EXHIBIT 2
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT ("Agreement"), dated as of December 31, 1998, by
and among Xxxx Gat, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx and Xxxxxx
Xxxxxx (collectively, the "Founders Group"), DIC Technology Holdings Ltd. and
PEC Israel Economic Corporation (collectively, the "IDB Group"), and General
Electric Company, GE American Communications, Inc. ("GE Americom"), General
Electric Finance Holding GMBH and General Electric Plastics B.V. (collectively,
"GE"). Each of Xxxx Gat, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx and
Xxxxxx Xxxxxx is individually referred to herein as a "Founder" and collectively
as the "Founders," each of the Founders Group, the IDB Group and GE is sometimes
hereinafter referred to as a "Group" and collectively as the "Groups," and each
of the Founders, DIC Technology Holdings Ltd., PEC Israel Economic Corporation
and GE and any other individual, corporation, limited liability company,
partnership, trust, unincorporated organization, other entity or a government or
any agency or political subdivision thereof (a "Person") who shall become a
party to or agree to be bound by the terms of this Agreement after the date
hereof is sometimes hereinafter referred to as a "Shareholder" and collectively
as the "Shareholders."
W I T N E S S E T H:
WHEREAS, the Shareholders are or will be the owners beneficially and of
record of the number of Ordinary Shares, par value NIS 0.01 per share (the
"Ordinary Shares"), of Gilat Satellite Networks Ltd. (the "Company") set forth
below each of their names on the signature pages hereto; and
WHEREAS, the Shareholders desire for their mutual benefit and protection to
enter into this Agreement for the purpose of regulating certain aspects of their
relationship with respect to the Company and to set forth certain of their
respective rights and obligations with respect to their Ordinary Shares (whether
issued or acquired hereafter, including all Ordinary Shares issuable upon the
exercise of warrants, options or other rights to acquire Ordinary Shares, or
upon the conversion or exchange of any security).
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
Section 1. Management
1.1 Election of Directors. The Shareholders hereby agree that they will
vote all of the Ordinary Shares then held by them at any meetings of the
shareholders of the Company (or in any action in lieu thereof) in order that the
Board of Directors of the Company shall be comprised of seven (7) members. So
long as the Founders Parties (as defined below) shall (a) collectively own not
less than thirty percent (30%) of the number of Ordinary Shares owned by them on
the date hereof or (b) at least one of the Founders shall be serving as an
employee of the Company, the holders of a majority of the Ordinary Shares held
by the Founders Group (and if no such Ordinary Shares are then held by the
Founders Group, then any Founders then serving as employees of the Company)
shall have the right to designate three individuals as nominees for election as
directors of the Company (collectively, the "Founder Directors"). So long as the
IDB Group shall collectively own (A) not less than fifty percent (50%) of the
number of Ordinary Shares owned by them on the date hereof, the holders of a
majority of the Ordinary Shares held by the IDB Group shall have the right to
designate two individuals as nominees for election as directors of the Company
or (B) less than fifty percent (50%) but not less than twenty-five percent (25%)
of the number of Ordinary Shares owned by them on the date hereof, the holders
of a majority of the Ordinary Shares held by the IDB Group shall have the right
to designate one individual as a nominee for election as a director of the
Company (any such directors, collectively, the "IDB Directors"). So long as the
GE Parties (as defined below) shall collectively own (A) not less than fifty
percent (50%) of the number of Ordinary Shares owned by them on the date hereof,
GE shall have the right to designate two individuals as nominees for election as
directors of the Company or (B) less than fifty percent (50%) but not less than
thirty-three percent (33%) of the number of Ordinary Shares owned by them on the
date hereof, GE shall have the right to designate one individual as a nominee
for election as a director of the Company (any such directors, collectively, the
"GE Directors"). Each of the Founders Parties, the IDB Group and the GE Parties
hereby agree to vote their Ordinary Shares at any meeting of the shareholders of
the Company (or in any action in lieu thereof) in favor of the election of the
Founder Directors, the IDB Directors and the GE Directors.
1.2 Definitions. For purposes of this Agreement:
1.2.1 "Founders Parties" shall mean the Founders and any members of
their immediate families, trusts for the benefit of any of the Founders and/or
members of their immediate families, and Persons which the Founders and/or
members of their immediate families control.
1.2.2 "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
1.2.3 "affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person; provided, however, that no Person shall be deemed to
be
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an affiliate of another Person solely by reason of such Person's investment in
the Company.
1.2.4 "GE Parties" shall mean GE and its affiliates.
1.3 Increase in Number of Directors. In the event the Company is required
by Israeli law or other applicable law or regulation to include one or more
independent directors from the public on the Board of Directors of the Company
and the then serving directors of the Company are unable to satisfy such
requirement, the Shareholders agree to vote all of the Ordinary Shares then held
by them in order that the Board of Directors be increased in size by the minimum
number of directors necessary to facilitate compliance with such law or
regulation and to vote all of the Ordinary Shares in favor of nominees
reasonably acceptable to each of the Groups (which nominees shall be residents
and citizens of the State of Israel) eligible to fulfill such legal or
regulatory requirement.
1.4 Vacancies and Removal; Action by Shareholders. If a vacancy is created
on the Board of Directors by reason of the death, disability, removal or
resignation of any director, the party, if any, which, under Section 1.1, is
entitled to nominate the director whose death, disability, removal or
resignation resulted in such vacancy shall be entitled to designate a new
nominee to serve as director, and the Shareholders and, to the extent consistent
with applicable law, their nominee directors shall use their best efforts as
soon as reasonably practicable to take any and all actions within their control
to fill such vacancy with such nominee. In addition, the Shareholders and, to
the extent consistent with applicable law, their nominee directors shall use
their best efforts as soon as reasonably practicable to take any and all actions
within their control to remove any directors and reduce the size of the Board of
Directors to the extent that such removal is intended to remove a nominee to the
Board of Directors whom the relevant party is no longer entitled to nominate in
accordance with the terms of Section 1.1 hereof. Each of the Founders Parties,
the IDB Group and the GE Parties hereby agree to vote their Ordinary Shares in
favor of such nominees, removals and reductions, as applicable.
1.5 Shareholder Voting. (a) Each of the Shareholders hereby agrees that it
will attend and take all necessary actions to constitute a portion of the
applicable quorum at any relevant meeting of the shareholders of the Company,
and at any such meeting (or in any action in lieu thereof) it will vote all of
the Ordinary Shares then owned by it in accordance with, and to fully give
effect to, the terms of this Agreement, and, to the extent not contrary to the
terms of this Agreement or applicable law or regulation, with the
recommendations of the Board of Directors of the Company with respect to any
resolutions or other matters submitted to a vote of the shareholders of the
Company (other than matters relating to the election of directors which are
explicitly governed by Section 1.1 hereof); provided, however, that no Group
shall be obligated by this Section 1.5(a) to vote in accordance with the
recommendations of the Board of Directors to the extent that (i) such vote
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relates to a merger (which merger results in a Change of Control (as defined
below) or sale of all or substantially all of the Company or a reorganization or
restructuring of the Company changing the rights of shareholders in a
significant and adverse manner or a transaction with substantially similar
results or (ii) such Group in reasonable good faith determines that voting in
accordance with such recommendation is directly and materially adverse to the
interests of such Group, solely in its capacity as a shareholder(s) of the
Company (provided, that notwithstanding the preceding proviso, all of the Groups
shall at all times be required to comply with all of the other terms of this
Agreement).
Subject to Section 2.1(b) hereof, in the event that the Board of Directors
shall not make any recommendation with respect to any such resolution or other
matter submitted to a vote of the shareholders of the Company, each of the
Shareholders shall be free, subject to compliance with the terms of this
Agreement, to vote thereon as such Shareholder deems appropriate.
(b) For a period of three (3) years from the date of this Agreement, each
of the Shareholders hereby agrees that at any meeting of the shareholders of the
Company (or in any action in lieu thereof) it will vote all of the Ordinary
Shares then owned by it in favor of, and will (to the extent permitted by
applicable law) direct its respective nominee(s) on the Board of Directors of
the Company to vote at any meeting of, or in any action by, the Board of
Directors in favor of the retention in their respective offices of all senior
officers of the Company holding such offices as of the date of this Agreement,
including, but not limited to, the Chairman, the Chief Executive Officer, the
President, the Chief Operating Officer, the General Counsel and the Chief
Financial Officer of the Company; provided, however, that nothing in this
Section 1.5(b) shall require any nominee to the Board of Directors of the
Company to vote in any manner which such nominee in good faith determines will
violate such nominee's fiduciary duties under applicable law.
1.6 Other Voting Agreements. Each of the Parties hereby agrees that no two
Groups shall enter into any formal voting trusts, agreements or other similar
arrangements (other than pursuant to this Agreement and the Agreement and Plan
of Merger, by and among GE Americom, GE Capital Spacenet Services, Inc.
("Spacenet"), Jonah Acquisition Corp. and the Company, dated as of September 25,
1998, and pursuant to the transactions contemplated hereunder and thereunder)
(each, an "Other Agreement") in respect of the voting of all or a portion of the
Ordinary Shares owned by them or in respect of the voting by their respective
nominee(s) to the Board of Directors of the Company, which Other Agreement is
not consented to in writing by the third Group (the "Outside Group"), for so
long as such Outside Group shall be entitled, pursuant to the terms of Section
1.1 hereof, to nominate at least one member of the Board of Directors of the
Company. Nothing in this Section 1.6 shall prevent the members of any Group (or
their respective nominees to the Board of Directors) from entering into any such
voting trust, agreement or other similar arrangements solely among the members
of such Group
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(or their respective nominees), in each case to the extent permitted by
applicable law.
Section 2. Standstill
2.1 Restrictions on Certain Activities by GE. GE hereby agrees that during
the term of the Agreement it will not, and will not permit any of the GE Parties
to, without the prior approval of the holders of a majority of the Ordinary
Shares then held by the Founders Group or the holders of a majority of the
Ordinary Shares then held by the IDB Group, respectively:
(a) Acquire (other than pursuant to the Merger Agreement and the contracts
and agreements referred to therein) or offer to acquire, whether by
purchase, gift or by joining a partnership or other Group (as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), any assets (other than acquisitions of
inventory or other materials in the ordinary course of business of the
Company), businesses or properties of the Company, or any Ordinary
Shares of the Company, securities convertible into, exchangeable for,
or exercisable for Ordinary Shares, which acquisitions of Ordinary
Shares or securities convertible into, exchangeable for, or
exercisable for Ordinary Shares, result in the GE Parties being the
beneficial owners of greater than thirty-three percent (33%) of the
Ordinary Shares of the Company then outstanding; provided, that in the
event of a bona fide tender offer (a "Third Party Tender Offer") for
at least 50% of the outstanding Ordinary Shares of the Company by a
party not affiliated with any of the Groups at a price in excess of
the Market Price (as defined below) of such Ordinary Shares
immediately prior to the announcement of such Third Party Tender
Offer, the GE Parties shall be free, during the pendency of the Third
Party Tender Offer, to commence a tender offer for all of the
outstanding Ordinary Shares or to acquire Ordinary Shares on the open
market or otherwise notwithstanding the provisions of this Section
2.1(a). Any Ordinary Shares acquired pursuant to the proviso at the
end of the preceding sentence shall be subject to all of the terms of
this Agreement. For purposes of this Agreement, "Market Price" of the
Ordinary Shares shall mean the average closing sales price per
Ordinary Share on the principal securities market on which such
Ordinary Shares are traded for the twenty (20) trading days ending on
the day prior to the date of commencement of a Third Party Tender
Offer.
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(b) (i) Solicit, initiate or participate in any "solicitation" of
"proxies" or become a participant in any "election contest" (as such
terms are defined in Regulation 14A under the Exchange Act); (ii)
Call, or in any way participate in a call for, any special or
extraordinary meeting of shareholders of the Company; (iii) Initiate
or propose any shareholder proposal or participate in the making of,
or solicit shareholders for the approval of, one or more shareholder
proposals relating to the Ordinary Shares; (iv) Subject any of its
Ordinary Shares to any voting trust or voting agreement or
arrangement, except as otherwise provided herein; (v) Form, join or in
any way participate in any Group with respect to any Ordinary Shares
(or any securities the ownership of which would make the owner thereof
a beneficial owner of Ordinary Shares) otherwise than as a result of
this Agreement; (vi) Solicit or propose to effect or negotiate any
form of business combination, restructuring, recapitalization or other
extraordinary transaction involving any change of control of the
Company; (vii) Disclose or act upon any intention, purpose, plan or
proposal with respect to its Ordinary Shares or the Company which is
inconsistent with the terms of this Agreement; (viii) Seek election to
or seek to place a representative or nominee on the Board of Directors
of the Company or seek the removal of any member of the Board of
Directors of the Company, in each case otherwise than in accordance
with the terms of this Agreement; or (ix) Assist, advise, encourage or
act in concert with any Person with respect to, or seek to do, any of
the foregoing.
2.2 Release of Certain Restrictions Under Certain Circumstances. (a)
Notwithstanding the provisions of Section 2.1 above, the restrictions set forth
in Section 2.1 shall not apply in respect of any transaction or event (a "Change
of Control Transaction") that results or is reasonably likely to result in a
Change of Control (as defined below) of the Company, unless the holders of a
majority of the Ordinary Shares then held by the Founders Group and the holders
of a majority of the Ordinary Shares then held by the IDB Group, respectively,
each certify in writing in response to a reasonable request by GE that they
intend, in connection with such Change of Control Transaction, to maintain
ownership of all or substantially all of the Ordinary Shares owned by them
immediately prior to the commencement of such Change of Control Transaction and,
solely in their capacities as shareholders of the Company, to oppose (to the
extent such opposition is in compliance with the terms of this Agreement and
applicable law) such Change of Control Transaction. For purposes of this
Agreement, a "Change of Control" shall mean: (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
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beneficial ownership of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting power of the
voting stock of the Company, whether as a result of issuance of securities of
the Company, any merger, consolidation, liquidation or dissolution of the
Company, any direct or indirect transfer of securities or otherwise; (ii) (1)
another corporation merges into the Company or the Company consolidates with or
merges into any other corporation, or (2) the Company conveys, transfers or
leases all or substantially all its assets (computed on a consolidated basis) to
any person or group, in one transaction or a series of transactions other than
any conveyance, transfer or lease between the Company and a subsidiary of the
Company, in each case in one transaction or a series of related transactions
with the effect that either (x) immediately after such transaction any person or
entity or group (as so defined) of persons or entities (other than any of the
Parties hereto) shall have become the beneficial owner of securities of the
surviving corporation of such merger or consolidation representing a majority of
the combined voting power of the outstanding securities of the surviving
corporation ordinarily having the right to vote in the election of directors or
(y) the securities of the Company that are outstanding immediately prior to such
transaction and which represent 100% of the combined voting power of the
securities of the Company ordinarily having the right to vote in the election of
directors are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or exchanged for,
in addition to any other consideration, securities of the surviving corporation
that represent immediately after such transaction, at least a majority of the
combined voting power of the securities of the surviving corporation ordinarily
having the right to vote in the election of directors; or (iii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 50% of the
directors of the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
(b) Notwithstanding anything else herein to the contrary, the restrictions
set forth in Section 2.1 shall no longer apply at any time that each of (i) the
Founders Group (together with any other Founders Parties) and (ii) the IDB Group
no longer collectively hold at least fifty percent (50%) of the Ordinary Shares
held by them, respectively, on the date of this Agreement.
2.3 Put by Founders Group and IDB Group in Certain Circumstances. In the
event (a "Put Event") that following any waiver of the restrictions set forth in
Section 2.1 pursuant to the waiver provisions set forth in the first paragraph
of Section 2.1, GE (together with any other GE Parties) at any time collectively
are the beneficial owners of greater than fifty percent (50%) of the
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outstanding Ordinary Shares, each of the Founders Parties and the IDB Group
shall have an option (the "Put Option"), on ten days' written notice from one or
more of the Founders Parties (the "Founders Notice") or from one or more members
of the IDB Group (the "IDB Notice"), to cause GE to purchase all or a portion of
the Ordinary Shares then owned by it at the Market Price (as defined below). The
GE Parties shall give the IDB Group and the Founders prompt notice of the
occurrence of a Put Event and the Put Option shall be effective until ninety
days from the receipt by the Founders and the IDB Group of such written notice.
For purposes of this Agreement, "Market Price" shall mean the closing price of
the Ordinary Shares on the principal securities exchange or other market on
which the Ordinary Shares are then traded or quoted for the last trading day
preceding the date of the relevant Founders Notice or IDB Notice, as applicable.
3. Restrictions on Transfer
3.1 General Restrictions on Transfer. Except as otherwise provided in
Section 3.4 below, for a period of three (3) years from the date of this
Agreement, each GE Party agrees that such GE Party will not, without the prior
written consent of each of the holders of a majority of the Ordinary Shares then
held by the Founders Group and the holders of a majority of the Ordinary Shares
then held by the IDB Group, directly or indirectly, sell, hypothecate, give,
bequeath, transfer, assign, pledge or in any other way whatsoever encumber or
dispose of (any such event, a "Transfer") any Ordinary Shares now or hereafter
at any time owned by such Shareholder (or any interest therein) to another
Person ("Transferee"), if as a result of such Transfer the GE Parties shall
collectively own less than fifteen percent (15%) of the then outstanding
Ordinary Shares of the Company; provided, however, that the restrictions set
forth in this Section 3.1 and in Section 3.4 below shall cease to apply (1) on
any Determination Date (as defined below) with respect to the Unrestricted
Percentage (as defined below) of the Ordinary Shares held in the aggregate by
the GE Parties on the date hereof, (2) at any time that the GE Parties shall
collectively own less than 5% of the then outstanding Ordinary Shares of the
Company, (3) if at any date the Market Price of the Ordinary Shares is below
$7.00 per share (adjusted to give effect to any change in the capitalization of
the Company, including as a result of any stock split, stock dividend or stock
combination), (4) under the circumstances permitting a Contingent Demand
Registration Request as described in Section 3.1(2) of the Registration Rights
Agreement dated on or about the date hereof among the Company and certain GE
entities, and (5) (q) in respect of a Change of Control Transaction that has
been approved by a majority of the directors of the Company with no material
interest in the matter being considered (other than in their capacities as
shareholders of the Company), or if at such time there are no such directors
with no material interest in the matter being considered, a majority of the
Board of Directors of the Company, unless the holders of a majority of the
Ordinary Shares then held by the Founders Group and the holders of a majority of
the Ordinary Shares then held by the IDB Group, respectively, each certify in
writing in response to a reasonable request by
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GE that they intend, in connection with such Change of Control Transaction, to
maintain the ownership of all or substantially all of the Ordinary Shares owned
by them immediately prior to the commencement of such Change of Control
Transaction and, solely in their capacities as shareholders of the Company, to
oppose (to the extent such opposition is in compliance with the terms of this
Agreement and applicable law) such Change of Control Transaction or (r)
following any Change of Control Transaction, provided that no GE Parties
participated in any manner in the relevant Change of Control Transaction. For
purposes of this Agreement, "Unrestricted Percentage" shall mean at any given
time (the "Determination Date") a percentage equal to the difference between (a)
one hundred percent (100%) minus (b) the greater of (x) the percentage of the
Ordinary Shares held by the Founders Parties on the date hereof still held by
the Founders Parties on the Determination Date or (y) the percentage of the
Ordinary Shares held by the IDB Group on the date hereof still held by the IDB
Group on the Determination Date (by way of example, if at the Determination Date
the Founders Parties and the IDB Group hold 40% and 60%, respectively, of the
Ordinary Shares held by them on the date hereof, the restrictions set forth in
this Section 3.1 and in Section 3.4 below shall no longer apply to 40% (i.e.
100% minus 60%) of the Ordinary Shares held by the GE Parties on the date
hereof). The parties to this Agreement will use their respective best efforts to
cause the Company not to transfer, and to instruct any transfer agent in respect
of the Ordinary Shares not to transfer, upon its books or stock records any
Ordinary Shares to any Person to the extent prohibited by this Agreement and any
purported transfer in violation hereof shall be null and void and of no effect.
Notwithstanding the foregoing, a Shareholder which is a GE Party may, without
the consents required by the first sentence of this Section 3.1, Transfer all or
part of its or his Ordinary Shares to a GE Transferee (as defined below),
provided that such GE Transferee in each such case, as a condition precedent to
the validity of such Transfer, agrees in a writing reasonably satisfactory to
counsel for the Founders Group and the IDB Group to be bound by all of the terms
and conditions of this Agreement as if named as a "Shareholder" hereunder. For
purposes of this Agreement, a "GE Transferee" of any GE Party shall be (i) any
other Shareholder or, to the extent permitted by applicable law, the Company or
(ii) any affiliate of such GE Party.
3.2 Involuntary Transfer. In the case of any Transfer of title or
beneficial ownership of the Ordinary Shares of a Shareholder which is a GE Party
upon default, foreclosure, forfeit, court order, or otherwise than by a
voluntary decision on the part of the respective GE Party (an "Involuntary
Transfer"), such GE Party (or its legal representatives) shall promptly (but in
no event later than two (2) business days after such Involuntary Transfer)
furnish written notice to the Founders Group and the IDB Group indicating that
the Involuntary Transfer has occurred, specifying the name of the Person to whom
such Ordinary Shares have been transferred, giving a detailed description of the
circumstances giving rise to, and stating the legal basis for, the Involuntary
Transfer.
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3.3 Veto on Certain Sales by GE Parties. Notwithstanding anything in this
Agreement to the contrary, during the term of the Agreement, none of the GE
Parties shall Transfer any of the Ordinary Shares held by it to any Competitor
(as defined below), without the prior written consent of each of (i) the holders
of a majority of the Ordinary Shares then held by the Founders Group and (ii)
the holders of a majority of the Ordinary Shares then held by the IDB Group. In
addition to any other consent or notice that may be required pursuant to the
terms of this Agreement, each GE Party agrees to give the Founders Group and the
IDB Group at least ten (10) days' advance written notice of any proposed
Transfer which requires consent pursuant to this Section 3.3, including the
number of Ordinary Shares to be transferred and the identity of the proposed
transferee. For the purposes of this Agreement, the term "Competitor" shall mean
any Person with a public equity market capitalization of at least $200 million
that prior to such acquisition of Ordinary Shares is engaged in a material
manner in the satellite communications manufacturing, equipment or service
industries. Notwithstanding the other provisions of this Section 3.3, (i) the GE
Parties shall be permitted to Transfer Ordinary Shares in any open-market or
reasonably similar "blind" Transfer notwithstanding that the other party to such
Transfer may be a Competitor, provided that such GE Party in good faith did not
know, and did not have any reasonable basis to believe, that such other party
was a Competitor, and (ii) the GE Parties shall be permitted to Transfer
Ordinary Shares without giving effect to the restrictions set forth in this
Section 3.3 (x) in respect of a Change of Control Transaction for such Ordinary
Shares that has been approved by a majority of the directors of the Company with
no material interest in the matter being considered (other than in their
capacities as shareholders of the Company), or if at such time there are no such
directors with no material interest in the matter being considered, a majority
of the Board of Directors of the Company, unless the holders of a majority of
the Ordinary Shares then held by the Founders Group and the holders of a
majority of the Ordinary Shares then held by the IDB Group, respectively, each
certify in writing in response to a reasonable request by GE that they intend,
in connection with such Change of Control Transaction, to maintain the ownership
of all or substantially all of the Ordinary Shares owned by them immediately
prior to the commencement of such Change of Control Transaction and, solely in
their capacities as shareholders of the Company, to oppose (to the extent such
opposition is in compliance with the terms of this Agreement and applicable law)
such Change of Control Transaction, and (y) at any time that the GE Parties
shall collectively own less than 5% of the then outstanding Ordinary Shares of
the Company.
3.4 Restrictions on Liens. During the three year period referred to in
Section 3.1 above, no GE Party shall create, incur or assume or suffer to exist
any lien, security interest, pledge, claim, option, right of first refusal or
first offer or other encumbrance ("Liens") on their respective Ordinary Shares
other than Liens created pursuant to the terms of this Agreement and the
Agreement and Plan of Merger by and among GE Americom, Spacenet, Jonah
Acquisition Corp. and the
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Company, dated as of September 25, 1998; provided, however, that the
restrictions set forth in this Section 3.4 shall not apply to any bona fide
pledge of Ordinary Shares to a commercial bank, savings and loan institution or
any other similar lending institution as security for any indebtedness to such
lender, provided, that prior to any such pledge, the Founders Group and the IDB
Group are informed in writing of such pledge and the pledgee shall deliver to
each of the Founders Group and the IDB Group its written agreement, in form and
substance satisfactory to counsel for such Groups, that upon any foreclosure
such pledgee shall comply with the terms of this Agreement applicable to the GE
Parties and will be bound by all of the terms and conditions of this Agreement
as if named as a "Shareholder" hereunder. Any attempt to place a Lien upon the
Ordinary Shares in violation of this Agreement shall be null and void and the
parties to this Agreement will use their respective best efforts to insure that
neither the Company nor any transfer agent shall give any effect to such
attempted encumbrance in its stock records.
3.5 Tax Matters Agreement. Notwithstanding anything in this Agreement to
the contrary, if at any time GE becomes entitled to the registration rights set
forth in Section 16(c) of the Tax Matters Agreement (the "Tax Agreement") dated
as of September 25, 1998, among GE Americom, the Company, Spacenet and the
Spacenet Subsidiaries (as defined in the Tax Agreement), GE shall be permitted
to Transfer such number of Ordinary Shares equal to the number of Tax Demand
Shares (as defined in, and determined in accordance with, the terms of the
Registration Rights Agreement, dated as of December 31, 1998, among the Company
and GE (as defined therein)); provided, however, that the restrictions set forth
in Section 3.3 hereof shall apply to any such Transfer.
Section 4. Rights of First Refusal
(i) If at any time during the term of this Agreement a Shareholder receives
from an unrelated third party, or makes to an unrelated third party, a bona fide
offer in writing to purchase all or a portion of his or its Ordinary Shares (the
"Shareholder Offer"), and such Shareholder (the "Offering Shareholder") desires
to sell such Ordinary Shares pursuant to the Shareholder Offer, he or it shall
deliver notice of such election (the "Offer Notice") in writing to each of the
other Groups (other than the Group to which the Offering Shareholder belongs)
together with a copy of such Shareholder Offer. Such Offer Notice shall state
the terms of such Shareholder Offer and the identity and business address of the
offeror (the "Offeror") and shall be deemed an offer by the Offering Shareholder
to sell all of his or its Ordinary Shares that are the subject of the
Shareholder Offer (the "Offered Shares") at a purchase price and on the terms
and conditions as set forth in the bona fide offer accompanying the Offer
Notice.
(ii) Subject to the other terms of the Agreement (including but not limited
to Section 2) each of the other Groups (other than the Group to which the
Offering Shareholder belongs; together with the Founders Parties or the GE
11
Parties, as applicable, the "Other Groups") shall have a first option (each a
"First Option") to purchase a portion of the Offered Shares equal to the product
of (a) the number of Offered Shares multiplied by (b) a fraction, the numerator
of which is the number of Ordinary Shares owned by such Other Group and the
denominator of which is the aggregate number of Ordinary Shares owned by the
Other Groups collectively. A First Option shall be exercisable by written notice
from the relevant Other Group to the Offering Shareholder and the other Other
Group within the fifteen business days (the "First Option Period") immediately
following receipt of the Offer Notice.
If one of the Other Groups does not exercise its First Option with respect
to all or a portion of the Offered Shares subject to its First Option within the
First Option Period, the other Other Group shall thereafter have the second
option (the "Second Option") to purchase all or a portion of such Offered
Shares. The Second Option shall be exercisable by written notice from the Buyer
to the Offering Shareholder and the other Other Group within the fifteen
business days (the "Second Option Period") immediately following the expiration
of the First Option Period. Any allocation among the members of an Other Group
of the rights set forth in this Section 4(ii) shall be at the sole discretion of
the members of such Other Group; provided, that such allocation shall be set
forth in the written notice delivered to the Offering Shareholders pursuant to
this Section 4(ii).
(iii) If either the First Option or the First Option together with the
Second Option are not exercised with respect to all of the Offered Shares, then,
all exercises of such options to purchase shall be null and void, and the
Offering Shareholder shall be entitled to sell all, but not less than all, of
the Offered Shares to the Offeror, but only on terms no more favorable to the
Offeror than those contained in the Shareholder Offer and within thirty (30)
days from the expiration of the Second Option Period (the "Disposition Period").
If the Offering Shareholder does not sell the relevant Offered Shares in strict
compliance with this Section 4(iii), any other disposition of its or his
Ordinary Shares must be made only pursuant to a new bona fide offer and the
provisions of this Section 4 or otherwise in accordance with the terms of this
Agreement.
(iv) The closing of any purchase and sale contemplated by Section 4(ii)
above shall take place at the offices of the Company, at 10:00 a.m, on the
fortieth business day after delivery of the Offer Notice, or such other time and
place as agreed upon by the parties. At the closing, the Offering Shareholder
shall deliver in exchange for the purchase price due hereunder certificates for
the Ordinary Shares being sold duly endorsed for transfer with signatures
guaranteed and with all applicable documentary and/or transfer stamps affixed.
(v) The provisions of this Section 4 shall not apply to (a) any Transfers
pursuant to a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or in a sale transaction in the course of
trading in the
12
Company's Ordinary Shares on the National Market System or Small Capitalization
System of the National Association of Securities Dealers, Inc. or any other
securities exchange (including, but not limited to, pursuant to a block trade),
(b) any Transfers (1) in respect of a Change of Control Transaction that has
been approved by a majority of the directors of the Company with no material
interest in the matter being considered (other than in their capacities as
shareholders of the Company), or if at such time there are no such directors
with no material interest in the matter being considered, a majority of the
Board of Directors of the Company, unless the holders of a majority of the
Ordinary Shares then held by the Founders Group and the holders of a majority of
the Ordinary Shares then held by the IDB Group, respectively, each certify in
writing in response to a reasonable request by GE that they intend, in
connection with such Change of Control Transaction, to maintain the ownership of
all or substantially all of the Ordinary Shares owned by them immediately prior
to the commencement of such Change of Control Transaction and, solely in their
capacities as shareholders of the Company, to oppose (to the extent such
opposition is in compliance with the terms of this Agreement and applicable law)
such Change of Control Transaction or (2) following any Change of Control
Transaction, provided that no GE Parties participated in any manner in the
relevant Change of Control Transaction, or (c) any Transfers by any member of a
Group or a Permitted Transferee (as defined below) thereof, on the one hand, to
another member of such Group or a Permitted Transferee of any member of such
Group, on the other hand, provided, that any such Permitted Transferee in each
such case agrees in a writing satisfactory to counsel for the Groups of which
the relevant transferor is not a member (or a Permitted Transferee thereof) to
be bound by all of the terms and conditions of this Agreement as if named as a
"Shareholder" hereunder.
For purposes of this Agreement, a "Permitted Transferee" of any Person
shall be (a) the Company (b) such Person's spouse, parents, step-parents,
brothers, sisters or half-siblings; (c) such Person's children, step-children or
their lineal descendants; (d) any trust of which such Person is the trustee and
the sole beneficiaries of which are such Person, such Person's spouse, parents,
step-parents, brothers, sisters, half-siblings, children, step-children or their
lineal descendants; (e) any partnership, the general partner(s) and limited
partner(s) (if any) of which are one or more of such Person, such Person's
spouse, parents, step-parents, brothers, sisters, half-siblings, children,
step-children or their lineal descendants; or (f) any affiliate of such Person.
(vi) If at any time the members of any Group (together with any other
Founders Parties or GE Parties, as applicable) no longer collectively hold 50%
of the Ordinary Shares held by them on the date of this Agreement, such Group
(together with any other Founders Parties or GE Parties, as applicable) shall no
longer have rights to a First Option or the Second Option in relation to any
Offered Shares and all calculations pursuant to Section 4(ii) hereof shall be
made without inclusion of any Ordinary Shares held by members of such Group
(together with any other
13
Founders Parties or GE Parties, as applicable); provided that, upon reasonable
request of any other Group, each Group shall reasonably and in good faith
determine whether it intends to exercise any first-refusal rights under this
Section 4 and shall reasonably promptly give notice of such determination to the
other Groups and, following any such notice of having no intention of exercising
its rights, until such time as such Group notifies the other Groups of a change
of its intentions, such Group shall no longer have rights to a First Option or
the Second Option in relation to any Offered Shares and all calculations
pursuant to Section 4(ii) hereof shall be made without inclusion of any Ordinary
Shares held by members of such Group (together with any other Founders Parties
or GE Parties, as applicable). In addition, if at any time the members of any
Group (together with any other Founders Parties or GE Parties, as applicable) no
longer collectively hold 5% or more of the Ordinary Shares then outstanding,
such Group (together with any other Founders Parties or GE Parties, as
applicable) shall be permitted to sell the Ordinary Shares held by members of
such Group (together with any other Founders Parties or GE Parties, as
applicable) without giving effect to the restrictions set forth in this Section
4.
(vii) The provisions of this Section 4 shall apply regardless of the form
of consideration contained in the Shareholder Offer. If and to the extent that
any Shareholder Offer shall include any non-cash consideration, any member of an
Other Group may exercise its rights under its First Option or Second Option, as
applicable, with respect to the non-cash consideration portion of such
Shareholder Offer by delivering either substantially identical non-cash
consideration or cash in the amount of the fair market value of such non-cash
consideration, which fair market value shall be determined by agreement of the
relevant parties or by a nationally recognized independent valuation consultant
or appraiser (with experience in evaluating such property) selected by the
relevant member of the Other Group and reasonably satisfactory to the Offering
Shareholder.
5. Representations and Warranties of the Shareholders.
Each of the Shareholders represents and warrants to each other as follows:
5.1 Organization. If it is an entity, it is a corporation, limited
partnership or other entity duly organized and validly existing under the laws
of its respective jurisdiction of organization.
5.2 Authority. It has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
5.3 Binding Obligation. The execution, delivery and performance of this
Agreement by it and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on its
part,
14
and this Agreement constitutes its binding obligation, enforceable against it in
accordance with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
5.4 No Conflict. The execution, delivery and performance of this Agreement
by it and the consummation by it of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (i)
violate any provision of law, statute, rule or regulation to which it is
subject, (ii) violate any order, judgment or decree applicable to it, or (iii)
conflict with, or result in a breach or default under, any term or condition of
its certificate of incorporation, bylaws or equivalent governing document or any
material agreement or other material instrument to which it is a party or by
which it or its property is bound.
Section 6. Legend on Certificates. The Shareholders agree that the
following legend or such legend as shall be substituted therefor by amendment of
this Agreement shall be placed on the certificates representing any Ordinary
Shares owned by each of them and shall be maintained on each and every such
certificate so long as the applicable restrictions contained in this Agreement
remain in effect:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A SHAREHOLDERS' AGREEMENT DATED AS OF DECEMBER 31, 1998
(THE "SHAREHOLDERS' AGREEMENT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE
WITH THE SHAREHOLDERS' AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY."
Section 7. Term of Agreement. This Agreement shall terminate on the tenth
anniversary of this Agreement.
Section 8. Entire Agreement; Amendments. This Agreement, including the
other documents and writings referred to herein or delivered pursuant hereto and
which form a part hereof, contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings with respect to such matters other than
those expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter, including but not limited to the Voting Agreement, dated as of March 25,
1993, by and among the Founders, the IDB Group and the Athena Group (as defined
therein), and the Shareholders Agreement, dated as of March 25, 1993, by and
among the Founders and the IDB Group, both of which hereby shall be terminated
for all purposes as of the date of this Agreement; provided, that all of
15
the parties hereto acknowledge the existence of a voting agreement among the
members of the IDB Group, which voting agreement will remain in full force and
effect after the date of this Agreement until amended, modified or terminated by
the parties thereto. This Agreement may not be amended except by an instrument
in writing signed on behalf of all of the parties hereto. Any agreement on the
part of a party hereto to any extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
Section 9. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
Section 10. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given on the date of delivery, if personally delivered, or if mailed
(registered or certified mail (in the case of international mailings, by
first-class air-mail), postage prepaid, return receipt requested), on the fifth
(5th) business day following mailing as follows:
If to the Founders Group:
c/o Gilat Satellite Networks Ltd.
Gilat House
Xxxxx Xxxxxxx Xx., Xxxxxx Xxxx
Xxxxx Xxxxx 00000
Israel
Fax: (000) 0-000-0000
Attention: General Counsel
with a copy to:
Kleinhendler & Halevy
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx 00000
Fax: (000) 0-000-0000
Attention: Xxxx Xxxxxxxxxxxx, Adv.
and
16
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
If to the IDB Group:
c/o DIC Communication and Technology Ltd.
00 Xxxx Xxxxxxxx Xxxx
Xxx Xxxx, Xxxxxx 00000
Fax: 000-0-000-0000
Attention: The Managing Director
and
x/x XXX Xxxxxx Electric Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: President
If to GE:
c/o GE American Communications, Inc.
0 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
Attention: Xxxxx Xxxxxxx, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective fifteen days after mailing notice thereof as set forth above.
Section 12. Successors and Assigns. All agreements herein contained shall
apply to and bind, and inure to the benefit of and be enforceable by, each of
the parties hereto and each of their respective heirs, executors,
administrators, successors and permitted assigns.
Section 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LOCAL
17
LAW OF THE STATE OF ISRAEL WITHOUT GIVING EFFECT TO CHOICE OF LAW PRINCIPLES.
Section 14. Recapitalization, Exchanges, Stock Options, etc. Affecting the
Ordinary Shares. As used in this Agreement, Ordinary Shares include any such
shares issued upon exercise of stock options, warrants or other convertible
securities. The provisions of this Agreement shall apply to the full extent set
forth herein with respect to (a) the Ordinary Shares and any option, right or
warrant to acquire Ordinary Shares and owned on the date hereof or hereafter
acquired, and (b) any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution for the Ordinary Shares, by combination, recapitalization,
reclassification, merger, consolidation or otherwise. In the event of any change
in the capitalization of the Company, as a result of any stock split, stock
dividend or stock combination, the provisions of this Agreement shall be
appropriately adjusted.
Section 15. Consent to Jurisdiction. Each Shareholder agrees that any
proceeding arising out of or relating to this Agreement or the breach or
threatened breach of this Agreement may be commenced and prosecuted in a court
in the State of Israel. Each Shareholder hereby irrevocably and unconditionally
consents and submits to the non-exclusive personal jurisdiction of any court in
the State of Israel in respect of any such proceeding. Each Shareholder consents
to service of process upon it with respect to any such proceeding by registered
mail, return receipt requested, and by any other means permitted by applicable
laws and rules. Each Shareholder waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of Israel and any claim that it may now or hereafter have that any such
proceeding in any court in the State of Israel has been brought in an
inconvenient forum.
Section 16. Injunctive Relief. Each of the parties to this Agreement
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party or parties would be irreparably harmed and could not be made
whole by monetary damages. It is accordingly agreed that the parties will waive
the defense in any action for injunctive relief, including specific performance,
that a remedy at law would be adequate and that the parties, in addition to any
other remedy to which they may be entitled to at law or in equity, shall be
entitled to injunctive relief, including specific performance, to enforce this
Agreement in any action instituted in any court of the State of Israel or any
court in the United States or any state thereof having subject matter
jurisdiction for such action.
Section 17. Additional Documents. Each party hereto agrees to execute any
and all further documents and writings within its powers and to perform such
other actions which may be or become necessary or expedient to effectuate and
carry out this Agreement.
18
Section 18. No Third-Party Benefits. None of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any third-party
beneficiary.
Section 19. No Inconsistent Agreements. None of the parties hereto will
hereafter enter into any agreements with respect to its Ordinary Shares which
are inconsistent with or violate in any material respects the rights granted to
the other parties under this Agreement.
Section 20. Information Regarding Beneficial Ownership. Each Shareholder
agrees to promptly provide to the Company and the other Shareholders any
information or representations that the Company or such other Shareholder may
reasonably request regarding such holder's beneficial ownership of Ordinary
Shares.
Section 21. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument.
Section 22. Definition. As used in this Agreement, "business day" shall
refer to any day which in the City of New York and in the State of Israel is
neither a legal holiday nor a day on which banking institutions are required or
authorized by law or regulation to close.
19
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
By: /s/ Xxxx Gat By: /s/ Xxxxxx Xxxxxxxxx
-------------------------- --------------------------
Name: Xxxx Gat Name: Xxxxxx Xxxxxxxxx
Number of Number of
Ordinary Shares: 204,465 Ordinary Shares: 380,465
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxxx
-------------------------- --------------------------
Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxxx
Number of Number of
Ordinary Shares: 94,120 Ordinary Shares: 340,570
By: /s/ Xxxxxx Xxxxxx
--------------------------
Name: Xxxxxx Xxxxxx
Number of
Ordinary Shares: 212,795
DIC COMMUNICATION AND PEC ISRAEL ECONOMIC CORPORATION
TECHNOLOGY LTD.
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxxx Xxxx
-------------------------- --------------------------
Name: Xxx Xxxxxx Name: Xxxxxxx Xxxx
Title: Managing Director Title: Treasurer
Number of Number of
Ordinary Shares: 682,418 Ordinary Shares: 746,917
GENERAL ELECTRIC COMPANY
By: /s/ Xxxxx X. Xxxx
--------------------------
Name: Xxxxx X. Xxxx
Title: Vice President and
Treasurer
Number of
Ordinary Shares: 72,496
20
GE AMERICAN COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
Number of
Ordinary Shares: 4,766,621
GENERAL ELECTRIC FINANCE HOLDING GMBH
By: /s/Xxxx X. Xxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxx
Title: Attorney-in-Fact
Number of
Ordinary Shares: 152,716
GENERAL ELECTRIC PLASTICS B.V.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxx
Title: Attorney-in-Fact
Number of
Ordinary Shares: 8,167
21
