Exhibit 1
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "AGREEMENT") is made as of this 29th day of
July 2007 by and between (i) M.S.N.D. REAL ESTATE HOLDINGS LTD. ("MIVTACH"); and
ELBIT LTD., a company formed under the laws of the State of Israel ("ELBIT"),
together with Mivtach, each, a "SHAREHOLDER" and, collectively, the
"SHAREHOLDERS").
RECITALS
A. Elbit is a shareholder of Elbit Vision Systems Ltd. (the "COMPANY"), an
Israeli public company whose shares are traded on the OTC Bulletin Board,
holding approximately 9% of the Company's issued share capital;
B. Mivtach is a shareholder of the Company, holding approximately 10% of the
Company's issued share capital;
C. The shareholders are party to a Shareholders Agreement dated February 21,
2006 (the "PREVIOUS AGREEMENT") which to date has not entered into force
and shall be of no further effect upon the execution of this Agreement;
D Elbit, Xx. Xxx Xxxx, Xxx Xxxx Holdings GmbH, Altro Warenhandels GmbH and
M.S. Master Investments (2002) Ltd. are party to a shareholders' agreement
dated February 21, 2006 (the "SA"), which shall be terminated upon the
execution of this Agreement;
E. The Shareholders wish to set forth certain matters regarding their holdings
in the Company following the termination of the SA and of the Previous
Agreement upon the terms more fully set forth herein;
IT IS HEREBY AGREED AS FOLLOWS:
1. BOARD OF DIRECTORS
1.1 Subject to Section 1.2 below, for as long as each of the
Shareholders holds at least 7.5% of the issued share capital of
the Company on a Fully-Diluted Basis (the "7.5% THRESHOLD"), the
Shareholders hereby agree to vote all of the Ordinary Shares now
or hereafter owned by them, for the election to the Company's
Board of Directors of: (i) one member designated by Mivtach, who
shall be nominated Chairman and (ii) one member designated by
Elbit.
A Fully Diluted Basis in this Agreement shall mean - a
theoretical increase of the Company's issued share capital
assuming the exercise and/or conversion of all outstanding
securities, options and warrants exercisable into shares of the
Company.
Notwithstanding the foregoing, a reduction in a Shareholder's
holdings below the 7.5% Threshold shall not be deemed to have
occurred unless such reduction results from such Shareholders
selling Ordinary Shares of the Company.
1.2 Notwithstanding the aforementioned provisions set forth in
Section 1.1, in the event that and for as long as, Mivtach holds
at least 15% of the issued share capital of the Company, the
Shareholders hereby agree to vote all of the Ordinary Shares now
or hereafter owned by them, for the election to the Company's
Board of Directors of: (i) two members designated by Mivtach, one
of whom shall be appointed chairman of the Board of Directors of
the Company and (ii) one member designated by Elbit.
1.3 For the purposes of Section 1.1 and 1.2 herein, if a Shareholder
fails to meet the 7.5% Threshold (the "Decreasing Shareholder"),
such Decreasing Shareholder's right to nominate directors to the
Board of Directors shall be terminated and the right to nominate
the same number of directors owned by the Decreasing Shareholder
shall be granted to the Shareholder who at such time shall hold
the largest number of shares of the Company (the "Largest
Shareholder") and the Decreasing Shareholder agrees to vote all
of the Ordinary Shares held by it at such time for the election
to the Company's Board of Directors of all the nominees which the
Largest Shareholder has nominated in accordance with this
Agreement.
Page 1 of 5 pages
1.4 Notwithstanding the foregoing, it is further agreed that if at
any time prior to May 14, 2008, being the expiry date of the
warrants granted to Elbit on May 14, 2004, Elbit shall hold less
than the 7.5% Threshold, excluding any reductions in Elbit's
holdings as a result of sales of the Company's shares by Elbit,
Elbit shall maintain its right to designate one member of the
Board, until May 14, 2008. For the avoidance of doubt, the
aforegoing shall in no way derogate from Elbit's right, at any
time during the term of this Agreement (i.e. even after May 14,
2008) to nominate a director to the Company's Board pursuant to
Sections 1.1 and 1.2 above.
1.5 Notwithstanding the foregoing, at any time during the term of
this Agreement, Elbit may, in its absolute discretion, by notice
in writing to Mivtach, voluntarily terminate its right to
designate a director to the Company's Board pursuant to Sections
1.1 and 1.2 above which shall in no way affect the validity of
the other provisions of this Agreement.
In the event Elbit shall terminate its right to designate a
director, as above mentioned, the right to designate the director
to the Company's Board shall be granted to Mivtach and Elbit
shall be obliged to vote its shares in favor of the nominee
designated by Mivtach.
1.6 No Shareholder, or any officer, director, shareholder or employee
of such Shareholder, makes any representation or warranty as to
the fitness or competence of the nominee of any other Shareholder
to the Company's Board of Directors by virtue of its execution of
this Agreement or by voting in accordance with the provisions of
this Agreement. For the avoidance of doubt, each Shareholder (and
the directors designated by it) shall be solely responsible for
its compliance or the compliance of its designee(s) with the
requirements and provisions of applicable law.
1.7 The voting of Ordinary Shares of the Company pursuant to this
Agreement may be effected in person, by proxy, by written consent
or in any other manner permitted by applicable law.
1.8 In the event of any share split, share dividend,
recapitalization, reorganization or combination, the provisions
of this Agreement shall apply also to any Ordinary Shares issued
to the Shareholders with respect to, or in replacement of, their
existing shareholdings in the Company.
2. RIGHT OF FIRST OFFER; TAG-ALONG
2.1. Any Shareholder (the "SELLING PARTY") wishing to sell or
otherwise transfer Ordinary Shares of the Company to a person or
entity who is not a Permitted Transferee, as defined hereinafter,
shall be required to first make an offer to the other
Shareholders (each an "OFFEREE"), as set forth below.
2.2. The Selling Party shall send each Offeree a written offer in
which the Selling Party shall specify the following information
(the "OFFER"): (i) the number of Ordinary Shares that the Selling
Party proposes to sell or transfer (the "OFFERED SHARES"); (ii) a
representation and warranty that the Offered Shares are free and
clear of all pledges, debts, security interests and other third
party interests; and (iii) the price that the Selling Party
intends to receive in respect of the Offered Shares, which shall
be stated in cash, together with the requested terms of payment
thereof.
The Offer shall constitute an irrevocable offer made by the
Selling Party to sell to each Offeree the Offered Shares or to
have such Offeree participate in such sale, on a pro rata basis
all upon the terms specified in the Offer and as described below.
For the purpose of this Section 2, the pro-rata portion of each
Offeree shall mean a fraction of the Offered Shares of which the
aggregate number of shares which are held by such Offeree
immediately prior to the Offer, on an outstanding basis, shall be
the numerator, and the aggregate number of shares which are held
at that time by all the Offerees, on an outstanding basis shall
be the denominator.
2.3. If the Offer specifies that it is contingent upon the purchase of
all of the Offered Shares, the Selling Party shall be entitled to
refuse to transfer the Ordinary Shares pursuant to the Offer to
an Offeree if, following compliance with Section 2.5 below, the
Offerees do not wish to purchase all of the Offered Shares.
Page 2 of 5 pages
2.4. Each Offeree will notify the Selling Party whether it (i) wishes
to purchase all or any portion of such Offeree's pro-rata portion
of the Offered Shares, (ii) wishes to participate in the sale to
the third party, or (ii) does not wish to either purchase the
Offered Shares or participate in the sale thereof. Such Offeree
response must be received by the Selling Party within ten (10)
days after receipt of the Offer by such Offeree ("OFFEREE'S
NOTICE").
2.5. If the aggregate number of Offered Shares accepted by the
Offerees is less than the number of Offered Shares, then the
Selling Party shall send a notice to the Offerees who accepted to
purchase all the Shares offered to them that shall state the
number of Offered Shares for which no acceptances were delivered
("NOTICE OF REMAINING OFFERED SHARES"). The Offerees who received
a Notice of Remaining Offered Shares, may exercise an option to
purchase any of the Offered Shares for which no acceptances were
delivered upon the terms of the Offer. Acceptances for purchasing
remaining Offered Shares must be received by the Selling Party
within ten (10) days after receipt by the relevant Offerees of
the Notice of Remaining Offered Shares.
2.6. If the number of Offered Shares for which there are acceptances
is, in the aggregate, equal to the number of Offered Shares, then
each of the accepting Offerees shall acquire the number of shares
for which he delivered notice of acceptance.
2.7. If the number of Offered Shares for which there are acceptances
is, in the aggregate, more than the number of Offered Shares,
then each of the accepting Offerees shall acquire the number of
shares for which he delivered notice of acceptance, and each
Offeree who sent acceptance to the Notice of Remaining Offered
Shares (the "ACCEPTING OFFEREE") shall acquire such number of the
Remaining Offered Shares that is equal to the Remaining Offered
Shares multiplied by a fraction in which the number of shares
held by such Accepting Offeree immediately prior to the Offer, on
an outstanding basis, shall be numerator, and the aggregate
number of shares which are held at that time by all Accepting
Offerees on an outstanding basis shall be the denominator.
2.8. The Offered Shares shall become the property of each Offeree who
agreed to purchase the Offered Shares on the terms specified in
the Offer, against payment of the consideration as specified in
the Offer. If there remain any Ordinary Shares that have not been
acquired by an Offeree and the Selling Party has not exercised
its right to refuse to transfer any of the Offered Shares
pursuant to the Offer (as set forth in Section 2.3), then subject
to the Offeree's right under Section 2.9 below, the Selling Party
may sell such remaining Ordinary Shares or, if it has exercised
its right under Section 2.3, all Offered Shares to a third party,
provided that such sale is consummated (i) in a bona fide
transaction; (ii) at a price that is not lower than that
specified in the Offer; (iii) subject to payment terms that are
no more favorable to the purchaser than those specified in the
Offer, all within a 90 day period from the expiry of the ten (10)
day period; and (iv) provided that, if the sale is not carried
out on the market and the transferee following such purchase will
hold shares representing three percent (3%) or more of the
Company's issued and outstanding share capital, the transferee of
the Offered Shares shall become party to this Agreement.
2.9. If an Offeree wishes to sell or otherwise transfer any or all of
such Offeree's Ordinary Shares together with the Offered Shares
being sold by the Selling Party, such Offeree (the "TAG ALONG
SHAREHOLDER") shall, during such 10 day period, have the right to
notify the Selling Party of its intention to exercise its Tag
Along Right pursuant to this Section 2.9 (the "TAG ALONG
NOTICE"). Following the Tag Along Notice, the Tag Along
Shareholder shall add to the Ordinary Shares being sold by the
Selling Party to such proposed purchaser thereof (the "PROPOSED
PURCHASER") that number of Ordinary Shares which bears the same
ratio to the total number of Ordinary Shares held by the Tag
Along Shareholder, on an outstanding basis, as the ratio that the
number of the Offered Shares bears to the Selling Party's total
number of Ordinary Shares of the Company, on an outstanding
basis, and upon the same terms and conditions under which the
Selling Party's Ordinary Shares shall be sold.
In the event that the Tag Along Shareholder exercises its rights
hereunder, the Selling Party must cause the Proposed Purchaser to
add such Ordinary Shares to the Offered Shares to be purchased by
the Proposed Purchaser, as part of the sale agreement, or reduce
the number of Ordinary Shares that it proposes to sell to the
Proposed Purchaser (in which case, the Selling Party and the Tag
Along Shareholder will contribute the identical portion of
Ordinary Shares relative to their total shareholdings in the
Company, calculated on an outstanding basis), and either conclude
the transaction in accordance with such revised structure or
withdraw from completing the transaction.
2.10. Notwithstanding the foregoing, the provisions of this Section 2
shall not apply to any transfer of Ordinary Shares by a
Shareholder to its Permitted Transferees. For purposes of this
Agreement, the term "PERMITTED TRANSFEREES" shall mean an entity
controlled by, controlling, or under common control with the
Selling Party. A transferee by operation of law shall not be
considered Permitted Transferee.
Page 3 of 5 pages
Notwithstanding anything set forth above, in the event that a
banking institution realizes its pledge over shares of the
Company held by a Shareholder and wishes to sell any or all of
such shares, the other Shareholder whose shares of the Company
are not being sold by such banking institution shall be granted a
Right of First Offer with respect to such shares (in accordance
with the provisions of Section 2.8 above) but shall not have the
Tag-Along Right set forth in Section 2.9 above.
2.11. Notwithstanding anything to the contrary in this Section 2, the
Parties acknowledge that Elbit is under contractual obligation
dated July 4, 1993 to Xxxxxx Xxxxxx and Xxxxxx Xxxx (the "OTHER
PARTIES"), who are entitled to a right of first refusal with
respect to any transfer of Ordinary Shares of the Company by
Elbit. Accordingly any Offer made by Elbit to the Offerees, shall
be made at the same time by Elbit to the Other Parties. In the
event the Other Parties exercise such right, Elbit's Offer to the
Offerees shall be deemed to be void. However, Elbit shall notify
the Offerees of the waiver of the right by the Other Parties or
the expiration of the notice period for such Other Parties to
fully exercise such right and failure by both to fully exercise
such right (the "ELBIT NOTICE"), in either case within 2 business
days of receipt of such waiver or expiration of such notice
period. Within 5 business days of receipt of the Elbit Notice
each Offeree shall be entitled to exercise his option to
purchased the Offered Shares either according to his Pro Rata
fraction of the Offered Shares or any Remaining Offered Shares
and the provisions of Section 2.8 shall apply.
2.12. Notwithstanding the above, any sale/s of shares of the Company
in the market in accordance with Rule 144 of the Securities Act
of 1933, shall not be subject to any of the restrictions on
transfer set forth in this Section 2.
3. TERM OF THE AGREEMENT
3.1. This Agreement shall enter into force upon the termination of (i)
the Previous Shareholders' Agreement by Mivtach, Elbit and the
other parties thereto; and (ii) the termination of the SA.
3.2. In the event the Shareholders Meeting of the Company summoned by
proxy dated ___ June 2007, shall not approve the series of
agreements between the Company Mivtach and Elbit, this agreement
shall terminate.
3.3. A Shareholder whose holdings of Ordinary Shares of the Company
shall fall below 5% of the Company's issued share capital on a
Fully Diluted Basis, shall, as from the time of such change,
automatically cease to be a party to this Agreement.
4. MISCELLANEOUS
4.1. The Preamble constitutes an integral part of this Agreement.
4.2. Each Shareholder shall perform such further acts and execute such
further documents as may reasonably be necessary to carry out and
give full effect to the provisions of this Agreement and the
intentions of the parties as reflected thereby.
4.3. This Agreement shall be governed by the laws of the State of
Israel. Any dispute arising under or with respect to this
Agreement shall be resolved exclusively in the appropriate court
in Tel Aviv, Israel.
4.4. All notices required or permitted hereunder to be given to a
party pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given to the addressee thereof (i) if
hand delivered, on the day of delivery, (ii) if given by
facsimile transmission, on the business day on which such
transmission is sent and confirmed, or (iii) if delivered by air
mail, five business days following the date it was sent, to such
party's address as set forth below or at such other address as
such party shall have furnished to each other party in writing in
accordance with this provision:
if to Mivtach: M.S.N.D. Real Estate Holdings Ltd.
00 Xxxxxxxx Xx., Xxxxxx, Xxx-Xxxx 00000
Tel: 00-0000000
Fax: 00-0000000
Page 4 of 5 pages
if to Elbit: Elbit Ltd.
3 Azrieli Center,
00xx Xxxxx, Xxxxxxxx Xxxxxxxx, Xxx Xxxx, 00000
Tel: 00- 0000000
Fax: 00- 0000000
4.5. Nothing contained in this Agreement shall be deemed to grant any
right to any person or entity that is not a party to this
Agreement.
4.6. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement is held by
a court of competent jurisdiction to be unenforceable under
applicable law, then such provision shall be excluded from this
Agreement and the remainder of this Agreement shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms; provided, however, that
in such event this Agreement shall be interpreted so as to give
effect, to the greatest extent consistent with and permitted by
applicable law, to the meaning and intention of the excluded
provision as determined by such court of competent jurisdiction.
4.7. Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the
provisions hereof.
4.8. This Agreement, together with the documents expressly referred to
herein, constitute the entire agreement among the parties hereto
with respect to the subject matter contained herein and
supersedes all prior agreements and understandings among the
parties with respect to such subject matter.
4.9. No modification, amendment or waiver (each, a "MODIFICATION") of
any provision of this Agreement will be effective against any
party to this Agreement unless such Modification is approved in
writing by such party. The failure of any party to enforce any of
the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such
party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
4.10. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which
together shall constitute one and the same document.
4.11. Subject to Section 2 above, a Shareholder's rights and
obligations pursuant to this Agreement may be transferred or
assigned by such Shareholder to the transferee or assignee to
whom all of the shares of the Company then held by such
Shareholder are transferred or assigned in one or more series of
transactions, provided that such transferee becomes party to the
Agreement.
4.12. Elbit's holding in the Company held indirectly through Water
Technologies Ltd. shall be aggregated with those shares of the
Company held directly by Elbit for the purposes of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement one or more
counterparts, as of the date first above written.
_________________________________
M.S.N.D. REAL ESTATE HOLDINGS LTD.
Name Xxxx Xxxxxx & Xxxxx Xxxxxx
Title Chairman & COO and Corporate Secretary
ELBIT LTD.
By______________________
Name____________________
Title___________________
Page 5 of 5 pages
