Page 82 of 91 Pages
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made as of January
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10, 2000, by and among NEXUS TELOCATION SYSTEMS LTD., a company organized under
the laws of Israel (the "Company"), CLAL Industries and Investments Ltd. ("CII")
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and CLAL (Israel) Ltd.("CLAL Israel" and together with CII "CLAL"), BVR
------------ ----
Technologies, Ltd. ("BVR") and those persons whose names are set forth on
---
Schedule I hereto (the "Purchasers" and together with CLAL and BVR, the
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"Shareholders").
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WHEREAS, the Company and the Purchasers, have entered into that certain
Securities Purchase Agreement dated as of the date hereof (the "Securities
----------
Purchase Agreement"), providing, among other things, for the purchase by the
-------------------
Purchasers of newly issued ordinary shares, nominal value NIS 0.01 per share, of
the Company ("Ordinary Shares");
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WHEREAS, BVR currently owns 4,849,201 Ordinary Shares;
WHEREAS, (i) CII currently owns 1,203,500 Ordinary Shares and (ii) CLAL
Israel currently owns 653,600 Ordinary Shares;
WHEREAS, each of BVR, CLAL Israel and CII is also a Purchaser of
Ordinary Shares under the Securities Purchase Agreement; and
WHEREAS, this is the Shareholders' Agreement referred to in the
Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Shareholders agree as follows:
1. Election of Director. The parties hereto agree that at all times until the
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earlier to occur of (i) QEG-NTS Holdings LLC (subject to Section 12 hereof, the
"Lead Investor") holds less than (A) 2,000,000 shares of the Ordinary Shares
--------------
purchased under the Securities Purchase Agreement if the Second Closing under
the Securities Purchase Agreement shall not have occurred or (B) 3,500,000
shares of the Ordinary Shares purchased under the Securities Purchase Agreement
if the Second Closing under the Securities Purchase Agreement shall have
occurred; or (ii) the Purchasers, in the aggregate, hold less than 10% of the
outstanding Ordinary Share capital of the Company, the provisions set forth in
this Section 1 shall be in effect.
(a) The Lead Investor shall be entitled to designate one (1) member
(the "Purchaser Nominee") of the Board of Directors of the Company (the "Board
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of Directors") and to have such Purchaser Nominee appointed to any and all
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committees of the Board of Directors, immediately after the closing of the
initial issuance of the Ordinary Shares under the Securities Purchase Agreement
and thereafter at each ordinary general meeting (or extraordinary general
meeting, as the case may be) of the Company.
Page 83 of 91 Pages
(b) The Company shall take all necessary measures within its power to
cause the Purchaser Nominee to be appointed to the Board of Directors. The
Company shall take all necessary measures within its power to permit and allow
such Purchaser Nominee to serve on the Board of Directors of the Company as the
Lead Investor requests, to attend meetings in person or by telephone and to
exercise all other rights contemplated by this Agreement.
(c) Pursuant to its obligations under Section 1(b) and as soon as
practicable, but in no event later than March 15, 2000, the Company shall take
all necessary measures within its powers to cause an extraordinary general
meeting of the shareholders of the Company to take place in order to approve the
amendment of the Company's Articles of Association to provide specifically for
the Lead Investor's right to appoint the Purchaser Nominee to the Board of
Directors of the Company as contemplated in this Shareholders' Agreement (the
"Articles Amendment"). The Articles Amendment must be in a form reasonably
-------------------
satisfactory to the Lead Investor.
(d) The Shareholders agree that they will vote, or cause to be voted,
all Ordinary Shares owned by them to approve the Articles Amendment.
(e) Until such time as the Articles Amendment has become effective (or
if the Articles Amendment has ceased to be effective), the Shareholders agree
that they will vote, or cause to be voted, all Ordinary Shares owned by them to
elect, and will otherwise support the election of, the Purchaser Nominee as a
director, including, without limitation voting to demand an extraordinary
general meeting to elect the Purchaser Nominee to the Board of Directors, if
requested by the Lead Investor.
(f) The Shareholders agree that they will not vote, or cause to be
voted, any Ordinary Shares owned by them to (i) dismiss or discharge the
Purchaser Nominee as a director or (ii) amend the Articles of Association of the
Company to remove or in any way limit the Lead Investor's right to appoint the
Purchaser Nominee as provided in the Articles Amendment, unless, in each case,
as otherwise requested by the Lead Investor.
(g) Until such time as the Articles Amendment has become effective
providing the Lead Investor directly with the right to fill a vacancy left by
the Purchaser Nominee (or if the Articles Amendment has ceased to be effective),
in the event that the Purchaser Nominee vacates his seat on the Board of
Directors, whether by resignation, death, removal or otherwise, the Shareholders
agree to vote, or cause to be voted, all Ordinary Shares owned by them to elect,
and will otherwise support the election of, the person designated by the Lead
Investor to fill any such vacancy.
2. Major Decisions. The Shareholders agree that at all times until the earlier
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to occur of (i) the Lead Investor holds less than (A) 2,000,000 shares of the
Ordinary Shares purchased under the Securities Purchase Agreement if the Second
Closing under the Securities Purchase Agreement shall not have occurred or (B)
3,500,000 shares of the Ordinary Shares purchased under the Securities Purchase
Agreement if the Second Closing under the Securities Purchase Agreement shall
have occurred; or (ii) the Purchasers, in the aggregate, hold less than 15% of
the outstanding Ordinary Share capital of the Company, without the prior written
2
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consent of the Lead Investor, the Shareholders shall not vote, or cause to be
voted, any Ordinary Shares owned by them to permit or direct the Company to:
(a) enter into any merger or consolidation with or into any other
entity or the sale, lease or other disposition of any material asset to any
other entity;
(b) invest in research and/or development an amount in excess of $4
million in any twelve (12) month period from the date of this Agreement until
the third anniversary of the date of this Agreement;
(c) make capital expenditures (including the acquisition of assets
outside the ordinary course of business) in an amount in excess of $3 million in
any twelve (12) month period from the date of this Agreement until the third
anniversary of the date of this Agreement;
(d) have outstanding at any time indebtedness for borrowed money
(excluding convertible securities currently owned by BVR) in excess of $10
million; or
(e) authorize the issuance of Ordinary Shares or options to purchase
Ordinary Shares issuable to employees, consultants or directors of the Company
pursuant to a plan approved by the Board of Directors of the Company which at
any time (after taking into account all Ordinary Shares and options then issued
under all other such plans) exceeds 15% of the fully diluted Ordinary Share
Capital of the Company.
3. Notices. Any notice, request or other communication required or permitted
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hereunder will be in writing and will be deemed to have been duly given (a) when
received if delivered by facsimile transmission or in person, (b) on the fifth
day after being sent by registered or certified mail, return receipt requested,
postage prepaid, or (c) on the next business day after being sent by priority
delivery by an established overnight courier, to the parties at their respective
addresses set forth below:
To the Company: Nexus Telocation Systems Limited
6B Tfutzot Xxxxxx Xxxxxx
Xxxxxxxxx 00000, Xxxxxx
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0-000-0000
To the Purchasers: At the addresses forth next to such Purchaser's
name on Part I to Exhibit A of the Securities Purchase Agreement.
To CLAL: Clal Atidim Tower, Bldg. Xx. 0
X.X. Xxx 00000
Xxx-Xxxx 00000, Xxxxxx
Attention: Xxx Xxxx, Adv.
Facsimile: (000) 000-0-000-0000
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To BVR: 0 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx
Attention: Yahel Shachar
Facsimile: (000) 000-0-000-0000
4. Specific Performance. The rights of the parties under this Agreement are
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unique and, accordingly, the parties shall, in addition to such other remedies
as may be available to any of them at law or in equity, have the right to
enforce their rights hereunder by actions for specific performance to the extent
permitted by law.
5. Entire Agreement. This Agreement and (A) with respect to the Company and the
----------------
Purchasers, the Securities Purchase Agreement (including any and all exhibits,
schedules and other instruments contemplated thereby) and (B) with respect to
CLAL and BVR, the Shareholders Agreement, dated April 13, 1998 between CLAL and
BVR, constitute the entire agreements among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
between them or any of them as to such subject matter.
6. Amendment and Waiver. No provision of this Agreement may be waived or amended
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except in a written instrument signed, in the case of an amendment, by the
Company, CLAL, BVR and the Lead Investor or, in the case of a waiver, by the
party against whom a waiver of any such provision is sought. The failure at any
time to require performance of any provision hereof shall in no way affect the
full right to require such performance at any time thereafter. The waiver by any
party to this Agreement of a breach of any provision hereof shall not be taken
or held to be a waiver of any succeeding breach of such provision or any other
provision or as a waiver of the provision itself.
7. Assignment; Successors and Assigns. This Agreement shall be binding upon and
-----------------------------------
shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and permitted transferees. This
Agreement may not be assigned by any party without the prior written consent of
the other parties hereto; provided, that the rights of the Lead Investor under
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Section 1 hereof may be assigned by the Lead Investor to a transferee (a
"Transferee") to which the Lead Investor transfers not less than (A) 2,000,000
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shares of the Ordinary Shares purchased under the Securities Purchase Agreement
if the Second Closing under the Securities Purchase Agreement shall not have
occurred or (B) 3,500,000 shares of the Ordinary Shares purchased under the
Securities Purchase Agreement if the Second Closing under the Securities
Purchase Agreement shall have occurred; provided, that such assignment may not
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be made without the consent of the Company, which consent shall not be
unreasonably withheld; and provided, further, that the Transferee shall continue
-----------------
to hold such right as long as (x) it holds more than (A) 2,000,000 shares of the
Ordinary Shares transferred to it by the Lead Investor if the Second Closing
under the Securities Purchase Agreement shall not have occurred, or (B)
3,500,000 shares of the Ordinary Shares transferred to it by the Lead Investor
if the Second Closing under the Securities Purchase Agreement shall have
occurred; or (y) the Purchasers (including the Transferee), in the aggregate,
hold 10% or more of the outstanding Ordinary Share capital of the Company.
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8. Severability. In case any one or more of the provisions contained in this
------------
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement and such invalid, illegal and
unenforceable provision shall be reformed and construed so that it will be
valid, legal, and enforceable to the maximum extent permitted by law.
9. Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10. Section Headings. The headings contained in this Agreement are for reference
----------------
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
11. Governing Law. The corporate laws of Israel shall govern all issues
--------------
concerning the relative rights of the Company and the Shareholders as its
shareholders and between the Shareholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to principles of conflicts of law. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
12. Definition of Lead Investor. For purposes of this Agreement, "Lead Investor
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means QEG-NTS Holdings LLC; provided that to the extent that QEG-NTS Holdings
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LLC transfers any of the Ordinary Shares purchased by it under the Securities
Purchase Agreement to any of Quantum Emerging Growth Fund, N.V. or its
affiliates (such term shall include any funds managed by Xxxxx Fund Management
LLC or any of its affiliates), then the term "Lead Investor" shall collectively
refer to QEG-NTS Holdings LLC and such other entities.
13. Transfers to Affiliates. If any of the Shareholders directly transfers any
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Ordinary Shares owned by it to one of more of its Affiliates, then such
Shareholder, upon such transfer, shall cause such Affiliate or Affiliates to
agree to be bound by the provisions of this Agreement. For purposes of this
Section 13, an "Affiliate" of any Shareholder means any person which, directly
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or indirectly, is in control of, is controlled by or is under common control
with such specified Shareholder.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
COMPANY:
NEXUS TELOCATION SYSTEMS LTD.
By:__________________________
Name:
Title:
SHAREHOLDERS:
QEG-NTS HOLDINGS LLC
By:__________________________
Name:
Title:
BVR TECHNOLOGIES LTD.
By:__________________________
Name:
Title:
THE EMERGING MARKETS
TELECOMMUNICATIONS FUND, INC.
By:__________________________
Name:
Title:
EMV CTSL LLC
By:__________________________
Name:
Title:
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Page 88 of 91 Pages
CLAL INDUSTRIES AND INVESTMENTS LTD.
By:__________________________
Name
CLAL (ISRAEL) LTD.
By:__________________________
Name
Title
HAPOALIM ELECTRONICS
COMMUNICATIONS LTD.
By:__________________________
Name
Title
_____________________________
XXXXX XXXXXXXX
GLADCOVE INTERNATIONAL LTD.
By:________________________
Name
Title
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Page 89 of 91 Pages
ADASHA PROJECT INITIATION
DEVELOPMENT (TA) LTD.
By:_______________________
Name
Title
SHREM, FUDIM, XXXXXX & CO. LTD.
By:____________________________
Name
Title
DS FOUNDERS GROUP L.P.
By:__________________________
Name
Title
THE CANADA ISRAEL OPPORTUNITY
FUND II
By:__________________________
Name
Title
THE KAHANOFF FOUNDATION
By:__________________________
Name
Title
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LEADER HOLDINGS & INVESTMENTS LTD.
By:_______________________________
Name:
Title:
_____________________________
XXXXXX XXXXX
_____________________________
ITAMAR PATISHI
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Page 91 of 91 Pages
SCHEDULE I
NAME OF PURCHASER
QEG-NTS Holdings LLC
Hapoalim Electronic Communications Ltd.
BVR Technologies Ltd.
The Emerging Markets Telecommunications
Fund, Inc.
EMV CTSL LLC
Xxxxx Xxxxxxxx
Clal (Israel) Ltd.
Clal Industries and Investments Ltd.
Gladcove International Ltd.
Adasha Project Initiation Development (TA) Ltd.
Shrem, Fudim, Xxxxxx & Co. Ltd.
DS Founders Group L.P.
The Canada Israel Opportunity Fund II
The Kahanoff Foundation
Leader Holdings & Investments Ltd.
Xxxxxx Xxxxx
Xxxxxx Patishi
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