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Exhibit 10.7  

 
 

SHAREHOLDERS AGREEMENT  
    

        THIS SHAREHOLDERS AGREEMENT (the "Agreement") made as of the 9th day of February, 2005, by and among Shamir Optica Holdings A.C.S. Ltd. Reg.
No. 570039115, Upper Galilee 12135, Israel (hereinafter "Shamir"); Fibi Investment House Ltd. Reg No. 520031188 with a principal
place of business at 14 Ehad Ha'am Street, Tel Aviv (hereinafter "Fibi"); Scorpio BSG Ltd. with a principal place of business at 85 Medinat
Hayehudim, Herzliya (hereinafter "Scorpio"); JFJ International Trading Ltd. with a principal place of business
at                        (hereinafter
"Jacobson"); and Gishrei Asia Ltd. with a principal place of business
at                        (hereinafter
"GA") (each shall be referred to as "Shareholder" and collectively, the
"Shareholders"). For the purposes of this Agreement, the term "Fibi Group" means Fibi, together with
Scorpio, Jacobson and GA, and any permitted assignee pursuant to section 5.4 below. 

W I T N E S S E T H: 

        WHEREAS, the Shareholders desire to set forth certain matters regarding their rights vis-à-vis each
other and their shares in Shamir Optical Industry Ltd. (the "Company") in the event the Company consummates an initial public offering of its
shares in the United States. 

        NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows: 

	1.
	Conditions Precedent

	1.1
	The
effectiveness of this Agreement shall be contingent upon and subject to: (a) the closing of the Company's initial public offering of its shares (the
"IPO") in the United States on or prior to December 31, 2005, such closing to be confirmed in writing by the Company to the Shareholders;
(b) the entering into effect of a Registration Rights Agreement among Fibi, the Company and others prior to consummation of the IPO, in the form attached hereto as Annex
A; and (c) due adoption by the Company of articles of association that are not in contradiction with the terms of this Agreement with effect as of closing of the IPO
("Post-IPO Articles"). The form of the Post-IPO Articles and any amendment thereof prior to closing of the IPO shall require all
approvals for amendment of the Company's articles of association required under the Shareholders Agreement between Fibi, Shamir and others dated January 5, 1999 (the
"Existing Shareholder Agreement"). In the event that any of the said contingencies are not fulfilled on or prior to December 31, 2005, this
Agreement and the Post-IPO Articles shall not become effective and shall be of no force or effect.

	1.2
	Simultaneously
with the fulfillment of the above-mentioned contingencies and upon this Agreement becoming effective, the Existing Shareholder Agreement shall be replaced by this
Agreement, and the Existing Shareholder Agreement shall be of no further force or effect.

	1.3
	The
parties agree to adopt articles of association to be in effect from the time of the change of the Company's status from an Agriculture Cooperative Society
("A.C.S.") into a limited company and until the closing of the IPO (the "Pre-IPO Articles")
in the form attached hereto as Annex B.

	1.4
	Unless
and until this Agreement becomes effective, the Existing Shareholders Agreement and the existing articles of association of the Company in its current status as an A.C.S., or
in the event the status of the Company has been changed into a limited company, the Pre-IPO Articles, shall continue in full force and effect. Furthermore, unless and until this Agreement
becomes effective, in the event of any conflict between the Existing Shareholders Agreement and the relevant articles of association then in effect, the provisions of the Existing Shareholders
Agreement shall govern. 

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	2.
	Board Of Directors

The
Shareholders shall vote for the election of directors to the board of directors of the Company, as follows: 

	2.1
	At
all times during the term of this Agreement, Fibi shall be entitled to nominate one director to the board of directors, and to remove such director from office and nominate another
person in such director's place ("Fibi's Director"), and Shamir shall be entitled to nominate all other directors, and to remove any such directors from
office and nominate other persons in such directors' place provided each such director is eligible to be a director on the Board pursuant to any applicable law and the Post-IPO Articles
("Shamir Director(s)"). (Fibi's Director and Shamir Director(s)' respectively, shall be hereinafter referred to as the
"Nominated Directors").

	2.2
	Prior
to any Shareholders' General Meeting of the Company (the "General Meeting"), the agenda of which includes a resolution to appoint
a director to and/or, to the extent permitted by the Post-IPO Articles, to remove a director from the board of directors of the Company (the
"Board"), Shamir and Fibi will meet and each shall inform the other of its respective Nominated Directors to be appointed to or removed from, the Board.

	2.3
	The
Shareholders undertake to vote in any General Meeting only and strictly in accordance with the instructions given in the aforesaid prior meeting, provided
however, that each such nominee is eligible to be a director on the Board pursuant to any applicable law and the Post-IPO Articles.

	2.4
	In
case the position of Fibi's Director becomes vacant, Fibi may recommend a new nominee for the position, the Shareholders shall demand the convening of a General Meeting of the
shareholders of the Company and the Shareholders shall vote in the General Meeting to be convened by the Company for this purpose in favor of the appointment of such nominee as a director
provided however, that such nominee is eligible to be a director on the Board pursuant to any applicable law and the Post-IPO Articles. The Shareholders shall
act to cause the convening of this General Meeting as promptly as possible upon the request of Fibi.

	3.
	Tag Along

Each
Fibi Group member shall be entitled to a tag along right as follows: 

	3.1
	In
any case whereby Shamir desires to transfer by sale, assignment or series of sales or assignments (a "Transfer") shares of the
Company held by Shamir (in this Section, the "Offered Shares") to any third party or parties other than (i) to a Shamir Affiliate, as defined
below, who agrees to assume all rights, privileges and obligations under this Agreement with respect to the Transferred shares; or (ii) in a sale or sales of shares to the public executed on
the securities exchange on which the Company's shares are listed for trading, and unless such sale is made in a registered public offering upon the "demand" of Shamir made in accordance with the
Registration Right Agreement or as a selling shareholder in a registered public offering initiated by the Company, Shamir shall first give a written notice thereof to each member of the Fibi Group
21 days prior to any Transfer of such Offered Shares (in this Section, the "Sale Notice"). 

For
the purposes of this Agreement the term "Affiliate" means an entity controlled by, controlling, or under common control with such Shareholder. 

	3.2
	The
Sale Notice to the members of the Fibi Group shall specify in reasonable detail the identity of the prospective transferee(s), (other than in the event of a registered public
offering) the number of shares to be transferred and the consideration per share and other material terms and conditions of the Transfer. Any member of the Fibi Group may elect to 

3

 

participate
in the contemplated Transfer at the same consideration per share and on the same terms and conditions by delivering written notice to Shamir within 21 days after delivery of the
Sale Notice. The Sale Notice shall constitute an irrevocable offer (the "Offer") by Shamir to members of the Fibi Group to participate in the Transfer.
This right in favor of the Fibi Group is referred to herein as the "Tag-Along Right." If any member or members of the Fibi Group elect to participate in such Transfer, it or they shall be
entitled to sell Existing Shares in the contemplated Transfer, at the same consideration per share and on the same terms, as those of the Offered Shares. Each Fibi Group member shall have the right to
sell that number of Existing Shares as shall be equal to the number of the Offered Shares, multiplied by the fraction, the numerator of which is the sum of Existing Shares held by such Fibi Group
member, and denominator of which is the sum of all Existing Shares and all shares held by Shamir, as of the date of the Sale Notice, and Shamir shall be entitled to sell the remainder of the shares to
be sold in the contemplated Transfer. In the event of a sale or sale by Shamir in a "demand" made pursuant to the Registration Rights Agreement, the allocation of shares to be sold as among Shamir and
the members of the Fibi Group shall be as set forth in this Section 3, notwithstanding any provision of the Registration Rights Agreement. 

	3.3
	Notwithstanding
section 3.2 above, in the event that the shareholding of Shamir as a result of the proposed Transfer of the Offered Shares would be reduced to 10% or lower of
the outstanding share capital of the Company, any member or members of the Fibi Group electing to participate in such Transfer shall be entitled to sell all of its Existing Shares in the contemplated
Transfer, at the same consideration per share and on the same terms, and not just its pro rata share. 

For
example: (a) if the Sale Notice contemplated a sale of 100 shares by Shamir, and if Shamir at such time owns 160 shares and if members of the Fibi Group own 40
Existing Shares, members of the Fibi Group would be entitled to sell 20 shares and Shamir would be entitled to sell the remaining 80 shares; (b) if the Sale Notice contemplated a sale of 140
shares by Shamir (which would reduce its percentage shareholding in the Company to 10%) members of the Fibi Group would be entitled to sell all 40 of their shares to the prospective transferee
according to the Sale Notice and Shamir would be entitled to sell the remaining balance. 

	3.4
	All
Shareholders participating in a Transfer shall pay their pro rata share, which shall be a several but not joint obligation (based
on the number of shares actually sold), of the reasonable, third-party expenses incurred by Shamir in connection with such Transfer. The only representations or warranties that may be required of a
participating Fibi Group member shall be as to title and ownership of its Existing Shares sold.

	3.5
	If
the sale as described in the Sale Notice is not completed within 145 days, the Transfer of any shares of the Company by Shamir shall continue to be subject to all of the
provisions of this Section 3.

	3.6
	For
purposes of this Agreement, "Existing Shares" shall mean:

	(a)
	all
shares of the Company that have been held by members of the Fibi Group since immediately prior to the IPO, and

	(b)
	any
shares of the Company received by members of the Fibi Group with respect to the foregoing shares, by way of bonus shares, or any other shares issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of the foregoing shares, and including shares obtained by members of the Fibi Group through a rights offering of the Company which
offering has an economically dilutive effect on the shares of the Company. 

4

 

	4.
	Shamir Right of First Offer

	4.1
	In
any case whereby a member or members of the Fibi Group (the "Seller") desire to Transfer shares of the Company it holds constituting
2.5% or more of the issued and outstanding capital of the Company (in this Section, the "Offered Shares") to any third party other than (i) in a
sale to the public executed on the securities exchange on which the Company's shares are listed for trading; or (ii) to an Affiliate, as defined above, who agrees to assume all rights,
privileges and obligations under this Agreement with respect to the Transferred shares, the Seller shall first give a written notice thereof to Shamir at least 21 days prior to any Transfer (in
this Section, the "Sale Notice"). The Sale Notice to Shamir shall specify in reasonable detail Seller's intention to make such Transfer, the number of
Offered Shares to be transferred, the price (the "Offer Price") at which such Seller proposes to dispose of the Offered Shares, and the material terms
and conditions of the prospective Transfer, and if the Seller is Fibi, whether Fibi intends to assign its right to nominate the Fibi Director together with the Offered Shares.

	4.2
	The
Sale Notice shall constitute an irrevocable offer (the "Offer") by the Seller to Shamir to sell the Offered Shares to Shamir, and
Shamir shall have the right to purchase all (but not less than all) of the Offered Shares at the Offer Price and otherwise on the same terms as set forth in the Sale Notice. This right in favor of
Shamir is referred to herein as the "First Offer Right."

	4.3
	Shamir's
First Offer Right shall be exercisable by the delivery, within 21 days from the date of receipt by Shamir of the Sale Notice, (the "Purchase
Notice") in which Shamir states whether or not it accepts the Seller's Offer to purchase the Offered Shares. If Shamir exercises its First Offer Right and accepts the Offer,
the Seller must sell the Offered Shares, and Shamir must purchase the Offered Shares, as stated in the Purchase Notice, to Shamir within 30 days after the date of receipt of the Purchase
Notice, in accordance with the terms set forth in the Sale Notice.

	4.4
	The
First Offer Right granted to Shamir pursuant to this Section 4 with respect to a Transfer set forth in a specific Sale Notice shall terminate if unexercised for more than
21 days after receipt of the Sale Notice.

	4.5
	If
Shamir's Purchase Notice has not been delivered within 21 days from the date of receipt by Shamir of the Sale Notice, or, Shamir has notified the Fibi Group member that it
has determined not to exercise its First Offer Right, then the Seller shall have the right, for a period of 145 days thereafter, to sell the Offered Shares at a price no lower than the Offer
Price set forth in the Sale Notice. If the Seller fails to complete such sale within 145 days after the expiration of the First Offer Right, the Offered Shares shall again become subject to all
of the restrictions of this Section 4.

	5.
	Miscellaneous

	5.1
	Termination.    (a)    In the event that the aggregate holdings of the members of the
Fibi Group shall decrease below 5% of the issued and outstanding share capital of the Company, and shall remain below 5% for a period of at least consecutive 90 days, this Agreement shall
terminate automatically and be of no further force and effect. 

(b)    In
order to ensure the resignation of Fibi's Director (i) in the event this Agreement terminates pursuant to Section 5.1(a) above or (ii) in the event of an
assignment of Fibi's rights, privileges and obligations under this Agreement by a Fibi transferee in an assignment that is not permitted under Section 5.4(a), Fibi's Director shall deposit with
counsel to the Company reasonably acceptable to Fibi, as trustee (the "Trustee"), a signed, but undated resignation letter. The Trustee shall hold the
letter in trust, and date and release it to the 

5

 

Company
only upon occurrence of either of the events described in clauses (i) or (ii) in the preceding sentence. 

	5.2
	Further Assurances.    Each of the parties hereto shall perform such further acts and execute
such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby, including, to the
extent necessary, any amendments to the Company's Articles of Association to reflect the terms hereof.

	5.3
	Governing Law; Jurisdiction.    This Agreement shall be governed by and construed in accordance
with the laws of the State of Israel, without reference to choice of law principles thereof, and the parties agree to exclusively submit to the jurisdiction and venue of Israel and exclusively to the
courts of Tel-Aviv-Jaffa.

	5.4
	Assignment.    (a)    Unless otherwise expressly stated in this Agreement, none of the
rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned or transferred, except to an Affiliate, provided however, that Fibi may make a
one-time assignment (without the right to re-assign) of all of its rights, privileges, or obligations set forth in, arising under, or created by this Agreement to any person or
entity acquiring shares held by Fibi, provided that such party agrees, in writing, to assume all rights, privileges and obligations in place of Fibi and becomes part of the Fibi Group. 

(b)    A
Nominated Director proposed by a Fibi assignee pursuant to Section 2 above shall be subject to the approval of Shamir, provided however, that a decision by Shamir not to
approve an assignee's Nominated Director may be made only upon reasonable grounds, and based strictly on the qualifications of the Nominated Director and not on the identity of the assignee. In
addition, no Nominated Director may be a competitor, or an Affiliate of a competitor, of the Company. 

	5.5
	Entire Agreement; Amendment and Waiver.    This Agreement and the Schedules hereto, if any,
constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof. Any term of this Agreement may be amended and the observance of
any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of all of the parties to this Agreement. All
article and section headings are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Agreement. The preamble and schedules to this
Agreement are incorporated herein and form an integral part hereto.

	5.6
	Notices, etc.    All notices and other communications required or permitted hereunder to be
given to a party to this Agreement shall be in writing and shall be telecopied or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to
such party's address as set forth hereinabove or such other address with respect to a party as such party shall notify each other party in writing as above provided. Any notice sent in accordance with
this Section 5.6 shall be effective (i) if mailed, five (5) business days after mailing, (ii) if sent by messenger, upon receipt, and (iii) if sent via telecopier,
upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation
of receipt (provided, however, that any notice of change of address shall only be valid upon receipt). 

6

 

	5.7
	Delays or Omissions.    No delay or omission to exercise any right, power, or remedy accruing to
any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default threreto or thereafter occurring. Any waiver, permit, consent, or approval of any
kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative
and not alternative.

	5.8
	Severability.    If any provision of this Agreement is held by a court of competent jurisdiction
to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted
by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

	5.9
	Counterparts.    This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument. 

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first hereinabove set forth. 

	 
	 	 

	Shamir Optica Holdings A.C.S. Ltd.	 	Fibi Investment House Ltd.
	By:  /s/
	 	By:  /s/

	By:  /s/
	 	By:  /s/

	 
	 	 

	Scorpio BSG Ltd.	 	JFJ International Trading Ltd.
	By:
	 	By:  /s/

	By:  /s/
	 	By:

	 
	 	 

	Gishrei Asia Ltd.	 	 
	By:  /s/
	 	 
	By:
	 	 

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Exhibit 10.8

EXECUTION
COPY 

 
 

REGISTRATION RIGHTS AGREEMENT    
    

        THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of the 7th day of February, 2005 by and among Shamir Optical Industry Ltd., a limited
liability company formed in Israel (the "Company"), and certain investors in the Company listed in the signature block of this Agreement (collectively, the "Investors"). 

 
 

RECITALS  

        WHEREAS,
the Company and the Investors desire to provide for certain arrangements with respect to the registration of ordinary shares of the Company under the United States Securities
Act of 1933, as amended. 

        NOW,
THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows: 

	1.
	Definitions. For purposes of this Agreement:

	(a)
	The
term "Act" means the United States Securities Act of 1933, as amended.

	(b)
	The
term "Exchange Act" or "1934 Act" shall mean the United States Securities Exchange Act of 1934, as amended.

	(c)
	The
term "Form F-3" means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

	(d)
	The
term "Holder" means each of the holders listed in Schedule A hereto.

	(e)
	The
term "Initiating Holders" has the meaning set forth in Section 2(c).

	(f)
	Except
as otherwise provided in Section 2(a)(y), the term "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

	(g)
	The
term "Registrable Securities" means (i) the Company's ordinary shares held by the Holders as of the date hereof as set forth in Schedule A and
any shares issuable or issued upon conversion of such shares held by, or entitled to be exercised by, the Holder (whether currently issued or hereafter acquired) and (ii) ordinary shares issued
as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the
shares referenced in (i) above. Notwithstanding the foregoing, "Registrable Securities" shall exclude any Registrable Securities to the extent (A) they are sold or otherwise transferred
by a Holder to a third party, unless the rights under this agreement have been assigned or transferred together with such Registrable Securities pursuant to Section 11, or (B) the
registration rights with respect to such Registrable Securities have been terminated pursuant to Section 13. "Registrable Securities" shall also not include any shares or other securities of
the Company acquired by the Holders after the date hereof. 

1

 

	(h)
	The
term "Rule 144" means Rule 144 promulgated under the Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the
SEC as a replacement thereto having substantially the same effect as such rule.

	(i)
	The
term "SEC" shall mean the United States Securities and Exchange Commission.

	(j)
	The
term "Violation" has the meaning set forth in Section 9(a).

	(k)
	The
term "FIBI" shall mean FIBI Investment House Ltd.

	(l)
	The
term "FIBI Group" shall mean FIBI Investment House Ltd. and any of its assignees or transferees pursuant to Section 11(b), Scorpio (BSG) Ltd., Gishrei
Asia Ltd. and JFJ International Trading Ltd. For purposes of this agreement, the FIBI Group shall be treated collectively as one Holder, and the rights to cause a registration of
Registrable Securities under this Agreement shall inure upon the FIBI Group as a group, but not upon any of its members individually. FIBI shall act in all respects on behalf of and shall be able to
exercise the rights of the FIBI Group under this Agreement. No other member of the FIBI Group shall act on behalf of or be able to exercise the rights of the FIBI Group for as long as FIBI holds any
of the Company's shares. If FIBI does not hold any of the Company's shares, that member of the FIBI Group who holds the greatest number of Company shares of all the members of the FIBI Group shall act
on behalf of and be able to exercise the rights of the FIBI Group under this Agreement. 

2.     Request for Registration  

	(a)
	At
any time after the Company's initial registration of ordinary shares (but not prior to the date that is six months after the effective date of a first registration statement either
(x) for a public offering of securities of the Company or (y) under the Exchange Act), each of the Holders shall have the right (a "demand registration right") to request in writing that
the Company file a registration statement under the Act covering the registration of a distribution of all or part of such Holder's Registrable Securities, provided
that, with the exception of Vision Capital, the amount of shares a Holder requests to register must be equal to at least 2% of the Company's ordinary shares on a fully diluted
basis at the time of the demand and have a market value of at least $4.0 million. This limit shall not apply to Vision Capital, who shall have a demand registration right regardless of whether
it requests to register 2% or $4.0 million of the Company's ordinary shares.

	(b)
	After
the respective Holder makes the request referred to in Section 2(a) above, the Company shall:

	(1)
	within
ten (10) days of the receipt thereof, give written notice of such request to all Holders; and

	(2)
	use
its best efforts to effect within ninety (90) days and no longer than one-hundred-and-eighty (180) days following the receipt of
such request, the registration under the Act of all Registrable Securities that the Holders request in writing to be registered within twenty (20) days of the mailing of such notice by the
Company in accordance with Section 2(b)(1).

	(c)
	If
the Holders initiating the registration request hereunder (the "Initiating Holders") intend to distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2(a) and the Company shall include such information in the written notice referred to in
Section 2(b)(1). The underwriter will be selected by the Company. In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon 

2

 

such
Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in
Section 4(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this
Section 2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders shall
so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the Initiating Holders shall have priority over all other Holders to include the Initiating
Holders' shares in the underwriting. If there is more than one Initiating Holder, and if the number of shares of Registrable Securities held by the Initiating Holders and requested to be included in
the underwriting exceeds the number of shares of Registrable Securities the underwriters determine in their sole discretion is compatible with the success of the offering, then the number of shares of
Registrable Securities that may be included in the underwriting shall be allocated among the Initiating Holders in proportion (as nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Initiating Holder. If the number of shares or Registrable Securities held by the Initiating Holders and requested to be included in the underwriting is less than the number of
shares of Registrable Securities the underwriters determine in their sole discretion is compatible with the success of the offering, then the excess number of shares of Registrable Securities that may
be included in the underwriting shall be allocated among the Holders thereof who are not Initiating Holders and who elect to include shares in the offering in proportion (as nearly as practicable) to
the amount of Registrable Securities of the Company owned by each such Holder participating in the offering, or in such other proportions as shall mutually be agreed to by such Holders. 

	(d)
	Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2 a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement, the Company shall have the right to defer taking action with respect to such filing for a period of not more than ninety
(90) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once
in any twelve (12) month period. For the avoidance of doubt: the 90-day and 180-day time limits described in Section 2(b)(2) will not begin to run during this
90-day deferral period.

	(e)
	With
the exception of Vision Capital LLC, each Holder shall be entitled to request two (2) such registrations pursuant to this Section 2. Vision Capital LLC shall be
entitled to request only one (1) such registration pursuant to this Section 2. The expenses for these registrations shall be borne in accordance with Section 6, below.

	(f)
	Notwithstanding
anything to the contrary in this Agreement, the Company shall not be required to effect more than one (1) registration pursuant to this Section 2 per
twelve-month period.

 

	3.
	Company Registration. If at any time after the date that is six months after the Company's initial public
offering (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Holders) any of its
shares or other securities under the Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants
in a Company share plan or a registration on Form F-4 or any similar successive 

3

 

form),
the Company shall, at such time, promptly give each Holder who holds Registrable Securities written notice of such registration. Upon the written request of each Holder given within twenty
(20) days after mailing of such notice by the Company, the Company shall, subject to the provisions of Section 7, include in the registration statement all the Registrable Securities
that each such Holder has requested to be registered. 

	4.
	Obligations of the Company. Whenever required under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably possible:

	(a)
	Prepare
and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective as
soon as practicable, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to two years
or until the Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs.

	(b)
	Prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary
to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement.

	(c)
	Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

	(d)
	Use
its best efforts to register and qualify the securities covered by such registration statement under such other securities or "Blue Sky" laws of such jurisdictions as shall be
reasonably requested by the Holders; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

	(e)
	In
the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form (including, without limitation,
procurement and delivery of a customary opinion of counsel for the Company and a customary "comfort" letter signed by the independent public accountants of the Company), with the underwriters of such
offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

	(f)
	Notify
each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the
happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

	(g)
	Enter
into such agreements and take such other actions as sellers of such Registrable Securities holding 50% of the shares so to be sold shall reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities, including with respect to depositing Company shares with a designated depositary to facilitate the issuance and sale of such shares.

	(h)
	Cause
all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or nationally recognized quotation system on which similar securities
issued by the Company are then listed. 

4

 

	5.
	Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action
pursuant to this Agreement with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as shall be reasonably required to effect the registration of such Holder's Registrable Securities.

	6.
	Expenses of Registration. The Company shall bear all registration, filing and qualification fees, printers'
and accounting fees, and fees and disbursements of counsel for the Company in connection with registrations, filings or qualifications pursuant to Section 3 of this Agreement and in connection
with the first registration requested by a Holder pursuant to Section 2 of this Agreement. In connection with the second registration requested by a Holder pursuant to Section 2 of this
Agreement, the selling Holders shall bear, on a pro rata basis of shares sold, all expenses incurred in connection with such registration, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company, and all out-of pocket expenses of the Company. For the avoidance of doubt: the Company
will not charge the Holders for the time expended by its management in relation to a registration under this Agreement. 

7.     Underwriting Requirements.  

	(a)
	In
connection with any offering involving an underwriting of the Company's shares, the Company shall not be required under Section 3 to include Registrable Securities of a
Holder in such underwriting unless the Holder of such Registrable Securities accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it, and then only
in such quantity as the underwriters determine in their sole discretion will not adversely affect their ability to market the offering. If the total amount of Registrable Securities requested by
Holders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the
offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion
will not adversely affect their ability to market the offering (the securities so included to be apportioned pro rata among the selling Holders according to the total amount of securities owned by
each selling Holder or in such other proportions as shall mutually be agreed to by such selling Holders).

	(b)
	In
connection with any offering involving an underwriting of shares of the Holders' Registrable Securities pursuant to Section 2, the Company shall not be permitted to sell its
securities in such underwriting unless the Company accepts the terms of the underwriting as agreed upon between the Holders and the underwriters, and then the Company may include only such quantity as
the underwriters determine in their sole discretion will not adversely affect their ability to market the offering. If the total amount of securities requested by the Company to be included in such
offering exceeds the amount the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be permitted to include in the offering only that
number of such securities that the underwriters determine in their sole discretion will not adversely affect their ability to market the offering.

 

	8.
	Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement. 

5

 
	9.
	Indemnification. In the event any Registrable Securities are included in a registration statement under
this Agreement:

	(a)
	To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the
1934 Act or other federal or state securities law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for inclusion in a
registration statement in connection with such registration by any such Holder, underwriter or controlling person.

	(b)
	To
the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person
of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or
other federal or state securities law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in conformity with information furnished by such Holder in connection with the drafting of the registration statement related
to such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 9(b), in
connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained
in this Section 9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided, however, that in no event shall any indemnity under this Section 9(b) exceed the net
proceeds from the offering received by such Holder.

	(c)
	Promptly
after receipt by an indemnified party under this Section 9 of notice of the commencement of any action (including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, deliver to the indemnifying party a written notice of the commencement thereof and the 

6

 

indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate (in the sole judgment of counsel for the indemnified party) due to actual or potential
differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party
under this Section 9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under
this Section 9. 

	(d)
	If
the indemnification provided for in this Section 9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

	(e)
	The
obligations of the Company and Holders under this Section 9 shall survive the completion of any offering of Registrable Securities in a registration statement under this
Agreement, and otherwise.

 

	10.
	Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 and any
other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on
Form F-3, the Company agrees to:

	(a)
	make
and keep public information available, as those terms are understood and defined in Rule 144, at all times after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;

	(b)
	file
with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and

	(c)
	furnish
to any Holder, for so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144 (at any time after the first anniversary of the effective date of the first registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports 

7

 

and
documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of
any such securities without registration or pursuant to such form. 

11.   Assignment and Transfer of Registration Rights. 

	(a)
	The
rights to cause the Company to register Registrable Securities pursuant to this Agreement inure specifically to each of the Holders listed in Schedule
A and may not be assigned or transferred by a Holder to any other party, other than an affiliate of the transferring party. An "affiliate" of a party shall mean an entity controlled by,
controlling or under common control with such party.

	(b)
	Notwithstanding
anything in Section 11(a), FIBI may assign or transfer (but only with all related obligations) its rights pursuant to this Agreement to cause the Company to
register the Registrable Securities held by FIBI to a transferee or assignee of such securities who, after such assignment or transfer, holds at least 20% of FIBI's Registrable Securities and 2% of
the Company's ordinary shares on a fully diluted basis; provided, however, that the Company be, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned or transferred. Any assignee or
transferee of FIBI's rights may not assign or transfer these rights.

 

	12.
	Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any
securities of the Company that would allow such holder or prospective holder to include such securities in any registration filed under Section 2 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders that is included.

	13.
	Effectiveness and Termination of Registration Rights. The effectiveness of this Agreement is contingent
upon and subject to the completion of an initial public offering of the Company's ordinary shares in the United States on or prior to December 31, 2005 and the effectiveness of the related
registration statement concerning the Company's ordinary shares in compliance with the Act. In the event that such a public offering does not occur on or prior to December 31, 2005, this
Agreement shall not become effective. This Agreement terminates as of the earlier of (a) the sixth anniversary of this Agreement, or (b) as to any Holder, such time at which all
Registrable Securities held by such Holder can be sold without restriction and without registration in compliance with Rule 144, or (c) as to any Registrable Securities held by each
Holder, such time at which such Registrable Securities have either been registered or sold or otherwise transferred to another party by such Holder.

	14.
	Mergers. The Company shall not, directly or indirectly, enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that purpose references hereunder to Registrable Securities shall be deemed to be references to the securities which the Holders
would be entitled to receive in exchange for Registrable Securities under any such merger, consolidation or reorganization; provided, however, that the
provisions of this Section 14 shall not apply in the event of any merger, consolidation or reorganization in which the Company is not the surviving corporation if all Holders are entitled to
receive in exchange for their Registrable Securities consideration consisting solely of (i) cash, (ii) securities of the acquiring corporation 

8

 

which
may be immediately sold to the public without registration under the Securities Act, or (iii) securities of the acquiring corporation which the acquiring corporation has agreed to
register within 90 days of completion of the transaction for resale to the public pursuant to the Securities Act. 

15.   Miscellaneous  

	(a)
	Successors and Assigns. The terms and conditions of this Agreement shall inure solely to the benefit of
and be binding upon the respective parties to this agreement, as well as their successors or assigns. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors or assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

	(b)
	Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York.

	(c)
	Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

	(d)
	Headings. The headings used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

	(e)
	Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon delivery by facsimile or overnight courier at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate.

	(f)
	Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

	(g)
	Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and all Holders who hold at least 2% of
the Company's ordinary shares on a fully diluted basis at the time of the amendment or waiver; provided, however, that this Agreement may be amended or
a term of this Agreement waived with the consent of the Holders of less than all Registrable Securities only in a manner which affects all Registrable Securities in the same fashion. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or
provision.

	(h)
	Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement, and the balance of the Agreement shall be interpreted as if such provision were so excluded, and shall be enforceable in accordance with its
terms. 

9

   
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 

	 	 	COMPANY:
	

 	
 	

SHAMIR OPTICAL INDUSTRY LTD.
	

 	
 	
By:	

/s/

	 	 	Name:

Title:

	
INVESTORS:	
 	

 
	

SHAMIR OPTICA HOLDINGS A.C.S. LTD.	
 	

 
	
By:	

/s/
	
 	

 
	Name:

Title:	 	 
	
FIBI INVESTMENT HOUSE LTD.	
 	

 
	
By:	

/s/
	
 	

 
	Name:

Title:	 	 
	
HAKLAEI EYAL HASHARON A.C.S. LTD.	
 	

 
	
By:	

/s/
	
 	

 
	Name:

Title:	 	 
	
VISION CAPITAL LLC	
 	

 
	
By:	

/s/  RICHARD P. KIPHART      
	
 	

 
	Name: Richard P. Kiphart

Title: Director	 	 
	
SCORPIO (BSG) LTD.	
 	

 
	
By:	

/s/  JEFFREY LEVINE      
	
 	

 
	Name: Jeffrey Levine

Title: C.F.O.	 	 
	
GISHREI ASIA LTD.	
 	

 
	
By:	

/s/
	
 	

 
	Name:

Title:	 	 
	 	 	 	 

10

 

	
JFJ INTERNATIONAL TRADING LTD.	
 	

 
	
By:	

/s/
	
 	

 
	Name:

Title:

	 	 

11

  

 
 

Schedule A  
    

HOLDERS:  

	1.	SHAMIR OPTICA A.C.S. LTD.

Kibbutz Shamir

Upper Galilee

12135 Israel

Number of Registrable Securities held: 10,240,775
	

    	

 
	2.	FIBI GROUP

c/o FIBI Investment House Ltd.

17th Floor, Africa Israel Building

14 Ehad Ha-Am Street

Tel Aviv, Israel

Number of Registrable Securities held: 1,807,196
	

    	

 
	3.	HAKLAEI EYAL HASHARON A.C.S. LTD.

Kibbutz Eyal

D.N. Hasharon Hatichon

45840 Israel

Number of Registrable Securities held: 502,400
	

    	

 
	4.	VISION CAPITAL LLC

c/o William Blair & Company, L.L.C.

222 West Adams Street

Chicago, IL 60606

USA

Number of Registrable Securities held: 160,961

12

QuickLinks

REGISTRATION RIGHTS AGREEMENT

RECITALS

Schedule A

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