Real Estate Central

HADERA, Israel, September 22 /PRNewswire-FirstCall/ — Hadera Paper
Ltd. (AMEX:AIP) (AIPM) announced that Pursuant to the immediate report
published by the Company on August 12, 2008, regarding negotiations for the
lease of a real-estate asset, the Company is honored to announce the
following:

On September 18, 2008, the Company has engaged in a lease agreement
(hereinafter: “The Agreement”) with Gav-Yam, Bayside Land Corporation Ltd.
(”The Lessor”), a public company controlled by the Company’s indirect
controlling shareholder, pursuant to which the Company will lease a
real-estate asset in Modiin comprising a total area of 18.4 acres, and
buildings that will be built by the Lessor for the Company on a plot of
land with a total building area of 21,300 square meter (the land and the
buildings hereinafter together: “The Leased Property”).

The Leased Property shall serve as a center for logistic purposes,
manufacture and offices for subsidiary and associated companies of the
Company and will partially replace existing leasing agreements.

The Company will take possession of the Leased Property approximately
21 months subsequent to obtaining all the necessary building permits
including the Israel Land Administration permit for the lease of the asset
to the Company (subject to changes as detailed in the agreement).

The Leasing Period shall be 15 years from the date of receiving
possession of the Leased Property. The Company will also hold an option to
extend the lease by an additional 9 years and 11 months (hereinafter: “The
Option”). It is agreed that the accumulated lease period shall in no way
exceeds 24 years and 11 months. Despite the aforesaid, the Leasing Party
shall be eligible to terminate the lease within 10 years of receiving
possession of the Leased Property, by providing advanced written notice of
180 days, prior to the termination of the said ten first years.

Pursuant to the agreement, the Company shall be eligible to request in
written from the Lessor to conduct additional construction work and/or
build additional buildings on its behalf, comprising a total area of up to
3.21 acres (hereinafter: “additional construction”). The leasing monthly
fees will be increased for the additional construction according to the all
inclusive investment cost in building the additional construction based on
an annual return that will be calculated as 10%. Despite the aforesaid,
should the Company realize its right to request the said additional
construction, then the Leasing Period shall not terminate earlier than ten
years from the date of completion of the additional construction and the
Company shall not be entitled to utilize the exit right and to announce the
termination of the agreement within ten years of receiving possession date.

Obtaining a building permit within the period as determined in the
agreement shall be a suspending condition for the execution of the
agreement.

The leasing fees shall be paid monthly and shall amount to NIS
1,135,000 (approximately $ 326,149) per month, linked to the Consumer Price
Index (CPI) of July 2008, as detailed in the agreement and with the
addition of VAT, as prescribed by law. It is noted that upon completion of
ten years of the leasing period (provided that the agreement was not
cancelled prior to that date, as detailed above), the leasing fees shall be
raised by 3%, in relation to the leasing fees in the last month prior to
the termination of the initial ten-year leasing period. It is further noted
that in the event that the company realizes the option, the leasing fees
will be raised by 5% in relation to the leasing fees in the last month
prior to the start of the option period.

The level of the leasing fees was determined by negotiation between the
parties.

The validity of the agreement is contingent upon obtaining the approval
of the certified bodies of the Company and the Lessor to the transaction
within and no later then 90 days of the signing of the agreement.

The transaction is subject to the receipt of the approval of the
Company’s Audit Committee and Board of Directors, and the General Meeting
of the Company, according to the Companies Law, 1999. Upon the approval of
the transaction, if will be approved, by the Company’s Audit Committee and
Board of Directors, the Company shall publish a detailed immediate report,
in accordance to the Securities Regulations (Transactions Between a Company
and its Controlling Shareholder) - 2001, regarding the transaction and its
conditions, and regarding the invitation to a special general meeting of
the Company’s shareholders for the purpose of approving the said
transaction



Contact:
Lea Katz, Adv.
Corporate Secretary and Chief of Legal Department
Hadera Paper Ltd. Group
Tel: +972-4-6349408
Leak@hadera-paper.co.il

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[Via Real Estate Newswire]