SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the Month of February 2005
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ELBIT SYSTEMS LTD.
(Translation of Registrant's Name into English)
Advanced Technology Center, P.O.B. 539, Haifa 31053, Israel
(Address of Principal Corporate Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
|X| Form 20-F |_| Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): |_|
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): |_|
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
|_| Yes |X| No
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule
12g3-2(b): 82-______________
Attached hereto as Exhibit 1 and incorporated by reference herein is the
Registrant's Proxy Statement, mailed to the Registrant's shareholders on or
about February 7, 2005.
Attached hereto as Exhibit 2 and incorporated by reference herein is the
Registrant's proxy card, mailed to the Registrant's shareholders on or about
February 7, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELBIT SYSTEMS LTD.
(Registrant)
By: /s/ Ilan Pacholder
--------------------------------------
Name: Ilan Pacholder
Title: Corporate Secretary
Dated: February 7, 2005
Exhibit No. Description
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1. Proxy statement.
2. Proxy card.
EXHIBIT 1
[LOGO OF ELBIT SYSTEMS LTD.]
February 7, 2005
Dear Fellow Shareholder,
You are cordially invited to attend the Elbit Systems Ltd. Extraordinary
General Meeting of Shareholders to be held at 3:00 p.m. local time on February
28, 2005, at our offices at the Advanced Technology Center, Haifa, Israel.
The agenda of the meeting and the proposals to be voted on are described in
the accompanying proxy statement. For the reasons described in the proxy
statement, the Board of Directors recommends that you vote "FOR" Items 1 and 2
as specified on the enclosed proxy card.
We look forward to greeting all the shareholders who will be present at the
meeting. However, whether or not you are able to attend, it is important that
your shares be represented. Therefore, at your earliest convenience please sign,
date and mail the enclosed proxy card in the envelope provided so that it is
received not later than 24 hours before the meeting.
Thank you for your cooperation.
Very truly yours,
MICHAEL FEDERMANN
Chairman of the Board of Directors
JOSEPH ACKERMAN
President and Chief Executive Officer
ELBIT SYSTEMS LTD.
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
Haifa, Israel
February 7, 2005
This is notice that an Extraordinary General Meeting of Shareholders of
Elbit Systems Ltd. (the "Company") will be held at the Company's offices at the
Advanced Technology Center, Haifa, Israel, on February 28, 2005, at 3:00 p.m.
local time, for the following purposes:
1. to approve and ratify the agreements entered into by the Company on
December 27, 2004 regarding the purchase from Koor Industries Ltd. of its
ordinary shares in Tadiran Communications Ltd.; and
2. to elect Nathan Sharony, who currently serves as an External Director on
the Company's Board of Directors, to an additional three-year term as an
External Director.
Shareholders of record at the close of business on February 3, 2005, are
entitled to receive notice of, and to vote at, the meeting. All shareholders are
cordially invited to attend the meeting in person.
Shareholders who are unable to attend the meeting in person are requested
to complete, date and sign the enclosed proxy card and return it promptly in the
pre-addressed envelope provided so that it is received by the Company at least
24 hours before the meeting. No postage is required if mailed in the United
States. Shareholders who attend the meeting may revoke their proxies and vote
their shares in person.
By Order of the Board of Directors,
MICHAEL FEDERMANN
Chairman of the Board of Directors
JOSEPH ACKERMAN
President and Chief Executive Officer
QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY
GENERAL MEETING
The following questions and answers summarize the major issues to be discussed
at the Extraordinary General Meeting. For a more complete description of the
issues please see the accompanying Proxy Statement.
Q: When and where is the Meeting?
A: The Meeting will take place at 3:00 p.m. local time, on Monday, February 28,
2005, at the Company's offices at the Advanced Technology Center, Haifa, Israel.
Q: What is the record date for the Meeting?
A: The record date is February 3, 2005, and all shareholders holding shares at
the close of business on that date will be entitled to receive notice of and to
vote at the Meeting.
Q: What are the items to be voted on at the Meeting?
A: The items to be voted on include:
o to approve and ratify the agreements entered into by the Company on
December 27, 2004 regarding the purchase from Koor Industries Ltd.
(Koor) of its ordinary shares in Tadiran Communications Ltd. (Tadiran)
(the Tadiran Acquisition).
o to elect Nathan Sharony, who currently serves as an External Director
on the Company's Board of Directors, to an additional three-year term
as an External Director.
Q: Does the Company and its Board of Directors support the proposals to be voted
on at the Meeting?
A: Yes.
Q: What voting majority is required?
A: The required voting majority, whether voting in person or by proxy, for
approval of each of the Items in the Proxy Statement (in each case not taking
into account abstentions) is:
Approval of Item 1 (the agreements relating to the Tadiran Acquisition)
requires:
(1) A majority of the shares voted regarding that Item in the
Meeting, provided that (i) the majority includes at least
one-third (1/3) of the total votes of shareholders having no
"Personal Interest" in the Item who vote on the Item at the
Meeting or (ii) the total number of votes of the shareholders
mentioned in (i) above that are voted against such Item does not
exceed one percent (1%) of the Company's voting rights.
(2) Each shareholder must indicate, either on the proxy card or
prior to voting in person at the Meeting, whether or not the
shareholder has a "Personal Interest" in the matter. Under
Israeli law, a Personal Interest means a person's interest in
an act or transaction of a company, including an interest of
such person's relative or of another entity in which such
person or his or her relative are interested parties. An
interest resulting merely from such person's holding of shares
in that company will not be considered a Personal Interest.
Approval of Item 2 (election of Mr. Sharony to an additional three-year
term as External Director) requires a majority of the votes cast regarding
such election at the Meeting, whether in person or by proxy, provided that
(i) that majority includes at least one-third (1/3) of the total votes of
non-controlling shareholders or anyone voting on their behalf present at
the Meeting in person or by proxy or (ii) the total number of votes of the
shareholders mentioned in (i) above that are voted against such election
does not exceed one percent (1%) of the Company's voting rights.
Q: Does the Company's management believe the Tadiran Acquisition is beneficial
to the Company?
A: Yes. The Company's management believes that the Tadiran Acquisition is
beneficial to the Company both from a financial and a strategic standpoint.
Q: Why are you being asked to approve the agreements relating to the Tadiran
Acquisition?
A: Under Israeli law, the Tadiran Acquisition is considered an "interested party
transaction" in which a controlling shareholder of the Company, Federmann
Enterprises Ltd. (FEL) has a Personal Interest. This is due to the signing of
the agreements and performance of the Tadiran Acquisition concurrently with the
agreements and transaction between Koor and FEL regarding the purchase by Koor
from FEL of shares in the Company, as described in the Proxy Statement.
Therefore, even though the Company's management supports the Tadiran Acquisition
irrespective of the Koor - FEL transaction, Israeli law requires that as an
"interested party transaction", the Tadiran Acquisition be approved by the
Company's Audit Committee and Board of Directors (without participation by
directors having a Personal Interest in the transaction), as well as the
Company's shareholders.
Q: What process was followed to review and approve the Tadiran Acquisition by
members of the Company's Audit Committee and Board of Directors who do not have
a Personal Interest in the transaction?
A: As further described in the Proxy Statement, the Audit Committee in a series
of meetings considered the impact of the Tadiran Acquisition on the Company,
irrespective of the Koor - FEL transaction. For this purpose the Audit Committee
members included four directors with no Personal Interest in the Tadiran
Acquisition or the Koor - FEL transaction, and each of those directors meet the
board member independence criteria of the U.S. Sarbanes-Oxley Act as well as the
Nasdaq Marketplace Rules.
During its considerations, the Audit Committee obtained an independent "fairness
opinion" regarding the Tadiran Acquisition, an English translation of which is
attached to the Proxy Statement. Following its considerations, the Audit
Committee as well as the Board of Directors, consisting for this purpose of the
same directors who served on the Audit Committee, concluded that the Tadiran
Acquisition is beneficial both to the Company and all of its shareholders and
unanimously approved the Tadiran Acquisition agreements.
Q: Why is it necessary to elect an External Director at this time?
A: Under Israeli law, a publicly traded company such as the Company is required
to have two External Directors who meet the independence criteria specified in
the Israeli Companies Law and who are elected by the required majority at a
general shareholders meeting. An External Director serves for a three-year term.
The term of Nathan Sharony, who was elected to serve as an External Director in
March 2002, expires in March 2005.
Q: Is Nathan Sharony permitted to be elected for an additional three-year term
as an External Director?
A: Yes. External Directors such as Mr. Sharony, who continue to meet the
qualification criteria, are permitted to be elected for an additional three-year
term.
Q: What do I need to do now?
A: Just indicate on your proxy card how you want to vote, and sign and mail it
in the enclosed return envelope as soon as possible, so that your shares will be
represented at the Meeting. The signed proxy must be received by the Company at
least 24 hours before the Meeting. If you sign and send in your proxy but do not
indicate how you want to vote, your proxy will be counted as a vote for all of
the proposals, however for purposes of Item 1 you must indicate on the proxy
card whether or not you have a personal interest in the transaction.
Q: What do I do if I want to change my vote?
A: Just mail a later-dated, signed proxy card or other document revoking your
proxy in time for it to be received by the Company at least 24 hours before the
Meeting or attend the Meeting in person and vote.
Q: If my shares are held in "street name" by my broker, a bank or other
representative, will my representative vote my shares for me?
A: If you hold your shares through a broker, bank or other representative,
generally the broker or other representative may only vote the shares it holds
for you in accordance with your instructions. However, if the broker or other
representative does not receive your instructions in time, it may vote on
certain types of matters for which it has discretionary authority.
Q: Who can help answer my questions?
A: For additional information about the Meeting, please contact during regular
office hours, Sunday through Thursday, Ilan Pacholder, the Company's Corporate
Secretary at the Company's offices in Haifa, Israel, telephone
011-972-4-8316632.
ELBIT SYSTEMS LTD.
Advanced Technology Center
P.O. Box 539
Haifa 31053, Israel
PROXY STATEMENT
This Proxy Statement is provided to the shareholders of ordinary shares, NIS
1.00 nominal value, of Elbit Systems Ltd. (the "Company" or "Elbit Systems") in
connection with the Board of Directors' solicitation of proxies for votes to be
cast at the Shareholders' Extraordinary General Meeting to be held on Monday,
February 28, 2005 (the "Meeting"), or at any adjournment of the Meeting, as
specified in the accompanying Notice of Extraordinary General Meeting of
Shareholders.
It is proposed that the shareholders adopt resolutions concerning the following
matters at the Meeting:
1. to approve and ratify the agreements entered into by the Company on
December 27, 2004 regarding the purchase from Koor Industries Ltd. of
its ordinary shares in Tadiran Communications Ltd.; and
2. to elect Nathan Sharony, who currently serves as an External Director
on the Company's Board of Directors, to an additional three-year term
as an External Director.
Shares represented by properly signed and unrevoked proxies will be voted in the
manner directed by the persons designated as proxies.
QUORUM AND VOTING REQUIREMENTS
Only shareholders of record at the close of business on February 3, 2005, have
the right to receive notice and to vote at the Meeting.
The Company had outstanding on February 1, 2005, 40,665,654 ordinary shares,
each giving a right of one vote for each of the matters to be presented at the
Meeting. (This amount includes 23,091 ordinary shares held by a subsidiary of
the Company but does not include 385,000 ordinary shares held by the Company as
treasury shares.) No less than two shareholders present in person or by proxy,
and holding or representing between them one-third of the outstanding ordinary
shares, will constitute a quorum at the Meeting.
If a quorum is not present within one-half hour after the time set for the
Meeting, the Meeting will be adjourned and will be reconvened one week later at
the same time and place unless other notice is given by the Board of Directors.
If there is not a quorum within one-half hour of the
1
time for the reconvened meeting, a quorum will be considered present as long as
at least two shareholders participate in person or by proxy.
Joint holders of shares should note that according to the Company's Articles of
Association the vote, whether in person or by proxy, of the more senior of joint
holders of any voted share will be accepted over vote(s) of the other joint
holders of that share. For this purpose seniority will be determined by the
order the joint holders' names appear in the Company's Register of Shareholders.
Approval of Item 1 of this Proxy Statement (the agreements relating to the
purchase from Koor Industries Ltd. of its ordinary shares in Tadiran
Communications Ltd.) requires a majority of the shares voted regarding that Item
in the Meeting, whether in person or by proxy, provided that (i) the majority
includes at least one-third (1/3) of the total votes of shareholders having no
"Personal Interest" in the Item who vote on the Item at the Meeting (abstentions
will not be taken into account) or (ii) the total number of votes of the
shareholders mentioned in (i) above that are voted against such Item does not
exceed one percent (1%) of the Company's voting rights.
In order to be counted for voting with respect to Item 1 of this Proxy
Statement, a shareholder must indicate, either on the proxy card or prior to
voting in person at the Meeting, whether or not the shareholder has a Personal
Interest in the matter. Shares of a shareholder who does not so indicate whether
or not there is a Personal Interest will not be voted for that Item.
Under the Israeli Companies Law - 1999 (the "Companies Law"), a Personal
Interest means a person's interest in an act or transaction of a company,
including an interest of such person's relative or of another entity in which
such person or his or her relative are interested parties. An interest resulting
merely from such person's holding of shares in that company will not to be
considered a Personal Interest.
Approval of Item 2 of this Proxy Statement (election of Mr. Sharony to an
additional three-year term as an External Director), requires a majority of the
votes cast regarding such election at the Meeting, whether in person or by
proxy, provided that (i) that majority includes at least one-third (1/3) of the
total votes of non-controlling shareholders or anyone voting on their behalf
present at the Meeting in person or by proxy (abstentions will not be taken into
account) or (ii) the total number of votes of the shareholders mentioned in (i)
above that are voted against such election does not exceed one percent (1%) of
the Company's voting rights.
VOTING BY PROXY
A proxy form for use at the Meeting and a return envelope for the proxy form are
enclosed. Shareholders may revoke any proxy form prior to its exercise by filing
with the Company a written notice of revocation or a properly signed proxy form
of a later date, or by voting in person at the Meeting. In order to be counted
for purposes of voting at the Meeting, a properly signed proxy form must be
received by the Company at least 24 hours before the Meeting.
2
Unless otherwise indicated on the proxy form, shares represented by a properly
signed and received proxy in the enclosed form will be voted in favor of all the
above described matters to be presented for voting at the Meeting, provided
that, as described above, voting for Item 1 requires specifying whether or not
there is a Personal Interest. Abstentions will not be treated as either a vote
"for" or "against" the matter, although they will be counted to determine if a
quorum is present.
Proxy forms are being mailed to shareholders on or about February 7, 2005, and
will be solicited mostly by mail. However, in some cases proxies may be
solicited by telephone, telegram or other personal contact. The Company will pay
for the cost of the solicitation of proxies, including the cost of preparing,
assembling and mailing the proxy material, and will reimburse the reasonable
expenses of brokerage firms and others for forwarding material to shareholders.
BENEFICIAL OWNERSHIP OF SECURITIES BY
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of February 1, 2005, to the best of the Company's
knowledge, the number of ordinary shares (1) owned by (i) all shareholders known
by the Company to own 5% or more of the Company's ordinary shares and (ii) all
directors and officers of the Company as a group.
Federmann Enterprises Ltd. 19,915,884 48.97%
99 Hayarkon Street
Tel-Aviv, Israel(2)
Heris Aktiengesellschaft 3,836,458(3) 9.43%
c/o 99 Hayarkon Street
Tel-Aviv, Israel
Bank Leumi Group 2,471,252 6.08%
Tel-Aviv, Israel(4)
Bank Hapoalim Group 2,282,562 5.61%
Tel-Aviv, Israel(4)
All officers and directors 426,562(5) 1.05%
as a group (25 persons)
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(1) The total number of ordinary shares includes 23,091 ordinary shares held by
a subsidiary of the Company but excludes 385,000 ordinary shares held by
the Company as treasury shares.
(2) Federmann Enterprises Ltd. ("FEL") owns the shares of Elbit Systems
directly and indirectly through Heris Aktiengesellschaft ("Heris") which is
controlled by FEL.
3
FEL is controlled by Beit Federmann Ltd. ("BFL"). BFL is controlled by Beit
Bella Ltd. ("BBL") and Beit Yekutiel Ltd. ("BYL"). Michael Federmann is the
controlling shareholder of BBL and BYL. He is also the Chairman of Elbit
Systems' Board and the Chairman of the Board and the Chief Executive
Officer of FEL. Therefore, Mr. Federmann controls, directly and indirectly,
the vote of the shares owned by Heris and FEL.
(3) The amount of shares owned by Heris also is included in the amount of
shares held by FEL as set forth in footnote (2) above.
(4) The holdings in Elbit Systems' shares by the Bank Leumi Group and the Bank
Hapoalim Group are divided among several entities, mainly mutual and/or
provident funds.
(5) This amount does not include any shares that may be deemed to be
beneficially owned by Michael Federmann as described in footnote (2) above.
The amount includes 202,880 shares underlying options that are currently
exercisable or that will become exercisable within 60 days of February 1,
2005. A portion of the underlying options are "phantom options" that have
been calculated based on Elbit Systems' February 1, 2005 share closing
price of $25.04 on the Nasdaq National Market.
ITEM 1 - APPROVAL AND RATIFICATION OF AGREEMENTS
RELATING TO THE PURCHASE OF KOOR'S SHARES IN
TADIRAN COMMUNICATIONS
The Tadiran Acquisition
On December 27, 2004, the Company signed a Share Transfer Deed (the "Tadiran
Deed") and a Shareholders Agreement (the "Tadiran Shareholders Agreement") with
Koor Industries Ltd. ("Koor") regarding the Company's purchase from Koor of the
3,944,276 ordinary shares held by Koor in Tadiran Communications Ltd.
("Tadiran"), which represent approximately 31.8% of Tadiran's issued and
outstanding ordinary shares based on Tadiran's current share capital without
reduction of treasury shares. The transactions described in the Tadiran Deed and
the Tadiran Shareholders Agreement are referred to as the "Tadiran Acquisition",
and the Tadiran Deed and Tadiran Shareholders Agreement are referred to
collectively as the "Tadiran Acquisition Agreements". The overall consideration
to be paid by the Company to Koor for the Tadiran Acquisition is approximately
$146 million, based on a purchase price of $37 per share. Interest is payable
for any amounts paid after April 1, 2005.
The Tadiran Acquisition will be made in two stages. In "Stage A" (as defined in
the Tadiran Deed), the Company will purchase from Koor 1,700,000 ordinary shares
of Tadiran, which currently constitute approximately 13.7% of Tadiran's ordinary
shares. Together with the approximately 5.2% of Tadiran's ordinary shares held
by the Company on February 1, 2005, the
4
Company would own approximately 18.9% of Tadiran's ordinary shares on the
completion of Stage A (based on Tadiran's current share capital without
reduction of treasury shares). Also on completion of Stage A, Koor has agreed to
support the appointment or election of at least 3 directors (but not less than
20% of Tadiran's directors) nominated by the Company to the Tadiran Board of
Directors (the "Tadiran Board"). Currently, the Tadiran Board consists of 10
directors, although 12 directors have been nominated for election at a General
Shareholders Meeting of Tadiran scheduled to be held on February 16, 2005. The
Tadiran Shareholders Agreement, which will become effective on the completion of
Stage A of the Tadiran Acquisition, also provides for other rights and
obligations of Koor and the Company as shareholders in Tadiran, as more fully
described in Annex A hereto.
In "Stage B" (as defined in the Tadiran Deed), the Company will purchase the
balance (an additional 2,244,276 shares) of the Tadiran ordinary shares
currently held by Koor, which would result in the Company holding a total of
approximately 37% of Tadiran's ordinary shares (based on Tadiran's current share
capital without reduction of treasury shares). Also, on completion of Stage B,
Koor will support the appointment or election of directors to Tadiran's Board,
so that following such appointment or election, more than 50% of the directors
on Tadiran's Board (including External Directors) will be nominees of the
Company.
Stage B is subject, among other conditions precedent as described in Annex A
hereto, to Tadiran purchasing at least 70% of the outstanding share capital of
Elisra Electronic Systems Ltd. ("Elisra") (such purchase referred to as the
"Elisra Acquisition"). Koor currently owns 70% of Elisra's outstanding share
capital. Should the Elisra Acquisition not occur within 16 months of the date of
the Tadiran Acquisition Agreements, and subject to the terms of the Tadiran
Deed, neither the Company nor Koor shall be obligated to complete Stage B of the
Tadiran Acquisition. However, in such case Koor will act to cause Koor and the
Company to have equal representation on the Tadiran Board, as provided in
Tadiran Shareholders Agreement.
The Tadiran Acquisition is subject to the approvals specified in the Tadiran
Deed, as described in Annex A hereto, including the approval of the Company's
shareholders at a General Shareholders Meeting as is being requested in this
Proxy Statement.
The Tadiran Acquisition is to be performed concurrently with the Koor - FEL
Transaction as described below.
The Tadiran Acquisition and the major provisions of the Tadiran Acquisition
Agreements are summarized in Annex A to this Proxy Statement, and English
translations of the Tadiran Deed and the Tadiran Shareholders Agreement are
attached in their entirety as Annexes C and D, respectively, to this Proxy
Statement.
All the translations referenced in this Proxy Statement are being attached for
the convenience of the reader, and in the event of any discrepancy between the
translations and the original Hebrew documents, the Hebrew documents will
prevail.
5
The Koor - FEL Transaction
Concurrently with the signing of the Tadiran Acquisition Agreements, Koor signed
a Share Transfer Deed (the "Koor - FEL Deed") and a Shareholders Agreement (the
"Koor - FEL Shareholders Agreement") with Federmann Enterprises Ltd. and one of
Federmann Enterprises Ltd.'s subsidiaries (collectively "FEL") relating to the
purchase by Koor from FEL of 4,000,000 ordinary shares of the Company,
representing approximately 9.8% of the Company's issued and outstanding ordinary
shares based on the Company's current share capital (the "Koor - FEL
Transaction"). (The Koor - FEL Deed and the Koor - FEL 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 Company share. Interest is
payable for any amounts paid after April 1, 2005.
The Koor - FEL Transaction will occur in two stages. "Stage A" (as defined in
the Koor - FEL Deed) of the Koor - FEL Transaction will occur concurrently with
Stage A of the Tadiran Acquisition. "Stage B" (as defined in the Koor - FEL
Deed) of the Koor - FEL Transaction will also 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 will
purchase 2,160,000 ordinary shares, representing approximately 5.3% of the
Company's shares (based on the Company's current share capital), and FEL will
support the appointment of one director nominated by Koor to the Company's Board
of Directors (the "Company'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 Company's shares (based on the
Company's current share capital), and FEL will support the appointment of an
additional director to the Company's Board (such that Koor nominees will consist
of not less than 20% of the directors on the Company's Board).
Under the Koor - FEL Shareholders Agreement, which will become effective upon
the completion of Stage A of the Koor - FEL Transaction, Koor will obtain
certain tag along rights in the event of FEL's sale of shares in the Company,
and Koor will be subject to certain restrictions on the transfer of its shares
in the Company. Also, Koor has agreed to vote at General Shareholders Meetings
of the Company in accordance with FEL's instructions, with certain exceptions,
and Koor will receive certain additional non-transferable rights, all as
described in Annex A hereto.
The major provisions of the Koor - FEL Agreements are summarized in Annex A of
this Proxy Statement, and English translations of the Koor - FEL Deed and the
Koor - FEL Shareholders Agreement are attached in their entirety as Annexes E
and F, respectively, of this Proxy Statement.
General descriptions of Koor, Tadiran and Elisra appear in Annex A to this Proxy
Statement.
Interested Party Transaction
The Company's management believes that the Tadiran Acquisition is beneficial to
the Company irrespective of the Koor - FEL Transaction. However, under Israeli
law, since the agreements
6
relating to the two transactions were signed concurrently, and the two
transactions will occur concurrently, and since FEL is considered a controlling
shareholder of the Company, the Tadiran Acquisition is considered an "interested
party transaction" in which FEL has a Personal Interest. Accordingly, the
Tadiran Acquisition is subject to the approval of the Company's Audit Committee
and the Company's Board, each with the participation of directors who are not
affiliated with FEL, as well as to the approval of the Company's shareholders by
a special majority required by the Companies Law for transactions of this
nature.
The Audit Committee of the Company's Board (the "Committee") has reviewed the
Tadiran Acquisition due to it being considered under Israeli law to be an
interested party transaction in which a controlling shareholder, FEL, has a
Personal Interest. The Committee's members, for this purpose, consisted of four
directors, none of whom are affiliated with FEL or have a Personal Interest in
the Tadiran Acquisition or the Koor - FEL Transaction and each of whom meets the
independence criteria of the U.S. Sarbanes-Oxley Act and the Nasdaq Marketplace
Rules.
In the course of several meetings over a two-week period, the Committee reviewed
the Tadiran Acquisition in order to determine whether it is beneficial to the
Company, without regard to the Koor - FEL Transaction. The Committee reviewed
the Tadiran Acquisition from a financial and strategic perspective, taking into
account, among other considerations, the potential impact of the Elisra
Acquisition (assuming it occurs) under the terms set forth in the Tadiran Deed.
In the course of its considerations the Committee requested and obtained an
independent opinion as to the fairness of the Tadiran Acquisition to the Company
and all of its shareholders (the "Fairness Opinion"). A copy of an English
translation of the Fairness Opinion is attached as Annex B to this Proxy
Statement. A further description of the process followed by the Committee and
the issues that it considered in approving the Tadiran Acquisition is contained
in Annex A to this Proxy Statement.
At the conclusion of its deliberations the Committee unanimously approved the
Tadiran Acquisition Agreements, finding the Tadiran Acquisition to be in the
interest of the Company and to all of its shareholders. In turn, the Company's
Board, in a forum consisting solely of the directors who served on the
Committee, unanimously approved the Tadiran Acquisition Agreements and is
recommending them for approval by the Company's shareholders pursuant to this
Proxy Statement.
At the Meeting, the Board of Directors will propose that the following
resolution be adopted:
"RESOLVED, that the Share Transfer Deed and the Shareholders
Agreement between the Company and Koor Industries Ltd., each
dated December 27, 2004, are hereby approved and ratified,
and that Joseph Ackerman, the Company's President and Chief
Executive Officer, and Joseph Gaspar, the Company's
Corporate Vice President and Chief Financial Officer, are
hereby authorized to take any and all required actions on
behalf of the Company to complete the transactions
contemplated by the aforesaid Share Transfer Deed and
Shareholders Agreement."
The members of the Board of Directors who participated in approving this matter
recommend a vote FOR approval of this resolution.
7
ITEM 2 - ELECTION OF
NATHAN SHARONY FOR AN ADDITIONAL TERM
AS AN EXTERNAL DIRECTOR
The Company is required under the Companies Law to have at least two
External Directors on its Board of Directors. Among other requirements of the
Companies Law, a person may not serve as an External Director if such person or
such person's relative, partner or employer, or any entity controlled by such
person has, at any time during the two years up to the date of appointment, any
affiliation with the Company, entities controlling the Company or entities
controlled by the Company. The term "affiliation" is broadly defined in the
Companies Law. In addition, no person may serve as an External Director if such
person's position or other business creates any conflict of interest with or
impairs his or her responsibilities as an External Director.
Each committee of the Company's Board of Directors is required to include
at least one External Director, and all External Directors must be members of
the Board of Directors' Audit Committee. An External Director is entitled to
compensation and to reimbursement of expenses as provided in regulations under
the Companies Law and is otherwise prohibited from receiving any other
compensation, directly or indirectly, in connection with services provided as an
External Director. External Directors are elected at a General Shareholders
Meeting and serve for a three-year term. The term may be extended for an
additional three-year term if the extension is approved by a General
Shareholders Meeting.
Nathan Sharony and Yaacov Lifshitz currently serve as the Company's
External Directors. Mr. Sharony has served as an External Director since March
2002, and his term of office as an External Director expires in March 2005. The
term of office of Mr. Lifshitz, who was elected as an External Director in
August 2003, expires in August 2006.
The Company's Board of Directors has recommended that Mr. Sharony's term as
an External Director be extended for an additional three-year period, and Mr.
Sharony has agreed to stand for re-election.
The Companies Law provides that a General Shareholders Meeting at which the
appointment of an External Director is to be considered will not be held unless
the nominee has declared to the Company that he or she complies with the
qualifications for appointment as an External Director. The proposed nominee,
Mr. Sharony, has declared to the Company that he complies with the
qualifications for re-appointment as an External Director. If elected for an
additional term as an External Director, he will hold office for a further
three-year period unless his office is vacated earlier in accordance with the
provisions of the Companies Law or the Company's Articles of Association. If for
any reason Mr. Sharony should be unable to serve, another person will be elected
in accordance with applicable law.
Background information regarding Mr. Sharony, who is 70 on the date of this
Proxy Statement, is as follows:
8
Nathan Sharony has served since 1997 as a director for several companies.
He currently serves as a director for Technorov Holdings (1993) Ltd.
("Technorov"), a high technology investment company, Bituach Yashir Ltd., Union
Bank, Ormat Industries Ltd., Genoa Technologies Ltd. and Israel Bonds
International Inc. From 1997 to 1999, he served as Chairman of Technorov. From
1994 to 1997, he was Chief Executive Officer of Israel Bonds, a U.S. brokerage.
Mr. Sharony served as the Director General of the Israel Ministry of Industry
and Trade from 1992 to 1994. Prior to that, Mr. Sharony held a number of
positions in industry and government including head of the Israeli Government
Economic Mission to the U.S., President and Chief Executive Officer of Elop
Electro-Optics Industries, Ltd. and Vice President for Logistics of Tadiran Ltd.
In 1982, Mr. Sharony completed 30 years of service in the IDF, retiring with the
rank of Major General. Mr. Sharony participated in the Field Artillery Battery
Officers Course in Fort Sill, Oklahoma.
At the Meeting, the Board of Directors will propose that the following
resolution be adopted:
"RESOLVED, that Mr. Nathan Sharony be elected for an
additional three-year term as an External Director of the
Company commencing on March 24, 2005."
The Board of Directors recommends a vote FOR approval of this resolution.
By Order of the Board of Directors
MICHAEL FEDERMANN
Chairman of the Board of Directors
JOSEPH ACKERMAN
President and Chief Executive Officer
Date: February 7, 2005
9
ANNEX A
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
SUMMARY OF TADIRAN ACQUISITION TRANSACTION
A-1
A. Overview of the Transaction
The Tadiran Acquisition
A general description of the Tadiran Acquisition appears in Item 1 to the Proxy
Statement. The terms, time periods, conditions precedent and approvals for the
Tadiran Acquisition are set forth in the Tadiran Deed, the major provisions of
which are summarized in Section D.1 below. The full text of a translation into
English of the Tadiran Deed appears in Annex C of this Proxy Statement. The
terms relating to Koor and the Company as shareholders in Tadiran are fully
described in the Tadiran Shareholders Agreement, the major provisions of which
are summarized in Section D.2 below. The full text of a translation into English
of the Tadiran Shareholders Agreement appears in Annex D to this Proxy
Statement.
Koor - FEL Transaction
A general description of the Koor - FEL Acquisition appears in Item 1 to the
Proxy Statement. The terms, time periods, conditions precedent and approvals for
the Koor - FEL Transaction are set forth in the Koor - FEL Deed, the major
provisions of which are summarized in Section E.1 below. The full text of a
translation into English of the Koor - FEL Deed appears in Annex E of this Proxy
Statement. The terms relating to Koor and FEL as shareholders in the Company are
fully described in the Koor - FEL Shareholders Agreement, the major provisions
of which are summarized in Section E.2 below. The full text of a translation
into English of the Koor - FEL Shareholders Agreement appears in Annex F to this
Proxy Statement.
The Elisra Acquisition
Prior to the Company and Koor entering into the Tadiran Acquisition Agreements,
Tadiran's Board of Directors and management had announced their intention to
pursue the acquisition of at least 70% of the outstanding share capital of
Elisra. This transaction is considered under Israeli law to be an interested
party transaction in which Koor, who is considered a controlling shareholder of
Tadiran, has a Personal Interest. It should be noted that other than as a
shareholder in Tadiran, the Company has no other involvement in the Elisra
Acquisition.
Tadiran has established a committee of members of its Board of Directors who are
not affiliated with Koor, to review the process for, and approve the terms of,
the Elisra Acquisition. This process will include investigation of the synergy
of Elisra's and Tadiran's businesses, the impact of the Elisra Acquisition on
Tadiran, due diligence and obtaining an outside independent financial appraisal
of Elisra. If the Tadiran Board committee approves such terms, the Elisra
Acquisition will be submitted for approval to Tadiran's audit committee and
Tadiran's Board, and upon their approval, for approval to the shareholders of
Tadiran at a General Shareholders Meeting, subject to the special majority
required under the Companies Law for shareholder approval of interested party
transactions. Due to the terms of the Tadiran Acquisition, during the
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period that the Tadiran Deed is in effect and binding on the Company, the
Company will be deemed to have a Personal Interest in the Elisra Acquisition for
purposes of the voting requirements at a General Shareholders Meeting of Tadiran
convened for approving the Elisra Acquisition.
Under the terms of the Tadiran Deed, the Company has agreed to vote its shares
in Tadiran in support of the Elisra Acquisition, subject to the favorable
recommendation of the Tadiran Board committee as described above (in reliance on
an outside independent financial appraiser), determining that the price and
terms of the Elisra Acquisition are not contrary to the interests of Tadiran. In
addition, the Tadiran Deed provides that in the event the company value of
Elisra established for the Elisra Acquisition exceeds $225 million, then the
Company shall not be required to vote in favor of the Elisra Acquisition or
complete Stage B of the Tadiran Acquisition, but shall be entitled to equal
representation on the Tadiran Board under the terms of the Tadiran Shareholders
Agreement.
Descriptions of Koor, Tadiran and Elisra
Koor. Koor Industries Ltd. is a major Israeli investment holding company,
focusing on high-growth internationally oriented Israeli companies. Koor
holdings include companies in the area of telecommunications through ECI
Telecom, Telrad Networks and ECTel; in agrochemicals through Makhteshim Agan
Industries; and in defense electronics through Tadiran Communications and the
Elisra Defense Group. Koor also invests in start-ups through Koor Corporate
Venture Capital. Koor's American Depository Shares are traded on the New York
Stock Exchange (NYSE: KOR), and its ordinary shares are traded on the Tel Aviv
Stock Exchange (TASE: KOR).
Tadiran. Tadiran Communications Ltd. is an Israeli company and one of the
leading companies in the worldwide market for military communications systems
and equipment. Tadiran currently has approximately 1,100 employees and
significant design, manufacturing and logistics support capabilities. It
reported annual sales for 2003 in excess of $270 million and sales of
approximately $236 million for the first three quarters of 2004, of which over
80% was derived from exports, with sales to more than 50 countries. Tadiran's
shares are traded on the Tel Aviv Stock Exchange (TASE: TDCM). Koor is currently
the largest shareholder in Tadiran, with no other individual shareholder holding
more than 10% of Tadiran's shares.
Elisra. The Elisra Defense Group is comprised of Elisra Electronic Systems Ltd.,
a privately held Israeli company, and Elisra's two wholly owned Israeli
subsidiaries - Tadiran Electronic Systems Ltd. and Tadiran Spectralink Ltd. The
Elisra Defense Group, which currently has approximately 1,250 employees,
specializes in the design, manufacture, integration and support of advanced
defense solutions for air, sea and land deployment for customers in over 25
countries. Koor currently owns 70% of Elisra's shares, with the balance being
owned by Elta Systems Ltd., a subsidiary of Israel Aircraft Industries Ltd.
B. Requirement for Shareholders' Approval
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As described in Item 1 of the Proxy Statement, since the Tadiran Acquisition is
being made concurrently with the Koor - FEL Transaction, and since the
agreements underlying the two transactions were signed concurrently, the Tadiran
Acquisition is considered under Israeli law as being an interested party
transaction in which FEL, which is considered under the Companies Law a
controlling shareholder of the Company, has a Personal Interest. Under the
Companies Law, a Personal Interest means a person's interest in an act or
transaction of a company, including an interest of such person's relative or of
another entity in which such person or his or her relative are interested
parties.
Accordingly, the Companies Law requires that the Tadiran Acquisition be approved
by both the Audit Committee of the Company's Board of Directors, as well as by
the Board of Directors as a whole, in each case without the participation of any
directors who are affiliated with FEL or who may otherwise have a Personal
Interest in the transaction.
In addition to the above mentioned approvals by the Company's Audit Committee
and Board of Directors, the Companies Law requires that such interested party
transactions be approved by a special majority of the Company's shareholders at
a General Shareholders Meeting. The majority required includes a majority of the
shares voted regarding the transaction at the meeting, provided that (i) the
majority includes at least one-third (1/3) of the total votes of shareholders
having no Personal Interest in the transaction who vote on the matter
(abstentions will not be taken into account) or (ii) the total number of votes
of the shareholders mentioned in (i) above that are voted against the
transaction does not exceed one percent (1%) of the Company's voting rights.
C. Basis for Audit Committee and Board of Directors Approval of the Tadiran
Acquisition
Review by Independent Directors
Due to the concurrent signing and performance of the Tadiran Acquisition and the
Koor - FEL Transaction, the Company's Audit Committee (the "Committee") reviewed
the Tadiran Acquisition from the perspective of its benefit to the Company,
irrespective of the Koor - FEL Transaction. For this purpose, the Committee
consisted of four members, none of whom are affiliated with FEL or have any
Personal Interest in the Tadiran Acquisition or the Koor - FEL Transaction,
including the two External Directors. Each of the Committee members meets the
board member independence criteria under the U.S. Sarbanes-Oxley Act as well as
those of the Nasdaq Marketplace Rules.
Process Followed
The Committee met on five separate occasions over an approximately two-week
period to extensively review the transaction and proposed agreements. The
Committee received
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presentations from Company management regarding the strategic and financial
aspects of the Tadiran Acquisition. The Committee also consulted with both the
Company's in-house counsel as well as outside counsel, who had no role in
advising FEL in the Koor - FEL Transaction, regarding legal implications of the
transactions and the Committee's role in reviewing a transaction of this nature.
Matters Considered
The Committee reviewed the terms of the Tadiran Acquisition Agreements in detail
as well as the terms of the Koor - FEL Transaction. Company management made
presentations to the Committee regarding the various implications to the Company
of the Tadiran Acquisition, including the possibility that only Stage A may
occur as well as the possibility that Tadiran may make the Elisra Acquisition
under terms that are not all known at this point in time. The Company's finance
department presented the Committee with the anticipated financial impact of the
Tadiran Acquisition on the Company and its financial results.
Fairness Opinion
The Committee reviewed the qualifications of Giza Singer Even Ltd. ("GSE"), an
experienced independent financial consultant, and following such review retained
GSE to provide the Company's Board of Directors with a fairness opinion
regarding the Tadiran Acquisition. The fairness opinion was made in reliance
upon interviews conducted by GSE with representatives of the management of Koor
and Tadiran. GSE also conducted general discussions with the Company's
management regarding the business environment in which the various companies
operate. The fairness opinion considered only publicly available information
regarding Elisra, and did not include a company valuation of Elisra.
The fairness opinion, which was provided to the Board of Directors on January 4,
2005, indicates that in the opinion of GSE the Tadiran Acquisition, subject to
all of its terms and stages, including the possibility that only Stage A would
occur and/or the possibility that Tadiran would make the Elisra Acquisition, is
fair and reasonable from the perspective of the Company and all of its
shareholders. A copy of a translation into English of the fairness opinion is
attached as Annex B to this Proxy Statement.
Audit Committee and Board Approval
Following the Committee's extensive review of the above mentioned issues and
receipt of the fairness opinion, the Committee unanimously approved the Tadiran
Agreements on January 5, 2005. Immediately thereafter, the Company's Board of
Directors, consisting for this purpose of only those directors who participated
in the Committee, also unanimously approved the Tadiran Agreements as being in
the interest of the Company and its shareholders as a whole.
A-5
D. Summary of the Major Provisions of the Tadiran Acquisition Agreements
1. Tadiran Deed (for a full English translation see Annex C to this Proxy
Statement)
Overview
The Tadiran Deed is an agreement for the Company's purchase, in two stages, of
Koor's 3,944,276 ordinary shares of Tadiran (the "Transaction Shares") which
currently constitute approximately 31.8% of the Tadiran's outstanding share
capital without reduction of treasury shares, for an overall consideration of
approximately $146 million.
Representations
Under the Tadiran Deed, the Company will purchase the Transaction Shares on an
"as is" basis and on the basis that the condition of Tadiran and its assets are
"as is". However, Koor undertook that upon the completion of each stage of the
Tadiran Acquisition the Transaction Shares that will be purchased at the
relevant stage will be transferred to the Company free and clear of any third
party rights. Koor also warranted that from the time the Transaction Shares were
acquired by Koor until the time of signing the Tadiran Deed, Tadiran had not
brought to Koor's attention nor given any report to the public that any material
agreement to which Tadiran is a party had been terminated or modified or that
there was any intent to terminate or modify any material agreement to which
Tadiran is a party.
Stage A
Timing. The completion deadline for Stage A of the Tadiran Acquisition is March
31, 2005. However, if by March 31, 2005 all the Stage A conditions precedent
(see below) have been fulfilled, other than the approval of the Israeli
Commissioner of Restrictive Trade Practices, the Stage A deadline shall be
automatically deferred until May 31, 2005 or to such later date as may be agreed
by the parties.
Share Purchase and Consideration
Pursuant to Stage A of the Tadiran Acquisition, the Company will purchase from
Koor 1,700,000 ordinary shares of Tadiran, which currently constitute
approximately 13.7% of Tadiran's outstanding share capital without deduction of
treasury shares, for a consideration of $37 per share, totalling $62,900,000.
Insofar as all or part of that amount is unpaid after April 1, 2005, such unpaid
amount shall accrue interest from April 1, 2005 until the time of actual
payment. The interest will be at the rate of three-month LIBOR at Bank Leumi
Le-Israel B.M., plus annual interest at the rate of 1.5%, compounded every three
months.
A-6
The Tadiran Deed also includes provisions for modification of the consideration
to be paid for the Transaction Shares or of the quantity of Transaction Shares,
if certain changes occur in the share capital or equity of Tadiran as a result
of distribution of dividends, distribution of bonus shares, rights offerings,
consolidations, sub-divisions or similar events.
Board Nominees. Subject to the completion of Stage A, Koor will act to support
the appointment or election to Tadiran's Board of such number of directors as
are nominated by the Company, and who meet qualification conditions for
membership on Tadiran's Board, such that after their appointment or election,
the number of directors who have been nominated by the Company will be the
greater of:
(1) three directors; or
(2) a number of directors equal to 20% of the number of the Tadiran's directors
(including External Directors and the directors who are appointed or
elected in accordance with the Company's nomination as aforesaid), rounded
up to the nearest whole number.
Conditions Precedent. Stage A of the Tadiran Deed and Stage A of the Koor - FEL
Deed will be completed concurrently. Therefore obtaining all the consents and
approvals necessary for the fulfilment of the Koor - FEL Deed Stage A conditions
precedent and the completion of Stage A of the Koor - FEL Deed is a condition
precedent for the completion of Stage A of the Tadiran Deed.
The other conditions precedent for the performance of Stage A of the Tadiran
Deed are:
(1) obtaining approval from the Company's shareholders at a General
Shareholders Meeting for the Company to enter into the Tadiran Acquisition
Agreements;
(2) insofar as necessary, obtaining applicable regulatory approvals in Israel
and outside Israel; and
(3) insofar as necessary, obtaining applicable approvals from certain banks or
other financial institutions.
Stage B
Timing. The completion deadline for Stage B of the Tadiran Acquisition is June
30, 2005. However, if all the Stage B conditions precedent (see below) have not
been fulfilled by June 30, 2005, the Stage B completion deadline shall
automatically be deferred until September 30, 2005. Moreover, if by September
30, 2005, all the Stage B conditions precedent have been fulfilled, except for
the completion of the Elisra Acquisition, Koor shall be entitled to provide
written notice to the Company of deferral of the Stage B completion deadline
until April 30, 2006 or such later date as may be determined by the parties.
A-7
Share Purchase and Consideration. Pursuant to Stage B of the Tadiran
Acquisition, the Company will purchase from Koor 2,244,276 ordinary shares of
Tadiran, which currently constitute approximately 18.1% of Tadiran's outstanding
share capital without deduction of treasury shares, for a consideration of $37
per share, totalling $83,038,212. Insofar as all or part of that amount is
unpaid after April 1, 2005, such unpaid amount shall accrue interest from April
1, 2005 until the time of actual payment, at the same rate of interest as is
applicable to Stage A. The amount of the consideration and the quantity of
Transaction Shares are subject to modification under the same circumstances as
described above with respect to Stage A.
Board Nominees. Subject to the completion of Stage B, Koor shall act to support
the appointment or election to Tadiran's Board of such number of directors as
are nominated by the Company, and who meet the Board member qualification
conditions, such that after their appointment or election, the number of
directors nominated by the Company will constitute more than 50% of the total
directors of Tadiran at that time.
Conditions Precedent
Stage B of the Tadiran Deed and Stage B of the Koor - FEL Deed are to be
completed concurrently. Therefore obtaining all the consents and approvals
necessary for the fulfilment of the Koor - FEL Deed Stage B conditions precedent
and the completion of Stage B of the Koor - FEL Deed is a condition precedent
for the completion of Stage B of the Tadiran Deed. Nevertheless, this condition
may not apply if the completion deadline for Stage B of the Koor - FEL Deed will
not be extended concurrently with the extension of Stage B of the Tadiran Deed,
under the circumstances described below under the heading of "The Koor - FEL
Deed" relating to the timing of Stage B of the Koor - FEL Deed.
The other conditions precedent for the performance of Stage B are:
(1) the completion of Stage A of the Tadiran Acquisition;
(2) the completion of the Elisra Acquisition;
(3) insofar as necessary, obtaining applicable regulatory approvals in Israel
and outside Israel; and
(4) insofar as necessary, obtaining applicable approvals from certain banks or
other financial institutions.
Lock-up Period
The Company and Koor agreed to a lock-up period from the signing of the Tadiran
Deed until April 30, 2006, during which each of them will not conduct any
transaction in Tadiran shares. This obligation shall continue in force even if
the Tadiran Deed is cancelled for any reason, except for termination due to its
breach by Koor and except if the Company exercises its walk-away rights under
the terms of the Tadiran Deed as described below. Nevertheless, during the
lock-up period either party may purchase up to 350,000 shares of Tadiran. To the
extent one of
A-8
the parties does not exercise its right to purchase such a quantity of shares,
the other party may exercise the right in the first party's place, subject to
certain notice provisions. This lock-up period undertaking will be applicable to
the Company only if the Company's shareholders, at a General Shareholders
Meeting pursuant to this Proxy Statement, approve the Tadiran Acquisition
Agreements.
Voting for the Elisra Acquisition
During the period that the Tadiran Deed is in effect and binding on the Company,
the Company has agreed to vote all of the shares in Tadiran then held by the
Company at a General Shareholders Meeting of Tadiran's shareholders in favor of
approving the Elisra Acquisition. This obligation will apply whether or not any
or all of the transactions contemplated by the Tadiran Deed are actually
implemented, provided that:
(1) the Elisra Acquisition consideration to be paid by Tadiran is established
in reliance on an evaluation by an outside independent appraiser obtained
by Tadiran for the purpose of the Elisra Acquisition, and the consideration
and terms and conditions of the Elisra Acquisition have been duly approved
by Tadiran's audit committee and board of directors and by any independent
committee of Tadiran that is or may be established for the purpose of
considering the Elisra Acquisition, and Tadiran's audit committee and board
of directors have determined that the Elisra Acquisition is not contrary to
the interests of Tadiran;
(2) the consideration for the Elisra Acquisition, as payable by Tadiran,
reflects a company value for Elisra of not more than $225 million; and
(3) the Elisra Acquisition is approved by a General Shareholders Meeting of
Tadiran's shareholders by April 30, 2006.
This undertaking by the Company to vote in favor of the Elisra Acquisition will
be applicable to the Company only if the Company's shareholders, at a General
Shareholders Meeting pursuant to this Proxy Statement, approve the Tadiran
Acquisition Agreements.
Further Undertakings by Koor
Koor has undertaken that, from the date of the signature of the Tadiran Deed and
until the earlier of:
(1) the Stage A completion deadline, if the Stage A conditions precedent have
not been fulfilled by that time; or
(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", as defined in the Tadiran Deed;
Koor and/or its subsidiaries and/or the controlling shareholders and/or officers
of Koor and/or companies under the control of any of them will not enter into an
extraordinary transaction with
A-9
Tadiran in which any of them has a Personal Interest, other than the Elisra
Acquisition. In addition, Koor has undertaken that it will oppose and vote
against certain shareholder resolutions of Tadiran, in relation to certain
events as specified in the Tadiran Deed.
"Walk-away" Provisions
The Company may rescind the Tadiran Deed or any of its stages before such stage
has been completed and performed in the event of the occurrence of one or more
of certain events such as: liquidation, insolvency or similar proceedings of
Tadiran; merger proceedings of Tadiran; alterations to Tadiran's incorporation
documents; private placements that vest a right to more than 1,500,000 shares of
Tadiran (with certain exclusions); certain new transactions of Tadiran that are
not in the ordinary course of business or that involve the sale or purchase of
assets or equity, if their aggregate amount exceeds $35 million, except for the
Elisra Acquisition; distributions of dividends in an aggregate amount exceeding
New Israeli Shekels 2.5 per share of Tadiran in any calendar quarter; or
completion of the Elisra Acquisition for consideration paid by Tadiran
reflecting a company value for Elisra in excess of $225 million.
Relation to Koor - FEL Deed
Contemporaneously with the signing of the Tadiran Deed, the Koor - FEL Deed was
also signed. The Company is not a party to the Koor - FEL Deed, and the
provisions of the Koor - FEL Deed do not impose any obligation, that is not
expressly provided in the Tadiran Deed, on Koor to the Company or on the Company
to Koor.
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2. Tadiran Shareholders Agreement (for a full English translation see Annex D
to this Proxy Statement)
Effective Date and Duration
The Tadiran Shareholders Agreement signed between the Company and Koor will
become effective upon the completion of Stage A of the Tadiran Acquisition, and
will remain in force so long as the parties cumulatively hold shares of Tadiran
entitling them to at least 15% of the voting rights in Tadiran and provided that
each party holds shares of Tadiran.
Nomination of Directors following the Completion of Stage A
Following completion of Stage A of the Tadiran Acquisition, Koor and the Company
shall act to support the appointment or election of directors nominated by the
Company to Tadiran's Board, as provided in the Tadiran Deed described above.
Subject to applicable law, Koor and the Company shall act so that there shall
serve at least one director nominated by the Company on every board of
directors' committee of Tadiran, other than the audit committee. The parties
also shall act so that a director of Tadiran, who has been nominated by the
Company, shall serve as chairperson of the finance committee of Tadiran's Board.
If Koor exercises its right under the Tadiran Deed to defer the Stage B
completion deadline from September 30, 2005 until April 30, 2006 (the
"Additional Period"), on commencement of the Additional Period Koor will support
the appointment or election of an additional director nominated by the Company
to Tadiran's Board, so that there shall be a total of twelve directors on
Tadiran's board of directors, four of whom shall have been nominated by the
Company. Also, during the Additional Period, Koor shall act to support that on
every board of directors' committee, at least one-third of the committee members
shall be directors who were nominated by the Company.
Arrangements Following Completion of Stage B
Voting at Shareholder Meetings. After and subject to completion of Stage B of
the Tadiran Acquisition, if and to the extent that at that time Koor continues
to be a shareholder of Tadiran, Koor has undertaken to participate in every
General Shareholders Meeting of Tadiran and vote in respect of all the Tadiran
shares held by it on every matter and/or decision that is referred for a
resolution of Tadiran's shareholders in accordance with instructions that are
given to it by the Company. However, Koor shall not be so obligated with respect
to shareholders' resolutions concerning the approval of transactions of Tadiran
in which the Company, or the Company's controlling shareholders or officers, has
a Personal Interest, if such voting by Koor as instructed by the Company would
cause Koor to breach any obligations imposed on Koor by law.
Company's Option to Purchase Koor's Additional Shares in Tadiran
A-11
Subject to the completion of Stage B of the Tadiran Acquisition, Koor grants the
Company the option to purchase from Koor any or all of the shares of Tadiran
that may be issued to or vested in Koor by Tadiran after the signature of the
Tadiran Deed (the "Additional Shares"). Said option shall apply as follows:
(1) to all of the Additional Shares for a period of 90 days after the
completion of Stage B;
(2) to one-half of the Additional Shares for a period commencing at the end of
90 days from the completion of Stage B and ending 180 days after said
completion, provided these shares were not purchased by the Company in
accordance with the sub-section (1) above; and
(3) to one-quarter of the Additional Shares for a period commencing at the end
of 180 days from the completion of Stage B and ending 365 days after said
completion, provided these shares were not purchased by the Company in
accordance with sub-sections (1) or (2) above.
The Additional Shares shall be purchased for consideration per Additional Share
equal to the average of: (a) the price per share at which the Additional Shares
were issued to Koor by Tadiran or vested in Koor by Tadiran, less any dividends
distributed for each share by Tadiran, commencing from the date on which Koor
was issued or vested in the share, and (b) the price per share of Tadiran on the
Tel Aviv Stock Exchange. For this purpose, the stock exchange price per share of
Tadiran shall be the average price of the share at the end of each of the ten
stock exchange trading days preceding the date on which notice is provided by
the Company in respect of the option's exercise.
Arrangements if Stage B is Not Completed
If after the Stage B completion deadline, including any extension of that date
in accordance with the Tadiran Deed, Stage B is not completed the following
arrangements shall apply between Koor and the Company in respect of their
cumulative holdings in Tadiran:
Board of Directors
(1) So long as the holdings of each of the parties are not less than 12% of
Tadiran's issued share capital, the parties shall act and vote by virtue of
all their cumulative holdings so that:
(a) There shall be 12 directors of Tadiran, including five who are
nominated by the Company, five who are nominated by Koor and two
External Directors.
(b) On all board of directors' committees there shall be equal
representation of the directors who are nominated by each party.
(c) When the term of office of the first of the two External
Directors serving on Tadiran's Board comes to an end, the Company
shall be entitled to nominate a candidate for the office of
External Director. When the term of office of the other of the
two External Directors comes to an end, Koor shall be entitled to
nominate a candidate for the office of External Director.
A-12
(d) Until December 31, 2006, the chairperson of Tadiran's Board shall
be a director recommended to that office by Koor. For the next 24
months, the office shall be held by a director recommended to the
office by the Company, and thereafter the right to recommend the
chairperson shall so alternate every 24 months.
(2) Should the holdings of either of the parties fall below 12% of Tadiran's
issued share capital, but so long as such party's holdings are not less
than 9% of Tadiran's issued share capital, that party shall be entitled
(under the above mentioned arrangements) to a number of directors equal to
its percentage holdings in Tadiran divided by the total cumulative holdings
of the parties multiplied by the number of directors then serving on the
Tadiran Board (rounded to the nearest whole number), provided that the
number of directors who are appointed or elected on the recommendation of
that party shall not be less than 20% of the total number of directors
(rounded up to a whole number).
(3) Should the holdings of either of the parties fall below 9% of the issued
share capital of Tadiran, but so long as they have not fallen below 5% of
Tadiran's issued share capital, that party shall be entitled (under the
above mentioned arrangements) to a number of directors equal to its
percentage holdings in Tadiran divided by the total cumulative holdings of
the parties multiplied by the number of directors then serving on the
Tadiran Board (rounded to the nearest whole number).
(4) Should the holdings of either of the parties fall below 5% of the issued
share capital of Tadiran, that party shall not be entitled (under the above
mentioned arrangements) to representation on Tadiran's Board.
Voting at Shareholders' Meetings
(1) The parties shall coordinate between them in advance the manner in which
they will vote on every resolution at a General Shareholders Meeting of
Tadiran. The parties shall act and vote by virtue of their cumulative
holdings against any proposed resolution in a General Shareholders Meeting
unless it is first agreed in writing between them to vote in its favor.
(2) Should the holdings of a party fall below 12% of Tadiran's issued share
capital, but so long as they have not fallen below 9% of the issued share
capital, the provisions regarding coordination in advance of voting at
General Shareholders Meetings shall not apply between the parties.
(3) If the holdings of a party fall below 9% of Tadiran's issued share capital,
that party undertakes to vote with all its shares in Tadiran at every
General Shareholders Meeting in accordance with the other party's
instructions, except in connection with a shareholders' resolution
concerning the approval of a transaction in which the other party or its
controlling shareholders or officers has a Personal Interest, if so voting
would cause the first party to breach duties imposed on it by law.
A-13
Restrictions on Transfer of Shares
(1) A transfer by either the Company or Koor of any of the 4,462,764 shares of
Tadiran, constituting all the shares held by Koor or by the Company as of
December 27, 2004, and any shares which may be issued or vested with
respect to these shares, (the "Core Shares"), shall be subject to a right
of first refusal of the other party, excluding a sale by a party of Core
Shares on the stock exchange, provided that such sale meets both of the
following conditions: (a) a party shall not sell more than 3% of Tadiran's
issued share capital during a 12-month period; and (b) a party shall not
sell more than 1.5% of Tadiran's issued share capital in the course of one
transaction or one act.
(2) If a party's total holdings in Tadiran's shares fall below 5% of the issued
share capital of Tadiran, that party may sell the shares in the course of
trading on the stock exchange without the application the above mentioned
right of first refusal provisions or the conditions for sale on the stock
exchange.
(3) Koor granted the Company options to purchase from Koor shares that are not
part of the Core Shares, which may be issued to Koor by Tadiran or vested
in Koor by Tadiran after signature of the Tadiran Deed, at the times and on
the terms described above under the heading "Arrangements following
Completion of Stage B".
E. Summary of the Major Provisions of the Koor - FEL Agreements
1. Koor - FEL Deed (for a full English translation see Annex E to this Proxy
Statement)
Overview
The Koor - FEL Deed is an agreement setting out the terms and conditions for the
Koor - FEL Transaction, under which Koor will purchase, in two stages, 4,000,000
of the Company's ordinary shares from FEL (the "Transaction Shares"), for an
overall consideration of approximately $99 million. The Transaction Shares
currently constitute approximately 9.8% of the Company's issued share capital.
Contemporaneously with the signing of the Koor - FEL Deed, the Tadiran Deed was
also signed.
Representations
Under the Koor - FEL Deed, Koor will purchase the Transaction Shares on an "as
is" basis and on the basis that the condition of the Company and its assets are
"as is". However, FEL undertook that upon the completion of each stage of the
Koor - FEL Transaction the Transaction Shares to be purchased at the relevant
stage, would be free and clear of any third party rights.
A-14
Stage A
Timing. The completion deadline for Stage A of the Koor - FEL Transaction is
March 31, 2005. However, if by March 31, 2005 all the Stage A conditions
precedent (see below) have been fulfilled, other than receipt of the approval of
the Israeli Commissioner of Restrictive Trade Practices, the Stage A completion
deadline shall be automatically deferred until May 31, 2005, or to such later
date as may be agreed by the parties.
Share Purchase and Consideration
Pursuant to Stage A of the Koor - FEL Transaction, Koor will purchase from FEL
2,160,000 ordinary shares of the Company, which currently constitute
approximately 5.3% of the Company's issued share capital, for a consideration of
$24.70 per share, totaling $53,352,000. Insofar as all or part of that amount is
unpaid by April 1, 2005, such unpaid amount shall accrue interest from April 1,
2005 until the time of actual payment, at the same interest rate as is
applicable to payments under the Tadiran Deed as described above.
The Koor - FEL Deed includes provisions allowing modifications to the amount of
the consideration to be paid for the Transaction Shares and to the quantity of
the Transaction Shares if certain changes in the capital or equity of the
Company occur, such as distribution of dividends, distribution of bonus shares,
rights offerings, consolidations, sub-divisions or similar events.
Board Nominees. Subject to the completion of Stage A of the Koor - FEL
Transaction, FEL shall support the appointment or election to the Company's
Board of one nominee proposed by Koor, who meets the applicable qualification
conditions for serving on the Company's Board.
Conditions Precedent
Stage A of the Koor - FEL Deed and Stage A of the Tadiran Deed will be completed
together. Therefore obtaining the consents and approvals necessary for the
fulfillment of the Tadiran Deed Stage A conditions precedent and the completion
of Stage A of the Tadiran Deed is a condition precedent for the completion of
Stage A of the Koor - FEL Deed.
Other conditions precedent for the performance of Stage A of the Koor - FEL
Transaction are:
(1) insofar as necessary, obtaining applicable regulatory approvals in Israel
and abroad; and
(2) insofar as necessary, obtaining applicable approvals from banks and other
financial institutions.
Stage B
Timing. The completion deadline for Stage B of the Koor - FEL Transaction is
June 30, 2005. However, subject to FEL's rights as provided below, if all the
Stage B conditions precedent have not been fulfilled by June 30, 2005, the Stage
B completion deadline shall be automatically deferred until September 30, 2005.
The Stage B completion deadline shall be further deferred if and to the extent
the Stage B completion deadline for the Tadiran Acquisition is deferred, unless
A-15
FEL informs Koor that FEL is unwilling to defer the Stage B completion deadline.
If FEL so informs Koor, Koor may elect to complete Stage B of the Koor - FEL
Transaction even if Stage B of the Tadiran Acquisition has not been completed,
if all other conditions precedent for Stage B of the Koor - FEL Transaction have
been met other than the completion of the Elisra Acquisition and the conditions
precedent specified in the Tadiran Deed for Stage B of the Tadiran Acquisition.
Share Purchase and Consideration. Pursuant to Stage B of the Koor - FEL
Transaction, Koor will purchase from FEL 1,840,000 ordinary shares of the
Company, which currently constitute approximately 4.5% of the Company's issued
share capital, for a consideration of $24.7 per share, totalling $45,448,000.
Insofar as all or part of that amount is unpaid by April 1, 2005, such unpaid
amount shall accrue interest from April 1, 2005 until the time of actual payment
at the same rate interest as applicable to Stage A. Also, the amount of the
consideration and the quantity of Transaction Shares are subject to modification
under the same circumstances as described above with respect to Stage A.
Board Nominees. Subject to the completion of Stage B of the Koor - FEL
Transaction, FEL will support the appointment or election to the Company's Board
of such number of directors as are nominated by Koor, who meet the applicable
qualification conditions, so that after their appointment or election, the
number of directors nominated by Koor shall be 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 the director or
directors appointed or elected pursuant to Koor's nomination as
aforesaid), rounded up to the nearest whole number.
Conditions Precedent
Stage B of the Koor - FEL Deed and Stage B of the Tadiran Deed will be completed
together. Therefore obtaining all the consents and approvals necessary for the
fulfillment of the Tadiran Deed Stage B conditions precedent and the completion
of Stage B of the Koor - FEL Deed is a condition precedent for the completion of
Stage B of the Koor - FEL Deed. Nevertheless, this condition may not apply if
the completion deadline for Stage B of the Koor - FEL Deed is not extended
contemporaneously with Stage B of the Tadiran Deed, as described above.
Other conditions precedent for the performance of Stage B of the Koor - FEL
Transaction are:
(1) the completion of Stage A of the Koor - FEL Transaction;
(2) the completion of the Elisra Acquisition; and
(3) insofar as necessary, obtaining applicable regulatory approvals in Israel.
Koor shall be entitled to waive fulfillment of part of the conditions precedent
for the completion of Stage B of the Koor - FEL Transaction as described in the
Koor - FEL Deed, and in this case, Stage B will be completed notwithstanding
non-fulfillment of such conditions precedent.
Transactions with Interested Parties
A-16
From the date of signing the Koor - FEL 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;
FEL and/or its subsidiaries and/or the controlling shareholders and/or officers
of FEL 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 the Koor - FEL
Deed and the Tadiran Deed. In addition, FEL has undertaken that it will oppose
and vote against certain shareholder resolutions of the Company in relation to
certain events as described in the Koor - FEL Deed.
"Walk-away" Provisions
Koor may rescind the Koor - FEL Deed or any of its stages before such stage has
been completed upon the occurrence of one or more of certain events such as:
liquidation, insolvency or similar proceedings of the Company or merger
proceedings of the Company.
2. Koor - FEL Shareholders Agreement (for a full English translation see Annex
F to this Proxy Statement)
Effective Date and Duration
The Koor - FEL Shareholders Agreement shall take effect upon completion of Stage
A of the Koor - FEL Transaction. The Koor - FEL 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 Koor - FEL
Shareholders Agreement) holdings in the FEL Shares together with Koor's (or a
Transferor Party) holdings in the "Koor Shares" (as defined in the Koor - FEL
Shareholders Agreement) fall below 25% of the Company's issued and outstanding
share capital, whichever is earlier.
In addition, after April 1, 2009, Koor may elect to bring to an end its rights
and obligations under the Koor - FEL Shareholders Agreement, with the exception
of the provisions specified in Clauses 11.6 and 11.7 thereof.
Board Members
Currently the Company has 8 directors, including the two External Directors. The
Company's Articles of Association provide that the standard number of directors
on the Company'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.
A-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 Company's share capital, or below 2,050,000
shares, whichever is sooner, FEL shall vote all its holdings of the Company's
shares in favor of the election of one director nominated by Koor.
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
Company's Board who are nominated by Koor, in a number equal to the higher of
either: (a) two or (b) 20% of the number of the Company'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 Company's share
capital, or below 3,050,000 shares, whichever is sooner, and until Koor's
holdings in the Koor Shares fall below 4.32% of the Company share capital or
2,050,000 shares, whichever is earlier, FEL shall vote all its holdings in the
Company's shares in favor of the election of one director nominated by Koor.
Koor has undertaken to vote for the election of all the candidates nominated by
FEL for the offices of the other directors of the Company (including External
Directors).
Koor also has undertaken to support the appointment of the candidate nominated
by FEL as chairperson of the Company'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 Company's
shareholders, in accordance with instructions that will be given to it by FEL,
subject to certain exceptions.
Restrictions on Transfer of Company's Shares
Both Koor and FEL are subject under the Koor - FEL Shareholders Agreement, to
certain limitations and rights regarding the transfer of their respective shares
in the Company. Accordingly, under the conditions described in the Koor - FEL
Shareholders Agreement:
(1) Koor has been granted a right to tag along to FEL's sale of shares in
the Company in the event FEL wishes to transfer to a third party more
than half of FEL's shares in the Company;
(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
Company (according to the provisions of Clause 16 of the Koor - FEL
Shareholders Agreement) FEL shall have a right of first offer to
acquire Koor's shares in the Company;
A-18
(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 Koor - FEL Shareholders
Agreement and ending on the later of the following:
(a) 12 months after completion of Stage A of the Koor - FEL
Transaction; or
(b) if Stage B of the Koor - FEL Transaction has been completed -
then nine months after the Second Closing Date.
(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 Koor- FEL Shareholders
Agreement.
The above mentioned limitations and rights on transfer of Company shares apply
only to the Federmann Shares and the Koor Shares and not to any other Company
shares that may be held by FEL or Koor, as the case may be.
Additional Non-Transferable Rights Granted to Koor
After the completion of Stage B of the Koor - FEL Transaction, 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
Company's share capital, or below 3,050,000 ordinary shares, whichever is
earlier:
(1) The appointment of one of the directors nominated by Koor to the position
of Vice Chairperson of the Company's Board, and the appointment of one
director nominated by Koor to each of the Company Board's committees. Such
right may be terminated by FEL in the event of a change of control of Koor
as specified in Clause 6.1 of the Koor - FEL Shareholders Agreement.
(2) Establishment of a Company 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 Company President and CEO (Mr.
Joseph Ackerman), a search committee having the authority to recommend will
be appointed to attempt to identify a suitable candidate for the office of
CEO of the Company. If the search committee does not succeed in unanimously
so recommending a candidate, the Company's Board will appoint a CEO of the
Company 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 Company, Koor will be entitled,
subject to applicable law, to appoint as a director in that subsidiary one
of the directors of the Company nominated by Koor. It
A-19
should be noted that currently officers or holders of control in FEL do not
serve as directors in any of the Company's subsidiaries.
A-20
ANNEX B
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
FAIRNESS OPINION OF GIZA-SINGER-EVEN LTD.
B-1
[TRANSLATION FROM THE HEBREW ORIGINAL]
GIZA-SINGER-EVEN LTD.
4 January 2005
To:
The Board of Directors of Elbit Systems Ltd. (Elbit")
3 Azrieli Center
Tel Aviv
Dear Members of the Board of Directors,
Subject: Fairness Opinion for the Transaction to Purchase the Controlling
Shares of Tadiran Communications (the "Transaction")
1. We have been asked by you to express our professional opinion on the
fairness of the planned Transaction under which Elbit will purchase from
Koor Industries Ltd. ("Koor") all of Koor's holdings in Tadiran
Communications Ltd. ("Tadiran Communications") (approximately 32%) in two
stages. As a condition for completing the second stage of the Transaction,
Tadiran is to purchase from Koor its holdings (70%) in Elisra Electronic
Systems Ltd. ("Elisra").
The opinion focuses on whether the price stated in the Transaction reflects
from an economic standpoint fair and reasonable consideration, so far as
Elbit is concerned, for Koor's holdings in Tadiran Communications,
including the possibility that Tadiran Communications will acquire Koor's
holdings in Elisra as set out in the share transfer deed made between Koor
and Elbit dated 27 December 2004 (the "Share Transfer Deed").
2. For the purpose of preparing our opinion we have, inter alia, relied on
periodic reports, audited financial statements, interim financial
statements and prospectuses that have been published by Tadiran
Communications and the material companies that are held by it, reports and
other information made public in connection with Elisra and other documents
given to us for the preparation of the opinion. It should be noted that
Tadiran Communications is a public company that is legally obligated to
publish, among other information, periodic reports, financial statements
and immediate reports, which contain the information material to a
reasonable investor.
3. For the purpose of preparing our opinion we have met management
representatives of Tadiran Communications and Elbit. In addition, we have
relied on data and other
B-2
explanations that we have obtained from management representatives of
Tadiran Communications, including with respect to the material companies
held by it, on general information that we have obtained from management
representatives of Elbit in connection with the business environment in
which Elbit operates and on public data and surveys that have been
published about the companies and the business areas in which they operate.
4. The opinion does not include a position or recommendation as to whether to
perform the Transaction described above, and the opinion does not
constitute a recommendation to Elbit's shareholders and other holders of
shares as to how to vote at the general meeting in connection with the
Transaction. This opinion does not constitute an evaluation of the assets
of Tadiran Communications but rather relates to its activities as a whole.
5. We have relied on sources that appear reliable to us, and nothing that
might indicate that the data used by us is unreasonable has come to our
attention. Nevertheless, we have not independently examined the data, and
our work therefore does not constitute verification or confirmation of the
correctness, completeness or accuracy of the data.
6. An economic appraisal should reasonably and fairly reflect a given
situation at a particular time on the basis of known data and with
reference to basic assumptions and forecasts that have been estimated on
the basis of that information.
7. We have in the past performed for payment various economic works for Elbit,
Koor, Federmann Enterprises and/or companies held by them.
8. We hereby certify that we have no personal interest in Elbit and/or Koor
and/or Tadiran Communications and/or Federmann Enterprises and that we have
no personal interest in the described Transaction, apart from receiving
professional fees with respect to the services that are to be provided by
our company. It should be clarified that we were not party to negotiations
in the described Transaction.
9. In connection with the opinion, Elbit has undertaken to indemnify Giza
Singer Even Ltd. ("Giza Singer Even"), as set out in the document signed
between Giza Singer Even and Elbit, pursuant to which if a claim is brought
against Giza Singer Even in a legal or any other proceeding by a third
party in connection with the performance of the services provided by it,
Elbit will bear two-thirds of the reasonable expenses up to aggregate
overall expenses of US$150,000 (one hundred and fifty thousand US dollars)
(namely Giza Singer Even will bear expenses up to a maximum of US$50,000
(fifty thousand US dollars)), and all reasonable expenses exceeding
US$150,000 (one hundred and fifty thousand US dollars), that Giza Singer
Even pays or is required to pay in connection with any claim, demand or
other proceedings the cause whereof derives from or is connected with,
directly or indirectly, the services
B-3
that have been provided by Giza Singer Even in accordance with said
document. Elbit will be under no duty of indemnity if it is held that Giza
Singer Even acted fraudulently in connection with the provision of the
services.
10. Having examined the documents and followed the procedures mentioned in
clauses 2 and 3, which should be emphasized did not include an evaluation
of Elisra, we estimate, to the best of our professional knowledge, that
Elbit's Transaction for the purchase of Tadiran Communications in
accordance with all its conditions and stages, including the possibility
that Tadiran Communications will purchase Elisra as described in the Share
Transfer Deed, is fair and reasonable so far as Elbit and all of its
shareholders are concerned.
11. The opinion does not express a view on the price of the Elisra shares
and/or the price at which the shares of Tadiran Communications and/or Elbit
and/or any company related to any of them are traded either on or after the
giving of our opinion and/or on or after the notice of the Transaction's
approval or performance.
12. We hereby agree that our opinion herein may be included and/or mentioned in
reports to be given in connection with the Transaction by Elbit in
accordance with the duties of disclosure owed by it under securities laws
in the United States and Israel or any statute and/or law that replaces
and/or augments them, including in any amended and/or other report that
Elbit is legally required to file. Moreover, Elbit may make use of the
opinion in the proceedings relating to the Transaction's approval and in
the meetings necessary to that end and before any person, entity and/or
authority that it deems fit.
Yours faithfully,
(Signed) (Signed)
Dr Eli Kreisberg Yuval Silberstein
Giza Singer Even Ltd.
B-4
ANNEX C
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
SHARE TRANSFER DEED
BETWEEN
KOOR INDUSTRIES LTD.
AND
ELBIT SYSTEMS LTD.
C-1
[TRANSLATED FROM THE HEBREW ORIGINAL]
SHARE TRANSFER DEED
Made in Tel Aviv this 27th day of December 2004
BETWEEN
KOOR INDUSTRIES LTD.
Public Company No. 52-001414-3
of 14 Hamalacha Street, Afek Industrial Park, Rosh Ha'ayin 48091
("Koor")
of the one part
AND
ELBIT SYSTEMS LTD.
Public Company No. 52-004302-7
of the Advanced Technology Center, Haifa 31053
("Elbit")
of the other part
WHEREAS Koor is the holder of 3,944,276 Ordinary Shares of the issued and
paid up share capital of Tadiran Communications Ltd., a public
company duly incorporated in Israel, whose number with the
Companies Registrar is Public Company No. 51-207441-0
(hereinafter the "Company");
AND WHEREAS Koor wishes to sell and transfer to Elbit, in two stages,
3,944,276 Ordinary Shares, which on the date of signing this Deed
constitute approximately 32% of the Company's issued and paid-up
share capital, while in the first stage Koor will sell and
transfer to Elbit 1,700,000 Ordinary Shares, which on the date of
signing this Deed constitute approximately 13.8% of the Company's
issued and paid-
C-2
up share capital, and in the second stage Koor will sell and
transfer to Elbit 2,244,276 Ordinary Shares, which on the date of
signing this Deed constitute approximately 18.2% of the Company's
issued and paid-up share capital, subject to and in accordance
with the provisions of this Deed;
AND WHEREAS Elbit wishes to purchase and receive from Koor 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 the
Conditions Precedent as set out below in this Deed;
AND WHEREAS Elbit believes, without placing Elbit under any obligation prior
to the transaction contemplated by this Deed being duly approved,
if at all, by Elbit's General Meeting of shareholders, that there
should be a consolidation of defense industries in Israel and
that in that context the transaction contemplated by this Deed as
well as the Elisra Transaction, on appropriate terms and
conditions, are in the interest of Elbit and the Company, from
the perspective of Elbit as a shareholder of the Company;
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 purchase shares of Elbit from
Federmann Enterprises Ltd, as set out in the Koor-Federmann Deed
and this Deed;
AND WHEREAS the parties wish to set forth their relationship in respect of
the sale and purchase of the Shares Being Sold in the context of
this Deed.
NOW, THEREFORE, THE PARTIES HEREBY WARRANT, PROVIDE AND AGREE BETWEEN THEM AS
FOLLOWS:
1. Preamble, Appendices and Interpretations
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.
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2. Definitions
2.1 In this Deed, the following expressions shall have the meanings herein
ascribed to them, unless expressly stated otherwise:
"Elbit" means as defined in the preamble hereto;
"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;
"Stock Exchange" means the Tel-Aviv Stock Exchange Ltd.;
"Company" means as defined in the preamble hereto;
"Shareholders Agreement" means an agreement between Koor and Elbit in
the form of Appendix "10.7" hereto, which is to be signed
contemporaneously with the signature of this Deed and will take effect
on the First Closing Date;
"Stage 'A' Conditions Precedent" means the Conditions Precedent for
Stage 'A' of the Transaction, as set out in Appendix "9.2" hereto;
"Stage 'B' Conditions Precedent" means the Conditions Precedent for
Stage 'B' of the Transaction, as set out 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;
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"First Closing Date" means the third Business Day after the date on
which all the Stage 'A' Suspending Conditions have been fulfilled or
such later date as may be agreed by the parties, as provided in Clause
20.3 below;
"Koor-Federmann Deed First Closing Date" means the First Closing Date
as the term is defined in the Koor-Federmann Deed;
"Second Closing Date" means the third Business Day after the date on
which all the Stage 'B' Conditions Precedent have been fulfilled or
such later date as may be agreed by the parties, as provided in Clause
20.3 below;
"Koor-Federmann Deed Second Closing Date" means the Second Closing
Date as the term is defined in the Koor-Federmann Deed;
"Stage 'A' Completion Deadline" means as defined in Clause 9.1 below;
"Stage 'B' Completion Deadline" means as defined in Clause 12.1 below;
"Koor-Federmann Deed Stage 'B' Completion Deadline" means the Stage
'B' Completion Deadline as the term is defined in the Koor-Federmann
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 applicable law;
"Ordinary Share" or "Ordinary Shares" means ordinary shares of 1 NIS
par value each of the Company's issued capital;
"Stage 'A' Shares" mean 1,700,000 (one million seven hundred thousand)
Ordinary Shares;
"Stage 'B' Shares" mean 2,244,276 (two million two hundred forty-four
thousand two hundred and seventy-six) Ordinary Shares;
"Koor-Federmann Deed Stage 'A' Shares" means the Stage 'A' Shares as
the term is defined in the Koor-Federmann Deed;
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"Koor-Federmann Deed Stage 'B' Shares" means the Stage 'B' Shares as
the term is defined in the Koor-Federmann Deed;
"Shares Being Sold" means the Stage 'A' Shares and the Stage 'B'
Shares;
"Federmann Enterprises" means Federmann Enterprises Ltd., Private
Company No. 51-227839-1;
"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 additional or other third
party right whatsoever;
"Elisra Transaction" means a transaction pursuant to which the Company
will purchase shares constituting at least 70% of Elisra's issued
capital;
"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;
"Deed" or "this Deed" means this Share Transfer Deed together with all
the Appendices hereto;
"Koor-Federmann Deed" means the Share Transfer Deed together with all
the Appendices thereto made between Koor and Federmann Enterprises
contemporaneously with the signature of this Deed, subject to the
terms thereof pursuant to which Federmann Enterprises will sell and
transfer to Koor, in two stages, 4,000,000 (four million) ordinary
shares of 1 NIS par value each of Elbit, which on the date of signing
this Deed constitute approximately 9.8% of Elbit'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;
"Koor-Federmann Deed Stage 'A'" means Stage 'A' of the transaction
contemplated by the Koor-Federmann Deed as the term is defined in the
Koor-Federmann Deed;
"Koor-Federmann Deed Stage 'B'" means Stage 'B' of the transaction
contemplated by the Koor-Federmann Deed as the term is defined in the
Koor-Federmann Deed;
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"Stage 'A' Consideration" means US$37 (thirty-seven U.S. dollars) for
each of the Stage 'A' Shares, totalling US$62,900,000 (sixty-two
million nine hundred thousand U.S. dollars), and insofar as all or
part of that amount is actually paid after April 1, 2005, such amount
shall be subject to the addition of Interest from April 1, 2005 until
the time of actual payment, all subject to the adjustments as set out
in Clause 15 below;
"Stage 'B' Consideration" means US$37 (thirty-seven U.S. dollars) for
each of the Stage 'B' Shares, totalling US$83,038,212 (eighty-three
million thirty-eight thousand two hundred and twelve U.S. dollars),
and insofar as all or part of that amount is actually paid after April
1, 2005, such amount shall be subject to the addition of Interest from
April 1, 2005 until the time of actual payment, all subject to the
adjustments as set out 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.
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" and "Company
Registrar".
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;
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3.2 Appendix 10.7 - the Shareholders Agreement between Koor and Elbit,
which is to be entered into contemporaneously with the signature of
this Deed and will take effect on the First Closing Date;
3.3 Appendix 12.2 - the Stage 'B' Conditions Precedent.
4. The Koor-Federmann Deed
Contemporaneously with the signing this Deed, the Koor-Federmann Deed is
also being signed. The Koor-Federmann 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 Elbit is not a party to the
Koor-Federmann Deed, and the provisions of the Koor-Federmann Deed do not
impose any obligation, that is not expressly provided in this Deed, on Koor
to Elbit or on Elbit to Koor.
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 set out in this Clause 5 and in Clauses 6 and 7 below, as
the case may be.
5.2 The parties' warranties and undertakings as set out in this Clause 5
and in Clauses 6 and 7 below, as the case may be, will continue to be
correct, complete and accurate as of the First Closing Date and the
Second Closing Date, and they shall be deemed as having been given
again by each of the parties as of both the First Closing Date and on
the Second Closing Date.
6. Koor's Warranties and Undertakings
Koor hereby warrants and undertakes to Elbit as follows:
6.1 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,
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 Fixed 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 Fixed Lien, as will be modified as provided in Clause
10.3 below), that it will not grant any person or entity an option or
right to purchase all or any of
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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, apart
from the Shares Being Sold, it does not hold securities of the Company
or any rights to receive or acquire securities of the Company.
6.3 That the Shares Being Sold are fully paid and Free and Clear, save for
a fixed lien in favor of Bank Hapoalim B.M.. (in this Deed the "Bank")
over all the Shares Being Sold, including all the rights, income and
proceeds that Koor now or in future has from them (in this Deed the
"Fixed Lien") and that in the context of the Fixed Lien the Shares
Being Sold are held in a trust account at the Bank in the name of
Poalim Trust Services Ltd. (in this Deed the "Trust Account") and that
on the First Closing Date, upon the Stage 'A' Consideration being
received in Koor'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 Koor's account, the Stage 'B' Shares
will be Free and Clear.
6.4 That apart from Koor's board of directors' approval, 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.
6.5 That subject to ratification by Koor's board of directors, the
signatories on Koor's behalf to this Deed and the documents ancillary
hereto are the persons 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 signature, and this
Deed, together with all its terms and conditions, obligates Koor in
all respects.
6.6 That subject to the approval of Koor's board of directors and the
fulfilment 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 Koor is a
party, to its incorporation documents or to any other obligation of
Koor, whether by virtue of contract (oral, by conduct or written) or
by virtue of law.
6.7 That apart from Koor's board of directors' approval and the Conditions
Precedent, all the approvals, consents and permits have been obtained
and all the necessary proceedings have been performed, including with
any
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authorities, government entities or any other body, for the purpose of
Koor's entering into this Deed and performing its obligations pursuant
hereto, including transferring the Shares Being Sold to Elbit.
6.8 That from the time of Koor's acquisition of the Shares Being Sold,
Koor and/or its controlling shareholders and/or officers have not
entered into a transaction in which any of them has a personal
interest with the Company and/or its subsidiaries, apart from the
payment of remuneration to the Company's directors, as customary with
the Company, and apart from arrangements for the grant of relief,
insurance and indemnity by the Company to the Company's directors.
Nothing in this Clause 6.8 shall be deemed to prevent Koor and the
Company from entering into the Elisra Transaction or into transactions
to which Elbit has given its consent by written notice signed by two
officers of Elbit, without any further approval being necessary.
6.9 That as at the time of signing this Deed, the Company and/or its
subsidiaries have not entered into a transaction in which Koor and/or
its subsidiaries and/or Koor's controlling shareholders and/or
officers and/or companies controlled by any of them have a personal
interest, other than: (1) transactions in the ordinary course of
business with Elisra and its subsidiaries, the total financial value
of which does not exceed $5,000,000; (2) a transaction in connection
with the provision of warehousing services by the Company to
subsidiaries of Elisra; (3) payment of remuneration to the Company's
directors; (4) arrangements for the grant of relief, insurance and
indemnity by the Company to the Company's directors; and that from the
time of signing this Deed until the Second Closing Date, the Company
and/or its subsidiaries will not enter into a transaction in which
Koor and/or its subsidiaries and/or controlling shareholders and/or
officers of Koor and/or the companies controlled by any of them have a
personal interest, other than: (1) transactions in the ordinary course
of business with Elisra and its subsidiaries; (2) transactions not in
the ordinary course of business, the total financial value of which
does not exceed $5,000,000; (3) a transaction in connection with the
provision of warehousing services by the Company to subsidiaries of
Elisra; (4) payment of remuneration to the Company's directors as
customary in the Company; and (5) arrangements for the grant of
relief, insurance and indemnity by the Company to the Company's
directors.
Nothing in this Clause 6.8 [sic] shall be deemed to prevent Koor and
the Company from entering into the Elisra Transaction or transactions
to which Elbit has granted its consent by written notice signed by two
officers of Elbit, without any further approval being necessary.
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6.10 That from the time the Shares Being Sold were acquired by Koor until
the time of signing this Deed, the Company had not brought to Koor's
attention nor given any report to the public that any material
agreement to which the Company is a party had been terminated or
modified or that there was any intent to terminate or modify any
material agreement to which the Company is a party.
7. Elbit's Warranties and Undertakings
Elbit hereby warrants and undertakes to Koor 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,
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 set out in this Deed.
7.3 That apart from approval by Elbit's audit committee and board of
directors, Elbit has no need, including pursuant to its incorporation
documents and 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, except for approval by
Elbit's General Meeting in accordance with Section 275 of the
Companies Law, if and insofar as not yet obtained. At the time of
signing this Deed, Elbit's General Meeting's approval had not yet been
obtained.
7.4 That subject to the approvals of Elbit's audit committee and board of
directors, the signatories on behalf of Elbit to this Deed and the
documents ancillary hereto are those who are empowered, on Elbit's
behalf, to sign this Deed and the documents ancillary hereto and/or
necessary for the performance hereof, and to obligate Elbit by their
signatures, and this Deed, including all its terms and conditions,
obligates Elbit in all respects, subject to obtaining Elbit's General
Meeting's approval.
7.5 That subject to the approvals of Elbit's audit committee and board of
directors and the fulfilment of the Conditions Precedent, there is no
legal or other impediment to its entering into and performing this
Deed 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,
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understanding or agreement to which it is a party, to its
incorporation documents or to any other obligation of Elbit, whether
by virtue of contract (oral, by conduct or written) or by virtue of
law.
7.6 That apart from the approvals of Elbit's audit committee and board of
directors and apart from the Conditions Precedent, including Elbit's
General Meeting's approval, 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 Elbit's entering into this Deed and
performing its obligations pursuant hereto, including the acquisition
from Koor of the Shares Being Sold.
7.7 That on signing this Deed it is the holder of 518,488 Ordinary Shares.
7.8 That subject only to Koor'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 Koor and that the
Consideration, as agreed between the parties, has been fixed having
regard also to the fact that the purchase is on such an "As Is" basis.
8. Stage 'A' of the Transaction
8.1 On the First Closing Date and subject to the fulfilment of Stage 'A'
Conditions Precedent by the Stage 'A' Completion Deadline, Koor shall
sell and transfer to Elbit, on and against payment of the whole of
Stage 'A' Consideration, 1,700,000 (one million seven hundred
thousand) Ordinary Shares (the Stage 'A' Shares), fully paid and Free
and Clear, and Elbit shall purchase and receive from Koor the Stage
'A' Shares and pay Koor the full amount of the Stage 'A' Consideration
(in this Deed "Stage 'A' of the Transaction").
8.2 Furthermore, on the First Closing Date, Koor shall purchase from
Federmann Enterprises 2,160,000 (two million one hundred and sixty
thousand) ordinary shares of 1 NIS par value each of Elbit, which on
the date of signing this Deed constitute approximately 5.3% of Elbit's
issued share capital, in accordance with the Koor-Federmann Deed,
which is being signed contemporaneously with this Deed. The
Koor-Federmann Deed Stage 'A' and Stage 'A' of the Transaction shall
be performed contemporaneously, and Stage 'A' of the Transaction
(contemplated by this Deed) shall not be performed without the
Koor-Federmann Deed Stage 'A' being performed.
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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 31 March 2005;
or -
9.1.2 If by 31 March 2005 all the Stage 'A' Conditions Precedent
have been fulfilled, other than the approval of the [Israel]
Commissioner of Restrictive Trade Practices, as set out in
Clause (3) of Appendix "9.2", the Stage 'A' Completion
Deadline shall be automatically deferred until 31 May 2005
or to such later date as may be fixed by the parties as
provided in Clause 20.3 below.
9.2 The Stage 'A' Conditions Precedent are set out 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, if and insofar as Elbit's General Meeting's approval for its
entering into the transaction contemplated by this Deed has been
obtained, the provisions of Clauses 14.3 (except insofar as concerns
the acquisition of Ordinary Shares), 14.5 and 17 hereof, without
either of the parties having any complaint and/or claim and/or demand
against the other. For the avoidance of doubt, it is clarified that if
the Stage 'A' Conditions Precedent have not been fulfilled by the
Stage 'A' Completion Deadline, neither of the parties shall be subject
to any restriction as regards the acquisition of Ordinary Shares.
Nothing in the provisions of this Clause 9.3 above shall be deemed to
derogate from any right or other remedy pursuant to this Deed or by
law that is available to the parties in respect of a breach of any of
the provisions of this Deed (insofar as breached). Without prejudice
to the above provisions of this Clause 9.3, it is clarified that no
provision of this Deed shall obligate Elbit in any manner whatsoever,
prior to obtaining the approval of its General Meeting, to enter into
the transactions contemplated by this Deed.
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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 Elbit shall remit the Stage 'A' Consideration by bank transfer to
Koor's bank account at the Bank, the details of which shall be
provided to it in writing by Koor by the First Closing Date (in this
Deed "Koor's Account") and confirmation from the Bank shall be
provided to Koor that the Stage 'A' Consideration has been received in
Koor's Account.
10.2 Koor shall provide Elbit confirmation from the Bank, according to
which the Bank agrees that on and against receipt of the Stage 'A'
Consideration in Koor's Account, it will discharge the Fixed Lien from
the Stage 'A' Shares.
10.3 Koor shall provide Elbit a letter of 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 Fixed Lien to the effect that the Fixed Lien will be discharged
from the Stage 'A' Shares.
10.4 Koor shall provide Elbit a written certificate from Poalim Trust
Services Ltd., in which Poalim Trust Services Ltd. gives instructions
to transfer the Stage 'A' Shares from the Trust Account to Elbit's
securities account, the details of which shall be provided to Koor by
Elbit in writing by the First Closing Date (hereinafter "Elbit's
Account").
10.5 Koor shall provide the Bank an irrevocable instruction to transfer the
Stage 'A' Shares, by means of a transaction outside the Stock
Exchange, from the Trust Account to Elbit's Account, and confirmation
from the Bank that the Stage 'A' Shares have been received in Elbit's
Account shall be provided to Elbit.
10.6 Koor shall provide Elbit a copy of the Company's board of directors'
resolution to the effect that, subject to the performance of Stage 'A'
of the Transaction, there shall be added to the Company's board of
directors and serve thereon as directors such number of nominees as
proposed for office by Elbit, who meet the Qualification Conditions,
such that after their addition to the board of directors, the number
of directors proposed for office by Elbit shall be the greater of:
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(1) three directors; or
(2) a number of directors equal to 20% of the number of the Company's
directors (including external directors and the directors who are
added in accordance with Elbit's nomination as aforesaid),
rounded up to the nearest whole number (for example, if the
number of directors who are serving in the Company immediately
after the addition of Elbit's nominees is 11, three nominees who
have been proposed by Elbit shall be added as directors).
In said board of directors' resolution it shall be provided that
Elbit's nominees as aforesaid shall be added to the Company's board of
directors on the First Closing Date.
Koor undertakes that there shall be sufficient vacancies on the
Company's board of directors to enable the addition of Elbit's
nominees as aforesaid.
If for any reason any of the nominees proposed by Elbit as aforesaid
cannot be appointed as a director or directors of the Company, another
nominee or nominees, as proposed by Elbit, shall be appointed in his
or their place.
Elbit shall give prior written notice to Koor and the Company of the
name of such nominees as aforesaid or of the other nominees in their
place, and Elbit (with the assistance of Koor) shall coordinate with
the Company's corporate secretary such nominees' compliance with the
Qualification Conditions, all by no later than 14 days prior to the
earlier of (1) the Stage 'A' Completion Deadline or (2) the First
Closing Date. Without prejudice to the foregoing, if any of the
nominees proposed by Elbit as aforesaid is not added to the Company's
board of directors on the First Closing Date, Koor shall hold a
General Meeting of the Company as soon as possible, the agenda of
which shall be the appointment of the nominees proposed by Elbit, who
have not been appointed as aforesaid, as directors of the Company.
Koor undertakes to vote in favor of the appointment of the nominees
proposed by Elbit who have not been appointed as aforesaid but who do
meet the Qualification Requirements. If and insofar as it is required
by law that a majority of the Company's directors meet any
Qualification Requirements, then if the number of directors appointed
in accordance with Elbit's nomination is an equal number, one half of
the directors appointed in accordance with Elbit's nomination as
aforesaid shall meet said conditions, and if the number of directors
appointed in accordance with Elbit's nomination is an odd number, the
majority of the
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Company's directors who are appointed in accordance with Elbit's
nomination as aforesaid shall meet the above conditions.
10.7 The Shareholders Agreement, in the terms annexed hereto as Appendix
"10.7", shall become effective.
10.8 Koor shall provide Elbit a written declaration, duly signed by Koor,
according to which all the warranties and representations of Koor as
set out in Clauses 5 and 6 of this Deed are also correct, complete
and accurate as of the First Closing Date.
10.9 Elbit shall provide Koor a written declaration, duly signed by
Elbit, according to which all the warranties and representations of
Elbit as set out in Clauses 5 and 7 of this Deed are also correct,
complete and accurate as of the First Closing Date.
10.10 The Koor-Federmann Deed Stage 'A' shall be completed, namely all the
acts that are to be performed on the Koor-Federmann Deed First
Closing Date shall be performed, as provided in Clause 10 of the
Koor-Federmann 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
having been performed contemporaneously, no individual act shall be
deemed as completed and no individual document shall be deemed as
delivered until all such acts have been completed and all the
documents have been delivered.
11. Stage 'B' of the Transaction
11.1 On the Second Closing Date and subject to the fulfilment of the
Stage 'B' Conditions Precedent by the Stage 'B' Completion Deadline,
Koor shall sell and transfer to Elbit, on and against payment of the
full Stage 'B' Consideration, 2,244,276 (two million two hundred
forty-four thousand two hundred and seventy-six) Ordinary Shares
(the Stage 'B' Shares), fully paid and Free and Clear, and Elbit
shall purchase and receive from Koor the Stage 'B' Shares and pay
Koor the full amount of the Stage 'B' Consideration (hereinafter in
this Deed "Stage 'B' of the Transaction").
11.2 On the Second Closing Date Koor shall purchase from Federmann
Enterprises 1,840,000 (one million eight hundred and forty thousand)
ordinary shares of 1 NIS par value each of Elbit, constituting
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approximately 4.51% of Elbit's issued and paid up share capital in
accordance with the Koor-Federmann Deed, which is being signed
contemporaneously with this Deed, and Stage 'B' of the Transaction
and the Koor-Federmann Deed Stage 'B' shall be performed together,
and Stage 'B' of the Transaction (contemplated by this Deed) shall
not be performed without the performance of the Koor-Federmann Deed
Stage 'B'. Nevertheless, it is agreed that the provisions of this
Clause 11.2 shall not apply if Federmann gives notice as provided in
Clause 12.1.3 of the Koor-Federmann Deed or as provided in Clause
12.1.5 of the Koor-Federmann Deed, 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 30 June 2005; or
12.1.2 if all the Stage 'B' Conditions Precedent have not been
fulfilled by 30 June 2005, the Stage 'B' Completion
Deadline shall automatically be deferred until 30
September 2005; or
12.1.3 if by 30 September 2005 all the Stage 'B' Conditions
Precedent have been fulfilled, except for the completion
of the Elisra Transaction as set out in Clause (2) of
Appendix "12.2", Koor shall be entitled to provide
written notice to Elbit, to be received by Elbit by said
date, of the Stage 'B' Completion Deadline's deferral
until 30 April 2006 or such later date as may be
determined by the parties, as provided in Clause 20.3
below.
12.2 The Stage 'B' Conditions Precedent are set out in Appendix
"12.2".
12.3 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 the performance of Stage 'B' of the Transaction in this
Deed shall be deemed null and void and be of no effect and,
inter alia, Koor shall not sell Elbit the Stage 'B' Shares and
Elbit shall not pay the Stage 'B' Consideration to Koor, and
neither party shall have any demand, claim or complaint against
the other in connection with Stage 'B' of the Transaction. For
the avoidance of doubt, it is clarified that the foregoing
provisions of this Clause 12.3 shall not be deemed to derogate
from the validity of any other provision, including the
provisions of Clauses 14.3 (except insofar as concerns the
acquisition of Ordinary Shares) or 14.5 of this Deed or as
provided in the Shareholders Agreement, which shall enter into
effect on the First Closing Date, or from
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any other right or remedy pursuant to this Deed or by law that
is available to the parties in respect of a breach of any of the
provisions of this Deed (if and insofar as breached).
12.4 Should Federmann act as provided in Clause 12.1.3 of the
Koor-Federmann Deed or as provided in Clause 12.1.5 of the
Koor-Federmann Deed, and should the Stage 'B' Conditions
Precedent be fulfilled by the Stage 'B' Completion Deadline, the
parties shall perform and Complete Stage 'B' of the Transaction
pursuant to this Deed on the Second Closing Date, and the
provisions of Clause 11.2 above and Clause 13.9 below shall not
apply.
13. The Second Closing Date
Subject to the fulfilment of the Stage 'B' Conditions Precedent by the
Stage 'B' Completion Deadline, the parties shall meet on the Second
Closing Date at such place as determined by them, and the following
interdependent acts shall be performed contemporaneously:
13.1 Elbit shall remit the Stage 'B' Consideration by bank transfer
to Koor's Account, and confirmation from the Bank shall be
provided to Koor that the Stage 'B' Consideration has been
received in Koor's Account.
13.2 Koor shall provide Elbit confirmation from the Bank, according
to which the Bank agrees that on and against receipt of the
Stage 'B' Consideration in Koor's Account, it will discharge the
Fixed Lien from the Stage 'B' Shares.
13.3 Koor shall provide Elbit a letter of instructions from the Bank,
in the Bank's standard terms, addressed to the Companies
Registrar pursuant to which the Bank applies to the Companies
Registrar to discharge the Fixed Lien from the Stage 'B' Shares.
13.4 Koor shall provide Elbit a written certificate from Poalim Trust
Services Ltd. in which it provides instructions to transfer the
Stage 'B' Shares from the Trust Account to Elbit's Account.
13.5 Koor shall provide the Bank an irrevocable instruction to
transfer the Stage 'B' Shares by means of a transaction outside
the Stock Exchange from the Trust Account to Elbit's Account,
and confirmation from the Bank that the Stage 'B' Shares have
been received in Elbit's Account shall be provided to Elbit.
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13.6 Koor shall cause the addition to the Company's board of
directors on the Second Closing Date of such number of nominees
who are proposed for their office by Elbit and meet the
Qualification Requirements so that on the appointment of those
nominees to the Company's board of directors those nominees
will, together with the directors appointed to their office per
Elbit's nomination as provided in Clause 10.6 above, constitute
more than 50% of the total directors of the Company at that
time, including external directors and directors who are
appointed to their position per Elbit's nomination as aforesaid.
Without prejudice to the generality of the foregoing, Koor
undertakes that there will be sufficient vacancies on the
Company's board of directors for the performance of its
foregoing obligations.
Elbit shall provide Koor and the Company prior written notice of
its nominees as aforesaid or of the other nominees in their
place as provided below in this Clause, and Elbit shall
coordinate with the Company's corporate secretary such nominees'
compliance with all the conditions required of the Company's
directors, all by no later than 14 days from the earlier of (1)
the Stage 'B' Completion Deadline or (2) the Second Closing
Date. If for any reason any of such nominees as aforesaid cannot
be appointed as a director or directors of the Company, another
nominee or nominees, as proposed by Elbit, who meet the
Qualification Requirements, shall be appointed in his or their
place.
13.7 Koor shall provide Elbit a written declaration duly signed by
Koor according to which all Koor's warranties and
representations as set out in Clauses 5 and 6 of this Deed are
also correct, complete and accurate as of the Second Closing
Date.
13.8 Elbit shall provide Koor a written declaration duly signed by
Elbit according to which all Elbit's warranties and
representations as set out in Clauses 5 and 7 of this Deed are
also correct, complete and accurate as of the Second Closing
Date.
13.9 The Koor-Federmann Deed Stage 'B' shall be completed, namely all
the acts that are to be performed on the Koor-Federmann Deed
Second Closing Date as provided in Clause 13 of the
Koor-Federmann Deed shall be performed. Nevertheless, it is
agreed that this Clause 13.9 shall not apply if Federmann acts
as provided in Clause 12.1.3 or as provided in Clause 12.1.5 of
the Koor-Federmann Deed.
13.10 Each party undertakes to perform all the acts for which it is
responsible pursuant to this Clause 13.
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13.11 All the acts mentioned above in this Clause 13 shall be deemed
as having been performed contemporaneously, no individual act
shall be deemed as having been completed and no individual
document shall be construed as delivered until all such acts are
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 to cause the fulfilment of all
the Conditions Precedent, including obtaining all the required
certificates, permits and consents, 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 involved in 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 fulfilment 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 as aforesaid, a "Fulfilment Payment"),
provided that if a party to this Deed refuses to make a
Fulfilment Payment, the other party may make it for the
fulfilment of all or any of the Conditions Precedent, provided
that the first party shall not be liable to indemnify the other
party in respect of a Fulfilment Payment, and the party that
makes the Fulfilment Payment shall have no demand, claim or
right of recourse against the other party in respect of the
making of such payment.
14.3 Subject to the provisions of Clause 9.3 above and Clause 14.4
below, from the date of signing this Deed until 30 April 2006
(the "Lock-up Period"), Koor and Elbit shall not conduct any
transaction (including any transfer, sale or acquisition) in
Ordinary Shares, either on or outside the Stock Exchange, unless
otherwise agreed between the parties, by written notice signed
by two officers of each of Koor and Elbit, without any further
approval being necessary. Said obligation shall continue in
force even if this Deed is cancelled for any reason, save for
rescission due to its breach by Koor and except if Elbit
exercises its right to rescind the Deed pursuant to the
provisions of Clause 16.1 below.
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14.4 Notwithstanding as provided in Clause 14.3 above, during the
Lock-up Period each party may purchase, either on or outside the
Stock Exchange, up to 350,000 Ordinary Shares (the "Acquirable
Quantity") without the other party's consent, provided that it
gives written notice to the other party of the purchase of the
shares and the quantity of shares purchased within 48 hours of
making each purchase. Should one party purchase 350,000 Ordinary
Shares (in this Clause the "Purchasing Party") and the other
party not purchase 350,000 Ordinary Shares, the Purchasing Party
may send written notice to the other party (in this Clause the
"Purchase Notice") stating that it wishes to purchase additional
shares of the Company in a quantity not exceeding the difference
between 350,000 Ordinary Shares and the quantity of shares
purchased under this Clause by the other party (in this Clause
the "Acquirable Shares"). Should 14 days elapse from the date of
providing the Purchase Notice (in this Clause the "Other Party's
Purchase Period") and the other party not have purchased all the
Acquirable Shares in trading on the Stock Exchange, the
Purchasing Party may purchase the Acquirable Shares in trading
on the Stock Exchange within 14 days of the end of the other
party's Purchase Period. Should the Purchasing Party not
purchase the Acquirable Shares during said period, it shall be
responsible to provide the other party Purchase Notice in order
to purchase additional shares.
14.5 Subject to the provisions in Clause 9.3 above, Elbit shall vote
in the Company's General Meeting by virtue of all the Shares in
the Company that are held by it at that time in favor of
approving the Elisra Transaction, whether or not all or any of
the transactions involved in this Deed are actually implemented,
provided that: (a) the Elisra Transaction consideration is
established in reliance on an evaluation by an outside
independent appraiser obtained for the purpose of the Elisra
Transaction, and the consideration and terms and conditions of
the Elisra Transaction have been duly approved by the Company's
audit committee and board of directors and by every independent
committee of the Company that is established for the purpose of
considering the Elisra Transaction, insofar as established, and
the Company's audit committee and board of directors have
determined that the Elisra Transaction is not contrary to the
Company's interests; (b) the consideration for the Elisra
Transaction, as payable by the Company, reflects a company value
for Elisra of up to US$225 million; and (c) the Elisra
Transaction has been referred to the Company's General Meeting
for a vote by 30 April 2006. Elbit's said obligation shall
expire on the earlier of: (1) 1 May 2006, or (2) the completion
of the Elisra Transaction, or (3) on the rescission of this Deed
due to its breach by Koor, whichever is earlier.
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14.6 Without prejudice to Clauses 15 and 16 below, Koor hereby
undertakes that from the date of the signature of 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; or (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, Koor and/or its
subsidiaries and/or the controlling shareholders and/or officers
of Koor 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, except for the Elisra
Transaction.
14.7 From the date of obtaining Elbit's General Meeting's approval of
its entering into the transaction contemplated by this Deed
until the Second Closing Date, Koor's president shall from time
to time, in his discretion, update Elbit's president regarding
the status of the Company's business, all subject to applicable
legal requirements (including antitrust laws).
14.8 Subject to applicable law and except for the purpose mentioned
in Clause 3.4.3 of the Shareholders Agreement, Koor, as a
shareholder of the Company, undertakes that after the Company's
annual General Meeting that is held after the date of signing
this Deed, it will not act to hold an annual General Meeting of
the Company before the Stage 'B' Completion Deadline, unless
Elbit consents thereto by written notice signed by two officers
of Elbit, without any further approval being necessary.
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; Koor 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, except - for the
purpose of sub-clauses (c), (e) and (f) - a resolution with
regard to the Elisra Transaction, which concerns: (a) the making
of any distribution whatsoever, whether in cash or in kind, or
by a distribution of bonus shares, to the Company's
shareholders, except from the distribution of a regular cash
dividend of not more than 1.5 NIS per Ordinary Share in any
calendar quarter; (b) a rights offering for the acquisition of
any securities of the Company; (c) a sale of the Company's
shares that are held by the Company or its subsidiaries; (d) any
modification to the Company's incorporation documents, except
for the purpose of increasing the Company's authorized share
capital; (e) transactions that are not in the ordinary course of
the Company's business
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and transactions that concern an investment or acquisition of
rights in entities and/or the acquisition of businesses (Asset
Transactions) (in this Deed the "New Transactions"), the
aggregate financial amount of which exceeds $25,000,000,
excluding the Elisra Transaction; (f) any allotment of the
Company's securities except for an allotment of shares deriving
from the exercise of options existing at the time of signing
this Deed and, without derogating from the provisions of Clause
14.5 above, except for an allotment of options to employees of
the Company or its subsidiaries in a proportion not exceeding 2%
of the Company's issued share capital and on the Company's
customary terms, all unless Elbit's consent thereto is provided
by written notice to be signed by two officers of Elbit, without
any further approval being necessary.
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 below-mentioned 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 Koor will be entitled to receive in respect of the
Shares Being Sold (gross) (namely 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 amount
of the Consideration shall be adjusted for the bonus
element embodied (if at all) in the rights, unless Elbit
instructs Koor in writing prior to the exercise date in
respect of those rights to exercise the rights and in
such event Koor shall exercise the rights by virtue of
the Shares Being Sold which have not yet been
transferred to Elbit as of that time and it shall
transfer to Elbit, 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 entire exercise amount paid
by Koor to the Company for the exercise
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thereof, plus Interest from the date of Koor's paying
the exercise price to the date of actual payment to Koor
by Elbit.
15.2.3 If the Company distributes bonus shares or dividends in
kind to its shareholders before 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
dividends in kind (gross) in respect of the Shares Being
Sold, Free and Clear, without Elbit being required to
pay additional consideration for them.
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 Stage 'A' Consideration and/or
the Stage 'B' Consideration, as the case may be, shall
be adjusted and the number of Shares Being Sold shall
also be adjusted pro rata to the consolidation or
sub-division.
16. Elbit'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 Elbit's consent, Elbit 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 before the performance of Stage
'A' of the Transaction, Elbit may only rescind this Deed in
full). Such rescission shall be effected by Elbit by written
notice, to be received by Koor within 10 Business Days of the
date on which Elbit learns of the occurrence of one of the
events set out in Clause 16.2 below. Should Elbit 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 Elbit shall not be rescinded, Elbit shall not return to Koor
the Stage 'A' Shares and Koor shall not refund to Elbit the
Stage 'A' Consideration, and nevertheless, all the parties'
other obligations and rights pursuant to this Deed and the
Appendices hereto, except for the Shareholders Agreement and the
provision of Clause 14.5 above, shall be void. For the avoidance
of doubt, it is clarified that after Elbit has given notice in
accordance with this Clause 16.1, Elbit may sell Ordinary Shares
held by it or purchase Ordinary Shares without any restriction.
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16.2 The events are as follows:
16.2.1 If a receiver or temporary 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.
16.2.3 If any alteration is made to the Company's incorporation
documents, except for the purpose of increasing the
Company's authorized share capital.
16.2.4 If the Company makes a private placement that vests a
right to more than 1,500,000 Ordinary Shares, except for
an issuance of shares deriving from the exercise of
options existing on the date of signing this Deed and
except for an issuance of options to employees of the
Company and its subsidiaries in a amount of not more
than 2% of the Company's issued and paid up share
capital as customary in the Company, at an exercise
price per share that is not materially less than the
market price.
16.2.5 If the Company enters into New Transactions, as defined
in Clause 15.1 above, insofar as their aggregate amount
exceeds US$35 million, except for the Elisra
Transaction.
16.2.6 If the Company makes a distribution, either in cash or
in kind (except for a distribution of bonus shares or
rights offering) in an aggregate amount exceeding 2.5
NIS per share in any calendar quarter commencing on 1
January 2005.
16.2.7 If the Elisra Transaction has been completed for
consideration that has been paid by the Company and
reflects a company value for Elisra in excess of US$225
million.
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16.3 Koor shall provide Elbit written notice immediately on the
occurrence of any of the events set out in Clause 16.2 above,
all in accordance with applicable legal requirements.
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 fulfilment 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 end
of the term of this Deed or if this Deed is annulled or
rescinded for any reason.
17.2 If and insofar as possible, and subject to applicable legal
requirements and to the time periods mandated by law, the
parties shall coordinate in advance the wording of every report,
application, communication or notice published by either of them
in connection with their entering into this Deed, its
performance and the fulfilment of the conditions 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 tax at source, tax shall
be duly withheld by the paying party unless the party receiving
the payment 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.
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
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(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 of Koor's board of directors for Koor 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.
19.2.1 Approval of Elbit's audit committee and board of
directors for Elbit to enter into this Deed and the
Shareholders Agreement and for performance thereof by
Elbit in accordance with their terms and conditions,
including ratification of the signatures of Messrs.
Joseph Ackerman and Joseph Gaspar 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 (in this Clause the "Effective Date");
(2) by the Effective Date, a copy of Koor's board of
directors' resolution, as mentioned in Clause 19.1.1
above, has been received at Elbit's offices together
with written confirmation from Koor's legal counsel that
the said resolutions were duly adopted and Messrs.
Jonathan Kolber and Danny Biran were empowered jointly
to sign, on behalf of Koor, this Deed and the documents
ancillary hereto or those necessary for the purpose of
its performance, and also the Shareholders Agreement,
and to obligate Koor thereunder;
(3) by the Effective Date, copies of the resolutions of
Elbit's audit committee and board of directors, as
mentioned in Clause 19.1.2 above, have been received at
Koor's offices, together with written confirmation from
Elbit's attorneys that the resolutions were duly adopted
and Messrs. Joseph Ackerman and Joseph
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Gaspar were empowered jointly to sign, on Elbit'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 Elbit
thereunder, subject to the approval of Elbit's General
Meeting; and
(4) all the approvals, as mentioned in Clause 19.1 of the
Federmann-Koor 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 none of the provisions of this Deed shall obligate Elbit
in any way until Elbit's General Meeting duly approves
its entering into the transaction contemplated by this
Deed; and
19.3.2 the performance and completion of Stage 'A' of the
Transaction are conditioned upon the fulfilment of all
the Stage 'A' Conditions Precedent by the Stage 'A'
Completion Deadline and, apart from 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 fulfilment of all the Stage 'A' Conditions
Precedent; and
19.3.3 the performance and completion of Stage 'B' of the
Transaction are conditional upon the fulfilment of all
the Stage 'B' Conditions Precedent by the Stage 'B'
Completion Deadline and, apart from 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 fulfilment of all the Stage 'B' Conditions
Precedent.
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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 Koor and Elbit, 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
given 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 they were bound, 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 Koor-Federmann Deed shall
not be applied in the interpretation of this Deed.
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 a
waiver on its behalf of or acquiescence in 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, unless
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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 in 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 given in writing to the
parties' addresses as set out in the heading hereto or to such
other addresses of which the parties may give 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 on
delivery, or if delivered after 17:00 hours on any Business Day,
then on the first Business Day after its delivery.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT:
__(signed)_________________ __(signed)_________________
KOOR INDUSTRIES LTD. ELBIT SYSTEMS LTD.
By: Jonathan Kolber By: Joseph Ackerman
-------------------- -------------------
By: Danny Biran By: Joseph Gaspar
-------------------- -------------------
C-30
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 all the consents and approvals necessary and the fulfilment
of all the Koor-Federmann Deed Stage 'A' Conditions Precedent, as set
out in the Koor - Federmann Deed,
(2) Obtaining approval from Elbit's General Meeting for Elbit's entering
into this Deed, in both its stages, as required by law and after the
transaction contemplated by the Koor-Federmann Deed has also been
presented to Elbit's General Meeting, and also written confirmation
from Elbit's attorneys that such approval has been duly obtained.
(3) Insofar as necessary, obtaining the [Israel] Commissioner of
Restrictive Trade Practices' approval, after the entire framework of
the transaction contemplated by this Deed has been provided to him, for
the parties' to enter into this Deed and perform Stage 'A' of the
Transaction, provided that the said authority's disapproval of Stage
'B' of the Transaction is not received.
(4) Insofar as necessary, obtaining approval from the antitrust authority
in the United States and/or Europe, after the entire framework of the
Transaction contemplated by this Deed has been provided to it, for the
parties' to enter into this Deed and to perform Stage 'A' of the
Transaction, provided that the disapproval of any such authorities as
aforesaid to approve Stage 'B' of the Transaction is not received.
(5) Obtaining approval from the [Israel] Ministry of Defense for the
parties' to enter into this Deed and perform the transaction
contemplated by this Deed, insofar as required.
(6) Obtaining approval from the [Israel] Investment Center and/or the
[Israel] Chief Scientist in respect of the terms and conditions of
grants or benefits that the Company has obtained, for the performance
of Stage 'A' of the Transaction contemplated by this Deed, insofar as
required.
(7) Obtaining approvals from Bank Hapoalim B.M., Bank Leumi Le-Israel B.M.,
United Mizrahi Bank Ltd., Israel Discount Bank Ltd., BNP Paribas or
other banks or financial institutions for the performance of Stage 'A'
of the Transaction contemplated by this Deed, insofar as required.
C-31
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 and/or the Company,
as existing at the time of signing this Deed or that may arise in the future, in
accordance with resolutions that have been passed by Elbit and/or the Company,
as the case may be, prior to signing this Deed, or the way in which Elbit and/or
the Company conducts its business.
C-32
Appendix 12.2
The Conditions Precedent for the Performance of Stage 'B' of the Transaction
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) The completion of Stage 'A' of the Transaction contemplated by this
Deed.
(2) The completion of the Elisra Transaction.
(3) Obtaining all the consents and approvals necessary and the fulfilment
of all the Koor-Federmann Deed Stage 'B' Conditions Precedent, as set
out in the Koor-Federmann Deed. Nevertheless, this condition will not
apply if Federmann gives notice as set out in Clause 12.1.3 of the
Koor-Federmann Deed or in Clause 12.1.5 of the Koor - Federmann Deed.
(4) Insofar as necessary, obtaining the [Israel] Commissioner of
Restrictive Trade Practices' approval of the parties' to enter into to
this Deed and perform Stage 'B' of the Transaction contemplated by this
Deed, insofar as such approval is not given in Stage 'A' of the
Transaction.
(5) Insofar as necessary, obtaining approval from the antitrust authority
in the United States and/or Europe of the parties' to enter into this
Deed and the performance of Stage 'B' of the Transaction contemplated
by this Deed, insofar as said authority's approval is not given in
Stage 'A' of the Transaction.
(6) Obtaining approval from the [Israel] Investment Center and/or the
[Israel] Chief Scientist in respect of the terms and conditions of
grants or benefits that the Company has obtained, for the performance
of Stage 'B' of the Transaction contemplated by this Deed, insofar as
required.
(7) Obtaining approvals from Bank Hapoalim B.M., Bank Leumi Le-Israel B.M.,
United Mizrahi Bank Ltd., Israel Discount Bank Ltd., BNP Paribas or
other banks or financial institutions to enter into in Stage 'B' of the
Transaction contemplated by this Deed, insofar as required.
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 and/or the Company,
as existing at the time of signing this Deed or that may arise in the future, in
accordance with resolutions that have been passed by Elbit and/or the Company,
as the case may be, prior to signing this Deed, or the way in which Elbit and/or
the Company conducts its business.
C-33
ANNEX D
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
SHAREHOLDERS AGREEMENT
BETWEEN
KOOR INDUSTRIES LTD.
AND
ELBIT SYSTEMS LTD.
D-1
[TRANSLATED FROM THE HEBREW ORIGINAL]
SHAREHOLDERS AGREEMENT
Made in Tel Aviv this 27th day of December 2004
BETWEEN
KOOR INDUSTRIES LTD.
Public Company No. 52-001414-3
of 14 Hamalacha Street, Afek Industrial Park, Rosh Ha'ayin 48091
( "Koor")
of the one part
AND
ELBIT SYSTEMS LTD.
Public Company No. 52-004302-7
of the Advanced Technology Center, Haifa 31053
( "Elbit")
of the other part
WHEREAS Koor and Elbit have on signing this Agreement entered into a
share transfer deed (hereinafter referred to as the "Share
Transfer Deed"), pursuant to which Elbit will purchase from
Koor and Koor will sell to Elbit, in Stage 'A' of the
Transaction, 1,700,000 Ordinary Shares of 1 NIS par value each
of Tadiran Communications Ltd., which is a public company duly
incorporated in Israel (hereinafter the "Company");
AND WHEREAS after the completion of Stage 'A' of the Transaction (as
defined in the Share Transfer Deed), Koor will be the holder
of at least 2,244,276 Ordinary Shares of 1 NIS par value each
of the Company's issued share capital and Elbit will be the
holder of at least 2,218,488 Ordinary Shares of 1 NIS par
value each of the Company's issued share capital;
D-2
AND WHEREAS in accordance with the Share Transfer Deed Elbit will purchase
from Koor and Koor will sell to Elbit in Stage 'B' of the
Transaction, as defined in the Share Transfer Deed, 2,244,276
Ordinary Shares, although there is a possibility that Stage
'B' of the Transaction will not be completed or that, even if
Stage 'B' of the Transaction is completed, Elbit and Koor will
both remain shareholders of the Company;
AND WHEREAS the parties wish to set forth the overall relationship between
them as shareholders of the Company, as provided below in this
Agreement.
NOW, THEREFORE, THE PARTIES HEREBY WARRANT, PROVIDE AND AGREE BETWEEN THEM AS
FOLLOWS:
1. Preamble, Headings and Interpretation
1.1 The preamble to this Agreement constitutes an integral part hereof and one
of its terms.
1.2 The clause headings in the Agreement are solely for the sake of
convenience and are not to be applied in the interpretation hereof.
1.3 In this Agreement, the following expressions shall have the meanings
ascribed to them, unless expressly stated otherwise:
"Shares" or "Shares of the Company" means ordinary shares of 1 NIS
par value each in the Company's issued share capital;
"Cumulative Holdings" means all the Shares of the Company that the
parties to this Agreement hold from time to time;
"Transfer" means a sale, gift, realization of a lien (but not the
creation of a lien), loan and any other transfer of any kind 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;
"Stock Exchange Sale" means a sale in trading on the Stock Exchange
or a sale in a transaction outside the Stock Exchange, through a
broker to purchasers whose identities are not known to the seller or
a sale to mutual funds in Israel or abroad or provident funds or
provident fund management companies;
"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,
D-3
including security clearance as required in Israel for the purpose
of such service;
"Core Shares" means 4,462,764 Shares, constituting all the Shares
that are held by Koor and/or Elbit on the date specified in the
preamble to this Deed, together with all the bonus shares that may
be issued in the future in respect thereof and together with all the
Shares that are acquired on issue by virtue of rights that are
vested in the context of a rights offering of the Company to its
shareholders in respect of those Shares.
1.4 The following terms shall have the meanings ascribed to them in the
Share Transfer Deed: the "First Closing Date", the "Second Closing
Date", the "Stage 'A' Completion Deadline", the "Stage 'B'
Completion Deadline", the "Stage 'A' Shares", the "Stage 'B'
Shares", the "Shares Being Sold", "Stage 'A' of the Transaction",
"Stage 'B' of the Transaction", the "Companies Law", the "Stock
Exchange", "General Meeting", "Free and Clear" and "Business Day".
1.5 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".
1.6 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" and "act".
2. The Parties' Warranties and Undertakings
Each party hereby respectively warrants and undertakes to the other as
follows:
2.1 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, receivership or like acts have been taken or are being
threatened against it.
2.2 That there is no legal or other impediment to its entering into this
Agreement and that this Agreement and the performance of its
obligations pursuant hereto are not contrary to any judgment, order
or
D-4
direction of a court, to any contract, understanding or agreement to
which it is a party, to its incorporation documents or to any other
of its obligations, whether by virtue of a contract (oral, by
conduct or written) or by virtue of law.
2.3 That by the time this Agreement enters into effect as provided in
Clause 7 below, all the approvals, consents and permits will be
obtained and all the necessary proceedings will have been performed,
including the approvals of any authorities, government entities or
any other body, for its entering into this Agreement and performing
its obligations pursuant hereto, and that the signatories on its
behalf are those who are empowered to sign this Agreement on its
behalf, subject in all cases to obtaining the approval of Elbit's
audit committee, board of directors and General Meeting and
obtaining the approval of Koor's board of directors to the parties'
entering into and performing this Agreement and the Share Transfer
Deed.
2.4 That it is not a party to any voting agreement or other arrangement
concerning the Company's Shares with other shareholders of the
Company, save for the other party hereto, and it will not enter into
any such agreement and/or arrangement so long as this Agreement is
in force, except in accordance with the provisions of this Agreement
and subject to the provisions of Clause 5.11 below.
3. Arrangements after the Completion of Stage 'A' of the Transaction
After the completion of Stage 'A' of the Transaction, as provided in the
Share Transfer Deed and until the Second Closing Date or the Stage 'B'
Completion Deadline, whichever is earlier, and without derogating from the
provisions of the Share Transfer Deed, the following arrangements shall
apply between the parties in connection with the Company's management:
3.1 On completion of Stage 'A' of the Transaction, directors shall be
appointed to the Company's board of directors in accordance with
Elbit's nomination, as provided in Clause 10.6 of the Share Transfer
Deed, and the provisions of Clause 10.6 of the Share Transfer Deed
shall be deemed part of this Agreement's provisions.
3.2 Subject to applicable law, the parties shall act so that on every
board of directors' committee of the Company, other than the audit
committee, there shall serve at least one director nominated by
Elbit, as provided in Clause 3.1 above.
3.3 Subject to applicable law, the parties shall act so that a director
of the Company, who has been nominated for the office by Elbit,
shall serve as chairperson of the Company's finance committee.
D-5
3.4 Notwithstanding the provisions of Clauses 3.1 and 3.2 above, should
Koor exercise its right to defer the Stage 'B' Completion Deadline
from 30 September 2005 until 30 April 2006, as provided in Clause
12.1.3 of the Share Transfer Deed (hereinafter the "Additional
Period"), the following arrangements shall apply between the parties
during the Additional Period with respect to the appointment of
directors:
3.4.1 On commencement of the Additional Period, an additional
director nominated by Elbit shall be appointed to the
Company's board of directors so that there shall be a total
of 12 (twelve) directors on the Company's board of
directors, of whom four (4) shall have been nominated by
Elbit, provided that they meet all the Qualification
Conditions. Subject to applicable law, the parties shall act
so that on every board of directors' committee, at least one
third of the committee members shall be directors who were
nominated for their office by Elbit, provided that in any
event at least one director nominated by Elbit shall serve
on every board of directors' committee of the Company, other
than the audit committee.
3.4.2 The parties undertake to act so that the provisions of
Clause 3.4.1 shall take effect as of the commencement of the
Additional Period including, if necessary, by calling a
shareholders meeting of the Company on the agenda of which
shall be such appointment of the director, and they
undertake to support the appointment of the director in
accordance with Elbit's nomination at that meeting, as
provided in Clause 3.4.1.
3.5 After the First Closing Date and during the Additional Period, the
parties shall cooperate at every General Meeting of the Company on
the agenda of which is the appointment of directors to the Company,
and they shall vote at every such meeting in favor of appointing
directors in accordance with Elbit's nomination, as provided in
Clause 3.1 or 3.4 of this Agreement, as the case may be, and in
favor of the appointment of all the other directors of the Company,
including the external directors, in accordance with Koor's
nomination.
4. Arrangements after Completion of Stage 'B' of the Transaction
-------------------------------------------------------------
After and subject to completion of Stage 'B' of the Transaction as
provided in the Share Transfer Deed, and without derogating from the
provisions of the Share Transfer Deed, if and to the extent that after
completion of Stage 'B' of
D-6
the Transaction Koor is a shareholder of the Company, the following
arrangements shall apply between the parties in connection with their
holdings in the Company:
4.1 Koor undertakes to participate in every General Meeting and vote in
respect of all the Shares held by it on every matter and/or decision
that is referred for a resolution of the Company's shareholders in
accordance with written instructions that are given to it by Elbit
at least seven days before the date the applicable resolution is to
be voted on by the Company's shareholders, unless the parties
otherwise agree in writing. Koor's said undertaking shall not apply
with respect to a resolution of the shareholders concerning the
approval of a transaction of the Company in which Elbit or Elbit's
controlling shareholders or officers, or any of them, has a personal
interest, if such voting as required by Elbit would cause Koor to
breach any obligations imposed on it by law. For the avoidance of
doubt, it is hereby clarified that Koor shall not be entitled to
appoint directors on its own behalf by virtue of its holding those
Shares.
4.2 Koor hereby grants Elbit options to purchase from it all or any of
the Shares that are issued to or vested in Koor by the Company after
the signature of this Agreement (in this Clause the "Additional
Shares"), in whole or in part, such Additional Shares being Free and
Clear, under the following time periods and conditions:
4.2.1 During the 90 day period commencing on the Second Closing
Date (in this Clause the "Base Date"), Elbit shall have the
right to provide Koor written notice of Elbit's desire to
purchase any or all of the Additional Shares on the terms
set out in Clauses 4.2.4 - 4.2.8 below. Koor undertakes that
until the end of said period it will not sell or Transfer
the Additional Shares. After the end of the said period,
Koor may, without any restriction, sell not more than
one-half of the Additional Shares.
4.2.2 During the period commencing at the end of 90 days from the
Base Date and ending 180 days from the Base Date, Elbit
shall have the right to provide Koor written notice of
Elbit's desire to purchase any or all of a quantity of
Additional Shares not exceeding half the Additional Shares,
on the terms set out in Clauses 4.2.4 - 4.2.8 below, if
those Shares have not yet been purchased by Elbit as
provided in Clause 4.2.1 above. After the end to said
period, Koor may, without any restriction, sell a further
amount of Additional Shares, so that the total of Additional
Shares sold by Koor as provided
D-7
in Clauses 4.2.1 - 4.2.2 does not exceed three-quarters of
the Additional Shares.
4.2.3 During the period commencing at the end of 180 days from the
Base Date and ending 365 days from the Base Date, Elbit
shall have the right to provide Koor written notice of
Elbit's desire to purchase any or all Additional Shares not
exceeding one-quarter of the Additional Shares, on the terms
set out in Clauses 4.2.4 - 4.2.8 below, if those Shares have
not yet been purchased by Elbit as provided in clauses 4.2.1
and 4.2.2 above. After the end of said period, Koor may sell
all the Additional Shares without any restriction.
4.2.4 The Additional Shares shall be purchased for consideration
in respect of each Additional Share equal to the average
between the price per Share at which the Additional Shares
were issued to Koor by the Company or vested in Koor by the
Company, less any dividend distributed for each Share by the
Company, commencing from the date on which Koor was issued
to or vested in it until the Option Transaction Completion
Date, as defined below, and the price per Share of the
Company on the Stock Exchange. For this purpose, the "Stock
Exchange Price Per Share of the Company" shall be the
average price of the Share at the end of each of the ten
Stock Exchange trading days preceding the date on which
notice is provided by Elbit with respect to the option's
exercise.
4.2.5 Should option exercise notice be provided by Elbit in
accordance with Clauses 4.2.1 - 4.2.3 with respect to any or
all of the Additional Shares, the sale of the Shares in
respect of which the option has been exercised shall be
completed within 14 Business Days after the notice is given
(in this Clause the "Option Transaction Completion Date").
On the Option Transaction Completion Date Elbit shall remit
to Koor the consideration for the Additional Shares in
respect of which exercise notice has been given by Elbit by
bank transfer to Koor's account of which Koor shall give
Elbit written notice at least five Business Days before the
Option Transaction Completion Date, and upon the remittance
of the consideration Koor shall transfer to Elbit the
Additional Shares in respect of which exercise notice is
given by Elbit, Free and Clear, to Elbit's securities
account, the details of which shall be given to Koor by
Elbit by written notice at least five Business Days before
the Option Transaction Completion Date.
D-8
4.2.6 If the Company distributes bonus shares or a dividend in
kind to its shareholders before the option transaction
exercise date, the consideration shall not be adjusted but
the Shares Being Sold on the option transaction exercise
date shall be subject to the addition of the bonus shares,
Free and Clear, or assets received as dividend in kind
(gross) with respect to the Shares Being Sold, Free and
Clear, without Elbit being required to pay additional
consideration for them.
4.2.7 If the Company makes a consolidation, reduction or
sub-division of its share capital or does any other act of
similar effect, the price per Share and the number of the
Additional Shares Being Sold shall be adjusted pro rata to
the consolidation or sub-division.
5. Arrangements between the Parties if Stage 'B' of the Transaction is
not Completed
--------------------------------------------------------------------------
If after the Stage 'B' Completion Deadline, including any extension of
that date in accordance with the Share Transfer Deed, Stage 'B' of the
Transaction is not completed, the following arrangements shall apply
between the parties in respect of the Cumulative Holdings:
Board of Directors
------------------
5.1 So long as the holdings of each of the parties hereto are not less
than 12% of the Company's issued share capital, the parties shall
act and vote by virtue of all the Joint Holdings so that there shall
be 12 directors on the board of the Company including five who are
nominated for office by Elbit, five who are nominated for office by
Koor and two external directors, provided that all the directors
shall meet the Qualification Conditions. The parties shall also act
subject to applicable law so that on all the board of directors'
committees there shall be equal representation of the directors who
are nominated for office by each party. The parties undertake to act
so that this provision is implemented, including, if necessary, by
calling a shareholders' meeting of the Company as soon as possible
in accordance with applicable law, on the agenda of which shall be
the appointment of directors as aforesaid, and they undertake to
support the appointment of directors as aforesaid at that meeting.
5.2 When the term of office of the first of the two external directors
serving on the Company's board of directors on the date of signing
this Agreement comes to an end, Elbit shall be entitled to nominate
a different candidate for the office of external director in his
place.
D-9
When the term of office of the other of the two external directors
serving on the Company's board of directors on the date of signing
this Agreement comes to an end, Koor shall be entitled to nominate
another candidate for the position of external director in his
place. Each party shall act and vote by virtue of all the Shares of
the Company that are held by it in favor of the appointment of the
candidate nominated by the other party to the position of external
director as aforesaid. Said arrangement shall also continue in
similar fashion in respect of the appointment to the Company's board
of directors of the subsequent external directors so long as there
is a legal duty to appoint external directors.
5.3 Subject to applicable law, the parties shall act so that the
Company's articles of association are amended to the effect that the
chairperson of the Company's board of directors shall be elected by
the Company's General Meeting from among the directors who are then
in office, whose office will not expire before the end of that
General Meeting or from among the new directors who are elected to
office at that General Meeting. It is agreed that until 31 December
2006, the chairperson of the Company's board of directors shall be a
director recommended to that post by Koor. Thereafter, the post
shall be held by a director recommended to the post by Elbit for a
period of 24 months, and thereafter the chairperson of the board of
directors shall be replaced every 24 months. The parties shall act
by virtue of the Cumulative Holdings to vote in favor of nominees as
aforesaid.
5.4 Subject to applicable law, the parties shall act so that so long as
a director recommended by one of the parties hereto serves as
chairperson of the Company's board of directors, the Company's
finance committee shall be chaired by a director recommended to the
post by the other party hereto.
5.5 Should the holdings of either of the parties fall below 12% of the
Company's issued share capital but so long as they are not less than
9% of the Company's issued share capital, that party shall be
entitled to a number of directors equal to its percentage holdings
in the Company divided by the total Cumulative Holdings multiplied
by the number of directors serving in the Company (rounded to the
nearest whole number), provided that the number of directors who are
appointed on the recommendation of that party shall not be less than
20% of the number of directors serving in the Company (rounded up to
a whole number).
5.6 Should the holdings of either of the parties fall below 9% of the
issued share capital of the Company but so long as they have not
fallen below 5% of the Company's issued share capital, that party
shall be entitled
D-10
to a number of directors equal to its percentage holdings in the
Company divided by the total Cumulative Holdings multiplied by the
number of directors serving in the Company (rounded to the nearest
whole number).
5.7 Should the holdings of either of the parties fall below 5% of the
issued share capital of the Company, that party shall not be
entitled, pursuant to this Agreement, to representation on the
Company's board of directors.
5.8 It is hereby clarified that if the holdings of a party to the
Agreement fall below the percentages specified in Clauses 5.5 to 5.7
above and as a result thereof the number of directors appointed on
its recommendation is reduced, as the case may be, that party shall
not be entitled to reinstate representation in addition to the
representation retained by it, if at all, on the Company's board of
directors, even if it subsequently acquires Shares of the Company
and again increases its holdings beyond said percentages.
General Meeting
---------------
5.9 The parties shall coordinate between them in advance the manner in
which they will vote on every resolution in the Company's General
Meeting. Subject to the provisions of Clauses 5.1 to 5.8 above, the
parties shall act and vote by virtue of all the Cumulative Holdings
against any proposed resolution in the Company's General Meeting,
unless it is first agreed in writing between them to vote in its
favor.
5.10 Should the holdings of a party fall below 12% of the Company's
issued share capital but so long as they have not fallen below 9% of
the Company's issued share capital, the provisions of Clause 5.9
above shall not apply between the parties.
5.11 Notwithstanding the provisions of Clause 5.9 above, if the holdings
of a party (in this Clause the "First Party") fall below 9% of the
Company's issued share capital, the First Party undertakes to vote
with all its Shares in the Company at every General Meeting in
accordance with the other party's instructions, to be given to it in
writing at least four days prior to the date of each meeting, except
in connection with a shareholders' resolution concerning the
approval of a transaction of the Company in which the other party or
its controlling shareholders or officers, or any of them, has a
personal interest, if so voting would cause the First Party to
breach duties imposed on it by law. The other party shall not
require the First Party's prior consent as regards its voting by
virtue of the Company's shares. Moreover, if the holdings of a party
fall below 9% of the Company's issued share capital, that party
D-11
alone shall be bound by the provisions of Clause 2.4 of this
Agreement, without the other party being so bound, provided that
said party's rights pursuant to this Agreement are not impaired.
Right of First Refusal
----------------------
5.12 A Transfer of Company Shares from the Core Shares by either of the
parties shall not be effective unless made in accordance with the
provisions of this Agreement (including a forced sale in
receivership or execution proceedings).
5.13 If either of the parties (in this Clause the "Offeror") wishes to
Transfer all or any of the Core Shares it holds to a third party, it
shall first offer them to the other party (in this Clause the
"Offeree") on the terms and in the manner set out below (in this
Clause the "Offer"). The parties hereby give their consent to the
granting of a temporary and/or permanent injunction against the
making of a transaction that does not comply with the terms of the
Clause, and they agree that any transaction whereby either of the
parties purports to Transfer the Company's Shares otherwise than in
accordance with these provisions shall be null and void.
5.14 The Offer shall be made in writing and sent to the Offeree.
5.15 In the Offer, the Offeror shall detail the number of Core Shares
that are offered for Transfer (in this Clause the "Offered Shares"),
their class, the price requested for each Share (which shall be
payable only in cash) and all the material commercial terms in
connection with the Transfer, together with the identity of the
purchaser (in this Clause the "Purchaser"), and insofar as the
Purchaser is a company, the identity of its controlling
shareholders, to the best of the Offeror's knowledge, through the
private individuals who control the Purchaser and/or to the
companies that control the Purchaser, whose shares are listed for
trading on a stock exchange in Israel or the United States. Without
derogating from the provisions of Clause 5.21 below, in the case of
a sale to an insurance company in Israel, which is purchasing the
Shares for investments that are not for its "nostro" and/or to a
provident fund and/or trust fund and/or pension fund in Israel, the
Offeror shall be entitled to detail a number of insurance companies
that are purchasing the Shares otherwise than for their "nostro",
and/or provident funds and/or trust funds and/or pension funds, one
of which will be the Purchaser. Moreover, in the event of a sale to
a provident fund or trust fund or pension fund in Israel, the
Offeror need not detail the identity of their controlling
shareholders. The Offeree shall keep the contents of the Offer
confidential, except as may be necessary in order to exercise its
rights pursuant to this Agreement.
D-12
5.16 The Offeree shall be entitled to give written notice to the Offeror
within a period of 21 Business Days from the date of receiving the
Offer (in this Clause the "Notice Period") that it wishes to accept
the Offer and purchase all the Shares offered at the price and on
the terms of the Offer (in this Clause the "Acceptance Notice") or
that it does not accept the Offer.
5.17 Should Acceptance Notice be given by the Offeree during the Notice
Period, the Shares offered shall be transferred to the Offeree
within 14 Business Days of the end of the Notice Period (in this
Clause the "Exercise Period"), Free and Clear, in consideration for
payment of the price specified in the Offer and on the terms
specified in the Offer. Notwithstanding the foregoing if an approval
required by law for the Transfer of the Shares offered to the
Offeree cannot be obtained during the Exercise Period, the Exercise
Period shall be extended by a further period of not more than 21
Business Day (hereinafter in this Clause the "Additional Period"),
provided that on obtaining all the approvals required by law during
the Additional Period, the Shares offered shall be transferred and
the consideration for them shall be paid within two Business Days of
the end of the Additional Period.
5.18 Should Acceptance Notice not be given at the end of the Notice
Period or should notice be given to the effect that the Offeree is
not accepting the Offer (in this Clause the "Rejection Notice") or
should the transaction not be completed within two Business Days of
the end of the Additional Period otherwise than due to the Offeror's
breach, the Offeror may Transfer to the Purchaser the Shares offered
in consideration for the price specified in the Offer or at a higher
price and on the material commercial terms prescribed in the Offer
or commercial terms more favorable to the seller, provided that the
Shares offered shall be transferred to the Purchaser and all the
rights and obligations in accordance with the provisions of this
Agreement shall be assigned to it, and provided that the Purchaser
assumes all the rights and obligations in accordance with the
provisions of this Agreement, subject to the provisions of Clause
5.23 below, within a period of 90 Business Days from the end of the
Notice Period or from the time the Rejection Notice is given,
whichever is earlier.
5.19 For the purposes of Clauses 5.12 - 5.18 above, a Transfer of Shares
from the Core Shares by way of a distribution of a dividend in kind
by Koor to its shareholders shall be treated as a Share Transfer
made on the date determining the rights to receive the dividend in
kind by Koor's shareholders, and such Transfer shall be treated as
though made at the average closing price of the Company's Share on
the Stock Exchange during the 12 trading days before, and during the
12
D-13
trading days after, the date of giving Koor's written Offer as
provided in Clause 5.13 above.
5.20 Notwithstanding in the provisions of this Clause 5, a Transfer of
Shares from the Core Shares by a party hereto to a related entity
shall not be subject to the provisions of this Clause but such a
Transfer shall be prohibited and shall be ineffective unless the
transferor and transferee have jointly and severally assumed all the
transferor's obligations pursuant to this Agreement and confirmed
the same in a written notice given in advance to the other party
hereto, duly signed by the transferor and the transferee. In this
Agreement a "related entity" to a party to the Agreement means a
person or entity that controls it or is controlled by it or is under
the same control as it, and also an entity to which Shares in the
Company are transferred by a party hereto in the course of the
transferor party's merger into that entity, pursuant to which the
transferor's legal personality is nullified.
5.21 Notwithstanding in the provisions of this Clause 5, a sale on the
Stock Exchange of Shares from the Core Shares by a party hereto
shall not be subject to the provisions of this Clause 5, provided
that it meets all the following conditions: (a) a party to this
Agreement shall not sell more than 3% of the Company's issued share
capital during a period of 12 months; and (b) a party to the
Agreement shall not sell more than 1.5% of the Company's issued
share capital in the course of one transaction or one act.
Nevertheless, if a party's total holdings of the Company's Shares
fall below 5% of the Company's issued share capital, that party may
sell the Shares in the course of trading on the Stock Exchange
without the application of the provisions of Clauses 5.12 to 5.21.
For the avoidance of doubt, the provisions of this Clause 5 shall
apply in full to a sale outside the Stock Exchange of Shares from
the Core Shares but they shall not apply to a sale on the Stock
Exchange or off the Stock Exchange of Shares that are not Core
Shares.
Share Purchase Option
---------------------
5.22 Koor hereby grants Elbit options to purchase from it Shares that are
not part of the Core Shares, which have been issued to Koor by the
Company or vested in Koor by the Company after signature of the
Share Transfer Deed, at the times and on the terms set out in Clause
4.2 above, mutatis mutandis.
D-14
5.23 Condition for Transferring Shares and Joining the Shareholders
Agreement
--------------------------------------------------------------------
Without derogating from the other provisions of this Agreement,
including this Clause 5, it is agreed that on any Transfer of Shares
from the Core Shares by a party hereto (in this Clause the
"Transferor Party") the following provisions shall apply:
If the Transferor Party wishes to Transfer all or any of the Core
Shares it holds, the Transferor Party may not do so and such a
Transfer shall be ineffective unless the recipient of the Shares
being transferred (in this Clause the "Acquiror") assumes all the
rights and obligations pursuant to this Agreement so that the
Transferor Party and the Acquiror shall be jointly entitled to the
rights of the Transferor Party pursuant to this Agreement (but not
more) and so that the Transferor Party and the Acquiror shall be
jointly and severally liable for all the Transferor Party's
obligations pursuant to this Agreement, and provided that the number
of shareholders that hold the Transferor Party's rights and
obligations pursuant to this Agreement shall not exceed two.
6. Provisions Regarding the Appointment and Replacement of Directors
-----------------------------------------------------------------
6.1 If a party to this Agreement requests to replace or bring to an end
the term of office of a director nominated to the Company's board of
directors by that party, the parties shall act insofar as necessary
to hold a General Meeting of the Company and vote in favor of a
proposal to remove such a director from office and appoint another
director in his place in accordance with the nomination of the party
seeking to remove such director from office as aforesaid.
6.2 The parties shall vote against a proposal to remove a member of the
Company's board of directors from office, if his nomination for the
office was proposed by Koor or Elbit, unless the party to this
Agreement that nominated said director's appointment directs
otherwise in advance and in writing.
6.3 If the position of a member of the board of directors who was
elected in accordance with the nomination of Koor or Elbit is
vacated for any reason, the parties shall act insofar as necessary
to hold a General Meeting of the Company and vote in favor of
removing from office a director who has been appointed by the
Company's board of directors in place of the board member whose
position has been vacated, if so appointed, and in favor of
appointing the candidate nominated by Koor or Elbit, as the case may
be, for the position of board member instead of the board member
whose position has been vacated, provided that such nominee meets
the Qualification Conditions.
D-15
6.4 Before any General Meeting of the Company on the agenda of which is
the appointment of directors in the Company, and in accordance with
the provisions of the Company's articles of association and
applicable law, each party shall give written notice to the Company,
with a copy to the other, of the candidates nominated by it for the
position of director in the Company.
7. The Term of the Agreement
-------------------------
7.1 This Agreement shall enter into effect on the First Closing Date and
remain in force so long as the parties hereto together hold Shares
of the Company entitling them to at least 15% of the voting rights
in the Company, provided that each party hereto holds Shares of the
Company.
7.2 Should the holdings of a party or the parties to this Agreement, as
the case may be, fall below the percentages set out in Clause 7.1
above, this Agreement shall automatically expire and not vest any
rights in either of the parties hereto or impose on either of them
under any obligations. The provisions of the Agreement shall not be
renewed or again become effective, even if the holdings of a party
or parties to this Agreement increase after it has expired as
provided in this Clause.
8. Confidentiality and Notices
---------------------------
8.1 Subject to applicable law and the provisions of Clause 8.2 below,
the parties shall not publish or provide information to any third
party in connection with this Agreement without the other party's
prior written consent to the publication and its contents.
8.2 The parties shall provide all the reports required by applicable law
concerning entering into and performing this Agreement as required
by applicable law, by prior coordination, if and insofar as legally
possible, with the other party hereto.
8.3 The parties shall use Confidential Information that comes into their
possession in connection with this Agreement or the Company solely
for the performance of their obligations pursuant to this Agreement,
and they shall not in any manner provide Confidential Information to
any third party.
8.4 For the purpose of this Clause 8.3, "Confidential Information" -
means any information relating to the parties hereto and/or 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
D-16
Agreement by a party hereto; and (b) information the disclosure of
which is required by law.
8.5 The obligations pursuant to Clauses 8.1 to 8.4 of this Agreement are
not limited in time.
9. Miscellaneous
-------------
9.1 Any modification, amendment and/or addendum, waiver, extension,
concession or failure to exercise a right pursuant to this Agreement
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 as aforesaid and shall not derogate from other rights
of a party pursuant to this Agreement.
9.2 The parties hereto may extend or reduce any time specified in this
Agreement and waive the performance of any of this Agreement's
provisions, either once or several times, by written notice signed
by two officers of Koor and of Elbit, without any further authority
being necessary.
9.3 No conduct by either of the parties shall be construed as a waiver
of any of its rights pursuant to this Agreement and/or by law or as
its waiver of or acquiescence to any breach or non-performance of
the terms of the Agreement 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.
9.4 This Agreement 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,
undertakings or representations with regard to the subject matter of
this Agreement that were given or made by the parties prior to
entering into this Agreement, in writing or orally, that are not
specifically expressed herein, shall not augment, modify or derogate
from the rights and obligations prescribed herein, and the parties
shall not be bound by them, insofar as they were bound, as from the
date of this Agreement. Without derogating from the generality of
the foregoing, the documents exchanged between the parties before
the signature hereof, including the drafts exchanged between them,
shall have no significance in the interpretation of this Agreement.
For the avoidance of doubt, the terms of the shareholders agreement
made between Koor, Federmann Enterprises Ltd. and HERIS
KTIENGESELLSCHAFT, contemporaneously with the signature of this
Agreement shall not be applied in the interpretation of this
Agreement.
D-17
9.5 Unless otherwise expressly provided in this Agreement, the parties
hereto may not assign or transfer their rights or obligations under
this Agreement to any third party or perform this Agreement through
any third party, unless the other party's prior written consent has
been obtained, and nothing in this Agreement shall be deemed to vest
any right in anyone who is not a party hereto.
9.6 Should either of the parties not enforce or delay in enforcing any
of the rights vested in it pursuant to this Agreement and/or by law,
in a particular case or series of cases, such shall not be construed
as a waiver of said right or of any other rights.
9.7 This Agreement shall be governed by the laws of the State of Israel.
Sole and exclusive jurisdiction in all matters relating to this
Agreement is vested only in the courts of the District Court in the
City of Tel Aviv - Jaffa and in them alone, and no other court shall
have jurisdiction thereover.
9.8 Notices under this Agreement shall be given in writing to the
parties' addresses as set out in the preamble hereto and/or to such
other addresses of which the parties give 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 that is delivered in person by 17:00 hours on any
Business Day shall be treated as received on delivery, or if
delivered after 17:00 hours on any Business Day, then on the first
Business Day after its delivery.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT:
______(signed)______ ______(signed)____
KOOR INDUSTRIES LTD. ELBIT SYSTEMS LTD.
D-18
ANNEX E
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
SHARE TRANSFER DEED
BETWEEN
FEDERMANN ENTERPRISES LTD.
AND
KOOR INDUSTRIES LTD.
E-1
[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
E-2
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 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;
E-3
"General Meeting" means as defined in the Companies Law, and any
adjourned meeting;
"U.S. Dollar" or "$" means United States dollars;
"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
E-4
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;
"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;
E-5
"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;
"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;
E-6
"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 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;
E-7
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.
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),
E-8
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.
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.
E-9
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 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
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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 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
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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.
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:
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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.
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.
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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 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
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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;
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
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'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
'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
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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 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'
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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
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
E-18
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
(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
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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.
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
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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 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
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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.
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
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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.
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
E-23
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.
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
E-24
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.
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
E-25
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 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
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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.
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
E-27
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, 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
E-28
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.
E-29
Appendix 12.2
-------------
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.
E-30
ANNEX F
-------
TO
ELBIT SYSTEMS LTD. PROXY STATEMENT
FEBRUARY 7, 2005
SHAREHOLDERS AGREEMENT
BETWEEN
FEDERMANN ENTERPRISES LTD.
AND
KOOR INDUSTRIES LTD.
F-1
[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
F-2
Shares of 1 NIS par value each of the Company (those specific
Shares and bonus Shares that are in future issued in respect of
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);
F-3
2.2 "Independent Director" means a director who meets all the
independence criteria in accordance with the Foreign Law;
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;
F-4
2.13 "Second Minimum Percentage" means 4.32% of the Company's issued
share capital at the time of computation;
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;
F-5
2.27 "Deed of Sale" means as stated in the preamble hereto;
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.
F-6
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
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;
F-7
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.
4.4 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.
F-8
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.
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
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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
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").
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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
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
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"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 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
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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
----------------------------------
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
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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.
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
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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 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.
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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:
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,
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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 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.
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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
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
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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.
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.
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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 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
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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
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
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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 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
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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
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.
F-23
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.
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
F-24
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, 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.
F-25
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.
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
F-26
EXHIBIT 2
ELBIT SYSTEMS LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 28, 2005
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned hereby appoints
MICHAEL FEDERMANN, JOSEPH ACKERMAN and ILAN PACHOLDER, and each of them, the
true and lawful proxies of the undersigned, with full power of substitution, to
vote with respect to all of the undersigned's ordinary shares of ELBIT SYSTEMS
LTD. (the "Company"), at the Extraordinary General Meeting of Shareholders of
the Company to be held at the Company's offices at Advanced Technology Center,
Haifa, Israel, on Monday, February 28, 2005, at 3 p.m. local time, and at any
adjournments, with all power that the undersigned would have if personally
present and especially (but without limitation) to vote as follows:
The shares represented by this Proxy will be voted in the manner directed, and
if no instructions to the contrary are indicated, will be voted "FOR" all
Proposals listed on the reverse side, subject to indicating whether or not there
is a personal interest in Item 1.
(Continued and to be signed on the reverse side)
14475
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF
ELBIT SYSTEMS LTD.
February 28, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon as
possible.
Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. APPROVAL AND RATIFICATION OF THE
AGREEMENTS DATED DECEMBER 27, 2004 [_] [_] [_]
FOR AGAINST ABSTAIN REGARDING THE
PURCHASE OF KOOR INDUSTRIES LTD.'S
SHARES IN TADIRAN COMMUNICATIONS
LTD.:
YES NO
Indicate whether you do or do not
have a personal interest in this [_] [_]
Item.
FOR AGAINST ABSTAIN
2. ELECTION OF NATHAN SHARONY TO AN
ADDITIONAL TERM AS AN EXTERNAL [_] [_] [_]
DIRECTOR:
----------------------------------------
To change the address on your account,
please check the box at right and
indicate your new address in the address [_]
space above. Please note that D changes
to the registered name(s) on the account
may not be submitted via this method.
----------------------------------------
Signature of Shareholder _______________________ Date: ____________
Signature of Shareholder _______________________ Date: ____________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership. please sign in
partnership name by authorized person.