |
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| 11.2. | Minutes signed by the chairperson of the meeting will serve as prima facie evidence of the matters listed therein. A declaration by the chairperson of the meeting regarding adoption of a resolution or its rejection and a notation regarding the matter in the minutes’ registry shall serve as prima facie evidence of this fact. |
| 11.3. | The register of minutes of Holders’ meetings will be maintained in the Trustee’s registered office and will be open for examination by the Company and the Bondholders, and a copy thereof will be sent to the Company and to any Bondholder requesting it. |
| 11.4. | The Trustee will be entitled to delay delivery of any minutes to any entity whatsoever if, in its exclusive discretion, provision of the minutes, in whole or in part, may harm or cause harm to the rights of Bondholders (Series D). |
| 12. | A person or persons appointed by the Trustee, the Company Secretary, and any other person or persons so authorized by the Trustee will be entitled to be present at the Bondholders’ meeting. In a case in which according to the Trustee’s reasonable discretion it shall be necessary to engage in discussions during a portion of the meeting outside the presence of the Company’s representatives, then representatives of the Company or anyone on their behalf will not take part in that portion of the meeting. |
| 13. | Everything stated in this supplement is subject to the Deed of Trust. |
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Third Addendum
Urgent Representation for the Holders of Bonds
| 1. | Regarding the Bonds (Series D), insofar as an urgent representation of the Bondholders of the Bonds (Series D) is appointed as set forth below, the Company undertakes that the urgent representation shall be appointed to act in accordance with the relevant provisions of Appendix 5.2.4.4 to Chapter 4 in Part 2 (Management of Investment Assets and Provision of Credit) in Section 5 (Principles of Business Conduct) in the Consolidated Circular,7 And the Company undertakes to act in cooperation with the urgent representative and the trustee, to the extent necessary for carrying out the tests required by them and formulating the decision of the urgent representatives, and to transmit to the urgent representative office all the data and documents in the Company’s possession that will be required of it for the Company and which were requested in writing. |
| 2. | Appointment; Tenure |
| 2.1 | The Trustee may, or at the request of the Company in writing will be obligated to, appoint and convene the urgent representation from among the Holders of Bonds, as detailed below (the “Urgent Representation”). |
| 2.2 | For the Urgent Representation, the Trustee will appoint three (3) Holders of Bonds who, to the best of the Trustee’s knowledge, are holders of a par value higher than all of the Holders of Bonds, and who will declare that they fulfill all of the conditions detailed below (the “Members of the Urgent Representation”). In a case where any of them cannot serve as a Member of the Urgent Representation as stated, the Trustee will appoint the Holder of Bonds with the next highest par value holding, for which all of the conditions have been fulfilled, as detailed below. |
And these are the conditions:
| 2.2.1 | The Holder of Bonds does not have a conflict of interest due to the existence of any additional material interest that is conflicting a matter derived from the office of the Urgent Representation, and from his holding of Bonds. For the avoidance of doubt it shall be clarified that a Holder who is a connected party (as the term is defined in Section 3.2 of the Deed of Trust, will be considered as having a conflict of interest as stated, and will not serve in the Urgent Representation; |
| 2.2.2 | During the course of that same calendar year, a bondholder does not serve on similar representations for other bonds whose aggregate amount exceeds the amount of the asset portfolio managed by him, which was determined as the maximum amount allowing the service on the Urgent Representation according to the Antitrust Commissioner’s orders in relation to establishment of an urgent representation; |
7 http://ozar.mof.gov.il/hon/2001/law/Codex.asp
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| 2.3 | If during his office in the Urgent Representation, one of the circumstances noted in Sections 2.2.1 and 2.2.2 above failed to be fulfilled, then the member’s office will expire and the Member of the Representation as stated will notify as such in writing to the Trustee and the Trustee will appoint another member in his place, from among the Holders of Bonds, as stated in Section 2.2 above. |
| 2.4 | Prior to the appointment of the Members of the Urgent Representation, the Trustee will receive, from the candidates for serving as Members of the Urgent Representation, a declaration regarding the existence of lack of conflicts of interest, as stated in Section 2.2.1 above, and regarding serving in additional representations, as stated in Section 2.2.2 above. Similarly, the Trustee is entitled to require such a declaration from the members of the Urgent Representation at any time during the course of the Urgent Representation’s service. A holder who does not provide said declaration will be considered as having a conflict of interests or preclusion from service based on the Antitrust Commissioner’s orders as aforesaid, as applicable. In relation to a declaration regarding a conflict of interest, the Trustee will check for the existence of conflicting interests and to the extent required, will decide whether the conflicts of interest disqualified that same holder from service on the Representation. It should be clarified that the Trustee will rely on the said declarations and will not conduct an additional personal test or investigation. The Trustee’s determinations in these matters shall be final. |
| 2.5 | The term of office of the Urgent Representation will end on the date where the Company will publish the decisions of the Urgent Representation in connection with providing an extension to the Company for the purpose of fulfilling the conditions of the Deed of Trust, as detailed in Section 8 of the Deed of Trust, but in any event shall not exceed three months from the appointment date. |
| 3. | Authority |
| 3.1 | The Urgent Representation shall have the authority to grant a one-time extension to the Company in connection with the dates for fulfilling any of the financial obligations set forth in the Deed of Trust in a manner that will not apply as the grounds for immediate repayment as in Sections 8.1.11 through 8.1.13 of the Deed of Trust, as applicable, for the entire extension term, as granted, for a term that is up to the publication date of the financial statements after the publication date of the financial statements, from which it arises that the company did not fulfill a financial obligation for two consecutive calendar quarters or for a term of up to 90 days, whichever is earlier. It shall be clarified that the period of time up until the appointment of the Urgent Representation shall be taken into consideration in the framework of the aforesaid extension, and it will not constitute cause for granting any additional extension to the Company beyond the aforesaid. It shall be clarified that the Urgent Representation’s activities and the collaboration between its members shall be limited to discussion of the possibility of granting said extension and no other information which does not relate to the granting of said extension shall be shared between the members of the Representation. |
| 3.2 | If an Urgent Representation is not appointed as aforesaid, or if the Urgent Representation decided not to grant the Company and extension as stated in section 3.1 above, the Trustee will be required to call a meeting of the bondholders in accordance with the provisions of section 8.2 of the Deed. |
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The above shall not derogate from the authority of the Trustee to convene an assembly of Holders of Bonds, including in relation to that matter for which the Urgent Representation was convened. If the decision of the assembly of Holders of Bonds was made for that matter, the decision of the assembly shall prevail over the decision of the Urgent Representation, including vis-à-vis the Company.
| 4. | The Company’s Obligations in Connection with the Urgent Representation |
| 4.1 | The Company undertakes to provide the Trustee all information in its possession or which it is able to secure in connection with the identity of the bondholders and the scope of their holdings. Similarly, the Trustee will act to secure said information in accordance with the authorities granted him according to law. |
| 4.2 | In addition, the Company undertakes to fully cooperate with the Urgent Representation and the Trustee, inasmuch as required for the purpose of executing the required checks by them and formulating the Urgent Representation’s decision, and to provide the Urgent Representation all of the data and documents in its possession or which it is able to reasonably secure which are required by it regarding the Company subject to the limitations of law. Without derogating from the generality of the aforesaid, the Company shall provide Urgent Representation with the relevant information for the purpose of formulating the decision, which to the best of the Company’s knowledge shall not include any misleading detail and shall not be lacking. |
| 4.3 | The Company shall bear the Urgent Representation’s expenses, including the cost of employing advisors and experts by the Urgent Representation or on its behalf and in this regards, the provisions of section 25 of the Deed will apply, mutatis mutandis. |
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| 5. | Liability |
| 5.1 | The Urgent Representation shall act and decide on the matters that were placed before it as aforesaid and its absolute discretion and shall not be liable, it or any of its members, officers therein, their employees or advisors, and the Company and the bondholders hereby grant them a waiver in relation to any claims, demands and lawsuits against them in respect of the fact that they utilized or abstain from utilizing powers, authorities or the discretion granted them according to the Deed of Trust and according to this supplement and in connection there with or from any other action which they took their under, unless they did so maliciously and/or in bad faith. |
| 5.2 | The indemnification provision stipulated in section 25of the Date of Trust shall apply to the members of the Urgent Representation and anyone acting on their behalf, as if they were the Trustee. |
| 5.3 | The Company shall publish an immediate report immediately upon the appointment of said Urgent Representation, regarding the appointment of the Person Representation, the identity of its members, and their powers. |
| 5.4 | The Company will publish an additional immediate report about the Urgent Representation’s decision. Upon the completion of the Urgent Representation’s service, the Company will publish all of the information which was provided by the Company for the Urgent Representation’s examination provided that there is nothing precluding its publication by law. |
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Appendix 22
Of the Deed of Trust dated September 14, 2026
THE TRUSTEE FEE
The Company will pay the Trustee wages for his services, in accordance with this Deed of Trust, as detailed below:
| 1. | For the entire trust year (or part thereof), commencing on the issuance date of the Bonds, the Trustee will be paid annual wages in the sum of ILS 27,000 (the “Annual Fee”). |
| 2. | For the Trustee’s participation in the general meetings of the shareholders held in Israel, the Trustee will be entitled to a fee of ILS 500. |
| 3. | Additionally, the Trustee will be entitled to a return on reasonable expenses from the Company, as defined below: “Reasonable Expenses” – sums paid by the Trustee in the framework of fulfilling his position and/or pursuant to the authorities granted thereto according to this Deed, including: expenses and costs for the initiation and convening of an assembly of holders of Bonds and expenses for the notices, transportation and advertisement publications connected to the convening of the assembly, and as required by any law. |
| 4. | Without derogating from the generality of the above, the Trustee will be entitled to fee payments from the Company in the sum of ILS 500 for each working hour required therefor for the Special Operations to be performed in its position as Trustee, all subject to the provisions of the Deed of Trust, which include the following operations (the “Special Operations”). |
| 4.1. | Operations derived from a material breach or a concern of a material breach of the Deed by the Company; |
| 4.2. | Operations in connection with the decision of the assembly of holders of Bonds to place the Bonds for immediate repayment; |
| 4.3. | Operations that the Trustee will be required to perform or will have to perform, in connection with the convening of bondholders’ meetings due to a real concern of a material breach of the Deed by the company; |
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| 4.4. | Special works (including, but not limited to, work required due to restructuring of the Company or work due to the Company’s requirement) or due to the need to perform additional operations in order to fulfill its role as a reasonable Trustee, due to a change in law (including regulations to be established following Amendments 50 and 51 of the Securities Law) and/or regulations and/or other binding provisions that will apply in connection with the actions of the Trustee and its responsibilities according to this Deed of Trust. |
| 5. | VAT, if applicable, will be added to each of the said sums, as applicable, and will be paid by the Company. |
| 6. | All of the abovementioned sums will be linked to the index of July 2026; however, in any event, a sum lower than the sum denominated in this Deed will not be paid. |
| 7. | The Trustee’s wages will be paid in respect of the period up until the end of the Trust included in this Deed even if a receiver is appointed for the Company (or a receiver and a manager), or whether the trust according to this Deed will be managed under the supervision of the court, or not. |
| 8. | The aforesaid Annual Fee will be paid at the beginning of every trust year. |
| 9. | Subject to the provisions of the Deed of Trust, all of the amounts described in this Appendix will have preference over monies due to the Bondholders. |
| 10. | To the extent that the Trustee’s service as described in this Deed of Trust shall come to an end, the Trustee will not be entitled to payment of its fees as of the date of commencement of service of the replacement Trustee. To the extent that the Trustee’s service ended during the course of the trust year, fees paid in respect of months in which the Trustee did not serve as trustee for the Bonds shall be refunded, as of the appointment of the replacement Trustee. This Section will not apply regarding the initial trust year. |
| 11. | In the appointment of a Trustee to replace the Trustee whose office ended according to Section 35b(a1) or 35(14)(d) of the Securities Law, the holders of Bonds of Series D will bear the difference in the fees of the appointed Trustee, as stated, from that which was paid to the Trustee who was replaced, if such difference is unreasonable, and the provisions of the relevant laws will apply at the time of the replacement as stated. The obligation of the Holders for the difference as stated will be performed by offsetting the relative part of the difference from any payment that the Company will make to the Holders of Bonds in accordance with the terms of the Deed of Trust and the transfer thereof will be directly from the Company to the Trustee. |
| 12. | If according to any law there will be an obligation to deposit a guarantee applying to the Company to ensure the Company’s obligation for the special expenses of the Trustee, the Company will act in accordance with the provisions as stated. |
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Exhibit 99.1
September 14, 2026
Strawberry Fields. REIT, Inc.
(The “Company”)
Shelf Offering Report
Pursuant to the Company’s offering prospectus, which is also the Company’s shelf prospectus dated August 5, 2024,1 and whose validity was extended by the Israel Securities Authority until August 4, 2027 (the “Shelf Prospectus”),2 and pursuant to the provisions of the Securities Regulations (Shelf Offering of Securities), 5766-2005 (the “Shelf Offering Regulations”), the Company is hereby honored to publish a shelf offering report (the “Shelf Offering Report”) for the issuance and listing on the Tel Aviv Stock Exchange Ltd. (the “Stock Exchange”) of the Company’s Bonds (Series D) (the “Bonds (Series D)” or the “Bonds”) and Series 2 Warrants of the Company (the “Series 2 Warrants” or the “Warrants”), as detailed below.
The Series D Debentures, together with the Warrants (Series 2), shall hereinafter also be referred to as the “Offered Securities”.
In the Shelf Offering Report, terms will be given the meaning given to them in the Shelf Offering Prospectus, unless otherwise stated in the Shelf Offering Report.
The Company’s shares are listed for trading on the NYSE American Stock Exchange. On April 15, 2024, the Company published a registration document for the trading of its shares on the Stock Exchange, in accordance with the provisions regarding dual listing under Chapter E3 of the Securities Law, 5728-1968 (the “Dual Listing Rules” and the “Securities Law”, respectively) and the regulations promulgated thereunder and as of April 21, 2024, the Company’s shares are also traded on the Stock Exchange in Israel. In accordance with the Dual Listing Rules, the Company’s ongoing reports are according to the law in the United States and in the English language and in accordance with the Dual Listing Rules.
1 Published on August 4, 2024 (reference: 2024-01-083038).
2 See the immediate report published by the Company on August 9, 2026 (Reference No.: 2026-02-074411).
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The Company prepared the Shelf Offering Report according to the rules of the United States Securities Act of 1933 (“Securities Act”) for a registration document on Form S-3 (“Form S-3”) in addition to the details required by the Shelf Offering Regulations, and the Shelf Offering Report (including the documents included therein by reference) that ostensibly adequately satisfies in all material respects the form requirements relevant to the Form S-3 registration documents under the Securities Act, the rules and regulations of the United States Securities and Exchange Commission (SEC) (the “U.S. Securities Commission”) in connection with this offering of the Offered Securities, except for those parts of the Shelf Offering Report which are in the Hebrew language and also except for the fact that the S-3 Form contained certain sections, exhibits and appendices that are not included in the Shelf Offering Report and are of a technical nature and/or are not material regarding an offer of securities to the public in Israel.
The Shelf Offering Report has not been submitted to the U.S. Securities and Exchange Commission and the Offered Securities offered pursuant to the Shelf Offering Report shall not be registered under the Securities Act or securities laws of any state of the United States or any other jurisdiction and shall not be offered or sold in the United States, or to the account or in favor of a U.S. Person as defined in Regulation S under the Securities Act (“Regulation S”). Notwithstanding the foregoing, it is noted that promptly following the publication of the Shelf Offering Report and as a condition to the listing for trading of the Series 2 Warrants, the Company will act to file with the U.S. Securities and Exchange Commission a Prospectus Supplement pursuant to which the shares to be issued upon the exercise of the Series 2 Warrants will be registered under the Securities Act.
The public offering according to the Shelf Offering Report, if made, will be made in Israel to residents of Israel and will not be made in the United States and/or for any person located in the United States or for anyone who is a U.S. Person, each according to its definition in Regulation S, and will be made in accordance with an exemption from American securities laws. The Company provided the Stock Exchange with the opinion of an American lawyer, according to which, subject to the assumptions, reservations and restrictions set forth in the opinion, it is not required to register the Offered Securities under the Securities Act for the purpose of offering and selling the Offered Securities in an offering in the manner described below, except with respect to the shares to be issued upon the exercise of the Series 2 Warrants as aforesaid.
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Any purchaser of the Offered Securities offered pursuant to the Shelf Offering Report shall be deemed to have presented, that he (or she) resides in Israel and is also a resident of Israel, that he (or she) is not a U.S. person as defined in Regulation S, that he (or she) is not acquiring the Offered Securities offered pursuant to the Shelf Offering Report for a person located in the United States, that he (or she) did not reside in the United States at the time they submitted the application to purchase the Offered Securities offered pursuant to this Shelf Offering Report and that he (or she) is not acquiring the Offered Securities offered with the intention of distributing said Offered Securities.
The distributors with whom the Company will enter into agreements, if any, for the distribution of the Offered Securities, including their related companies and anyone acting on their behalf, shall be deemed to have presented, that they will offer the Offered Securities in Israel to the residents of Israel only, and not to anyone who is a person located in the United States or a U.S Person, each as defined in Regulation S, and that they are not engaged in any “directed selling efforts” as such term is defined in Clause 920(c) of Regulation S. This offer is not part of a plan to evade registration requirements under US securities laws.
Pursuant to Rule 904 of Regulation S, the Offered Securities offered under the Shelf Offering Report may be resold in or through the facilities of the Stock Exchange (assuming that at the time of such resale, the Stock Exchange is a “designated offshore securities market”) as defined in Section 902(b) of Rule S without imposing any holding period or other restriction under the Securities Act or the rules promulgated thereunder, by any person other than the Company, the distributor, any affiliate company of theirs, or any person acting on behalf of any of the foregoing, as long as (a) the sale is made as an “offshore transaction” as defined in Rule 902(h) of Regulation S, so that the offer will not be made to a person located in the United States and the transaction is carried out in or through the facilities of the Stock Exchange, and neither the seller nor anyone acting on its behalf knows that the transaction was planned in advance with a buyer in the United States; and (b) the seller, any of its affiliate companies, and anyone acting on their behalf did not make any “directed selling efforts” (as defined in Rule 902(c) of Regulation S) in the United States.
No person is authorized to take any action in the United States in connection with the offer or sale of the Offered Securities offered pursuant to the Shelf Offering Report. The Company and the officers serving in the Company (and who will serve in it in the future) irrevocably undertake, inter alia, not to oppose the request of the trustee and/or the Offered Securities holders who will apply to the Israeli court to apply Israeli law regarding a compromise and settlement and insolvency, insofar as filed; not to turn on their own initiative to a court outside Israel in order to receive protection against a proceeding initiated by the trustee for the Bonds (Series D) and/or by the holders of the Offered Securities; not to object if the court in Israel wishes to apply Israeli law regarding compromise and settlement and insolvency; and not to raise claims against the local jurisdiction of the court in Israel in connection with proceedings filed by the trustee for the Bonds (Series D) and/or holders of the Offered Securities. In addition, the Company declares that to the best of its knowledge, there is no impediment under the law applicable to it or by virtue of its obligations towards third parties, that such proceedings will take place in Israel.
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| 1. | Offered Securities (Tender Number 1233527) |
| 1.1. | Bonds (Series D) |
| 1.1.1. | Up to NIS 80,000,000 par value of Bonds (Series D), registered in the Company’s name, of NIS 1 par value each, bearing annual interest at a fixed rate of 7.5% (the “Annual Interest Rate”), offered together with Warrants (Series 2) by way of a tender for the Unit Price, as set forth in Section 2 below. |
| 1.1.2. | The principal of the Bonds (Series D) is repayable in four unequal annual payments on June 30 of each of the years 2027 and 2028 and on December 31 of each of the years 2030 and 2031, such that the first payment on account of principal shall constitute 20% of the total par value of the Bonds (Series D), the second payment on account of principal shall constitute 25% of the total par value of the Bonds (Series D), the third payment on account of principal shall constitute 20% of the total par value of the Bonds (Series D), and the fourth and final payment on account of principal shall constitute 35% of the total par value of the Bonds (Series D). |
| 1.1.3. | Interest on the unpaid principal of the Bonds (Series D) shall be paid on December 31, 2026, and on June 30 and December 31 of each of the years 2027 through 2031 (inclusive), such that the first interest payment shall be made on December 31, 2026 and the last interest payment shall be made together with the final repayment of principal on December 31, 2031. Interest payments shall be made for the period of six months that ended on the day preceding the date of the relevant interest payment (the “Interest Period”), except for the first interest payment to be made on December 31, 2026, which shall be paid for the period commencing on the first clearing date following the Day of the Tender (i.e., the date on which the purchaser of the securities was charged the issuance consideration) (the “First Clearing Date”) and ending on the day before the date of said payment, i.e., December 30, 2026, to be paid according to the Annual Interest Rate and calculated according to the number of days in the said period and on a basis of 365 days per year. |
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It should be clarified that the semi-annual interest rate, excluding the first interest rate, will be the Annual Interest Rate divided by two (3.75%).
The First Clearing Date and the interest rate for the first Interest Period of the Bonds (Series D) will be detailed in the immediate report regarding the results of the issuance that will be published by the Company.
| 1.1.4. | The Bonds (Series D) will not be linked (principal and interest). |
Together with
| 1.2. | Series 2 Warrants |
| 1.2.1. | Up to 1,600,000 Series 2 Warrants of the Company, registered in the Company’s name and traded on the Stock Exchange, exercisable into up to 1,600,000 shares of common stock of par value $0.0001 each of the Company, on any trading day except on certain dates as specified in Section 5.2.3 below, commencing on the date of listing for trading on the Stock Exchange and until December 30, 2027 (inclusive) (the “Exercise Period” and the “End of the Exercise Period”, respectively), such that each Series 2 Warrant shall be exercisable into one common share of the Company of par value $0.0001, subject to the adjustments specified in Section 5.2.4 below (the “Exercise Shares”), against payment in cash of an exercise price of 46 NIS per Warrant, which is linked to the U.S. dollar exchange rate, as set forth below, and in any event, not less than the price of the Company’s common stock on the NYSE on the date of allotment of the Warrants (Series 2) (the “Exercise Price”).3 |
3 The exercise price of the Series 2 Warrant is approximately 9.32% higher than the closing price of the Company's share on the NYSE and approximately 14.83% than the closing price of the Company’s share on the TASE on September 10, 2026.
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The Exercise Price of the Warrants is linked to the Base Rate (as defined below), as set forth below:
| “US Dollar” | - | United States Dollar | |
| “Known Rate” | - | the last representative exchange rate of the US Dollar determined by the Bank of Israel; provided, however, that during any period in which the Bank of Israel does not customarily determine a representative exchange rate, the Known Rate shall be the rate most recently determined by the Minister of Finance together with the Governor of the Bank of Israel for government debentures linked to the US Dollar exchange rate. | |
| “Base Rate” | - | the last representative exchange rate of the United States Dollar published by the Bank of Israel at the end of September 10, 2026, being NIS 3.0230 per US$1. | |
| “Exercise Rate” | - | the Known Rate on the date of exercise of the Warrant. | |
| “Business Day” | - | a day on which most banks in Israel are open for the execution of transactions. | |
| “Exercise Date” | - | the date on which a notice of exercise is delivered to the Company, in the case of direct delivery, and in the case of delivery of an exercise notice through exchange members, the date on which the Clearing House of the Stock Exchange receives from the exchange member a notice regarding the exercise of a Warrant that fulfills all the conditions specified in the shelf offering report. For this purpose, a notice of exercise received by the Clearing House of the Stock Exchange after the hour prescribed in the by-laws of the Clearing House shall be deemed to have been received on the next trading day. |
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If, on any payment date of the exercise price, it is found that the Exercise Rate has changed compared to the Base Rate, the exercise price of the Warrants shall increase or decrease by a rate identical to the rate of increase or decrease of the Exercise Rate compared to the Base Rate; that is, no protection shall apply to the exercise price.
The aforesaid linkage method may not be changed throughout the entire exercise period of the Warrants.
| 1.2.2. | A Series 2 Warrant that is not exercised by the last exercise date shall expire and be null and void and shall confer no right or claim whatsoever upon its holder. |
| 1.2.3. | The economic value of each Series 2 Warrant is approximately NIS 6.081. The said economic value was calculated in accordance with the calculation formula in the Stock Exchange guidelines and based on the Black-Scholes model, according to the following data: (a) the underlying asset price for the purpose of calculating the Warrants is NIS 40.06 (the closing price of the Company’s shares on September 10, 2026); (b) the Exercise Price of the Series 2 Warrant is NIS 46; (c) annual standard deviation (calculated weekly) – 41.608%; and (d) the USD interest rate in accordance with the discount factors circular published by the Stock Exchange on September 10, 2026 is 3.7%. |
| 1.3. | The offer of the Offered Securities pursuant to the Shelf Offering Report is not underwritten. |
| 2. | The manner of offering the securities |
| 2.1 | The Offered Securities are offered to the public in a uniform offering in accordance with the Securities Regulations (Manner of Offering Securities to the Public), 5767-2007 (the “Manner of Offering Regulations”), in 80,000 units (“Units”), by way of a tender on the Unit Price, which shall not be less than NIS 997 (the “Minimum Price” or the “Minimum Unit Price”). The composition of each Unit and its price is as follows: |
| NIS 1,000 par value Bonds (Series D) | NIS 997 | |
| 20 Series 2 Warrants | No consideration | |
| Total price per Unit | NIS 997 |
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| 2.2 | Tender on the Unit Price |
| 2.2.1. | List of signatures |
| 2.2.1.1. | The tender for the purchase of the Units will open on September 15, 2026 (the “Day of the Tender” or “Application Submission Date”), at 9:30 a.m. and will close on the same day at 4:30 p.m., provided that at least 7 hours, of which at least 5 are trading hours, have passed since the publication of the Shelf Offering Report (the “Closing Date of the List of Signatures”). |
| 2.2.1.2. | The Company may cancel the offer at any time before receiving the issuance funds from the investors, without the investors having any claim in connection therewith. In such a case, all bids given to the Company in connection with that offer shall be deemed null and void. |
| 2.2.2. | Submission of applications and tender procedures |
| 2.2.2.1. | The applications to purchase the Units must be submitted to the Company, on forms that are standard for this purpose4, through Eximus Capital Markets Ltd. (the “Issuance Coordinator”), directly or through bank branches or through other members of the Stock Exchange (“Authorized to Receive Applications”), no later than the Closing Date of the List of Signatures | |
| Any application submitted to someone Authorized to Receive Applications on the Day of the Tender will be considered to have been submitted on that day if received by someone Authorized to Receive Applications until the Closing Date of the List of Signatures, provided that it is transferred by someone Authorized to Receive Applications to the Issuance Coordinator, and will be received by the Issuance Coordinator until the end of half an hour from the Closing Date of the List of Signatures, that is, until 5:00 pm (the “Deadline for Submission to the Coordinator”). An application received by the Stock Exchange members after the Closing Date of the List of Signatures or received by the Issuance Coordinator more than half an hour after the Closing Date of the List of Signatures, will not be answered by the Company. |
4 Which can be received by those Authorized to Receive Applications through the Issuance Coordinator or through bank branches or other members of the Stock Exchange.
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| 2.2.2.2. | Each applicant may submit up to three applications at different Unit Prices, which shall not be lower than the Minimum Unit Price, provided that the Unit Prices offered by it shall be quoted in increments of NIS 0.05, such that the first increment at which it is possible to request to purchase Units above the Minimum Unit Price shall be NIS 997.05, and thereafter Units may be ordered at a price of NIS 997.10, NIS 997.15, and so on (the “Price Brackets”). | |
| The unit price stated in the offer that is not equal to one of the Price Brackets shall be rounded down to the nearest Price Bracket. |
| 2.2.2.3. | Each applicant shall state in its application the number of Units it wishes to purchase, as well as the offered Unit Price, which shall not be lower than the Minimum Unit Price. An application in which a Unit Price lower than the Minimum Unit Price was offered shall be void and shall be deemed not to have been submitted. |
| 2.2.2.4. | Subject to any law, the applications to purchase the Units are irrevocable. Any application shall be deemed an irrevocable undertaking on the part of the applicant to receive the securities allocated to him as a result of full or partial acceptance of his application and to pay through the Issuance Coordinator the full price, according to the terms of the Prospectus and this Shelf Offering Report, of the securities allocated to him due to acceptance according to the terms of the Prospectus and this Shelf Offering Report at his request. |
| 2.2.2.5. | Applications may only be submitted for whole Units. An application submitted regarding any part of a Unit shall be deemed to be an application submitted regarding the number of complete Units specified in it only and the part of the Unit that appears in the application shall be deemed not to have been included in it in the first place. An application in which the number of Units specified in it is less than one Unit will not be accepted. |
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| 2.2.2.6. | Any application that specifies a quantity of ordered Units higher than the amount offered according to this Shelf Offering Report shall be deemed an application that stated the amount offered according to this Shelf Offering Report. |
| 2.2.2.7. | Those Authorized to Receive Applications shall be responsible and liable towards the Company and the Issuance Coordinator for the full payment of the consideration due to the Company in respect of applications submitted through them and which were fully or partially accepted. |
| 2.2.2.8. | “Applicant” or “Bidder” - together with his family member who lives with him, including a classified investor with whom the Company contracted, who gave a prior commitment to purchase Units as detailed in the Shelf Offering Report. |
| 2.2.2.9. | Interested parties in the Company will be entitled to submit orders for the purchase of Units offered to the public according to this Shelf Offering Report. |
| 2.2.2.10. | The applications will be forwarded by those Authorized to Receive Applications to the Issuance Coordinator by transmitting the applications to the Issuance Coordinator digitally, via a virtual vault. In addition, applications submitted directly to the Issuance Coordinator will be stored in a virtual vault. In addition, as a backup, the applications can be transferred in closed envelopes which will be kept closed until the Deadline for Submission to the Coordinator has elapsed. The closed envelopes will be placed in a closed box together with the applications submitted directly to the Issuance Coordinator, until the Deadline for Submission to the Coordinator has elapsed. |
| 2.2.2.11. | On the Day of the Tender after the deadline for submitting bids to the Issuance Coordinator the applications in the vaults, including applications submitted directly to the Issuance Coordinator, will be presented in the presence of the Company’s representative and its accountant who will supervise the proper observance of the tender procedures and at that time the results of the tender will be agreed upon and processed. |
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| 2.2.2.12. | On the first clearing Date, no later than 10:00, the Issuance Coordinator shall provide notice to the Applicants whose applications have been fully or partially accepted, through those Authorized to Receive Applications. The notice shall indicate the unit price set forth in the tender, the number of Units to be allocated to the Applicant and the consideration due from them for them. Upon receipt of the notice and on the same day until 12:30 pm, the Applicants will transfer, through those Authorized to Receive Applications, to the Issuance Coordinator, to the special account as defined in section 2.2.4 below, the full consideration due from them in respect of the Units for which their application was accepted as stated in the aforementioned notice. |
| 2.2.2.13. | On the first clearing day, the Company will notify the Israel Securities Authority and the Stock Exchange of the results of the tender. |
| 2.2.3. | Determining the unit price in the tender and the manner of allocating the Units to the Applicants | |
| All the Units for which applications to purchase are accepted shall be issued at a uniform Unit Price (the “Uniform Price”), which shall be the highest price at which the applications for Units stating such price per Unit, together with applications stating higher Unit Prices, will be sufficient to allocate all Units offered to the public (including the Classified Investors) under the offering report. | ||
| The allocation of the Units will be done as follows: |
| 2.2.3.1. | If the total number of Units included in the applications received (including Units that applications to purchase them were received from classified investors as stated in section 3 below) is less than the total number of Units offered according to the offering report, all the applications will be accepted in full, subject to the fulfillment of the requirements of the Stock Exchange guidelines as 9.2 below. In such a case, the Uniform price will be the minimum unit price. The remaining Units for which no applications were received, will not be issued. |
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| 2.2.3.2. | If the total number of Units included in the applications received (including Units whose applications to purchase will be received from classified investors as stated in section 3 below) will be equal to or exceed the total number of Units offered to the public, all Units offered to the public shall be issued as follows: |
| (1) | Applications that state a Unit Price lower than the Uniform Price shall not be accepted. |
| (2) | Applications that indicate a unit price higher than the Uniform Price - shall be accepted in full. |
| (3) | Applications (excluding applications received from Classified Investors) stating a price equal to the Uniform Price shall be accepted on a pro rata basis, so that each Applicant shall receive from the total Units offered that remain for allocation after acceptance of applications stating a higher price than the Uniform Price (after deducting the acceptance of the applications of the Classified Investors, who will order at the Uniform Price), a share equal to the ratio between the number of Units ordered in the application in which the Uniform Price was stated and the total number of Units included in all applications submitted to the Company in which the Uniform Price was stated (after deducting the share of the Classified Investors as stated in Section 3 below). | |
| (4) | The allocation to the classified investors shall be as specified in section 3 below. |
| 2.2.3.3. | If the allocation as stated in 2.2.3.2 above does not lead to the fulfillment of the minimum dispersion requirements of the Bonds (Series D), as stated in section 9.2.2 below will be canceled and the allocation of the Units will be done as follows: |
| (1) | Applications that state a Unit Price lower than the Uniform Price shall not be accepted. |
| (2) | Applications stating a Unit Price higher than the Uniform Price shall be accepted in full. |
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| (3) | Applications (including applications submitted by Classified Investors) stating a Unit Price equal to the Uniform Price shall be accepted on a pro rata basis, so that each Applicant shall receive from the total Units offered to the public that remain for allocation after acceptance of applications stating a Unit Price higher than the Uniform Price, a share equal to the ratio between the number of Units ordered at the Uniform Price and the total number of Units for which applications to purchase at the Uniform Price were submitted to the Company (including Units in respect of which commitments of Classified Investors were received as stated in Section 3 below). |
| 2.2.3.4. | If the allocation as stated in section 2.2.3.3 above does not result in compliance with the Minimum Dispersion requirements of the Bonds (Series D), then the allocation of the Units will be made as follows: |
| (1) | Applications that state a stating a Unit Price lower than the Uniform Price shall not be accepted. |
| (2) | Applications (including applications submitted by Classified Investors in accordance with their prior commitment as stated in Section 3 below) stating the Uniform Price and/or a price higher than it shall be accepted on a pro rata basis, so that each Applicant shall receive, out of the total number of Units offered, a number equal to the ratio between the number of Units ordered at the Uniform Price and/or at a price higher than it and the total number of applications stating the Uniform Price and/or a price higher than it that were submitted to the Company (including Units in respect of which commitments of Classified Investors were received). |
| 2.2.3.5. | If the allocation as stated in Section 2.2.3.4 above does not result in compliance with the minimum dispersion requirements of the Bonds, a reallocation shall be carried out for the purpose of determining a new uniform Unit Price, which shall not be lower than the Minimum Unit Price and which shall be the highest Unit Price at which the offered Units may be allocated so as to satisfy the minimum dispersion requirements, provided that no Applicant shall be allocated a number of Units higher than the number it ordered or at a Unit Price higher than that specified in its application (the “New Uniform Price”). |
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| If such a new Uniform Price is determined, the allocation shall be made in accordance with Section 2.2.3.4 above, and wherever the “Uniform Price” appears, it shall be deemed to read the “New Uniform Price.” | ||
| 2.2.3.6. | If the allocation as set forth in Section 2.2.3.5 above also does not result in the fulfillment of the Minimum Dispersion requirements of the Series D Bonds, Section 2.2.4.4 below shall apply. |
| 2.2.3.7. | If fractional Units are created in the allocation of the Securities pursuant to the acceptance of applications in the tender, as described above, such fractional Units shall be rounded, to the extent possible, to the nearest whole Unit. Any excess Units remaining as a result of such rounding shall be purchased by the Issuance Coordinator at the price per Unit determined as set forth above. |
| 2.2.3.8. | Each Applicant shall be deemed to have undertaken in its application to purchase all Units allocated to it as a result of the full or partial acceptance of its application, in accordance with the rules set forth above. |
| 2.2.4. | Special Account, Bond Certificate and Allocation Letter |
| 2.2.4.1. | Shortly before the Tender date, the Issuance Coordinator shall approach The Tel Aviv Stock Exchange Clearing House Ltd. (the “TASE Clearing House”) with a request to open a special designated account for clearing the offering in the name of the TASE Clearing House with a banking corporation (the “Special Account”), and shall notify the Authorized to Receive Applications that the TASE Clearing House is the clearing agent for the offering. The Special Account shall be administered exclusively by the Issuance Coordinator in the name of and for the benefit of the Company, in accordance with the provisions of the Securities Law. |
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| 2.2.4.2. | On the first clearing day, by 10:30 p.m., the Authorized to Receive Applications shall authorize the TASE Clearing House to debit all amounts paid in respect of the securities for which purchase applications were accepted in accordance with the terms of the offering report, and the offering coordinator shall handle such amounts and act in accordance with the terms of the offering report.. |
| 2.2.4.3. | If the Minimum Dispersion requirements and/or the Public Holdings Value requirements, as set forth in Section 9.2 below and the provisions of Section 9.3 shall apply with respect to the Warrants (Series 2), are satisfied, then no later than 12:30 p.m. on the first trading day following the fulfillment of the conditions as aforesaid, the Issuance Coordinator shall transfer to the Company shall transfer to the Company, or to whomever the Company directs the issuance consideration, together with any proceeds accrued thereon, all as detailed in this report, against the delivery of the bond certificate in respect of the Bonds to be allocated and the allocation letters in respect of the Series 2 Warrants to be allocated pursuant to this report, to The Tel Aviv Stock Exchange Nominee Company Ltd. (the “Nominee Company”). |
| 2.2.4.4. | If, upon summarizing the Day of the Tender, it is found that the Minimum Dispersion requirements and/or the Public Holdings Value requirements, as set forth in Section 9.2 below, have not been satisfied, the issuance of the Units to the public shall be canceled and no funds shall be collected from the Applicants. | |
| If the Company accepts an application, in whole or in part, the Company shall allocate to the Applicants the Bonds (Series D) and Series 2 Warrants included in the Units in respect of which the application to purchase was accepted, as stated in Section 2.2.4.3 above - by sending a bond certificate and an allocation letter, as applicable, to the Nominee Company against the transfer of the funds deposited in the Special Account by the Issuance Coordinator to the Trustee, as aforesaid, provided that the allocation shall not be made before the Issuance Coordinator has confirmed that the Stock Exchange requirements have been fully satisfied, as stated in Section 9.2 below. |
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| 3. | Classified Investors |
The Company entered into an early engagement with classified investors, as defined in section 1 of the Manner of Offering Regulations (the “Classified Investors”) in5 relation to some of the Units offered to the public as part of this Shelf Offering Report and received a commitment from those classified investors to submit orders as part of the tender, as detailed below:
| 3.1 | Of the Units offered to the public, with respect to 51,143 Units, which constitute approximately 63.9% of the total Units offered in this Shelf Offering Report, early commitments were given to purchase them from Classified Investors whose names are detailed in Section 3.3 below, according to which the Classified Investors will submit applications in the tender to purchase Units at the interest rate and in the quantities specified in Section 3.3 below. |
“Oversubscription” - the ratio between the number of Units for which orders were submitted at the Uniform Price to be determined in the tender and the amount remaining for allocation (as defined below), provided that it is greater than one; “The Amount Remaining for Allocation” means the number of Units offered in the tender at the Unit Price pursuant to the Shelf Offering Report, after deducting the number of Units for which orders were submitted at a Unit Price higher than the Uniform Price to be determined in the tender.
| 3.2 | According to the Manner of Offering Regulations, in the event of Oversubscription, the allocation to Classified Investors will be as follows: |
| 3.2.1 | If there was an Oversubscription of up to 5 times the number of Units offered to the public, each Classified Investor will be allocated 100% of the amount he undertook to purchase. If there was an Oversubscription of more than 5 times the amount offered to the public, each Classified Investor will be allocated 50% of the amount he undertook to purchase. | |
| 3.2.2 | If the amount of units left for distribution is not sufficient for allocation, as stated in section 3.2.1 above, then the Amount Left for Distribution will be allocated to Classified Investors according to the relative share of any prior undertaking out of the total early undertakings submitted at the same unit price. |
5 "Classified Investor" - one of the following: (1) a portfolio manager as defined in section 8(b) of the Consultancy Law, who purchases at his discretion on a client's account; (2) a corporation wholly owned by one or more Classified Investor, who buys for himself or another Classified Investor; (3) an investor listed in section 15a(b) (2) of the Securities Law; or (4) an investor listed in items (1) to (9) or (11) in the First Addendum to the Securities Law, who buys for himself. In addition, a Classified Investor must undertake to purchase securities in the issuance at a scope of at least NIS 800,000.
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Orders of the Classified Investors will be considered as orders submitted by the public for the purpose of determining the Uniform Price.
In the event that there is no Oversubscription, the orders of the Classified Investors in the framework of the tender will be considered as orders submitted by the public for the purpose of distributing the securities to the customers.
The allocation to the Classified Investors will be at the Uniform Price as determined in the tender.
| 3.3 | Each of the Classified Investors listed below undertook as part of an early commitment to purchase the securities offered according to this Shelf Offering Report, to submit applications to purchase Units at a Unit Price that shall not be lower than that specified below: |
| The name of the investor | How
it meets the definition of a classified investor |
Unit Price | Units | |||
| Agility Strategies LP | Corporation with equity of NIS 50 million | 1,015 | 3,000 | |||
| Alpha Bonds L.P. | Corporation with equity of NIS 50 million | 1,000 | 2,500 | |||
| HAZAVIM BOND LP | Corporation with equity of NIS 50 million | 997.5 | 1,250 | |||
| Agility Bond Limited Partnership | Corporation with equity of NIS 50 million | 1,015 | 2,000 | |||
| Ayalon Mutual Funds Ltd. | Mutual fund | 997 | 7,288 | |||
| Altshuler Shaham Netz Limited Partnership | Corporation with equity of NIS 50 million | 1,010 | 1,000 | |||
| Altshuler Shaham Netz Limited Partnership | Corporation with equity of NIS 50 million | 1,004 | 1,000 | |||
| Altshuler Shaham Netz Limited Partnership | Corporation with equity of NIS 50 million | 1,001 | 1,000 | |||
| Almogim Holdings Ltd. | Corporation with equity of NIS 50 million | 1,005 | 1,000 | |||
| First International Bank of Israel Ltd. | Bank | 1,006 | 3,500 | |||
| Hazavim Limited Partnership | Corporation with equity of NIS 50 million | 1,000.5 | 850 | |||
| Hazavim Limited Partnership | Corporation with equity of NIS 50 million | 997.5 | 1,500 | |||
| Unique Investments and Fintech Limited Partnership | Corporation with equity of NIS 50 million | 1,021 | 2,400 | |||
| Sigma Mutual Funds Ltd. | Mutual fund | 1,013 | 10,000 | |||
| Sigma Mutual Funds Ltd. | Mutual fund | 1,006 | 1,000 | |||
| Pontifax Bond L.P. | Corporation with equity of NIS 50 million | 1,010 | 2,000 | |||
| Pontifax Opportunities L.P. | Corporation with equity of NIS 50 million | 1,010 | 2,500 | |||
| Portfolio I Limited Partnership | Corporation with equity of NIS 50 million | 1,010 | 1,000 | |||
| Portfolio I Limited Partnership | Corporation with equity of NIS 50 million | 1,007.5 | 1,000 | |||
| Portfolio I Limited Partnership | Corporation with equity of NIS 50 million | 1,002.5 | 1,000 | |||
| Fidelity Venture Capital Ltd. | Corporation with equity of NIS 50 million | 1,030 | 1,555 | |||
| R.Y.L Spirit Management and Investments Ltd. | Corporation with equity of NIS 50 million | 1,010 | 800 | |||
| Shekef Investments in Maof Ltd. | Portfolio manager | 1,004 | 2,000 | |||
| Total | 51,143 | |||||
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| 3.4 | Obtaining early commitments from the Classified Investors on the eve of publication of the Shelf Offering Report, was done in accordance with the principles set forth in sections 4 and 5 of the Manner of Offering Regulations. |
| 3.5 | The Classified Investors who have undertaken an early commitment as set forth above, shall be entitled to order Units in an amount exceeding that specified in their early commitment, however the excess units ordered shall not be considered as part of the applications of Classified Investors for the purpose of this Shelf Offering Report, but as applications submitted by the public for all intents and purposes. |
| 3.6 | The consideration to be paid by the Classified Investors shall be transferred to the Issuance Coordinator through those Authorized to Receive Applications on the first clearing day until 12:30 p.m. and shall be deposited by him in the Special Account as stated in section 2.2.4.1 above. |
| 3.7 | The Classified Investors will be entitled to an early commitment fee of 0.5% of the total consideration for the Units in respect of which the Classified Investors undertook to submit applications. |
| 3.8 | In accordance with the Manner of Offering Regulations, a Classified Investor who undertook an early commitment as specified above, shall be entitled, on the Day of the Tender, to increase the unit price that he stated in his early commitment as stated above (in the margins specified in section 2.2.2.2 above) by delivering a written notice to the Issuance Coordinator, which will be received by the Issuance Coordinator until the Closing Date of the List of Signatures. |
| 4. | Company capital details |
| 4.1. | As of the date of this Shelf Offering Report, the authorized share capital of the Company consists of 500,000,000 shares of common stock and 100,000,000 shares of preferred stock. |
| 4.2. | Shortly prior to the date of the Shelf Offering Report, the Company’s issued and fully paid share capital consists of 14,364,225 shares of common stock. |
In addition to the above, as of the date of this Shelf Offering Report, the Company has (a) 41,769,041 rights to shares (OP Units); (b) 961,975 shares of common stock that the Company may issue under its compensation plan for employees, directors, officers, consultants, service providers and other parties (the “Incentive Plan”); and (c) 2,583,442 traded Series 1 Warrants.
The issued and paid-up share capital of the Company immediately after the offering pursuant to this Shelf Offering Report, assuming full dilution (i.e., assuming the exercise of 2,583,442 Series 1 Warrants and all of the publicly issued Series 2 Warrants), shall be 18,547,667 shares of common stock.6
6 Assuming the purchase of the full amount issued to the public as, meaning 80,000,000 NIS par value Series D Bonds together with 1,600,000 Series 2 Warrants ("Amount Issued to the Public").
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| 4.3. | The shares that will result from the exercise of all of the publicly issued Series 2 Warrants offered pursuant to this Shelf Offering Report shall constitute approximately 11.1% of the Company’s issued and paid-up share capital and approximately 8.6% of the Company’s issued and paid-up share capital on a fully diluted basis. |
It should be noted that the Company has entered into an At Market Issuance Sales Agreement (ATM) for the sale of shares of common stock, pursuant to which, shortly prior to the date of publication of this report, the Company may sell 13,609,696 shares of common stock thereunder (based on the last closing price of the Company’s shares on the NYSE on September 10, 2026 (US$ 13.92 per share)).
| 4.4. | Stock Exchange prices of the Company’s shares |
Below are data regarding the highest and lowest Stock Exchange prices of the Company’s shares of common stock during the period commencing on April 18, 2024 (the Company’s listing for trading), during 2025, and during the period commencing on January 1, 2026 until shortly before the date of publication of this Shelf Offering Report:7
| Period | Low price (ag’) | High price (ag’) | ||||||
| Price | Date | Price | Date | |||||
| April 18, 2024 - December 31, 2024 | 2,838.85 | 21.4.2024 | 5,143.57 | 7.11.2024 | ||||
| 2025 | 3,273.04 | 24.7.2025 | 4,487.68 | 16.3.2025 | ||||
| January 1, 2026 - September 10, 2026 | 3,531.96 | 7.5.2026 | 4,633 | 14.8.2026 | ||||
The adjusted closing price on the Stock Exchange of the Company’s shares on September 10, 2026 was 4,006 agorot per share.
7 If the share price was identical on several different days, an arbitrary date among such days was selected.
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| 5. | The Trustee and other terms of the Offered Securities |
| 5.1. | The Trustee and other terms of the Bonds (Series D). |
| 5.1.1. | The Trustee |
On September 14, 2026, the Company contracted with Mishmeret - Trustee Services Company Ltd. in a Deed of Trust for the holders of the Bonds (Series D), which is attached as Appendix A to the Shelf Offering Report (the “Trustee” and the “Deed of Trust”, respectively). The Trustee’s contact details - Address: 48 Menachem Begin Rd., Tel Aviv 6618001; Phone: 03-6374352; Fax: 03-6374344; Contact person on behalf of the Trustee: Rami Sabati, CPA, [email protected].
| 5.1.2. | Payments |
| 5.1.2.1. | Regarding the principal and interest payments of the Bonds (Series D), the effective date for their payment and the manner of payment, see Section 3 of the terms listed overleaf in the First Addendum to the Deed of Trust (the “Overleaf Terms”). The last payment of principal and interest shall be made on December 31, 2031, against the delivery of the certificates of the Bonds (Series D) to the Company on the date of payment, at the Company’s registered office or in a different place notified by the Company. The Company’s notice as aforesaid shall be delivered no later than five business days before the date of the last payment. |
| 5.1.2.2. | Regarding interest in arrears in case of a delay exceeding 7 days from the effective date for payment on account of the principal and/or interest, according to the bond, for reasons dependent on the Company, see section 4(a) of the Overleaf Terms. |
| 5.1.2.3. | Any payment for the Bonds (Series D) will be deducted from any compulsory payment as required by law, as specified in Section 6 below. |
| 5.1.3. | Additional undertakings |
For details regarding the Company’s obligations towards the bond holders, including obligations to comply with financial conditions (including a distribution limit), see sections 5 and 6 of the Deed of Trust.
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| 5.1.4. | Adjustment of the interest rate |
For details regarding the mechanism of adjustment of the interest rate to be borne by the Bonds, as a result of a change in rating and/or as a result of non-compliance with financial covenants, see sections 5.3 and 5.4, respectively, of the Deed of Trust.
| 5.1.5. | Early redemption |
For details regarding early redemption of the Bonds, at the initiative of the Stock Exchange, and/or at the initiative of the Company, see section 7 of the Deed of Trust.
| 5.1.6. | Partnership’s Undertaking as Co-Borrower |
Strawberry Fields Realty LP, a limited partnership incorporated in the State of Delaware, USA, which directly holds all of the issued share capital of the Subsidiary and in which the Company is the general partner and holds approximately 25.3% of the partnership units (the “Partnership”), has joined the Deed of Trust as a co-borrower together with the Company. For details, see Section 5.2 of the Deed of Trust.
For U.S. federal income tax purposes, and for other tax purposes as applicable, the Company and the Partnership intend to treat the Partnership as the borrower of the Bonds (Series D), and any payments made or received by the Company as described in this document shall be deemed, for such purposes, to have been made or received by the Company on behalf of the Partnership.
| 5.1.7. | Guarantee |
In order to secure the full undertakings of the Company under the Deed of Trust for the Bonds, the Subsidiary, Strawberry Fields REIT Limited, which is a reporting corporation (as defined in the Securities Law) (the “Subsidiary”), provided a guarantee unlimited by amount in favor of the Trustee and the holders of the Bonds (Series D) (in this Section: the “Guarantee”). It should be noted that the letter of guarantee in respect of such Guarantee is attached as Appendix 6.2 to the Deed of Trust.
It is noted that the Company may, at any time, announce by immediate report the expiration of the guarantee, provided that it receives prior confirmation from the rating agency that the rating in effect immediately prior to the cancellation of the Subsidiary’s guarantee will not be downgraded as a result thereof (the “Rating Agency Confirmation”). In such case, as of the date of the Rating Agency Confirmation, the Subsidiary’s guarantee shall expire immediately and automatically and, as of such date, shall be null and void, without requiring the consent of the holders of the Series D Bonds and/or the Trustee.
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| 5.1.8. | Immediate repayment |
The Bonds (Series D) can be placed for immediate repayment in the cases described in Section 8 of the Deed of Trust.
| 5.1.9. | Rating |
| 5.1.9.1. | On August 26, 2026, S&P Global Ratings Maalot Ltd. (“Maalot”) announced a rating of ilA+ for the Company’s Bonds (Series D), by way of issuance of a new series, in an amount of up to NIS 150 million par value. For the rating report, see the immediate report dated August 26, 2026 (reference: 2026-15-080182), the detailed information of which is incorporated herein by reference. |
| 5.1.9.2. | On September 14, 2026, Maalot gave its consent to attach the rating report and its update, including by way of reference, to the Shelf Offering Report. Maalot’s said consent is attached as Appendix B to the Shelf Offering Report. |
| 5.1.10. | For the full terms of the Bonds (Series D), see the Deed of Trust, which, as stated above, is attached as Appendix A to the Shelf Offering Report. |
| 5.1.11. | In any case of contradiction between the Deed of Trust and the provisions described in the Shelf Offering Report in connection with the Deed, the provisions of the Deed of Trust shall prevail, all subject to the regulations and the instructions of the Stock Exchange. |
| 5.2. | Additional Terms of the Offered Series 2 Warrants |
| 5.2.1. | The shares that will be issued upon the exercise of the Series 2 Warrants (the “Exercise Shares”) shall rank pari passu with the existing shares in the Company’s capital and shall entitle their holders to receive in full any dividends or bonus shares declared (if any), and any other distribution declared or made by the Company (if any), the record date for which is after the exercise date of the Series 2 Warrants. With respect to the rights attached to the existing shares of common stock in the Company’s capital, see the Company’s organizational documents published on April 15, 2024, and the registration statement published on April 18, 2024 (reference nos. 2024-02-037714 and 2024-02-037597, respectively). |
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| 5.2.2. | The Series 2 Warrants and the shares that will be issued upon exercise of the Warrants shall be registered in the Company’s securities register in the name of the nominee company. |
| 5.2.3. | The Series 2 Warrants shall not be exercisable on the record date for a bonus share distribution, dividend distribution, rights offering, share consolidation, share split or capital reduction (each of the foregoing, a “Company Event”). It is further clarified that where the ex-date of a Company Event falls before the record date of such Company Event, no conversion shall be made on such “ex-date”. |
| 5.2.4. | Adjustments. | |
| From the date of listing for trading of the Series 2 Warrants until the last exercise date of the Series 2 Warrants, the following provisions shall apply to Series 2 Warrants that have not yet been exercised: |
| 5.2.4.1. | Adjustment due to the distribution of bonus shares. If, during the period in which the right to exercise the Series 2 Warrants exists, the Company distributes bonus shares, the rights of the holders of the Series 2 Warrants shall be preserved, such that the number of Exercise Shares to which a warrant holder will be entitled upon exercise shall increase or decrease by the number of shares of the same class to which the warrant holder would have been entitled as bonus shares had the warrant been exercised up to the trading day preceding the ex-date. The exercise price of each warrant shall not change as a result of the addition of such shares. In the event of an adjustment under this subsection, the applicant shall not be entitled to receive a fraction of a whole share, and the provisions of Section 5.2.7.7 below shall apply. This adjustment method is irrevocable. In the event of a bonus share distribution, the Company shall issue an immediate report regarding the adjusted exercise ratio before trading opens on the day the shares trade ex-bonus. |
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| 5.2.4.2. | Adjustment due to a rights offering. If, during the period in which the right to exercise the Series 2 Warrants exists, the Company offers to its shareholders, by way of rights issuance, rights to purchase any securities, the number of shares resulting from the exercise of the unexercised Series 2 Warrants up to such date shall be adjusted to reflect the rights benefit component, as expressed in the ratio between the closing price of the share on the Stock Exchange on the last trading day before the ex-date and the base price of the share on the ex-rights date. This adjustment method is irrevocable. In the event of a rights offering, the Company shall issue an immediate report regarding the adjusted exercise ratio before trading opens on the day the shares trade ex-rights. |
| 5.2.4.3. | Adjustment for dividend distribution |
If, during the period in which the right to exercise the Series 2 Warrants exists, the Company declares a dividend, as defined in the Companies Law, 5759-1999, to the holders of the Company’s shares of common stock, and the record date entitling such holders to receive it (the “Dividend Record Date”) precedes the exercise date of the Series 2 Warrants, then the exercise price shall be multiplied by the ratio between the base price “ex-dividend” and the closing price of the share on the Stock Exchange on the last trading day before the ex-dividend date. This adjustment method is irrevocable. In the event of a dividend distribution, the Company shall issue an immediate report regarding the adjusted exercise price before trading opens on the day the shares trade ex-dividend.
| 5.2.5. | Various provisions for protecting warrant holders during the exercise period. |
From the date of the Shelf Offering Report with respect to the Warrants and for so long as all the Warrants have not been exercised or have not expired under the terms of the Shelf Offering Report, as applicable, but in any event no later than the end of the exercise period, the following provisions shall apply for the protection of warrant holders:
| 5.2.5.1. | The Company shall maintain a sufficient number of shares of common stock in its authorized capital to secure the exercise right of the warrant holders and, if necessary, shall cause its authorized capital to be increased. |
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| 5.2.5.2. | If the Company consolidates the shares of common stock in its issued capital or subdivides them, the number of Exercise Shares to be issued upon exercise of the Warrants, as applicable, shall be reduced or increased, as the case may be, following such action. In such case, the warrant holder shall not be entitled to receive a fraction of a whole share, and any resulting fractional shares shall be treated as the Board of Directors of the Company deems appropriate. |
| 5.2.5.3. | The Company shall refrain from distributing bonus shares if such distribution would result in the issuance of Exercise Shares at a price below thirty (30) agorot or the par value of the Exercise Shares, whichever is higher. |
| 5.2.5.4. | No later than three (3) weeks and no earlier than four (4) weeks prior to the end of the exercise period, the Company shall publish an immediate report regarding the expiration of the exercise period of the Warrants. The immediate report shall also state that the exercise right will cease after the end of the exercise period of the Warrants and that after such date the Warrants shall be void and of no effect. In the event of an extension of the exercise period, which shall be made sufficiently in advance, the Company shall publish an immediate report at the beginning of the month in which the additional exercise period ends. |
| 5.2.5.5. | The Company shall not adopt a resolution and shall not announce any dividend distribution or bonus shares or rights offering for the purchase of securities where the record date for entitlement thereto precedes the date of the resolution, and the record date shall be no less than six (6) trading days after the resolution or announcement, as applicable. |
| 5.2.5.6. | In the event of a resolution to effect a voluntary liquidation, the Company shall publish an immediate report to that effect and shall also publish a notice in two (2) daily newspapers circulated in Israel in Hebrew. Each warrant holder shall be entitled, within three (3) months from the date of the notice, to notify the Company in writing that it wishes to be deemed to have exercised its Warrant immediately before the resolution was adopted. In such case, such warrant holder shall be entitled to receive an amount equal to the amount that would have been payable to it upon liquidation had it been a shareholder as a result of the exercise of the Warrant held by it, prior to the resolution for liquidation, less the exercise price. |
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| 5.2.6. | Notices of exercise of the Warrants |
The registered owners of the Warrants shall be entitled during the exercise period to exercise their rights under the Warrants to purchase the Exercise Shares and receive them by allocation in consideration for payment in cash of the exercise price, subject to the following conditions:
| 5.2.6.1. | Each holder of a Warrant (the “Applicant”) who wishes to exercise its right to purchase the Exercise Shares to which it is entitled shall submit, through the banks and other stock exchange members if it is an unregistered holder, or directly (if it is registered in the register of warrant holders), in the manner described below, a written request in a form to be determined by the Company (the “Exercise Notice”), together with the allocation letters for the Warrants to which the request relates and the cash amount equal to the exercise price for each Warrant whose exercise is requested. The number of shares to which a holder of each Warrant will be entitled to purchase for the exercise price shall be adjusted in accordance with the provisions of Section 5.2.4 above. |
| 5.2.6.2. | The exercise date shall be deemed to be the date on which the Exercise Notice is delivered to the Company, in the case of direct delivery, and, in the case of delivery of an Exercise Notice through stock exchange members, the date on which the stock exchange clearing house receives from the stock exchange member notice of the exercise of the Warrant, which meets all of the conditions specified in the Shelf Offering Report (the “Exercise Date”). |
| 5.2.6.3. | The Applicant shall sign, at any time requested by the Company, any additional document required under any law and the Company’s bylaws in order to give effect to the allocation of the Exercise Shares. |
| 5.2.6.4. | The Board of Directors of the Company is authorized to empower any person it deems fit to sign on behalf of and for the Applicant any document required for the allocation of the Exercise Shares. |
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| 5.2.6.5. | If the Applicant has not fully complied with all of the conditions for exercise of the Warrant, and such deficiency cannot be remedied by a person appointed by the Board of Directors as aforesaid, the Exercise Notice shall be deemed void, and the warrant allocation letters and funds attached to the Exercise Notice shall be returned to the Applicant within two (2) business days from the time the Company determined that the notice was void. |
| 5.2.6.6. | An Exercise Notice may not be revoked or amended. No right shall be granted to exercise partial Warrants, but a warrant allocation letter may be split, transferred or waived as set forth in Section 5.2.9 below. |
| 5.2.6.7. | If the last day of the exercise period for the Warrants falls on a day that is not a trading day, the date shall be deferred to the next trading day immediately thereafter. |
| 5.2.7. | The clearing house by-laws regarding the timetable for exercising the Warrants Offered |
Any holder of Warrants through banks and other stock exchange members (the “Authorized Persons”) shall submit an Exercise Notice through them. The by-laws regarding the timetable for exercising the Warrants provide as follows:
| 5.2.7.1. | An Exercise Notice received by 12:00 noon at the offices of the stock exchange member through which the Warrants are held shall be forwarded by the member to the stock exchange clearing house no later than 12:00 noon on the next trading day. |
| 5.2.7.2. | If the stock exchange clearing house receives notice from the stock exchange member regarding exercise by 12:00 noon, the stock exchange clearing house shall debit the stock exchange member for the cash consideration and credit the nominee company accordingly, no later than 12:00 noon on the next trading day after the notice was received. |
| 5.2.7.3. | If the nominee company receives a credit notice as stated in subsection (b) above by 12:00 noon, the nominee company shall forward the exercise request to the offices of the issuing company no later than 12:00 noon on the next trading day thereafter. |
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| 5.2.7.4. | Any notice referred to in subsections (a) through (c) above received after 12:00 noon on any trading day shall be deemed to have been received before 12:00 noon on the next trading day thereafter. |
| 5.2.7.5. | Notwithstanding the foregoing, on the date of expiration of the exercise period, and if the date of expiration of the exercise period is not a trading day, on the next trading day, the members of the stock exchange clearing house must transfer the final exercise requests to the clearing house by 12:00 noon. The exercise shall be carried out on that day. A clearing house member who did not submit a request by the aforesaid time shall be deemed by the clearing house not to have exercised its right to exercise, and the Warrants held through it shall expire. |
| 5.2.7.6. | Notwithstanding the foregoing, it is hereby emphasized that the exercise of the Warrants shall be governed by the by-laws of the stock exchange clearing house as they are on the actual exercise date. |
| 5.2.7.7. | If a fractional share is created as a result of the exercise of the Warrants after the exercise operation, the amount shall be rounded down to the nearest whole unit. |
| 5.2.8. | Transfer and split |
| 5.2.8.1. | The warrant allocation letters may be transferred and waived, provided that an appropriate transfer deed is submitted to the Company. The transfer deed shall be in a form similar to a share transfer deed. The Company shall maintain at its registered office a register containing a list of the registered holders of the Warrants. The Company shall be entitled to close the register and not permit transfers therein for periods not exceeding thirty (30) days in any year. The Company’s bylaws relating to the transfer of shares fully paid up shall apply, mutatis mutandis, to the transfer of warrant allocation letters. |
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| 5.2.8.2. | Any warrant allocation letter may be split into several allocation letters, provided that the total number of Warrants included therein equals the number of Warrants included in the allocation letter whose split is requested. The split shall be made upon a signed split request by the registered owner of such allocation letter, together with the allocation letter whose split is requested. All expenses associated with the split, including stamp duty and other mandatory payments, if any, shall be borne by the applicant for the split. |
| 5.2.9. | Expiration of the Warrants |
A Warrant that is exercised shall expire as of the date of allocation of the Exercise Shares. A Warrant that is not exercised by the end of the exercise period, i.e., for which the Exercise Notice, exercise price and allocation letter have not been received by the Company by such date, shall not confer any right and shall expire on such date.
| 5.2.10. | Change of rights of the Warrants and meetings of warrant holders |
| 5.2.10.1. | Subject to prior approval by resolution adopted by a majority of 75% of the votes cast at a general meeting of warrant holders, the Company may compromise with the warrant holders regarding any right or claim of theirs, or make any amendment, change or arrangement of their rights or of the terms of the Warrants. |
| 5.2.10.2. | Notwithstanding the foregoing, under the bylaws and the Stock Exchange guidelines, the terms of the Warrants relating to the exercise period, exercise price, linkage terms, and adjustments for bonus shares, dividends and rights may not be changed, except for a change in the exercise period and/or exercise price and/or linkage terms of the Warrants in the context of an arrangement or compromise proceeding under Section 350 of the Companies Law. |
| 5.2.10.3. | In addition, in accordance with the bylaws and the Stock Exchange guidelines, the Company may change the exercise price as part of a split process of the Company or a merger process of the Company, provided that the change includes only the adjustments required by such process, subject to the condition that the exercise price shall not be less than thirty (30) agorot or the par value of the Exercise Shares, whichever is higher, all in accordance with and subject to the Stock Exchange’s and the Authority’s guidelines as then in force. |
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| 5.2.10.4. | In accordance with the bylaws and the Stock Exchange guidelines, “split process” means, for this purpose, a process in which the Company transfers to its shareholders shares it holds in another company, or a process in which the Company transfers assets and liabilities to a new company established for the purpose of the split and the shareholders in the new company are also shareholders in the company transferring the assets and liabilities, provided that the split process is carried out on equal terms for the Company’s shareholders. |
| 5.2.10.5. | In accordance with the bylaws and the Stock Exchange guidelines, “merger process” means, for this purpose, a process in which all of the Company’s shares are transferred to the ownership of a new company or another registered company, or a process in which the Company transfers all of its assets and liabilities to a new company or another registered company, provided that the Company’s securities whose shares or assets are transferred as aforesaid are delisted from trading on the Stock Exchange and the process is carried out on equal terms for the Company’s shareholders. |
| 5.2.10.6. | The provisions of the Company’s organizational documents regarding the conduct of general meetings of shareholders, the majority required for resolutions and voting rights, shall apply, with the necessary changes and as applicable, to general meetings of warrant holders, subject to the provisions of the law applicable to the Company. |
| 5.2.10.7. | At a meeting of warrant holders, each Warrant shall carry one vote for each Warrant held by the holder. Voting at a general meeting of warrant holders shall be by count of votes. |
| 5.2.11. | Register of warrant holders |
The Company shall maintain at its registered office a register containing an up-to-date list of the holders of the Warrants. The Company shall be entitled to close the register and not permit transfers therein for periods not exceeding thirty (30) days in any year.
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| 5.2.12. | Registration
The Company shall recognize only the ownership of the person in whose name the Warrant is registered in the register and shall not be obliged to register in the register or recognize any trust, whether express or implied, or any pledge or lien of any kind whatsoever or any equitable right in connection with a Warrant. The Company shall recognize every registered holder of a Warrant as entitled to the Warrant free of any right of set-off, counterclaim or equitable rights between the Company and a prior holder, including the original holder of such Warrant. |
| 5.2.13. | Heirs
The executors and administrators of the estate of a sole holder of a deceased Warrant, or where there are no executors or administrators - the persons entitled to the Warrant as heirs of the sole holder of the deceased Warrant, shall be the only persons the Company will recognize as holders of any right in the Warrant. In the event of the death of one or more joint holders of a Warrant, the Company shall recognize only the survivor or survivors as the person(s) entitled to any right in the Warrant or any beneficial interest therein. Any person who becomes entitled to a Warrant as a result of the death or bankruptcy of a holder of the Warrant shall have the right, upon producing such evidence as the Board of Directors of the Company may from time to time require, to be registered as the holder of the Warrant or, subject to these conditions, to transfer the Warrant. |
| 5.2.14. | Notices
Except where otherwise determined, any notice from the Company to a holder of Warrants, including holders of Warrants registered in the register of warrant holders, shall be published by way of an immediate report in the MAGNA system and shall be deemed to have been given to them on the date of such publication. |
| 6. | Taxation |
For a description of the tax provisions that may be relevant for investment in the offered securities, as applicable at the time of publication of the Shelf Offering Report, see Appendix C Shelf Offering Report.
As is customary when making decisions on financial investments, the tax implications related to the investment in the offered securities offered pursuant to this Shelf Offering Report should be considered. It is clarified that the purpose of the following is to provide a general overview only of the taxation of the Bonds, and it does not address individual cases, and it is based on the tax laws as they are as of the date of the Shelf Offering Report, which may change and lead to different results. It should also be emphasized that the foregoing does not purport to constitute a competent interpretation of the provisions of the law cited or the regulations or orders thereunder, or an exhaustive description of the tax provisions relating to the Bonds included therein, and does not replace legal advice in this regard, which should be obtained according to the specific circumstances of each investor. In addition, changes in tax law or in the interpretation of tax law may apply retroactively and/or lead to different results.
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For U.S. federal income tax purposes, and for other tax purposes as applicable, the Company and the Partnership intend to treat the Partnership as the borrower of the Bonds (Series D), and any payments made or received by the Company as described in this document shall be deemed, for such purposes, to have been made or received by the Company on behalf of the Partnership.
| 7. | Discount |
The Series D Bonds offered pursuant to this Shelf Offering Report are being issued for the first time as a package together with the Warrants (Series 2), which are being offered for no consideration, and accordingly they may be issued at a discount.
The proceeds from the offering in connection with the issuance of the Units shall be allocated to the Series D Bonds and the Warrants (Series 2) issued as part of the Unit, based on their relative value, which will be determined at the end of the first trading day on the Stock Exchange for each of the Offered Securities, and subject to tax laws. If the Series D Bonds are issued at a discount as aforesaid, the Company shall, by the end of the second trading day of the Offered Securities, publish an immediate report specifying the discount rate on the Series D Bonds.
In the event of a series expansion, regarding the discount rate, the Company will act in accordance with the provisions of section 1.1.b.2 (d) of Appendix C to the Shelf Offering Report.
| 8. | Refraining from making arrangements |
| 8.1. | The Company and the Directors undertake by signing the Shelf Offering Report: |
| 8.1.1. | To refrain from making arrangements that are not written in the Prospectus and the Shelf Offering Report, in connection with the offer of the Securities that are offered in the Shelf Offering Report, their distribution and dispersion in public, and undertake to refrain from granting rights to the buyers of the Securites offered in the Shelf Offering Report to sell the Securities that they purchased beyond that specified in the Prospectus and in the Shelf Offering Report. |
| 8.1.2. | To notify the Securities Authority of any arrangement known to them with a third party that contradicts the undertaking stated in section 8.1.1 above. |
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| 8.1.3. | To refrain from engaging with any third party who to the best of their knowledge made arrangements contrary to the 8.1.1 above. |
| 8.2. | Such undertaking of the directors shall remain in force so long as the directors continue to hold office as directors of the Company. |
| 9. | Permits and approvals |
| 9.1. | The Company approached the Stock Exchange with a request to register the Offered Securities offered according to this Shelf Offering Report, and the Stock Exchange gave its approval for this, subject to the provisions 9.2-9.3 below. |
The aforesaid approval of the Stock Exchange shall not be deemed confirmation of the details presented in the Shelf Offering Report, their reliability and integrity and does not express any opinion on the Company or the nature of the securities offered in the report or the price at which they are offered.
| 9.2. | In accordance with the Stock Exchange regulations and guidelines, the listing of the Bonds (Series D) offered according to this report for trade on the Stock Exchange is subject to the following conditions: |
| 9.2.1. | The value of the public holdings in the series of Bonds (Series D) after registration for trading shall not be less than NIS 36 million. |
| 9.2.2. | The Minimum Dispersion required in the series of Bonds (Series D) is 35 holders at least, each holding a minimum holding value of NIS 200 thousand (the “Minimum Holding Value”). | |
| For the purposes of this section, “Holder” means one holder whose holding value exceeds the Minimum Holding Value or who holds jointly with others and their joint holdings value exceeds the Minimum Holding Value. | ||
| 9.2.3. | As stated above in section 5.1.8, on August 26, 2026, Maalot announced a rating of +ilA, for the issuance of the Company’s Bonds (Series D) in the amount of up to NIS 150 million par value, therefore, the Company is exempt and is not required to comply with the equity requirement as specified in the Stock Exchange regulations and guidelines. |
| 9.3. | The listing for trading on the stock exchange of the Warrants (Series 2) offered pursuant to this report, and of the common shares that will result from their exercise, is subject to the filing with the U.S. Securities and Exchange Commission of a prospectus supplement in connection with the offering of the shares that will result from the exercise of the Warrants (Series 2). |
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| 9.4. | If the Stock Exchange requirements set forth in Sections 9.2-9.3 above are not satisfied within 7 days from the publication date of the issuance results, the issuance of the Offered Securities shall be canceled under this Shelf Offering Report, they shall not be listed for trading on the Stock Exchange, and no funds shall be collected from the subscribers in respect thereof. |
| 9.5. | If said issuance is canceled, on the first clearing day after the Day of the Tender, the Company will report this in an immediate report to the Securities Authority and the Stock Exchange and the Company will publish a notice in accordance with the provisions of the law. |
| 9.6. | The Company considers the receipt of the issuance consideration by the Issuance Coordinator (in the Special Account) or in the trust account opened by the Trustee in accordance with the provisions of the Deed of Trust, as a transfer of the issuance consideration to it, and in light of this will request the listing of the Offered Securities for trading on the Stock Exchange upon receipt of the full consideration as stated. |
| 9.7. | All permits, approvals and licenses required under any applicable law for the offering of the Securities offered pursuant to this Shelf Offering Report, their issuance and the publication of this Shelf Offering Report, have been obtained. |
| 10. | Fee payment |
In accordance with the provisions of Regulation 4A of the Securities Regulations (Application Fees for Granting a Permit for the Publication of a Prospectus), 5755-1995, the Company shall pay the Securities Authority the additional fee for the securities offered under this Shelf Offering Report.
| 11. | Consideration of the Issuance |
| 11.1. | The expected consideration for the Company from this issuance (assuming that all the Offered Units will be purchased), less the estimated expenses involved in the issuance, will be as follows: |
| The expected gross consideration | Approximately NIS 79,760 thousands | |
| Early commitment, coordination and distribution fees | Approximately NIS 1,837 thousands8 | |
| Other expenses | Approximately NIS 627 thousands | |
| The expected net consideration | Approximately NIS 77,296 thousand |
8 The distributors in this issuance are: Eximus Capital Markets Ltd., Apax Issuances Ltd., Unicorn Capital Ltd. and Y.A.Z. INVESTMENTS & ASSETS LTD. (the “Distributors”). The Distributors will receive in connection with this issuance a total advisory, management and distribution fee at the rate of 1.7% of the total (gross) consideration received for the Bonds (Series D) offered according to the Shelf Offering Report, plus VAT as per the law, To the extent applicable. The fees will be allocated among the distributors at the sole discretion of the offering coordinator provided, however, that a distributor shall not be entitled to any commission in respect of any Securities actually purchased by it as a result of an early commitment submitted by it in the institutional investors’ auction. For the early commitment fees that will be paid to the Classified Investors, see section 3.7 above. The Issuance Coordinator will be entitled to an Issuance Coordination fee of NIS 35,000. All of the above fees shall be subject to applicable taxes.
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| 11.2. | In addition, the expected future proceeds to the Company, assuming full exercise of the Series 2 Warrants and assuming the full amount issued to the public is purchased, are approximately NIS 73,600 thousand, without taking into account adjustments to the NIS/$ exchange rate. |
| 11.3. | No minimum amount for raising has been set for this issuance. |
| 11.4. | Designation of the consideration |
The net proceeds from the issuance, which will be received according to the Shelf Offering Report (assuming the allocation of all the securities offered to the public), will be used by the Company for its ongoing operations and general purposes, including the repayment of existing debts and the acquisition of assets.
It should be noted that the Company may, from time to time, at its sole discretion, change the designation of the issuance consideration. Until such issuance consideration is used, the Company may deposit and invest the proceeds of the issuance as it deems appropriate, in low-risk investments, such as US dollar deposits, government or corporate bonds with an A credit rating (Israeli) or higher, short-term loans, etc., as determined, from time to time, by the Company’s Board of Directors. For more details about the designation for the consideration of the issuance according to this report, see 12.5 below.
| 12. | Information about the Company and Offering |
You should carefully read this Shelf Offering Report in its entirety and the documents incorporated by reference to understand fully our business and the terms of the Series D Bonds and the Series 2 Warrants (the “Securities”), as well as tax and other considerations that are important to you in making your investment decision. You should consider carefully the “Risk Factors” in section 12.3 of this Shelf Offering Report to determine whether an investment in the Securities is appropriate for you.
Unless otherwise specified or unless the context requires otherwise, all references in this Shelf Offering Report to the “Company,” “STRW,” “we,” “us,” “our” or similar references mean Strawberry Fields REIT Inc. and/or one or more of its subsidiaries. Unless indicated otherwise, or the context otherwise requires, references in this Shelf Offering Report to the U.S. are to the United States and “$” or “dollars” are to the lawful currency of the United States and financial information presented in this Shelf Offering Report is prepared in accordance with accounting principles generally accepted in the United States. Amounts and percentages presented herein may have been rounded for presentation and all dollar amounts, excluding share and per share amounts, are presented in thousands unless otherwise noted.
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| 12.1. | Our Company and Recent Developments |
Company Overview
Strawberry Fields REIT, Inc. is a Maryland corporation operating as a qualified real estate investment trust (“REIT”) under Section 856 through 859 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ending December 31, 2022. We believe that we have been organized and have operated, and we intend to continue to operate, in a manner to qualify for taxation as a REIT. To assist us in complying with certain federal income tax requirements applicable to REITs, among other purposes, our Charter imposes certain restrictions on ownership and transfer of our common stock including provisions, with certain exceptions, that restrict any person from owning, or being deemed to own by virtue of the attribution provisions of the Code, more than 9.9%, in number of shares or value of the issued and outstanding shares of our common stock. See “Risk Factors” on Section 12.3 of this Shelf Offering Report.
We operate through an umbrella partnership, commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held through Strawberry Fields Realty, L.P. (the “Operating Partnership”). We are the general partner of the Operating Partnership. To maintain REIT status, we must meet certain organizational and operational requirements, including requirements related to the sources of our gross income and the composition of our assets, limitations on the concentration of ownership of our stock, and minimum distribution requirements based on our taxable income.
We are specializing in skilled nursing facilities and other post-acute healthcare properties across the United States. Our primary business is the acquisition, ownership and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties. As of June 30, 2026, our portfolio consists of 133 income-producing properties leased to operate as 142 medical institutions in Arkansas, Illinois, Indiana, Kansas, Kentucky, Missouri, Ohio, Oklahoma, Tennessee and Texas.
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We are a self-managed and self-administered real estate company that specializes in the acquisition, ownership and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties.
Our revenue comes solely from monthly rent payments by tenants. As of June 30, 2026, we currently lease 142 facilities to tenants under 31 lease agreements, with an average remaining lease term of 7.1 years and annual rent escalators of 2.80%. Notably, 90.1% of properties are held under a master lease with risk-mitigating features like cross-default provisions. As of June 30, 2026, the aggregate annualized average base rent under the leases for our properties was approximately $142.4 million.
We have experienced growth through acquisitions. Since 2020, we have acquired 72 properties with an aggregate purchase price of approximately $439.8 million, achieving a 14.2% weighted average lease yield. This translates to a compound annual growth rate (CAGR) of 13.0% in our annualized base rent. We have also seen growth in key financial metrics - projected Adjusted EBITDA (13.5% CAGR) and projected Adjusted FFO (13.3% CAGR) - from 2021 to 2026.
Our executive offices are located at 6101 Nimtz Parkway, South Bend, Indiana, 46628, and our telephone number is (574) 807-0800. While we have (through a subsidiary) approximately 9 employees as of June 30, 2026, the core focus is on acquiring, owning, and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties. Our common stock is listed on the NYSE American Stock Exchange. We maintain a website at www.strawberryfieldsreit.com. Information contained on, or accessible through, our website is not incorporated by reference into and does not constitute a part of this Shelf Offering Report or any other report or document we file with or furnish to the SEC.
Recent Developments
On March 6, 2026, the master lease agreement under the Landmark framework agreement (which is with a third party unrelated to the Company) was amended to include two additional properties, Lincoln Park and Westshire, which had previously been operated by companies affiliated with the Company’s controlling shareholders under identical rental terms. The amendment was approved by the Company’s Audit Committee. Following the amendment, the annual base rent under the master lease increased by approximately $2 million. All other lease terms, including the lease term and the annual rent escalation rate of 3%, remained unchanged.
On April 15, 2026, the Company filed with the SEC a Form S-3 as a $200,000,000 “shelf registration” (the “2026 Form S-3”) On April 23, 2026, the SEC declared the 2026 Form S-3 effective. As of the date hereof, the Company has not commenced any offering under the 2026 Form S-3 shelf registration.
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On May 7, 2026, the Company’s Board of Directors declared a cash dividend on its common stock in the amount of $0.17 per share. The dividend was paid in cash on June 30, 2026 to holders of record of the common stock as of June 16, 2026.
On May 11, 2026 the Company sold the SNF portion of the 8200 National Ave Realty, LLC to a third-party buyer. The property was sold after the exercise of an option by the current tenant for a total of $4.2 million dollars. The SNF portion consists of 106 licensed beds. The Company still maintains the LTACH portion of the LLC, which has 31 licensed beds.
Strawberry Fields REIT, LTD Series C Bonds
On May 14, 2026, the Strawberry Fields REIT, LTD’s (“Strawberry LTD”) Board of Directors resolved to carry out a partial early redemption of the Strawberry LTD Series C bonds, at Strawberry LTD’s initiative, to be executed on June 2, 2026 (the “Partial Early Redemption”).
According to the resolution, Strawberry LTD performed the Partial Early Redemption in the amount of NIS 146,447,274 (par value). The redemption price determined in accordance with the mechanism set forth for early redemption in the bonds c deed of trust is 101.89 agorot per NIS 1 par value of bonds; thus, the total consideration to be paid by the Company amounts to NIS 149,214,525.
The remaining principal balance of the Series C bonds following the partial early redemption amounted to NIS 101,436,566 (par value) and was repaid in accordance with the terms of the Series C bonds, i.e., on July 31, 2026. The remaining bond principal was redeemed with cash from the balance sheet.
The Company’s Series C Bonds
On May 19, 2026, the Company completed an offering of units solely within Israel. The units consisted of par value NIS 1,000 Bonds (Series C) and 16 Warrants (Series 1) and yielded gross proceeds of approximately $56 million.
The warrants were exercisable upon their listing on the TASE and will expire on June 30, 2027. Each warrant entitles its holder to purchase one share of Company common stock at an exercise price per share equal to NIS 39.8, linked to the U.S. dollar exchange rate.
On August 6, 2026, the Company’s Board of Directors declared a cash dividend on its common stock (in the amount of $0.17 per share). The dividend will be payable in cash on September 30, 2026 to holders of record of common stock as of September 16, 2026.
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| 12.2. | Summary and Terms of the Offering |
The following summary contains basic information about the Series D Bonds and the deed of trust between us and the Trustee that will govern the Series D Bonds (the “Deed of Trust”) and the Series 2 Warrants and is not intended to be complete. For a more complete understanding of the Series D Bonds, please refer to the Deed of Trust in Annex A of this Shelf Offering Report.
| Issuer | Strawberry Fields REIT, Inc., a corporation incorporated in Maryland. | |||
| Co-Borrower | Strawberry Fields Realty L.P., a limited partnership organized under the laws of the State of Delaware. | |||
1. Up to NIS 80,000,000 par value of Series D Bonds, which will be listed for trading on the Tel Aviv Stock Exchange Ltd (the “TASE"). | ||||
| Securities Offered to the public | 2. Up to 1,600,000 Series 2 Warrants which will be listed for trading on the TASE. Each Warrant is exercisable for one share of common stock. | |||
| Series D Bonds and Series 2 Warrants shall be referred to collectively as the “Securities". | ||||
| Offering Units | The Securities will be issued in units, with each unit consist of NIS 1,000 principal amount Bonds and 20 Warrants. | |||
| Minimal Offering Price | NIS 997 per Unit. | |||
| Maturity | The principal of Series D Bonds shall be repaid in four (4) unequal annual payments (unless earlier redeemed): (1) 20% of the Series D Bonds principal shall be repaid on June 30, 2027; (2) 25% of the Series D Bonds principal shall be repaid on June 30, 2028; (3) 20% of the Series D Bonds principal shall be repaid on December 31, 2030; and (4) 35% on December 31, 2031. | |||
| Interest Rate | Annual interest at a fixed rate of 7.5% a year. | |||
Series D Bonds |
Interest Payment Dates | Interest shall be paid on December 31, 2026, and on June 30 and December 31 of each of the years 2027 through 2031 (inclusive), such that the first interest payment shall be made on December 31, 2026 and the last interest payment shall be made together with the final principal payment on December 31, 2031. Interest payments shall be made in respect of the six-month period ending on the day preceding the relevant interest payment date (the "Interest Period"), except for the first interest payment to be made on December 31, 2026, which shall be paid in respect of the period commencing on the clearing date (the trading day following the tender date) and ending on the day preceding such payment date, i.e., December 30, 2026. Such payment shall be made at the annual interest rate and shall be calculated according to the number of days in such period and based on a 365-day year. | ||
Denomination |
The Series D Bonds will be denominated in NIS. | |||
| USD Linkage | The principal and the interest will not be linked to the U.S. Dollar. | |||
| CPI Linkage | The principal and the interest will not be linked to the Israeli Consumer Price Index (“CPI”). |
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| Rating | S&P Global Ratings Maalot Ltd., Midroog Ltd., or any other credit rating company registered under the Law for Regulating the Activities of Credit Rating Companies, 2014. | |||
| Early Redemption | The Company may, at its sole discretion, at any time on or after 60 days have elapsed from the listing of the Series D Bonds, effect the early redemption of all or a portion of the Series D Bonds, subject to and in accordance with Section 7.2 of the Deed of Trust.
In the event that the TASE decides to delist the Series D Bonds in circulation due to a decrease in the value of the Series D Bonds below the minimum amount prescribed in the TASE rules regarding the delisting of bonds, the Company will effect an early redemption of the Series D Bonds in accordance with the terms of Section 7.1 of the Deed of Trust. | |||
| Acceleration | The Series D Bonds will be subject to acceleration under certain conditions set forth in Section 8 of the Deed of Trust. | |||
| Trustee | Mishmeret Trust Company Ltd. (the “Trustee”). | |||
| Series 2 Warrants | Last Date to Exercise. | December 30, 2027 | ||
| Exercise Price | 46 NIS per Warrant, which shall be adjusted to changes in the NIS/$ exchange rate as of September 10, 2026 (which was 3.0230 shekels to 1 U.S. dollar) and in any event, not less than the price of the Company’s share of common stock on the date of allotment of the Warrants (Series 2). | |||
| Trading | We have received approval with respect to the listing of the Series D Bonds and the Series 2 Warrants for trading on the TASE. | |||
| Net Immediate Proceeds | App. NIS 77,296 thousand. | |||
| Future Proceeds | App. NIS 73,600 thousand, assuming the full offered amount is issued and the Warrants are fully exercised, without taking into account adjustments to the NIS/$ exchange rate). | |||
| Use of Proceeds | See section 12.5 below. | |||
| Governing Law and Courts | Israeli law and subject to jurisdiction in Israeli courts. |
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| 12.3. | Risk Factors |
Any investment in our securities involves risk. Before making an investment in our securities, you should consider carefully the risks below and the other information contained in this Shelf Offering Report and the documents incorporated by reference into this Shelf Offering Report, including the risks discussed under the caption “Risk Factors” in our Registration Statement on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2026, as well as any subsequent updates thereto and other reports and documents we file with the ISA and/or the TASE after the date of this Shelf Offering Report, including any current reports on Form 8-K we may file, all of which are incorporated herein by reference, and may be amended, supplemented or superseded from time to time by other reports we file with the ISA in the future. If any of these risks were to occur, our business, financial condition and operating results or our ability to pay interest, principal or redeem or repurchase our Series D Bonds could be harmed, which may lower the trading price of our securities. You may lose all or part of your investment. See also “Incorporation of Certain Information by Reference” below and “Where You Can Find More Information.”
Risks Related to Investing in the Securities Offered by this Shelf Offering Report
Our Series D Bonds will be unsecured, and your investment in our Series D Bonds is subject to our credit risk.
Our Series D Bonds will be unsubordinated unsecured general obligations of ours and will not, either directly or indirectly, be an obligation of any third party (Except for the guarantee provided by Strawberry Ltd. and the status of Strawberry Fields Realty, L.P. as a co-borrower, as set forth below). Our Series D Bonds will rank on par with all of our other unsecured and unsubordinated debt obligations, except as such obligations may be preferred by operation of law. Any payment to be made on our Series D Bonds, including the return of the principal amount at maturity or any redemption date, as applicable, depends on our ability to satisfy our obligations as they come due. As a result, our actual and perceived creditworthiness may affect the market value of our Series D Bonds and, in the event we were to default on our obligations, you may not receive the amounts owed to you under the terms of our Series D Bonds – $162.6 million of outstanding unsecured indebtedness under our principal credit facility, approximately $250.0 million of secured mortgage indebtedness on our properties, and approximately $359.5 million of other secured loans payable. A substantial portion of our existing indebtedness has scheduled maturity dates prior to the maturity date of the Series D Bonds. Our level of debt could have important consequences to us, including the following:
| ● | our ability to obtain additional financing, if necessary, for working capital, capital expenditures, debt repayment (including the Series D Bonds), acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms; | |
| ● | we may need to use a substantial portion of our cash from operations to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations and future business opportunities; | |
| ● | our debt level could make us more vulnerable to competitive pressures or a downturn in our business or the economy generally than our competitors with less debt; and | |
| ● | our debt level may limit our flexibility in responding to changing business and economic conditions. |
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Our ability to service our debt will depend upon, among other things, our financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our results of operations are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these actions on satisfactory terms, or at all.
We have the ability to incur substantial additional debt, which may increase the risks associated with our substantial existing debt, including our ability to service the Series D Bonds and other debt.
Our credit agreements and other debt instruments, including the Deed of Trust that will govern the Series D Bonds, will permit us, subject to compliance with certain covenants, to incur a substantial amount of additional indebtedness, including senior secured indebtedness. As of June 30, 2026, and without giving effect to this offering, we have three series of traded bonds: Series A, Series B and Series C bonds. The Company is authorized, subject to applicable terms and conditions, to issue additional bonds in each of Series B and Series C by way of expansion of the respective series. If we incur additional debt above the levels in effect upon the closing of the offering, the risks associated with our substantial existing debt, including our ability to service our debt, could increase.
We may not have sufficient cash from our operations to enable us to pay interest or principal on our Series D Bonds.
We may have insufficient cash available to pay interest and principal on our Series D Bonds. Our ability to pay interest or principal on our Series D Bonds depends in part upon the amount of cash we generate from and use in our operations, which may fluctuate significantly based on, among other things:
| ● | adverse changes in financial conditions of buyers, sellers and tenants of properties; | |
| ● | vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options, and the need to periodically repair, renovate and re-let space; |
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| ● | increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; | |
| ● | civil unrest, acts of war, terrorist attacks and natural disasters, which may result in uninsured or underinsured losses; | |
| ● | geopolitical challenges and uncertainties; | |
| ● | decreases in the underlying value of our real estate; and | |
| ● | changing market demographics. |
Our Series D Bonds will be unsecured obligations and will be effectively subordinated to our secured debt.
Our Series D Bonds are unsecured and therefore will be effectively subordinated to our existing secured indebtedness and any secured financing we may incur in the future to the extent of the value of the assets securing the financing. In the event of a bankruptcy, liquidation or similar proceeding involving us, the assets that serve as collateral will be available to satisfy the obligations under any secured financing before any payments are made on our Series D Bonds.
On June 30, 2026, we had an aggregate of approximately $412.6 million of secured debt outstanding (excluding Strawberry Ltd’s Series C bonds of $34.1 million). We will continue to have the ability to incur additional secured debt, subject to limitations in our credit facility and other indebtedness and the Deed of Trust relating to the Series D Bonds.
Restrictive covenants in our credit facility, the Series D Bonds offered hereby, and our other indebtedness impose financial and other restrictions on us, which may limit, among other things, our ability to borrow funds under our credit facility.
To borrow funds under our existing credit facility, we must, among other things, meet specified financial covenants. For example, we are prohibited under our existing credit facility from incurring total borrowings in an amount greater than 75% of our total assets, as defined in the applicable agreements, and we must also ensure certain interest coverage, and interest and principal coverage ratios are met. Total borrowings and total assets are terms defined in our credit facility and differ from those used in preparing our consolidated financial statements, which are prepared in accordance with U.S. GAAP. To the extent we are unable to satisfy the requirements in our credit facility, we may be unable to borrow additional funds under the credit facility.
If we are not in compliance with specified financial ratios or other requirements in our credit facility, the Series D Bonds or our other indebtedness, we may be in breach, which could require us to repay outstanding amounts. Additionally, most of our debt instruments contain cross-default provisions, which generally cause a default or event of default under each instrument upon a qualifying default or event of default under any other debt instrument. If we are unable to repay outstanding indebtedness when due, holders of our secured debt also have the right to proceed against the collateral granted to them that secures the indebtedness. If the indebtedness under the Series D Bonds and our other debt agreements were to be accelerated, our assets may not be sufficient to repay in full that indebtedness and our other indebtedness. If not cured or waived, such default could have a material adverse effect on our business, financial condition and operating results.
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Our subsidiaries conduct a portion of our operations and own certain of our operating assets, and your right to receive payments on our Series D Bonds is effectively subordinated to the rights of the creditors of our subsidiaries.
Our subsidiaries conduct a portion of our operations and own certain of our operating assets. As a result, our ability to make required payments on our Series D Bonds depends in part on the operations of our subsidiaries and our subsidiaries’ ability to distribute funds to us. Our subsidiaries are separate and distinct legal entities, except to the extent described below, and have no obligation, contingent or otherwise, to pay amounts due on our Series D Bonds or to make funds available for that purpose. Strawberry Fields Realty, L.P. is the co-borrower of our Series D Bonds and such bonds will be guaranteed by Strawberry Fields REIT, LTD. For further information please see Appendix 6.2 to the Deed of Trust.
The rights of holders of our Series D Bonds will be structurally subordinated to the rights of our subsidiaries’ creditors. A default by a subsidiary under its obligations could result in a block on distributions from the affected subsidiary to us. Our Series D Bonds will be effectively junior to all existing and future liabilities of our subsidiaries, whether secured or unsecured. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries, creditors of such subsidiaries will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. As of June 30, 2026, our subsidiaries had $810.2 million of outstanding secured and unsecured debt obligations and assets with a net book value of at least $802.6 million.
Our Securities do not have an established trading market, which may negatively affect their market value and your ability to transfer or sell your Securities.
Our Securities are a new issuance of securities with no established trading market. We have received approval to list our Securities on the TASE. An active trading market on the TASE for our Securities may not develop or, even if it develops, may not last, in which case the trading price of our Securities could be adversely affected and your ability to transfer your Securities will be limited and you may be required to bear the financial risk of an investment in the Securities for an indefinite period of time.
The market price of the Securities may fluctuate.
If an active trading market does develop on the TASE, our Securities may trade at prices lower than the offering price and/or the exercise price of the Series 2 Warrants. The trading price of our Securities will depend on many factors, including:
| ● | prevailing interest rates; | |
| ● | the market for similar securities; | |
| ● | general economic and financial market conditions; | |
| ● | the credit rating assigned to our Series D Bonds; | |
| ● | our issuance of debt or preferred or common equity securities; and | |
| ● | our financial condition, results of operations and prospects. |
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Our management will have discretion over the use of the proceeds to us from this offering and from the exercise of the Series 2 Warrants (if exercised) and the intended use of proceeds of this offering may not increase the value of your investment.
Our management will have discretion on the use of the net proceeds from this offering and from the exercise of the Series 2 Warrants (if exercised), and you will be relying on their judgment regarding the application of these proceeds. There can be no assurance that management’s intended use of proceeds will increase the value of your investment. Please read “Use of Proceeds” below.
Although we expect to list the Securities on the TASE, there are restrictions on your ability to transfer or resell the Securities in the United States without registration under applicable U.S. federal and state securities laws.
Although the Company has shares of common stock listed on the NYSE American Exchange, the Securities are being offered and sold in Israel pursuant to an exemption from registration under U.S. federal and applicable state securities laws. Therefore, you may not resell the Securities in the United States or to U.S. persons.
A downgrade, suspension or withdrawal of the rating assigned by a rating agency to the Series D Bonds could cause the liquidity or market value of the Series D Bonds to decline significantly.
S&P Global Ratings Maalot Ltd. (“Maalot”), an Israeli rating agency, assigned rating of ilA+ for this Bond offering in an amount of up to NIS 150 million. We cannot assure you that such rating will remain for any given period of time or that the rating will not be revised, lowered or withdrawn entirely by Maalot (or any other rating agency) if, in such rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, or if ratings for such other securities would imply a lower relative value for our Series D Bonds, could adversely affect the market for, or the market value of, our Series D Bonds. A security rating is not a recommendation to buy, sell or hold securities, including our Series D Bonds. Ratings do not reflect market prices or suitability of a security for a particular investor and any rating of our Series D Bonds may not reflect all risks related to us and our business or the structure or market value of our Series D Bonds.
It may be difficult to obtain and enforce civil judgments against us and our directors, officers and experts.
We are a Maryland corporation, and our principal executive offices are located in the United States. All of our assets are located in the United States. As a result, even though the Deed of Trust is governed by Israeli law and any disputes thereunder are stipulated to be adjudicated in Israeli courts, you may have difficulty enforcing in Israel judgments you may obtain in an Israeli court against us.
We file reports with the SEC; see “Where You Can Find More Information” below. After the Offering, we will file with the ISA and the TASE copies of our SEC reports, pursuant to the rules under the Israeli Securities Law for companies that are dual-listed on the NYSE American Stock Exchange and the TASE.
Likewise, the substantive laws regarding liability for our disclosures (including those in this Shelf Offering Report) will likely be governed by U.S. law. The applicable reporting requirements and the substantive laws regarding liability for disclosures under U.S. law differ from those under Israeli law and arguably afford less protection for purchasers of our securities.
U.S. courts may refuse to hear a securities law claim of a non-U.S. investor who purchased our securities on the TASE. It also may be difficult enforcing in the United States judgments you may obtain in Israeli courts against us or our directors, officers and experts in any action, including actions based upon the civil liability provisions of U.S. securities laws.
Because all our operations are conducted in the United States, the outcome of any debt restructuring proceedings in Israel is difficult to predict.
We are a Maryland corporation, and we conduct all of our operations in the United States. Our principal executive offices are in the United States, and all of our directors and officers reside in the United States. In addition, all of our assets and substantially all of the assets of our directors, officers and experts are located in the United States. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws of the United States and not those of Israel are likely to apply. If we become subject to a debt restructuring in Israel, Israeli courts may seek to assert jurisdiction over all of our assets, wherever located, including property situated in the United States. There can be no assurance, however, that courts in the United States that have jurisdiction over us and our operations would recognize an Israeli court’s jurisdiction.
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| 12.4. | Forward-Looking Statements |
This Shelf Offering Report and the documents incorporated by reference in this Shelf Offering Report contain forward-looking statements within the meaning of the U.S. federal Securities laws. Forward-looking statements include, but are not limited to, statements regarding future expectations, projections of our results of operations or financial condition. Forward-looking statements involve estimates, assumptions, risks and uncertainties and are based on information currently available to our management. Therefore, our actual results and performance may differ materially from those expressed or implied in the forward-looking statements. Forward looking statements often, although not always, include words or phrases such as the following: “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “intends,” “plans,” “projection” and “outlook.” or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are included in this Section 12 and others are described in the Form 8-K filed with the SEC on April 15, 2026 under the heading “Risk Factors” and in our other filings with the SEC. These and other risks, uncertainties and factors could cause our actual results to differ materially from those included in any forward-looking statements we make. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Important factors that could cause actual results to differ materially from our expectations include, among others:
| ● | risks and uncertainties related to the national, state and local economies, particularly the economies of Arkansas, Illinois, Indiana, Kentucky, Kansas, Missouri, Ohio, Oklahoma, Tennessee and Texas, and the real estate and healthcare industries in general; | |
| ● | availability and terms of capital and financing; | |
| ● | the impact of existing and future healthcare reform legislation on our tenants, borrowers and guarantors; | |
| ● | adverse trends in the healthcare industry, including, but not limited to, changes relating to reimbursements available to our tenants by government or private payors; | |
| ● | competition in long-term healthcare industry and shifts in the perception of various types of long-term care facilities, including skilled nursing facilities; | |
| ● | our tenants’ ability to make rent payments; | |
| ● | our dependence upon key personnel whose continued service is not guaranteed; | |
| ● | availability of appropriate acquisition opportunities and the failure to integrate successfully; | |
| ● | ability to source target-marketed deal flow; | |
| ● | ability to dispose of assets held for sale for the anticipated proceeds or on a timely basis, or to deploy the proceeds therefrom on favorable terms; | |
| ● | fluctuations in mortgage and interest rates; | |
| ● | changes in the ratings of our debt securities; | |
| ● | risks and uncertainties associated with property ownership and development; | |
| ● | the potential need to fund improvements or other capital expenditures out of operating cash flow; | |
| ● | potential liability for uninsured losses and environmental liabilities; | |
| ● | the outcome of pending or future legal proceedings; | |
| ● | changes in tax laws and regulations affecting REITs; | |
| ● | our ability to maintain our qualification as a REIT; and | |
| ● | the effect of other factors affecting our business or the businesses of our operators that are beyond our or their control, including natural disasters, other health crises or pandemics and governmental action; particularly in the healthcare industry. |
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This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. New risks and uncertainties may also emerge from time to time that could materially and adversely affect us.
| 12.5. | Use of Proceeds |
The net proceeds from the issuance, which will be received according to the Shelf Offering Report (assuming the allocation of all the securities offered to the public), will be used by the Company for ongoing operations and general purposes, including the repayment of existing debts and the acquisition of assets.
| 12.6. | Provisions of Maryland Law and of Our Charter and Bylaws |
Please refer to “Certain Provisions of Maryland Law and of Our Charter and Bylaws” in the 2026 Form S-3.
| 12.7. | Material U.S. Federal Income Tax Considerations |
Please refer to “Material U.S. Income Tax Considerations” in the 2026 Form S-3.
| 12.8. | Plan of Distribution |
Please refer to “Plan of Distribution” in the 2026 Form S-3.
| 12.9. | Expenses of the Offering |
The aggregate amount that we will pay for arrangement fees and our other commissions and expenses in connection with this offering under the Shelf Offering Report, assuming we will sell Securities for gross consideration of approximately NIS 80 million, is approximately NIS 2.5 million.
| 12.10. | Incorporation of Certain Information by Reference |
We are allowed to incorporate by reference into this Shelf Offering Report the information that we file separately with the SEC and provide an active hyperlink thereto, or the ISA, which means that we can disclose important information to you by referring to those filings. The information incorporated by reference is considered to be part of this Shelf Offering Report, except for any information superseded by information contained expressly in this Shelf Offering Report and is an important part of this Shelf Offering Report. You may access any document listed below on the SEC’s EDGAR website by opening the applicable hyperlink. Documents referenced by active hyperlinks to SEC filings are deemed to be filed herewith with the ISA and the TASE for liability purposes. Information described below that we file later with the SEC (and provide an active hyperlink thereto) or the ISA prior to the termination of this offering will also be considered to be part of this Shelf Offering Report and will automatically update and supersede previously filed information, including information contained in this Shelf Offering Report.
We are incorporating by reference in this Shelf Offering Report the documents listed below:
| ● | our Registration Statement on Form S-3 filed with the SEC on April 15, 2026; | |
| ● | our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 19, 2026; | |
| ● | ● our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed with the SEC on August 8, 2026; | |
| ● | our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 1, 2026; | |
| ● | our Current Reports on Form 8-K filed with the SEC on August 8, 2026, August 8, 2026, June 25, 2026, June 22, 2026, May 20, 2026, May 8, 2026, May 7, 2026, May 8 2026 (1), May 8, 2026 (2) April 15, 2026, February 26, 2026, February 19, 2026 and January 30, 2026, other than any information in such reports that was “furnished” but not “filed”; and | |
| ● | the description of our securities registered with the SEC pursuant to Section 12 of the Exchange Act included as Exhibit 4.1 to the above described 2026 Form 10-K; and | |
| ● | any subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Definitive Proxy Statements on Schedule 14A, and Current Reports on Form 8-K filed by us with the SEC prior to the termination of the offering being made pursuant to this Shelf Offering Report (other than any information in such reports that is “furnished” and not “filed”). | |
| ● | prior to the termination of the offering being made pursuant to this Shelf Offering Report (other than any information in such reports that is “furnished” and not “filed”). |
These reports contain important information about us, our financial condition and our results of operations.
As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and this Shelf Offering Report, you should rely on the statements made in the most recent document.
In deciding whether to purchase the Securities, you should rely only upon the information contained in this Shelf Offering Report or incorporated by reference in this Shelf Offering Report. Neither we nor the distributors of this offering have authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the distributors make an offer to sell these securities in any state or jurisdiction where the offer or sale of such securities is not permitted. You should assume that information appearing in this Shelf Offering Report is accurate only as of the date of this Shelf Offering Report. Our business, financial condition, results of operations and prospects may have changed since that date.
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We will provide to each person, including any beneficial owner, to whom this Shelf Offering Report is delivered, a copy of these SEC filings, at no cost, upon written or oral request to our Israeli counsel, FBC & Co., at 146 Derech Menachem Begin, Tel Aviv, Israel, telephone number: +972-3-694-4111. Copies of these SEC filings may also be obtained from the SEC through its website at www.sec.gov.
You may request a free copy of these filings (other than exhibits, unless they are specifically incorporated by reference in the documents) by writing or telephoning us at the following address and telephone number:
STRAWBERRY FIELDS REIT, INC.
6101 Nimtz Parkway, South Bend, IN 46628
(574) 807-0800
| 12.11. | Where You Can Find More Information |
We have filed with the ISA and the TASE a Shelf Offering Report under the Israeli Securities Law with respect to the Securities offered hereunder. As permitted by the rules and regulations of the ISA relating to this Shelf Offering Report, this Shelf Offering Report does not contain all the current public information about the Company. For further information regarding our company and our securities, please refer to our annual, quarterly and current reports, proxy statements and other information that we have filed with the SEC.
Our SEC filings are available to you on the SEC’s website (http://www.sec.gov). We also have a website (www.strawberryfieldsreit.com) through which you may access our recent SEC filings. Information contained on our website is not a part of this Shelf Offering Report. Our common stock is listed and traded on the NYSE American Stock Exchange. Our reports are also available from the website of the ISA at www.magna.isa.gov.il or the website of the TASE at http://maya.tase.co.il.
| 12.12. | Legal Matters |
Certain legal matters with respect to the offering of the Securities are being passed upon for us by FBC & Co. of Tel Aviv, Israel. Certain legal matters with respect to the laws of the State of Maryland will be passed upon for us by Shapiro Sher Guinot & Sandler, P.A. Certain other legal matters will be passed upon for us by Igler and Pearlman, P.A..
| 12.13. | Experts |
The consolidated financial statements of Strawberry Fields REIT, Inc. as of December 31, 2025 and 2024, and the two-year period ended December 31, 2025, included in this Shelf Offering Report by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, have been audited by Hacker, Johnson & Smith PA, an independent registered public accounting firm, as stated in their report incorporated herein by reference.
The condensed consolidated financial statements of Strawberry Fields REIT, Inc. as of June 30, 2026 and December 31, 2025, and for the three-and-six months ended June 30, 2026 and 2025, included in this Shelf Offering Report by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, have been reviewed by Hacker, Johnson & Smith PA.
Such financial statements are incorporated herein in reliance upon the report of Hacker, Johnson & Smith PA, and upon the authority of such firm as experts in accounting and auditing.
| 12.14. | Indemnification of Directors and Officers |
Maryland General Corporate Law (MGCL) permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty that is established by a final judgment as being material to the cause of action. Our charter contains such a provision that eliminates such liability to the maximum extent permitted by Maryland law.
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The MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not), to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:
| ● | The act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; | |
| ● | The director or officer actually received an improper personal benefit in money, property or services; or | |
| ● | In the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. |
Under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in the right of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.
In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of:
| ● | a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and | |
| ● | a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct. |
Our charter obligates us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:
| ● | any present or former director or officer of ours who is made or threatened to be made a party to, or witness in a proceeding by reason of his or her service in such capacity; and | |
| ● | any individual who, while a director or officer of ours and at our request, serves or has served as a director, officer, trustee, member, manager, or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in a proceeding by reason of his or her service in such capacity; | |
| ● | in either case, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in such capacity. |
Our charter also requires us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and any employee or agent of ours or a predecessor of ours.
We entered into customary indemnification agreements with our directors and executive officers that will require us, among other things, to indemnify our directors and executive officers against certain liabilities that may arise by reason of their status as directors or officers to the maximum extent permitted by Maryland law and provide for the advancement of expenses in connection therewith.
We maintain directors’ and officers’ liability insurance which will indemnify our directors and officers against damages (including legal fees and expenses), arising out of certain kinds of claims which might be made against them based on acts and things done (or not done) by them while acting in their capacity as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be provided to directors, officers or persons controlling us pursuant to the foregoing provisions, in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
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| 12.15. | Undertakings |
The undersigned registrant hereby undertakes, mutatis mutandis, to the extent applicable to an offering of securities solely in Israel to residents of Israel and which has not been registered with the United States Securities and Exchange Commission:
| (a) | The undersigned Registrant hereby undertakes: |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| i. | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
| iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of the registration statement.
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| i. | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) (§ 230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
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| ii. | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| i. | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter); |
| ii. | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| iii. | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| iv. | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (b) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (c) | insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
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| 13. | Details regarding protection mechanisms in the Deed of Trust |
Below is a concise breakdown of the main defense mechanisms set forth in the Deed of Trust. The expressions listed below shall have the definitions given to them under the Deed of Trust.
A. Contractual clauses and collateral:
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| The promissory notes are secured by collateral or other fixed liens | See Section 6.2 of the Deed of Trust | Upon execution of the Deed of Trust, the Subsidiary (as defined in the Deed of Trust) shall execute an irrevocable guarantee, without limitation in amount, securing the full obligations of the Company and the Partnership towards the Trustee and/or the holders of the Series D Bonds under the Deed of Trust, which shall remain in effect until the full repayment of the Company’s obligations under this Deed of Trust (the “Subsidiary Guarantee”). The form of the Subsidiary Guarantee is attached as Appendix 6.2 to the Deed of Trust.
Notwithstanding the provisions of Section 6.2 of the Deed of Trust, the Company may, at any time, notify by way of an immediate report of the expiration of the Subsidiary Guarantee, provided that prior approval is obtained from the rating company confirming that the rating immediately prior to the cancellation of the Subsidiary Guarantee will not be downgraded as a result thereof (the “Rating Company Approval”). In such case, as of the date of the Rating Company Approval, the Subsidiary Guarantee shall automatically and immediately expire and, as of such date, shall be null and void, without requiring the consent of the holders of the Series D Bonds and/or the Trustee. |
- | |||
| The promissory notes are secured by a floating and/or current lien | N/A | - | - | |||
| Undertaking not to create liens (negative lien) | See sections 6.4.1 - 6.4.4 of the Deed of Trust
|
The Company and the Subsidiary shall not create a general floating charge (or a charge similar in its characteristics under the law applicable to the Company or the Subsidiary) over all of their direct, existing and future assets and rights, in favor of any third party to secure their obligations to any third party, unless they have obtained the prior consent of the holders of the Bonds by Special Resolution, or unless, concurrently with the granting of such general floating charge over all of the direct, existing and future assets and rights of the Company and the Subsidiary in favor of such third party, they grant a floating charge in favor of the holders of the Bonds at the same rank, and such charges shall rank pari passu in accordance with the ratio of the debts of the Company or the Subsidiary, as applicable, to each of the parties. If such a charge is created, it shall be created in coordination with the Trustee and in forms satisfactory to the Trustee, and, shortly prior to the creation of the charge, the Trustee shall be provided with documents lawfully creating the charge, charge registration documents and evidence of their submission to the relevant authorities. In addition, concurrently with the creation of the charge, the Trustee shall be provided with (a) a confirmation the following documents: from a senior officer of the Company that the charge does not contradict or conflict with any other undertaking of the Company; and(b) an opinion from local counsel regarding the creation of such charge and its validity, enforceability and realization, all in accordance with the relevant law. |
Yes. See Section 8.1.26 of the Deed of Trust |
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| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
For the avoidance of doubt, the foregoing shall not limit: (1) the Company and the Subsidiary from creating fixed charges over all or part of their assets; (2) the Company and the Subsidiary from creating floating charges over one or more specific assets of the Company or the Subsidiary, as applicable; or (3) the ability of corporations controlled by the Company and the Subsidiary to create any type of charge, whether fixed or floating, over any assets whatsoever, including all or most of the assets, with or without any limitation, or to guarantee in any manner whatsoever the obligations of the Company or the Subsidiary, as applicable.
For the avoidance of doubt, the Trustee shall not be required to examine the possibility and/or need to register the undertaking of the Company or the Subsidiary to refrain from creating charges, or any corresponding registration in nature and substance outside Israel, and such undertaking shall constitute a contractual undertaking toward the Trustee and the holders of the Bonds. The Company hereby confirms and declares that, as of the date of the Deed of Trust, neither it nor the Subsidiary has created, registered or undertaken to create such floating charges over all of their direct, existing and future assets and rights in respect of which the undertaking set forth above was provided.
The group companies shall be entitled to sell, lease, assign, deliver or otherwise transfer all or part of their property in any manner whatsoever, to whomever they deem appropriate, without requiring any consent from the Trustee and/or the holders of the Bonds (Series D), as applicable. The group companies shall not be required to notify the Trustee of any transfer or sale of any of their assets, unless such transfer or sale is of a “Material Asset of the Company” as defined in Section 8.1 of the Deed of Trust, and shall not be required to notify the Trustee of the creation of any charge over their assets, except for a general floating charge over all of the Company’s property. |
||||||
| Obligation to comply with financial covenants | See sections 5.5 and 6.5 of the Deed of Trust | See details in the table in part C below. | Yes. See Section 8.1.13 o;f the Deed of Trust |
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| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| Obligation to rate the bonds at the time of issuance; maintaining a rating throughout the life of the promissory note | See section 5.4(j) of the Deed | The Company undertakes to act that insofar as it is under its control, the Bonds (Series D) will be rated by at least one rating company for the entire period of the Bonds (Series D) and for this purpose the Company undertakes, inter alia, to pay the rating company the payments it undertook to pay the rating company and to provide the rating company with the reports and information required by it in the engagement between the Company and the rating company. In this regard, inter alia, the failure to make the payments that the Company undertook to pay the rating company and failure to provide the reports and information required by the rating company as part of the engagement between the Company and the rating company, will be considered reasons and circumstances that are under the control of the Company. The Company does not undertake not to replace the rating company or to terminate the engagement with it during the period of the Bonds (Series D). In the event that the Company replaces the rating company even in the event that at the time of the replacement it is not the only rating company that rates the Bonds (Series D) and/or terminates the work of the rating company (in the case where it is not a single rating company), the Company undertakes to report this immediately and will notify the Trustee and Bondholders and will state in its notice the reasons for the change in the rating company, and all this no later than one trading day from the date of such replacement and/or from the date of the decision to terminate the work of the rating company, whichever is earlier. It is clarified that the foregoing does not derogate from the right of the Company to replace a rating company at any time or to terminate the work of the rating company (in the case where it is not a single rating company), at its sole discretion and for any reason it deems appropriate. | Yes. See Section 8.1.21 of the Deed of Trust | |||
| Commitment to double rating for the bond certificates | N/A | - | - |
| 54 |
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| Commitment not to replace the rating company throughout the life of the bond certificate | See section 5.4(g) of the Deed of Trust. | In the event that the rating company is replaced or the Bonds (Series D) cease to be rated by a rating company (even in the event that the Bonds (Series D) are rated by a number of rating companies), the Company will publish an immediate report, within one trading day from the date of the change in which the Company will announce the circumstances of the replacement of the rating company or discontinuation of the rating, as applicable. | - | |||
| Restrictions on creating additional financial debt | See section 4.1 - 4.2 of the Deed of Trust
|
An additional issuance of Bonds (Series D) shall be carried out subject to receipt of the approval of the Stock Exchange and subject to the fulfillment of all the conditions listed below: (a) The rating of the Bonds (Series D) as will be at that time, will not be affected due to the additional issuance of Bonds (Series D) as stated (i.e., the rating on the eve of the expansion of the series will not change immediately after its expansion due to the said expansion). For the purposes of this section, it will be clarified that in the event that the Bonds (Series D) are rated by more than one rating company, the rating will be examined for the purpose of this section at any time, according to the lower rating among them; (b) on the date of the additional issuance, in accordance with its last financial statements published prior to the date of the additional issuance, and after taking the additional issuance into account retroactively, the Company will comply with all the financial covenants specified in section 6.5 of the Deed (without taking into account the healing and waiting periods listed in connection with those financial covenants); and (c) on the date of the additional issuance there is no ground for providing the bonds for immediate repayment as specified in section 8.1 of the Deed of Trust without taking into account any cure and waiting periods. |
Yes. See Section 8.1.22 of the Deed of Trust | |||
The Company shall provide the Trustee prior to the actual performance of the additional issuance and as a condition therefor (and to the extent that a tender is held for Classified Investors, no later than the date on which the tender for Classified Investors was held), written confirmation signed by the company’s CEO or senior officer in the financial field of the Company regarding (in this subsection: the “Confirmation”): (1) the fulfillment of the said conditions at the time of the Confirmation (except for the condition in subsection (a) above, for which the Company shall provide the confirmation of the rating company as detailed below); (2) that at the time of the Confirmation the Company does not violate any of its material obligations to the holders of the Bonds (Series D). It is clarified that the consideration for the expansion of the series will be transferred directly to the Company, on the condition that the Company provided to the Trustee with the said confirmations.
In any case of such additional issuance, the actual increase of the series will be done subject to obtaining prior approval from the rating company according to which the rating on the eve of the series expansion will not change negatively immediately after its expansion due to the said expansion. The approval of the rating company will be published in an immediate report before the actual expansion of the series. |
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Without derogating from the generality of the foregoing, the Company reserves the right, subject to the provisions of any law, to issue at any time and from time to time (whether by way of a private placement or pursuant to a prospectus and/or amendment to a prospectus, whether pursuant to a shelf offering report or in any other manner), and without requiring the consent of the holders of the Bonds (Series D) and/or the consent of the Trustee, as applicable, including to any related person (as defined in section 3.2 of the Deed), additional series of bonds and/or additional securities, as the Company deems fit, all without prejudicing the repayment obligation imposed on the Company under this Deed. In addition, if the Company issues an additional series of bonds or other debt securities, and such additional series or securities are not secured by collateral (and so long as they remain unsecured), the rights of such additional series or securities, as the case may be, in liquidation shall not rank senior to those of the Bonds (Series D) (for purposes of section 4.2 of the Deed of Trust only: the “Additional Issuance”). Likewise, if the Company issues other bonds (of another series) or other debt securities that are secured by collateral and/or liens (of any kind), then such other bonds or debt securities, as applicable, shall rank senior in liquidation to the Bonds (Series D) only with respect to the collateral and/or liens included in such other bonds. For the avoidance of doubt, nothing in this section shall prevent the Company from issuing additional bonds of any kind secured by collateral and/or liens of any kind, at the Company’s sole discretion. |
| 55 |
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| Notwithstanding the foregoing, the Additional Issuance shall be subject to approval of the Stock Exchange (to the extent the securities in the Additional Issuance will be traded on the Stock Exchange) and to the fulfillment of all the conditions set forth below: (a) the Additional Issuance shall not adversely affect the rating of the Bonds (Series D), as then in effect (i.e., the rating on the eve of the Additional Issuance). The rating company’s approval that the Additional Issuance will not adversely affect the rating of the Bonds (Series D) shall be published by the Company prior to the completion of the Additional Issuance; (b) on the date of the Additional Issuance, based on the Company’s latest financial statements published prior to the date of the Additional Issuance, and immediately after giving effect to the Additional Issuance, the Company shall comply with all financial covenants set forth in section 6.5 of the Deed of Trust; (d) no ground exists for immediate repayment as set forth in section 8.1 of the Deed; and (e) the Company complies with all of its material undertakings to the holders of the Bonds in accordance with the provisions of the Deed. The Company shall deliver to the Trustee a written confirmation from the Company, together with a calculation with respect to the condition set forth in section 4.2 of the Deed, as to the fulfillment of all the aforesaid conditions prior to completion of the Additional Issuance, all in a form satisfactory to the Trustee. | ||||||
| Limitation on distribution of dividends | See section 6.6 of the Deed of Trust | As long as the Company does not violate any of the financial covenants stated in section 6.5 of the Deed of Trust, no distribution limit shall apply to the Company. In the event that the Company finds itself deviating from one or more of the financial covenants as stated in section 6.5 of the Deed of Trust, the Company may make a distribution in an amount not exceeding the amount required to comply with the requirements of U.S. law applicable to REIT funds. If the Company ceases to be a REIT, then the Company shall not be entitled to make any distribution in the event that it is in breach of one or more of the financial covenants set forth in section 6.5 of the Deed.
In the event of a distribution when the Company is in deviation of one or more of the financial covenants as stated in Section 6.5 of the Deed of Trust, the Company shall provide the Trustee in advance with notice of its intention to perform a distribution together with confirmation from the Company’s senior officer that the distribution amount does not exceed the amount required to meet the requirements of U.S. law applicable to REIT funds. The Trustee shall rely on the aforesaid confirmation without being required to carry out any examination on the subject. |
Yes. See section 8.1.14 of the Deed of Trust. | |||
| Restrictions on transactions with the controlling shareholders of the company | N/A | - | - |
| 56 |
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| Limitations on change of control | See Section 8.1.11 of the Deed of Trust | If there is a change in control, and the Company does not publish a tender offer in relation to the purchase of all the bonds, at a price not less than their par value, within 45 days of the occurrence of such an event.
“Change of Control” - if any person, other than authorized shareholders (as defined below), holds or becomes a holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting rights in the Company; provided, however, that if the Company becomes a subsidiary corporation (as defined below) directly or indirectly of a holding company, such holding company itself shall not be deemed a person as stated if (a) said holding company is the owner, directly or indirectly of 100% of the Company’s share capital and (b) upon completion of said transaction a person, apart from one or more authorized shareholder, will not hold or become a holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting shares of such holding company.
“Authorized Shareholders” – any of (a) the undersigned Moshe Gubin and Michael Blisko or any of their estates, spouses, and/or descendants; (b) any trust in favor of any of the individuals listed in section (a) above only.
“Subsidiary Corporation” – In connection with any individual, any corporation, general or limited partnership or other business entity which: (a) on the effective date more than 50% of the voting rights of shares with voting rights or other rights (including partnership rights) is entitled (unconnected to the occurrence of any incident) to vote in the appointment of directors, managers, or trustees of whom it is owned or controlled, directly or indirectly, by (1) such individual, (2) such individual and one or more subsidiaries of such individual or (b) on the effective date holds control, whether directly or indirectly, including joint control. |
Yes. See Section 8.1.11 of the Deed of Trust |
| 57 |
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
Mechanism for adjusting interest rates in certain cases
|
See section 5.4 of the Deed of Trust | Adjustment of the interest rate due to a change in the rating of the Bonds (Series D)
The interest rate to be borne by the Bonds (Series D) shall be adjusted due to a change in the rating of the Bonds (Series D), as specified in section 5.4 of the Deed of Trust:
If the rating of the Bonds (Series D) by the rating company (in the case of a change in rating company, the Company will transfer to the Trustee a comparison between the rating scale of the replaced rating company and the rating scale of the new rating company) will be updated during any interest period, so that the rating determined for the Bonds (Series D) will be lower by one or more notch (the “Reduced Rating”) from the base rating, and the annual interest rate that will be borne by the unpaid balance of the principal of the Bonds (Series D) will increase by the additional interest rate, approximately 0.25% per year in respect of any decline in the rating of the Bonds below the base rating, in accordance with the brackets determined in the Deed of Trust, for the period starting from the date of publication of the Reduced Rating by the rating company and until whichever is earlier of (a) full repayment of the balance of the principal or (b) the date the rating is increased in accordance with the provisions of section 5.4(d) of the Deed of Trust. If the interest rate was previously raised for deviation from the financial covenants as stated in section 5.4 of the Deed of Trust, then the increase in the interest rate for the reduction of such a rating will be limited in accordance with the maximum interest rate increase limit (1.75% above the annual interest rate). |
- | |||
In the event that, after the rating is lowered in a manner that affected the interest rate to be borne by the Bonds (Series D) as stated in section 5.3(a) of the Deed of Trust, the rating company will update the rating for the Bonds (Series D) upwards, so that the annual interest rate borne by the principal will be reduced, at the time of the relevant payment of the interest, by the additional interest rate in accordance with the brackets established as stated, for the period in which the Bonds (Series D) were rated at the highest rating only (i.e., from the date the rating report regarding the increase in rating is published), so the interest rate borne by the unpaid balance of the principal of the Bonds (Series D) after updating the rating upwards to a rating equal or higher than the base rating, will be the annual interest rate, without any increase due to the rating reduction as stated in section 5.4 of the Deed of Trust (and in any case, the interest rate will not be lower than the annual interest rate). In such a case, the Company shall act in accordance with the provisions of subsections 5.4(a) to (c) of the Deed of Trust, mutatis mutandis arising from the high rating instead of the reduced rating. For the avoidance of doubt, it is clarified that if the rating of the Bonds exceeds the base rating, this shall not have any effect on the interest rate borne by the Bonds at that time.
Insofar as the Bonds (Series D) shall cease to be rated at all for a reason dependent on the Company (for example, but not limited to, due to non-compliance with the Company’s obligations towards the rating company, including due to failure to provide payments and/or reports that the Company undertook towards the rating company) for a period exceeding 21 trading days, prior to their final repayment, the cessation of the rating shall be considered as a maximum reduction of rating in such a way that the additional interest rate shall amount to 1.5% (even if the interest rate was raised in accordance with section 5.4(a) of the Deed of Trust prior to that date), even if the interest rate was previously raised due to deviation from the financial covenants as stated in section 5.5 of the Deed of Trust (but subject to the maximum interest rate increase limit), and the provisions of subsections (b) to (e) above shall apply accordingly without derogating from the provisions of section 8.1.21 of the Deed of Trust. For the avoidance of doubt, it is clarified that if the Bonds (Series D) cease to be rated, before their final repayment, for a reason that is not dependent on the Company, this will not affect the interest rate as stated in subsection 5.4(a) of the Deed of Trust, and the provisions of this section of the Deed of Trust will not apply. |
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For the avoidance of doubt, it is clarified that: (1) a change in the rating horizon of the Bonds (Series D) will not result in a change in the interest rate that the Bonds (Series D) will bear as stated in this section above; (2) if the Bonds (Series D) are rated by more than one rating company and as long as they will be rated by more than one rating company as stated, subsection (f) above will not apply unless in the event that all the rating companies together cease to rank the Bonds (Series D), and an examination of the rating for the purpose of adjusting the interest rate for a change in the rating (if and to the extent that such a change is made) will be done, at any time, according to the lower rating between them.
In the event of a downgrade, the Company shall act in accordance with section 5.4(b) of the Deed of Trust. To the extent that prior to the date of the downgrade, there was an increase in the interest rate due to a deviation from one or more of the financial covenants according to the mechanism specified in section 5.5 of the Deed of Trust, the change that will apply to the interest rate due to the adjustment mechanism specified in section 5.4 of the Deed of Trust will be limited by the maximum interest rate increase limit. |
| 58 |
| Exists (section in the deed) /does not exist | Brief description | Is the breach grounds for immediate repayment | ||||
| See section 5.5 of the Deed of Trust | Adjustment of the interest rate as a result of non-compliance with financial covenants
The interest rate to be borne by the Bonds (Series D), shall be adjusted for deviation from any of the financial covenants listed below, as specified in section 5.5 of the Deed of Trust: |
- |
| - | If the ratio of financial debt to EBITDA (as defined in section 5.5 (1) of the Deed) exceeds 8. |
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| - | If the EBIDTA ratio to the Company’s total financing expenses payments (as defined in section 5.5(2) of the Deed) of the Company (DSCR) shall be less than 1.35. |
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| - | If the consolidated equity of the Company (including minority rights) on the last day of each calendar quarter according to the Company’s financial statements, shall be less than USD 25 million (this amount shall not be linked to any linkage basis). |
| Examination of the Company’s compliance with any of the financial covenants will be carried out by the Company on the day of publication of the financial statements and as long as the Bonds (Series D) are in circulation, in relation to the financial statements that the Company was required to publish up to that date. | ||||||
| If the Company deviates from one of the financial covenants listed in subsections a-c above according to its reviewed or audited financial statements, the annual interest rate borne by the unpaid balance of the principal of the Bonds (Series D), at a rate of 0.5% (the “Additional Interest Rate”), above the interest rate as it was at that time, prior to the change, in respect of the period beginning from the date of deviation until whichever is earlier between the full repayment of the unpaid balance of the principal of the Bonds (Series D) or the date of publication of the financial statements according to which the Company does not deviate from the financial covenants, all subject to the maximum interest rate increase limit. | ||||||
The increase in the interest rate will be done only once in respect of any deviation from any of the financial covenants, insofar as there is such a deviation, and the interest rate will not be raised again in the event that the deviation from the relevant financial covenant exists (in this regard it should be clarified that insofar as the deviation from any of the financial covenants has been corrected and thereafter there is an additional deviation, the aforementioned addition shall apply). It should be emphasized that in the event that in respect of a decrease in the rating of the Bonds, the annual interest rate was raised in accordance with the provisions of section 5.4 of the Deed of Trust, then in any case the Additional Interest Rate by virtue of that section together with the Additional Interest Rate by virtue of section 5.5 of the Deed of Trust, due to deviation from the financial covenants, shall not exceed the maximum interest rate increase limit.
For the avoidance of doubt, it is clarified that subject to the foregoing and the maximum increase in the interest rate, the additional interest payments as a result of the downgrade of the rating as stated in section 5.4 of the Deed of Trust and/or as a result of the failure of the Company to comply with any of the financial covenants as stated in this section 5.5 are cumulative. Therefore, in the event that there is a decline in the rating, and in addition, the Company deviates from one or more financial covenants, the holders of the Bonds (Series D) will be entitled to an increase in the interest rate as detailed above, provided that the annual interest addition does not exceed the maximum interest rate increase limit. |
| 59 |
B. Grounds for placing for immediate repayment:
| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| There has been a material deterioration in the business of the issuer/investee companies, and there is concern that the issuer will not be able to repay the promissory notes on time. | See Section 8.1.10 of the Deed of Trust | (a) If there is a material deterioration in the Company’s business compared to its situation at the time of the first issuance of the Bonds (Series D); and there is a real concern that the Company will not be able to repay the Bonds (Series D) on time or (b) there is a real concern that the Company will not be able to meet its material undertakings towards the bond holders. | ||
| The inclusion of a “going concern” note in the auditor’s opinion/review report that is attached to the Company’s financial statements. | See Section 8.1.27 of the Deed of Trust | If a “going concern” note is recorded in the Company’s consolidated financial statements for a period of two consecutive quarters. | ||
| The promissory notes were not repaid on time. | See Section 8.1.1 of the Deed of Trust | If the Company does not repay any amount due from it in connection with the Bonds or the Deed of Trust. For the purposes of this section, the Company will have seven (7) days to correct the breach, unless a different period is specified in the Deed of Trust. |
| 60 |
| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| A debt of the issuer has been placed for immediate repayment. | See Section 8.1.12 of the Deed of Trust | If placed for immediate repayment (and in relation to sub-clause (2) and (3)) the demand for such immediate repayment was not removed within thirty (30) days from the date on which it was placed for immediate repayment as stated): (1) another series of bonds issued by the Company which is listed for trading on any Stock Exchange, or (2) a debt and/or a number of cumulative debts of the Company and/or of corporations it holds whose liability value (or their cumulatively) is at least USD 100 million or whose volume (or their cumulative volume) exceeds 15% of the total assets of the Company, according to the latest financial statements published (audited or reviewed, as the case may be), whichever is lower (provided that if they are cumulative debts - they were placed for immediate repayment simultaneously or adjacent to each other) (such debts as stated in Subsection (2) will be referred to in this section as the: “Other Debt”) or (3) debt and/or a number of cumulative debts of the Company and/or of corporations it holds (including non-recourse debt to the Company (Non-Recourse)) the liability value of which (or of which in the aggregate) exceeds USD 100 million, provided that if such debts are cumulative, they were placed for immediate repayment simultaneously or in close proximity to one another. Regarding Subsection (2) above, a loan without the ability to repay to the Company and/or to the partnership and/or to the Subsidiary (Non-Recourse) will not be considered in this regard Another Debt as stated above. To the extent that the aforementioned conditions are met, the aforementioned grounds will apply, starting from the date on which the Company was required to repay the Other Debt (subject to the healing period specified above) and not from the date the debt was placed for immediate repayment, to the extent that these dates do not overlap. | ||
| Cross Default/Cross Acceleration: (Cross violation, in case of non-payment of other debts or placement for immediate repayment). | ||||
| Cessation of rating or a reduction in the rating of the Bonds below the minimum rating set. | See Section 8.1.15 of the Deed of Trust | If the rating of the Bonds (Series D) by the rating company is reduced to a rating lower than BBB-minus. In the event of a change of rating company, the Company will transfer to the Trustee a comparison between the rating scale of the replaced rating company and the rating scale of the new rating company.
For the purposes of this section below, it should be emphasized that in the event that the Bonds (Series D) will be rated by more than one rating company, an examination of the rating for the purpose of grounds for immediate repayment above will be done, at all times, according to the lower rating between them. | ||
| See Section 8.1.21 of the Deed of Trust | If the Bonds (Series D) cease to be rated for a period of over 60 consecutive days due to reasons and/or circumstances that are under the control of the Company. In this regard, inter alia, the failure to make the payments that the Company undertook to pay the rating company and the failure to provide the reports and information required by the rating company as part of the engagement between the Company and the rating company, will be considered reasons and circumstances that are under the control of the Company. It is clarified that insofar as the Bonds (Series D) will be rated by more than one rating company and as long as they will be rated by more than one rating company as stated, section 8.1.21 of the Deed of Trust will not apply unless all the rating companies together cease to rank the Bonds (Series D) for a period exceeding 60 consecutive days due to reasons and/or circumstances that are under the control of the Company as described above. |
| 61 |
| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| The issuer has stopped or announced the cessation of its payments. | See section 8.1.9 of the Deed of Trust | If the Company ceased or announced its intention to cease its payments, or ceased or announced its intention to cease conducting its business, as it will from time to time. | ||
| Realization of a lien on a material asset or the sale of a basic asset. | See Section 8.1.8 | If liens holders exercise the liens they have on a significant asset of the Company (as this term is defined in the Deed). | ||
| Failure to publish financial statements at the relevant time. | See Section 8.1.24 of the Deed of Trust | If the Company has not published a financial statement that it is required to publish under any law or under the provisions of the Deed of Trust, within 30 days from the last date it is required to publish it. | ||
| A fundamental breach of the terms of bonds. | See Sections 8.1.20 of the Deed of Trust | If the Company violated the terms of the Bonds and/or the Deed of Trust with a fundamental breach, including if it turns out that a material representation of the Company’s representations in the Bonds or the Deed of Trust is incorrect and/or incomplete, and the Trustee notified the Company in writing to correct the breach and the Company did not correct the breach within 14 days of providing the notice. | ||
| Breach of material obligations or performance of an action that may materially impair the rights of the holders. | ||||
| Breach of an undertaking regarding structural changes, mergers and acquisitions, without the approval of the bond holders. | See Section 8.1.17 of the Deed of Trust | If a merger is carried out (except for a merger as aforesaid with a wholly owned company of the Company that shall merge with and into the Company) without the prior approval of the holders of the Bonds (Series D) by a special resolution, unless the absorbing entity has assumed the full obligations of the Company towards the holders of the Bonds (Series D) and in addition the absorbing company or entity has declared (as applicable) towards the holders of the Bonds (Series D), including through the Trustee, at least 10 business days before the merger date, that there is no reasonable concern that due to the merger, the absorbing entity will not be able to fulfill its obligations towards the holders of the Bonds (Series D). Nothing in this section shall derogate from the other grounds for immediate repayment granted to Bond holders in accordance with section 8.1 of the Deed of Trust. In addition, from a period of 30 days before the planned merger until the date of the merger, all the grounds listed in section 8.1 of the Deed of Trust and below shall also apply to the absorbing company as if it were the Company. In relation to the provisions of the sections of this Deed in which the aforesaid is derived from the Company’s financial statements, the examination will be carried out in relation to the financial statements of the absorbing company as they will be after the merger. In this regard, it should be emphasized and clarified that the ground stated in this section will not apply to a merger between corporations wholly owned by the Company. |
| 62 |
| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| Sale of most of the issuer’s assets. | See Section 8.1.16 of the Deed of Trust | If the Company sells to another(s) all of its assets or most of its assets, and prior consent of the holders of the Bonds (Series D) has not been received for such sale by an ordinary resolution. “Sale to another” - sale to any third party whatsoever (including the controlling shareholder of the Company and/or corporations under its control), except for a sale to corporations wholly owned by the Company; “Most of the Company’s assets” - an asset or combination of a number of assets whose value and/or aggregate value (as applicable) in the last financial statements published prior to the occurrence of the relevant event exceeds 50% of the scope of its assets in the Company’s balance sheet according to the financial statements as stated, unless all of the proceeds of the sale (a) will be invested in the Company’s field of activity, and such an investment agreement was signed within a period of 12 months from the date of the sale, or (b) will be used for early redemption (partial or full) of the Bonds in accordance with the provisions of section 7.2 of the Deed of Trust and/or to purchase Bonds (Series D) (partial or full). In relation to subsections (a) and (b) above - on the date of the sale the approval of the Company’s board of directors will be obtained regarding the intention to make use of the proceeds of the sale for the obligation stated in subsection (a) or (b) above. | ||
| A change was made mainly in the issuer’s area of activity. | ||||
| Issuance of a Permanent liquidation order/issuance of a temporary liquidation order that was not revoked within a period of X. | See Sections 8.1.4 and 8.1.5 of the Deed of Trust | If the Company makes a liquidation decision (except for liquidation as a result of a merger with another company as stated in section 8.1.17 of the Deed of Trust) or if a permanent and final liquidation order is issued in relation to the Company by a court and/or a permanent liquidator is appointed to it or a similar decision is made or a similar functionary is appointed by the Company and/or to it. It should be clarified that for the purposes of this subsection, the liquidation proceedings in relation to the Company will be proceedings in accordance with Israeli law or parallel proceedings, in accordance with foreign law, corresponding to the Israeli procedure.
If a temporary liquidation order is issued or a provisional liquidator is appointed or any similar functionary appointed or any judicial decision of a similar nature is taken, and such order or decision has not been postponed or revoked within 45 days from the date of issuance of the order or making of the decision, as applicable. Notwithstanding the foregoing, the Company will not be granted any remedy period in respect of requests or orders submitted or granted, as the case may be, by the Company or with its consent. It should be clarified that for the purposes of this subsection, the liquidation proceedings in relation to the Company will be proceedings in accordance with Israeli law or parallel proceedings, in accordance with foreign law, corresponding to the Israeli procedure. | ||
| Imposition of an attachment on the issuer’s assets or execution of execution agency action. | See Section 8.1.7 of the Deed of Trust | If an attachment is imposed on a material asset of the Company (as this term is defined below) or execution office actions are carried out in connection with a material asset of the Company (as this term is defined below) and the attachment is not removed, or the action is not canceled, as applicable, within 45 days from the date of their imposition or performance, as applicable. Notwithstanding the foregoing, the Company will not be granted any remedy period in respect of requests or orders submitted or granted, as the case may be, by the Company or with its consent. It should be clarified that for the purposes of this subsection, attachment or execution office proceedings in relation to the Company will be proceedings in accordance with Israeli law or parallel proceedings, in accordance with foreign law, parallel to the Israeli procedure.
“Material Asset of the Company” - an asset or a number of assets in the aggregate, the value of which, as of the relevant date, according to the most recent consolidated financial statements (audited or reviewed, as applicable) of the Company published prior to such date, exceeds 40% of the total assets in the Company’s consolidated balance sheet according to such financial statements. |
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| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| Appointment of a permanent or temporary receiver (provided that the appointment was not canceled on a reasonable date). | See section 8.1.6 of the Deed of Trust | If an application has been filed for receivership or the appointment of a receiver (temporary or permanent) or any similar functionary to be appointed to the Company or on a Material Asset of the Company (as defined above), or if an order has been issued for the appointment of a temporary receiver or any similar functionary to be appointed - which has not been rejected or revoked within 45 days from the date of their submission or provision, as applicable; or - if an order has been issued for the appointment of a permanent receiver to the Company or on a Material Asset of the Company (as defined below) or a similar order under the law applicable to the Company. Notwithstanding the foregoing, the Company will not be given any healing period in relation to requests or orders filed or granted as applicable, by the Company or with its consent. It should be clarified that for the purposes of this subsection, the receivership proceedings in relation to the Company will be proceedings in accordance with Israeli law or parallel proceedings, in accordance with foreign law, corresponding to the Israeli procedure. | ||
| The issuer has announced its intention to cease continuing its business and/or conduct its business. | See section 8.1.9 of the Deed of Trust | If the Company ceased or announced its intention to cease its payments, or ceased or announced its intention to cease conducting its business, as it will from time to time. | ||
| The Company ceased to be a reporting corporation under the Securities Law. | See Section 8.1.23 of the Deed of Trust | If the Company ceases to be a reporting corporation. | ||
| Deletion from the Companies Register, excluding a merger. | See Section 8.1.19 of the Deed of Trust | If the Company is liquidated or deleted for any reason whatsoever (subject to the provisions of section 8.1.17 of the Deed of Trust). | ||
| Request/issuance of a stay of proceedings order. | See Section 8.1.2 of the Deed of Trust | If the Company submits a request for a stay of proceedings order, or if a stay of proceedings order is issued against the Company, or if the Company submits a request for an order to open proceedings, as such term is defined in the Insolvency Law, as defined below, or such order is issued, or if the Company submits a request for a compromise or arrangement with the Company’s creditors pursuant to section 350 of the Companies Law or pursuant to the Insolvency and Economic Rehabilitation Law, 5778-2018 (the “Insolvency Law”), or a similar proceeding under foreign law, in respect of any of the orders or requests referred to in this section above (except for the purpose of merging with another company as stated in section 8.1.17 of the Deed of Trust and/or a change in the structure of the Company or a split that is not prohibited under the terms of this Deed and except for making arrangements between the Company and its shareholders and/or holders of warrants (that are exercisable into shares) of the Company only, which are not prohibited under the terms of this Deed and which do not affect the ability to repay the Bonds (Series D)). |
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| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| An motion was filed for an order to open proceedings under the Insolvency and Economic Rehabilitation Law, 5778-2018. | ||||
| A motion was filed for certification of a debt arrangement outside the framework of an order to open proceedings under the Insolvency and Economic Rehabilitation Law, 5778-2018. | ||||
| The Stock Exchange suspended/deleted the trading in the Bonds. | See sections 8.1.18 and 8.1.25 of the Deed of Trust | If the trading in the Bonds (Series D) on the Stock Exchange has been suspended by the Stock Exchange, except for a suspension on the grounds of the creation of ambiguity as stated in Part Four of the Stock Exchange Regulations, and 60 days have passed since the suspension during which the suspension was not canceled.
If the Bonds (Series D) were delisted from trading on the Stock Exchange. | ||
| Violation of restrictions on raising additional debt, including series expansion. | See Section 8.1.22 of the Deed of Trust | In the event that the Company expands a series to Bonds (Series D) or issues additional series of bonds and/or other securities, contrary to the provisions of section 4 of the Deed of Trust. | ||
| Failure to comply with the undertaking to the mechanism of adjustment to the interest rate, as a result of failure to remove a floating lien. | N/A | - | ||
| Taking on financial or credit debt contrary to a commitment not to create a current lien. | See Section 8.1.26 of the Deed of Trust | If the Company breaches any of its undertakings not to create liens as stated in section 6.4 of the Deed of Trust. |
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| The ground | Exists (section in the deed) /does not exist | Notes / Explanation | ||
| Violation of an obligation to deposit money in an expense cushion and interest cushion or deposit money in a deposit for special expenses. | See Section 8.1.29 of the Deed of Trust | If the Company breaches any of its material obligations to deposit an interest pillow as stated in section 5.6 of the Deed of Trust. In this regard, the Company will have a period of 7 (seven) days to correct the breach. | ||
| See Section 8.1.30 of the Deed of Trust | If the Company breaches any of its material obligations to deposit an expense cushion as stated in section 5.7 of the Deed of Trust. In this regard, the Company will have a period of 7 (seven) days to correct the breach | |||
| Provision of a temporary trustee order or appointment of a temporary trustee. | See section 8.1.4 of the Deed of Trust | If the Company makes a liquidation decision (except for liquidation as a result of a merger with another company as stated in section 8.1.17 of the Deed of Trust) or if a permanent and final liquidation order is issued in relation to the Company by a court and/or a permanent liquidator is appointed to it or a similar decision is made or a similar functionary is appointed by the Company and/or to it. It should be clarified that for the purposes of this subsection, the liquidation proceedings in relation to the Company will be proceedings in accordance with Israeli law or parallel proceedings, in accordance with foreign law, corresponding to the Israeli procedure. | ||
| Failure to comply with financial covenants | See section 8.1.13 of the Deed of Trust. | If the Company fails to meet any of the financial obligations stated in section 6.5 of the Deed of Trust for two consecutive quarters. | ||
| Change of control | See Section 8.1.11 of the Deed of Trust | If there is a Change of Control, and the Company does not publish a tender offer in relation to the purchase of all the Bonds, at a price not less than their par value, within 45 days of the occurrence of such an event.
“Change of Control” - if any person, other than authorized shareholders (as defined below), holds or becomes a holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting rights in the Company; provided, however, that if the Company becomes a subsidiary corporation (as defined below) directly or indirectly of a holding company, such holding company itself shall not be deemed a person as stated if (a) said holding company is the owner, directly or indirectly of 100% of the Company’s share capital and (b) upon completion of said transaction a person, apart from one or more authorized shareholder, will not hold or become a holder, directly or indirectly, of more than 50% of the total voting rights of shares with voting shares of such holding company. | ||
“Authorized Shareholders” – any of (a) the undersigned Moshe Gubin and Michael Blisko or any of their estates, spouses, and/or descendants; (b) any trust in favor of any of the individuals listed in section (a) above only.
“Subsidiary Corporation” – In connection with any individual, any corporation, general or limited partnership or other business entity which: (a) on the effective date more than 50% of the voting rights of shares with voting rights or other rights (including partnership rights) is entitled (unconnected to the occurrence of any incident) to vote in the appointment of directors, managers, or trustees of whom it is owned or controlled, directly or indirectly, by (1) such individual, (2) such individual and one or more subsidiaries of such individual or (b) on the effective date holds control, whether directly or indirectly, including joint control. | ||||
| Execution of a distribution contrary to commitments | See section 8.1.14 of the Deed of Trust. | If the Company made a distribution contrary to the provisions of the distribution limit, as specified in section 6.6 of the Deed of Trust. | ||
| Breach of undertaking in connection with non-transfer of surplus from the project | N/A | - | ||
| Breach of business scope limitation | See section 8.1.31 of the Deed of Trust | If the Company’s primary activity is not real estate activity in the United States in medical institutions. |
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C. Requirements of compliance with financial covenants
| The covenant | Exists (section in the deed) /does not exist | Details of covenant | ||
| Equity | See section 6.5 of the Deed of Trust | On the last day of each calendar quarter the Company’s consolidated equity (including minority rights) as shown in the Company’s consolidated financial statements, shall not be less than USD 22 million (this amount shall not be linked to any linkage basis). | ||
| Financial Debt to EBITDA Ratio | See section 6.5 of the Deed of Trust | On the last day of each calendar quarter, the ratio of financial debt to EBITDA (as defined in Section 5.5 of the Deed of Trust), shall not exceed 10. | ||
| EBITDA to Finance Expenses Ratio | See section 6.5 of the Deed of Trust | The EBITDA to finance expenses ratio (as defined in Section 5.5 of the Deed of Trust) shall not be less than 1.25. In accordance with the consolidated financial statements of the Company as of June 30, 2026, the aforesaid ratio stands at 2.59. |
| 14. | Consent to inclusion |
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Shelf Offering Report of Strawberry Fields REIT, Inc. (the “Company”), to be filed with the Israel Securities Authority and/or the Tel Aviv Stock Exchange Ltd. on or about the date hereof (the “Shelf Offering Report”), of our report dated March 19, 2026, relating to the consolidated financial statements of the Company as of December 31, 2025 and 2024, and for each of the years in the two-year period ended December 31, 2025, which appears in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
We also consent to the incorporation by reference in the Shelf Offering Report of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, including the condensed consolidated financial statements of the Company as of June 30, 2026 and December 31, 2025, and for the three-and-six-month periods ended June 30, 2026 and 2025.
We further consent to the reference to our firm under the heading “Experts” in the Shelf Offering Report.
/s/ Hacker, Johnson & Smith PA
HACKER, JOHNSON & SMITH PA,
Fort Lauderdale, Florida
September 14, 2026
Attorney’s opinion
The Company received the following legal opinion:
The following is a legal opinion given to the company by FBC & Co., who serve as attorneys for this issuance.
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Date: September 14, 2026
To
Strawberry Fields. REIT, Inc.
Dear Sirs/Madams,
| Re: | Shelf Offering Report for Strawberry Fields REIT, Inc. (the “Company”), dated September 14, 2026 (“Shelf Offering Report”) |
With regard to the Prospectus of the Company dated August 5, 2024 (the “Prospectus”) and the Shelf Offering Report, and based on the opinion of legal counsel to the Company that was incorporated in Maryland, USA, we hereby provide our opinion as follows:
| 1. | The rights that go with the securities offered according to the Shelf Offering Report were accurately described in the Prospectus and the Shelf Offering Report. | |
| 2. | The Company has the authority to issue the offered securities according to the Shelf Offering Report in the way described in the Prospectus and the Shelf Offering Report. | |
| 3. | The directors of the Company were lawfully appointed and their names appear in the Shelf Offering Report. |
We agree that this opinion will be included in the Shelf Offering Report.
Sincerely,
Adv. Boaz Noiman, Adv. Guy Masas
(FBC & Co.)
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Appendix A - Deed of Trust
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Appendix B - Letter of consent from the rating company
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Appendix C - Taxation and Discount Rate
The following description is general only and is not to be construed as tax and/or legal advice. The description does not constitute a substitute for individual advice by experts, taking into account the special circumstances for each investor. Potential investors should consult with their tax advisors to clarify the particular income or other tax implications to such investors, taking into account the unique circumstances of the investor and of the proposed security.
| 1. | In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved.Taxation according to the laws of the United States |
| 1.1 | Taxation under US federal law |
This section summarizes material tax implications relating to federal income tax and federal estate tax in the United States in relation to the purchase, possession, sale or any other disposition of the bonds (Series D) (in this Section: the “Bonds”).
Unless otherwise specified, this section is relevant only to the “Israeli holder” (as defined below) who holds the bonds as a capital asset for US tax purposes (in general, an asset held for investment purposes).
This description is based on the provisions of the U.S. Internal Revenue Code of 1986 as amended (the “Code”), the legislative history of the Code, existing regulations and proposed regulations published by the U.S. Treasury Department (collectively: “Treasury Provisions”), legal interpretations and administrative guidelines published by the U.S. Internal Revenue Service (“IRS”), which may apply retroactively, and which are subject to various interpretations. This description does not address all aspects of U.S. federal income tax which may apply to investors in light of their special circumstances or to investors who are subject to special treatment under U.S. federal income tax laws, nor does it address aspects of non-U.S. federal income tax such as gift tax as well as state or local tax. In addition, this description is based on the provisions of the Convention between the United States and the Government of Israel with respect to income taxation signed on November 20, 1975, and amended using protocols signed on May 30, 1980 and January 26, 1993, and entered into force on January 1, 1995 (the “Convention”).
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For purposes of this description, an “Israeli holder” is any holder and owner of bonds (including an Israeli corporation and an individual residing in Israel for tax purposes in Israel) who is a resident of Israel for the purposes of the Convention, and is entitled to benefits by virtue of the Convention, and is the beneficial owner of the bonds, provided that such holder is not: (a) a citizen or resident of the United States; (b) a citizen or former resident of the United States who is subject to the special rules under sections 877 or 877A of the Code; (c) a corporation, partnership or other entity created or incorporated under the laws of the United States or one of the states within the United States; (d) a trust if (1) a U.S. court has the power to exercise primary supervision over its management and one or more U.S. persons are authorized to control all significant decisions of the trust, or (2) the trust existed on August 20, 1996, in accordance with the relevant treasury regulations, it has in effect a valid choice to be considered a domestic trust, or - (e) an estate, whose income is subject to income tax in the US, regardless of its source .
This summary is general in nature and does not discuss any U.S. tax implications that may be relevant to Israeli holders in light of their special circumstances or to certain types of investors who are subject to special tax treatment under US federal income tax laws, including (but not limited to) government institutions, banks or financial institutions, insurance companies, non-US entities that can and will be classified as partnerships or trusts for US federal income tax purposes, foreign controlled corporations, passive foreign investment companies, securities or currency traders, tax-exempt investors, employees who receive the securities as part of their salary or during their employment, and Israeli holders who hold (directly or indirectly) at least 10% of the voting power in the payer. In addition, this summary does not address the U.S. tax implications of the beneficial owners of the bonds, except for the original purchasers of the bonds who purchased the bonds in this offer under this Shelf Offering Report.
It is recommended that Israeli holders consult with their tax advisors regarding the implications of Israeli income tax law and taxes in respect of property, franchise, local, state and federal in the United States and other tax implications, including the applicability of the provisions of the Convention, relating to the purchase, ownership and sale of the bonds.
| 1.a.1.1 | Taxation of Israeli Holders |
Federal income tax laws that apply to non-U.S. holders of bonds are complex, and this Shelf Offering Report will attempt to provide only a concise summary of these laws. Future investors are advised to consult with their tax advisors to determine the impact of U.S. and non-U.S. federal tax laws (including Israel), as well as any applicable income tax treaties, regarding investment in the bonds, and related reporting requirements to the extent they exist.
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| 1.a.1.2 | Interest income |
In general, the payer of interest income (including an original issuance discount (“OID”) attributable to bonds under the relevant provisions of the Code( obtained by an Israeli holder in relation to the bonds, and which is not considered “effectively connected” to the trade or business in the United States of the Israeli holder, must deduct tax at source in the United States of a non-resident at a rate of 30% according to the internal law, or, as applicable, at a rate of 17.5% according to the Convention which is collected by the company, the relevant tax withholding agent or their representatives if the Israeli holder is considered a resident of Israel under the Convention, as well as other relevant requirements for receiving the Treaty benefits are met. However, with the exception of section 1.1.5 and section 1.1.7 below, income from interest payments received or paid by an Israeli holder in connection with the bonds, may comply with the “Portfolio Interest Exemption” stipulated in sections 871(h) and 881(c) of the Code, and, accordingly, may be exempt from tax at source or US federal income tax of a non-resident – if such interest is not “effectively connected” to the conduct of a trade or business in the United States by the Israeli holder, provided that among other conditions: (1) the interest is paid on an obligation that satisfies the criteria of registered form, as such term is defined in the Code and the Regulations; (2) the interest is not characterized under the Code as contingent interest; (3) the Israeli holder does not directly or constructively hold 10% or more of the total voting power, within the meaning of Section 871(h) of the Code, of all types of shares in the company; (4) the Israeli holder is not a “controlled foreign corporation” (as defined for US federal income tax purposes) related to the company through the ownership of shares; (5) the Israeli holder is not a bank which is considered to be the recipient of interest on the extension of credit made in accordance with a loan agreement signed during the ordinary course of his business, as described in Section 881(c) (3) (A) of the Code; (6) the interest on the bonds is not considered to be “effectively connected” to the trade or business of the Israeli holder within the United States; and (7) (a) the Israeli holder authorizes the company, the relevant tax withholding agent or their representatives , subject to the penalties provided by law for perjury, that the Israeli holder is not a U.S. citizen or resident and gives the name of such holder, his address and other information as may be required, on a Form W-8BEN (in the case of an individual), Form W-8BEN-E (in the case of an entity), or other relevant US withholding tax forms to someone who is not a resident, duly prepared, or an acceptable alternative form duly prepared and signed; or (b) in some cases, securities clearing house , a bank or other financial institution that holds securities (including the bonds) on behalf of its clients (including the Israeli holder) in the course of its ordinary business, confirms to the company, the relevant tax withholding agent or their representatives, subject to the penalties provided by law for perjury, that he received a Form W-8BEN or Form W-8BEN-E form, or other relevant forms confirming withholding at source in the US for a non-resident, signed under penalty for perjury (as described above) from the beneficial owner (or that he received from another financial institution a similar certificate, according to which he or another financial institution acting on behalf of the owner, has received such form from the beneficial owner) as well as additional requirements regarding bonds and interest, all in accordance with the provisions of the Code and the Regulations. The relevant non-resident US tax withholding form may need to be updated from time to time.
Except where otherwise provided by the Convention, an Israeli holder may be liable for federal income tax in the United States (as a rule on the basis of net income) with respect to interest received on bonds, if such interest is effectively related to the trade or business of the Israeli holder in the United States. In such a case, the Israeli holder classified as a US federal tax corporation may also be subject to a US “branch profits” tax (which is generally imposed on a non-U.S. corporation with respect to a dividend equivalent from the United States, in practice or considered, of income or profits attributable to trade or business in the United States) at a rate of 30% (or, if certain requirements are met, a reduced rate of 12.5% under the Convention). In order to claim any benefits under the Convention or to claim an exemption from withholding of tax at source in the United States of a non-resident, since the income generated by the Israeli holder is effectively related to trade or business in the United States, the Israeli holder must timely provide the appropriate form for deduction at source in the United States of a non-resident, which is properly filled out and signed under penalty of perjury, to the Company, the relevant tax withholding agent or their representatives.
It is anticipated that the bonds will be issued with no more than a de minimis amount (as set forth in the applicable Treasury Provisions) of OID. If, however, a bond is issued for an amount less than the principal amount and the difference is more than a de minimis amount, an Israeli holder will be required to include the difference in income as OID as it accrues in accordance with a constant-yield method, based on compounding of interest before the receipt of cash attributable to this income. Such income would be subject to the same withholding rules as interest income.
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According to the applicable Treasury regulations, the possibility of premium on the notes will not affect the amount or timing of interest income recognized by the holder of the note, if the likelihood of the additional payment, as of the date of issue of the notes, is remote.
| 1.a.1.3 | Sale, exchange, repurchase, redemption, repayment or other disposition of the bonds |
As a rule, an Israeli holder will not be subject to US federal income tax in respect of any profit considered as capital gain for US federal income tax purposes, from sale, exchange, repurchase, redemption, repayment, or other disposition of the bonds, unless: (1) the gain is effectively connected to the trade or business of the Israeli holder in the United States, and if the Convention applies, such profit is attributed to a permanent establishment of the Israeli holder in the United States; or (2) if the Israeli holder is an individual, such Israeli holder who has been present in the United States for a total of 183 days or more in the tax year, in which the disposition was made and certain additional conditions have been met, in such case, except as otherwise provided in the applicable tax convention, the profit, which may be offset by certain capital losses from a U.S. source, will be subject to a fixed tax of 30%, even though the holder is not a resident of the United States.
Capital Gains
Gain realized by Israeli Holders from the sale of options or shares issuable upon exercise of options generally will not be subject to U.S. federal income tax unless one of the following conditions applies:
The gain is effectively connected with the Israeli Holder’s conduct of a trade or business in the United States and, if an applicable treaty applies, such gain is attributable to a permanent establishment of the Israeli Holder in the United States;
The Israeli Holder is a non-resident alien individual who is present in the United States for 183 days or more during the taxable year and whose tax home is in the United States. In such case, the individual will be subject to a 30% tax on his or her capital gains for such taxable year; or
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Our shares and/or options to acquire our shares constitute a “United States real property interest” within the meaning of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”), as described below:
Our shares and/or options with respect to our shares will not constitute a “United States real property interest” if we qualify as a domestically controlled real estate investment trust. We will be treated as a domestically controlled real estate investment trust if, at all times during a specified testing period, less than 50% of the value of our shares is held, directly or indirectly, by non-U.S. shareholders.
We believe that, as of the date hereof, we qualify as a domestically controlled real estate investment trust, and therefore a sale of our shares should not be subject to tax under FIRPTA. However, we cannot assure you that we are, or will continue to be, treated as a domestically controlled real estate investment trust in the future.
Even if we are not treated as a domestically controlled real estate investment trust at the time an Israeli Holder sells options and/or shares issuable upon exercise of options, gain arising from such sale may nevertheless not be subject to tax under FIRPTA if:
The class or series of shares sold is considered regularly traded, within the meaning of the applicable U.S. Treasury Regulations, on an established securities market; and
The Israeli Holder held 10% or less of the value of the class or series of shares sold (of the issued and outstanding shares) throughout the five-year period ending on the date of sale or exchange.
If the gain is subject to tax under FIRPTA, the Israeli Holder will be subject to regular U.S. federal income tax on the entire gain in the same manner as a U.S. resident shareholder subject to tax, including any applicable minimum tax under the Code. In addition, the Israeli Holder may be required to withhold 15% of the amount realized and remit it to the U.S. Internal Revenue Service.
Warrants
As a general matter, holders of warrants will not recognize gain or loss upon the exercise of a warrant.
A holder’s tax basis in a share received upon exercise of a warrant will equal the sum of the holder’s adjusted tax basis in the warrant plus the exercise price paid.
The holder’s holding period for a share received upon exercise of a warrant will not include the period during which the warrant was held by the holder.
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Upon the expiration of a warrant, the holder will recognize a capital loss equal to the holder’s adjusted tax basis in the warrant, subject to the capital loss limitation rules.
A sale of a warrant to a third party generally is a taxable transaction resulting in gain or loss equal to the difference between the amount realized and the holder’s adjusted tax basis in the warrant.
Such gain or loss will be capital gain or capital loss and will be treated as long-term capital gain or loss if the warrant was held for more than one year. Upon a sale of a warrant to us, the U.S. Internal Revenue Service may assert that the holder must recognize ordinary income on the sale. Investors should consult their tax advisors regarding the consequences of selling a warrant to us.
| 1.a.1.4 | Federal estate tax |
If the interest on the bonds meets the terms of the Portfolio Interest exemption described above, then the bonds held by a single Israeli holder, who is not a US resident or citizen (as explicitly defined for US federal estate tax purposes), at the time of death will not be included in that individual’s estate for US federal estate tax purposes (it should be noted that there is no signed estate tax treaty between the US government and the State of Israel).
| 1.a.1.5 | Information reporting and backup withholdings |
The company or the relevant tax withholding agent are required to report any interest amount paid or earned on the bonds as well as the tax amount, if any, deducted and/or withheld for such amounts paid or earned and, in certain cases of sale or transfer of shares, report the amount of the consideration, on information returns, and copies of such information forms must be provided to any Israeli holder and submitted to the IRS.
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Copies of such information forms may also be made available to the Israeli tax authorities in accordance with the provisions of the Convention or other agreement signed by the United States with the Government of Israel. The company or the relevant tax-withholding agent is required to make a “backup for withholding at source on a gross basis on all interest payments in respect of the bonds if certain requirements are not met. Under the existing law, the rate of withholding at source for non-US persons in receipt of US source interest income is 30%. Withholding tax backup does not apply to payments in respect of the bonds to an Israeli holder if the relevant statements described 1.1.6 below or an applicable Form W-8BEN or W-8BEN-E have been duly provided by the Israeli holder, provided that the company has no actual knowledge or reason to know that the Israeli holder is a US resident. Reporting of information, and, depending on the circumstances, backup of withholding tax, shall apply to any payment of the proceeds from the sale, exchange, repurchase, redemption, repayment or other disposition of the bonds within the United States or made through certain financial intermediaries related to the United States, unless an Israeli holder approves, subject to penalties for perjury provided by law, that the Israeli holder is not a citizen or resident of the United States and provides the name and address of the Israeli holder, as well as additional information as to the extent necessary, in the Form W-8BEN (in the case of an individual) or Form W-8BEN-E (in the case of an entity), or other relevant withholding tax forms to a non-resident, which have been prepared in accordance with applicable law or an acceptable alternative form, and the relevant withholding agent has no actual knowledge or reason to know that the Israeli holder is not a U.S. citizen or resident.
| 1.a.1.6 | Completion of IRS Form W-8BEN or IRS Form W-8BEN-E by bondholders |
As stated, 1.1.2 above, persons purchasing the bonds in this issuance under this Shelf Offering Report will require, as a condition of purchase, to fill in the form W-8BEN (in case of an individual) or W-8BEN-E (in case of an entity) at the member of the stock exchange, through which they purchase the bonds.
For the avoidance of doubt, it should be noted that any holder of the bonds who does not provide a Form W-8BEN or W-8BEN-E, filled in as required, will be subject to a US withholding tax of a non-resident imposed by the company, the relevant tax withholding agent or their representatives on all interest payments at the rate of 30% as described above.
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| 1.a.1.7 | Foreign Account Tax Compliance Act |
The Code’s Foreign Account Tax Compliance Act (“FATCA”) provisions generally impose a 30% gross withholding tax obligation on interest from a U.S. source (including interest on bonds), paid to certain foreign entities, whether as beneficial owners or Intermediaries, to the extent that the authorization, identification, withholding or other reporting requirements imposed by FATCA are not met.
In the event that withholding tax payments made to a “Foreign Financial Institution”, as the term is defined in the FATCA, subject to a number of exceptions, withholding tax will be imposed under the FATCA, unless such Institution (i) collects and remits to the IRS or other relevant tax authorities, certain information about such Institution’s “United States account holders” (as specifically defined by the Code) by virtue of an agreement with the IRS or relevant foreign law enacted in connection with an intergovernmental agreement; and (ii) establishes withholding obligations with respect to certain payments to its specific account holders and to certain other persons. In the case of payments made to a foreign entity which is a non-financial foreign entity (as specifically defined by the Code), subject to a number of exceptions, the withholding tax under the FATCA will generally be levied on payments from which the source can be withheld unless such foreign entity has provided the withholding agent the following: (1) confirmation that it does not have substantial US owners; or (2) certain information regarding its substantial US owners.
An Israeli holder, or any non-U.S. intermediary in the chain of ownership, who has not complied with the requirements for certificates or other requirements imposed under the FATCA or under an applicable intergovernmental agreement, will generally be subject to withholding tax at the rate of 30% under the FATCA imposed by the Company, the applicable tax withholding agent or their representatives for withholding tax payments. If withholding taxes are imposed under the FATCA in relation to interest payments made under the bonds, holders who may be entitled to an exemption or reduction of federal withholding tax in the United States for such interest or consideration will be required to apply for an IRS credit or reimbursement in order to receive the exemption or reduction benefit, if any. No additional amounts shall be required on account of the withholding tax obligation imposed on payments in respect of the bonds as a result of the failure of an Israeli holder to comply with the bonds, or any non-U.S. intermediary through which such holder is the owner, directly or indirectly, of the bonds, of the requirements under the FATCA. Holders or Future holders of the bonds may be required to provide additional information in order to allow the relevant tax withholding agent to determine whether a tax withholding is required.
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THE TAX AND OTHER MATTERS DESCRIBED IN THIS SUPPLEMENT DO NOT CONSTITUTE, AND SHOULD NOT BE CONSIDERED AS, LEGAL OR TAX ADVICE TO PROSPECTIVE INVESTORS. PROSPECTIVE INVESTORS SHOULD CONSULT LEGAL AND TAX ADVISERS IN THE COUNTRIES OF THEIR CITIZENSHIP, RESIDENCE, AND DOMICILE TO DETERMINE THE POSSIBLE TAX OR OTHER CONSEQUENCES OF PURCHASING, HOLDING, AND WITHDRAWING INTERESTS UNDER THE LAWS OF THEIR RESPECTIVE JURISDICTIONS.
| 2. | Taxation of income according to the laws of the State of israel |
As is customary in investment decisions, the investor must consider the tax implications associated with investing in securities that are included in the Shelf Offering Report. The stated in the Shelf Offering Report does not purport to constitute an agreed and/or complete interpretation of the provisions of the law or an exhaustive description of the tax provisions relating to the securities included in it, and does not replace legal and professional advice in the matter, which should be obtained in accordance with the special data of each investor.
The provisions contained in the Shelf Offering Report in relation to the taxation of securities do not purport to be a competent interpretation of the provisions of the law and they do not replace professional advice, which examines the special circumstances of each investor.
Investors seeking to purchase securities or bonds (Series D) in accordance with this Shelf Offering Report should consult with their tax advisors regarding the implementation of Israeli income tax laws for their respective cases, as well as any tax implications arising from any non-Israeli jurisdiction or under a relevant tax treaty.
It should be clarified that the description below relates to the manner of taxation of Israeli resident investors. Therefore, it is proposed to a foreign resident who wishes to purchase the securities offered to seek professional advice before making the purchase. Various provisions and tax implications that are proposed to be examined separately may apply.
Tax aspects applicable to securities holders issued under this Shelf Offering Report
It should be clarified that the following relates to the manner of taxation of Israeli investors only. Therefore, it is proposed to a foreign resident who wishes to purchase the offered securities to seek professional advice before making the purchase.
According to current law, the main tax arrangements in Israel that apply to the securities offered under this Shelf Offering Report are described hereunder in summary:
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In recent years, a number of amendments have been enacted that materially amend the Income Tax Ordinance [New Version], 5721-1961 (the “Ordinance”), relating to the taxation of securities traded on the Stock Exchange.
In addition, from the date of this Shelf Offering Report, further legislative changes may be made to the Company’s tax regime, the securities and the investors in such securities, beyond the changes made to date in the provisions. Naturally, it is not possible to predict the content and effect of such changes.
On July 25, 2005, the Knesset approved the amendment to the Income Tax Ordinance (Amendment No. 147), 5765-2005 (the “Amendment”). The Amendment materially changed the provisions of the Income Tax Ordinance [New Version], 5721-1961 (the “Ordinance”), relating to the taxation of securities traded on the Stock Exchange.
In addition, on December 29, 2008, the Knesset approved Amendment 169 to the Ordinance, which was published in the Official Gazette on December 31, 2008 (and came into effect on January 1, 2009), and brought about additional changes with respect to the taxation of securities.
As of the date of publication of this Shelf Offering Report, not all of the new regulations expected to be published following the above amendments have yet been published. In addition, as of the date of publication of this prospectus, there is no established practice regarding some of the provisions of the said amendment and there is no case law interpreting some of the tax provisions in this amendment.
On December 6, 2011, the Law for Changing the Tax Burden (Legislative Amendments), 5772-2011, was published in the Official Gazette, adopting most of the tax recommendations of the committee for social-economic change headed by Professor Trajtenberg (the “Law for Changing the Tax Burden”). Most of the changes in the law came into effect as of January 1, 2012.
Among other things, the amendment increased the tax rates on income received by individuals from capital gains, interest and dividends, from 20% to 25%, and, with respect to a substantial shareholder9, on capital gains and dividends from 25% to 30%.
| 9 | An individual holding, directly or indirectly, alone or together with another (as such term is defined in section 88 of the Ordinance), 10% or more of one or more of any of the means of control (as such term is defined in section 88 of the Ordinance) in the company, at the time of the sale of the security or at any time during the 12 months preceding such sale (the “Substantial Shareholder”). |
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On August 13, 2012, the Law for Reducing the Deficit and Changing the Tax Burden (Legislative Amendments), 5772-2012, was published in the Official Gazette, which included Amendment No. 195 to the Ordinance (hereinafter: “Amendment 195”). Pursuant to Amendment 195, section 121B was added to the Ordinance, which provides that an individual shall be liable, as of January 1, 2013, to an additional tax on the portion of his taxable income exceeding the amount referred to in the section (the “Surtax”), which is updated annually in accordance with the rate of increase in the consumer price index (the “Threshold”).
This section was updated on December 29, 2016 when the Economic Efficiency Law (Legislative Amendments for Achieving Budget Goals for Fiscal Years 2017 and 2018), 5777-2016, was published in the Official Gazette (the “Economic Efficiency Law”). The updated section 121B provides that an individual whose taxable income in tax year 2026 exceeded NIS 721,560 shall be liable to additional tax on the portion of his taxable income exceeding such amount at an additional rate of 3% above the foregoing. Taxable income includes all types of income, including capital gains and real estate appreciation gains (a sale of rights in real estate in a residential apartment will be included only if the sale value exceeds NIS 5,385,285 (for 2026) and the sale is not exempt from tax under any law), excluding an inflationary amount as defined in section 88 of the Ordinance and an inflationary amount as defined in section 47 of the Real Estate Taxation Law.
In addition, under the Economic Efficiency Law, the corporate tax rate set forth in section 126(a) of the Ordinance was reduced, so that as of January 1, 2018 it is 23%. In addition, under that law, the tax brackets for individuals were changed and the highest marginal tax rate was reduced to 47% as of 2017 and thereafter.
As part of the government’s measures to make adjustments in order to meet the fiscal frameworks for 2025 through 2027, on December 26, and in Amendment 276 to the Ordinance, the Economic Efficiency Law (Legislative Amendments for Achieving Budget Goals for 2025) (Taxation of Undistributed Profits), 5784-2024, was published (the “Economic Efficiency Law” and also “Amendment 276 to the Ordinance”). The amendment provides that an additional surtax will be imposed on the portion of taxable income from capital sources (the “Additional Surtax on Income from Capital Sources”) at a rate of 2% on capital income, excluding income from personal exertion as stated in sections 2(1) and 2(2) of the Ordinance, on amounts exceeding NIS 721,560 (for 2025-2027, such amount will be adjusted from 2028 in accordance with the increase in the consumer price index at the end of 2027). It was also provided under the Economic Efficiency Law that as of 2025, the tax rate applicable to passive income will increase. As a general rule, the above amounts are correct for tax year 2026 and are adjusted annually according to the rate of increase in the consumer price index, except for the years 2025 through 2027 as stated in Amendment 276 (the “Additional Surtax”, or “Additional Surtax on Capital Sources”, as applicable).
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On August 5, 2013, the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Goals for 2013 and 2014), 5773-2013, was published, which included amendments in many and varied areas of taxation, and pursuant to which, among other things, the tax exemption provisions for foreign residents on capital gains from the sale of shares of an Israeli resident company were narrowed, such that the exemption will not apply to the sale of a bond of an Israeli resident company where, on the date of acquisition and in the two years preceding the sale, the principal value of the assets, directly or indirectly, derived from rights in real estate or rights in a real estate association, including any other right in real estate, right to exploit natural resources in Israel, right to use real estate or any asset attached to real estate in Israel and/or right to enjoy the fruits of real estate in Israel, all in accordance with section 97 of the Ordinance.
It is clarified that the following refers to the manner of taxation of Israeli resident investors. It should be noted that with respect to an “individual who became an Israeli resident for the first time”, “returning resident” and “veteran returning resident”, as defined in section 14 of the Ordinance, different tax implications may apply from those described below, and such residents are advised to seek specific advice in order to examine their eligibility for tax benefits in Israel. It should also be noted that with respect to investors who will be deemed “controlling shareholders” or “substantial shareholders”, as defined in the Ordinance, additional tax consequences may apply beyond those described below.
In addition, the discussion below regarding the taxation of a foreign resident company is subject to the case where Israeli residents are controlling shareholders therein, if the beneficiaries or those entitled to 25% or more of the income or profits of the foreign resident, directly or indirectly, pursuant to the provisions of section 68A of the Ordinance.
As is customary when making decisions on financial investments, the tax implications related to investing in the offered bonds should be considered.
The provisions included in the offering report regarding the taxation of bonds are not intended to constitute an authoritative interpretation of the cited legal provisions in the offering report, and do not replace professional advice, in light of the specific data and unique circumstances of each investor.
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Under the law currently in effect, the tax arrangements described in summary below apply to the bonds offered pursuant to this offering report:
Capital gain from the sale of securities
Pursuant to section 91(b)(1) of the Ordinance, real capital gain10 from the sale of the redemption of bonds by an individual resident of Israel, where the income from the sale of the bonds does not constitute income from a “business” or an “occupation” and where no financing expenses were claimed as a deduction, shall be taxable at the individual’s marginal tax rate pursuant to section 121 of the Ordinance, but at a rate not exceeding twenty-five percent (25%), and the capital gain shall be deemed to be the highest level in the taxable income ladder.
Notwithstanding the provisions of section 91(b)(1) with respect to the sale of securities by an individual who is a “substantial shareholder” in a company - that is, a person who holds, directly or indirectly, alone or together with another11, at least 10% of one or more of any type of means of control12 in the company (as defined in section 88 of the Ordinance) (a “Substantial Shareholder”) - at the time of the sale of the securities or at any time during the 12 months preceding such sale, the tax rate applicable to real capital gain in his hands shall not exceed thirty percent (30%).
The tax rates described above apply to the real capital gain, from which the indexation component embedded in the gain is excluded. For this purpose, it should be noted that, in accordance with the provisions of section 88 of the Ordinance, the index on the basis of which the indexation component is calculated is the consumer price index, as defined in that section; however, a person who, as a foreign resident, lawfully purchased the bond in foreign currency may request that the foreign currency exchange rate be treated as the index for this purpose.
Notwithstanding the foregoing, pursuant to section 91(b)(3) of the Ordinance, capital gain from the sale of the offered bonds that are not linked to the index13 (or that are not denominated in foreign currency or whose value is not linked to foreign currency), by an individual resident of Israel, where the income from the sale of the bonds does not constitute income from a “business” or an “occupation” and where no financing expenses were claimed as a deduction, shall be taxed at a rate not exceeding 15%, or 20% in the case of a “substantial shareholder” in a company - that is, a person who holds, directly or indirectly, alone or together with another14, at least 10% of one or more of any type of means of control15 in the company, at the time of the sale of the securities or at any time during the 12 months preceding such sale (hereinafter: a “Substantial Shareholder”) - and the entire capital gain shall be deemed real capital gain.
| 10 | As defined in section 88 of the Ordinance. |
| 11 | As defined in section 88 of the Ordinance. |
| 12 | As defined in section 88 of the Ordinance. |
| 13 | As defined in section 91 of the Ordinance. |
| 14 | As defined in section 88 of the Ordinance. |
| 15 | As defined in section 88 of the Ordinance. |
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In addition, with respect to an individual who claimed real interest expenses and indexation differentials in respect of the bonds, the capital gain from the sale of the bonds shall be taxed at a rate of 30%, until the issuance of provisions and conditions for the deduction of real interest expenses pursuant to sections 101A(a)(9) and 101A(b) of the Ordinance. The reduced tax rate described above shall not apply to an individual whose income from the sale of the bonds constitutes income from a “business” or an “occupation” in accordance with section 2(1) of the Ordinance. In such case, the individual shall be taxed at the marginal tax rate pursuant to section 121 of the Ordinance (and up to 47% in 2026). In addition, an individual shall be subject to surtax at a rate of 3% and an additional surtax at a rate of 2% in respect of income from capital sources, as defined above, on the amount of taxable income for 2025 exceeding NIS 721,560.
A body of persons shall be liable for tax on real capital gain from the sale of bonds at the corporate tax rate set forth in section 126(a) of the Ordinance (23% in 2026 and thereafter).
An exempt mutual fund shall be exempt from tax on capital gain from the sale of such securities, and provident funds and entities exempt from tax under section 9(2) of the Ordinance shall also be exempt from tax on capital gains from the sale of such securities, provided the conditions set forth in that section are met. The income of a taxable mutual fund from the sale of securities shall be subject to the tax rate applicable to the income of an individual whose income does not constitute income from a “business” or an “occupation”, unless expressly otherwise provided by law. If no special tax rate is prescribed for the income, the income shall be taxed at the maximum rate set forth in section 121 of the Ordinance, as well as surtax and additional surtax on income from capital sources, if applicable.
Pursuant to Regulations 2(a) and 3(d) of the Income Tax Regulations (Calculation of Capital Gain on the Sale of a Security Traded on a Stock Exchange, Government Loan, State Security or Unit in a Mutual Fund), 2002 (the “Capital Gain Calculation Regulations”), upon the sale of the Company’s shares originating from options that were converted into shares as aforesaid, the original price of the option shall be deemed the original price of the shares (for purposes of calculating the capital gain on their sale), and the payment made (if any) in consideration for their conversion into shares shall be deemed improvement expenses. In addition, the acquisition date of such shares shall be deemed to be the acquisition date of the options.
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Pursuant to the provisions of Section 94B of the Ordinance, upon the sale of a share traded on a stock exchange by a seller who is a substantial shareholder in the company at the time of sale or at any time during the 12 months preceding the sale, the amount of the real capital gain arising from the sale shall be reduced by an amount equal to the seller’s proportionate share of the distributable profits in the company whose shares are being sold, accumulated from January 1, 2006 or from the end of the tax year preceding the year of acquisition of the share, whichever is later, through the end of the tax year preceding the year of sale, in accordance with the seller’s share in the rights to profits of the company. That portion of the distributable profits, in accordance with the seller’s relative share in the profits, shall be subject to the dividend tax rate under Section 125B or 126(b), as applicable.
Pursuant to the provisions of Section 94C of the Ordinance, upon the sale of a share by a body of persons, the amount of capital loss arising from the sale of the share shall be reduced by the amount of any dividend received in respect of the share during the 24 months preceding the sale, but not in excess of the amount of the loss, excluding a dividend on which tax was paid (other than tax paid outside Israel) at a rate of 15% or more (but not in excess of the amount of the loss).
With respect to withholding tax at source from the real capital gain upon the sale of the offered securities, pursuant to the Income Tax Regulations (Withholding from Proceeds, Payment or Capital Gain upon the Sale of a Security, upon the Sale of a Unit in a Mutual Fund or in a Futures Transaction), 2002 (the “Capital Gain Withholding Regulations”), an obligor (as such term is defined in the Capital Gain Withholding Regulations) paying consideration to a seller who is an individual upon the sale/redemption of the securities shall withhold, through a stock exchange member, tax at the rate of 25% of the real capital gain, and in the case of a security not linked to the index16, at the rate of 15% of the capital gain, where the seller is an individual. An obligor paying consideration to a seller that is a body of persons upon the sale of securities shall withhold tax at the corporate tax rate prescribed in Section 126(a) of the Ordinance (23% in 2026) from the real capital gain or from the payment, as applicable. The foregoing is subject to valid exemption certificates (or certificates for a reduced withholding rate) from withholding tax at source issued by the Israel Tax Authority, and subject to the offsetting of losses that the withholding agent is entitled to perform.
Pursuant to section 89(b)(2) of the Ordinance, a foreign resident (individual or body of persons) is liable for tax on capital gain that has accrued or arisen in Israel. Accordingly, a foreign resident (individual or body of persons), as such term is defined in the Ordinance, shall not be liable for tax in Israel upon the sale of bonds of a foreign-resident company that is neither controlled nor managed from Israel, and that does not hold assets in Israel (directly or indirectly), provided that the capital gain is not attributable to a permanent establishment of the foreign resident in Israel, since such sale will not generate capital gain that has arisen or accrued in Israel. In addition, as a general rule, a foreign resident (individual or company), as such term is defined in the Ordinance, is exempt from tax on capital gains from the sale of bonds traded on the stock exchange in Israel, provided that the capital gain is not attributable to its permanent establishment in Israel (except for the sale of a share in a real estate investment trust, and under Amendment 186 to the Ordinance, also short-term government securities and short-term bonds), and subject to the conditions and limitations of section 97(b2) of the Ordinance. If the date of acquisition of the security was before the date of its registration for trading on the stock exchange and if it had been sold before such registration, the foreign resident would not have been entitled to the exemption upon sale as detailed in section 97(b3) of the Ordinance, and the portion of the capital gain that would have accrued had the security been sold before the date of its registration for trading on the stock exchange shall be subject to tax (but not more than the capital gain realized at the time of sale, in accordance with the conditions set forth in section 97(b2) of the Ordinance). The foregoing, for purposes of the exemption under section 97(b2) of the Ordinance, shall not apply to a foreign-resident company if Israeli residents are controlling shareholders17 in it, or if the beneficiaries or those entitled to 25% or more of the income or profits of the foreign-resident body of persons, directly or indirectly, pursuant to section 68A of the Ordinance. If such exemption does not apply, the exemption provisions of a tax treaty (if any) between Israel and the country of residence of the foreign resident may apply, subject to prior presentation of an appropriate certificate from the Tax Authority.
| 16 | As such term is defined in Section 91 of the Ordinance. |
| 17 | “Controlling shareholders” means shareholders holding, directly or indirectly, alone, together with another, or together with another Israeli resident, more than 25% of one or more means of control. |
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For the purposes of withholding tax on real capital gain from the sale of the offered bonds, in accordance with sections 164-170 of the Ordinance and the Income Tax Regulations (Withholding from Consideration, Payment or Capital Gain on the Sale of a Security, Sale of a Unit in a Mutual Fund or Futures Transaction), 5763-2002 (the “Capital Gain Withholding Regulations”), the obligor (as defined in those regulations) paying consideration to an individual seller upon the sale of bonds that are not linked to the index shall withhold tax at a rate of 15% from the capital gain, and at the corporate tax rate set forth in section 126(a) of the Ordinance from the real capital gain where the seller is a body of persons. It should be noted that in the sale of an indexed security, tax shall be withheld at a rate of twenty-five percent (25%) from the real capital gain where the seller is an individual, and at the corporate tax rate where the seller is a body of persons, from the real capital gain. This is subject to the prior presentation of exemption certificates (or a reduced withholding rate certificate) and subject to the offsetting of losses that the withholding agent is permitted to make. It should be noted that if the full withholding tax is not withheld from the real capital gain at the time of sale, the provisions of section 91(d) of the Ordinance and the regulations thereunder regarding reporting and payment of an advance by the seller in respect of such sale shall apply, on July 31 and January 31 of each tax year, in respect of sales of bonds that occurred in the six months preceding the month in which the reporting date falls.
The provisions of the consideration withholding regulations shall not apply to an obligor that is a financial institution paying a foreign-resident seller consideration or other payment in respect of an exempt capital gain, if the foreign-resident seller submitted to the financial institution, within 14 days of opening the account and once every three years, if present in Israel, either personally or through his representative, a declaration on Form 2402 as to his foreign-resident status and entitlement to the exemption.
In addition, no withholding tax shall be deducted from provident funds, mutual funds and other entities exempt from withholding tax under the law, as listed in the appendix to the Income Tax Regulations (Withholding from Interest, Dividends and Certain Profits), 5766-2005 (the “Interest and Dividend Withholding Regulations”), following the presentation by them of the appropriate certificates evidencing exemption from withholding tax issued by the Tax Authority. In addition, no withholding tax shall be deducted by a banking corporation or stock exchange member from a foreign resident upon the fulfillment of certain conditions.
As a general rule, if the offered securities are delisted from trading on the stock exchange, the withholding rate that will be deducted upon their sale (after delisting) shall be 30% of the consideration, unless an approval from the assessing officer is presented directing a different withholding rate (including an exemption from withholding tax).
Pursuant to section 92 of the Ordinance, losses in the tax year originating from the sale of the offered bonds in that tax year and which, had they been capital gains, would have been taxable in the hands of the recipient, shall be offset against real capital gains and real estate appreciation gains arising from the sale of any asset whatsoever (as defined in section 88 of the Ordinance) in Israel or outside it (except for the taxable inflationary amount, which shall be offset at a ratio of 1 to 3.5). Such capital loss may also be offset in the tax year in which it arose against interest and dividend income paid in respect of the same security or in respect of other securities in that same tax year, provided that the tax rate applicable to interest or dividend from such other security does not exceed the corporate tax rate under section 126(a) of the Ordinance in the case of a company and does not exceed the tax rate set forth in sections 125B(1) and 125C(b) of the Ordinance in the case of an individual. Loss offsetting shall be carried out by offsetting the capital loss against capital gains or against income from interest or dividends, as aforesaid. Pursuant to section 92(a)(3) of the Ordinance, such capital loss originating from the sale of an asset outside Israel shall first be offset against capital gains outside Israel. Investors whose income from the sale of securities constitutes business income shall be subject to other offset rules.
It should be noted that, following the Law for Changing the Tax Burden, the tax applicable to a dividend received by an individual who is a substantial shareholder is 30%. Accordingly, the capital loss arising in the tax year from the sale of securities will not be deductible against dividend or interest income from other securities in the hands of an individual classified as a substantial shareholder.
A loss from the sale of bonds that cannot be offset, in whole or in part, in the relevant tax year, may be offset against real capital gains and real estate appreciation gains only, as provided in section 92(b) of the Ordinance, in subsequent tax years, one after the other, after the year in which the loss arose, provided that a tax return for the tax year in which the loss arose has been filed with the assessing officer. Such capital loss originating from the sale of an asset outside Israel shall first be offset against capital gains from the sale of an asset outside Israel.
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With respect to losses from traded securities that arose before 2006, there are additional restrictions on the manner of offsetting, as set forth in the transitional provisions of section 92 of the Ordinance prior to Amendment 147. A real loss from securities, as defined in section 6 of the Adjustments Law (as worded before its repeal in Amendment 147), which existed before January 1, 2006 and was not offset before that date and could be carried forward pursuant to the provisions of section 6, may be offset only against gains from the sale of securities traded on the stock exchange. If the seller was a financial institution when the loss arose, the loss shall be treated, for purposes of section 28(b) of the Ordinance, as a carried-forward business loss.
Pursuant to the Capital Gain Withholding Regulations, it has been determined that, for purposes of calculating capital gain for withholding tax on the sale of securities and futures transactions, the obligor (as defined in those regulations) shall offset a capital loss generated from the sale of securities and futures transactions in accordance with section 92 of the Ordinance, provided that all of the following conditions are met: (1) the loss was generated from the sale of securities that were under the control of the obligor; and (2) the gain was generated in the same tax year in which the loss was created, whether before or after the date on which the loss arose.
The tax rate that will apply to interest income from bonds
Pursuant to section 125C(c) of the Ordinance, an individual who is not a substantial shareholder in the paying company shall be subject to tax at a rate of 15% on interest (including partial linkage differentials, as defined in section 3(h6) of the Ordinance) or discount fees, if any, derived from a bond that is not linked to the index, or that is partially linked to the rate of increase in the index, in whole or in part, or that is not linked to the index until maturity.
Pursuant to section 125C(d) of the Ordinance, the reduced tax rate described above shall not apply if, inter alia, one of the following conditions is met: (1) the interest is income from a “business” or an “occupation” under section 2(1) of the Ordinance or is recorded in the individual’s books of account or is required to be so recorded; (2) the individual claimed a deduction for interest expenses and linkage differentials in respect of the bonds on which the interest is paid; (3) the individual is a substantial shareholder, as defined in section 88 of the Ordinance, in the company paying the interest; (4) the individual is an employee of the company paying the interest or provides services to it or sells products to it or has other special relations with the company, unless it is proven to the satisfaction of the assessing officer that the interest rate was determined in good faith and without being affected by such relationship between the individual and the body of persons; (5) the interest was paid from a training fund before the periods specified in section 9(16a) or (16b) have elapsed; (6) any other condition set by the Minister of Finance with the approval of the Knesset Finance Committee is met. In such cases, the individual shall be subject to tax on the interest or discount fees at the marginal tax rate pursuant to section 121 of the Ordinance. In addition, surtax at a rate of 3% shall apply to the portion of the individual’s taxable income exceeding NIS 721,560 (in 2026).
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The tax rate applicable to interest income or discount fees of a body of persons resident in Israel that is not a body of persons to which section 9(2) of the Ordinance applies in determining its income, except with respect to section 3(h) of the Ordinance regarding accrued interest originating from bonds traded on the stock exchange, shall be the corporate tax rate pursuant to section 126(a) of the Ordinance.
An exempt mutual fund shall be exempt from tax on interest received by it, and provident funds and entities exempt from tax under section 9(2) of the Ordinance shall also be exempt from tax on such interest income or discount fees, subject to the conditions and limitations of section 9(2) of the Ordinance and subject to the provisions of section 3(h) of the Ordinance regarding interest or discount fees accrued during the holding period by another holder. The income or gains of a taxable mutual fund from interest or discount fees shall be subject to the tax rate applicable to the income of an individual whose income does not constitute income from a “business” or an “occupation”, unless otherwise expressly provided. If no special tax rate is established for such income, the income shall be subject to tax at the maximum rate set forth in section 121 of the Ordinance.
As a general rule, a foreign resident (individual or body of persons) is liable for tax on interest income or discount fees that accrued or were produced in Israel. A foreign resident shall not be liable for tax in Israel on interest income or discount fees whose source is outside Israel. Interest income or discount fees shall be deemed income whose source is outside Israel when paid by a foreign resident. To the Company’s understanding, the interest income and discount fees shall be deemed income that accrued or was produced outside Israel, in accordance with the provisions of section 4A of the Ordinance. Accordingly, as a general rule, foreign resident investors are not subject to tax in Israel in respect of their interest income or discount fees from the securities issued.
Pursuant to Section 9(15D) of the Ordinance, interest, discount amounts or linkage differentials paid to a foreign resident in respect of a bond traded on a stock exchange in Israel and issued by a body of persons resident in Israel are exempt from tax, provided that such income is not attributable to the foreign resident’s permanent establishment in Israel. The exemption shall not apply in the following cases: (a) the foreign resident is a substantial shareholder in the issuing body of persons; or (b) the foreign resident is a “relative” as defined in paragraph (3) of the definition of “relative” in Section 88 of the Ordinance, of the issuing body of persons; or (c) the foreign resident is an employee of, service provider to, or seller of products to the issuing body of persons, or has a special relationship with it (unless it is proven that the rate of interest or discount was determined in good faith and was not affected by the existence of such special relationship).
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Pursuant to sections 164 and 170 of the Ordinance and the Interest and Dividend Withholding Regulations, the withholding tax rate applicable to Israeli residents on interest (as defined in the Interest and Dividend Withholding Regulations)18 paid on bonds traded on the stock exchange that are not linked to the index, for an individual who is not a substantial shareholder in the company paying the interest, shall be 15%. The withholding tax rate on such interest for an individual who is a substantial shareholder in the company paying the interest, or an individual who works for the company paying the interest or provides services to it or sells products to it (including a foreign resident who does not meet the exemption conditions set forth in section 9(15d) of the Ordinance), shall be in accordance with the maximum marginal tax rate under section 121 of the Ordinance as detailed above. In the case of a body of persons, tax shall be withheld in accordance with the corporate tax rate set forth in section 126(a) of the Ordinance.
Pursuant to section 2(4) of the Ordinance and additional applicable laws, discounting fees in respect of a bond shall be treated as interest subject to tax and withholding at source as aforesaid. The withholding tax in respect of discount fees shall be withheld at the principal repayment dates.
The Interest and Dividend Withholding Regulations do not prescribe withholding tax at source upon payment to a person who is not considered a “recipient”, as defined in the regulations, so that in relation to an entity defined as a “mutual fund”, pursuant to section 88 of the Ordinance, provident funds and other entities listed in the appendix to the Interest and Dividend Withholding Regulations, no withholding tax shall be deducted at source in respect of the payment of interest.
The foregoing is subject to and takes into account exemption certificates (or a reduced withholding rate) and subject to the offsetting of losses that the withholding agent is permitted to make.
| 18 | Interest - interest, non-exempt linkage differentials from tax under any law, including partial linkage differentials, as defined under section 9(13) of the Ordinance, and discount fees. |
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It is clarified that, in accordance with the directives of the Tax Authority dated December 27, 2010, as of January 1, 2011, the withholding tax on interest (including discount fees) paid on bonds traded on the stock exchange, and its remittance to the Tax Authority, shall be carried out by stock exchange members and not by the Company. The Company shall transfer to the stock exchange members (through the stock exchange) the gross amount of the interest. The stock exchange members shall withhold tax at source from the interest payments to be paid by the Company to the bondholders in accordance with the Interest and Dividend Withholding Regulations and shall remit it to the Tax Authority. In the event that interest is paid to a substantial shareholder or to an individual working for a body of persons paying the interest or to a person who provides services or sells products to a body of persons paying the interest, the Company shall be responsible for completing the withholding tax on the interest payments up to the maximum tax rate, as prescribed in the Interest and Dividend Withholding Regulations.
Interest income in the hands of an Israeli resident (individual or company), whose source is the offered bonds, may be offset against a current business loss from an Israeli source (which, had it been business income, would have been taxed under the provisions of the Ordinance), subject to the provisions of section 28 of the Ordinance. In addition, subject to the conditions of section 29(2) of the Ordinance, interest income may also be offset against a business loss from a foreign source, which, had it been profit, would have been taxable in Israel, provided that a tax return was filed with the assessing officer for the tax year in which the loss arose, as stated in sections 131 and 132 of the Ordinance.
In addition, subject to the conditions of section 29(1) of the Ordinance, interest income in the hands of an Israeli resident (individual or company) derived from the offered bonds may be offset against a passive loss (current or carried forward) incurred by the Israeli resident outside Israel, which, had it been profit, would have been taxable as passive income, provided that a tax return was filed with the assessing officer for the tax year in which the loss arose, as stated in sections 131 and 132 of the Ordinance.
Under Regulation 4 of the Income Tax Regulations (Calculation of Capital Gain on the Sale of a Security Traded on the Stock Exchange, State Loan or Unit in a Mutual Fund), 5763-2002, it is provided that upon redemption of bonds traded on the stock exchange in which discount fees are also paid, the redemption consideration shall be deemed to be the consideration plus the discount fees, if all of the following conditions are met: (1) the capital gain on the sale of the bond is not exempt from tax; (2) on the redemption date, a capital loss exists; and (3) the redemption is not by controlling shareholders or by a person who held the bond from the date it was allocated or issued, all up to the amount of the capital loss. Discount fees deemed to be consideration under these provisions shall not be considered income under section 2(4) of the Ordinance.
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Notwithstanding the foregoing, the withholding tax rate applicable to a foreign resident (individual or body of persons, to the extent taxable as aforesaid) may be reduced pursuant to a valid approval from the Tax Authority, subject to the provisions of any double taxation treaties to which the State of Israel is a party (if any), and subject to the prior presentation of a certificate of exemption from withholding tax or a certificate of reduced withholding tax rate from the Tax Authority in Israel, if granted.
Tax Rate Applicable to Dividend Income in Respect of the Offered Options Converted into Shares
Pursuant to Section 125B of the Ordinance, a dividend derived from the Company’s shares shall generally be subject to tax, in the hands of Israeli resident individuals, at the rate of twenty-five percent (25%), except with respect to an individual who is a substantial shareholder in the Company at the time of receipt of the dividend or at any time during the 12 months preceding such receipt, in which case the applicable tax rate shall be thirty percent (30%). In addition to the foregoing, an individual’s income shall be subject to surtax at the rate of 3% of taxable income for the 2025 tax year exceeding NIS 721,560 (as of 2025; this amount is updated annually in accordance with increases in the Consumer Price Index).
In addition, an individual whose taxable income from capital sources in 2026 exceeded NIS 721,560 shall be subject to an additional surtax at the rate of 2% on the portion of such individual’s taxable income from capital sources exceeding the aforesaid amount.
As a general rule, dividends received by Israeli resident companies shall, pursuant to Section 126(b) of the Ordinance, not be included in their taxable income, provided that the dividend is derived from income produced or accrued in Israel and received directly or indirectly from another body of persons subject to corporate tax, and provided further that income for which a special tax rate has been prescribed shall also not be included.
A foreign resident (individual or company) who is not a substantial shareholder shall be subject to tax at the rate of twenty-five percent (25%). A foreign resident who is a substantial shareholder in the Company at the time of receipt of the dividend or at any time during the 12 months preceding such receipt shall be subject to tax at the rate of thirty percent (30%).
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In addition to the foregoing, an individual’s income shall be subject to surtax at the rate of 3% of taxable income for the 2026 tax year exceeding NIS 721,560 (as of 2026; this amount is updated annually in accordance with increases in the Consumer Price Index).
In addition, an individual whose taxable income from capital sources in 2026 exceeded NIS 721,560 shall be subject to an additional surtax at the rate of 2% on the portion of such individual’s taxable income from capital sources exceeding the aforesaid amount.
These tax rates may be reduced pursuant to the provisions of an applicable double taxation treaty (if any) entered into between the State of Israel and the country of residence of the foreign resident, and subject to the prior submission of a certificate of exemption from withholding tax or a certificate providing for withholding tax at a reduced rate issued by the Israel Tax Authority.
A dividend received by a taxable mutual fund shall be subject to tax in accordance with the tax rates applicable to an individual for whom the income does not constitute a “business” or “profession,” unless expressly provided otherwise. Where no special tax rate has been prescribed for such income, the income shall be taxed at the maximum tax rate set forth in Section 121 of the Ordinance.
An exempt mutual fund, as well as provident funds and other entities exempt from tax pursuant to Section 9(2) of the Ordinance, shall be exempt from tax in respect of such dividend, subject to the provisions of that section.
Pursuant to the said Dividend and Interest Withholding Regulations, the rate of tax to be withheld at source on dividends paid to an Israeli resident individual and to a foreign resident (individual or body of persons) in respect of the offered securities listed for trading on the stock exchange and held through a nominee company is 25%. Withholding tax at source on dividends paid by an Israeli resident body of persons whose shares are listed for trading on the stock exchange in respect of shares held through a nominee company shall be effected through a financial institution.
With respect to an individual or foreign resident who is a substantial shareholder and whose shares are neither registered in nor held through the nominee company, withholding tax at source on such dividend income shall be at the rate of 30%.
With respect to a foreign resident, the rate of withholding tax at source shall be subject to the provisions of any double taxation treaty entered into between the country of residence of the company and the country of residence of such holder, and to obtaining approval from the tax authority. Pursuant to the Dividend and Interest Withholding Regulations, where a dividend is paid to an Israeli resident (individual or body of persons) for whom a limited tax rate has been prescribed by law, the tax shall be withheld at the prescribed rate.
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No tax shall be withheld at source from payments made to provident funds, mutual funds, and other entities exempt from withholding tax at source under applicable law.
Foreign Tax Credit
Against the tax liability stated above, an Israeli resident (individual or company) shall be granted a credit in the amount of foreign tax withheld abroad, if any, in respect of the said bonds, subject to the provisions of the relevant tax treaty (if any, and if none, no credit shall be granted) and the conditions set forth in sections 199, 203 and 204 of the Ordinance, and subject to the presentation of appropriate certificates.
The amount of foreign tax withheld abroad, if any, in respect of the said bonds that exceeds the Israeli taxes applicable to an Israeli resident (individual or company) in the relevant tax year, shall be credited against Israeli taxes applicable to foreign-source income from the same source, subject to the conditions set forth in sections 199-210 of the Ordinance and subject to the credit limitation set forth in section 204 of the Ordinance.
The amount of foreign tax withheld abroad, if any, in respect of the said bonds that cannot be credited, in whole or in part, against the Israeli taxes applicable to foreign-source income from the same source in such tax year and that meets the conditions referred to in subsection B above, may be credited against the tax imposed in Israel on income produced outside Israel from the same source during the following five years, one after the other, subject to the conditions set forth in section 205A of the Ordinance.
Issuance of additional bonds as part of the expansion of the series
Since the bonds (Series D) are issued at their nominal value, there will be no discount in the issuance by virtue of this Shelf Offering Report.
In the event that the company issues additional bonds in the future, as part of the expansion of the series, at a discount rate different from the discount rate for that series (including the absence of discount, if applicable), the company will, before expanding the series, turn to the Tax Authority in order to receive its approval, that for the purpose of withholding tax on the discount fees for the bonds, a uniform discount rate will be determined for the bonds according to the formula that weighs the various discount rates in that series, if any (hereinafter in this section: “weighted discount rate”). In the event of obtaining such approval, the Company shall calculate before the expansion of the series the weighted discount rate for all bonds in accordance with that approval, and before the expansion of the series, the Company shall submit an immediate report, in which it shall notify the weighted discount rate for the entire series, and tax shall be deducted on the redemption dates of the bonds from the said series according to the weighted discount rate as stated and in accordance with the provisions of the law. In such a case, all of the other provisions of the law that pertain to taxes on discount fees will apply. If such approval is not obtained from the Tax Authority, the Company shall submit an immediate report prior to the expansion of the series, in which it shall notify of the non-receipt of such approval and that the uniform discount rate shall be the highest discount rate created in respect of the series, and all the other provisions of the law relating to taxation of discount fees shall apply. Members of the stock exchange will withhold tax at source at the time of redemption of the series, in accordance with the rate reported as stated.
Therefore, there may be cases in which withholding tax will be deducted in respect of discount fees at a higher rate than the discount fees determined for those who held the bonds from the Series Cefore increasing the series (“excess discount fees”), whether or not an approval from the Tax Authority has been received for determining a uniform discount rate for that series. A taxpayer who held the bonds from the said Series Cefore expanding the series until the repayment of the bonds held by him, will be entitled to submit a report to the Tax Authority and receive a tax refund in the amount of the tax deducted from the excess discount fees, to the extent that he is entitled to a refund as stated by law.
Stock Exchange members shall deduct at source from the interest payments paid by them to the bond holders the tax payments that must be withheld at source, except for entities exempted from such withholding tax in accordance with the law. On the dates of repayment of the principal of bonds, stock exchange members will deduct tax at source in respect of the discount fees, if any.
As of the date of the Shelf Offering Report, the company has started the process of opening a deductions file at the Income Tax in Israel.
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Signatures
| The Company | |||
| STRAWBERRY FIELDS REIT, INC. _____________________________ | |||
| Directors | |||
| Moishe Gubin | |||
| Michael Blisko | |||
| Tel Lerman | |||
| Jack Levine | |||
| Stanford Gertz | |||
| Mark Myers | |||
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GUARANTEE
THIS GUARANTEE (“Guarantee”), dated as of September 14, 2026 is made and entered into by Strawberry Fields REIT Ltd, a private company incorporated limited by shares under the BVI Business Companies Act of 2004 (the “Guarantor”), for the benefit of Mishmeret Trust Services Ltd., as trustee under the Deed of Trust dated as of September 14, 2026 (the “Trustee”), and the registered holders (from time to time, the “Holders”) of the outstanding Series D Bonds (the “Bonds”) issued by Strawberry Fields REIT Inc. (the “Company”) pursuant to the Deed of Trust (which, together with all amendments thereto, is hereinafter referred to as the “Deed of Trust”).
RECITALS
WHEREAS, the Company intends to issue and sell Bonds pursuant to the Deed of Trust; and
WHEREAS, the Guarantor desires to irrevocably and unconditionally guarantee the obligations of the Company to the Trustee and/or the Holders under the Deed of Trust as hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the parties agree as follows:
| 1. | Guarantee. The Guarantor absolutely, unconditionally, and irrevocably guarantees to the Trustee and/or the Holders the full and prompt performance by the Company of each and every obligation of the Company under the Deed of Trust, including, without limitation to: (a) The payment of principal and interest (including late payment interest, if any) on the Bonds when due and payable; (b) The payment of all other sums due and payable by the Company under the Deed of Trust; and (c) The performance by the Company of all other covenants and agreements contained in the Deed of Trust. |
| 2. | Continuing Guarantee. This Guarantee shall be a continuing guarantee and shall remain in full force and effect until all of the obligations of the Company under the Deed of Trust have been fully paid, performed, and discharged, or the Bonds have been redeemed or cancelled in accordance with their terms. |
| 3. | Demand for Payment. The Guarantor shall pay to the Trustee and/or the Holders, in accordance with the Deed of Trust, all amounts due and payable thereunder. Such payment shall be made within seven (7) days from the date of a written demand from the Trustee stating that the Company has not paid the required payment under the Deed of Trust. |
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| 4. | Guarantor’s Defenses and Rights. |
| 4.1. | Independent Obligation to Pay. The Guarantor’s obligation to pay hereunder shall be independent of and shall not be affected by any defense, setoff, counterclaim, or right of deduction that the Guarantor may have against the Company, except as expressly provided in this Section 4. | |
| 4.2. | Guarantor’s Rights under the Deed of Trust and Law. Notwithstanding the foregoing, the Guarantor shall have the right to assert and enforce all rights and claims that the Company has against the Trustee and/or the Holders under the Deed of Trust and applicable law, as if the Guarantor were the Company itself. These rights and claims include, but are not limited to: (i) the right to cure any defaults by the Company under the Deed of Trust; (ii) the right to participate in any enforcement action taken by the Trustee under the Deed of Trust, including foreclosure proceedings; and (iii) the right to assert any defenses available to the Company under the Deed of Trust and applicable law, including defenses relating to the validity, enforceability, or interpretation of the Deed of Trust. | |
| 4.3. | Information Sharing. The Trustee shall provide the Guarantor, upon written request and at the Guarantor’s expense, with copies of all documents and notices received by the Trustee relating to the obligations of the Company under the Deed of Trust. |
| 5. | Subrogation and Enforcement Rights. Upon payment by the Guarantor hereunder, the Guarantor shall be subrogated to all of the rights, remedies, and powers of the Trustee and/or the Holders under the Deed of Trust with respect to the obligations of the Company that have been paid by the Guarantor. The Guarantor shall also have the right, at its own cost and expense, to enforce any rights and remedies available to the Trustee and/or the Holders under the Deed of Trust to the extent necessary to recover the amounts paid by the Guarantor hereunder. |
| 6. | Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, sent by certified or registered mail, postage prepaid, return receipt requested, addressed as follows: |
If to the Guarantor:
Strawberry Fields REIT Ltd.
[Address of Guarantor]
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If to the Trustee:
Mishmeret Trust Services Ltd.
48 Menachem Beg Road, Tel Aviv
If to a Holder:
Notices to Holders shall be deemed given when published on the Tel Aviv Stock Exchange (TASE) MAGNA or MAYA systems in accordance with applicable TASE regulations.
| 7. | Governing Law. This Guarantee shall be governed by and construed in accordance with the laws of the State of Israel, without regard to its conflict of laws principles. |
| 8. | Entire Agreement. This Guarantee constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written. |
| 9. | Binding Effect. This Guarantee shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. |
| 10. | Termination of the Guarantee. |
| 10.1. | Termination Notice. The Guarantor may, at any time, deliver a written notice to the Company (the “Termination Notice”) stating that this Guarantee will expire, in whole or in part, as of a date specified in such Termination Notice. | |
| 10.2. | Automatic Effect. This termination of the Guarantee shall occur ipso facto (by the very fact itself), without the need for any further act, consent, or approval from the Holders or the Trustee. | |
| 10.3. | Notwithstanding Sections 10.1-10.2 above, this Guarantee shall not be terminated unless prior approval is obtained from the credit rating agency that rates the Company’s Bonds, according to which the Bonds’ rating shall not be reduced as a result of the termination of the Guarantee. |
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| 11. | Waiver of Defenses. The Guarantor hereby waives any defense based on any claim that (i) the Deed of Trust is invalid or unenforceable, (ii) there has been a failure of consideration or a defect in the issuance or delivery of the Bonds, or (iii) the Guarantor was not duly authorized to execute and deliver this Guarantee. |
| 12. | Amendments to Deed of Trust. The Guarantor’s obligations under this Guarantee shall be binding upon the Guarantor and inure to the benefit of the Trustee and the Holders notwithstanding any amendments to the Deed of Trust, provided that such amendments do not materially increase the Guarantor’s obligations hereunder without the Guarantor’s prior written consent. |
| 13. | Representations and Warranties. The Guarantor represents and warrants to the Trustee and the Holders that: (i) the Guarantor is a duly organized, validly existing, private company incorporated limited by shares under the BVI Business Companies Act of 2004 in good standing under the laws of the British Virgin Islands; (ii) the execution and delivery of this Guarantee by the Guarantor has been duly authorized by all necessary action of the Guarantor; and (iii) this Guarantee is a valid and binding obligation of the Guarantor, enforceable in accordance with its terms. |
| 14. | Severability. If any provision of this Guarantee is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall remain in full force and effect. |
| 15. | Expenses. The Guarantor shall reimburse the Trustee for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Trustee in connection with the enforcement of this Guarantee, the collection of any payments due hereunder, or the protection of the rights and remedies of the Trustee and/or the Holders hereunder. Such amounts shall be payable by the Guarantor upon demand by the Trustee and shall be added to the obligations of the Guarantor hereunder and shall bear interest at the same rate as the interest accruing on the Bonds. |
IN WITNESS WHEREOF, the parties hereto have executed this Guarantee as of the date first written above.
Strawberry Fields REIT Ltd.
| By: | ||
| Name: | ||
| Title: | ||
| Date: |
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