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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 13D
(AMENDMENT NO. 3)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
----------
ELBIT SYSTEMS LTD.
(Name of Issuer)
Ordinary Shares, Nominal Value 1.00 New Israeli Shekels M3760D101
per share ---------
-------------------------------------------------------
(Title of class of securities)
Zvi Firon, Advocate
M. Firon & Co., Advocates and Notaries
16 Abba Hillel Silver Road
Ramat Gan, Israel
972-3-7540000
--------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive notices and
communications)
(See Explanatory Note)
--------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [_].
CUSIP No. M3760D101 13D/A Page 2
--------------------------------------------------------------------------------
1. Names of Reporting Person: Michael Federmann
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: BK
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Israel
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 17,778,469/1/2/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 17,755,448
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
17,778,469/1/2/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
43.68%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
--------------------------------------------------------------------------------
1 The 17,778,469 Ordinary Shares beneficially owned by the Reporting
Person consist of an aggregate 17,755,448 Ordinary Shares beneficially
owned by the Reporting Person and 23,021 Ordinary Shares held by a
wholly owned subsidiary of the Issuer (as defined in Item 1 below)
which, under Israeli law, are considered or, prima facie, deemed to be
beneficially owned by the Reporting Person.
2 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
2
CUSIP No. M3760D101 13D/A Page 3
--------------------------------------------------------------------------------
1. Names of Reporting Person: Federmann Enterprises Ltd.
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: BK
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Israel
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 17,778,469/1/2/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 17,755,448
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
17,778,469/1/2/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
43.68%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
1 The 17,778,469 Ordinary Shares beneficially owned by the Reporting
Person consist of an aggregate 17,755,448 Ordinary Shares beneficially
owned by the Reporting Person and 23,021 Ordinary Shares held by a
wholly owned subsidiary of the Issuer (as defined in Item 1 below)
which, under Israeli law, are considered or, prima facie, deemed to be
beneficially owned by the Reporting Person.
2 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
3
CUSIP No. M3760D101 13D/A Page 4
--------------------------------------------------------------------------------
1. Names of Reporting Person: Heris Aktiengesellschaft
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: N/A
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Liechtenstein
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 3,836,458/1/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 3,836,458
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,836,458/1/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
9.42%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
1 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
4
CUSIP No. M3760D101 13D/A Page 5
--------------------------------------------------------------------------------
1. Names of Reporting Person: Beit Federmann Ltd.
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: BK
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Israel
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 17,778,469/1/2/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 17,755,448
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
17,778,469/1/2/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
43.68%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
1 The 17,778,469 Ordinary Shares beneficially owned by the Reporting
Person consist of an aggregate 17,755,448 Ordinary Shares beneficially
owned by the Reporting Person and 23,021 Ordinary Shares held by a
wholly owned subsidiary of the Issuer (as defined in Item 1 below)
which, under Israeli law, are considered or, prima facie, deemed to be
beneficially owned by the Reporting Person.
2 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
5
CUSIP No. M3760D101 13D/A Page 6
--------------------------------------------------------------------------------
1. Names of Reporting Person: Beit Bella Ltd.
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: BK
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Israel
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 17,778,469/1/2/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 17,755,448
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
17,778,469/1/2/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
43.68%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
1 The 17,778,469 Ordinary Shares beneficially owned by the Reporting
Person consist of an aggregate 17,755,448 Ordinary Shares beneficially
owned by the Reporting Person and 23,021 Ordinary Shares held by a
wholly owned subsidiary of the Issuer (as defined in Item 1 below)
which, under Israeli law, are considered or, prima facie, deemed to be
beneficially owned by the Reporting Person.
2 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
6
CUSIP No. M3760D101 13D/A Page 7
--------------------------------------------------------------------------------
1. Names of Reporting Person: Beit Yekutiel Ltd.
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds: BK
--------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization Israel
--------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares Bene- ------------------------------------------------------
ficially Owned 8. Shared Voting Power 17,778,469/1/2/
By Each ------------------------------------------------------
Reporting 9. Sole Dispositive Power -0-
Person With ------------------------------------------------------
10. Shared Dispositive Power 17,755,448
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
17,778,469/1/2/
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
43.68%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
1 The 17,778,469 Ordinary Shares beneficially owned by the Reporting
Person consist of an aggregate 17,755,448 Ordinary Shares beneficially
owned by the Reporting Person and 23,021 Ordinary Shares held by a
wholly owned subsidiary of the Issuer (as defined in Item 1 below)
which, under Israeli law, are considered or, prima facie, deemed to be
beneficially owned by the Reporting Person.
2 The Reporting Person may also be deemed to have shared voting power
with respect to, and to beneficially own, an additional 2,160,000
shares of the Issuer that are owned by Koor Industries, Ltd. ("Koor"),
representing an additional 5.3% of the Issuer's outstanding ordinary
shares, as a result of a Shareholders Agreement between Koor and
certain of the Reporting Persons, a description of which is attached as
Schedule F hereto. The Reporting Person disclaims beneficial ownership
of such shares.
7
Explanatory Note
This Amendment No. 3 to the Schedule 13D amends and restates Schedule
13D and Amendments No. 1 and No. 2 to the Schedule 13D previously filed with the
Securities and Exchange Commission (collectively, the "Prior Schedule").
Item 1. Security and Issuer.
The title and class of equity security to which this Amendment No. 3 to
the Schedule 13D relates is ordinary shares, nominal value 1.00 New Israeli
Shekels per share (the "Ordinary Shares"), of Elbit Systems Ltd. (the "Issuer"),
a corporation existing under the laws of the State of Israel. The address of the
Issuer's principal executive offices is the Advanced Technology Center, Haifa,
31053 Israel.
The Ordinary Shares are traded on the NASDAQ National Market System and
the Tel Aviv Stock Exchange.
The CUSIP number for the Ordinary Shares is M3760D101.
Item 2. Identity and Background.
This statement is being filed by Michael Federmann, for and on behalf
of himself, Federmann Enterprises Ltd. ("FEL"), Heris Aktiengesellschaft ("HF"),
Beit Federmann Ltd. ("BFL"), Beit Bella Ltd. ("BBL") and Beit Yekutiel Ltd.
("BYL") (collectively, the "Reporting Persons" or the "Federmann Group").
Michael Federmann is the controlling shareholder of each of BBL and BYL; BBL and
BYL are the controlling shareholders of BFL; BFL is the controlling shareholder
of FEL; and FEL is the controlling shareholder of HF. The Reporting Persons are
making this single joint filing pursuant to Rule 13d-1(k) under the 1934 Act. An
agreement among the Reporting Persons with respect to the filing of this
statement is attached hereto as Exhibit 1.
The business address of Mr. Michael Federmann is c/o Federmann
Enterprises Ltd., 87 Hayarkon Street, Tel-Aviv, Israel. Mr. Michael Federmann is
the Chairman of the Board of Directors of each of FEL (see description below)
and Dan Hotels Corp. Ltd., which is principally engaged in the business of
operating luxury hotels in Israel. The address of Dan Hotels Corp. Ltd. is 111
Hayarkon Street, Tel Aviv, Israel. Mr. Michael Federmann is also the Chairman of
the Board of Directors of the Issuer, which is principally engaged in the
development, manufacturing and integration of advanced, high-performance defense
electronics systems. The address of the Issuer is set forth in Item 1 above. Mr.
Michael Federmann is a citizen of the State of Israel.
FEL is a corporation existing under the laws of the State of Israel
with its principal executive offices located at 87 Hayarkon Street, Tel-Aviv,
Israel. The principal business activity of FEL is the holding and managing of
investments in private and public companies.
HF is a corporation existing under the laws of the State of
Liechtenstein with its principal executive offices located at Aeulestrasse 38
F1-9490 Vaduz Forstentum Liechtenstein, c/o Prasidial-Anstalt. The principal
business activity of HF is the holding of investments in private and public
companies.
8
Each of BFL, BBL and BYL is a corporation existing under the laws of
the State of Israel with its registered offices located at 16 Abba Hillel Silver
Road, Ramat Gan, Israel, c/o M. Firon & Co., Advocates and Notaries. The
principal business activity of each of BFL, BBL and BYL is the holding of
investments in private companies.
The name, present business address, present principal occupation or
employment and citizenship of each director and executive officer of FEL, HF,
BFL, BBL and BYL are set forth on Schedules A, B, C, D and E attached hereto,
respectively.
During the last five years none of the Reporting Persons, nor, to the
best of their knowledge, any of their directors or executive officers, has been
(i) convicted of any criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On December 19, 1999, the Issuer, FEL, HF, Rehovot Instruments Ltd. and
Elop Electro-Optics Industries, Ltd. ("Elop") entered into a Merger Agreement
(the "Merger Agreement"), pursuant to which Elop would be merged into and become
a subsidiary of the Issuer in exchange for the issuance by the Issuer of an
aggregate of 12,100,000 Ordinary Shares to FEL and HF. The merger transaction
contemplated under the Merger Agreement was completed on July 5, 2000.
Concurrently with the signing of the Merger Agreement, on December 19,
1999 Elron Electronic Industries Ltd. ("Elron"), FEL and HF entered into a
Shareholders' Agreement (the "Old Shareholders Agreement") which governed the
relations between Elron, FEL and HF as shareholders of the Issuer following the
merger. Pursuant to the Old Shareholders Agreement, should any party to the Old
Shareholders Agreement desire to transfer any of its Ordinary Shares and the
rights associated with such shares ("Associated Rights") to a third party, it
must first offer such Ordinary Shares and Associated Rights to the other parties
of the Old Shareholders Agreement. On July 8, 2004, Elron entered into an
agreement with Tadiran Communications Ltd. to sell its 7,815,448 Ordinary Shares
and Associated Rights for $196.5 million, subject to Elron's obligations under
the Old Shareholders Agreement to first offer the Ordinary Shares and Associated
Rights to FEL and HF on the same terms and conditions as were agreed between
Elron and Tadiran Communications Ltd. After Elron made the offer to FEL and HF,
FEL exercised on July 28, 2004 its rights to purchase the 7,815,448 Ordinary
Shares and Associated Rights from Elron.
In order to obtain some of the funds to purchase the 7,815,448 Ordinary
Shares and Associated Rights from Elron, FEL entered into a loan agreement with
Bank Leumi Le'Israel B.M. (the "Lender"), dated July 28, 2004 (the "Loan
Agreement") and two related security agreements with the Lender, each dated July
28, 2004 (each, a "Security Agreement"). A summary of the Loan Agreement is
attached hereto as Exhibit 3 and a summary of the Security Agreements is
attached hereto as Exhibit 4.
9
The remainder of the purchase price was paid by FEL from its own funds. Under
the Loan Agreement, the Lender made the following loans to FEL:
(1) a loan in an amount of approximately $111 million, which is secured
by 4,915,448 Ordinary Shares pledged in favor of the Lender. From September 23,
2004 through April 18, 2005, FEL paid back the Lender approximately $61 million
under this loan. Currently, $50 million remains outstanding and secured by
2,755,448 Ordinary Shares pledged in favor of the Lender.
(2) two loans in the total amount of $51 million, one of which is
secured by 2,900,000 Ordinary Shares pledged in favor of the Lender. On
September 20, 2004, FEL paid back the Lender one of the loans in an amount of
$24 million. The other loan, in the amount of $27 million remains outstanding
and secured by 2,900,000 Ordinary Shares pledged in favor of the Lender.
The shares so pledged are registered in the name of a trust company
which is an affiliate of the Lender (the "Trustee"). The Trustee has granted FEL
a proxy to vote the pledged Ordinary Shares. This proxy can be revoked by the
Lender upon the occurrence of an event of default under the Loan Agreement. In
addition, FEL agreed, if necessary to make payments under the Loan Agreement, to
sell up to approximately 4 million Ordinary Shares previously held by it and to
use the proceeds for payment of the Loan. The Loan Agreement contains customary
events of default.
Pursuant to Israeli law, the Reporting Persons, together with the
Issuer, may be considered, or prima facie deemed, to beneficially own the
Ordinary Shares held by a wholly owned subsidiary of the Issuer. A wholly owned
subsidiary of the Issuer holds 23,021 Ordinary Shares which are entitled to be
voted. Therefore, the Reporting Persons may have the right to direct the vote of
such Ordinary Shares and may be considered, or prima facie deemed, to
beneficially own such Ordinary Shares. Each of the Reporting Persons currently
beneficially owns 17,755,448 Ordinary Shares, except for HF which beneficially
owns 3,836,458 Ordinary Shares.
Subsequent to the sale of Elron's Ordinary Shares to FEL on July 28,
2004, the Old Shareholder's Agreement is of no more force and effect.
Item 4. Purpose of Transaction.
On December 27, 2004, the Issuer signed a Share Transfer Deed (the
"Tadiran Deed") and a Shareholders Agreement (the "Tadiran Shareholders
Agreement") with Koor Industries Ltd. ("Koor") regarding the Issuer's purchase
from Koor of the 3,944,276 ordinary shares held by Koor in Tadiran
Communications Ltd. ("Tadiran") for overall consideration of approximately $146
million, based on a purchase price of $37.00 per share (subject to adjustment
for dividends and interest). The Tadiran Acquisition is being consummated in two
stages. In "Stage A" (as defined in the Tadiran Deed), the Issuer purchased from
Koor 1,700,000 ordinary shares of Tadiran. In "Stage B" (as defined in the
Tadiran Deed), the Issuer will purchase the balance (an additional 2,244,276
shares) of the Tadiran ordinary shares currently held by Koor.
Concurrently with the signing of the Tadiran Acquisition Agreements,
Koor signed a Share Transfer Deed with FEL (the "Koor - FEL Deed") and a
Shareholders Agreement
10
with FEL and HF (the "New Shareholders Agreement") relating to the purchase by
Koor from FEL of 4,000,000 ordinary shares of the Issuer, representing
approximately 9.8% of the Issuer's issued and outstanding ordinary shares based
on the Issuer's current share capital (the "Koor - FEL Transaction"). (The Koor
- FEL Deed and the New Shareholders Agreement are referred to as the "Koor - FEL
Agreements"). The total consideration to be paid by Koor to FEL under the Koor -
FEL Transaction is approximately $99 million, based on a purchase price of
$24.70 per Issuer share (subject to deductions for dividends paid by the
Issuer). Interest is payable for any amounts paid after April 1, 2005. A
description of the New Shareholders Agreement is attached as Schedule F hereto.
A translation of the Koor - FEL Deed is attached hereto as Exhibit 5 and a
translation of the New Shareholders Agreement is attached hereto as Exhibit 6.
The Koor - FEL Transaction is being consummated in two stages. "Stage
A" (as defined in the Koor - FEL Deed) of the Koor - FEL Transaction closed
concurrently with Stage A of the Tadiran Acquisition. "Stage B" (as defined in
the Koor - FEL Deed) of the Koor - FEL Transaction will occur concurrently with
Stage B of the Tadiran Acquisition, subject to certain exceptions as described
in the Koor - FEL Deed. Pursuant to Stage A of the Koor - FEL Transaction, Koor
purchased 2,160,000 ordinary shares, representing approximately 5.3% of the
Issuer's shares (based on the Issuer's current share capital), and FEL will
support the appointment of one director nominated by Koor to the Issuer's Board
of Directors (the "Issuer's Board"). Under Stage B of the Koor - FEL
Transaction, Koor will purchase from FEL an additional 1,840,000 ordinary
shares, representing approximately 4.5% of the Issuer's shares (based on the
Issuer's current share capital), and FEL will support the appointment of an
additional director to be nominated by Koor to the Issuer's Board (such that
Koor nominees will consist of not less than 20% of the directors on the Issuer's
Board).
On April 18 2005 FEL, Koor and the Issuer, respectively, extended the
time period for completion of "Stage B" of the Koor-FEL Transaction and for
completion of "Stage B" of the Tadiran Acqisition by four months.
Under the Koor - FEL Shareholders Agreement, which became effective
upon the completion of Stage A of the Koor - FEL Transaction, Koor obtained
certain tag along rights in the event of FEL's sale of shares in the Issuer, and
Koor is subject to certain restrictions on the transfer of its shares in the
Issuer. Also, Koor has agreed to vote at General Shareholders Meetings of the
Issuer in accordance with FEL's instructions, with certain exceptions, and Koor
will receive certain additional non-transferable rights after the consummation
of Stage B.
Except as set forth above, none of the Reporting Persons, nor, to the
best of their knowledge, any of their directors or executive officers, has any
present plans or proposals which relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) The responses of the Reporting Persons to Rows (11) through (13) of
the cover pages of this Schedule 13D/A are incorporated herein by reference. As
of April 26, 2005, each of the Reporting Persons beneficially owns an aggregate
of 17,778,469 Ordinary Shares, representing approximately 43.68% of the
outstanding Ordinary Shares of the Issuer (based on an aggregate of 40,705,863
Ordinary Shares outstanding as of March 31, 2005, excluding
11
385,900 Ordinary Shares held in treasury by the Issuer), except for HF which
beneficially owns 3,836,458 Ordinary Shares, representing approximately 9.42% of
the outstanding Ordinary Shares of the Issuer (based on an aggregate of
40,705,863 Ordinary Shares outstanding as of March 31, 2005, excluding 385,900
Ordinary Shares held in treasury by the Issuer).
Except as disclosed in this Item 5(a), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, beneficially owns any Ordinary Shares.
(b) The responses of the Reporting Persons to (i) Rows (7) through (10)
of this Schedule 13D/A and (ii) Item 5(a) hereof are incorporated herein by
reference.
Except as disclosed in this Item 5(b), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, presently has the power to vote or to direct the vote or to dispose or
direct the disposition of any of the Ordinary Shares which they may be deemed to
beneficially own.
(c) On April 18, 2005 FEL and Koor consummated Stage A of the Koor-FEL
Deed, dated December 27, 2004. Pursuant thereto, FEL sold Koor 2,160,000
Ordinary Shares at a price per share of $24.62. As a result, each of the
Reporting Persons beneficially owns 17,778,469 Ordinary Shares, except for HF
which beneficially owns 3,836,458 Ordinary Shares.
(d) Pursuant to Israeli law, the Reporting Persons, together with the
Issuer, may be considered, or prima facie deemed, to beneficially own Ordinary
Shares held by a wholly owned subsidiary of the Issuer. A wholly owned
subsidiary of the Issuer holds 23,021 Ordinary Shares which are entitled to be
voted. Therefore, the Reporting Persons may have the right to direct the vote of
such Ordinary Shares and may be considered, or prima facie deemed, to
beneficially own such Ordinary Shares. 5,655,448 Ordinary Shares and Associated
Rights purchased by FEL from Elron are registered in the name of the Trustee,
which is an affiliate of the Lender. The Trustee granted FEL a proxy to vote the
pledged Ordinary Shares. This proxy can be revoked upon the occurrence of an
event of default under the Loan Agreement. Upon the termination of the Loan
Agreement, such Ordinary Shares will be re-registered under the name of FEL.
Each of the Reporting Persons currently beneficially owns 17,778,469 Ordinary
Shares, except for HF which beneficially owns 3,836,458 Ordinary Shares. The
wholly owned subsidiary of the Issuer, however, retains the right to dispose of
the Ordinary Shares held by it.
Under the Loan Agreement, FEL undertook to oppose any amendment of the
Issuer's organizational documents that would adversely affect the Lender's
rights in connection with the pledged Ordinary Shares and Associated Rights.
Failure to do so will be considered to be a default under the Loan Agreements.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
The information set forth in Items 3 and 4 hereof is incorporated
herein by reference.
12
On July 5, 2000, upon consummation of the merger transaction
contemplated by the Merger Agreement, Elron, FEL and HF entered into a
Registration Rights Agreement which governs the rights and obligations of the
parties with respect to the registration of their Ordinary Shares for sale in
the United States. Elron's rights under the Registration Rights Agreement were
assigned to FEL on July 28, 2004. A copy of that agreement is set forth on
Exhibit 2.
An agreement among the Reporting Persons with respect to the filing of
this Schedule 13D and any amendments hereto is attached as Exhibit 1.
Under the Loan Agreement, FEL undertook to oppose any amendment of the
Issuer's organizational documents that would adversely affect the Lender's
rights in connection with the pledged Ordinary Shares and Associated Rights.
Failure to do so will be considered to be a default under the Loan Agreements.
Pursuant to the Security Agreements, the 5,655,448 Ordinary Shares and
Associated Rights purchased from Elron are pledged to the Lender. Such Ordinary
Shares are registered in the name of the Trustee, which is a trust company and
an affiliate of the Lender. The Trustee granted FEL a proxy to vote the pledged
Ordinary Shares. This proxy can be revoked by the Lender upon the occurrence of
an event of default under the Loan Agreement. Upon the termination of the Loan
Agreement, such Ordinary Shares will be re-registered under the name of FEL.
A description of the New Shareholders Agreement is attached as Schedule
F hereto.
Except as disclosed in this Item 6, none of the Reporting Persons, nor,
to the best of their knowledge, any of their directors or executive officers,
are parties to any contract arrangement, understanding or relationship (legal or
otherwise) with respect to securities of the Issuer.
Item 7. Materials to be Filed as Exhibits.
Exhibit 1 Joint Filing Agreement by and among Michael Federmann,
Federmann Enterprises Ltd., Heris Aktiengesellschaft, Beit
Federmann Ltd., Beit Bella Ltd. and Beit Yekutiel Ltd.
(Incorporated by reference to Amendment No. 1 to the Schedule
13D filed by Michael Federmann on August 19, 2003.)
Exhibit 2 Registration Rights Agreement dated July 5, 2000 by and among
Elbit Systems Ltd., Elron Electronic Industries Ltd.,
Federmann Enterprises Ltd. and Heris Finanz Aktiengesellschaft
(now known as Heris Aktiengesellschaft). (Incorporated by
reference to Amendment No. 1 to the Schedule 13D filed by
Michael Federmann on August 19, 2003.)
Exhibit 3 English Summary of Loan Agreement dated July 28, 2004 by and
among Michael Federmann, Federmann Enterprises Ltd. and Bank
Leumi Le-Israel B.M. (Incorporated by reference to Amendment
No. 2 to the Schedule 13D filed by the reporting persons on
August 2, 2004.)
Exhibit 4 English Summary of Security Agreements, dated July 28, 2004,
by and between Federmann Enterprises Ltd. and Bank Leumi
Le-Israel B.M.
(Incorporated by reference to Amendment No. 2 to the Schedule
13D filed by the reporting persons on August 2, 2004.)
13
Exhibit 5 English Translation of Share Transfer Deed, dated December 27,
2004, between Federmann Enterprises Ltd. and Koor Industries
Ltd.
Exhibit 6 English Translation of Shareholders Agreement, dated December
27,2004, between Federmann Enterprises Ltd., Heris
Aktiengesellschaft and Koor Industries Ltd.
14
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 5, 2005
/s/ Michael Federmann
-------------------------
Michael Federmann
FEDERMANN ENTERPRISES LTD.
By: /s/ Michael Federmann
-------------------------
Name: Michael Federmann
Title: Chairman of the Board
HERIS AKTIENGESELLSCHAFT
By: /s/ Michael Federmann
-------------------------
Michael Federmann, Attorney in Fact
BEIT FEDERMANN LTD.
By: /s/ Michael Federmann
-------------------------
Name: Michael Federmann
Title: Director
BEIT YEKUTIEL LTD.
By: /s/ Michael Federmann
-------------------------
Name: Michael Federmann
Title: Director
BEIT BELLA LTD.
By: /s/ Michael Federmann
-------------------------
Name: Michael Federmann
Title: Director
15
SCHEDULE A TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
FEDERMANN ENTERPRISES LTD.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME* ADDRESS OCCUPATION
---- ------- ----------
Directors
Bella Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Michael Federmann 87 Hayarkon St. Chairman of the Board
Tel-Aviv, Israel of each of Federmann Enterprises
Ltd.,
Dan Hotels Corp. Ltd. and Elbit
Systems Ltd.
Samuel Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Irit Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Liora Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Officers
Dov Ninveh 87 Hayarkon St. Manager
Tel-Aviv, Israel
Aharon Beth-Halachmi 87 Hayarkon St. Manager
Tel-Aviv, Israel
* Each person listed in this Schedule is a citizen of the State of Israel.
16
SCHEDULE B TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
HERIS AKTIENGESELLSCHAFT
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRESENT
NAME AND BUSINESS PRINCIPAL
CITIZENSHIP ADDRESS OCCUPATION
----------- ------- ----------
Directors
Prasidial Aeulestrasse 38 Management Company
Management Anstalt Fl-9490 Vaduz
Forstentum Liechtenstein
Dr. Lina Alexander Aeulestrasse 38 Manager
Austrian Fl-9490 Vaduz
Forstentum Liechtenstein
Michael Federmann 87 Hayarkon St. Chairman of the Board
Tel-Aviv, Israel of each of Federmann Enterprises
Ltd.,
Dan Hotels Corp. Ltd. and Elbit
Systems Ltd.
Federmann Enterprises ltd. 87 Hayarkon St.
Tel-Aviv, Israel
Officers
None
17
SCHEDULE C TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
BEIT FEDERMANN LTD.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME* ADDRESS OCCUPATION
---- ------- ----------
Directors
Bella Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Michael Federmann 87 Hayarkon St. Chairman of the Board
Tel-Aviv, Israel of each of Federmann Enterprises
Ltd., Dan Hotels Corp. Ltd. and
Elbit Systems Ltd.
Samuel Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Irit Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Officers
None
* Each person listed in this Schedule is a citizen of the State of Israel.
18
SCHEDULE D TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
BEIT BELLA LTD.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME* ADDRESS OCCUPATION
---- ------- ----------
Directors
Bella Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Michael Federmann 87 Hayarkon St. Chairman of the Board
Tel-Aviv, Israel of each of Federmann Enterprises
Ltd., Dan Hotels Corp. Ltd. and
Elbit Systems Ltd.
Samuel Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Officers
None
* Each person listed in this Schedule is a citizen of the State of Israel.
19
SCHEDULE E TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
BEIT YEKUTIEL LTD.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME* ADDRESS OCCUPATION
---- ------- ----------
Directors
Bella Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Michael Federmann 87 Hayarkon St. Chairman of the Board
Tel-Aviv, Israel of each of Federmann Enterprises
Ltd., Dan Hotels Corp. Ltd. and
Elbit Systems Ltd.
Samuel Federmann 87 Hayarkon St. Manager
Tel-Aviv, Israel
Officers
None
* Each person listed in this Schedule is a citizen of the State of Israel.
20
SCHEDULE F TO SCHEDULE 13D/A
Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.
DESCRIPTION OF THE NEW SHAREHOLDERS AGREEMENT
EFFECTIVE DATE AND DURATION
The New Shareholders Agreement between Koor, FEL and HF took effect upon
completion of Stage A of the Koor - FEL Transaction. The New Shareholders
Agreement shall remain in effect for a period of 15 years from its effective
date or until such time as FEL's (or a "Transferor Party" as defined in Clause
12 of New Shareholders Agreement) holdings in the FEL Shares together with
Koor's (or a Transferor Party) holdings in the "Koor Shares" (as defined in the
New Shareholders Agreement) fall below 25% of the Issuer's issued share capital,
whichever is earlier.
In addition, after October 1, 2008, Koor may elect to terminate its rights and
obligations under the New Shareholders Agreement, with the exception of the
provisions specified in Clauses 5, 11.6, 11.7 and 16 thereof.
BOARD MEMBERS
The Issuer's Articles of Association provides that the standard number of
directors on the Issuer's Board shall be ten, including the two External
Directors. However, the Board or a General Shareholders Meeting may determine a
different number of directors between 5 and 17.
After the completion of Stage A of the Koor - FEL Transaction and until the
completion of Stage B of the Koor - FEL Transaction, and if Stage B of the Koor
- FEL Transaction does not occur, then until such time as Koor's holdings of the
Koor Shares fall below 4.32% of the Issuer's issued share capital, or below the
Second Minimum Quantity (as defined in the New Shareholders Agreement),
whichever is sooner, FEL shall vote all its holdings of the Issuer's shares in
favor of the election of one director nominated by Koor; provided, that the
nominee fulfills all the Qualification Conditions (as defined in the New
Shareholders Agreement).
Commencing from the time of completion of Stage B of the Koor - FEL Transaction,
FEL will support the appointment or vote for the election of directors to the
Issuer's Board who are nominated by Koor; provided, that the nominee fulfills
all the Qualification Conditions, in a number equal to the higher of either: (a)
two or (b) 20% of the number of the Issuer's directors (including External
Directors and the director(s) appointed or elected pursuant to Koor's
nomination), rounded up to the nearest whole number.
After the completion of Stage B of the Koor - FEL Transaction, from such time as
Koor's holdings of the Koor Shares fall below 6.45% of the Issuer's issued share
capital, or below the First Minimum Quantity (as defined in the New Shareholders
Agreement), whichever is sooner, and until Koor's holdings in the Koor Shares
fall below 4.32% of the Issuer's issued share
21
capital or below the Second Minimum Quantity, whichever is sooner, FEL shall
vote all its holdings in the Issuer's shares in favor of the election of one
director nominated by Koor; provided, that the nominee fulfills all the
Qualification Conditions.
After the completion of Stage A of the Koor - FEL Transaction and until FEL's
holdings in the Issuer's shares fall below 20% of the Issuer's issued share
capital, Koor has undertaken to vote for the election of all the candidates
nominated by FEL for the offices of the other directors of the Issuer (including
External Directors) ; provided, that the nominees fulfills all the Qualification
Conditions.
Koor also has undertaken to support the appointment of the candidate nominated
by FEL as chairperson of the Issuer's Board.
VOTING AT SHAREHOLDERS MEETINGS
Koor has undertaken to vote, in every matter and proposed resolution that will
be submitted for approval to a General Shareholders Meeting of the Issuer's
shareholders, in accordance with instructions that will be given to it by FEL,
subject to certain exceptions.
RESTRICTIONS ON TRANSFER OF ISSUER'S SHARES
Both Koor and FEL are subject under the New Shareholders Agreement, to certain
limitations and rights regarding the transfer of their respective shares in the
Issuer. Accordingly, under the conditions described in the New Shareholders
Agreement:
(1) Koor has been granted a right to tag along to FEL's sale of
shares in the Issuer in the event FEL wishes to transfer to a
third party more than half of FEL's shares in the Issuer;
(2) FEL has been granted a right of first refusal if Koor wishes
to transfer to a third party any of the Koor Shares;
(3) If Koor elects to withdraw from the "Controlling Interest" in
the Issuer (according to the provisions of Clause 16 of the
New Shareholders Agreement) FEL shall have a right of first
offer to acquire Koor's shares in the Issuer;
(4) The parties have been granted a mutual right to jointly
participate in the acquisition of shares from a single third
party if the proposed acquisition will exceed a total
consideration of $25 million;
(5) Koor shall not transfer any of the Koor Shares during the
period commencing on the date of signing the New Shareholders
Agreement and ending on the later of the following:
(a) 12 months after the First Closing Date (as defined in
the Koor - FEL Deed); or
(b) if the Stage B of the Koor - FEL Transaction has been
completed - then nine months after the Second Closing
Date (as defined in the Koor - FEL Deed).
22
(6) A transfer to a third party of: (1) Koor Shares that are
subject to FEL's right of first refusal, or (2) "Federmann
Shares" (as defined in the Koor - FEL Deed) that are subject
to Koor's tag along rights, will be subject to the third party
transferee's undertaking to assume the transferor's
undertakings according to the New Shareholders Agreement.
The above mentioned limitations and rights on transfer of Issuer's shares apply
only to the Federmann Shares and the Koor Shares and not to any other Issuer's
shares that may be held by FEL or Koor, as the case may be.
ADDITIONAL NON-TRANSFERABLE RIGHTS GRANTED TO KOOR
After the Second Closing Date, Koor will be granted, subject to applicable law,
certain non-transferable rights, as specified below, which will expire if Koor's
holdings fall below 6.45% of the Issuer's issued share capital, or below the
First Minimum Quantity, or at the Termination Date (as defined in clause 6.1 of
the New Shareholders Agreement), whichever is sooner:
(1) The appointment of one of the directors nominated by Koor to the
position of Vice Chairperson of the Issuer's Board, and the appointment
of one director nominated by Koor to each of the Issuer Board's
committees.
(2) Establishment of a Board Committee for Strategic Planning, in which at
least one member will be a director nominated by Koor, having the
authority to assist and recommend on strategic issues;
(3) In the event of a change of the current Issuer's President and CEO (Mr.
Joseph Ackerman), a search committee having the authority only to
recommend will be appointed to attempt to identify a suitable candidate
for the office of CEO of the Issuer. If the search committee does not
succeed in unanimously so recommending a candidate, the Issuer's Board
will appoint a CEO of the Issuer by a majority vote of its members.
(4) FEL will support, if so requested by Koor, granting registration rights
to Koor.
(5) In the event that an officer or any of the holders of control in FEL
serves as a director in a subsidiary of the Issuer, Koor will be
entitled, subject to applicable law, to appoint as a director in that
subsidiary one of the directors of the Issuer nominated by Koor. It
should be noted that currently officers or holders of control in FEL do
not serve as directors in any of the Issuer's subsidiaries.
23
EXHIBIT INDEX
Exhibit No.
Exhibit 1 Joint Filing Agreement by and among Michael Federmann,
Federmann Enterprises Ltd., Heris Aktiengesellschaft, Beit
Federmann Ltd., Beit Bella Ltd. and Beit Yekutiel Ltd.
(Incorporated by reference to Amendment No. 1 to the Schedule
13D filed by Michael Federmann on August 19, 2003.)
Exhibit 2 Registration Rights Agreement dated July 5, 2000 by and among
Elbit Systems Ltd., Elron Electronic Industries Ltd.,
Federmann Enterprises Ltd. and Heris Finanz Aktiengesellschaft
(now known as Heris Aktiengesellschaft). (Incorporated by
reference to Amendment No. 1 to the Schedule 13D filed by
Michael Federmann on August 19, 2003.)
Exhibit 3 English Summary of Loan Agreement dated July 28, 2004 by and
among Michael Federmann, Federmann Enterprises Ltd. and Bank
Leumi Le-Israel B.M. (Incorporated by reference to Amendment
No. 2 to the Schedule 13D filed by the reporting persons on
August 2, 2004.)
Exhibit 4 English Summary of Security Agreements, dated July 28, 2004,
by and between Federmann Enterprises Ltd. and Bank Leumi
Le-Israel B.M. (Incorporated by reference to Amendment No. 2
to the Schedule 13D filed by the reporting persons on August
2, 2004.)
Exhibit 5 English Translation of Share Transfer Deed, dated December 27,
2004, between Federmann Enterprises Ltd. and Koor Industries
Ltd.
Exhibit 6 English Translation of Shareholders Agreement, dated December
27,2004, between Federmann Enterprises Ltd., Heris
Aktiengesellschaft and Koor Industries Ltd.
24
EXHIBIT 5
[TRANSLATED FROM THE HEBREW ORIGINAL]
SHARE TRANSFER DEED
Made in Tel Aviv this 27th day of December 2004
BETWEEN
FEDERMANN ENTERPRISES LTD.
(Public Company No. 51 - 227839-1)
of 99 Hayarkon Street, Tel Aviv
("FEDERMANN")
OF THE ONE PART
AND
KOOR INDUSTRIES LTD.
(Public Company No. 52 - 001414-3)
of 14 Hamalacha Street, Afek Industrial Park, Rosh Ha'ayin 48091
("KOOR")
OF THE OTHER PART
(hereinafter the "PARTIES")
WHEREAS Federmann is the holder of 19,915,448 Ordinary Shares of the issued
and paid up share capital of Elbit Systems Ltd., a public company
duly incorporated in Israel, whose number with the Companies
Registrar is Public Company No. 52-004302-7 (hereinafter the
"COMPANY");
AND WHEREAS Federmann wishes to sell and transfer to Koor, in two stages,
4,000,000 (four million) Ordinary Shares, which on the date of
signing this Deed constitute approximately 9.8% of the Company's
issued and paid-up share capital, while in the first stage Federmann
will sell and transfer to Koor 2,160,000 (two million one hundred
and sixty thousand) Ordinary Shares, which on the date of signing
this Deed constitute approximately 5.3% of the Company's issued and
paid-up share capital, and in the
1
second stage Federmann will sell and transfer to Koor 1,840,000 (one
million eight hundred and forty thousand) Ordinary Shares, which on
the date of signing this Deed constitute approximately 4.5% of the
Company's issued and paid-up share capital, subject to and in
accordance with the provisions of this Deed;
AND WHEREAS Koor wishes to purchase and receive from Federmann the Shares Being
Sold, subject to and in accordance with the provisions of this Deed;
AND WHEREAS the performance of this Deed, in both stages, is subject to
Conditions Precedent as provided below in this Deed;
AND WHEREAS the Parties wish to set forth their relationship with respect to the
sale and purchase of the Shares Being Sold in the context of this
Deed;
AND WHEREAS Koor is interested in the performance of the Transaction
contemplated by this Deed as part of an overall Transaction, in the
scope of which Koor will sell to the Company shares of Tadiran
Communications, as set out in the Elbit-Koor Deed and this Deed.
NOW, THEREFORE, IT IS WARRANTED, PROVIDED AND AGREED BETWEEN THE PARTIES AS
FOLLOWS:
1. PREAMBLE, APPENDICES AND INTERPRETATION
1.1 The preamble and appendices hereto constitute an integral part hereof.
1.2 The clause headings in this Deed are solely for the sake of
convenience and shall not be applied in the interpretation hereof.
2. DEFINITIONS
2.1 In this Deed, the following terms shall have the meanings herein
ascribed to them, unless expressly stated otherwise:
"ELISRA" means Elisra Electronic Systems Ltd., Private Company No.
52-003587-4;
"GENERAL MEETING" means as defined in the Companies Law, and any
adjourned meeting;
"U.S. DOLLAR" or "$" means United States dollars;
2
"COMPANY" means as defined in the preamble hereto;
"SHAREHOLDERS AGREEMENT" means the Agreement between Federmann and
Koor in the form of APPENDIX "10.7" hereto, which is to be signed on
the signature of this Deed and will enter into effect on the First
Closing Date;
"STAGE `A' CONDITIONS PRECEDENT" means the Conditions Precedent for
Stage `A' of the Transaction, as provided in APPENDIX "9.2" hereto;
"STAGE `B' CONDITIONS PRECEDENT" means the Conditions Precedent for
Stage `B' of the Transaction, as provided in APPENDIX "12.2" hereto;
"CONDITIONS PRECEDENT" means the Stage `A' Conditions Precedent and
the Stage `B' Conditions Precedent;
"COMPANIES LAW" means the [Israel] Companies Law, 5759-1999;
"BUSINESS DAY" means a day on which the two major banks in Israel are
open for business, other than Fridays and holiday eves, which shall
not be treated as a "Business Day";
"KOOR" means as defined in the preamble hereto;
"FIRST CLOSING DATE" means the third Business Day after the date on
which all the Stage `A' Conditions Precedent have been fulfilled or
such later date as agreed by the Parties, as provided in Clause 20.3
below;
"ELBIT-KOOR DEED FIRST CLOSING DATE" means the First Closing Date as
the term is defined in the Elbit-Koor Deed;
"SECOND CLOSING DATE" means the third Business Day after the date on
which all the Stage `B' Conditions Precedent have been fulfilled or in
the event that the Stage `B' Conditions Precedent are deemed wholly
fulfilled in accordance with the provisions of Clause 12.4 or 12.5
below, as the case may be, the 14th Business Day after 30th June 2005
or after the date of receiving Koor's notice pursuant to Clause 12.5,
as the case may be, or such later date as agreed by the Parties, as
provided in Clause 20.3 below;
"ELBIT-KOOR DEED SECOND CLOSING DATE" means the Second Closing Date as
the term is defined in the Elbit-Koor Deed;
3
"STAGE `A' COMPLETION DEADLINE" means as defined in Clause 9.1 below;
"STAGE `B' COMPLETION DEADLINE" means as defined in Clause 12.1 below;
"ELBIT-KOOR DEED STAGE `B' COMPLETION DEADLINE" means the Stage `B'
Completion Deadline as the term is defined in the Elbit-Koor Deed;
"CONFIDENTIAL INFORMATION" means all information relating to the
Parties hereto or to the Company, other than (a) information that was
in the public domain or came into the public domain otherwise than due
to a breach of this Deed and (b) information the disclosure of which
is required in accordance with the provisions of law;
"ORDINARY SHARE" or "ORDINARY SHARES" means Ordinary Shares of 1 NIS
par value each of the Company's issued share capital;
"STAGE `A' SHARES" mean 2,160,000 (two million one hundred and sixty
thousand) Ordinary Shares;
"STAGE `B' SHARES" mean 1,840,000 (one million eight hundred and forty
thousand) Ordinary Shares;
"SHARES BEING SOLD" means the Stage `A' Shares and the Stage `B'
Shares;
"FREE AND CLEAR" means free and clear of any charge, pledge,
attachment, levy, debt, lien, claim, right of pre-emption, right of
refusal, option, lock-up arrangement or any further or other third
party right whatsoever, other than restrictions with respect to the
transfer and/or negotiability of shares that are imposed pursuant to
U.S. securities law (shares which are not registered under U.S.
securities laws);
"ELISRA TRANSACTION" means a transaction pursuant to which Tadiran
Communications will purchase shares constituting at least 70% of
Elisra's issued share capital;
"FEDERMANN" means as defined in the preamble to this Deed;
"INTEREST" means three-month LIBOR at Bank Leumi Le-Israel B.M., plus
annual interest at the rate of 1.5%, compounded every three months;
E-4
"DEED" means this Share Transfer Deed together with all the appendices
hereto;
"ELBIT-KOOR DEED" means the Share Transfer Deed together with all the
appendices thereto made between the Company and Koor on the signature
of this Deed, subject to and in accordance with the conditions of
which Koor will sell and transfer to the Company, in two stages,
3,944,276 (three million nine hundred forty-four thousand two hundred
and seventy-six) Ordinary Shares of 1 NIS par value each of Tadiran
Communications, which on the date of signing this Deed constitute
approximately 32% of Tadiran Communication's issued share capital;
"STAGE `A' OF THE TRANSACTION" means as defined in Clause 8.1 below;
"STAGE `B' OF THE TRANSACTION" means as defined in Clause 11.1 below;
"ELBIT-KOOR DEED STAGE `A'" means Stage `A' of the Transaction
contemplated by the Elbit-Koor Deed as the term is defined in the
Elbit-Koor Deed;
"ELBIT-KOOR DEED STAGE `B'" means Stage `B' of the Transaction
contemplated by the Elbit-Koor Deed as the term is defined in the
Elbit-Koor Deed;
"TADIRAN COMMUNICATIONS" means Tadiran Communications Ltd. (Private
[sic] Company No. 51-207441-0);
"STAGE `A' CONSIDERATION" means US$24.70 (twenty-four U.S. dollars and
seventy cents) for each of the Stage `A' Shares, totaling
US$53,352,000 (fifty-three million three hundred and fifty-two
thousand U.S. dollars), and insofar as all or part of that amount is
actually paid after April 1, 2005, such amount as aforesaid shall be
subject to the addition of the Interest from April 1, 2005 until the
time of actual payment, all subject to the adjustments as provided in
Clause 15 below;
"STAGE `B' CONSIDERATION" means US$24.70 (twenty-four U.S. dollars and
seventy cents) for each of the Stage `B' Shares, totaling US$-
45,448,000 (forty-five million four hundred and forty-eight thousand
U.S. dollars), and insofar as all or part of that amount is actually
paid after April 1, 2005, such amount as aforesaid shall be subject to
the addition of the Interest from April 1, 2005 until the time
5
of actual payment, all subject to the adjustments as provided in
Clause 15 below;
"CONSIDERATION" means the Stage `A' Consideration and the Stage `B'
Consideration together;
"QUALIFICATION CONDITIONS" means all the requirements in accordance
with applicable law and pursuant to the Company's incorporation
documents for a person to serve as a director of the Company,
including security clearance as required in Israel for the purpose of
such service, but excluding the conditions for an Independent
Director;
"INDEPENDENT DIRECTOR" means a director who meets the independence
criteria in accordance with U.S. securities law, including the
Sarbanes-Oxley Act and the rules and regulations that have been and
are in future issued by virtue thereof, including rules of the Nasdaq.
2.2 The following terms shall have the meanings defined in Section 1 of
the [Israel] Securities Law, 5728-1968:
"securities", "company", "subsidiary", "acquisition of securities",
"holding and acquisition" and "control".
2.3 The following terms shall have the meanings defined in Section 1 of
the Companies Law:
"dividend", "director", "external director", "public company",
"distribution", "bonus shares", "officer", "personal interest",
"transaction", "extraordinary transaction", "act", the "Companies
Registrar" and "share certificate".
3. APPENDICES
The following appendices, which constitute an integral part hereof, are
annexed to this Deed:
3.1 APPENDIX "9.2" - the Stage `A' Conditions Precedent;
3.2 APPENDIX "10.7" - the Shareholders Agreement between Federmann and
Koor, which is to be signed contemporaneously with the signature of
this Deed and will enter into effect on the First Closing Date;
3.3 APPENDIX "12.2" - the Stage `B' Conditions Precedent.
6
4. THE ELBIT-KOOR DEED
Contemporaneously with the signing of this Deed, the Elbit-Koor Deed is
also being signed. The Elbit-Koor Deed and this Deed are separate and
unrelated deeds, except as expressly provided in this Deed. For the
avoidance of doubt it is hereby clarified that the Company is not a Party
to this Deed, and the provisions of the Elbit-Koor Deed do not impose any
duty on Koor to Federmann or on Federmann to Koor that is not expressly
provided in this Deed.
5. THE PARTIES' WARRANTIES AND UNDERTAKINGS
The Parties hereby warrant and undertake to each other as follows:
5.1 The representations and warranties of the Parties in this Deed are
solely as provided in this Clause 5 and in Clauses 6 and 7 below, as
the case may be.
5.2 The Parties' warranties and undertakings as provided in this Clause 5
and in Clauses 6 and 7 below, as the case may be, will continue to be
correct, complete and accurate on the First Closing Date and the
Second Closing Date, and they shall be deemed as having been provided
again by each of the Parties on both the First Closing Date and on the
Second Closing Date.
6. FEDERMANN'S WARRANTIES AND UNDERTAKINGS
Federmann hereby warrants and undertakes to Koor as follows -
6.1 That it is a duly incorporated private company, that its number with
the Companies Registrar is as appears in the preamble hereto and that
no actions or proceedings for delisting, liquidation, winding-up,
receivership or like acts have been taken or are threatened against
it.
6.2 That on signing this Deed and until the completion of Stage `A' of the
Transaction it is and shall be the sole owner of the Shares Being Sold
(subject to the Lien), and after the completion of Stage `A' of the
Transaction and until the completion of Stage `B' of the Transaction
it is and shall be the sole owner of the Stage `B' Shares (subject to
the Lien, as will be modified, amended as provided in Clause 10.4
below), that it will not grant any person or entity an option or right
to purchase all or any of the Shares Being Sold, that it has not
undertaken to grant such an option or right as aforesaid, that no
person or entity has any right of first refusal or tag-along right in
connection with all or any of the Shares Being Sold and that on the
date of signing this Deed it holds 19,915,448 Ordinary Shares.
7
6.3 That the Shares Being Sold are fully paid and Free and Clear, except
for a first ranking fixed lien and an assignment by way of charge, of
unlimited amount, which are registered in favor of Bank Leumi
Le-Israel B.M. (in this Deed the "BANK") over the Shares Being Sold
and over Federmann's rights in the Shares Being Sold (in this Deed the
"LIEN") and that pursuant to the Lien the Shares Being Sold are held
by and registered in the name of Bank Leumi Le-Israel Trust Co. Ltd.,
and that on the First Closing Date, upon the Stage `A' Consideration
being received in Federmann's Account, the Stage `A' Shares will be
Free and Clear and that on the Second Closing Date, upon the Stage `B'
Consideration being received in Federmann's Account, the Stage `B'
Shares will be Free and Clear.
6.4 That apart from approval by Federmann's General Meeting and board of
directors, Federmann has no need, including pursuant to its
incorporation documents and applicable law, in Israel or abroad, to
obtain any other approvals from any of its organs for the purpose of
entering into this Deed and performing all its obligations pursuant
hereto.
6.5 That subject to ratification by Federmann's General Meeting and board
of directors, the signatories on Federmann's behalf to this Deed and
the documents ancillary hereto are the persons who are empowered, on
Federmann's behalf, to sign this Deed and the documents ancillary
hereto and/or necessary for the performance hereof and to obligate
Federmann by their signature, and this Deed, together with all its
terms and conditions, obligates Federmann in all respects.
6.6 That subject to the approval of Federmann's General Meeting and board
of directors and the fulfillment of the Conditions Precedent, there is
no legal or other impediment to its entering into this Deed and the
performance hereof and that this Deed and the performance of its
obligations pursuant hereto are not contrary to any judgment, order or
direction of a court, to any contract, understanding or agreement to
which Federmann is a party, to its incorporation documents or to any
other obligation of Federmann, whether by virtue of an contract (oral,
by conduct or written) or by virtue of law.
6.7 That apart from the approval of Federmann's General Meeting and board
of directors and the Conditions Precedent, all the approvals, consents
and permits have been obtained and all the necessary proceedings have
been performed, including with any authorities, government entities or
any other body, for the purpose of Federmann's
8
entering into this Deed and performing its obligations pursuant
hereto, including transferring the Shares Being Sold to Koor.
6.8 That neither the Company nor any of its subsidiaries is party to any
transaction or agreement in which Federmann and/or its subsidiaries
and/or the controlling shareholders and/or officers of Federmann
and/or the companies controlled by any of them has a personal
interest, other than (1) payment of remuneration to directors of the
Company, in the same amounts as paid to the Company's external
directors; (2) arrangements for the grant of relief, insurance and
indemnity by the Company to the Company's directors; and (3) apart
from, for the avoidance of doubt, Federmann's holding of securities of
companies whose securities are also held by the Company.
7. KOOR'S WARRANTIES AND UNDERTAKINGS
Koor hereby warrants and undertakes to Federmann as follows:
7.1 That it is a duly incorporated public company, that its number with
the Companies Registrar is as appears in the preamble hereto and that
no actions or proceedings for delisting, liquidation, winding up the
receivership or like acts have been taken or are being threatened
against it.
7.2 That it has the ability and resources to perform its obligations
pursuant to this Deed in full and on time and that it is in possession
of the financial resources sufficient for payment of the Consideration
in full and at the times provided in this Deed.
7.3 That apart from approval by Koor's board of directors, Koor has no
need, including pursuant to its incorporation documents and applicable
law, in Israel or abroad, to obtain any other approvals from any of
its organs for the purpose of entering into this Deed and performing
all its obligations pursuant hereto.
7.4 That subject to ratification by Koor's board of directors, the
signatories on behalf of Koor to this Deed and the documents ancillary
hereto are those who are empowered, on Koor's behalf, to sign this
Deed and the documents ancillary hereto and/or necessary for the
performance hereof, and to obligate Koor by their signatures, and this
Deed, including all its terms and conditions, obligates Koor in all
respects.
7.5 That subject to the approval of Koor's board of directors and the
fulfillment of the Conditions Precedent, there is no legal or other
impediment to its entering into and performing this Deed and that this
9
Deed and the performance of its obligations pursuant hereto are not
contrary to any judgment, order or direction of a court, to any
contract, understanding or agreement to which it is a party, to its
incorporation documents or to any other obligation of Koor, whether by
virtue of a contract (oral, by conduct or written) or by virtue of
law.
7.6 That except for the approval of Koor's board of directors and
except for the Conditions Precedent, all the approvals, consents
and permits have been obtained and all the necessary proceedings
have been performed, including with any authorities, government
entities or any other body, for the purpose of Koor's entering
into this Deed and performing its obligations pursuant hereto,
including the acquisition from Federmann of the Shares Being
Sold.
7.7 That subject only to Federmann's warranties and representations
in Clauses 5 and 6 of this Deed, the Shares Being Sold are being
purchased in their actual condition, and the actual condition of
the Company and its assets, and they are "As Is", without any
other representations or warranties being received from or on
behalf of Federmann and that the Consideration, as agreed between
the Parties, has been fixed having regard also to the fact that
the purchase is on such a "As Is" basis as aforesaid.
8. STAGE `A' OF THE TRANSACTION
8.1 On the First Closing Date and subject to the fulfillment of the Stage
`A' Conditions Precedent by the Stage `A' Completion Deadline,
Federmann shall sell and transfer to Koor, on and against payment of
the full amount of the Stage `A' Consideration, 2,160,000 (two million
one hundred and sixty thousand) Ordinary Shares (the Stage `A'
Shares), fully paid and Free and Clear, and Koor shall purchase and
receive from Federmann the Stage `A' Shares and pay Federmann the full
amount of the Stage `A' Consideration (in this Deed "STAGE `A' OF THE
TRANSACTION").
8.2 Furthermore, on the First Closing Date, the Company shall purchase
from Koor 1,700,000 (one million seven hundred thousand) Ordinary
Shares of 1 NIS par value each of Tadiran Communications, which on the
date of signing this Deed constitute approximately 13.8% of Tadiran
Communication's issued share capital, in accordance with the
Elbit-Koor Deed, which is being signed contemporaneously with this
Deed. The Elbit-Koor Deed Stage `A' and Stage `A' of the Transaction
contemplated by this Deed shall be performed contemporaneously and
Stage `A' of the Transaction (contemplated by this Deed) shall not be
performed without the Elbit-Koor Deed Stage `A' being performed.
10
8.3 For the avoidance of doubt, after the performance and completion
of Stage `A' of the Transaction, Stage `A' of the Transaction
will not be revoked, even if Stage `B' of the Transaction is not
performed or completed for any reason.
9. THE STAGE `A' COMPLETION DEADLINE AND THE STAGE `A' CONDITIONS PRECEDENT
9.1 In this Deed the "STAGE `A' COMPLETION DEADLINE" means:
9.1.1 March 31, 2005; or
9.1.2 if by March 31, 2005 all the Stage `A' Conditions
Precedent have been fulfilled, other than the approval
of the [Israel] Commissioner of Restrictive Trade
Practices, as provided in Clause 1 of APPENDIX "9.2",
the Stage `A' Completion Deadline shall be automatically
deferred until May 31, 2005 or to such later date as
agreed by the Parties as provided in Clause 20.3 below.
9.2 The Stage `A' Conditions Precedent are provided in APPENDIX
"9.2".
9.3 Should all the Stage `A' Conditions Precedent not have been
fulfilled by the Stage `A' Completion Deadline, this Deed shall
be void, except for the provisions of Clause 17 hereof, without
either of the Parties having any complaint and/or claim and/or
demand against the other. The foregoing provisions of this
Clause 9.3 shall not derogate from any right or other remedy
pursuant to this Deed or by law that is available to the Parties
with respect to a breach of any of the provisions of this Deed
(insofar as breached).
10. THE FIRST CLOSING DATE
Subject to the Stage `A' Conditions Precedent being fulfilled by the
Stage `A' Completion Deadline, the Parties shall meet on the First
Closing Date at such place as determined by the Parties and the
following interdependent acts shall be performed contemporaneously:
10.1 Koor shall remit the Stage `A' Consideration by bank transfer to
Federmann's bank account at the Bank, the details of which shall
be provided to it in writing by Federmann by the First Closing
Date (in this Deed "FEDERMANN'S ACCOUNT"), and confirmation from
the Bank that the Stage `A' Consideration has been received in
Federmann's Account shall be provided to Federmann.
11
10.2 Federmann shall deliver to the Company a share transfer deed
pursuant whereto the Stage `A' Shares are being transferred from
Bank Leumi Le-Israel Trust Co. Ltd to Federmann, signed by Bank
Leumi Le-Israel Trust Co. Ltd and Federmann, and the Company
shall enter Federmann in its shareholder registry as the holder
of the Stage `A' Shares.
10.3 Federmann shall provide Koor confirmation from the Bank,
according to which the Bank agrees that, on and against receipt
of the Stage `A' Consideration in Federmann's Account, it will
discharge the Lien from the Stage `A' Shares.
10.4 Federmann shall provide Koor written instructions from the Bank,
in the Bank's standard form, addressed to the Companies
Registrar, pursuant to which the Bank applies to the Companies
Registrar to amend the Lien to the effect that the Lien will be
discharged from the Stage `A' Shares.
10.5 Federmann and Koor shall deliver this Deed to the Company, and
Federmann shall procure that Koor is entered in the Company's
shareholder registry as the holder of the Stage `A' Shares and
that Koor receives a share certificate from the Company, in the
Company's standard form, attesting to Koor's ownership of the
Stage `A' Shares.
10.6 Federmann shall provide Koor a copy of the Company's board of
directors' resolution to the effect that, subject to the
performance of Stage `A' of the Transaction, as of the First
Closing Date there shall be added to the Company's board of
directors and serve thereon as a director one nominee who shall
be nominated for office by Koor and who meets the Qualification
Conditions. Federmann undertakes that there will be a vacancy on
the Company's board of directors so that it will be possible to
add Koor's nominee as aforesaid to the Company's board of
directors. Koor shall provide Federmann and the Company prior
written notice of the name of such nominee or of another
nominee, as nominated by Koor, in his place, and Koor (with
Federmann's assistance) shall coordinate with the Company's
corporate secretary such nominee's compliance with the
Qualification Conditions, all no later than 14 days prior to the
earlier of: (1) the Stage `A' Completion Deadline or (2) the
First Closing Date.
If for any reason it is not possible to appoint the nominee
nominated by Koor as aforesaid as a director of the Company,
another nominee nominated by Koor, who meets the Qualification
Conditions, shall be appointed in his place. Without derogating
from the foregoing, if the nominee nominated by Koor as
aforesaid is not added to the Company's board of directors on
the First Closing Date, Federmann
12
shall call a General Meeting of the Company as soon as possible,
on the agenda of which shall be the appointment of the nominee
nominated by Koor as aforesaid as a director of the Company.
Federmann undertakes to vote in favor of the appointment of the
nominee nominated by Koor, who was not appointed as aforesaid
but does meet the Qualification Conditions.
10.7 The Shareholders Agreement, in the form annexed hereto as
APPENDIX "10.7", shall become effective.
10.8 Federmann shall provide Koor a written declaration, duly signed
by Federmann, according to which all the warranties and
representations of Federmann as provided in Clauses 5 and 6 of
this Deed are also correct, complete and accurate as of the
First Closing Date.
10.9 Koor shall provide Federmann a written declaration, duly signed
by Koor, according to which all the warranties and
representations of Koor as provided in Clauses 5 and 7 of this
Deed are also correct, complete and accurate as of the First
Closing Date.
10.10 The Elbit-Koor Deed Stage `A' shall be completed, namely all the
acts that are to be performed on the Elbit-Koor Deed First
Closing Date shall be performed, as provided in Clause 10 of the
Elbit-Koor Deed.
10.11 Each Party undertakes to do all the acts for which it is
responsible pursuant to this Clause 10.
10.12 All the acts mentioned above in this Clause 10 shall be deemed
as being made concurrently, no individual act shall be deemed as
completed and no individual document shall be deemed as
delivered until all the concurrent acts have been completed and
all the documents have been delivered.
11. STAGE `B' OF THE TRANSACTION
11.1 On the Second Closing Date:
11.1.1 subject to the fulfillment of the Stage `B' Conditions
Precedent by the Stage `B' Completion Deadline; or
11.1.2 in the event that the Stage `B' Conditions Precedent are
treated as wholly fulfilled in accordance with the
provisions of Clause 12.4 below or Clause 12.5 below, as
the case may be;
13
Federmann shall sell and transfer to Koor, on and
against payment of the full amount of the Stage `B'
Consideration, 1,840,000 (one million eight hundred and
forty thousand) Ordinary Shares (the Stage `B' Shares),
fully paid and Free and Clear, and Koor shall purchase
and receive from Federmann the Stage `B' Shares and pay
Federmann the full amount of the Stage `B' Consideration
(in this Deed "STAGE `B' OF THE TRANSACTION").
11.2 On the Second Closing Date the Company shall purchase from Koor
2,244,276 Ordinary Shares of 1 NIS par value each of Tadiran
Communications, constituting approximately 18.2% of Tadiran
Communication's issued share capital in accordance with the
Elbit-Koor Deed, which is being signed contemporaneously with
this Deed, so that Stage `B' of the Transaction (contemplated by
this Deed) and the Elbit-Koor Deed Stage `B' shall be performed
contemporaneously, and Stage `B' of the Transaction
(contemplated by this Deed) shall not be performed without the
performance of the Elbit-Koor Deed Stage `B'. This Clause 11.2
shall not apply if Federmann provides notice to Koor as provided
in Clause 12.1.3 below or Clause 12.1.5 below, as the case may
be.
12. THE STAGE `B' COMPLETION DEADLINE AND THE STAGE `B' CONDITIONS PRECEDENT
12.1 In this Deed "the Stage `B' Completion Deadline" means:
12.1.1 30th June 2005; or -
12.1.2 subject to the provisions of Clause 12.1.3 and Clause
12.1.4 below, if all the Stage `B' Conditions Precedent
have not been fulfilled by 30th June 2005, the Stage `B'
Completion Deadline shall be automatically deferred
until 30th September 2005;
12.1.3 notwithstanding as provided in Clause 12.1.2 above, it
is agreed that Federmann may provide notice to Koor, to
be received by Koor by 21st June 2005, that Federmann is
not willing to extend the Stage `B' Completion Deadline
as provided in Clause 12.1.2 above, and in such event
the Stage `B' Completion Deadline shall be the date
specified in Clause 12.1.1 above, namely 30th June 2005;
12.1.4 notwithstanding as provided in Clause 12.1.2 above, if
Koor provides notice to the Company as provided in
Clause 12.1.3 of the Elbit-Koor Deed, and Federmann does
not provide notice as provided in Clause 12.1.3 of this
Deed, the Stage
14
`B' Completion Deadline shall be deferred until April
30, 2006;
12.1.5 notwithstanding as provided in Clause 12.1.4 above, if
Koor provides notice to the Company as provided in
Clause 12.1.3 of the Elbit-Koor Deed, Federmann may
provide notice to Koor, to be received by Koor within
seven Business Days after the date on which Koor's
notice is received by the Company as aforesaid, that
Federmann is not willing to extend the Stage `B'
Completion Deadline as provided in Clause 12.1.4 above,
and in such event the Stage `B' Completion Deadline
shall be the date specified in Clause 12.1.2, namely
September 30, 2005, even if Federmann's notice as
aforesaid is provided to Koor after September 30, 2005.
12.2 The Stage `B' Conditions Precedent are provided in APPENDIX
"12.2".
12.3 Subject to Clauses 12.4 and 12.5 below, should all the Stage `B'
Conditions Precedent not be fulfilled by the Stage `B'
Completion Deadline, Stage `B' of the Transaction shall not be
performed, the provisions in connection with Stage `B' of the
Transaction in this Deed shall be deemed null and void and be of
no effect and, inter alia, Federmann shall not sell to Koor the
Stage `B' Shares and Koor shall not pay the Stage `B'
Consideration to Federmann, and neither Party shall have any
demand, claim or complaint against the other in connection with
Stage `B' of the Transaction. It is clarified that the
provisions of this Clause 12.3 are not such as to derogate from
the validity of any other provision of this Deed and/or from the
effect of the Shareholders Agreement, which shall enter into
effect on the First Closing Date, or to derogate from any other
right or remedy pursuant to this Deed or by law that is
available to the Parties with respect to a breach of any of the
provisions of this Deed (if and insofar as breached).
12.4 Notwithstanding as provided in Clause 12.3 above, it is agreed
that if the Stage `B' Completion Deadline is determined in
accordance with the provisions of Clause 12.1.3 above, and
insofar as Koor wishes to perform Stage `B' of the Transaction
despite the non-fulfillment of all the Stage `B' Conditions
Precedent, Koor may provide written notice to Federmann, to be
received by Federmann by no later than 30th June 2005, that Koor
waives the fulfillment of the Stage `B' Conditions Precedent. In
such event and provided that all the Conditions Precedent for
the completion of Stage `B' detailed in APPENDIX "12.2" of this
Deed, other than the Conditions Precedent in Clauses 3
15
and 4 of APPENDIX "12.2", have been fulfilled by the Stage `B'
Completion Deadline, all the Stage `B' Conditions Precedent
shall be treated as though wholly fulfilled, and the Parties
shall perform and complete Stage `B' of the Transaction on the
Second Closing Date. The foregoing is without the Elbit-Koor
Deed Stage `B' being performed and completed at the same time
and without the provisions of Clause 11.2 above and Clause 13.9
below applying and without Clauses 3 and 4 of APPENDIX "12.2"
constituting Conditions Precedent for Stage `B'. The foregoing
shall not preclude the performance of the Elbit-Koor Deed Stage
`B' pursuant to and subject to the provisions of the Elbit-Koor
Deed on the Elbit-Koor Deed Second Closing Date if and when the
Elbit-Koor Deed Stage `B' Conditions Precedent (as defined in
the Elbit-Koor Deed) are fulfilled by the deadline fixed for
their performance in the Elbit-Koor Deed.
12.5 Notwithstanding as provided in Clause 12.3 above, it is agreed
that if the transaction's Stage `B' Completion Deadline is fixed
in accordance with the provisions of Clause 12.1.5 and insofar
as Koor wishes to perform Stage `B' of the Transaction despite
the non-fulfillment of all the Stage `B' Conditions Precedent,
Koor may provide Federmann written notice (in this Deed "KOOR'S
NOTICE PURSUANT TO CLAUSE 12.5"), to be received by Federmann
within seven Business Days after the date on which Koor receives
Federmann's notice as provided in Clause 12.1.5 above, that it
waives the fulfillment of the Stage `B' Conditions Precedent. In
such event and provided that all the Stage `B' Conditions
Precedent detailed in APPENDIX "12.2" of this Deed, other than
the Conditions Precedent in Clauses 3 and 4 of APPENDIX "12.2",
have been fulfilled by the Stage `B' Completion Deadline, all
the Stage `B' Conditions Precedent shall be deemed as wholly
fulfilled and the Parties shall perform and complete Stage `B'
of the Transaction on the Second Closing Date. The foregoing is
without the Elbit-Koor Deed Stage `B' being performed and
completed at the same time and without the provisions of Clause
11.2 above and Clause 13.9 below applying and without Clauses 3
and 4 of APPENDIX "12.2" constituting Conditions Precedent for
Stage `B'. The foregoing shall not preclude the performance of
the Elbit-Koor Deed Stage `B' pursuant to and subject to the
provisions of the Elbit-Koor Deed on the Elbit-Koor Deed Second
Closing Date, if and when the Elbit-Koor Deed Stage `B'
Conditions Precedent (as defined in the Elbit-Koor Deed) are
fulfilled by the deadline fixed for their performance in the
Elbit-Koor Deed.
13. THE SECOND CLOSING DATE
Subject to the fulfillment of the Stage `B' Conditions Precedent by the
Stage `B' Completion Deadline or if they are deemed as wholly fulfilled
in
16
accordance with the provisions of Clause 12.4 above or Clause 12.5
above, as the case may be, the Parties and the Company shall meet on the
Second Closing Date at such place as determined by the Parties and the
Company, and they shall perform the following interdependent acts
contemporaneously:
13.1 Koor shall remit the Stage `B' Consideration by bank transfer to
Federmann's Account, and confirmation from the Bank that the
Stage `B' Consideration has been received in Federmann's Account
shall be provided to Federmann.
13.2 Federmann shall deliver to the Company a share transfer deed
pursuant to which the Stage `B' Shares are being transferred
from Bank Leumi Le-Israel Trust Co. Ltd. to Federmann, signed by
Bank Leumi Le-Israel Trust Co. Ltd. and Federmann, and the
Company shall enter Federmann in its shareholders registry as
the holder of the Stage `B' Shares.
13.3 Federmann shall provide Koor confirmation from the Bank,
according to which the Bank agrees that on and against receipt
of the Stage `B' Consideration in Federmann's Account, it will
discharge the Lien from the Stage `B' Shares.
13.4 Federmann shall provide Koor a letter of instructions from the
Bank, in the Bank's standard terms, addressed to the Companies
Registrar pursuant whereto the Bank applies to the Companies
Registrar to amend the Lien to the effect that the Lien will be
discharged from the Stage `B' Shares.
13.5 Federmann and Koor shall deliver this Deed to the Company, and
Federmann shall procure the entry of Koor in the Company's
shareholder registry as the holder of the Stage `B' Shares and
that Koor receives a share certificate from the Company in the
Company's standard form attesting to Koor's ownership of the
Stage `B' Shares.
13.6 Federmann shall provide Koor a copy of the Company's board of
directors' resolution that, subject to the performance of Stage
`B' of the Transaction, there shall be added to the Company's
board of directors and serve on it an additional director or
directors another nominee or such number of other nominees who
is or are nominated for office by Koor to the effect that after
his or their addition to the board of directors, the number of
the Company's directors who have been nominated for office by
Koor and meet the Qualification Requirements, including the
director added to the Board of Directors as provided in Clause
10.6 above, shall be the greater of:
(1) two directors; or
17
(2) a number of directors equal to 20% of the number of the
Company's directors (including external directors and
including the director or directors added on Koor's
nomination as aforesaid), rounded up to the nearest
whole number.
Said board of directors' resolution shall provide that Koor's
nominee or nominees as aforesaid shall be added to the Company's
board of directors on the Second Closing Date.
Federmann undertakes that there will be sufficient vacancies on
the Company's board of directors to make the addition of Koor's
nominee or nominees as aforesaid possible.
Koor shall arrange to provide Federmann and the Company prior
written notice of the name or names of its nominee or nominees
as aforesaid or of another nominee or other nominees, as
nominated by Koor in his or their place, and Koor (with
Federmann's assistance) shall coordinate with the Company's
corporate secretary those nominees' compliance with the
Qualification Requirements, all by no later than 14 days prior
to the earlier of (i) the Stage `B' Completion Deadline; or (ii)
the Second Closing Date.
If for any reason it is not possible to appoint the nominee or
nominees that Koor proposes as aforesaid as a director or
directors of the Company, another nominee or nominees, meeting
the Qualification Requirements, shall be appointed on Koor's
nomination in his or their place.
If and insofar as according to U.S. securities laws, including
the U.S. Sarbanes-Oxley Act and the rules and regulations that
have been and are in future issued by virtue thereof, including
the rules of Nasdaq, it is required that a majority of the
Company's directors be Independent Directors, then there shall
be appointed as additional directors of the Company, on Koor's
nomination as aforesaid, such number of nominees who fulfill the
requirements for Independent Directors, equal to one half (50%)
of the total number of directors who are elected to office on
Koor's nomination as provided in Clause 10.6 above and in this
Clause 13.6, that number being rounded up to the nearest whole
number.
13.7 Federmann shall provide Koor a written declaration duly signed
by Federmann that all Federmann's warranties and representations
as provided in Clauses 5 and 6 of this Deed are also correct,
complete and accurate as of the Second Closing Date.
18
13.8 Koor shall provide Federmann a written declaration duly signed
by Koor that all Koor's warranties and representations as
provided in Clauses 5 and 7 of this Deed are also correct,
complete and accurate as of the Second Closing Date.
13.9 The Elbit-Koor Deed Stage `B' shall be completed, namely all the
acts that are to be performed on the Elbit-Koor Deed Second
Closing Date as provided in Clause 13 of the Elbit-Koor Deed
shall be performed. Nevertheless, this Clause 13.9 shall not
apply if Federmann provides notice as provided in Clause 12.1.3
or as provided in Clause 12.1.5 above.
13.10 Each Party undertakes to perform all the acts for which it is
responsible pursuant to this Clause 13.
13.11 All the acts mentioned above in this Clause 13 shall be deemed
as being performed concurrently, no individual act shall be
deemed as completed and no individual document shall be deemed
as delivered until all the concurrent acts have been completed
and all the documents are delivered.
14. ACTS AND OBLIGATIONS AFTER THE SIGNATURE OF THIS DEED
14.1 Immediately after the signature of this Deed, the Parties shall
act and use their best efforts for the fulfillment of all the
Conditions Precedent, including obtaining all the certificates,
permits and consents necessary, as early as possible. In such
connection and without derogating from the generality of the
foregoing, the Parties shall apply to every competent authority
and to every other entity whose approval is necessary for the
performance of the transaction contemplated by this Deed, in
both its stages, they shall submit all the applications and
deliver all the information, data and particulars in their
possession, without delay, and act to resolve or avoid a
disapproval, if any, by the various government authorities in
any respect relating to or arising out of this Deed.
14.2 It is hereby agreed that the provisions of this Deed are not
such as to place either of the Parties under a duty to make any
payment for the fulfillment of the Conditions Precedent or any
of them, other than official fees and other reasonable expenses
(such payment as aforesaid, excluding official fees and other
reasonable expenses, is hereinafter a "FULFILLMENT PAYMENT"),
provided that if a Party to this Deed refuses to make a
Fulfillment Payment, the other Party may make it for the
fulfillment of all or any of the Conditions Precedent, provided
that the first Party shall not be responsible to indemnify the
19
other Party in respect of a Fulfillment Payment and the Party
that makes the Fulfillment Payment shall have no demand, claim
or right of recourse against the other Party with respect to the
making of such payment.
14.3 Without prejudice to the provisions of Clauses 15 and 16 below,
Federmann hereby undertakes that from the date of signing this
Deed until the earlier of:
14.3.1 the Stage `A' Completion Deadline, if the Stage `A'
Conditions Precedent have not been fulfilled by that
time; or
14.3.2 the Stage `B' Completion Deadline, if the Stage `B'
Conditions Precedent have not been fulfilled by that
time; or
14.3.3 the Second Closing Date;
Federmann and/or its subsidiaries and/or the controlling
shareholders and/or officers of Federmann and/or companies under
the control of any of them shall not enter into an extraordinary
transaction with the Company in which any of them has a personal
interest, other than the transactions contemplated by this Deed
and the Elbit-Koor Deed.
15. MODIFICATIONS TO THE CONSIDERATION OR THE NUMBER OF SHARES BEING SOLD
15.1 During the period from the date of signing this Deed until the
earlier of: (1) the Stage `A' Completion Deadline, if the Stage
`A' Conditions Precedent have not been fulfilled by that time;
(2) the Stage `B' Completion Deadline, if the Stage `B'
Conditions Precedent have not been fulfilled by that time; or
(3) the Second Closing Date; Federmann shall, insofar as it is
able, oppose and vote by virtue of all the Company's shares that
it holds at that time against any resolution that concerns: (a)
the making of any distribution whatsoever, whether in cash, in
kind or by a distribution of bonus shares, to the Company's
shareholders, apart from the distribution of a current dividend
in cash of not more than $ 0.23 per Ordinary Share in any
calendar quarter; (b) an rights offering for the acquisition of
any securities of the Company; (c) any modification to the
Company's incorporation documents that is such as to affect
Koor's rights pursuant to the Company's incorporation documents
in a way that is prejudicial to Koor in comparison with
Federmann, all unless Koor's consent is provided thereto by
written notice to be signed by two officers of Koor without any
further approval being necessary.
20
15.2 Insofar as during the period from the date of signing this Deed
until the First Closing Date or until the Second Closing Date,
as the case may be, one or more of the following events occurs,
despite or in accordance with the provisions of Clause 15.1
above, the Consideration or number of the Shares Being Sold, as
the case may be, shall be adjusted in accordance with the
following provisions:
15.2.1 If the Company resolves to make any distribution to its
shareholders, the Consideration shall be subject to the
deduction of any amount (translated into Dollars at the
representative exchange rate on the earlier of the date
of actually making the distribution or the First Closing
Date or the Second Closing Date, as the case may be)
that Federmann will be entitled to receive in respect of
the Shares Being Sold (gross) (namely that the record
date for its distribution is prior to the First Closing
Date or the Second Closing Date, as the case may be).
15.2.2 If the Company offers its Shareholders rights for the
acquisition of any securities, the record date for the
exercise of which is prior to the First Closing Date or
the Second Closing Date, as the case may be, the
Consideration shall be adjusted for the bonus element
embodied (if at all) in the rights, unless Koor
instructs Federmann in writing prior to the exercise
date in respect of those rights to exercise the rights
and in such event Federmann shall exercise the rights by
virtue of the Shares Being Sold which have not yet been
transferred to Koor as at that time, and it shall
transfer to Koor, immediately on the occurrence of the
earlier of (1) the exercise date or (2) the First
Closing Date, or after the Second Closing Date, as the
case may be, the securities exercised as aforesaid on
and against payment of the whole exercise price paid by
Federmann to the Company for the exercise thereof, plus
Interest from the date of Federmann's paying the
exercise price to the date of actual payment to
Federmann by Koor.
15.2.3 If the Company distributes bonus shares or dividend in
kind to its shareholders prior to the First Closing Date
or the Second Closing Date, as the case may be, the
Consideration shall not be adjusted but the Shares Being
Sold shall be subject to the addition of the bonus
Shares, Free and Clear, or of assets received as
dividend in kind (gross) in respect of the Shares Being
Sold, Free and Clear, without Koor being required to pay
additional Consideration for them.
21
15.2.4 If the Company makes a consolidation, reduction or
sub-division of its share capital or does any other act
of similar effect, the number of Shares Being Sold shall
be adjusted pro rata to the consolidation or
sub-division and the Consideration shall not be
modified.
16. KOOR'S RIGHT TO RESCIND THE DEED
16.1 On the occurrence of one or more of the events set out in Clause
16.2 below, unless it occurs with Koor's consent, Koor may
rescind this Deed or any of its stages before it has been
completed and performed (provided that if one of the events set
out in Clause 16.2 below occurs prior to the performance of
Stage `A' of the Transaction, Koor may only rescind this Deed in
full). Such rescission shall be effected by Koor by written
notice, to be received by Federmann within 10 Business Days of
the date on which Koor learns of the occurrence of one of the
events set out in Clause 16.2 below. Should Koor provide such
notice of the rescission of this Deed after the completion of
Stage `A' of the Transaction, the sale of the Stage `A' Shares
to Koor shall not be set aside, Koor shall not return to
Federmann the Stage `A' Shares and Federmann shall not refund to
Koor the Stage `A' Consideration. Nevertheless, all the Parties'
other obligations and rights pursuant to this Deed and the
appendices hereto, except for the Shareholders Agreement, shall
be void.
16.2 The events are as follows:
16.2.1 If a temporary or permanent receiver and/or temporary
liquidator and/or liquidator and/or trustee is appointed
for the Company and/or if a winding-up order and/or
receivership order and/or suspension of proceedings
order is awarded against it and/or if any of the
Company's material assets is attached, provided that
such appointment, order or attachment is not set aside
within 30 days.
16.2.2 If the Company enters into merger proceedings as
provided in Chapter Eight of the Companies Law or
compromise or arrangement proceedings in accordance with
Section 350 of the Companies Law or restructuring and/or
merger proceedings in accordance with Section 351 of the
Companies Law.
16.3 Subject to applicable law, Federmann shall provide written
notice to Koor of the occurrence of any of the events set out in
Clause 16.2 above, immediately upon its publication.
22
16.4 The foregoing provisions of this Clause 16 shall not derogate
from any other right or remedy pursuant to this Deed or by law
that is available to Koor with respect to a breach of any of the
provisions of this Deed (if and insofar as breached).
17. CONFIDENTIALITY AND NOTICES
17.1 The Parties shall use Confidential Information that comes into
their possession in connection with this Deed and the Company
solely for the performance of their obligations pursuant to this
Deed, and they shall not disclose or transfer in any manner
whatsoever Confidential Information to any third party, other
than to their employees or independent advisors and except
insofar as required for the fulfillment of the Conditions
Precedent and insofar as possible by prior coordination with the
other Party. Without derogating from the foregoing, if the
transaction contemplated by this Deed is not actually
implemented, each Party shall return to the other Party hereto
all Confidential Information that has come into its possession
in connection with this Deed, if any. This obligation is not
limited in time and shall continue in force even after the term
of this Deed or if this Deed is cancelled or rescinded for any
reason.
17.2 If and insofar as possible and subject to applicable law and to
the time periods mandated by law, the Parties shall coordinate
in advance the wording of every report, communication or notice
published by either of them in connection with their entering
into this Deed, its performance and the fulfillment of the terms
pursuant hereto.
18. TAXES AND MANDATORY PAYMENTS
18.1 Unless otherwise provided in this Deed, each Party shall bear
the mandatory payments and taxes that may be imposed on it by
law (if and insofar as charged) in respect of the sale or
acquisition of the Shares Being Sold pursuant to this Deed.
18.2 If any amount payable in accordance with the provisions of this
Deed is subject to a duty to withhold taxes at source, the tax
shall be duly withheld by the paying Party unless the recipient
Party produces a valid tax withholding exemption certificate
issued by the tax authorities.
18.3 Each Party shall bear its own expenses, including the
professional fees of its legal advisers in connection with the
preparation and performance of this Deed.
23
18.4 If any amount paid by one Party to the other in accordance with
the provisions of this Deed is subject under applicable law to
value added tax (VAT), the paying Party shall, at the same time
and in the same manner as it pays that amount, also pay the VAT
at its legal rate on and against a duly issued tax invoice.
19. ENTRY INTO EFFECT
19.1 This Deed shall enter into effect upon the receipt of all the
following approvals:
19.1.1 Approval from Federmann's General Meeting and board of
directors for it to enter into this Deed and the
Shareholders Agreement and for performance thereof by
Federmann in accordance with their terms and conditions,
including ratification of the signatures of Messrs
Michael Federmann and Dov Ninveh to this Deed and the
Shareholders Agreement.
19.1.2 Approval by Koor's board of directors for it to enter
into this Deed and the Shareholders Agreement and for
performance thereof by Koor in accordance with their
terms and conditions, including ratification of the
signatures of Messrs Jonathan Kolber and Danny Biran to
this Deed and the Shareholders Agreement.
Provided that:
(1) such approvals as mentioned in Clauses 19.1.1 and 19.1.2
have been obtained by no later than January 6, 2005 by
17:00 hours (in this Clause referred to as the
"EFFECTIVE DATE");
(2) by the Effective Date copies of the resolutions of
Federmann's General Meeting and board of directors, as
mentioned in Clause 19.1.1 above, have been received at
Koor's offices jointly with written confirmation from
Federmann's attorneys that the said resolutions were
duly adopted and Messrs Michael Federmann and Dov Ninveh
were together empowered to sign, on behalf of Federmann,
this Deed and the documents ancillary hereto or those
necessary for the purpose of its performance, and also
the Shareholders Agreement, and to obligate it
thereunder; and written confirmation from the attorneys
of Heris Aktiengesellschaft that the competent organs of
Heris Aktiengesellschaft have approved its entering into
the
24
Shareholders Agreement and Mr. Michael Federmann has
been empowered to sign, on behalf of Heris
Aktiengesellschaft, the Shareholders Agreement and
obligate it by virtue thereof;
(3) by the Effective Date a copy of the resolution of Koor's
board of directors, as mentioned in Clause 19.1.2 above,
has been received at Federmann's offices, together with
written confirmation from Koor's legal counsel that the
resolution was duly adopted and Messrs Jonathan Kolber
and Danny Biran were together empowered to sign, on
Koor's behalf, this Deed and the documents ancillary
hereto or those necessary for the purpose of its
performance and also the Shareholders Agreement and to
obligate it thereunder; and
(4) all the approvals, as mentioned in Clause 19.1 of the
Koor-Elbit Deed, have been obtained by the Effective
Date.
19.2 Should all the approvals as mentioned in Clauses 19.1.1 and
19.1.2 not have been obtained by the Effective Date, and without
derogating from the provisions of Clause 20.3 below, this Deed
shall automatically expire and be null and void, without either
of the Parties having any complaint, claim or demand against the
other.
19.3 This Deed shall become effective, if and insofar as it becomes
effective, at such time as mentioned in Clause 19.1 above.
Nevertheless:
19.3.1 the performance and completion of Stage `A' of the
Transaction are conditional upon the fulfillment of all
the Stage `A' Conditions Precedent by the Stage `A'
Completion Deadline and, except for the obligations in
Clauses 14 to 18 above and Clause 20.8 below, neither
Party shall be liable to do any act for the performance
and completion of Stage `A' of the Transaction before
the fulfillment of all the Stage `A' Conditions
Precedent; and
19.3.2 the performance and completion of Stage `B' of the
Transaction are conditional upon the fulfillment of all
the Stage `B' Conditions Precedent by the Stage `B'
Completion Deadline and, except for the obligations in
Clauses 14 to 18 above and Clause 20.8 below, neither
Party shall be liable to do any act for the performance
and completion of Stage `B' of the Transaction before
the fulfillment of all the Stage `B' Conditions
Precedent.
25
20. MISCELLANEOUS
20.1 This Deed shall be governed by the laws of the State of Israel.
Sole and exclusive jurisdiction in all respects relating to this
Deed shall be vested only in the courts of the District Court in
the City of Tel Aviv-Jaffa, and no other court shall have
jurisdiction thereover.
20.2 Any modification, addendum or addition, waiver, extension,
concession or failure to exercise a right pursuant to this Deed
shall only be effective if done in an express document signed by
all the Parties hereto and shall only apply to the case
specified in such document and shall not derogate from other
rights of any Party pursuant to this Deed.
20.3 The Parties hereto may extend or reduce any time specified in
this Deed and waive the performance of any of the provisions of
this Deed, either once or several times, by written notice
signed by two officers of each of Federmann and Koor, without
any further authority being necessary.
20.4 This Deed fully contains, embodies, merges, expresses and
exhausts all the understandings of the Parties hereto solely in
respect of the matters mentioned herein. Any promises,
guarantees or agreements, whether written or oral, undertakings
or representations concerning the subject matter of this Deed
provided or made by the Parties prior to entering into this
Deed, orally or in writing, that are not specifically expressed
herein, shall not be deemed to augment the rights and
obligations prescribed in this Deed or to derogate from or
modify them, and the Parties shall not be bound by them, insofar
as existed, as from the date of this Deed. Without derogating
from the generality of the foregoing, the documents exchanged
between the Parties prior to the signature hereof, including the
drafts exchanged between them, shall have no significance in the
interpretation of this Deed. For the avoidance of doubt, the
terms of the Elbit-Koor Deed shall not be applied in the
interpretation hereof.
20.5 No conduct by either of the Parties shall be construed as a
waiver of any of its rights pursuant hereto or by law or as its
waiver of or acquiescence to any breach or non-performance of a
condition of the Deed by the other Party or as granting a
postponement or extension or as a modification, cancellation or
addition of any condition, unless done expressly and in writing.
20.6 Unless otherwise expressly provided in this Deed, the Parties
hereto may not assign or transfer their rights or obligations
pursuant to this Deed to any third party or perform this Deed
through any third party,
26
unless the other Party's prior written consent has been
obtained, and nothing in this Deed shall be deemed to vest any
right in anyone who is not a Party hereto.
20.7 Should either of the Parties not enforce or delay in enforcing
any of the rights vested in it pursuant to this Deed or by law
in a particular case or series of cases, such shall not be
deemed a waiver of said right or of any other rights.
20.8 Subject to the provisions of Clause 14.2 above in connection
with the Conditions Precedent, the Parties shall cooperate
between them in the implementation of the provisions of this
Deed and they shall assist each other insofar as reasonable and
necessary and in such connection they shall sign every
reasonable document, application and approval necessary for such
purpose.
20.9 Notices pursuant to this Deed shall be provided in writing to
the Parties' addresses as set out in the preamble hereto or to
such other addresses of which the Parties may provide notice in
accordance with the provisions of this Clause. Any notice sent
by one Party to the other by registered mail shall be deemed to
have reached the addressee following the passage of three days
from the date of being posted, and notice delivered in person by
17:00 hours on any Business Day shall be treated as received
immediately on delivery, or if delivered after 17:00 hours on
any Business Day, it shall be treated as received on the first
Business Day after its delivery.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT:
(signed) (signed)
-------------------- --------------------------
Koor Industries Ltd. Federmann Enterprises Ltd.
By: Jonathan Kolber By: Michael Federmann
Danny Biran Dov Ninveh
27
APPENDIX 9.2
THE CONDITIONS PRECEDENT FOR THE PERFORMANCE OF STAGE `A' OF THE TRANSACTION
Set out below are the Conditions Precedent and approvals required, insofar as
necessary, for the completion of Stage `A' of the Transaction contemplated by
the Deed of which this Appendix is an integral part ("THIS DEED") -
1. Obtaining the [Israel] Commissioner of Restrictive Trade Practices'
approval of the Parties' contracting pursuant to this Deed and the
performance of Stage `A' of the Transaction, provided that the
Commissioner's disapproval of Stage `B' of the Transaction is not
received.
2. Obtaining all the consents and approvals necessary and the fulfillment
of all the Conditions Precedent for the Elbit-Koor Deed Stage `A' to
become effective, as provided in the Elbit-Koor Deed.
3. Obtaining the [Israel] Ministry of Defense's approval of the Parties'
contracting pursuant to this Deed and the performance of all their
obligations pursuant hereto, including in connection with Stage `B' of
the Transaction, all insofar as necessary.
4. Obtaining the [Israel] Chief Scientist's approval of the Parties'
contracting pursuant to this Deed and the performance of all their
obligations pursuant hereto, including in connection with Stage `B' of
the Transaction, all insofar as necessary.
5. Obtaining the [Israel] Investment Center's approval of the Parties'
contracting pursuant to this Deed and the performance of all their
obligations pursuant hereto, including in connection with Stage `B' of
the Transaction, all insofar as necessary.
6. Obtaining approval from banks, all insofar as necessary.
In this Appendix 9.2, "APPROVAL" means - including an approval that is subject
to conditions but excluding an approval that is subject to conditions that are
such as to materially alter the business activity of Elbit, as existing at the
time of signing this Deed or as may arise in the future in accordance with
resolutions that have been adopted by Elbit prior to signing this Deed, or the
way in which Elbit conducts its business.
28
APPENDIX 12.1
Set out below are the Conditions Precedent and approvals required, insofar as
necessary, for the completion of Stage `B' of the Transaction contemplated by
the Deed of which this Appendix is an integral part ("THIS DEED") -
1. Insofar as necessary, obtaining the [Israel] Commissioner of
Restrictive Trade Practices' approval of the Parties' contracting
pursuant to this Deed and the performance of Stage `B' of the
Transaction contemplated by this Deed, insofar as such approval is not
provided in Stage `A' of the Transaction.
2. The completion of Stage `A' of the Transaction contemplated by this
Deed.
3. The completion of the Elisra Transaction.
4. Obtaining all the consents and approvals necessary and the fulfillment
of all the Koor-Elbit Deed Stage `B' Conditions Precedent, as provided
in the Koor-Elbit Deed, except for completion of the Elisra
Transaction.
In this Appendix 12.2, "APPROVAL" means - including an approval that is subject
to conditions but excluding an approval that is subject to conditions that are
such as to materially alter the business activity of Elbit, as existing at the
time of signing this Deed or as may arise in the future in accordance with
resolutions that have been adopted by Elbit prior to signing this Deed, or the
way in which Elbit conducts its business.
29
EXHIBIT 6
[TRANSLATED FROM THE HEBREW ORIGINAL]
APPENDIX 10.7
SHAREHOLDERS AGREEMENT
Made in Tel Aviv this 27th day of December 2004
BETWEEN
KOOR INDUSTRIES LTD.
whose address for the purpose of this Agreement is
14 Hamalacha Street, Afek Industrial Park, Rosh Ha'ayin 48091
("KOOR")
OF THE ONE PART
AND
1. FEDERMANN ENTERPRISES LTD.
("FEDERMANN ENTERPRISES")
2. HERIS AKTIENGESELLSCHAFT
("HERIS")
whose address solely for the purpose of this Agreement is
99 Hayarkon Street, Tel Aviv
(Federmann Enterprises and Heris are hereinafter
jointly and severally referred to as "FEDERMANN")
OF THE OTHER PART
(hereinafter the "PARTIES")
WHEREAS on the date of signing this Agreement Federmann is the holder
of 19,915,448 Ordinary Shares of 1 NIS par value each of Elbit
Systems Ltd, a public company whose Shares are traded on the
Tel Aviv Stock Exchange and on Nasdaq in the United States
(hereinafter the "COMPANY"), of which Federmann Enterprises is
owner of 16,078,990 Ordinary Shares of 1 NIS par value each of
the Company and Heris is the owner of 3,836,458 Ordinary
Shares of 1 NIS par value each of the Company (those specific
Shares and bonus Shares that are in future issued in respect
of
1
them, if at all, excluding the Koor Shares, as defined below,
are hereinafter the "FEDERMANN SHARES");
AND WHEREAS in accordance with a Share Transfer Deed between
Federmann Enterprises and Koor, together with the appendices
thereto, of which this Agreement constitutes Appendix 10.7
(herein the "DEED OF SALE"), Federmann Enterprises and Koor
have agreed upon the sale of 4,000,000 (four million) Ordinary
Shares of 1 NIS par value each of the Company from Federmann
Enterprises to Koor, subject to various conditions precedent
and in two stages, in the first stage 2,160,000 (two million
one hundred and sixty thousand) Ordinary Shares of 1 NIS par
value each of the Company being sold to Koor, and in the
second stage an additional 1,840,000 (one million eight
hundred and forty thousand) Ordinary Shares of the Company
being sold to Koor, all subject to and in accordance with the
provisions of the Deed of Sale (the specific Shares that are
to be transferred to Koor from Federmann Enterprises pursuant
to the Deed of Sale and bonus Shares issued in respect of
them, if at all, are herein referred to as the "KOOR SHARES");
AND WHEREAS the Parties wish to set forth their relationship with respect
to their holdings of the Company's Shares.
NOW THEREFORE THE PARTIES HEREBY WARRANT, PROVIDE AND AGREE BETWEEN THEM AS
FOLLOWS:
1. PREAMBLE AND INTERPRETATION
1.1 The preamble and appendices hereto constitute an integral part
hereof and are as binding as the other terms hereof.
1.2 The Clause headings herein are solely for the sake of convenience
and are not to be applied in the interpretation hereof.
2. DEFINITIONS
In this Agreement the following terms shall have the meanings ascribed to
them, unless expressly stated otherwise:
2.1 "HERIS" means Heris Aktiengesellschaft (Company No. 56-002196-6);
2.2 "INDEPENDENT DIRECTOR" means a director who meets all the
independence criteria in accordance with the Foreign Law;
2
2.3 "STOCK EXCHANGE" means the Tel Aviv Stock Exchange Ltd. or the
Nasdaq National Market or any other stock exchange on which the
Company's Shares are listed for trade;
2.4 "EXTERNAL DIRECTOR" means as defined in the Companies Law;
2.5 "FOREIGN LAW" means the law applicable in the United States
regarding securities, including the provisions of the Sarbanes Oxley
Act and the rules and regulations that have been and are in future
issued by virtue thereof, and including the rules of the Nasdaq
National Market;
2.6 "AGREEMENT" means this Agreement together with the appendices
hereto;
2.7 "COMPANY" means Elbit Systems Ltd. (Public Company No. 520043027);
2.8 "FIRST MINIMUM QUANTITY" means 3,050,000 (three million fifty
thousand) Ordinary Shares, together with all bonus Shares that are
issued in respect of them, if any, and together with all the Shares
that are issued to Koor by virtue of rights that are vested in Koor
solely in respect of the Koor Shares in the context of a rights
offering of the Company to its shareholders, if any, all from the
time of signing this Agreement;
2.9 "SECOND MINIMUM QUANTITY" means 2,050,000 (two million fifty
thousand) Ordinary Shares, together with all bonus Shares that are
issued in respect of them, if any, and together with all the Shares
that are issued to Koor by virtue of rights that are vested in Koor
solely in respect of the Koor Shares in the context of a rights
offering of the Company to its shareholders, if any, all from the
time of signing this Agreement;
2.10 "TRANSFER" means a sale, gift, realization of a lien (but not the
creation of a lien), loan and any other transfer whatsoever of a
Share and/or any right vested in the Share's owner and/or holder,
whether or not for consideration and whether voluntary or
involuntary;
2.11 "COMPANIES LAW" means the [Israeli] Companies Law, 5759-1999;
2.12 "FIRST MINIMUM PERCENTAGE" means 6.45% of the Company's issued share
capital at the time of computation;
2.13 "SECOND MINIMUM PERCENTAGE" means 4.32% of the Company's issued
share capital at the time of computation;
3
2.14 "BUSINESS DAY" means a day on which the two major banks in Israel
are open for business, other than Fridays and holiday eves, which
shall not be treated as a Business Day;
2.15 "KOOR" means Koor Industries Ltd. (Public Company No. 520014143);
2.16 "FIRST CLOSING DATE" means as defined in the Deed of Sale;
2.17 "SECOND CLOSING DATE" means as defined in the Deed of Sale;
2.18 "STOCK EXCHANGE SALE" means a sale in the context of trading on the
Stock Exchange or a sale in a transaction outside the Stock Exchange
by means of a distributor to buyers whose identity is unknown to the
seller or a sale to trust funds in Israel or abroad or to provident
funds or to provident fund management companies;
2.19 "KOOR SHARES" means as stated in the preamble hereto;
2.20 "FEDERMANN SHARES" means as stated in the preamble hereto;
2.21 "ORDINARY SHARES", "SHARES" or the "COMPANY'S SHARES" means Ordinary
Shares of 1 NIS par value each in the Company;
2.22 "FEDERMANN ENTERPRISES" means Federmann Enterprises Ltd. (Private
Company No. 512278391);
2.23 "OFFICER" means as defined in the Companies Law;
2.24 "FREE AND CLEAR" means free and clear of any charge, pledge,
attachment, levy, debt, lien, claim, right of pre-emption, right of
refusal, option, lock-up arrangement or any further or other third
party right whatsoever, other than restrictions in respect of the
Transfer and/or negotiability of Shares that are imposed pursuant to
the Foreign Law (Shares which are not registered under U.S.
securities laws);
2.25 "FEDERMANN" means as stated in the preamble hereto;
2.26 "ACQUISITION" means acquisition, purchase, receipt of a gift and any
receipt of a Transfer, in any way whatsoever, of a Share and/or
right vested in the owner and/or holder of the Share, whether or not
for consideration;
2.27 "DEED OF SALE" means as stated in the preamble hereto;
4
2.28 "DIRECT CONTROL" means Control deriving from holding Shares alone
and not together with others;
2.29 "CONTROL" means as the term is defined in the [Israel] Securities
Law, 5728-1968;
2.30 "QUALIFICATION CONDITIONS" means all the requirements in accordance
with applicable law and pursuant to the Company's documents of
incorporation for a person to serve as a director of the Company,
including security clearance as required in Israel for the purpose
of such service, but excluding the conditions for an Independent
Director.
3. THE PARTIES' WARRANTIES
3.1 Federmann hereby warrants that Federmann Enterprises is a limited
company, duly registered in Israel and that Heris is a foreign
company, duly registered in Liechtenstein.
3.2 Koor hereby warrants that it is a limited company, duly registered
in Israel.
3.3 Each of the Parties warrants that it is empowered to enter into this
Agreement and perform all its obligations pursuant hereto and that
its signatories hereto are duly empowered to obligate it.
3.4 Each of the Parties hereto warrants and undertakes that there is no
legal impediment and/or no impediment pursuant to its incorporation
documents and/or applicable law and/or any order or direction of a
court and/or any contract, understanding or agreement to which it is
a party, to its entering into this Agreement and performing all its
obligations pursuant hereto.
3.5 Except as set out in this Agreement, each of the Parties hereby
warrants that it is in possession of all the approvals and consents
necessary for the purpose of signing and performing this Agreement.
3.6 Each of the Parties further warrants that it is not a party to any
agreement, arrangement or obligation that is contrary to and/or
impairs its ability to perform all its obligations pursuant hereto.
4. VOTING AGREEMENT - BOARD OF DIRECTORS
4.1 From the Second Closing Date until such time as Koor's holdings of
the Koor Shares fall below the First Minimum Percentage or until
such time as Koor's holdings of the Koor Shares fall below the First
Minimum Quantity, whichever is earlier, Federmann shall vote by
5
virtue of all its holdings in the Company's Shares in favor of the
election to the Company's Board of Directors of such number of
candidates as are nominated to office by Koor, which is the greater
of:
(1) two directors; or
(2) a number of directors equal to 20% of the number of the
Company's directors, including External Directors and
including the directors who are elected as aforesaid in
accordance with Koor's nomination, rounded up to the nearest
whole number.
It is hereby agreed that if it is required in accordance with the
Foreign Law that a majority of the Company's directors are
Independent Directors, Koor undertakes that at least one half of the
directors who are elected to office in accordance with its
nomination as aforesaid, that number being rounded up to the nearest
whole number, will fulfil the conditions required in respect of
Independent Directors.
4.2 After the Second Closing Date, from such time as Koor's
holdings of the Koor Shares fall below the First Minimum
Percentage or from such time as Koor's holdings of the Koor
Shares fall below the First Minimum Quantity, whichever is
earlier, until such time as Koor's holdings of the Koor Shares
fall below the Second Minimum Percentage or until such time as
Koor's holdings of the Koor Shares fall below the Second
Minimum Quantity, whichever is earlier, Federmann shall vote
by virtue of all its holdings in the Company's Shares in favor
of the election of one director who has been nominated by
Koor, provided that the candidate fulfils all the
Qualification Conditions.
4.3 From the First Closing Date until:
(i) the Second Closing Date; or
(ii) to the extent that the Second Closing Date does not
occur, until such time as Koor's holdings of the Koor
Shares fall below the Second Minimum Percentage or until
such time as Koor's holdings of the Koor Shares fall
below the Second Minimum Quantity, whichever is earlier;
Federmann shall vote by virtue of all its holdings in the Company's
Shares in favor of the election of one director who has been
nominated by Koor, provided that the candidate fulfils all the
Qualification Conditions.
6
4.4 From the First Closing Date, so long as Federmann holds 20% or more
of the Company's issued share capital and so long as Koor holds the
Company's Shares, Koor shall vote by virtue of all its holdings in
the Company's Shares:
4.4.1 In favor of the election of all the directors of the Company
whose candidacy for office has been nominated by Federmann,
except for the directors for whose election Federmann has
undertaken to vote as provided in Clauses 4.1 or 4.2 or 4.3,
as the case may be, except for a candidate who does not fulfil
the Qualification Conditions.
4.4.2 Without derogating from the generality of Clause 4.4.1 above,
in favor of the appointment of all the external directors
whose candidacy is nominated by Federmann.
4.4.3 In favor of the appointment of the chairperson of the board of
directors who has been nominated for office by Federmann,
provided that if at the time of the General Meeting at which
the appointment of the chairperson of the Company's board of
directors is raised for discussion and vote, Koor is entitled
to the restricted right described in Clause 6.3 below, then at
the time of the General Meeting there shall serve one of the
directors who has been elected to office in accordance with
Koor's nomination as provided in Clause 4.1 above, who is
nominated by Koor as Vice chairperson of the Company's board
of directors.
4.5 In Clauses 4.6 to 4.8 below, "Proposing Party" means the Party on
whose nomination, as provided in Clauses 4.1 or 4.2 or 4.3 or 4.4
above, a particular candidate has been appointed as a director of
the Company.
4.6 If a Proposing Party wishes to replace or terminate the office of a
director elected in accordance with its nomination, the Parties
shall act, to the extent necessary, to hold a General Meeting of the
Company and vote in favor of a proposal to remove said director from
office and in favor of the appointment of another director in his
place whose candidacy is nominated by the Proposing Party and who
fulfils all the Qualification Conditions.
4.7 The Parties shall vote against a proposal to remove from office a
director whose candidacy was nominated by Koor or Federmann, unless
the Proposing Party otherwise instructs in writing and in advance.
7
4.8 If the post of a director is vacated for any reason, the Parties
shall act, to the extent necessary, to hold a General Meeting of the
Company and vote for the appointment as a director of such candidate
as nominated by the Proposing Party in place of the director whose
post has become vacant, provided that such candidate meets all the
Qualification Conditions.
4.9 Before holding any General Meeting of the Company, on the agenda of
which is the appointment of directors, notice shall be given by the
Company or by Federmann to Koor in connection with holding the
General Meeting and, in accordance with applicable law and the
Company's incorporation documents, each Party shall give the Company
three Business Days' prior written notice, with a copy to the other,
of the candidates nominated by it for the office of a director in
the Company, as provided in this Clause 4 above.
4.10 Should Koor's holdings of the Koor Shares fall below the First
Minimum Percentage or should Koor's holdings of the Koor Shares fall
below the First Minimum Quantity, whichever is earlier, Koor shall
use its best efforts, subject to applicable law, in order to procure
that all the directors who have been appointed to office on Koor's
nomination as provided in Clause 4.1 above, other than one director,
will immediately resign from their office as directors of the
Company.
4.11 Should Koor's holdings of the Koor Shares fall below the Second
Minimum Percentage or should Koor's holdings of the Koor Shares fall
below the Second Minimum Quantity, whichever is earlier, Koor shall
use its best efforts, subject to applicable law, to procure that the
director appointed to office on its nomination, as provided in
Clauses 4.2 and/or 4.3 above, shall immediately resign from his
office as a director.
5. GENERAL VOTING AGREEMENT
5.1 From the First Closing Date and subject to the provisions of Clause
4 above, Koor undertakes to vote by virtue of all its holdings in
the Company's Shares, on every matter and proposed resolution that
is put to the Company's General Meeting for decision and/or for a
resolution of the Company's shareholders in any manner whatsoever,
in accordance with written instructions that are given to it by
Federmann at least seven Business Days in advance before the time of
the relevant General Meeting or the time of passing the relevant
resolution, as the case may be.
Solely for the purpose of this Clause 5.1, Koor shall not be deemed
holder of the Company's Shares that are exclusively owned by related
8
private companies that are not companies under Koor's Control and by
related public companies of Koor. At Federmann's request and subject
to applicable law, Koor shall make a recommendation to those
companies to vote in accordance with such instructions as have been
given to Koor by Federmann as aforesaid.
5.2 The provisions of Clause 5.1 above shall not apply:
(i) as regards approval by the Company's General Meeting of
transactions that are to be approved by reason of the fact
that Federmann, Federmann's controlling shareholders or the
officers of any of them have a personal interest in them; and
(ii) in connection with a proposal to alter the Company's Articles
of Association that is such as to affect Koor's rights in
accordance with the Company's Articles of Association in a
manner that is prejudicial to Koor in comparison with
Federmann.
5.3 For the performance of the provisions of Clauses 4 and 5 above, the
Parties undertake to attend every General Meeting of the Company and
do all acts necessary, at the times prescribed therefor, so that
their voting in the General Meeting by virtue of all their holdings
in the Company will be valid and effective in accordance with
applicable law and pursuant to the Company's incorporation
documents.
6. OTHER NON-TRANSFERABLE RIGHTS
6.1 Koor undertakes to give Federmann written notice immediately after
it learns that members of Charles Bronfman's family and/or trusts
for the benefit of Charles Bronfman's family have ceased being
Koor's controlling shareholders.
Federmann may, in its discretion, give written notice to Koor within
90 days of the date on which it receives Koor's written notice as
aforesaid that it has decided to bring to an end the additional
non-transferable rights set out in Clause 6.3 below (the date on
which Federmann's written notice is received by Koor being referred
to below in this Clause as the "TERMINATION DATE").
6.2 The provisions of Clauses 6.3 to 6.8 below shall only apply in the
period between the Second Closing Date and the earlier of the
following two dates:
6.2.1 such time as the number of the Koor Shares that are
exclusively owned by Koor falls below the First Minimum
9
Percentage or such time as the number of the Koor Shares that
are exclusively owned by Koor falls below the First Minimum
Quantity, whichever is earlier. For the avoidance of doubt,
Shares owned by a person or entity that is not Koor shall not
be deemed as Shares that are exclusively owned by Koor, even
if Koor is deemed to hold them by virtue of Clause 17.6 below;
or
6.2.2 the Termination Date, as defined in Clause 6.1 above.
6.3 The Parties shall act, subject to applicable law, for the
appointment of one of the directors who have been elected to office
on the nomination of Koor as provided in Clause 4.1 above, who shall
be nominated by Koor, as Vice Chairperson of the Company's Board of
Directors.
6.4 The Parties shall act, subject to applicable law, so that on every
one of the Company's Board of Directors' committees there shall be a
member one of the directors elected for office on Koor's nomination
as provided in Clause 4.1 above, who shall be nominated by Koor.
6.5 The Parties shall act, subject to applicable law, so that there
shall be established in the Company a board of directors' committee
for strategic planning, its members being: one of the directors
elected for office on Koor's nomination as provided in Clause 4.1
above, who shall be nominated by Koor, at least one of the external
directors and such other directors as determined by the Company's
board of directors (hereinafter the "STRATEGIC PLANNING COMMITTEE").
The function of the Strategic Planning Committee shall be to assist
and make recommendations to the Company's board of directors on the
strategic planning of the Company's business activity.
6.6 When the tenure of Mr Joseph Ackerman (hereinafter "MR. ACKERMAN")
as President and CEO of the Company comes to an end, the Parties
shall act, subject to the provisions of applicable law, so that the
Company's board of directors establishes a special search committee,
the composition of which shall include the Chairperson of the board
of directors, the Vice Chairperson of the board of directors, a
director elected to office on the nomination of Federmann as
provided in Clause 4.4.1 above and a director elected to office on
the nomination of Koor, as provided in Clause 4.1 above (hereinafter
the "SEARCH COMMITTEE"). The Search Committee shall act for 30 days
in an attempt to identify a candidate for the post of the Company's
CEO, who is agreed by all the members of the Committee and it shall
make a recommendation to the Company's board of directors to elect
that candidate to the post of the Company's CEO. In any event, even
if the Search Committee has been unable to locate a candidate agreed
by all
10
the members of the Search Committee within 30 days as aforesaid, the
Company's CEO shall be elected by the Company's board of directors.
For the avoidance of doubt, it is clarified that the Company's
President and CEO is currently Mr Ackerman, and that the Company's
board of directors may extend Mr Ackerman's tenure as it deems fit,
and that the Search Committee mentioned above shall not be
established for that purpose.
6.7 To the extent requested to do so by Koor, Federmann shall vote in
the Company's General Meeting by virtue of all its holdings in the
Company in order to pass a resolution of the Company approving the
Company's entering into a Registration Rights Agreement with Koor,
which will vest Koor, so long as it holds 5% or more of the
Company's issued share capital, with one demand right on the same
conditions, mutatis mutandis, ("REGISTRATION RIGHT") as those
detailed in the Registration Rights Agreement dated 5 July 2000
among the Company, Elron Electronic Industries Ltd. and Federmann
(the "REGISTRATION RIGHTS AGREEMENT"). Federmann hereby undertakes
that to the extent that pursuant to the Registration Rights
Agreement it is vested with more than one demand right and to the
extent that the Company so requires for the purpose of granting the
Registration Right to Koor, Federmann shall, without any
consideration or compensation, relinquish one demand right that is
vested in it pursuant to the Registration Rights Agreement.
6.8 Should officers or controlling shareholders of Federmann serve as
directors of any subsidiary of the Company, the Parties shall act,
subject to applicable law, so that the Company also appoints as a
director of that subsidiary one of the directors of the Company who
has been appointed to office on Koor's nomination as provided in
Clause 4 above. The foregoing shall not apply if there is any legal
restriction to the appointment of more than one director, who is a
director of the Company, to the subsidiary's board of directors as
aforesaid.
7. For the avoidance of doubt, it is clarified that the rights granted to
Koor pursuant to Clause 6 above, in all its sub-clauses, are personal
(non-transferable) rights that are not attached to the Koor Shares that
are held by Koor. Said rights are not assignable and/or transferable to
any third party, either together with a Transfer of all or any of the Koor
Shares in the Company or otherwise.
8. RESTRICTIONS ON TRANSFER OF SHARES
11
8.1 From the First Closing Date, Koor shall not Transfer all or any of
the Koor Shares, including in the event of a forced sale due to
receivership, execution proceedings or winding-up proceedings,
except subject to and in accordance with the provisions of Clauses
10, 11 and 12 below.
8.2 From the First Closing Date, Federmann shall not Transfer all or any
of the Federmann Shares, including in the event of a forced sale due
to receivership, execution proceedings or winding-up proceedings,
except subject to and in accordance with the provisions of Clauses 9
and 12 below.
9. KOOR'S TAG-ALONG RIGHT ON A SALE OF THE FEDERMANN SHARES
9.1 Should Federmann wish to Transfer any of the Federmann Shares that
constitute more than half the Federmann Shares that are held by
Federmann for the time being to a third party (in this Clause 9 the
"THIRD PARTY"), Federmann shall provide Koor written notice
detailing the number of Shares that it intends to Transfer to the
Third Party (in this Clause "the OFFERED SHARES"), the identity of
the Third Party, the identity of all the Third Party's ultimate
interested parties or, to the extent that the Third Party wishes to
receive a Transfer of the Offered Shares indirectly through a
trustee and/or another person and/or another entity in any manner
whatsoever, the identity of every such trustee and other person and
entity as aforesaid and the identity of the third party beneficiary
and all its ultimate interested parties, the number of Shares that
are held by Federmann at the time of giving the notice, all to the
level of detail for which the Company and/or the Third Party would
be obligated, in accordance with Israeli securities laws, for
reporting the identity of the said entities and persons, were the
Third Party an interested party in the Company, and the
consideration that the Third Party has undertaken to pay Federmann
for the Offered Shares, the payment terms and all the other material
conditions of the transaction, including the transaction's
conditions precedent (hereinafter in this Clause the "SALE NOTICE").
9.2 By the end of a period of 7 Business Days starting on the date of
Koor's receipt of the Sale Notice (hereinafter the "TAG-ALONG NOTICE
PERIOD"), Koor may provide Federmann written notice that it wishes
to sell to the Third Party the Koor Shares that it holds at that
time or a portion thereof together with the Offered Shares and at
the price and on the payment terms and other conditions specified in
the Sale Notice (in this Clause 9 the "TAG-ALONG NOTICE"). In the
Tag-Along Notice, which will be provided during the Tag-Along Notice
Period, Koor shall specify the quantity of Shares, solely out of the
Koor Shares, that Koor wishes to sell the Third Party as aforesaid.
12
9.3 Should Koor provide a Tag-Along Notice during the Tag-Along Notice
Period, Federmann shall be entitled to Transfer its Shares to the
Third Party, provided that the Third Party also purchases from Koor,
at the price and on the payment terms and other conditions specified
in the Sale Notice, and at the same time, the Koor Shares specified
by Koor in the Tag-Along Notice. If the number of Offered Shares,
together with the number of the Koor Shares specified in the
Tag-Along Notice, exceeds the quantity of Shares that the Third
Party is willing to purchase, the quantity of Shares that is
purchased by the Third Party shall be apportioned pro rata between
Federmann and Koor in the ratio between the number of the Federmann
Shares that are held by Federmann prior to completing the Share
Transfer to the Third Party and the number of the Koor Shares that
are held by Koor prior to completing the Share Transfer to the Third
Party.
9.4 Should Koor not provide a Tag-Along Notice during the Tag-Along
Notice Period, Federmann may Transfer the Offered Shares to the
Third Party for consideration and on payment terms and other
conditions no better to Federmann than those detailed in the Sale
Notice, provided that an Agreement for the Transfer of the Offered
Shares is signed by Federmann and the Third Party within 30 Business
Days of the end of the Tag-Along Notice Period and the Transfer of
the Offered Shares pursuant thereto is completed within 180 days of
the end of the Tag-Along Notice Period, all subject to the
provisions of Clauses 12.1 to 12.3 below.
9.5 For the avoidance of doubt, to the extent that a transaction for the
Transfer to the Third Party of the Offered Shares is not signed by
the expiration of 30 Business Days from the end of the Tag-Along
Notice Period or the transaction for the Transfer of the Offered
Shares is not completed within 180 days of the end of the Tag-Along
Notice Period, Federmann may only Transfer the Offered Shares after
again providing a Tag-Along Notice to Koor as provided above in this
Clause 9.
9.6 For the purpose of the foregoing provisions of Clause 9, there shall
be deemed as a single Transfer (1) a number of transactions for the
Transfer of Shares that are effected with a single Third Party
during a six-month period and for such purpose a "Transaction for
the Transfer of Shares" includes the grant, Transfer or sale of any
option or right to acquire or receive Shares; and the "Single Third
Party" includes any related company (as defined in the Securities
Law, 5728-1968) of the Third Party and any interested party (as
defined in the Securities Law, 5728-1968) in any of them and
includes anyone acting with the Third Party, in cooperation under an
agreement, whether written or oral, and
13
also (2) a transaction for the Transfer of Shares (as defined above)
in the scope of which there are Transferred in any manner whatsoever
- including as a result of a Transfer of Control in Heris from
Federmann Enterprises to a Third Party or Third Parties and/or in
other subsidiaries of Federmann from Federmann to any Third Party or
Third Parties and/or a Transfer of actual economic control of the
Federmann Shares that are owned by Heris and/or other subsidiaries
of Federmann from Federmann to any Third Party or Third Parties -
Shares of Federmann, from Federmann to any Third Party or Third
Parties, in a percentage of more than 50% of the Federmann Shares
that are then held by Federmann.
9.7 For the avoidance of doubt, the foregoing shall not preclude
Federmann from entering into an agreement to Transfer the Offered
Shares to the Third Party before giving the Sale Notice, provided
that such does not preclude Koor from tagging along in the sale of
the Offered Shares to the Third Party in accordance with the
provisions of this Clause 9.
9.8 Without derogating from and in addition to the provisions of Clause
9.6, the provisions of Clauses 9.1 to 9.7 above shall not apply, and
Koor shall not have a Tag-Along Right, in respect of a Transfer of
any of the Federmann Shares from Federmann Enterprises to Heris and
vice versa. Nevertheless, if Federmann Enterprises sells Control of
Heris and at the time of the sale Heris holds more than 50% of the
Federmann Shares, Federmann shall grant Koor the Tag-Along Right as
provided in Clauses 9.1 to 9.7 above, mutatis mutandis. To the
extent that at the time of the Transfer of Control of Heris, Heris
holds other assets, in addition to the Federmann Shares, the value
of the Federmann Shares that are held by Heris at that time shall be
determined by an appraiser agreed between the Parties, and in the
absence of such agreement, then by the chairperson of the accounting
firm of Somekh Chaikin (KPMG), who may also appoint himself.
9.9 It is agreed that the foregoing provisions of Clauses 9.1 to 9.8
shall not apply and Koor's Tag-Along Right shall expire from such
time as Koor's holdings of the Koor Shares fall below the Second
Minimum Percentage or from such time as Koor's holdings fall below
the Second Minimum Quantity, whichever is earlier.
10. NON-TRANSFER OF SHARES BY KOOR
Koor shall not Transfer the Koor Shares or any of them during the period
commencing on the date of signing this Agreement and ending at the later
of the following two dates:
14
10.1 on the expiration of 12 months after the First Closing Date; or
10.2 if the performance of Stage `B' of the Transaction pursuant to the
Deed of Sale is completed - the expiration of nine months after the
Second Closing Date;
(hereinafter the "PROHIBITED SALES PERIOD").
11. FEDERMANN'S RIGHT OF FIRST REFUSAL
11.1 Subject to the provisions of Clause 10 above and Clause 12 below, if
Koor wishes to Transfer any of the Koor Shares to a Third Party, it
may only do so if it first enters into an agreement with a specific
Third Party for the Transfer of those Shares, the agreement being
subject to the Right of First Refusal vested in Federmann pursuant
to this Agreement, and subject to the following provisions.
Koor shall provide Federmann written notice within 2 Business Days
of entering the agreement with the Third Party, in which it shall
notify Federmann that it has entered into a binding agreement for
the Transfer of Shares from the Koor Shares to a Third Party (in
this Clause 11 the "THIRD PARTY"), subject to the Right of First
Refusal vested in Federmann pursuant to this Clause 11, and in the
notice it shall detail the number of Shares that it has undertaken
to Transfer to the Third Party (in this Clause the "OFFERED
SHARES"), the identify of the Third Party and the identity of all
the Third Party's ultimate interested parties or to the extent that
the Third Party wishes to receive a Transfer of the Offered Shares
indirectly through a trustee and/or other person and/or entity in
any manner, then the identity of every such trustee and other person
and entity as aforesaid, the identity of the Third Party beneficiary
and of all its ultimate interested parties, the number of the Shares
held by the Third Party on the date of providing the notice, all to
the same level of detail for which the Company and/or the Third
Party would be obligated, in accordance with Israeli securities
laws, for reporting the identity of the said entities and persons,
were the Third Party an interested party in the Company, and the
consideration that the Third Party has undertaken to pay to Koor for
the Offered Shares (which shall only be cash consideration), the
payment terms and all the other material conditions of the
transaction, including all the conditions precedent of the
transaction (hereinafter in this Clause the "SALES NOTICE").
11.2 Until the end of a period of 21 Business Days commencing on the date
of Federmann's receipt of the Sales Notice (hereinafter in this
Clause 11 the "ACCEPTANCE NOTICE PERIOD"), Federmann may give Koor
written notice that it has decided to purchase the Offered Shares
for
15
the consideration and on the payment terms and other conditions
detailed in the Sales Notice (hereinafter the "ACCEPTANCE
NOTICE").
11.3 In the event of Acceptance Notice being provided, Koor shall
Transfer to Federmann and Federmann shall take a Transfer from
Koor of all the Offered Shares, Free and Clear, for the
consideration and on the terms and conditions detailed in the
Sale Notice, within 7 Business Days of the date on which all the
approvals and permits necessary for such transaction as
aforesaid in accordance with applicable law are obtained and in
any event not later than the expiration of 60 days from the date
the Acceptance Notice is provided (hereinafter the "COMPLETION
PERIOD"). The Parties shall cooperate in order to obtain all the
approvals and permits necessary for the transaction as aforesaid
as soon as possible.
11.4 Should Federmann not provide Koor an Acceptance Notice in
writing by the end of the Acceptance Notice Period or should
Federmann provide an Acceptance Notice but the transaction
mentioned in Clause 11.3 above not be completed by the end of
the Completion Period other than due to a breach of this
Agreement by Koor, Koor may Transfer the Offered Shares to the
Third Party for the consideration and on the payment terms and
other conditions detailed in the Sales Notice, provided that the
transaction for the sale to the Third Party of the Offered
Shares is completed by the expiration of 120 days from the end
of the Acceptance Notice Period or from the end of the
Completion Period, as the case may be (hereinafter the "MAXIMUM
SALES PERIOD"), all subject to the provisions of Clauses 12.1 to
12.3 below.
11.5 For the avoidance of doubt, should the transaction for the sale
of the Offered Shares to the Third Party not be completed by the
end of the Maximum Sales Period, Koor may only Transfer the
Offered Shares after again providing a Right of First Refusal to
Federmann as provided above in this Clause 11.
11.6 From the end of the Prohibited Sales Period, the provisions of
Clauses 11.1 to 11.5 above shall not apply with respect to a
Stock Exchange sale of the Koor Shares by Koor in aggregate
quantities not exceeding in any 12-month period 2% of the
Company's issued share capital.
11.7 Notwithstanding the provision of Clause 11.6 above, Koor may not
Transfer, pursuant to Clause 11.6 above, in the aggregate, more
than 950,000 of the Koor Shares that are held by it:
11.7.1 unless Federmann Transfers any of the Federmann Shares,
except on a Transfer subject to Koor's Tag-Along Right
16
pursuant to Clause 9 above, and except for a Transfer to
a person or entity, the Shares held by which are deemed
as held by Federmann in accordance with the provisions
of Clause 17.6 below; or
11.7.2 unless the quantity of the Federmann Shares together
with the Koor Shares falls below 45% of the Company's
issued share capital, other than as a result of a breach
of this Agreement by Koor.
12. TRANSFER OF SHARES AND OBLIGATIONS PURSUANT TO THE AGREEMENT
Without derogating from the other provisions of this Agreement,
including Clause 7 above, it is agreed that on any Transfer of the
Federmann Shares by Federmann that is subject to Koor's Tag-Along Right
under Clause 9 above, and on any Transfer of the Koor Shares by Koor
that is subject to Federmann's Right of First Refusal under Clause 11
above (hereinafter in this Clause 12 the "SHARES BEING TRANSFERRED", and
Koor and Federmann being respectively the "TRANSFEROR PARTY"), the
following provisions shall apply:
12.1 If the Transferor Party wishes to Transfer all the Federmann
Shares or all the Koor Shares, as the case may be, the
Transferor Party may not do so and such a Transfer shall be
ineffective unless the Transferor Party Transfers and assigns to
the transferee the Shares Being Transferred (in this Clause 12
the "PURCHASER"), together with the Transfer of the Shares Being
Transferred, all the rights and obligations of the Transferor
Party pursuant to this Agreement, and the Purchaser and the
Transferor Party so confirm in writing to the other Party as
provided in Clause 12.3 below. On completion of the assignment
and Transfer of all the Transferor Party's rights and
obligations as aforesaid, the Transferor Party shall cease being
a Party to this Agreement and shall be succeeded by the
Purchaser.
12.2 If the Transferor Party wishes to Transfer only a portion of the
Federmann Shares or only a portion of the Koor Shares, as the
case may be, then the Transferor Party may not do so and such a
Transfer shall be ineffective, unless, together with the
Transfer of the Shares being Transferred, the Purchaser assumes
all the obligations of the Transferor Party jointly and
severally with the Transferor Party and confirms said obligation
in writing to the other Party as provided in Clause 12.3 below.
For the avoidance of doubt, it is clarified that the Transferor
shall continue to be entitled as against the other Party to all
the rights vested in the Federmann Shares or the Koor Shares, as
the case may be, that are held by it.
17
12.3 In the event that Koor is the Transferor Party, Koor shall
provide Federmann, together with the Sales Notice as mentioned
in Clause 11.1 above, the written confirmation of Koor and the
Purchaser as provided in Clause 12.1 above or the written
confirmation of the Purchaser as provided in Clause 12.2 above,
as the case may be, duly signed by the Purchaser and/or Koor, as
the case may be.
In the event that Federmann is the Transferor Party, Federmann
shall provide Koor, within 2 Business Days of signing an
agreement with the Purchaser for the Transfer of the Offered
Shares, as provided in Clause 9.4 or Clause 9.7 above, the
written confirmation of the Purchaser, as provided in Clause
12.1 above or the written confirmation of Federmann and the
Purchaser, as provided in Clause 12.2 above, as the case may be,
duly signed by the Purchaser and/or Federmann, as the case may
be.
12.4 In addition to the foregoing, even in a case or cases in which
Federmann Transfers any of the Federmann Shares that are held by
it, the Transfer of which is not subject to Koor's Tag-Along
Right pursuant to Clause 9 above, Federmann may, if it so
desires, assign and Transfer its obligations pursuant to this
Agreement or any of them so that the transferee of the Shares
and Federmann shall be jointly and severally liable to Koor for
all the obligations pursuant to this Agreement or a portion of
them, in such proportion as determined between Federmann and the
transferee of the Shares. For the avoidance of doubt, Federmann
may exercise its right to assign and Transfer all or any of its
obligations as provided in this Clause 12.4 together with a
Transfer of any of the Federmann Shares, once or several times,
in its discretion.
13. LIMITATION ON RESTRICTIONS AND RIGHTS
The limitations imposed with respect to a Share Transfer and the rights
vested in the Parties in connection with a Share Transfer pursuant to
Clauses 9 to 12 above only apply to the Federmann Shares and the Koor
Shares, and those limitations and rights shall not apply with respect to
other Shares in the Company that may be held by Federmann or Koor, as
the case may be.
14. TAG-ALONG RIGHT TO PURCHASE
Should a Party to this Agreement (in this Clause 14 the "PURCHASING
PARTY") directly or indirectly, including through subsidiaries and/or
any trustee, acquire Shares of the Company for total consideration in
excess of US$ 25 million (in this Clause 14 the "PURCHASED SHARES") from
a Single Third Party, as defined in Clause 9.6 above (in this Clause 14
the "SELLER"), whether or not on the Stock Exchange (in this Clause 14
the "PURCHASE TRANSACTION"), the other
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Party to the Agreement (in this Clause 14 the "OTHER PARTY") shall have
a right to tag along on such Acquisition as aforesaid, on the terms of
the Purchase Transaction, and to acquire a portion of the securities
that are being purchased (in this Clause 14 the "PURCHASE TAG-ALONG
RIGHT") in accordance with the provisions set out below:
14.1 The Purchasing Party shall provide the other Party written
notice within 3 Business Days of the completion of the Purchase
Transaction, detailing the terms of the Purchase Transaction
that it has made, including the quantity of additional Shares,
the price (which shall only be cash consideration), the payment
terms, the Seller's identity and every other material condition
(in this Clause 14 the "SELLER'S NOTICE").
14.2 Within 14 Business Days of receiving the Purchaser's notice, the
Other Party shall give the Purchasing Party written notice if it
is tagging along in the Purchase Transaction and of the quantity
of Shares, out of the additional Shares, that it wishes to
purchase, not exceeding such quantity the ratio between which it
and the rest of the additional Shares is equal to the ratio:
(i) if Koor is the Other Party - between the Koor Shares
that are held by Koor on the date the Purchaser's notice
is given and the Federmann Shares that are held by
Federmann on the date the Purchaser's notice is given;
(ii) if Federmann is the Other Party - between the Federmann
Shares that are held by Federmann on the date the
Purchaser's notice is given and the Koor Shares that are
held by Koor on the date the Purchaser's notice is
given.
14.3 Should the Other Party give the Purchasing Party Tag-Along
notice at such time as mentioned in Clause 14.2 above, the
Purchasing Party shall Transfer to the Other Party Shares of the
Company in the quantity specified in the Tag-Along notice, Free
and Clear, for the consideration and on the terms detailed in
the Purchaser's notice, all within 7 Business Days of the date
of giving the Tag-Along notice.
15. TERM OF THE AGREEMENT AND EFFECT OF THE AGREEMENT
15.1 This Agreement shall take effect on the First Closing Date.
Should Stage `A' of the Transaction (as the term is defined in
the Deed of
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Sale) not be performed and completed by the end of 3 Business
Days after the Stage `A' Completion Deadline (as defined in the
Deed of Sale), then this Agreement shall be null and void and
ineffective, without either of the Parties having any claim,
complaint or demand against the other.
15.2 This Agreement shall be in effect until the end of a period of
15 years from the date on which it enters into effect as
provided in Clause 15.1 above or until such time as Federmann's
holdings of the Federmann Shares together with Koor's holdings
of the Koor Shares fall below 25% of the Company's issued share
capital, whichever is the earlier.
15.3 For the avoidance of doubt, it is clarified that this Agreement
shall not come to an end if Koor or Federmann ceases to hold
Koor Shares or the Federmann Shares, as the case may be, if
together with a Transfer of the remainder of the Federmann
Shares or the Koor Shares, as the case may be, the Transferor
Party (as defined in Clause 12 above) Transferred and assigned
all its rights and obligations pursuant to this Agreement to the
Purchaser (as defined in Clause 12 above), and the provisions of
this Agreement shall continue to apply and obligate the
Purchaser and the Other Party.
16. KOOR'S WITHDRAWAL FROM THE CONTROLLING INTEREST
16.1 Koor may at any time from October 1, 2008, provide written
notice to Federmann in which it shall inform Federmann of Koor's
desire to bring to an end its rights and obligations pursuant to
Clauses 4, 6 (if Koor is entitled to rights pursuant to Clause 6
at that time), 7, 8, 9, 10, 11 (except for Clauses 11.6 and
11.7), 12, 13 and 14 of this Agreement (hereinafter in this
Clause 16 the "REVOKED CLAUSES"), and on the expiration of 6
months from the date on which Federmann is given Koor's written
notice as aforesaid (hereinafter in this Clause 16 the
"EXPIRATION DATE"), all the Parties' rights and obligations
pursuant to the Revoked Clauses shall expire so that the sole
rights and obligations that will continue to obligate and
entitle the Parties pursuant to this Agreement shall be the
rights and obligations in Clause 5 above and this Clause 16, all
without prejudice to either of the Party's rights to any relief
in respect of a breach of any of the provisions of the Revoked
Clauses that occurred prior to the Expiration Date.
16.2 Should such notice be given by Koor and to the extent that
Federmann so wishes, the Parties shall discuss the possibility
of Koor's Shares that are held by Koor at that time being
acquired by Federmann, alone or together with others, without
the provisions of this Clause being such as to obligate either
of the Parties to enter into such a purchase
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agreement or to permit Koor to Transfer the Koor Shares
otherwise than in accordance with the provisions of Clauses 16.3
and 16.4 below.
16.3 As from the Expiration Date, Koor may Transfer all or any of the
Koor Shares that are held by it in any way, either by a Stock
Exchange sale or otherwise, including a distribution in kind to
its shareholders, subject nevertheless to Federmann's Right of
First Offer as provided in Clause 16.4 below or in accordance
with the provisions of Clauses 11.6 and 11.7 above.
16.4 Federmann's Right of First Offer
16.4.1 As of the Expiration Date, Koor may not Transfer any of
the Koor Shares unless it first gives Federmann written
notice detailing the quantity of the Koor Shares that it
wishes to transfer (hereinafter the "OFFERED SHARES").
16.4.2 Federmann may, but is not required to, within 14
Business Days of receiving Koor's notice as aforesaid
(hereinafter in this Clause 16.4 the "OFFER PERIOD"),
provide Koor written notice (hereinafter in this Clause
16.4 "FEDERMANN'S NOTICE"), informing Koor that it
wishes to purchase from Koor the Offered Shares or the
portion of them as specified by Federmann in Federmann's
Notice (hereinafter in this Clause 16. the "SHARES FOR
PURCHASE") and the price per Share that it is willing to
pay for those Shares (hereinafter in this Clause 16.4
the "PRICE OFFERED").
16.4.3 Within 7 Business Days of Koor's receiving Federmann's
Notice, Koor shall provide Federmann written notice
(hereinafter in this Clause 16.4 the "KOOR'S NOTICE") if
it agrees or if it does not agree to Transfer to
Federmann the Shares for Purchase at the Price Offered.
Should Koor inform Federmann in Koor's Notice that it
agrees to Transfer to Federmann the Shares for Purchase
at the Price Offered, Koor shall Transfer to Federmann
and Federmann shall accept from Koor a Transfer of the
Shares for Purchase, and Federmann shall pay Koor the
Price Offered, all by the expiration of 21 Business Days
from the date Koor's Notice is received by Federmann
(hereinafter in this Clause 16.4 the "COMPLETION
PERIOD").
16.4.4 Should Koor inform Federmann in Koor's Notice that it
does not agree to Transfer to Federmann the Shares for
Purchase at the Price Offered, Koor may Transfer the
Shares for
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Purchase to a Third Party or Third Parties, but only at
a price greater than the Price Offered on the same or
more favorable payment terms to Koor than those
specified in Clause 16.4.3 above, without any further
obligation of Koor, all within 90 Business Days of the
date Koor's Notice is given. For the avoidance of doubt,
to the extent that the Shares for Purchase have not been
Transferred by Koor to a Third Party as aforesaid within
90 Business Days of the date of Koor's notice being
provided, Koor may only Transfer the Shares for Purchase
after again providing Federmann the Right of First Offer
as provided in this Clause 16.4.
16.4.5 Should Federmann not provide Federmann's Notice within
the 14 Business Days mentioned in Clause 16.4.2 above or
should Federmann state in Federmann's Notice that it
wishes to acquire only some of the Offered Shares or if
the Transfer of the Shares for Purchase has not been
completed by the end of the Completion Period, otherwise
than due to a breach of contract by Koor, Koor may,
within 90 Business Days of the date on which Koor's
Notice was provided as provided in Clause 16.4.3 above
or from the end of the Completion Period, as the case
may be, sell the Offered Shares (if Federmann's Notice
has not been provided as aforesaid) or that portion of
them that are not included in the Shares for Purchase
(if Federmann's Notice is provided with respect to only
a portion of the offered Shares).
16.4.6 For the purpose of Clauses 16.4.3 and 16.4.5 above, a
Transfer of Shares by means of their distribution as a
dividend in kind by Koor to its shareholders shall be
deemed as a Transfer of Shares that is made on the date
determining the rights to receive the dividend in kind
by Koor's shareholders, and such Transfer as aforesaid
shall be deemed as though made at the average closing
price of the Company's shares on the Tel Aviv Stock
Exchange in the 12 trading days before and in the 12
trading days after the date of giving Koor's written
notice as provided in Clause 16.4.1 above.
17. MISCELLANEOUS
17.1 This Agreement may be signed in several separate copies and each
copy signed by one of the Parties shall be treated as an
original and all together they shall be treated as a single,
complete document.
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17.2 No conduct by either of the Parties shall be deemed a waiver of
any of its rights pursuant to this Agreement or by law or as its
waiver of or acquiescence to in any breach or non-performance of
any condition, unless the waiver, acquiescence, postponement,
modification, cancellation or addendum has been done expressly
and in writing.
17.3 This Agreement contains, embodies, merges and expresses all the
terms and conditions agreed between the Parties on the matters
mentioned herein. Any promises, guarantees, agreements, whether
written or oral, undertakings or representations on the matters
mentioned in this Agreement that were given or made by the
Parties prior to the making of this Agreement that have not
found specific expression herein shall not be deemed to augment,
derogate from or modify the rights and obligations provided in
this Agreement or deriving herefrom, and the Parties shall not
be bound by them from the date of this Agreement (hereinafter
"REVOCATION OF THE OBLIGATIONS PRECEDING SIGNATURE"). It is
hereby expressly agreed that the Revocation of the Obligations
Preceding Signature shall be effective even in the event that
this Agreement is revoked or rescinded for any reason. The
foregoing shall not be such as to impair the effect of the
Parties' rights and obligations pursuant to the Sale [sic]
Agreement.
17.4 For the avoidance of doubt, the provisions of the Shareholders
Agreement between Koor and the Company, including wording that
is different from the wording of this Agreement, shall not in
any manner be applied in the interpretation of this Agreement.
Without prejudice to the generality of the foregoing, the
exchanges of documents between the Parties prior to the
signature of this Agreement, including the drafts exchanged
between them, shall have no significance in the interpretation
of this Agreement.
17.5 Except as otherwise provided in this Agreement, the Parties'
rights and obligations pursuant to this Agreement are not
assignable and/or transferable. The provisions of this Clause
are not such as to affect Federmann's right to exercise its
right of first refusal as provided in Clause 11 above by means
of any third party and/or third parties.
17.6 In this Agreement any person or entity shall be deemed as
holding all the Shares held by it, directly or indirectly and,
without prejudice to the generality of the foregoing, all the
Shares held, directly or indirectly, by any related entity and
by any member of his family, as they are defined in the
Securities Law, 5728-1968; and also all the Shares that are held
by any person and/or entity that is construed in accordance with
the provisions of the Securities Law, 5728-1968 as holding
Shares of the Company together with that person or entity and
also all the Shares held through a trustee and/or registration
company,
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and also all the Shares that are held by another shareholder of
the Company who is jointly and severally liable with a Party to
this Agreement for the obligations pursuant to this Agreement.
Nevertheless, a Party to this Agreement shall not, for the
purpose of this Agreement, be treated as holding Shares that are
held by the other Party to this Agreement.
17.7 This Agreement shall be governed by the laws of the State of
Israel, without taking into account its choice of law rules.
Exclusive jurisdiction on all matters relating to this Agreement
or deriving herefrom is vested in the competent courts in the
City of Tel Aviv-Jaffa and in them alone.
17.8 Each of the Parties to this Agreement shall bear the legal
expenses that it is charged in respect of this Agreement.
17.9 An obligation to vote by virtue of all of a Party's Shares in
the Company in connection with any resolution in any way also
includes the obligation to participate in the vote by virtue of
all those Shares, and not to vote for any further or other
proposed resolution that is such as to contradict, cancel or
diminish said resolution.
17.10 Without being such as to impose any further limitations on the
Transfer of Shares other than that expressly provided in this
Agreement, each of the Parties undertakes to act in good faith
towards the other and not, by act or omission, to cause the
frustration of this Agreement's provisions or any of them and/or
to make them unrealizable.
17.11 The Parties hereto may extend any time specified in this
Agreement, either once or several times, by written notice
signed by two officers of each Party to this Agreement, without
any further approval being necessary.
18. NOTICES
18.1 The Parties' addresses for the purpose of this Agreement are as
set out in the heading hereto or any other address in Israel of
which one Party gives the other written notice.
18.2 Any notice pursuant to this Agreement shall be in writing and be
sent by registered mail or personal delivery by messenger to the
address of the relevant Party, as mentioned in Clause 18.1
above, and that address shall in all respects in connection with
this Agreement also be the address of that Party for the service
of court process.
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18.3 Notice that is sent shall be treated as having reached the
addressee and come to its knowledge within five Business Days if
sent by registered mail or, if delivered in person by messenger
by 17:00 hours on any Business Day, it shall be treated as
received on the Business Day after delivery.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT:
(signed) (signed)
-------------------- --------------------------
Koor Industries Ltd. Federmann Enterprises Ltd.
(signed)
------------------------
Heris Aktiengesellschaft
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