CURRENT SHAREHOLDERS AGREEMENT OF JULY 2009
EXHIBIT
10.4
CURRENT SHAREHOLDERS
AGREEMENT OF JULY 2009
AGREEMENT
Made
and executed in Tel Aviv on the 5 day of July 2009
Between: ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, I.D. 5140932-4 (hereinafter: “▇▇. ▇▇▇▇▇▇”)
The first
party
And
between: Prof.
David Grusher, I.D. 1376060-8 (hereinafter: “Prof. Grusher”)
The
second party
And
between: ▇▇▇▇▇
▇▇▇▇▇▇▇▇, I.D. 050678796 (hereinafter: “Assaf”)
The third
party
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And
between:
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GPI
Granot Development Enterprises Ltd., PC: ▇▇-▇▇▇▇▇▇-▇ (hereinafter:
“GPI”)
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The
fourth party
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And
between:
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Life
Support Ltd., PC 513331915 (hereinafter: “Life
Support”)
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The
fifth party
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And
between:
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Ramport
Ltd. _____________________((hereinafter:
“Ramport”)
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The sixth
party
And
between: Microdel
Ltd., PC: 513577874 ((hereinafter: “Microdel”)
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The
seventh party
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And
between:
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A.M.
Maagal Ltd., PC: ____________((hereinafter:
“▇▇▇▇▇”)
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The
eighth party
All of
the above mentioned parties, the first through the seventh (with the exception
of ▇▇▇▇▇) shall be referred to hereinafter as the “Shareholders” or the “Current
Shareholders”
WHEREAS
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a.
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Microdel
is involved in mobilizing funds for the Babies’ Breath Co. Ltd., Private
Co. ▇▇-▇▇▇▇▇▇-▇ (hereinafter: “the Company”)
particularly by way of setting up a new company in the U.S. (hereinafter:
“the Offered
Company”) which shall hold all the share capital of the Company and
the shares whereof shall be registered for “over the counter” trading on
the Nasdaq Stock Exchange in the United States. The source of the decisive
majority of the funds of the offering is institutional bodies in the U.S.,
which will invest sums of money in the offered company that will serve to
continue to finance the ongoing activity of the Company (hereinafter: “the
Offering”).
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1
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b.
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For
the purpose of the Offering, the Articles of Incorporation of the Company
must be changed so that all Company shares shall be shares of equal rights
and the right of first refusal in the Articles of Incorporation of the
Company must be updated so that it applies and obligates solely
shareholders who hold at least 5% of the allocated capital of the
Company.
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c.
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Within
the context of the Offering procedure, all Company shareholders are to
transfer all their shares in the Company to the Offered Company. And
shares of equal rights are to be allotted to several private investors who
are to invest in the Company together the sum of $150,000 (hereinafter:
“the Private Investors”) in order to
meet the threshold demands of the
Offering.
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d.
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The
current Articles of Incorporation of the Company (hereinafter: “the Current Articles”)
comprise three types of shares, all as specified in the current Articles
of Incorporation.
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e.
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The
parties agree to amend the Current Articles and at the shareholders’
General Meeting to pass a special resolution to amend the Articles so that
all rights attached to Company shares shall be identical and to amend the
section concerning the right of first refusal so that it applies and
obligates solely shareholders who hold at least 5% of the allocated
capital of the Company, all as specified herein in this
agreement.
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f.
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At
the same time as the signature of this agreement, “A Pre-Offering
Agreement” between Microdel and the Company has been signed (hereinafter:
“the Pre-Offering Agreement”).
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g.
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The
parties would like to preserve, to the extent possible and in the event
that the offering fails to succeed, the rights between them concerning all
that is connected to the rights to receive dividends in future from the
Company, in the event of the failure of the Offering, so that they may
remain as close as possible to the rights thereof pursuant to the current
Articles in the event the Offering fails to succeed, all as specified
herein in this agreement and in accordance with the conditions and
arrangements specified therein.
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2
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h.
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The
shares owing to ▇▇▇▇▇ in the Company prior to the signature of this
agreement are 564 ordinary C shares which have yet to be allocated to
▇▇▇▇▇ in practice.
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Accordingly,
the parties have declared, agreed and stipulated as
follows:
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1.
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Preamble and
Interpretations
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1.1
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The
preamble to this agreement constitutes an integral part
thereof.
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1.2
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The
section titles are solely for the sake of convenience and shall not be
relied on in the interpretation or clarification of this
agreement.
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1.3
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A
definition given in this agreement in the plural shall have the same
meaning also in the event that it appears in the singular and vice
versa.
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1.4
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Unless
otherwise stated explicitly, the terms in this agreement shall have the
same meaning as the terms in the Pre-Offering
Agreement.
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2. Definitions
and Appendices
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2.1
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In
this agreement, the following terms shall have the meaning specified
alongside thereof insofar as this meaning fails to contradict the contents
of matters or context thereof.
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2.1.1
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“Dollar,
$” – A United States dollar. If the reference is to payment in dollars –
the payment shall be performed in shekels according to the representative
rate of the dollar publicized by the Bank of Israel and known on the date
of actual payment.
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2.12
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“Future Dividends”
– Dividends to be distributed by the Company in future if the Offering
should fail.
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3
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2.1.3
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“Attributed Future
Dividends” – The total amount of dividends that the Company is to
distribute from time to time to all current shareholders and/or the
alternates thereof. (For example: If the Company decides to distribute
dividends in any given year in the amount of $200,000 and the percentage
of holdings of current shareholders in the Company is 60%, then the sum of
the attributed dividends with respect to the same distribution shall be
$120,000.)
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2.2
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In
the event of a conflict between the provisions of this agreement and one
of the appendices thereof, the provisions of this agreement shall
prevail.
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2.3
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The
appendices attached hereto to this agreement shall constitute an integral
part of the agreement.
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3. Percentage
of Holdings of Current Shareholders in the Company
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3.1
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At
the time of signing this agreement the holdings of the shareholders in the
Company are as follows:
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| § | ▇▇. ▇▇▇▇▇▇ | 1,658 Type A ordinary shares |
| § | Prof. Grusher | – 1,222 Type A ordinary shares |
| § | Assaf | – 3,533 Type A ordinary shares |
| § | GPI | – 2,717 Type A ordinary shares |
| § | ▇▇▇▇. ▇. ▇▇▇▇▇▇▇▇ | – 870 Type A shares |
| § | Life Support | – 8,453 Type A ordinary shares |
| § | Ramport | – 1,765 Type A ordinary shares and |
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–
1,765 Type B shares
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| § | Microdel | – 187 Type A ordinary shares and 188 Type B shares (which constitute the “Unconditional Shares” as defined in the Pre-Offering Agreement) |
| § | ▇▇▇▇▇ | – 564 Type C shares (which have yet to be allocated to ▇▇▇▇▇) |
4
All
holders of Type A ordinary shares shall be called together herein in this
agreement “Holders of Ordinary
A Shares” and all holders of Type B ordinary shares shall be called
together herein in this agreement “Holders of Ordinary B Shares.”
This will be so even after all the shares of the Company become shares of the
same type. The distribution between holders of ordinary A shares among
themselves shall be according to the proportion of ordinary A shares that each
of the shareholders held prior to the signature of this agreement in relation to
all the ordinary A shares that were allocated and paid up prior to the signature
of this agreement. The distribution between holders of ordinary B shares among
themselves shall be according to the proportion of ordinary B shares that each
of the shareholders held prior to the signature of this agreement in relation to
all the ordinary B shares allocated and paid up prior to the signature of this
agreement.
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3.2
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According
to the current Articles, the rights attached to the various shares
are:
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3.2.1
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The
rights attendant on Ordinary A Shares and Ordinary
B Shares shall
grant the holders thereof the following
rights:
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With respect to the
distribution of dividends:
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3.2.1.1
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To
receive dividends and participate in the distribution of Company revenues
at a proportion of 60% for holders of Ordinary A Shares and 40% for
holders of Ordinary B Shares, until all the holders of A shares receive
the sum of $500,000.
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3.2.1.2
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Following
the distribution of dividends of $500,000 to all holders of Ordinary A
Shares, holders of Ordinary A Shares will not be entitled to receive any
dividends until the holders of Ordinary B Shares receive dividends in the
amount of the difference between the sum of the investment in cash and the
sum of the dividend paid them by virtue of section 3.2.1.1 above, and they
will be paid the sum of suppliers’ credit and the holders of Ordinary B
Shares will be paid any other owners’ loan that they placed in favor of
the Company. For the avoidance of doubt, it is clarified that the sum of
dividends the holders of Ordinary B Shares will receive by virtue of
combining the sums subject of sections 3.2.1.1 and 3.2.1.2 above together
with the sum of suppliers’ credit that is refunded shall be equal to the
sum of the comprehensive
investment.
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5
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3.2.1.3
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Following
payment of the sums as aforesaid in section 3.2.1.2 above, all holders of
Ordinary A shares shall be entitled to receive 60% “of the differential in
Company profits” to be distributed during a period of 4 (four) years
commencing on the date of payment of the final sum, according to section
3.2.1.2 above. In the event that during the aforesaid 4-year period, no
profit that may be distributed according to standard accounting rules,
which accrued during the aforesaid 4-year period, are distributed
(hereinafter: “the
Undistributed Sum of Profits”), then the sum
of the undistributed profits shall be distributed on the first date of
dividend distribution at the Company in a division of 60% “of the
differential of Company profits” to holders of Ordinary A Shares and 40%
to holders of Ordinary B Shares until the entire amount of undistributed
profits is distributed, even if the distribution, as aforesaid, shall be
subsequent to the 4-year period, as
aforesaid.
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“Company Profits
Differential” signifies: all Company profits that are distributed
as dividends with the deduction of the sums that are distributed as
dividends to holders of Ordinary C
Shares.
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3.2.1.4
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Following
the occurrence of the aforesaid condition in subsection 3.2.1.3 above
(including subsequent to the distribution of the sum of undistributed
profits), the rights of the holders of Ordinary A Shares and the holders
of Ordinary B Shares and the holders of Ordinary C Shares in relation to
the right to receive dividends, shall be
identical.
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6
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With respect to the remaining
rights
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3.2.1.5
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Save
with respect to the right to receive dividends as aforesaid, the rights
attendant on the Ordinary A and B Shares shall be identical and shall
grant the holders thereof the right to receive invitations and participate
and vote at members’ meetings of the Company, the right to participate in
receiving excess Company assets at the time of liquidation thereof and the
right to receive face value of shares at the time of liquidation
thereof.
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3.2.1.6
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Whoever
holds 5% or more or any group of holders of 5% (five percent) or more of
the ordinary A and B share capital allotted by the Company shall be
entitled to appoint one director to the Board of Directors of the Company,
to dismiss any director who was appointed as aforesaid and to appoint
another director in lieu thereof. A shareholder holding more than 5% as
aforesaid may appoint one director by virtue of every 5% of ordinary A and
B share capital allotted by the Company. The weight of each director’s
vote shall be the relative weight of the number of ordinary A and/or B
shares by virtue whereof he was appointed in relation to the total number
of A and B shares allocated in the
Company.
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3.2.1.7
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The
supplementary rights for holders of ordinary C shares shall be solely to
receive dividends and participate in Company profits, following payment of
the sums aforesaid in section 3.1.2.2, in accordance with the relative
share thereof in the total number of ordinary shares of the Company.
Subsequent to the occurrence of the condition aforesaid in subsection
3.2.1.2 above, the supplementary rights to all the ordinary shares, A, B
and C, will be equal solely with respect to the distribution of dividends,
subject to the priority given to holders of ordinary A shares as opposed
to holders of ordinary B shares, according to subsection
3.2.1.3.
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Apart
from the aforesaid right (i.e., to participate in Company profits, as
aforesaid), the ordinary C shares shall not grant the holder thereof any
rights whatsoever – neither rights to vote at general meetings of
shareholders nor rights to appoint directors to the Board of Directors of
the Company and/or any other supplementary
right.
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7
4. Agreement
with Respect to the Distribution of Future Dividends
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4.1
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Current
shareholders hereby give their agreement to vote at a general meeting of
shareholders to pass a special resolution to amend the Articles of
Incorporation of the Company so that all Company shares shall be shares of
equal rights. Furthermore, current shareholders hereby agree irrevocably
that in the event of the
failure of the Offering, all attributed future dividends shall be
divided among them according to the principles in section 3.2.1 above so
that each of the current shareholders and the alternates thereof shall
receive a share in the attributed future dividends that reflects his
portion and the type of shares he held at the time of signature of this
agreement (i.e., prior to the Offering and prior to the amendment of the
Articles of Incorporation of the Company). Thus, among the current
shareholders, the provisions of section 3.2 above shall be read with the
following amendments specified herein
below:
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4.1.1.1
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To
receive dividends and participate in the distribution of attributed future
dividends at a rate of 60% for holders of ordinary A shares and 40% for
holders of ordinary B shares, until all holders of ordinary A shares shall
receive the sum of $500,000.
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4.1.1.2
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Following
the distribution of $500,000 of dividends from all the attributed future
dividends to all holders of ordinary A shares, the ordinary A shares shall
not be entitled to receive any dividends from the funds of the attributed
future dividends until holders of ordinary B shares shall receive
dividends in the amount of the difference between the sum of the
investment in cash (i.e., $_______) and the sum of the dividend paid them
by virtue of section 4.1.1.1 above and shall be paid the sum of suppliers’
credit (i.e., the sum of $_______) and holders of ordinary B shares shall
have any other loans from shareholders paid up, which they placed at the
Company’s disposal (i.e., $_________). For the avoidance of doubt, it is
clarified that the sum of the dividends that holders of ordinary B shares
shall receive by virtue of combining the amounts subject of sections
4.1.1.1 and 4.1.1.2 above together with the sum of suppliers’ credit to be
refunded shall be equal to the sum of the comprehensive investment (i.e.,
$ ____________).
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8
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4.1.1.3
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Following
payment of the sums aforesaid in subsection 4.1.1.2, all holders of
ordinary A shares shall be entitled to receive 60% of all attributed
future dividends to be distributed during a period of four (4) years
commencing on the date of payment of the final sum, pursuant to section
3.2.1.2 above. In the
event that during the aforesaid 4-year period, no profits that may be
distributed according to standard accounting rules are distributed, which
accrued during the aforesaid 4-year period (hereinafter: “the Sum of
Undistributed Profits”), then the sum of
undistributed profits shall be distributed on the first date of the
distribution of dividends in the Company with a distribution of 60% to holders
of ordinary A shares and 40% to holders of ordinary B shares, until the
entire sum of undistributed profits shall be distributed, even if the
distribution, as aforesaid, shall take place following the 4-year period,
as aforesaid.
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“Company
Profits Difference” signifies all attributed
future dividends to be distributed with the deduction of the sums that
will be distributed as dividends to holders of the other shares in the
Company, who are not listed as current
shareholders.
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4.1.1.4
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Following
the occurrence of the condition aforesaid in subsection 4.1.1.3 (including
after the distribution of the sum of undistributed profits), the rights of
ordinary shareholders in the Company (including ordinary A and B shares)
shall be the same in relation to the right to receive
dividends.
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9
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4.2
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If
the Offering procedure fails, the parties shall give the Company an
irrevocable instruction to divide the attributed future dividends among
the current shareholders and the alternates thereof in accordance with the
provisions of section 4.1.1 above. This section constitutes an irrevocable
instruction to the Company to act in accordance with the provisions of
section 4.1 above in the event of the failure of the Offering. All current
shareholders may contact the Company at any time and instruct it to act in
accordance with the provisions of this section. In addition, the contents
of this section shall apply with respect to any alternate of a current
shareholder and current shareholders undertake to have anyone who comes in
place thereof sign this agreement as a party thereto with respect to the
shares being transferred. There shall be no validity to the transfer of
shares in the Company of a current shareholder unless the transferee
shareholder has signed this agreement as a party thereto and as one who
enters in place of the transferring shareholder, for the purposes of this
agreement.
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4.3
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The
parties are aware that if the Offering succeeds, then all Company shares
shall be held by the offered company and the current shareholders shall
hold shares in the offered company while all shares of the parties in the
offered company shall be of equal rights. Accordingly, the current
shareholders who hold ordinary A shares in this case waive their
preferential right pursuant to the current
Articles.
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5.
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Amendment of the Articles of Incorporation with
Respect to the Right of First
Refusal
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Current
shareholders hereby give their agreement to vote at a general meeting of
shareholders to pass a special resolution to amend Regulation 32A of the
Articles of Incorporation of the Company concerning the right of refusal
of shareholders in the Company to purchase the shares of another member,
so that this right shall obligate any shareholder to offer them first
solely to whoever holds at least 5% of the allocated capital of the
Company such that the offerees pursuant to this regulation shall be solely
holders of at least 5% of the allocated capital of the
Company.
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The
text of the special resolution to amend Regulation 32A shall be signed at
the same time as the signature of the Pre-Offering
agreement.
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10
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6.
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Lock-Up of Shares and Registration for Trade
Rights
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The
parties agree that the Offering as defined above shall not obligate a
shareholder to diverge from the two following
principles:
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6.1
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All
shareholders shall be subject to a contractual Lock-Up provision that
applies to the shares thereof, which fails to exceed the lock-up period
required by American law and the provisions of the Israeli Income Tax
Ordinance as a result of the transfer of their shares in the Company to
the offered company against receiving shares in the offered company. Each
lock-up period or restriction beyond this with respect to the shares of a
current shareholder in the offered company shall require the advance
written agreement thereof.
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6.2
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The
shares of all current shareholders in the offered company shall benefit
from the same “Registration for Trade Rights” as the shares to be
allocated to institutional investors and to shareholders to whom Company
shares will be allocated within the context of the Offering. Any variation
from this principle with respect to shares of current shareholders in the
offered company shall require the advance written agreement
thereof.
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6.3
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Notwithstanding
the aforesaid, all current shareholders, save for Microdel, hereby
undertake vis-à-vis GPI (hereinafter: “the Incubator”) as
follows:
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(1)
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Insofar
as there is a restriction on the registration of Incubator shares for
trade and/or the sale thereof (such as the Lock-up period in American law)
as a result of the Offering (insofar as it will be implemented), then the
current shareholders shall instruct the Company to take steps so that the
Incubator shares will be registered for trade at the first opportunity
wherein the shares of the other shareholders in the Company are registered
following conclusion of the aforesaid
restriction.
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(2)
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Notwithstanding
the aforesaid in subsection (1), the current shareholders (save for
Microdel) undertake vis-à-vis the Incubator that insofar as there will be
a restriction on the number of shares that may be registered for trade
within the confines of the Offering, which will preclude the registration
of all current shareholders for trade, the current shareholders (with the
exception of Microdel) shall waive their right to register the relative
share of their shares for trade and will allow the Incubator to register
all the shares thereof for trade prior to the registration of their shares
for trade. The waiver of the current shareholders (save for Microdel)
strictly among themselves shall be relative to the percentage of holdings
of the current shareholders (save for Microdel and the
Incubator).
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11
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(3)
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In
the event that there is a restriction according to the Israeli tax laws on
the sale of the shares of the current shareholders (i.e., a lock-up period
which precludes the sale of shares) and it is not possible to be released
from such restriction against the payment of the tax that the Incubator
will be charged to pay or in the event the tax authorities in Israel
demand that all current shareholders shall be subject to restrictions it
shall impose within the context of the “Early Authorization” procedure,
without exception, without the possibility of the “release” of the
Incubator from this demand (even “at the price” of its payment of the tax,
a demand whereto the Incubator agrees), then despite the Incubator joining
the aforesaid arrangement with the Income Tax Authorities, the
provisions of subsection (1) and (2) above shall apply in the event of the
imposition of a restriction, pursuant to the tax laws in
Israel.
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(4)
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The
agreement specified herein in this section above shall apply also in the
event that the Offering is implemented by way of a different structure
using the same Offering consultant, as aforesaid in section 10 of the
Pre-Offering agreement between the Company and Microdel. Nonetheless, it
shall not apply in the event that the Offering or the mobilization of
capital is executed not by way of the Offering consultant, as aforesaid,
and/or anyone on behalf thereof and it shall not apply to any other
offering that occurs in the event that the Offering, pursuant to this
agreement, is not executed and the Company opts to undertake another
offering procedure.
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(5)
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For
the avoidance of doubt, the rights of the Incubator, pursuant to this
section, shall apply also in the event that prior to the Offering, the
Incubator transfers the shares thereof in the Company to a third party,
subject to the provisions of the Articles of Incorporation of the Company.
In such event, the third party transferee shall be entitled to rights
pursuant to this section as a result of the implementation of the Offering
(insofar as it is implemented). However, the said rights shall expire in
the event of the sale of the shares to a third party following the
Offering.
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7.
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Temporary Right of Microdel to Appoint Two
Directors and the Weight of their
Votes
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At the
request of Microdel, the parties agree that Microdel shall appoint two directors
to the Board of Directors of the Company as long as the Offering proceeding
remains unaltered – ▇▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇ and ▇▇. ▇▇▇▇ Zifroni, notwithstanding the
fact that according to the Articles of Incorporation of the Company, Microdel
may not appoint two directors. It is clarified that the weight of the votes of
these two directors together shall be as the relative weight of the number of
unconditional shares in relation to the entire number of shares allocated in the
Company. If the Offering proceeding should fail, this right of Microdel shall
expire of its own accord and forthwith, the directors on its behalf shall cease
to serve as such and Microdel shall be able to appoint directors in accordance
with the Articles of Incorporation of the Company. The same is the rule in the
event the Offering succeeds. In the event the Offering succeeds, this section
shall expire and the appointment of the directors shall be in accordance with
the Articles of Incorporation of the Company.
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8.
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Agreement to Restrictions to be Imposed by the Tax
Authorities in Israel as a Condition to the
Offering
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It
is hereby clarified that within the context of the tax arrangement
pertaining to the transfer of shares of the shareholders in the Company to
the offered company, prior to the Offering procedure, provisions that
restrict the shareholders may be included, including a two-year
restriction on the sale of shares in the offered company and a provision
with respect to a trustee holding shares of shareholders in the offered
company, to be appointed on behalf thereof. The trustee shall be liable to
pay the tax in the event of the sale of shares of current shareholders in
the offered company. The current shareholders agree to take on, within the
confines of the Offering procedure if it should succeed, the restrictions
in the appendix indicated above (of a lock-up of shares and deposit with a
trustee) and undertake to take steps to apply them insofar as the matter
relates to shares held in the Company by each of the current shareholders.
The current shareholders further agree to transfer, within the confines of
the Offering procedure, the shares thereof in the Company to the offered
company, provided that they are allocated shares in the offered company at
the same rate as the quantity of shares transferred, so that the
percentage of holdings of the shareholders in the offered company is the
same as the percentage of their holdings in the Company, prior to the
transfer.
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12
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In Witness Whereof the Parties Have
Signed:
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____________________________
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____________________________
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Microdel
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Life
Support
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____________________________
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____________________________
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▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
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Prof.
David Grusher
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____________________________
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____________________________
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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GPI
▇▇▇▇▇▇ Development Enterprises Ltd.
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____________________________
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_____________________________
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▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Ramport
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_____________________________
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A.
A. Maagal Ltd. (▇▇▇▇▇)
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Company
Authorization
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The
Company is aware of the agreement of the shareholders indicated above and
undertakes to take steps to implement the provisions thereof with respect to all
that pertains to the relations between current shareholders in connection with
the registration rights for trade of the Company shares and the sale thereof as
explained in the agreement above.
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_____________________________
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Babies’
Breath Co. Ltd.
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