The company's board of directors approved the transaction. I accept the directors' position because as far as they are concerned, this was the only deal that was practically on the table. As Mr. Dubrovsky, Chairman of the Board of Directors, testified, "Not only did we understand that the deal with the Dayan brothers best served the company's best interests at the time, we were informed at the board meeting at which the transaction was approved - that this is the only deal on the agenda, which allows the company to meet the repayment of the loans on the agreed dates, 'since there is no other alternative to receive €6 million immediately' [...]. In other words, the board of directors had no other alternative that would prevent the complete collapse of the company, other than the deal with the Dayan brothers" (paragraph 142 of his affidavit [emphases in original]).
- It seems clear to me that this deal was better than the deal that was formulated with Mr. Knefler, before it was updated. The cash component of Mr. Knepfler's transaction was lower, and it should not be forgotten that he had a past experience in which he could not meet the payment of some of the considerations that had been agreed, since the completion of the previous transaction was also not carried out. In these circumstances, the suspicion of the board of directors towards him was clear.
In fact, even Mr. Lorenzi, Mr. Knefler's partner in the proposal, admitted, in fairness, that the Dayan Group's proposal was preferable. He testified that the Dayan Group paid too high a price, according to him, in relation to what they had sold to them (p. 256, Q. 29).
And as will be explained below, even if Mr. Knefler's current proposal had been brought up for discussion, insofar as it can be seen as such, it would not have changed it, since it was also inferior to the Dayan Group's proposal.
Cancellation of the agreement with Mr. Knepfler
- On November 6, 2016, the Company's Board of Directors convened to discuss the cancellation of the transaction with Mr. Knepler (Appendix 40 to the Affidavits of the Directors). Here, the company relied on the opinion of Dr. Gilad Wakselman of Herzog Fox & Neeman.
Mr. Nehemia asked for permission to send a notice of cancellation to Mr. Knepfler of the agreement dated May 24, 2016, on the grounds that "until this date the transaction has not been completed. Despite repeated warnings, Mr. Knepfler did not meet the deadlines for the payment of the criminal appeal of the agreement, in a manner that caused damage to the company, and despite the extensions of the deadline granted to him for the purpose of completing the transaction" (p. 1). Mr. Nehemia further noted that according to the legal counsel, the cancellation would require the company to return to Mr. Knefler €3.5 million, deducting compensation in the amount of 10% of the consideration, in exchange for the return of the shares of Guy Development to the company.