Exhibit 7(d)
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "AGREEMENT") is made as of this 21st day of
February 2006 by and between (i) M.S.N.D. REAL ESTATE HOLDINGS LTD. ("MIVTACH");
(ii) NIR ALON ("NIR"); (iii) NIR ALON HOLDINGS GMBH, a company formed under the
laws of Austria ("NIR ALON HOLDINGS" and, together with Nir, "NIR ALON"); (iv)
ELBIT LTD., a company formed under the laws of the State of Israel ("ELBIT");
and (v) M.S. MASTER INVESTMENTS (2002) LTD., a company formed under the laws of
the State of Israel ("MS"). (Nir Alon, Elbit and MS will be referred to
collectively as the "FOUNDERS") (Founders, together with Mivtach, each, a
"SHAREHOLDER" and, collectively, the "SHAREHOLDERS").
RECITALS
A. The Founders are shareholders of Elbit Vision Systems Ltd. (the "COMPANY"),
an Israeli public company whose shares are traded on the OTC Bulletin Board
in N.Y, hold approximately 38 % of the Company's issued share capital;
B. Mivtach-Shamir Holdings Ltd. ("MIVTACH HOLDINGS") is entering into an
Agreement (the "AGREEMENT") with the Company, pursuant to which Mivtach
Holdings shall lend to the Company the sum of three million Dollars
convertible into 6,000,000 Ordinary Shares of the Company subject to the
terms and conditions of a Convertible Note and the Company shall grant to
Mivtach Holdings a right (which has been assigned to Mivtach) to purchase
from the Company up to an aggregate of 4,000,000 Ordinary Shares of the
Company for a purchase price of $0.5 per share pursuant to the terms and
conditions of a Warrant, everything as defined in the Agreement ("CN & W
AGREEMENT");
C. Concurrently with the CN & W Agreement, Mivtach Holdings is entering into a
Share Purchase Agreement with certain shareholders of the Company (the
"SPA"), pursuant to the SPA and a letter dated February 21, 2006, Mivtach
shall purchase 2,939,192 Ordinary Shares of the Company (the "PURCHASED
SHARES") representing approximately 8% of the Company's issued share
capital;
D. Concurrently with, and contingent upon, the closing of the CN & W
Agreement, the closing of the SPA and the termination of an existing
shareholders agreement dated March 28, 2001 as amended on September 8, 2004
(the "OLD SHAREHOLDERS AGREEMENT") (collectively, the "CLOSING"), the
parties hereto wish this Agreement to become effective upon the terms more
fully set forth herein;
IT IS HEREBY AGREED AS FOLLOWS:
1. BOARD OF DIRECTORS
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1.1 Following both (i) acquisition by Mivtach of Ordinary Shares of the
Company upon full conversion of its debt under the Convertible Note,
and (ii) notice by Mivtach within twenty four (24) months from the
consummation of the CN&W Agreement (the "CONVERSION PERIOD") that
this Agreement is effective, 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 nominated Chairman, (ii) one member designated by Nir
Alon, (iii) one member designated by Elbit, (iv) one member
designated by MS and (iv) subject to applicable law, two external
directors whom the parties shall mutually recommend, provided that
the designating Shareholder continues to hold or, with regards to MS,
has the proxy to vote, 7.5% or more of the Company's issued share
capital on a Fully Diluted Basis (the "7.5% Threshold").
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 Shareholder or, with
regards to MS, MS or a holder of Remaining Shares, selling Ordinary
Shares of the Company.
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.
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 the Convertible Note, the Warrant and all
outstanding securities, options and warrants exercisable into shares
of the Company.
Remaining Shares in this Agreement shall mean - 1,080,944 shares of
the Company held by S.R. Master Investment (2002) Ltd., 700,540
shares of the Company held by R.D. Master Investment (2002) Ltd. and
182, 405 shares of the Company held by Xxxxx Xxxxxxx. 1,963,889
Company's shares in total.
1.2 Following both (i) expiration of the Conversion Period without
Mivtach's having converted the debt under the Convertible Note into
Ordinary Shares of the Company, and (ii) notice by Mivtach prior to
the expiration of the Conversion Period that this Agreement is
effective, 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 Nir
Alon, one of whom shall be nominated Chairman, (ii) one member
designated by Mivtach, (iii) one member designated by Elbit, (iv) one
member designated by MS and (iv) subject to applicable law, two
external directors whom the parties shall mutually recommend,
provided that the designating Shareholder continues to hold or, with
regards to MS, has the proxy to vote, 5% or more of the Company's
issued share capital on a Fully Diluted Basis (the "5% THRESHOLD").
Notwithstanding the foregoing, a reduction in a Shareholder's
holdings below the 5% Threshold shall not be deemed to have occurred
unless such reduction results from such Shareholder or, with regards
to MS, MS or a holder of Remaining Shares (as this term is defined in
the SPA), selling Ordinary Shares of the Company.
If a Shareholder fails to meet the 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.
1.3 Notwithstanding the foregoing, it is further agreed that if at any
time prior to May 14, 2008, being the expiry date of the Elbit
warrant period of the warrants granted to Elbit on May 14, 2004,
Elbit shall hold less than the 7.5% Threshold or the 5% Threshold, as
the case may be, 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 nominated a director to
the Company's Board pursuant to Sections 1.1 and 1.2 above.
1.4 For the purpose of applying the 7.5% Threshold or 5% Threshold to MS,
it is agreed that MS shall be considered to be the holder of all
Ordinary Shares of the Company which are either held by MS or are
Remaining Shares in respect of which MS shall be granted a proxy by
such other shareholders to exercise their voting rights.
1.5 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.
1.6 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.
1.7 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
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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.
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.
Notwithstanding the above said, this Section 2.9 shall not apply to
sales by MS of its shares of the Company.
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.
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
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3.1. This Agreement shall be signed at the Closing and shall enter into
force upon written notice by Mivtach to the other Shareholders.
Notwithstanding the above said, this Agreement shall be null and void
and have no effect in the event that Mivtach shall not have delivered
such notice prior to the expiration of the Conversion Period as
defined in the CN &W.
3.2. A Shareholder whose holdings of Ordinary Shares of the Company (which
holdings, in the case of MS, shall including any holdings of
Remaining Shares, 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. Any such
event shall have no effect on the validity of the Agreement between
the other Shareholders.
4. Miscellaneous
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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: Mivtach Holdings Ltd.
00 Xxxxxxxx Xx., Xxxxxx, Xxx-Xxxx 00000
Tel: 00-0000000
Fax: 00-0000000
if to Nir Alon: Xxxxxxxxxxxxxxxxxxx 0/00 - 0000 Xxxxxx, Xxxxxxx
if to Elbit: 3 Azrieli Center, 00xx Xxxxx, Xxxxxxxx Xxxxxxxx,
Xxx Xxxx, 00000
if to MS: 0 Xxxxxxx Xxxxxx
Xxxx Xxxxxx 00000
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.
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M.S.N.D. REAL ESTATE HOLDINGS LTD.
Name Xxxx Xxxxxx & Xxxxx Xxxxxx
Title Chairman & COO and Corporate Secretary
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NIR ALON ELBIT LTD.
By
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Name
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Title
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NIR ALON HOLDINGS GMBH M.S. MASTER INVESTMENTS (2002) LTD.
By By
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Name Name
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Title Title
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