Exhibit 4.5
THIS SHAREHOLDERS AGREEMENT is made on 25 May 2000
BETWEEN:
(1) NORTEL NETWORKS LIMITED a company incorporated under the laws of
Canada, having its executive offices at 0000 Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 ("Nortel Networks")
(2) NORTEL COMMUNICATIONS HOLDINGS (1997) LIMITED a company incorporated
in accordance with the laws of the State of Israel, having its office
at Kibbutz Glil Yam, Herzliya, Israel ("Nortel").
(3) KOOR INDUSTRIES LIMITED ("Koor") a company incorporated in accordance
with the laws of Israel having its registered office at 00 Xx'xxxxx
Xxxxxx, Xxx Xxxx 00000, Xxxxxx.
(4) TELRAD NETWORKS LIMITED ("Telrad") a company incorporated in
accordance with the laws of Israel having its registered office at XX
Xxx 00, Xxx 00000, , Xxxxxx (Koor and Telrad (for so long as it
remains a Koor Subsidiary) together, the "Koor Group").
(5) NORTEL NETWORKS ISRAEL (SALES AND MARKETING) LIMITED (the "Company")
a company incorporated in accordance with the laws of Israel having
its registered office at Xxxx Xxxxx, 0 Xxxxxxxx Xxxxxx, Xxx Xxxx
00000, Xxxxxx.
RECITALS
(A) On 22 May 2000, the Company was incorporated in accordance with the
laws of Israel. As of the date hereof, the shareholders of the
Company are Nortel which holds one (1) Ordinary Share of NIS 1.00
nominal value. As of the date hereof, the sole director of the
Company is Xxxxx Xxxxxxx.
(B) The intention of the parties is that the Company shall act as the
primary entity for the furtherance of Nortel Networks' interests in
the Territory and the primary channel for distribution of the Nortel
Networks products in the Territory, all as further described in this
Shareholders Agreement.
(C) Pursuant to a Asset Purchase Agreement signed on the date hereof
("the Asset Purchase Agreement") between Nortel Networks Corporation,
the Company, Koor and Telrad, the Company undertook to acquire
certain assets and assume certain liabilities of Telrad, all as set
out in the Asset Purchase Agreement.
(D) The parties hereto wish to cooperate as shareholders of the Company
for the benefit of the Company and the parties hereto.
1. Interpretation
--------------
In this Agreement, unless the context otherwise requires:
1.1 The following words and expressions shall bear the meanings set
opposite them:
"Affiliate" means, in the case of a Party, any company directly or
indirectly Controlled by that Party, any company which
directly or indirectly Controls such Party and any
company under common Control with such Party;
"Control" means ownership of more than 50% of the issued shares or
ownership of shares conferring more than 50% of the
voting rights exercisable at general meetings;
"Party" Means a party to this Agreement
"Territory" means Israel, Palestinian Autonomous Authorities and such
other territories as shall be determined by the Parties
from time to time, together with the sales to Rwandatel,
Ethiopia ETC, Mali Sotelma and Ghana Telecom.
1.2 Reference to any statute or statutory provision includes a
reference to that statute or statutory provision as amended.
1.3 The headings in this Agreement are inserted for convenience only
and shall not affect the construction thereof.
1.4 References herein to recitals, sections and exhibits refer to
recitals, sections and exhibits of this Agreement unless otherwise
stated.
1.5 The Exhibits form part of this Agreement.
2. Capitalisation of the Company
-----------------------------
At the Closing (as hereinafter defined), the parties shall fund
the Company as follows:
2.1 Nortel shall transfer to the Company the sum of US$ 36,800,000, of
which the sum of US$ 14,400,000 shall be on account of share
capital against the issuance by the Company to Nortel of 7199
Ordinary Shares of the Company, and the sum of US$ 22,400,000
shall be a shareholders loan pursuant to a loan agreement to be
signed between the Company and Nortel in the form attached hereto
as Exhibit A.
2.2 The Koor Group shall transfer to the Company the sum of US$
47,900,000 in the following manner:
2.2.1 Koor shall transfer to the Company the sum of US$ 4,200,000
on account of share capital against the issuance by the
Company to Koor of 2100 Ordinary Shares of the Company;
2.2.2 Telrad shall transfer to the Company the sum of US$
1,400,000 on account of share capital against the issuance
by the Company to Telrad of 700 Ordinary Shares of the
Company;
2.2.3 The Koor Group shall transfer the sum of US$ 42,300,000
to the Company (of which US$ 31,725,000 shall be provided
by Koor and US$ 10,575,000 shall be provided by Telrad) as
a shareholders loan pursuant to a loan agreement to be
signed between the Company as borrower and Koor and Telrad
as lenders in the form attached hereto as Exhibit B.
2.3 All funds detailed above shall be sent in immediately available US
Dollars to the bank account of the Company.
2.4 The funds described above shall be used by the Company primarily
to pay the purchase price for the assets acquired pursuant to the
Asset Purchase Agreement, and thereafter to fund the working
capital of the Company.
2.5 The sums to be transferred pursuant to the loan agreements
referred to in Sections 2.1. and 2.2 and the resulting sums set
out in Section 3.1 shall be adjusted within ten (10) days
following the determination of the Final Net Asset Amount,
pro-rata to the Koor Group's and Nortel's shareholding in the
Company, to the extent the Final Net Asset Amount in respect of
the Israeli Business differs from the March Net Asset Amount in
respect of the Israeli Business in an amount exceeding $1,000,000,
and the Company shall issue new loan agreements reflecting such
adjustment against surrender by Nortel and the Koor Group of the
loan agreement signed at Closing.
2.6 Nortel Networks hereby undertakes to cause the Company to repay to
Koor and Telrad the loans described in Section 2.2 above pursuant
to the terms of the loan agreement attached as Exhibit B.
3. Closing
-------
3.1 The closing of this Shareholders Agreement (the "Closing") shall
take place at the same time and place as the closing of the Asset
Purchase Agreement. At the Closing the following shall occur:
3.1.1 Nortel and the Company shall sign the loan agreement
referred to in Section 2.1 above and Nortel shall transfer
to the Company the sum of US$ 36,800,000.
3.1.2 Koor and Telrad as lenders and the Company as borrower
shall sign the loan agreement referred to in Section 2.2
above and the Koor Group shall transfer to the Company the
sum of US$ 47,900,000.
3.1.3 The Company shall deliver to Nortel and Koor a resolution
of the Board of Directors of the Company pursuant to which
(a) the Company agrees to accept the loans specified in
Sections 3.1.1 and 3.1.2 above and (b) the Company issues
7199 Ordinary Shares to Nortel, 2100 Ordinary Shares to
Koor and 700 Ordinary Shares to Telrad.
3.1.4 Nortel shall deliver to the Company the documents specified
in Schedule 3.1.4, duly signed by Nortel Networks.
3.1.5 Telrad shall deliver to the Company the documents
specified in Schedule 3.1.5, duly signed by Telrad.
3.1.6 Nortel and Koor shall cause the Company to sign each of
the documents specified in Schedule 3.1.6.
3.1.7 All of the documents specified in Sections 3.1.4 - 3.1.6
shall be in the forms agreed between the parties and
initialled for identification purposes.
3.1.8 Nortel, Telrad and Koor shall sign a unanimous written
consent of the shareholders of the Company to adopt the
Amended and Restated Articles of Association reflecting
the provisions of this Shareholders Agreement in the form
to be agreed between Nortel and Koor.
3.1.9 Each of Nortel and Koor shall deliver notifications to the
Company appointing the directors to be appointed by them
pursuant to Section 5.1 below.
3.1.10 The closing of the Asset Purchase Agreement shall be
consummated.
3.9 All transactions occurring at the Closing shall be deemed to take
place simultaneously and no transaction shall be deemed to have
been completed and no document or certificate shall be deemed to
have been delivered until all transactions are completed and all
documents delivered. Unless otherwise indicated, all documents and
certificates shall be dated on or as of the date of the Closing.
4. Business of the Company
-----------------------
4.1 The Company shall have as its business (the "Business") the
marketing, selling, integrating, servicing and supporting of
Nortel Networks telecommunications products and network solutions
in the Territory, including, without limitation, network design,
architecture planning, consulting, systems integration, project
management and installation.
4.2 The Company may perform all these activities itself, or procure
any of such services from third party sources or from either of
the parties hereto (subject to Clause 6.1 below), all as the
Company's management shall decide.
4.3 The initial objectives of the Company will be the marketing,
selling, servicing and supporting in Israel of Nortel Networks
products which are the subject of the Distribution Agreement (as
set out as Exhibit C) (the "Products") and other distribution
agreements between the Company and Nortel Networks from time to
time, and those Telrad or third party products which are the
subject of OEM agreements between the Company and Telrad or those
third parties from time to time.
4.4 The Products shall be marketed, sold, serviced and supported
subject to and in accordance with distribution rights granted to
the Company in the Distribution Agreement to be signed between the
Company and Nortel Networks at the Closing as described above.
4.5 The Parties have agreed upon a preliminary three-year (3 year)
business plan (hereinafter "Business Plan") for the Company in the
form attached as Schedule 4.5 hereto. The parties agree that they
shall cooperate in order to attain the goals set forth in the
Business Plan.
4.6 The Parties shall procure that the Company shall prepare within
forty-five (45) days before the end of each fiscal year a budget
and a business plan for the Company for the coming fiscal year
which shall include the following:
(a) the working capital requirements contained in a cashflow
statement;
(b) the projected profit and loss account;
(c) a balance sheet forecast;
(d) a report by the CEO giving business objectives for the
year; and
4.7 The Parties shall procure that the Company shall prepare within
forty-five (45) days following the end of each fiscal year for
presentation to the Parties a report by the CFO which shall
include an analysis of the results of the Company compared with
the business plan for such fiscal year.
4.8 In the event that financing is required for the Company's sales
which cannot be funded either by the Company from its own
resources or by bank or other financing without the support of the
Company's shareholders, then Nortel and Koor shall together
provide such financial support as required to support the
Company's sales, provided that:
(a) any decision to provide such financing shall be subject
to the approval of Nortel and Koor and neither party
shall be able to require the other party to provide such
financing;
(b) subject only to the provisions of sub-Section (c) below,
any such financing shall be provided by the parties pro
rata to the shareholdings of Nortel and the Koor Group in
the Company;
(c) in the event that, for whatever reason, it is deemed
advisable by all the parties hereto that the financing
should be provided by one of the shareholders of the
Company, then the other shareholder shall be liable (in
the event the customer defaults) for the portion of such
financing which would have been assumed by such
shareholder in the event that the financing had been
assumed by both shareholders of the Company pro rata to
their shareholdings in the Company.
Nortel Networks hereby covenants to the Koor Group that
all loans provided by the Koor Group pursuant to this
Section 4.8 shall be repaid at such time as the Koor
Group ceases to be shareholders of the Company. If
Telrad's shares are transferred to Koor pursuant to
Section 9.5, the Telrad portion of the Koor Group's loan
shall not be repaid at that time but shall be transferred
to Koor.
5. Board of Directors and Management
---------------------------------
5.1 From the Closing, the Parties shall procure that the Board of
Directors of the Company shall not be elected by the shareholders
but shall be appointed as follows.
5.1.1 4 directors shall be appointed by Nortel (the "Nortel
Networks Directors")
5.1.2 2 directors shall be appointed by Koor (the "Koor
Directors")
5.1.3 The Chief Executive Officer of the Company shall be an
additional director of the Company.
5.2 The Chairman of the Board of Directors of the Company shall be one
of the Nortel Networks Directors.
5.3 Subject to any restrictions or limitations under law, the parties
hereto shall cooperate to ensure that the parties' representation
on the committees of the Board of Directors of the Company and the
Boards of Directors of any subsidiaries of the Company shall be
proportionate to their representation on the Board of Directors of
the Company, as set forth above.
5.4 Directors of the Company or the subsidiaries or members of
committees of the Board of Directors of the Company designated by
Nortel or Koor may be removed or replaced only with the consent of
the party appointing them.
5.5 The Chief Executive Officer and the Chief Financial Officer of the
Company shall be nominated by Nortel and appointed by the Board of
Directors of the Company.
6. Fundamental Matters
-------------------
6.1 Nortel Networks agrees and undertakes towards Koor that the
Company shall not carry out, and shall exercise its control of its
subsidiaries, in order that such subsidiaries shall not carry out,
any of the following without the prior written consent of Koor, if
the matter is required to be approved by the shareholders of the
Company, or without the prior written consent of one of the Koor
Directors, in all other matters:
6.1.1 Amendment of the Memorandum or Articles of Association of
the Company;
6.1.2 Liquidation of the Company or make an assignment for the
benefit of its creditors;
6.1.3 Acquire a material business or dispose of the whole or a
material part of the business of the Company or merge the
whole or a material part of its business with that of any
other entity, where a material part of the business shall
mean a part of the business which has a value greater than
20% of the value of the Company's assets at such time, or
the incurrence of debt in order to effect any of the
above;
6.1.4 Issue additional shares in the Company, options to purchase
shares or securities convertible into, exercisable for or
exchangeable for shares of the Company, or repurchase
shares or options for shares in the Company;
6.1.5 Enter into, modify or waive any material obligation under,
or terminate any material contract by the Company with any
shareholder or Affiliate thereof, other than any contract
that is entered into in the ordinary course of business
and on an arm's length basis.
6.2 Notwithstanding any of the provisions of this Clause 6, Nortel
Networks and Koor undertake towards each other to use their
respective best endeavours to resolve any disagreements with
respect to issues requiring resolution by the Parties.
6.3 Eighteen months following the Closing, Nortel Networks and Koor
shall meet to discuss their relationship as shareholders in the
Company and any changes in such relationship for their mutual
benefit.
7. Financial Information
---------------------
Each party hereto agrees that it shall make all reasonable efforts
to assist the other party and their representatives in receiving
all the financial information in connection with the Company that
it requires in order to accurately assess the financial position
of the Company and to include the relevant information concerning
the Company in the parties' financial or other reports as required
by law or otherwise. Specifically, the Company shall provide the
parties with unaudited quarterly financial statements of the
Company within thirty (30) days of the end of each quarter and
annual audited financial statements in accordance with Israeli
GAAP within forty-five (45) days from the end of each calendar
year. The unaudited quarterly financial statements of the Company
may be provided in accordance with Israeli GAAP or, if the Company
chooses, in accordance with US GAAP, provided the statement is
accompanied by a letter from an external accountancy firm
confirming that the statement under US GAAP leads to no material
difference in the quarterly results as compared to Israeli GAAP.
8. Standstill
----------
Each of the Parties undertakes towards the others that, from the
date hereof until the expiry of a period of three years from the
Closing (the "Standstill Period"), it shall not sell, transfer,
dispose of or encumber in any way any shares held by it in the
Company.
9. Put and Call Options
--------------------
9.1 For a period of ninety (90) days commencing on the day which shall
be one hundred and twenty (120) days prior to the third
anniversary of the Closing (the "Option Period"), Koor, on its own
behalf and on behalf of Telrad, shall be entitled to serve notice
on Nortel in the form attached as Schedule 9.1 that it wishes to
sell to Nortel all of its shares in the Company, together with all
of the shares held by Telrad in the Company (the "Put Option").
9.2 During the Option Period, Nortel shall be entitled to serve notice
on Koor in the form attached as Schedule 9.2 that it wishes to buy
from Koor and Telrad all of the Koor Group's shares in the Company
(the "Call Option").
9.3 Immediately following the delivery and receipt of a notice
referred to in Sections 9.1 and 9.2 above, the parties shall take
all actions necessary to receive all approvals or consents, if
any, necessary for the transfer of all of the shares of the
Company from the Koor Group to Nortel (the "Koor Shares"), and
shall themselves and cause the Company to make such filings as are
necessary in order to obtain such consents and approvals.
9.4 In consideration for the sale and transfer of the Koor Shares by
the Koor Group to Nortel, Nortel shall pay to Koor and Telrad, pro
rata to their respective holdings in the Company, an amount (the
"Option Price"), calculated in accordance with the mechanism
detailed in Schedule 9.4.
(a) By no later than thirty (30) days prior to Option Closing
(as hereinafter defined), Nortel shall prepare and
deliver to Koor (which, with respect to the provisions of
this Section 9.4, shall act on its own behalf and on
behalf of Telrad) a calculation of the Option Price,
including reasonable explanatory detail.
(b) Following the delivery of the calculation contemplated by
Section 9.4(b), Nortel shall cooperate with Koor so as to
make the Company's employees and/or Nortel and/or Nortel
Networks employees available to meet and discuss any and
all financial matters relating to the preparation of the
calculation of the Option. Within twenty-one (21) days
following the delivery of the calculation of the Option
Price as aforesaid, Koor may deliver to the Seller its
objections to the determination of the Option Price. If
Koor does not deliver written notice of an objection to
the calculation of the Option Price within such
twenty-one (21) day period, Koor shall be deemed to have
accepted Nortel's determination of the Option Price and
such calculation shall be deemed to be the Option Price
for payment at the Option Closing.
(c) If Koor delivers written notice of an objection to the
calculation of the Option Price as aforesaid (the "Koor
Objections") within the twenty-one (21) day period
contemplated above, Koor and Nortel shall, during the
forty-five (45) days (or such longer period as those
parties shall mutually agree) following delivery of the
Koor Objections, meet and discuss in good faith the Koor
Objections. If the Koor Objections cannot be resolved by
negotiation between those parties within such period
after delivery of the Koor Objections, the Koor
Objections will be referred for resolution to
PricewaterhouseCoopers in Tel Aviv to serve as the
accounting expert (the "Accounting Expert") with respect
to the Koor Objections. The Accounting Expert will be
instructed to select, at its discretion, the individuals
who will have primary responsibility for this matter, and
to reach a determination, giving full reasons for such
determination, within forty-five (45) days from the date
of referral. The Accounting Expert will be limited to
determining matters of accounting as they relate to the
Koor Objections, it being understood that such
determination shall be in conformity with US GAAP. The
decision of the Accounting Expert will be final and
binding upon the parties. The fees and expenses of the
Accounting Expert engaged pursuant to this Section 9.4
shall be paid one-half by Koor and one-half by Nortel.
(d) In the event that Koor delivers the Koor Objections as
aforesaid then, at the Option Closing, Nortel shall pay
to Koor the amount specified in its calculation as
referred to in Section 9.4(a) above. Within ten (10) days
of the resolution of the Koor Objections pursuant to
Section 9.4(c), as by agreement of Koor and Nortel or by
the Accounting Expert, Nortel shall pay the difference,
if any, between the amount as resolved and the amount
paid at the Option Closing.
(e) For the avoidance of doubt, the Price of the Koor Shares
shall be calculated pursuant to the provisions of
Schedule 9.4 and based upon the dates and period set
forth therein, regardless of the date of the exercise of
the Put Option or the Call Option.
9.5 The Koor Group warrants to Nortel that it will remain from the
date of the Closing until the third anniversary of the Closing,
the beneficial owner of the Koor Shares, and has and will have
full power and authority to sell the Koor Shares upon the terms
and conditions of this Agreement. Prior to Telrad ceasing to be a
Subsidiary of Koor for any reason, Koor shall procure the transfer
of ownership to Koor of Telrad's shareholding and interest in the
Company
9.6 The closing ("Option Closing") of the sale of the Koor Shares by
the Koor Group to Nortel shall take place on a date sixty (60)
days following the third anniversary of the Closing (the "Option
Closing Date"). At the Option Closing, the following actions shall
take place:
9.6.1 The Koor Group shall deliver to Nortel share certificates
representing all of the Koor Shares, together with a
share transfer form evidencing the transfer of the Koor
Shares from the Koor Group to Nortel, duly executed and
witnessed.
9.6.2 The parties shall cause the secretary of the Company to
register the transfer of the Koor Shares and issue a
certificate representing the Koor Shares to Nortel.
9.6.3 The Koor Group shall deliver to Nortel an opinion of its
legal counsel confirming that Koor and Telrad have taken
all corporate action to sign the share transfer form and
to transfer the Koor Group Shares to Nortel.
9.6.4 Each of Koor and Telrad shall deliver to Nortel a letter
of undertaking and representation in the form attached
hereto as Schedule 9.6.4.
9.6.5 Nortel shall pay the Option Price (or the calculation
thereof pursuant to the provisions of Section 9.4(d)
above) to the Koor Group by bank cheque, pro rata to
their shareholdings in the Company, in immediately
available US dollars.
9.7 In the event that, as a result of the delay of the deregulation of
the Israeli telecommunication market, there is a material adverse
impact on the business of the Company in the first year following
the Closing as compared to the business plan, Nortel Networks and
Koor shall, at such time, meet and discuss in good faith how such
delay may affect the provisions of this Section 9. In addition, in
the event that during the third year following Closing there are
negotiations between the Company and a major operator which will
come into effect only in the fourth year, Nortel Networks and Koor
shall meet and discuss in good faith how such situation may affect
the provisions of this Section 9. Notwithstanding all of the
above, in the event that no agreement is reached by Nortel
Networks and Koor at such time, the provisions of Sections 9.1 -
9.6 shall continue to apply to the parties hereto.
10. Non-Competition
---------------
10.1 Each Party, on its own behalf and on behalf of its Affiliates
(other than Affiliates whose shares are listed for trading on a
recognised stock exchange), agrees and undertakes towards the
other Parties that it shall not buy, establish or engage in a
business (or acquire a controlling interest in a business) that
has as its principal business the marketing, selling, integrating,
servicing and supporting of competing telecommunications or
networking products or equipment ("Competing Products")in Israel
for so long as it, or any of its Affiliates, remains a shareholder
in the Company and for a period of one year thereafter.
10.2 In addition, without the consent of Telrad, the Company and Nortel
shall not hire employees of Telrad for a period of eighteen months
following the date of the Closing. Without the consent of Nortel
Networks, Telrad shall not hire employees of the Company, Nortel
or Nortel Networks for a period of eighteen months following the
date of Closing.
10.3 The provisions of Clause 10.1 shall not apply to:
(a) Nortel Networks' direct (either by Nortel Networks or by
one or more of its Affiliates) or indirect (through other
channels) provision of products to Nortel Networks global
accounts in the Territory;
(b) Telrad's key system business and the fulfillment of Phase
B of the Blue Avnet contract prior to assignment;
(c) restrict Nortel and its Affiliates from supplying
products and services to customers in the Territory by
means of other pan-regional or global distributors and
value added resellers (such distributors and resellers
being those whose territory encompasses a number of
geographical territories and/or customer accounts and
whose area of endeavour is not primarily focussed on the
Territory);
(d) the fulfilment by Telrad Business Communications Limited
("TBC") of its existing contract with Bezeq provided
that:
(i) within 7 days of signing this Agreement Telrad
shall write to Bezeq informing them of TBC's
inability to take further contracts for the
supply of Competing Products and of its
intention to sell TBC; and
(ii) no later than 30 December 2000 Telrad shall have
entered into a binding Memorandum of
Understanding for the sale of TBC; and
(iii) if by 30 December 2000 TBC has neither been sold
nor has a binding Memorandum of Understanding
been signed in respect of such sale, then TBC
shall on no later than 8 January 2001 be placed
into trust, at Telrad's cost, with trustees
nominated by Nortel Networks, such trustees to
hold and manage TBC according to the joint
instructions of Telrad and Nortel Networks or
one of Nortel Networks' Affiliates nominated by
Nortel Networks;
(e) Beta site testing by Telrad for Telrad's products in
which such products are either removed at the end of such
testing or are transferred to the customer for no
additional consideration.
11. Miscellaneous
-------------
11.1 Expenses
--------
All costs, fees or expenses (including, without limitation, legal
and accounting fees), incurred in connection with this
Shareholders Agreement and the agreements attached hereto, and in
connection with all obligations required to be performed by each
party hereto under this Shareholders Agreement and the agreements
attached hereto, shall be borne by the party incurring such costs,
fees or expenses, except as expressly provided herein.
11.2 Amendment
---------
This Shareholders Agreement may not be modified, amended, altered
or supplemented except by a written agreement executed by Nortel
and Koor (on its own behalf and on behalf of Telrad).
11.3 Entire Agreement
----------------
This Shareholders Agreement, including the Exhibits and Schedules
hereto, together with the Asset Purchase Agreement, contain all of
the agreements, covenants, terms, conditions and representations
and warranties agreed upon by the parties relating to the subject
matter of this Shareholders Agreement and supersede all prior and
contemporaneous agreements, negotiations, correspondence,
undertakings, representations, warranties and communications of
any kind of or between the parties and their representatives,
whether oral or written, respecting each subject matter.
11.4 Waivers
-------
Waiver by any party of any breach of or failure to comply with any
provision of this Agreement by the other parties shall not be
construed as, or constitute, a continuing waiver of such
provision, or a waiver of any other breach of, or failure to
comply with, any other provision of this Shareholders Agreement.
No waiver of any such breach or failure or of any term or
condition of this Shareholders Agreement shall be effective unless
in a written notice signed by the waiving party and delivered, in
the manner required for notices generally, to each affected party.
11.5 Notices
-------
Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to
the provisions of this Shareholders Agreement ("notice") shall be
sufficiently given or made if in writing and delivered in person
with receipt acknowledged, sent by registered or certified mail,
receipt requested, posted prepaid, sent by overnight courier with
guaranteed next day delivery or sent by telex or facsimile to the
party to whom directed at the following address:
To Nortel Networks or to Nortel:
Nortel Networks
Xxxxxxxx Xxxx Xxxxx
XXXXXX X00 0XX
Xxxxxxx
Fax: x00 (00) 0000 0000
Attention: Company Secretary
To the Company
As above but with a copy to
Xxxxxx, Xxx & Xxxxxx
Xxxx Xxxxx, 0 Xxxxxxxx Xxxxxx
Xxx Xxxx 00000, Xxxxxx
Fax: (000 0)000 0000
Attention: Xxxxxx Xxxxx
To Koor
00 Xx'xxxxxx Xxxxxx
XXX XXXX, Xxxxxx 00000
Fax: (x000) 0 000 0000
Attention: Xxxxxxxx Xxxxxx
With a copy to
Xxxxxxx, Behar Chen & Co
3 Xxxxxx Xxxxxx Xxxxxx
XXX XXXX 00000
Xxxxxx
Fax (x000) 0 000 0000
Attention: Xxxxxx Xxxxx
To Telrad
X.X. Xxx 00
Xxx 00000
Xxxxxx
Fax: (x000) 0 000 0000
Attention: Reuven Avi-Tal
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such notice.
Every notice shall be deemed to have been duly given or served on
the date on which personally delivered, with receipt acknowledged,
one Business Day after sent by overnight (next day) courier, two
Business Days after sent by international (two day) courier or on
the day telexed or faxed.
11.6 Counterparts
------------
This Shareholders Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same document.
11.7 Governing Law
-------------
This Shareholders Agreement shall be governed by and construed in
accordance with the laws of England and the parties submit to the
exclusive jurisdiction of the courts of England in respect of any
dispute arising out of or connected to this Shareholders
Agreement. Nothing herein shall derogate from the mandatory
provisions of Israeli law with regard to the Company.
11.8 Binding Effect; Assignment; No Third Party Beneficiaries
--------------------------------------------------------
This Shareholders Agreement shall be binding upon, enure to the
benefit of, and be enforceable by, the parties hereto and their
respective legal representatives, successors and permitted
assigns; provided, that no party hereto may assign or transfer
this Shareholders Agreement nor any right or obligation hereunder
by operation of law or otherwise, without the consent of the other
parties hereto. This Shareholders Agreement shall not be construed
to confer any benefits or rights on, or be enforceable by, any
person other than the parties that are signatories hereto.
11.9 Severability
------------
Any provision of this Shareholders Agreement which is prohibited
or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction, and
any such provision, to the extent invalid or unenforceable, shall
be replaced by a valid and enforceable provision which comes
closest to the intention of the parties underlying such invalid or
unenforceable provision.
11.10 Headings
--------
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.11 Power of Attorney
-----------------
Telrad hereby grants to Koor an irrevocable power of attorney to
act in its name in connection with any actions required to be
performed under this Agreement, and in particular with respect to
all matters in which, pursuant to this Agreement, Koor is entitled
to act on behalf of Telrad, and Telrad and Koor confirm that
Nortel, Nortel Networks and the Company will be entitled to rely
upon Koor's declaration at any time that it is acting on behalf of
Telrad.
IN WITNESS whereof the Parties have executed this Agreement effective as of
the date first above written
NORTEL NETWORKS KOOR INDUSTRIES LTD.
LIMITED
---------------------------- ----------------------------
---------------------------- ----------------------------
NORTEL NETWORKS ISRAEL NORTEL COMMUNICATIONS
(SALES AND MARKETING) LIMITED HOLDINGS (1997) LTD
---------------------------- ----------------------------
---------------------------- ----------------------------
TELRAD NETWORKS LIMITED
---------------------------- ----------------------------
---------------------------- ----------------------------
Exhibit A
Nortel Loan Agreement
PROMISSORY NOTE
USD 22,400,000 [Date]
FOR VALUE RECEIVED, the undersigned, NORTEL NETWORKS ISRAEL (SALES
AND MARKETING) LIMITED, a corporation incorporated under the laws of
Israel, having its executive offices at [address] (hereinafter "Nortel
Networks Israel"), hereby promises to pay to or to the order of Nortel
Communications Holdings (1997) Limited, a corporation incorporated under
the laws of Israel, having its executive offices at Kibbutz Glil Yam,
Herzliya, Israel (hereinafter "Lender"), Xxxxxx Xxx Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (USD 22,400,000) (the "Aggregate Principal
Amount") in one (1) payment on [date], or if such day is not a Business
Day, on the next Business Day immediately following the said date (the
"Maturity Date").
Nortel Networks Israel further agrees to pay to Lender, interest
on the Aggregate Principal Amount on each Interest Payment Date at a rate
of interest per annum equal to 6 percent. Interest shall be paid for the
actual number of days elapsed (including the first day but excluding the
last day).
Both principal and interest hereunder are to be paid to Lender's
account at [bank details], or such other location as Lender may designate
in writing to Nortel Networks Israel on the Maturity Date.
Any and all payments by Nortel Networks Israel to, or for the
account of, Lender shall be net of taxes, imposts and levies of any kind.
Nortel Networks Israel expressly waives presentment, protest and
notice of protest, demand and notice of demand, and nonpayment and notice
of nonpayment of this Promissory Note, and expressly agrees that this
Promissory Note, or any payment hereunder, may be extended from time to
time without in any way affecting the liability of Nortel Networks Israel.
For the purposes of this Promissory Note:
"Business Day" means any day other than a Saturday or Sunday, on
which commercial banks are open for business in Toronto, Ontario,
New York, New York, and Tel Aviv, Israel, and on which commercial
banks are open for international business and dealing in USD
deposits in London, England.
"Interest Payment Date" means the last Business Day of each
Interest Period.
"Interest Period" means each successive period of ninety (90) days
used to determine the rate of interest applicable hereunder. The
first Interest Period shall commence on the date hereof.
Thereafter, each successive Interest Period shall commence on the
Interest Payment Date of the immediately preceding Interest
Period. If any Interest Payment Date falls on a date which is not
a Business Day, it shall instead fall on the immediately preceding
Business Day, provided, however, that if the Interest Period in
effect on the Maturity does not end on the Maturity Date, the
Interest Period shall be shortened to end on the Maturity Date.
This Promissory Note shall be governed in accordance with English
law.
NORTEL NETWORKS
ISRAEL (SALES AND MARKETING) LIMITED
By:
---------------------------------
Name:
Title:
Exhibit B
Koor Loan Agreement
PROMISSORY NOTE
USD 42,300,000 [Date]
FOR VALUE RECEIVED, the undersigned, NORTEL NETWORKS ISRAEL (SALES
AND MARKETING) LIMITED, a corporation incorporated under the laws of
Israel, having its executive offices at [address] (hereinafter "Nortel
Networks Israel"), hereby promises to pay to or to the order of Koor
Industries Ltd., a company incorporated under the laws of Israel, having
its executive offices at 00 Xx'xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxx (hereinafter
"Lender"), Xxxxx Xxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars
(USD 42,300,000) (the "Aggregate Principal Amount") in one (1) payment on
[date], or if such day is not a Business Day, on the next Business Day
immediately following the said date (the "Maturity Date").
Nortel Networks Israel further agrees to pay to Lender, interest
on the Aggregate Principal Amount on the Maturity Date at a rate of
interest per annum equal to 6 percent. Interest shall be paid for the
actual number of days elapsed (including the first day but excluding the
last day) (the Aggregate Principal Amount together with the interest
payable thereon on the Maturity Date. The "Repayment Amount").
In the event that the Equivalent Indexed Amount at the Maturity
Date is greater than the Repayment Amount, then Nortel Networks Israel
shall pay to Koor the Equivalent Indexed Amount at the Maturity Date in
place of the Repayment Amount.
Both principal and interest hereunder are to be paid to Lender's
account at [bank details], or such other location as Lender may designate
in writing to Nortel Networks Israel on the Maturity Date.
Any and all payments by Nortel Networks Israel to, or for the
account of, Lender shall be net of taxes, imposts and levies of any kind.
Nortel Networks Israel expressly waives presentment, protest and
notice of protest, demand and notice of demand, and nonpayment and notice
of nonpayment of this Promissory Note, and expressly agrees that this
Promissory Note, or any payment hereunder, may be extended from time to
time without in any way affecting the liability of Nortel Networks Israel.
For the purposes of this Promissory Note:
"Business Day" means any day other than a Saturday or Sunday, on
which commercial banks are open for business in Toronto, Ontario,
New York, New York, and Tel Aviv, Israel, and on which commercial
banks are open for international business and dealing in USD
deposits in London, England.
"Equivalent Indexed Amount" means an amount calculated as follows:
EIA = (APA x RR1) x (NI/BA)/RR2
Where:
EIA means the Equivalent Indexed Amount
APA means the Aggregate Principal Amount
RR1 means the Representative Rate of Exchange of the United States
Dollars as published by the Bank of Israel on the day prior to the
date hereof.
NI means the consumer price index last published by the Israeli
Bureau of Statistics prior to the Maturity Date.
BI means the consumer price index last published by the Israeli
Bureau of Statistics prior to the date hereof.
RR2 means the Representative Rate of Exchange of the United States
Dollar on the day prior to the Maturity Date.
This Promissory Note shall be governed in accordance with English law.
NORTEL NETWORKS
ISRAEL (SALES AND MARKETING) LIMITED
By:
---------------------------------
Name:
Title:
SCHEDULE 3.1.4
1. A distribution agreement between the Company and Nortel Networks
in the form initialled by the parties thereto.
2. A computer services agreement between the Company and Nortel
Networks in the form initialled by the parties thereto.
3. A trademark licence agreement between the Company and Nortel
Networks in the form initialled by the parties thereto.
4. A manufacturing and services subcontract between Telrad and Nortel
Networks in the form initialled by the parties thereto.
5. A technology access and licence agreement between Telrad and
Nortel Networks in the form initialled by the parties thereto.
6. A master technology development agreement between Telrad and
Nortel Networks in the form initialled by the parties thereto.
SCHEDULE 3.1.5
1. A trademark licence agreement between the Company and Telrad in
the form initialled by the parties thereto.
2. An interim services agreement between the Company and Telrad in
the form initialled by the parties thereto.
3. A manufacturing and services subcontract between Telrad and Nortel
Networks in the form initialled by the parties thereto.
4. A technology access and licence agreement between Telrad and
Nortel Networks in the form initialled by the parties thereto.
5. A master technology development agreement between Telrad and
Nortel Networks in the form initialled by the parties thereto.
6. A services agreement between Telrad and the Company in respect of
the Blue Avnet Contract in the form initialled by the parties
thereto.
SCHEDULE 3.1.6
1. A distribution agreement between the Company and Nortel Networks
in the form initialled by the parties thereto.
2. A computer services agreement between the Company and Nortel
Networks in the form initialled by the parties thereto.
3. A trademark licence agreement between the Company and Nortel
Networks in the form initialled by the parties thereto.
4. A trademark licence agreement between the Company and Telrad in
the form initialled by the parties thereto.
5. An interim services agreement between the Company and Telrad in
the form initialled by the parties thereto.
SCHEDULE 4.5
BUSINESS PLAN
01/07/2000 to 30/06/2003
-----------------------------------------------------------------------------
US$ Million Year 1 Year 2 Year 3 TOTAL 3 yr
------ ------ ------ plan
01/07/00 01/07/01 01/07/02
30/06/01 30/06/02 30/06/03
Revenues 317 335 403 1,055.0
-----------------------------------------------------------------------------
SCHEDULE 9.1
[Letterhead of Koor Industries Ltd.]
To
Nortel Communications Holdings (1997) Limited
[Address]
Also by fax to: ______________
Date:_______
Dear Sirs,
Re: Notice of Exercise of Option
Reference is made to the Shareholders Agreement (the "Shareholders
Agreement") dated ________, between Nortel Networks Limited, Nortel
Communications Holdings (1997) Limited ("Nortel"), Nortel Networks Israel
(Sales and Marketing) Limited Koor Industries Ltd. and Telrad Networks Ltd.
pursuant to which Koor and Telrad were granted an option by Nortel to sell
the Koor Shares to Nortel, on the terms and conditions set forth in the
Shareholders Agreement. Unless otherwise defined in this letter,
capitalised terms used herein and defined in the Shareholders Agreement
shall have the meanings ascribed thereto in the Shareholders Agreement.
On behalf of the undersigned and on behalf of Telrad, we hereby irrevocably
exercise the Put Option pursuant to the provisions of Section 9 of the
Shareholders Agreement to acquire the Koor Shares. Closing of the sale of
the Koor Shares to Nortel shall take place on the later of _________ or 7
days following the receipt of all consents and approvals required for the
transfer of the shares, subject only to the terms and conditions of the
Shareholders Agreement.
Yours sincerely,
Koor Industries Ltd.
By: _____________________
Name:
Title:
SCHEDULE 9.2
[Letterhead of Nortel Communications Holdings (1997) Limited]
To
Koor Industries Ltd.
[Address]
Also by fax to: ______________
Date:_______
Dear Sirs,
Re: Notice of Exercise of Option
Reference is made to the Shareholders Agreement (the "Shareholders
Agreement") dated ________, between Nortel Networks Limited, Nortel
Communications Holdings (1997) Limited ("Nortel"), Nortel Networks Israel
(Sales and Marketing) Limited, Koor Industries Ltd. and Telrad Networks
Ltd. pursuant to which Nortel was granted an option by Koor and Telrad to
acquire the Koor Shares, on the terms and conditions set forth in the
Shareholders Agreement. Unless otherwise defined in this letter,
capitalised terms used herein and defined in the Shareholders Agreement
shall have the meanings ascribed thereto in the Shareholders Agreement.
We hereby irrevocably exercise the Call Option pursuant to the provisions
of Section 9 of the Shareholders Agreement to acquire the Koor Shares. This
notice is provided to Koor on its own behalf and on behalf of Telrad.
Closing of the sale of the Koor Shares to Nortel shall take place on the
later of _________ or 7 days following the receipt of all consents and
approvals required for the transfer of the shares, subject only to the
terms and conditions of the Shareholders Agreement.
Yours sincerely,
Nortel Communications Holdings (1997) Limited
By: _____________________
Name:
Title:
SCHEDULE 9.4
EXIT MECHANISM
Exit mechanism - formulas
Definitions:
E = The Koor Group equity investment in the Company
F = The Koor Group Loan
D = The Koor Group Loan + accrued interest
P = Total estimated revenues of the Company as set forth
in the Company's Business Plan as attached hereto.
- R = total actual revenues in the Territory of Nortel Networks
and its Affiliates in the three years following
Completion, less revenues of companies acquired by Nortel
Networks or its Affiliates where the acquired companies
are not dealing with products included in Nortel
Networks' present product portfolio or its evolution or
replacements thereof.
In the event that the company acquired does deal with products included in
Nortel Networks' present product portfolio or its evolution or replacements
thereof , and the sales in the Territory of such company in the year prior
to such acquisition was greater than US$ 8 Million (a "Major Acquisition"),
then only revenues in excess of such company's projections at the time of
such Major Acquisition from the date of acquisition to the 3rd anniversary
of Completion will be included in "R". In the event that a Major
Acquisition by Nortel Networks results in a material adverse effect on the
performance of the Company, Nortel Networks, at its own discretion, will
decide after discussion in good faith with Koor whether the situation would
justify any adjustment of "R".
In the event that the company acquired does deal with products included in
Nortel Networks' present product portfolio or its evolution or replacements
thereof, and the total sales in the Territory of such company within the
year prior to such acquisition was less than $US 8 Million, then all
revenues of such company from the date of acquisition to the 3rd
anniversary of Completion shall be included in R
I) If R is less than or equal to P, then the purchase price (in $US
million) for the Koor Group's shares in the Company will be the
higher of
i. ((E+F)*1.124864)-D
__ __
ii. |R |
|(- -0.7)*((E+F)*2.005377)|]+(E+F)-D
|P__ __|
II) If R is greater than P, then the purchase price (in $US million)
for the Koor Group's shares in the Company will be the lower of
i. ((E+F)*0.6406452)+((E+F)*1.601613)-D
ii. |R |
|(- -1)*((E+F)*2.135484)|]+(E+F)*1.601613)-D
|P |
SCHEDULE 9.6.4
[Letterhead of Koor/Telrad]
To
Nortel Communications Holdings (1997) Limited
[Address]
Also by fax to: ______________
Date:_______
Dear Sirs,
Re: Shareholders Agreement dated ______
Reference is made to the Shareholders Agreement (the "Shareholders
Agreement") dated ________, between Nortel Networks Limited, Nortel
Communications Holdings (1997) Limited ("Nortel"), Nortel Networks Israel
(Sales and Marketing) Limited, Koor Industries Ltd. and Telrad Networks
Ltd. (the "Shareholders Agreement") pursuant to which [Koor/Telrad] is
obliged to deliver to Nortel certain undertakings and representations.
Unless otherwise defined in this letter, capitalised terms used herein and
defined in the Shareholders Agreement shall have the meanings ascribed
thereto in the Shareholders Agreement.
We hereby represent and warrant to you as follows:
1. [Koor/Telrad] is a duly organized and validly existing corporation
in good standing under the laws of the State of Israel.
2. The documents executed by [Koor/Telrad] in order to effect the
transfer of the Koor Shares to Nortel and every instrument and
document delivered by or on behalf of [Koor/Telrad] pursuant
thereto, including, without limitation, the share transfer form
pursuant to which the Koor Shares are transferred to Nortel (the
"Documents"), have been duly executed and delivered by a duly
authorised representative of [Koor/Telrad] and constitutes legal,
valid and binding obligations enforceable against [Koor/Telrad] in
accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganisation, insolvency,
liquidation, receivership and similar laws and to moratorium laws
from time to time in effect relating to or effecting the
enforcement of creditor's rights and to general principles of
equity.
3. Neither the execution or the delivery of the Documents by
[Koor/Telrad] nor the Closing of the transactions contemplated
therein is prohibited by, violates or will result in a default
under, any provision of any contract or instrument, judgement,
order or decree to which [Koor/Telrad] is subject and will not
result in a breach of any applicable law, rule or regulation or of
the Memorandum or Articles of Association of [Koor/Telrad].
4. There is no suit, action, proceeding, claim or investigation
pending against [Koor/Telrad] that seeks to prevent [Koor/Telrad]
from consummating the transactions contemplated in the Documents.
5. [Koor/Telrad] has taken all corporate and other actions necessary
to enable it to execute and deliver the Documents and has secured
all necessary approvals and consents required for the performance
of the transactions contemplated by the Documents.
Yours sincerely,
[Koor/Telrad]
_____________________
By:
Title:
