Exhibit 1
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement") is made as of this 16th day of
February 2005, by and between (i) FIMI Opportunity Fund, L.P., a limited
partnership formed under the laws of the State of Delaware (the "Delaware Fund")
and (ii) Ildani Holdings Ltd. ("Ildani"), an Israeli private company wholly
owned by Mr. Xxx Xxxxxxxxx ("Xxxxxxxxx"). Each of the Delaware Fund and Ildani
may be referred to herein as a "Shareholder" and, collectively, as the
"Shareholders."
RECITALS
1. The Shareholders wish to form and register FIMGold Ltd. (the "Company") as
a private Israeli company limited by shares.
2. The Company is being formed for the purpose of acting as the sole General
Partner of FIMGold, Limited Partnership (the "Partnership"), an Israeli
limited partnership in formation. The Partnership's Limited Partnership
Agreement (the "Partnership Agreement") shall be substantially in the form
attached hereto as Exhibit A.
3. The Partnership is being formed solely for the purpose of (1) entering
into, holding and disposing of the following investments (collectively, the
"Purchase Transactions"): (i) the purchase, in a private placement
transaction, of 2,400,000 Ordinary Shares of Formula Systems (1985) Ltd.
("Formula") from Formula, and (ii) the purchase from Xxxxxxxxx of (a)
2,000,000 Ordinary Shares of Formula, and (b) 15,500,000 Ordinary Shares of
Formula Vision Technologies (F.V.T) Ltd. ("FV"), and (2) taking such steps
as the Shareholders shall deem required for purposes of appreciating the
value of Formula and its subsidiaries and realizing Formula's investments
therein.
4. The Shareholders wish to set forth the general terms and conditions of
their joint operations and relationships within the Company in furtherance
of the Purchase Transactions and following such Purchase Transactions.
IT IS HEREBY AGREED AS FOLLOWS:
1. Registration of the Company
1.1 The Shareholders shall cause the formation and registration in
Israel of the Company, as a private company limited by shares. The
Company's Articles of Association (the "Articles") shall be in the
form attached hereto as Exhibit 1.1.
1.2 In the event of conflict between the governing documents of the
Company (including the Articles) and the provisions of this
Agreement, the provisions of this Agreement shall prevail, unless
specifically stated to the contrary herein.
2. Name of the Company
The name of the Company is FIMGold Ltd. or such other name as shall be
mutually agreed to by the Shareholders.
3. Capitalization of the Company; Allotment of Shares; Capital Notes;
Signatory Rights
3.1 The Company's registered share capital shall be NIS 100,000,
divided into 100,000 Ordinary Shares of NIS 1.00 nominal value
each (the "Ordinary Shares").
3.2 An aggregate of 500 Ordinary Shares shall be issued to each of the
Delaware Fund and Ildani, against payment of their nominal value.
Accordingly, upon the formation of the Company, each of Ildani and
the Delaware Fund shall hold 50% of the Company's issued and
outstanding share capital.
3.3 The Ordinary Shares shall have the rights, privileges and
obligations as more fully set forth in the Articles.
3.4 Shareholders' Capital Notes
3.4.1 At the Closing of the Purchase Transactions, each of
the Shareholders shall grant the Company shareholders'
loans in the aggregate amount of US$ 1,782,132 in
return for Capital Notes (the "Capital Notes"), in the
form attached hereto as Exhibit 3.4.1, which the
Company shall issue to each of them.
3.4.2 The Capital Notes shall bear interest at a rate that
shall be mutually agreed upon in accordance with the
advice of the Company's accountants. Payments with
respect to the Capital Notes shall be made only from
distributions that shall be received by the Company
from the Partnership.
3.5 Additional Undertakings of the Shareholders
3.5.1 Ildani hereby undertakes to make an aggregate capital
contribution in the amount of US$15,217,868 to the
Partnership at the Closing of the Purchase
Transactions, as full payment for the limited
partnership interest held by it, as set forth in the
Partnership Agreement.
3.5.2 The Delaware Fund, on behalf of FIMI Israel Opportunity
Fund, Limited Partnership (the "Israeli Fund"), hereby
undertakes to cause the Israeli Fund and certain
co-investors to make an aggregate capital contribution
in the amount of US$15,217,868 to the Partnership at
the Closing of the Purchase Transactions, as full
payment for the limited partnership interest held by
the Israeli Fund and such co-investors, as set forth in
the Partnership Agreement.
3.6 Signatory Rights
Unless otherwise determined by the Board, the signatures of at
least one director appointed to the Board by the Delaware Fund and
one director appointed to the Board by Ildani, together with the
Company's stamp or printed name, shall be required in order to
bind the Company for all intents and purposes.
4. Board of Directors of the Company (the "Board")
4.1 Each of the Delaware Fund and Ildani shall be entitled to appoint
two (2) members of the Board and shall be entitled to remove and
replace such members. The initial directors appointed by the
Delaware Fund shall be: Xx. Xxxxx Xxxxxx and Mr. Xxxxx Xxxx, and
the initial directors appointed by Ildani shall be Mr. Xxx
Xxxxxxxxx and Xx. Xxx Xxxxxxxxx.
4.2 At least two directors, of whom at least one was appointed by the
Delaware Fund and one by Ildani, shall constitute a legal quorum.
Notwithstanding anything to the contrary herein, if both directors
appointed by a Shareholder fail to participate in a duly called
meeting of the Board, then the presence of a director appointed by
such Shareholder shall not be required to constitute a legal
quorum at the next duly called meeting of the Board (or the
adjourned meeting of the first such meeting, as the case may be)
and the approval of a director appointed by such Shareholder shall
not be required to adopt any resolutions at such meeting that were
referenced in the notice of such meeting.
4.3 A resolution proposed at any meeting of the Board shall be deemed
adopted only if approved by at least one director appointed by the
Delaware Fund and one director appointed by Ildani. In the event
of a deadlock, upon the request of any two of the Board members,
the Board shall appoint Xxxxxx Xxxxx, as a fifth member of the
Board, for the sole purpose of resolving the issue in question.
Upon the adoption of a resolution, the appointment of such
additional director shall be automatically terminated. If Xx.
Xxxxx shall be unable or unwilling to act as the fifth member of
the Board, another person agreed to by the parties shall be
appointed as the fifth Board member.
4.4 Sale of Formula shares or FV shares by the Partnership
Notwithstanding the foregoing, during each of (a) the 30 month
period immediately following the Closing of the Purchase
Transactions (the "Initial Period"), and (b) the 30 month period
immediately following the termination of the Initial Period (the
"Second Period" and, together with the Initial Period, the
"Periods"), if any two directors appointed by a Shareholder to the
Board (the "Demanding Directors") wish to cause the Partnership to
sell Formula shares or FV shares and the directors appointed by
the other Shareholder disagree, then the Demanding Directors shall
be deemed to have a casting vote solely with respect to Board
resolutions relating to the sale(s) by the Partnership, in bona
fide, arm's length transactions, of an aggregate (with respect to
each Shareholder) per Period of (i) up to 10% of the Formula
shares purchased by the Partnership in the Purchase Transactions,
and (ii) up to 10% of the FV shares purchased by the Partnership
in the Purchase Transactions; in each case provided that such
sales are at a dividend-adjusted price per share in U.S. Dollars
(as adjusted for share combinations, subdivisions, rights
offerings, recapitalizations and the like) that is not lower than
the price per share paid by the Partnership in the Purchase
Transactions. If such right was not exercised in full by any
Shareholder during the Initial Period, then such Shareholder shall
be entitled to exercise the balance of such right in the Second
Period, in addition to its right to cause the sale of additional
shares during the Second Period.
5. Rights Relating to Company Shares
General: (a) Company shares may only be sold together with the pro-rata
portion of the Capital Notes and of the limited partnership interest of
the Partnership held by the Shareholder (and its affiliates and, with
respect to the Delaware Fund, also Atara S.M Trust Company Ltd.)
wishing to transfer Company shares. Accordingly, for purposes of this
Section 5, any reference to "shares" or "Company shares" shall also
include the pro-rata portion of the Capital Notes and of the limited
partnership interest of the Partnership held by the applicable
Shareholder (and its affiliates and, with respect to the Delaware Fund,
also Atara S.M Trust Company Ltd.), and (b) the provisions of this
Section 5 shall apply, mutatis mutandis, to the sale or other transfer
of shares of Ildani by Xxxxxxxxx.
5.1 Right of First Offer.
5.1.1. If a Shareholder wishes to sell or otherwise transfer
any or all of such Shareholder's shares in the
Company (the "Selling Party"), such Shareholder shall
be required to first offer such shares (the "Offered
Shares") to the other Shareholder of the Company (the
"Offeree"). The Selling Party shall send the Offeree
a written offer in which the Selling Party shall
specify the following information (the "Offer"): (i)
the number of shares that the Selling Party proposes
to sell or transfer; (ii) a representation and
warranty that the shares proposed to be sold or
transferred 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, and the requested terms of payment
thereof.
5.1.2 The Offer shall constitute an irrevocable offer made by
the Selling Party to sell to the Offeree the Offered
Shares covered by the Offer, upon the terms specified
in the Offer and as described below.
5.1.3 If the Offeree wishes to purchase the Offered Shares it
shall notify the Selling Party of such intent within 14
days of receipt of the Offer.
5.1.4 If the Offeree declines to purchase the Offered Shares
upon the terms specified in the Offer or does not
respond to the Offer within 14 days of receipt, the
Selling Party may sell the 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 and (iii)
subject to payment terms that are no more favorable to
the purchaser than those specified in the Offer, if
any, all within 90 days of the expiration of the 14 day
period specified above.
5.1.5 If the Offeree agrees to purchase the Offered Shares on
the terms specified in the Offer, the Offered Shares
shall become the property of such Offeree against
payment of the consideration as specified in the Offer.
Any transferee of shares pursuant to this Section 5.1
shall take such shares subject to all of the
restrictions contained herein and in the Articles (and,
with respect to the limited partnership interest, also
in the Partnership Agreement).
5.2 Tag Along. Notwithstanding the provisions of Section 5.1
above, each Offeree (the "Tag Along Shareholder") shall,
during the 14 day period in which the Offered Shares could
have been acquired by such Offeree pursuant to Section 5.1
above, have the right to notify the Selling Party of its
intention to exercise its Tag Along Right pursuant to this
Section 5.2 (the "Tag Along Notice"). Following the Tag Along
Notice, the Tag Along Shareholder shall add to the securities
being sold by the Selling Party to such proposed purchaser
thereof (the "Proposed Purchaser") that number of Company
shares which bears the same ratio to the total number of
Company shares held by the Tag Along Shareholder, as the ratio
that the number of the Offered Shares bears to the Selling
Party's total number of Company shares, and upon the same
terms and conditions under which the Selling Party's
securities 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 shares to the Offered Shares to be
purchased by the Proposed Purchaser, as part of the sale
agreement, or reduce the number of Company shares that it
proposes to sell to the Proposed Purchaser (in which case, all
Shareholders participating in the sale to the Proposed
Purchaser shall contribute the pro rata number of Company
shares based on its ownership percentage of the Company), and
either conclude the transaction in accordance with such
revised structure or withdraw from completing the transaction.
6. Management of the Investment in Formula and FV
6.1 Formula's and FV's Boards of Directors:
Following the Closing of the Purchase Transactions, the
Company shall vote all the Formula shares and FV shares held
by the Partnership for the election to the Board of Directors
of each of Formula and FV of seven members of whom: (i) two
members shall be designated by the Delaware Fund (initially,
Xxxxx Xxxxxx and Xxxxx Xxxx to Formula and Xxxxx Xxxxxx and
Xxxxxx Xxxx to FV), (ii) two members shall be designated by
Ildani, and (iii) subject to applicable law, two External
Directors (as such term is defined in the Israeli Companies
Law) (following the termination of the term of the current
External Directors) and one "Independent Director" (as such
term is defined in NASDAQ MarketPlace Rule 4200(a)) on the
identity of which the Delaware Fund and Ildani shall mutually
agree.
To the maximum extent permitted by applicable law, including
fiduciary duties under applicable law, the Shareholders shall
use their reasonable efforts to cause one representative of
each Shareholder to be elected or appointed to the Board of
Directors of each of Formula's direct subsidiaries and F.T.S.
- Formula Telecom Solutions Ltd. (collectively, the
"Subsidiaries").
6.2 Discussions prior to Meetings. The Shareholders shall meet
regularly and in any event prior to each General Meeting of
shareholders and Board of Directors of Formula, FV or any of the
Subsidiaries and will review, discuss and, subject to the
provisions of applicable law, shall attempt to reach a unified
position with respect to principal issues on the agenda of each
such meeting.
6.3 Executive Committee. The Board shall form an Executive Committee
for consultation purposes, which shall comprise of Xxxxxxxxx and
Xxxxx Xxxxxx or, in the event any of them cannot fulfill such
duty, an alternate member will be appointed by the Delaware Fund
(if Davidi can not fulfill his duties) or Ildani (if Xxxxxxxxx
cannot fulfill his duties). For the avoidance of doubt, the
Executive Committee is not a committee of Formula and may not bind
Formula in any way.
6.4 Dividend Distributions. Subject to the provisions of applicable
law, the Company, as the general partner of the Partnership, shall
use reasonable efforts to cause Formula and, if possible, its
subsidiaries, to adopt a dividend policy which, in the case of
Formula, shall provide for the distribution of annual cash
dividends of not less than US$ 8 million
7. No Agreements with Other Shareholders; No Purchase of Additional Formula
Securities other than through the Partnership.
Each Shareholder shall be prohibited from entering into, or otherwise
being a party to, any Stockholders Agreement (as defined herein) with
any direct or indirect shareholder of Formula. For purposes of this
Section 7, "Stockholders Agreement" means any voting or similar
agreement, or any agreement relating to the exercise of voting rights
in Formula or FV, or any similar undertaking or commitment (including a
unilateral commitment), whether in the form of a written instrument or
otherwise.
Following the date hereof and until the termination of this Agreement,
each Shareholder (including any funds affiliated with the Delaware
Fund) shall be prohibited from directly or indirectly purchasing
Formula shares or securities of Formula's subsidiaries or securities
convertible into Formula shares or into shares of Formula's
subsidiaries, except as contemplated by the Purchase Transactions or
otherwise agreed to by mutual consent of the Shareholders and except
for the exercise of any investment rights existing on the date of this
Agreement.
For the avoidance of doubt, nothing herein shall be deemed to restrict
the rights of Xx. Xxx Xxxxxxxxx to buy or sell securities in Formula or
FV or any of the subsidiaries thereof. In the event that Xxx Xxxxxxxxx
acquires any such securities, the Delaware Fund and/or its affiliates
shall be entitled to acquire up to a similar number of such securities.
Any securities acquired by the Delaware Fund pursuant to this paragraph
may be sold at any time.
8. Term of the Agreement
This Agreement shall come into effect as of the date hereof and shall
continue until the lapse of 63 months following the Closing of the
Purchase Transactions, unless terminated earlier or extended by mutual
consent of the Shareholders.
Upon the termination of this Agreement, the Shareholders shall take all
actions necessary in order to dissolve the Partnership and distribute
its assets in accordance with the provisions of the Partnership's
Limited Partnership Agreement.
9. Miscellaneous
9.1 The Preamble constitutes an integral part of this Agreement.
9.2 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 hereby.
9.3 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.
9.4 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 Ildani:
c/o Formula Systems (1985) Ltd.
0 Xxx Xxxx Xxxx.
Xxxxxxx, Xxxxxx
Facsimile: x000-0-000-0000
Attn.: Xxx Xxxxxxxxx
If to the Delaware Fund:
c/o FIMI 2001 Ltd.
"Xxxxxxxxxx House"
00 Xxxxxx Xxxxx Xxxx
Xxx Xxxx
Facsimile: 03-5652245
Attn.: Xxxxx Xxxxxx
9.5 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.
9.6 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.
9.7 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.
9.8 This Agreement together with the documents expressly attached, or
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.
9.9 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.
9.10 This Agreement may be executed in any number of counterparts,
each of whichshall be deemed to be an original and all of
which together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Ildani Holdings Ltd.
By:/s/ Xxx Xxxxxxxxx
------------------
Name
Title:
FIMI Opportunity Fund, L.P.
By: FIMI 2001 Ltd.
Its General Partner
By: /s/ Xxxxx Xxxxxx
-----------------
Name: Xxxxx Xxxxxx
Title: CEO
I, the undersigned, hereby agree to be bound by the provisions of Section 7
of this Agreement as if it had applied to me directly. In addition, I
hereby confirm that I do not intend to resign from my position as Formula's
CEO during the term of the Partnership.
In the event that the Delaware Fund requests to propose a different
candidate to serve as either the Chairman or CEO of Formula, then, subject
to applicable law, Xx. Xxxxxxxxx will resign from such position and will
support the appointment of such candidate to the position of Chairman or
CEO of Formula, to be selected by Xx. Xxxxxxxxx.
In the event that the Delaware Fund requests to propose a different
candidate to serve as either the Chairman or CEO of FV, then, subject to
applicable law, Xx. Xxxxxxxxx will resign from such position and will
support the appointment of such candidate to the position of Chairman or
CEO of FV, to be selected by Xx. Xxxxxxxxx.
/s/ Xxx Xxxxxxxxx
-----------------
Xxx Xxxxxxxxx
