EXHIBIT 10.6
EXECUTION COPY
CDI SHAREHOLDERS AGREEMENT
CDI SHAREHOLDERS AGREEMENT, dated as of December 15, 1997, among
ISRAEL AIRCRAFT INDUSTRIES LTD., a corporation organized under the laws of the
State of Israel ("IAI"), Xxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, individuals
residing within the State of New York (the "Controlling Shareholders"; together
with IAI, the "Shareholders"), CELL DIAGNOSTICS INC., a corporation organized
under the laws of the State of Delaware (the "Corporation"), MEDIS INC., a
corporation organized under the laws of the State of Delaware ("Medis"), CDS
DISTRIBUTOR, INC., a corporation organized under the laws of the State of
Delaware ("CDS"), and MEDIS EL LTD., a corporation organized under the laws of
the State of Israel ("EL").
W I T N E S S E T H:
WHEREAS, IAI and the Corporation have entered into a Stock Purchase
Agreement (the "Purchase Agreement"), of even date herewith, pursuant to which
3,600,457 shares of the Corporation's Common Stock, $.01 par value ("Common
Stock"), are being issued to IAI.
WHEREAS, after giving effect to the aforesaid issuance, the
Shareholders will collectively own of record approximately 64% of the
outstanding shares of Common Stock; and
WHEREAS, the Shareholders believe that this Agreement is in the best
interest of themselves and the Corporation and will promote harmonious
relationships among the Shareholders with respect to the conduct of the affairs
of the Corporation and its subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations set forth herein and in the Purchase Agreement, and in
order to induce IAI to enter into the Purchase Agreement, the parties hereto
hereby agree as follows:
1. Management Matters. (a) The Corporation shall use its best efforts to,
and each of the Shareholders shall, take and cause to be taken all necessary
action (corporate or other), including the voting of shares of Common Stock and
common stock of the "Subsidiaries" (as defined below), to maintain a Board of
Directors of the Corporation and each of its direct and indirect subsidiaries
(including Medis, CDS and EL) (collectively, "Subsidiaries") consisting of only
six directors, three of whom shall be designees of the Controlling Shareholders
and three of whom shall be designees of IAI, with each director having the same
voting rights as the others. At each annual meeting of the shareholders of the
Corporation, the Shareholders shall nominate such designees for election as
directors of the Corporation, and the Shareholders shall vote all of their
shares, and shares for
which they hold a proxy, in person or by proxy, for the election of such persons
as directors of the Corporation and for the election, as successor to any
director of the Corporation who shall resign, die, be removed or whose term of
office shall otherwise expire or be terminated (collectively, a "Retired
Director"), of such person as may be designated to succeed the Retired Director
by that Shareholder who designated the Retired Director. For so long as Xxxxxx
X. Xxxxxx takes an active management role in the operations of the Corporation
and until he resigns or is unable or unwilling to continue to perform his duties
as Chairman of the Board, the Shareholders shall direct their respective
director designees to vote for the election of Xxxxxx X. Xxxxxx as Chairman of
the Board of Directors and Chief Executive Officer of the Corporation and of the
boards of directors of each of the Subsidiaries. The Board of Directors may
elect or appoint such other officers as it may from time to time determine. The
duties and functions of the officers shall be those duties and functions
described in the Corporation's By-Laws.
(b) Any Shareholder vote that is inconsistent with Section 1(a)
above, or that otherwise results in a Board of Directors that does not consist
only of three IAI designees and three designees of the Controlling Shareholders,
shall be void ab initio and shall have no force and effect and, in such event,
in order to accomplish the agreements set forth in Section 1(a), above, with
respect to all matters submitted to a vote of the shareholders of the
Corporation or the shareholders of the Subsidiaries, any Shareholder that voted
inconsistently with Section 1(a) above, automatically, and without further
action by anyone, grants to IAI, if the inconsistent vote was by a Controlling
Shareholder, or to the Controlling Shareholders, if the inconsistent vote was by
IAI, an irrevocable proxy for all of the Common Stock owned by such Shareholder,
solely for the purpose of allowing the proxy holder to vote those shares of
Common Stock consistently with Section 1(a), above. Each Shareholder
acknowledges that such proxy is coupled with an interest, is irrevocable for so
long as this Agreement remains in effect and is exercisable only if a
Shareholder for any reason fails or refuses to vote its shares of Common Stock
in such manner as will best give effect to the provision of Section 1(a),
above.
(c) So long as any of the Ordinary Shares, NIS 0.1 par value, of EL
("Ordinary Shares") are owned or controlled, directly or indirectly, by any of
the Shareholders, such Ordinary Shares shall be voted in such a manner as to
effect the provisions of Section 1(a) above.
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2. Special Approval Requirements for Certain Actions. The Corporation
shall not, and shall not permit any of its Subsidiaries, without the consent of
both IAI and at least one of the Controlling Shareholders, do any of the
following:
(a) Increase, decrease or reclassify its capital stock or the
capital stock of any of its Subsidiaries.
(b) Issue or sell any of its equity interests or equity interests of
any of its Subsidiaries.
(c) Amend its Certificate of Incorporation or comparable instrument
or the Certificate of Incorporation or comparable instrument of any of its
Subsidiaries.
(d) Amend its By-Laws or comparable instrument or the By-Laws or
comparable instrument of any of its Subsidiaries.
(e) Sell, mortgage, convey or in any other manner encumber all or
substantially all of its assets or substantially all of the assets of any of its
Subsidiaries.
(f) Merge or consolidate with another entity.
(g) Guarantee or in any other manner be responsible for the debts or
obligations of another entity or person.
(h) License, assign or otherwise dispose of technology or know-how
to any person or entity.
(i) Transfer or encumber in any manner shares of its capital stock
or the capital stock of any of its Subsidiaries.
(j) Approve any modification to its capitalization or the
capitalization of any of its Subsidiaries.
(k) Subject to Section 10 of the Amended and Restated Subscription
and Shareholders Agreement, originally dated May 26, 1992, as amended and
restated on August 13, 1992, and effective as of June 1, 1992 (the "Existing
Shareholders Agreement"), and except as otherwise agreed by the Shareholders,
invest in any Product, as defined therein.
(l) Permit EL to approve a "Successor Marketing Entity" pursuant to
Section 6(b)(y) of the Existing Shareholders Agreement.
(m) Approve the Corporation's budget and that of any of its
Subsidiaries.
(n) Vote the shares of any Subsidiary.
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3. Board Deadlock. Subject to the delegation of management
responsibilities under this Agreement and the Corporation's By-Laws, the Board
of Directors shall be charged with the general management of the Corporation. In
the case of an irreconcilable deadlock with respect to the approval of the
Corporation's annual budget, the most recent approved budget shall remain in
effect pending resolution of such deadlock.
Non-Disclosure. Each of the Shareholders covenants and agrees that,
subject to the following two sentences, it will not at any time disclose to
anyone or use for any purpose whatsoever (except to the extent reasonable
necessary for it to perform its duties for the Corporation, including obtaining
distributors for Products and financing for the production of Products) any
"confidential information", as such term is hereinafter qualified, concerning
the business or affairs of the Corporation or its subsidiaries which it may have
acquired in the course of or as incident to its being a Shareholder, and any of
its designees being an officer or a director, of the Corporation, including,
without limitation, business or trade secrets of the Corporation, or methods or
techniques used by the Corporation in or about its business. For the purposes of
this Section, confidential information shall not include information which was
known to the public prior to the date of communication thereof by the
Shareholder or which became known to the public thereafter other than through
communications by a Shareholder. In addition, a Shareholder may disclose
information of a kind which would be disclosable in a filing with a government
agency in connection with a sale or offer of shares of Common Stock, but not
information for which confidential treatment by the Commission might reasonably
be requested.
4. Legend. Each certificate for the shares of Common Stock subject to the
provisions hereof shall be marked on the face thereof with a legend in
substantially the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS,
AND ACCORDINGLY NEITHER THE SHARES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN
EXCEPTION FROM REGISTRATION IS AVAILABLE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A
SHAREHOLDERS AGREEMENT, DATED AS OF DECEMBER 15, 1997, AMONG CELL DIAGNOSTICS
INC., ISRAEL AIRCRAFT INDUSTRIES LTD., XXXXXX XXXXXXXX, XXXXXX X. XXXXXX, CDS
DISTRIBUTOR, INC., MEDIS INC. AND MEDIS EL LTD., COPIES OF WHICH AGREEMENT ARE
ON FILE AT THE PRINCIPAL OFFICE OF CELL DIAGNOSTICS INC.
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5. Termination. This Agreement shall terminate on the earliest to occur of
the following events: (a) the dissolution or complete liquidation of the
Corporation, (b) the mutual written agreement of the Shareholders, (c) such time
as more than 30% of the shares of Common Stock then outstanding are freely
tradeable without restrictions under the Securities Act of 1933, as amended, and
are listed and traded on a U.S. national securities exchange or quoted on the
NASDAQ System or a comparable interdealer quotation system, (d) the merger or
consolidation of the Corporation with or into any other person, or the sale of
all or substantially all of the Corporation's assets to any other Person, which
is duly approved pursuant to Section 2 hereof, (e) the aggregate number of
shares of Common Stock owned or controlled, directly or indirectly, by the
Shareholders shall constitute less than 10% of the total number of shares of
Common Stock outstanding, (f) IAI shall not own any of the 1,250,000 Ordinary
Shares of EL presently owned by it and (g) the date ten years after the date of
this Agreement; provided, however, that no such termination shall relieve either
party of any liability for a prior breach or default.
6. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been given (a) when received, if delivered in person, (b) five
(5) business days following the mailing thereof if mailed by certified first
class mail, postage prepaid, return receipt requested, or (c) upon confirmed
electronic answer-back, if sent by telecopier, in any case as follows:
If to the Controlling Shareholders, the Corporation, Medis, CDS or
EL to:
c/o Medis Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
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If to IAI, to:
Xxx-Xxxxxx Xxxxxxxxxxxxx Xxxxxxx
Xxx, Xxxxxx 00000
Attn: Xxxxx Xxxxx, Esq.
Telecopier: 011-972-3-935-8987
with a copy to:
Xxxxxx Xxxxxx & Brozman, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
or at such other address as either party may have advised in the manner provided
in this Section 6.
7. Termination of Existing Shareholders Agreement Provisions. The Existing
Shareholders Agreement shall, upon the execution and delivery hereof, terminate
and be of no further force and effect, except for clauses (i) and (j) of Section
5, Section 6 and Section 10(b) thereof which, as the same may have been amended,
shall survive until the termination of this Agreement under Section 5 hereof and
be deemed incorporated by reference into this Agreement as if such provisions
were stated herein in their entirety, and shall be binding upon the parties
hereto notwithstanding the termination provisions of the Existing Shareholders
Agreement.
8. Distributorship Agreement. Each of CDS and EL reaffirms to the other
their respective rights and obligations pursuant to the Distributorship
Agreement, dated as of August 13, 1992, between EL and CDS.
9. Miscellaneous. (a) The Shareholders agree to vote their shares of
Common Stock to effectuate the provisions of this Agreement.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, subject to the
provisions of this Section 9(b). Shares of Common Stock acquired by any third
party, as well as shares of Common Stock of a deceased Shareholder in the hands
of his legal representative or distributees, shall continue to be bound by the
terms and conditions of this Agreement which are applicable to its or his
transferor. Any transfer of shares of Common Stock to any such person or entity
shall be contingent on confirmation to the Corporation and the other parties
hereto by the proposed transferee, in writing in a manner satisfactory to the
Corporation, that the proposed transferee is bound by the
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terms and conditions of this Agreement which are applicable to its or his
transferor. Notwithstanding the foregoing, at such time as shares of Common
Stock are listed and traded on a national securities exchange or quoted on
Nasdaq System or a comparable interdealer quotation system, the foregoing
provisions of this Section 9(b) shall no longer be applicable with respect to
shares of Common Stock to be sold to or held by any person or entity other than
the Shareholders and any persons or entities owned or controlled, directly or
indirectly, by the Shareholders and the second legend referred to in Section 4
of this Agreement shall not be required with respect to such shares.
(c) This Agreement sets forth the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior or
contemporaneous agreements, contracts, promises, representations, warranties,
statements, arrangements and understandings, if any, among the parties hereof or
their representatives. No waiver, modification or amendment of any provision,
term or condition hereof shall be valid unless in writing and signed by the
party to be charged therewith and any such waiver, modification or amendment
shall be valid only to the extent therein set forth.
(d) If any provision of this Agreement, or portion thereof, shall be
held invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision, or portion
thereof, and shall not in any manner affect or render invalid or unenforceable
any other provision of this Agreement, or portion thereof, and this Agreement
shall be carried out as if any such invalid or unenforceable provision, or
portion thereof, were not contained herein. In addition, any such invalid or
unenforceable provision, or portion thereof, shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
(e) The captions appearing in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope and intent of this Agreement or any of the provisions hereof.
(f) Each party hereto shall cooperate and shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
(g) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the conflict
of laws principles thereof.
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(h) This Agreement may be executed in counterparts and all such
counterparts taken together shall constitute one agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
set forth above.
ISRAEL AIRCRAFT INDUSTRIES LTD. CDS DISTRIBUTOR INC.
By: /s/ M. Keret By: /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------
Name: M. Keret Name: Xxxxxx X. Xxxxxx
Title: Title: Ch. of Bd.
By: /s/ N. Gilad
----------------------------- MEDIS EL LTD.
Name: N. Gilad
Title:
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
CONTROLLING SHAREHOLDERS: Name: Xxxxxx X. Xxxxxx
Title: Ch. of Bd.
/s/ Xxxxxx Xxxxxxxx By:
--------------------------------- -----------------------------
Xxxxxx Xxxxxxxx Name:
Title:
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx MEDIS INC.
CELL DIAGNOSTICS INC. By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ Xxxxxx X. Xxxxxx Title: Ch. of Bd.
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Ch. of Bd.
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