Exhibit 4.2
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SHAREHOLDERS' AGREEMENT
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Made and signed in Tel Aviv on 2nd November, 2002
Between:
Koor Industries Ltd. (Public Company No. 52-001414-3)
of 00 Xx'xxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile: 00-0000000
("Koor")
of the first part;
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And:
Elta Systems Ltd. (Private Company No. 51-048798-6)
of 100 Xxxxxxx Hanassi Avenue, X.X.X. 000, Xxxxxx 00000
Xxxxxxxxx: 08-8563930
("Elta")
of the second part;
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And:
Elisra Electronic Systems Ltd. (Private Company No. 52-003587-4)
of 00 Xxxxxx Xxxxxx Xxxxxx, Xxxx Xxxx 00000
Facsimile: 00-0000000
("the Company")
of the third part;
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Whereas Koor and Elta contacted in the Purchase Agreement, as defined
below, whereby Koor will sell to Elta the Shares Being Sold, as
defined below, and will xxxxx Xxxx an option to purchase from
Koor the Option Shares, as defined below; and
Whereas Immediately after closing the transaction of sale of the Shares
Being Sold, as defined below, Koor and Elta will be the sole
owners of the shares in the Company; and
Whereas Koor and Elta wish to regulate the relations between them as
owners of the Company's shares, all as set forth in this
Agreement below:
Now therefore, the parties have declared, agreed and
stipulated as follows:
1. Preamble, headings and definitions
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1.1 The preamble and the Appendices to this Agreement constitute an
integral part thereof.
1.2 The headings of the clauses in this Agreement are for convenience of
orientation only, and shall not be used for interpretation purposes.
1.3 In this Agreement, the following terms shall have the meanings
appearing alongside them, unless specifically stated otherwise:
"Stock Exchange" A Stock Exchange in Israel or abroad
"Foreign Stock Exchange" As this term is defined in the
Securities law, 5728-1968.
"a Stock Exchange As the term "Stock Exchange" is
in Israel" defined in the Securities Law,
5728-1968.
"Interested Party" As this term is defined in the
Securities Law, 5728-1968.
"Outside Director" or "Outside Those directors who will serve in
Directors" the Company starting from the
Closing Date of a Public Offering
and who will be Outside Directors,
as that term is defined in the
Companies Law, 5759-1999.
"Notice of Sale" Written notice given by the First
Party to the Second Party, stating
the identity of the Third Party
and the consideration offered to
the first party by the Third Party
for the Offered Shares, the terms
of payment and all the other
material terms and conditions of
the transaction.
"the Notice of Purchase" Written notice given by the Second
Party to the First Party, stating
its decision to purchase the
Offered Shares for the
consideration, on the terms of
payment and other terms and
conditions set out in the Notice
of Sale.
"the Index" The Consumer Price Index of the
U.S.A. as published by the Bureau
of Labor Statistics of the Labor
Department of the United States.
"the Offered Shares " As defined in Clause 6.1 below.
"the Shares Being Sold" 35,013,000 Ordinary Shares of a
par value of NIS 1 each of the
Company, being sold and
transferred to Elta under the
Purchase Agreement.
"Public Offering" An initial public offering of
shares of the Company in which the
shares of the Company will be
listed for trading on a Stock
Exchange.
"Private Placement" An offering of shares
to any third party and/or to any
third parties, which is not a
Public Offering.
"Agreement for Sale to a An agreement contacting with a third
Third Party" party for the sale of all or some
of the shares of the First
Party to the Third Party, as
set out in Clause 6 below.
"the Purchase Agreement" An agreement for
the purchase of the Shares
Being Sold, which was signed
between Xxxx, Xxxx and the Company
on 2nd July, 2002.
"the Other Party" As defined in Clause 6.5 below.
"the Transferring Party" As defined in Clause 5.2 below.
"the First Party" As defined in Clause 6.1 below.
"the Third Party" Any third party.
"the Second Party" Where the First Party is Koor -
Elta,and where the First party
is Elta - Koor.
"the Offer of the Second Party" As defined in Clause 6.2 below.
"the Second Period" As defined in Clause 6.2 below.
"the Budget" The consolidated annual
budget of the Company,
cross-sectioned to include inter
alia, each of the companies
controlled by the Company in
connection with a particular
calendar year.
"the Members of the Board as As defined in Clause 2.1(b) below.
Proposed by the Parties"
"Government Company" As defined in the Government
Companies law, 5735-1975.
"Security Knowledge" Knowledge in the security field,
including research, development,
study-planning, design, software,
basic theoretical research,
inventions, patents, plans,
engineering designs and
specifications, and also knowledge
relating to security equipment and
its manufacture, the use thereof,
its maintenance, repair or
handling in any other way, and all
even if the knowledge serves or is
designed to serve non-security
needs, provided that the main use
thereof is for security needs.
"Business Day" A day on which banking services
are provided to the public by most
of the banks in Israel.
"the Closing Date of a Public If as part of the Public Offering,
of the Company are Offering" shares listed on a Foreign Stock
Exchange - thedate on which the
Company's shares are listed or the
date on which the proceeds of the
Public Offering are transferred
from the underwriters to the
Company, and all the documents
which are a condition for the
closing of the Public Offering are
exchanged between the parties,
including opinions of the legal
advisers, whichever is the later
date;
If as part of the Public Offering
the shares of the Company are
listed for trading on a Stock
Exchange in Israel only - the date
on which the Company's shares are
listed on a Stock Exchange in
Israel.
"the Option Shares" 9,336,800 ordinary Shares of a par
value of NIS 1 each of the
Company, which are the subject of
the option granted to Elta by Koor
in the Purchase Agreement.
"Strategic Investor" An individual or corporation of
repute, with business ties,
technical know-how and resources
in the field of the security
operations.
"Transferee" As defined in Clause 53 below, as
well as the Permitted Transferee.
"Permitted Transferee" A company wholly-owned (100%) by
the Transferring Party.
"Security Operations" Activities in the field of
manufacture or maintenance of
security equipment or in the field
of Security Knowledge development.
"Security Equipment" Equipment used or designed to be
used for warfare, the prevention
of warfare or hostile activity,
for the support of warfare, for
military training, for defense
against warfare or hostile
activity, as well as materials,
parts, spare parts, auxiliary
equipment, accessories and means
for the development, manufacture,
testing, maintenance or repair of
such equipment, or for its
treatment in any other way, or
equipment used for similar
purposes in the security field,
and all even if it is used or
designed to be used for
non-security purposes, provided
that its main use is for security
needs.
"Control" As this term is defined in the
Securities Law, 5728-1968.
"Tadiran Systems" Tadiran Electronic Systems Ltd.
"Tadiran Spectralink" Tadiran Spectralink Ltd.
"IAI" Israel Aircraft Industries Ltd.
"the Negotiation Period" As defined in Clause 6.1 below.
"the Acceptance Period" A period of 14 days starting on
the date of receipt of the Notice
of Sale by the Second Party.
2. The Board of Directors of the Company
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2.1 Koor and Elta, each of them separately, undertakes to vote by virtue of
all the shares it will hold, and to take all the actions required by
virtue of all the shares it will hold, to ensure:
(a) That the Board of Directors of the Company will consist of ten
members in addition to the Outside Directors, if there is a need
for Outside Directors.
(b) That all the members of the Board of Directors of the Company
who are not Outside Directors, and if the Company also has other
shareholders - as large a number a possible of the members of
the Board of Directors of the Company who are not Outside
Directors ("the Members of the Board as Proposed by the
Parties"), will be those who were nominated by Koor and Elta,
divided as described below.
(c) That the Members of the Board as Proposed by the Parties will
include:
(1) A number of directors nominated by Elta, the ratio of
which to all the Members of the Board as Proposed by the
Parties will be the same as the ratio of the number of
shares held at the relevant time by Elta to all the shares
held at the relevant time by Koor and Elta.
(2) A number of directors nominated by Koor, the ratio of
which to all the Members of the Board as Proposed by the
Parties will be the same as the ratio of the number of
shares held at the relevant time by Koor to all the shares
held at the relevant time by Koor and Elta.
(3) The number of members of the Board of Directors nominated
by either Koor or Elta as aforesaid, will be rounded to
the nearest whole number.
(d) That all the Outside Directors who serve on the Board of
Directors of the Company, if their office is required by
the provisions of the law and/or the Stock Exchange, will
be those who are recommended to the General Meeting by the
Board of Directors of the Company. Elta and Koor will
consult concerning the Outside Directors recommended by
the Board of Directors as aforesaid, and each of them may
oppose the appointment of an Outside Directors proposed by
the Board of Directors for reasonable cause only, by
submitting reasoned notice to the other of them within 4
Business Days from the date on which the Board of
Directors gives notice of its proposed candidates for the
offices of Outside Directors.
2.2 For implementation of the above, Koor and Elta undertake, inter alia:
(a) Subject to the provisions of Clauses 2.1(d) above and 2.3
below, to participate in any General Meeting and/or
written resolution of the shareholders of the Company, in
which members of the Board of Directors of the Company or
the Outside Directors are to be elected, and to vote by
virtue of all the shares they hold, for such a number of
candidates as proposed by Elta or Koor, as the case may
be, for the Board of Directors, as equals the number of
directors which Elta or Koor, as the case may be, is
entitled to include among the Members of the Board as
Proposed by the Parties, in accordance with the provisions
of Clauses 2.1(b) and 2.1(c) above, and to vote by virtue
of all the shares they hold for the candidates for the
offices of Outside Directors who were nominated by the
Board of Directors of the Company as provided in Clause
2.1(d) above.
(b) Subject to the provisions of Clauses 2.1 (d) above and 2.3
below, Koor and Elta undertake that should the office of a
member of the Board of Directors who was elected according
to the proposal of Koor or Elta fall vacant, or the office
of an Outside Director, they will participate in any
General Meeting and/or written resolution of the
shareholders of the Company, and will vote by virtue of
all the shares they hold, for the candidate proposed by
Elta or Koor, as the case may be, for the office of member
of the Board of Directors instead of the member of the
Board of Directors whose office has fallen vacant and/or,
as the case may be, for the candidate for the office of
Outside Director proposed by the Board of Directors of the
Company.
(c) Subject to the provisions of Clause 2.3 below, Koor and
Elta undertake to participate in any General Meeting
and/or written resolution of the shareholders of the
Company, and to vote by virtue of all the shares they hold
against the removal from office of a member of the Board
of Directors of the Company whose nomination for that
office was proposed by Koor or Elta, unless Koor or Elta
receives the prior written consent of the other of them.
2.3 Koor and/or Elta may nominate any candidate for the office of members
of the Board of Directors, subject to the provisions of any law and to
the required security classification, provided that such candidate is
not or is not liable to be in a situation of material conflict of
interests which will prevent him from participating in most of the
meetings of the Board of Directors of the Company.
2.4 On all the committees of the Board of Directors of the Company, the
ratio of members of the Board of Directors nominated for office by Koor
and Elta will be maintained to the extent possible, and in any case,
all the committees of the Board of Directors will include at least one
director who was nominated for office by Koor and at least one director
who was nominated for office by Elta.
2.5 The undertaking of Koor and Elta as set our above in Clauses 2.1, 2.2,
2.3 and 2.4, shall apply as long as Koor and/or its Transferee hold
more than 20% of the issued share capital of the Company and as long as
Elta and/or its Transferee hold more than 20% of the issued share
capital of the Company. The aforesaid notwithstanding, should Koor and
its Transferee and/or Elta and its Transferee hold 20% or less of the
issued share capital of the Company (hereinafter: "the Smaller
Shareholder"), and the other of them holds more than 20% of the issued
share capital of the Company (hereinafter: "the Larger Shareholder"),
the Larger Shareholder may notify the Smaller Shareholder, in writing,
that it must continue to fulfill the undertakings described in Clauses
2.1, 2.2, 2.3 and 2.4 above, and in such case the Larger Shareholder
shall also be obligated to fulfill all the undertakings described in
Clauses 2.1, 2.2, 2.3 and 2.4 above.
2.6 In a vote at the Board of Directors of the Company, every director
shall have one vote. Resolutions of the Board of Directors will be
passed by a majority of the votes. The Chairman of the Board of
Directors of the Company shall not have a casting vote in the event of
a tied vote. In a tied vote of the Board of Directors on the subject of
any proposed resolution, the proposed resolution shall be deemed to
have been rejected and shall not be forwarded to discussion by the
General Meeting of the Company.
2.7 The Board of Directors of the Company will convene at least once per
quarter.
2.8 The Company manages its business by means of business units and
subsidiaries, including Tadiran Systems and Tadiran Spectralink. The
Board of Directors of the Company will report and discuss the business
affairs of the subsidiaries in the same format, scope and frequency as
it reports and discusses the business affairs of the business units in
the Company. It is hereby clarified that the aforesaid shall not
derogate from the authority and powers vested in the Boards of
Directors of the subsidiaries under any law.
3. Preferred majority
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3.1 As long as Koor and/or its Transferee hold 20% or more of the issued
share capital of the Company and as long as Elta and/or its Transferee
hold 20% or more of the issued share capital of the Company, the
resolutions adopted on the subjects listed below will be adopted as
follows:
(I) Subject to the provisions of any law, resolutions on the
subjects listed in sub-sections (b), (c) and (i) below, insofar
as they relate to the Company, will be adopted by a majority
vote in the Board of Directors of the Company, provided that at
least one director appointed in accordance with Koor's proposal
and one director appointed in accordance with Elta's proposal
voted for the resolution or gave their written consent thereto.
(II) Resolutions on the subjects listed in sub-sections (a), (d),
(e), (f), (g), (h), (j) and (k) below, insofar as they relate to
the Company, will be adopted by a majority vote at the General
Meeting of the Company, provided that at the General meeting of
the Company, Koor and Elta voted for the resolution or gave
their written consent thereto.
(III) Resolutions on the subjects listed in sub-sections (d), (e),
(h), (j) and (k) below, insofar as they relate to Tadiran
Systems and/or Tadiran Spectralink, and any change in the
Memorandum and Articles of Association of Tadiran Systems and
Tadiran Spectralink insofar as they are incompatible with the
provisions of this Agreement (provided that Tadiran Systems
and/or Tadiran Spectralink, as the case may be, is controlled by
the Company), shall be adopted by a majority at the General
Meeting of Tadiran Systems and/or Tadiran Spectralink, as the
case may be, provided that at such General Meeting, the Company
votes for the resolution on those subjects only if Koor and Elta
have given their written consent to the resolution.
In the matter of giving written consent as aforesaid - Koor and Elta or
all the directors appointed in accordance with Koor's proposal and all
the directors appointed in accordance with Elta's proposal, as the case
may be, shall notify the Company of their position in connection with
the resolutions on the subjects listed below, within 7 days of the date
of which they are requested by the Company to give their consent to any
of the resolutions.
And these are the subjects:
(a) A change in the Memorandum and Articles of Association of the
Company.
(b) Any change from the dividend distribution policy at the Company
as determined in this Agreement, and any resolution on the
distribution of bonus shares in the Company.
(c) Any change of the management fees arrangement between the
Company, and Koor and Elta.
(d) The entry of the Company and/or Tadiran Systems and/or Tadiran
Spectralink into a new area of operation in which is not
involved on the date of signing this Agreement and which is not
included in the Security Operations.
(e) The entry of the Company and/or Tadiran Systems and/or Tadiran
Spectralink into a new area of operation, in which the Company
and/or Tadiran Systems and/or Tadiran Spectralink, as the case
may be, is not involved on the date of signing this Agreement
and which is included in the Security Operations and involves a
financial investment or series of related financial investments,
of a cumulative scope of more than US $50,000,000 (fifty million
US dollars), where that amount is linked to the Index.
(f) A Public Offering, by 31st May, 2004, at a Company value of less
than US $330,000,000 (three hundred and thirty million US
dollars), where that amount is linked to the Index.
(g) A Private Placement of shares and/or options of the Company to a
Strategic Investor.
(h) Purchase by the Company and/or by Tadiran Systems and/or by
Tadiran Spectralink, of shares in any other corporation, in an
amount exceeding US $100,000,000 (one hundred million US
dollars), where that amount is linked to the Index.
(i) A transaction between the Company and/or any of the companies in
its control, and Interested Parties in the Company, except for
(i) transactions with Interested Parties agreed upon in this
Agreement and in the Purchase Agreement, (ii) transactions
between the Company and the companies it owns or between the
companies owned by the Company among themselves, and (iii)
transactions in the normal course of business with IAI and/or
companies in its control or with Koor and/or companies in its
control.
(j) Sale of all or most of the assets of the Company and/or the
assets of Tadiran Systems and/or the assets of Tadiran
Spectralink.
(k) A proposal for the voluntary liquidation of the Company and/or
the voluntary liquidation of Tadiran Systems and/or the
voluntary liquidation of Tadiran Spectralink.
3.2 It is hereby agreed that on the Closing Date of a Public Offering, the
validity of Clause 3 shall exp[ire automatically, and that on the date
on which either of Tadiran Systems and/or Tadiran Spectralink becomes a
public company as defined in the Companies Law, 5759-10999, the
validity of Clause 3 above, including Clause 3.1(III) above, shall
expire in everything connected with the same company.
4. Consultation
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As long as each of Koor and Elta holds 20% or more of the issued share capital
of the Company, then at least 30 Business Days before an appointment or
dismissal of the CEO of the Company is brought for the approval of the Board
of Directors of the Company, the matter will be presented by the Larger
Shareholder of Koor and Elta to the other of them, and they will consult on
that subject.
5. Restriction on the sale of shares and assignment of rights and obligations
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5.1 It is hereby agreed that shares of the Company shall not be sold and/or
transferred except in accordance with the provisions of this Clause 5
and the provisions of Clauses 6, 7 and 8 below and subject to the
provisions of any law, and that none of the parties may assign and/or
endorse and/or transfer its rights and/or obligations under this
Agreement except in accordance with the provisions of this Agreement,
and to the extent that such assignment, endorsement and/or transfer is
permitted under the provisions of this Agreement only.
5.2 Notwithstanding the provisions of Clause 5.1 above, a party to this
Agreement is allowed to transfer shares of the Company which it holds
("the Transferring Party"):
(a) to a Permitted Transferee, and the provisions of Clauses 6 and
8 below shall not apply to such transfer, provide that prior to
actual transfer, the Permitted Transferee undertakes in writing
the obligations of the Transferring Party in respect of the
shares of the Transferring Party in the Company which were
transferred to the Permitted Transferee. If only some of the
shares of the Transferring Party in the Company were
transferred to the Permitted Transferee, then after the
transfer, the Transferring Party and the Permitted transferee
shall be entitled and bound, jointly and severally, by all the
obligations and rights of the Transferring Party under this
Agreement.
(b) to all the shareholders of the Transferring Party (hereinafter
in this clause: "the Transferee Shareholders"), whether by way
of distribution of a dividend in kind to all the shareholders
of the Transferring Party or in any other way, and subject to
all the approvals and consents required for the transfer under
any law and/or agreement, and the provisions of Clauses 6 and 8
below shall not apply with regard to such transfer (hereinafter
in this clause: "the Spin-Off").
A condition for Spin-Off is the existence of one of the
following two alternatives immediately after the Spin-Off:
(1) The holdings of the Transferring Party are not less than
20%.
(2) The holdings of the Other Party to this Agreement who is
not the Transferring Party (hereinafter in this clause -
"the Other Party to the Agreement") alone, or the holdings
of the Other Party to the Agreement together with the
Transferring Party (if any holdings remain after the
Spin-Off) and/or Interested Parties in the Company with
whom the Other Party to the Agreement will make a voting
agreement for the appointment of directors in the Company,
shall be larger than the holdings of all the other
Interested Parties in the Company together. And all in
such a way that the Other Party to the Agreement will be
able, together with the Transferring Party and/or
Interested Parties in the Company with whom it makes an
agreement as aforesaid, as the case may be, to appoint
most of the members of the Board of Directors of the
Company, as provided in Clause 2.1 above. The appointment
of Outside Directors will be effected in accordance with
the provisions of any law.
The Other Party to the Agreement shall be obligated to
sign a voting agreement with the aforementioned Interested
Parties in the Company (including the Transferring Party,
if it has any Company shares remaining after the
Spin-Off). The agreement shall include provisions in the
matter of Clauses 2 and 6 to this Agreement, mutatis
mutandis.
5.3 Notwithstanding anything written elsewhere in this Agreement, in any
case where Koor or Elta transfers shares of the Company to a Third
Party ("the Transferee"), the shares transferred to the transferee
shall not have the rights described in the following clauses: 3.1(d),
3.1(e), 3.1)f), 3/1(g) and 3.1(h). The provisions of this clause shall
not apply to a transfer of shares to a Permitted Transferee.
5.4 Notwithstanding anything written elsewhere in this Agreement, in a case
where the transferor transfers only part of the shares of the
transferor in the Company and the transfer entitles or obligates the
Transferee to certain rights pursuant to this Agreement (subject to the
provisions of Clause 3.5 above), the transferor shall serve, in all
matters and respects, as the exclusive representative of the transferor
and the Transferee in the matter of the rights and obligations assigned
to the Transferee, and as far as the other parties to this Agreement
are concerned, the transferor, and the transferor only, shall be the
exclusive holder of the rights to obligate and/or entitle the
transferor and the Transferee in everything relating to those rights
and obligations.
The transferor and the Transferee shall be deemed to hold, jointly and
severally, the shares of the Company for the purpose of calculating the
percentage of holdings pursuant to Clauses 3.2, 4, 6 and 9, insofar as
the rights regarding the shares were transferred, only if their total
number did not exceed three and provided that the holdings of Company
shares of the Transferring Party are not less than 15% of the issued
share capital of the Company, and that the joint holdings of the
Transferring Party and of the Transferees are not less than 20% of the
issued share capital of the Company.
Before implementing a share transfer as described in this clause, a
written document shall be signed by the transferor and the Transferee,
a copy of which shall be submitted to the Other Parties to this
Agreement at least 10 days in advance, corroborating everything stated
above.
5.5 Notwithstanding anything written elsewhere in this Agreement, it is
hereby agreed that transfer of the Option Shares, in whole or in part,
to the Trustee (as defined in the Purchase Agreement) or from the
Trustee to Koor or to Elta or to any Third Party, and all in accordance
with the provisions of the Purchase Agreement and its appendices, shall
not be subject to the restrictions described in this Agreement above
and below concerning the transfer of shares (except for the provisions
of Clause 8 below), provided that for transfer of shares from the
Trustee to any Third Party as aforesaid, the provisions of Clauses 5.2,
5.3 and 5.4 shall apply, and foe the purposes of these clauses, Elta
shall be deemed to be the transferor of the shares, rather than the
Trustee.
6. Share transfer (Right of First Offer)
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6.1 If Koor or Elta ("the First Party") should wish to sell all or some of
its shares in the Company ("the Offered Shares"), whether it holds an
offer from any Third Party or not, the First Party shall give written
notice thereof to the Second Party, setting out the quantity of Offered
Shares, and will give notice of its wish to negotiate with the Second
Party for the sale of the Offered Shares to the Second Party. If the
Second Party wishes to purchase the Offered Shares, then during a
period of 15 days starting on the date of delivery of the written
notice by the First Party to the Second Party as aforesaid ("the
Negotiation Period"), the parties will negotiate in good faith
regarding the consideration and the terms and conditions on which the
Second Party will purchase the Offered Shares from the First Party.
6.2 If during the Negotiation Period the Second Party makes a written offer
to the First Party that includes the terms and conditions on which it
will be ready to buy the Offered Shares from the First Party, including
the consideration therefor ("the Second Party's Offer"), but by the end
of the Negotiation Period the parties have not signed a written
agreement relating to the sale of the Offered Shares to the Second
Party, or if during the Negotiation Period the Second Party does not
submit the Second Party's Offer, then during a period of 180 days
starting immediately at the end of the Negotiation period ("the Second
Period"), the First Party may sell the Offered Shares to a Third Party,
without need to grant the Second Party the right of first offer as
described in Clause 6.1 above and the right of first refusal as
described in Clause 6.4 below, provided that the Second Party's offer,
if given, is based on a cash price per share that is less than US
$2.8275 per share and provided that the sale transaction of the Offered
Shares to the Third Party is signed by the end of the Second Period,
and all subject to any other restriction imposed upon it under any law
and/or agreement, including the provisions of Clauses 5 above and 7.3
below.
The First Party shall notify the Second Party of its contacting with
the Third Party in the agreement of sale to the Third Party, within 7
Business Days from the date of such contracting.
It is hereby agreed that in addition to the above, the Second Party's
Offer shall be unconditional (except for terms and conditions dictated
by any law), and will state whether as a result of the purchase of the
offered Shares by the Second Party, the Company can expect to become a
Government Company.
6.3 For the removal of doubt, if the transaction of sale of the offered
Shares to the Third Party is not signed as aforesaid in Clause 6.2, the
First Party may only sell the Offered Shares to the Third Party after
granting the Second Party a right of first offer and a right of first
refusal, if it exists, as provided in this Clause 6 above and below.
6.4 If all of the following cumulative conditions obtain -
(a) the Second Party submitted the Second Party's Offer during the
Negotiation Period, based on a cash price per share of more than
US $2.8275;
(b) by the end of the Negotiation Period the parties had not signed
a written agreement relating to the sale of the offered Shares
to the Second Party;
then an additional restriction will be imposed upon the sale of the
Offered Shares by the First Party, and it may not sell the Offered
Shares to the Third Party even during the Second Period, except after
the Second Party has been granted a right of first refusal as follows:
6.4.1 The First Party will give the Second Party Notice of Sale.
6.4.2 The Second Party may submit to the First Party, by the end of
the acceptance period, written Notice of Purchase.
6.4.3 In the case of giving Notice of Purchase, an agreement will be
signed whereby the First Party will sell to the Second Party and
the Second Party will buy from the First Party, all the Offered
Shares at the consideration and on the terms and conditions set
out in the Notice of Sale, within 7 Business Days from the date
on which the First Party received the Notice of Purchase as
aforesaid, subject to receipt of the approvals and permits
required from third parties for the transaction as provided in
any law and/or agreement.
6.4.4 If the Second Party does not submit written Notice of Purchase
to the First Party by the end of the acceptance period, the
First Party may sell the Offered Shares to the Third Party at
the consideration and on the terms of payment and other terms
and conditions as set out in the Notice of Sale, and provided
that the sale transaction of the Offered Shares to the Third
Party is signed by the end of the Second Period or by the end of
30 days from the end of the acceptance period, whichever is the
later.
6.4.5 If the sale transaction of the Offered Shares to the Third Party
is not signed by the end of the Second Period or by the end of
30 days from the end of the acceptance period, whichever is the
later, the First Party may not sell the Offered Shares to the
Third Party except after granting a right of first offer and
right of first refusal, if it exists, to the Second Party as
provided in this Clause 6.
6.5 (a) Notwithstanding the provisions of Clause 6.4, if the Second
Party is Elta and as a result of purchase of the Offered Shares
by Elta the Company will become a Government Company, Elta
shall not be entitled to give the First Party Notice of
Purchase as provide in sub-clause 6.4.2 above in respect of all
the Offered Shares, but it may assign its right to give Notice
of Purchase to any Other Party ("the Other Party") in respect
of all or some of the Offered Shares. The Other Party may give
Notice of Purchase up to the end of the acceptance period, and
Clause 6.4.3 above shall apply mutatis mutandis, provided that
prior to the Other Party giving Notice of Purchase as
aforesaid, Koor has given its written consent to the assignment
to the Other Party. Koor shall not refrain from giving its
consent except for reasonable cause only. If Koor opposed the
Other Party, it shall give notice thereof within 3 Business
Days of the date of receipt of notice from Elta of the identity
of the Other Party. Elta may assign its right to give Notice of
Purchase to an additional other party, and Koor's notice of
refusal shall be seen as a new Notice of Sale, and all the
relevant dates will be re-counted. All the provisions of this
clause shall apply, mutatis mutandis.
(b) If Elta assigned its right to give Notice of Purchase to an
Other Party in respect of only some of the Offered Shares, a
condition for giving Notice of Purchase by the Other Party is
that Elta shall give Notice of Purchase on the same date, in
respect of the Offered Shares not assigned by it to the Other
Party, and Clause 6.4.3 shall apply mutatis mutandis. It is
hereby clarified that the quantity of the Offered Shares in
respect of which Elta may assign its right to give Notice of
Purchase, shall be such a quantity as will ensure that as a
result of purchase of the shares by Elta and the Other Party,
the Company will not become a Government Company. In addition,
it is clarified that Elta and the Other Party will sign one
joint agreement for purchase of the Offered Shares from the
transferor, with the same conditions and dates for both of
them. Koor shall have the right to cancel the joint agreement
against Elta and the Other Party, if the Other Party does not
meet all of its obligations under the joint agreement.
6.6 Notwithstanding the provisions of Clause 6.4, if the Second Party is
Elta and at the end of 51 days from the date of giving the Notice of
Sale or at the end of 30 days from the date of making the agreement for
purchase of the Offered Shares a provided in Clause 6.4.3 above,
whichever is the later, Elta has not obtained the requisite government
approval for performance of that agreement (hereinafter in this clause
- "the Date for Approval"), Elta may, within four Business Days from
the end of the Date for Approval, assign that agreement to the Other
Party, which will sign the agreement and take upon itself all the
rights and/or obligations of Elta thereunder, provided that prior to
assigning the agreement as aforesaid, Koor has given its written
consent to the assignment to the Other Party. Koor shall not refrain
from giving its consent except for reasonable cause only. However, if
the Third Party is a Strategic Investor incorporated in Israel or a
corporation directly or indirectly controlled by that Strategic
Investor, the period of the Date for Approval will be extended by 30
days, and Elta may assign its right to give Notice of Purchase in
respect of all or some of the Offered Shares to an Other Party, and in
such case the provisions of Clauses 6.5(a) and 6.5(b) above shall
apply, mutatis mutandis.
If Elta did not obtain government approval at the end of the period of
the Date for Approval as aforesaid (hereinafter in this clause - "the
Last Date for Approval"), the First Party may sell the Offered Shares
to the Third Party at the consideration, on the terms of payment and
the other terms set out in the Notice of Sale, provided that the
transaction of sale of the Offered Shares to the Third Party is signed
by the end of a period of 90 days from the Last Date for Approval. If
the transaction of sale of the Offered Shares to the Third Party is not
signed by the end of 90 days from the Last Date for Approval, the First
Party may not sell the Offered Shares to the Third Party except after
grant of a right of first offer and a right of first refusal, if it
exists, to the Second Party as provided in this Clause 6.
6.7 It is hereby clarified that the share price stated in Clauses 6.2 and
6.4(a) above will be adjusted in any case of consolidation and/or
splitting of the share capital of the Company and/or of a distribution
of bonus shares, and all in relation to the share capital of the
Company on the date of signing this Agreement.
6.8 The provisions of this Clause 6 above shall not apply to sales by the
First Party in a total cumulative volume of les than 5% of the issued
share capital of the Company after completion of a Public Offering of
the Company in any year starting from the date of signing this
Agreement, provided that the such sale of shares does not make the
buyer of the shares an Interested Party in the Company.
6.9 The provisions of this Clause 6 shall apply as long as the Second
Party holds 20% or more of the issued share capital of the Company.
7. Sale of shares as part of a Public Offering and lockup provisions
------------------------------------------------------------------------
7.1 Koor may sell part of its holdings in the Company as part of a Public
Offering, on the same terms and conditions as those of the Public
Offering, in addition to shares of the Company which will be issued by
the Company to the public as part of the Public Offering. Koor shall
notify the Company and Elta of its intention to do so at least 15 days
prior to the date planned as the Closing Date of the Public Offering.
7.2 Should Koor give notice of its intention to sell part of its holdings
in the Company as part of a Public Offering as aforesaid in Clause 7.1,
then Elta may sell, as part of the Public Offering and on the same
terms and conditions as those of the Public Offering, shares in the
Company in such number that its ratio to all the shares that Elta will
hold in the Company on that date will be the same as the ratio of the
number of shares in the Company that will be sold by Koor in the Public
Offering to all the shares that Koor will hold in the Company on the
same date, or a lesser number of shares.
7.3 It is hereby agreed that if for the purpose of a Public Offering the
transferability of the shares held by Koor on the Closing Date of a
Public Offering is restricted by law and/or by the rules and/or
directives of the Stock Exchange where the Company's shares are listed
as a result of the Public Offering, then that transferability
restriction shall apply pro rata to the holdings of Koor and Elta in
Company shares on the Closing Date of the Public Offering, also to the
shares of the Company held by Elta on that date.
8. Drag-along right
-----------------------
Should Koor wish to sell all of its holdings in the Company to a Third Party
and Elta does not exercise its right to purchase the Offered Shares in
accordance with the provisions of Clause 6 above, and if the Third Party makes
the purchase of all of Koor's holdings in the Company contingent upon the
purchase of the entire issued share capital of the Company, Elta will be
obligated, if so demanded in writing by Koor in the Notice of Sale, to sell
all of its holdings in the Company to the Third Party on the same date as Koor
sells all of its shares in the Company to the Third Party, provided that the
consideration that Elta receives for its shares in the Company will be derived
from the same Company value as the Company value based on which Koor sells its
shares as aforesaid, and provided that the Company value is not less than US
$330,000,000 (three hundred and thirty million US dollars), where that sum is
linked to the Index, and provided also that the agreement for the sale of the
Company's shares to the Third Party is signed by the end of the Second Period
or by the end of 30 days from the end of the acceptance period, whichever is
the later of the two, and all subject to any other restriction imposed by law.
On the Closing Date of a Public Offering, this Clause 8 shall expire
automatically.
9. Distribution of a dividend
---------------------------------
9.1 Not later than the date of approval of the financial statements of the
Company for any year, the Company shall announce dividends of 25% of
its net profits according to the annual financial statements of the
Company for that year, but if as a result of distribution of a dividend
at that percentage, the Company will owe tax deriving from distribution
of income from an Approved Enterprise pursuant to the Encouragement of
Capital Investments Law, 5719-1959, the percentage of the dividend to
be distributed shall be lowered to a percentage at which there will be
no tax liability in respect of that income and the balance of the net
profit for distribution as aforesaid shall be transferred cumulatively
to the amount to be announced as a dividend in the subsequent year.
These dividends will be distributed 14 days after being announced. The
Board of Directors of the Company will consider the possibility of
distributing an interim dividend once every quarter. In any case, no
dividend will be distributed except from profits worthy of distribution
and after the Board of Directors of the Company has reached the
conclusion that such distribution is permitted under the Companies Law,
5859-1999.
9.2 On the Closing Date of a Public Offering, this Clause 9 shall
expire automatically.
10. Books of account, financial statements and submitting information
------------------------------------------------------------------------
10.1 The Company will maintain books of account and accounting in accordance
with the provisions of any law.
10.2 The Company will prepare quarterly and annual consolidated financial
statements, reviewed and/or audited, as the case may be, in accordance
with generally accepted accounting principles in Israel and in
accordance with the regulations issued and which will be issued by
virtue of the Securities Law, 5728-1968. The Company intends to act to
enable it to submit to Elta the data it requires for approval of its
financial statements pursuant to the Securities Law, 5728-1968, not
later than the planned date for approval of the financial statements of
Elta, as Elta will notify the Company from time to time, and the
Company will also submit to Elta drafts of the financial statements, to
the extent possible, on a regular basis.
It is hereby clarified that Elta and its controlling shareholder - IAI
- are obligated by the directives of the Government Companies Authority
to submit to that Authority a copy of the periodic financial
statements, annual and/or quarterly, audited and/or reviewed, of all
the Subsidiaries of the Company. Accordingly, the Company undertakes to
submit such financial statements to Elta, as close as possible to the
date of approval of the statements as aforesaid.
10.3 The Company will convey to the members of the Board of Directors a copy
of the budget that will be brought for the Board of Directors' approval
at least 7 days prior to the Board of Directors meeting at which the
budget will be brought for the approval of the Board of Directors.
11. Confidentiality
----------------------
The parties undertake to keep confidential the details of this Agreement, as
well as any information relating to the activities of the Company and any
other information connected with the Company, except for information the
disclosure of which is required by law and to the extent it is required by
law. Furthermore, the parties undertake not to make any use, at any time
whatsoever, of knowledge or information of any kind, including professional
and/or commercial secrets connected with the business of the Company which is
not to the Company's benefit. Each party to this Agreement is responsible for
the fulfillment of the undertaking in this clause also by anyone acting in its
name and on its behalf, including its employees, agents, related companies and
their employees. The provisions of this clause will bind the parties even
after the expiry an d/or cancellation of this Agreement for any reason
whatsoever.
12. Priority of this Agreement
-----------------------------------
The parties agree that their relations as shareholders in the Company shall be
regulated in accordance with this Agreement and the Articles of Association of
the Company and the Articles of Association of Tadiran Systems and of Tadiran
Spectralink, as the case may be. In any discrepancy between the provisions of
this Agreement and the provisions of the Articles of Association of the
Company and the Articles of Association of Tadiran Systems and of Tadiran
Spectralink, as the case may be, the provisions of this Agreement shall
prevail, and the parties will amend the Articles of Association of the Company
and the Articles of Association of Tadiran Systems and of Tadiran Spectralink
so as to make them compatible with this Agreement.
13. Sundry provisions
------------------------
13.1 This Agreement and everything connected with it is governed by the laws
of the State of Israel, without application of the choice of law
sections. The competent court in the jurisdiction of the District Court
in Tel Aviv-Yafo shall have sole and exclusive jurisdiction in any
matter arising in connection with this Agreement and its performance.
13.2 Notices pursuant to or in connection with this Agreement shall be
delivered in writing and signed by the person conveying the notice or
whoever is authorized to sign on his behalf. A written notice which is
dispatched by a party to this Agreement to another party to this
Agreement (to the address appearing in the preamble to this Agreement,
or to another address of which that party notifies the other parties to
this Agreement in accordance with the provisions of this clause), shall
be deemed to have been received by the party to which the notice was
sent, within 4 (four) Business Days of the date it was handed in for
dispatch by registered mail (against confirmation of handing in); on
the date on which it was actually delivered or acceptance was refused
if delivered by hand; on the date of transmittal by facsimile (if
transmitted during a Business Day and if not transmitted during a
Business Day, on the first Business Day after the date of its
transmittal), provided that the transmitting party presents facsimile
confirmation concerning transmittal of the notice.
In witness whereof the parties have affixed their signatures:
Signed: ( - ) Signed: ( - ) Signed: ( - ) Signed: ( - )
--------------------------------------------- ------------------------------------------
Koor Industries Ltd. Elta Systems Ltd.
By: Ran Medan, Vice President By: Xxxx Xxxxxx, VP-Finance
And by: Xxxxxx Xxxxxx, Legal Counsel And by: Xxx Xxxxxxxx, Legal Counsel
/s/ Ran Medan /s/ Xxxx Xxxxxx
/s/ Xxxxxx Xxxxxx /s/ Xxx Xxxxxxxx
Signed: ( - )
---------------------------------------------
Elisra Electronic Systems Ltd.
By: Xxxxx Xxx, CEO
/s/ Avemer Raz
