Document:

exhibit_4-7.htm

 

Exhibit 4.7

 

ENGLISH SUMMARY OF THE DEBT RESTRUCTURE AGREEMENT

(ORIGINAL LANGUAGE – HEBREW)

 

BY AND BETWEEN

 

ELBIT VISION SYSTEMS LTD. ("EVS", or the “Company”)

 

AND

 

BANK LEUMI LEISRAEL LTD.

 

Dated May 30, 2010

(the “Agreement”)

 

	
Description:

	 	
Letter Agreement pursuant to which Bank Leumi LeIsrael Ltd. (the "Bank"), within the framework of the sale of ScanMaster Ltd., agrees to waive up to $546,000 of existing debt to the Bank and restructure the repayment of the remaining debt, pursuant to the EVS fulfilling certain conditions.

 

	
Debt Balance

	 	
EVS confirms its Debt Balance to the Bank is NIS 653,110.40, $1,654,962.94, €105,142.46, $3,116.47, and 39,393 NIS.

 

EVS will pay the Bank $88,000 towards the Debt Balance. Additionally, all funds in EVS' account with the Bank, plus the sums of (i) $490,000, and; (ii) €103,578 which will be withdrawn from ScanMaster Ltd's account with the Bank, will be applied towards the Debt Balance.

 

	
First Loan - Terms and Interest

	 	
The Bank will loan $353,000 to EVS, upon EVS's request, to be applied to any part of the Debt Balance, at the Bank's discretion. The loan will be for 5 years, with principal repayable in 17 consecutive quarterly payments commencing January 1, 2011, and interest of LIBOR+2.25% repayable in 20 consecutive quarterly payments commencing May 31, 2010.

 

	
Second Loan - Terms and Interest

	 	
Additionally, the Bank will loan $260,000 to EVS, upon EVS's request, to be applied to any part of the Debt Balance, at the Bank's discretion. The loan will be for 6 months, with principal repayable in one payment by December 1, 2010, and interest of LIBOR+1.7% plus CPI to be repaid, in 2 monthly payments commencing on the date of the loan and ending December 1, 2010.

 

If by December 1st, 2010, EVS will pay the interest for the abovementioned second loan but will not have paid all/part of the principal of the second loan (the "Second Loan Principal Balance"), the Bank will loan to EVS, upon EVS's request, an additional loan at the amount of the Second Loan Principal Balance to be applied to any part of the Second Loan Principal Balance and the Debt Balance, at the Bank's discretion. This additional loan will be for 9.5 years, with the principal repayable in 20 consecutive quarterly payments commencing May 31, 2015 and ending May 31, 2020, with interest plus CPI to be set at the date of the loan and to be repayable, in 38 consecutive quarterly payments commencing December 1, 2010 and ending May 31, 2020.

 

These 2 loans will be referred to as the "Second Loan".

 

	
Third Loan - Terms and Interest

	 	
Additionally, the Bank will loan 267,251 NIS to EVS, upon EVS's request, to be applied to any part of the Debt Balance, at the Bank's discretion. The loan will have interest of Prime+1.5% (per annum), with both the principal and the interest plus CPI repayable in 6 consecutive monthly payments commencing June 30, 2010 and ending November 30th, 2010.

 

	
Security

	 	
As security on the Debt Balance and any other amounts that are due or that may be due by EVS to the Bank, EVS shall grant the Bank: (i) a first ranking fixed charge over management shares, ordinary shares and ordinary A shares in Panoptes; (ii) an unlimited guarantee in favor of the bank from Panoptes on behalf of EVS's obligations; (iii) a first ranking fixed charge on EVS' shares in Miniscule Components Ltd.; (iv) an unlimited guarantee in favor of the bank from EVS Inc. on behalf of EVS's obligations, and; (v) a first ranking fixed charge on all of EVS's shares in EVS Inc.

 

Notwithstanding the foregoing, the Bank agreed to cancel EVS's guarantee to ScanMaster.

 

  

  

  

 

	
Waivers

	 	
The Bank agrees to waive a part of the Debt Balance  not exceeding $546,000.

 

	
Option Restrictions

	 	
Mr. Sam Cohen's and Mr. Yaron Menashe's (the "Investors")shareholdings will not be changed without the Bank's prior written consent. Notwithstanding the above, and subject to each of the Investors remaining a controlling shareholder: (i) until December 1, 2011, the Investors will be entitled to reduce their shareholdings to 42% (in the aggregate); (ii) as of December 1, 2011, the Investors will be entitled to reduce their shareholdings to 38% (in the aggregate) and as of December 1, 2012 they will be entitled to reduce their holdings to 35% (in the aggregate); (iii) if EVS repays the Second Loan in its entirety, and at least 4 principal payments from the First Loan, and the Third Loan will be repaid in its entirety, then the Investors will be entitled to reduce their shareholdings without restriction.

 

New options for employees will not exceed 5% of the outstanding share capital of EVS at all times, and will not exceed 0.25% per employee.

 

	
Loan Arrangement

 

	 	
In June 2010, the Investors undertook two financial commitments toward the company: (i) each of Mr. Cohen and Mr. Menashe provided EVS with a loan in the amount of US $50,000 and the repayment schedule of each loan shall commence on January 1, 2013, provided that the Company meet certain milestones in the aggregate set by the Banks, the milestones are: (i) the Company shall receive authorization from the Bank 60 days prior to the repayment date.; (ii) the Company shall include in its request for such authorization a certified external auditors report for the Company's financial condition during the previous year, (iii) the Bank shall authorize the repayment subject to the company meeting the following conditions, in the aggregate: (1) the existence of net profit for distribution; (2)the existence of a positive cashflow from ongoing operations; (3) the repayment amount shall not exceed the lesser of 50% of the net profit "for distribution" and/or 50% of the positive cashflow from ongoing operations, and in any case, shall not exceed the initial loan amount; (4) the confirmation shall attest that EVS's tangible capital is greater than zero; (ii) each of Mr. Cohen and Mr. Menashe agreed to delay payment by EVS of the first US $50,000 of their salary until July 2011 at which time EVS shall repay each of Mr. Cohen and Mr. Menashe US $50,000 in three equal monthly installments.

 

	
Bank Fee

	 	
In addition to the amounts specified in this Agreement, EVS shall pay to the Bank a handling fee of $10,000 in NIS with respect to this Agreement.

 

	
Other Terms

	 	
●

 

	
The total of EVS's financial obligations (to all banks, financial institutions and other lenders) shall not exceed $4,000,000.

 

	 	 	●	
EVS has not and shall not issue securities to the bearer of this letter without the prior written consent of the Bank. EVS shall not merge with any other corporation without the Bank's prior written consent.

 

	 	 	
●

	
EVS will provide the Bank any report requested by the Bank. Additionally, EVS will provide the Bank monthly reports regarding the business plan, inventory distribution, etc.exhibit_4-8.htm

 

Exhibit 4.8

 

ENGLISH SUMMARY OF THE FRAMEWORK LETTER

(ORIGINAL LANGUAGE – HEBREW)

 

BY AND BETWEEN

 

ELBIT VISION SYSTEMS LTD. ("EVS")

SCANMASTER SYSTEMS (IRT) LTD. ("SCANMANSTER")

(TOGETHER, THE "DEBTORS")

 

AND

 

BANK HAPOALIM LTD. (THE "BANK")

 

Dated May 27, 2010

(the “Letter”)

 

	
Description:

	 	
Letter pursuant to which Bank Hapoalim Ltd. (the "Bank"), within the framework of the sale of ScanMaster Ltd., consents to the sale of ScanMaster and EVS shares, sets the terms for the outstanding obligations of the Debtor's to the Bank and agrees to waive certain outstanding debts.

 

	
Guarantees

	 	
To guarantee the Debtors' debts to the Bank, both EVS and ScanMaster have created unlimited first ranking floating charges in favor of the Bank, on all of their assets and rights.

 

The Bank's prior written consent is required for any change in control or in structure in EVS and/or ScanMaster.

 

	
Bank Consent to Sale

	 	
The Bank consents to:

 

	 	 	
(i)

	
the sale of ScanMaster's shares (free of floating charge) held by EVS to David Gal ("Gal") and Ofer Sela ("Sela"), and;

 

	 	 	(ii)	
the purchase of Panoptes' shares held by ScanMaster by EVS, and;

 

	 	 	(iii)	
the transfer of EVS' shares held by M.S.N.D Real Estate Holdings Ltd. to Mr. Sam Cohen ("Cohen") and Mr. Yaron Menashe ("Menashe") for no compensation, and;

 

	 	 	
(iv)

	
to cancel the abovementioned charges;

 

	 	 	
subject to the fulfillment of the following conditions, in the aggregate, no later than June 30, 2010:

 

	 	 	
1.

 

	
Gal and Sela shall transfer USD $1,000,000 to ScanMaster at the date of the sale of the ScanMaster shares.

 

	 	 	
2.

 

	
Gal and Sela and/or ScanMaster shall pay EVS USD $250,000

 

	 	 	
3.

 

	
EVS shall transfer Gal and Sela the ScanMaster shares.

 

	 	 	
4.

 

	
Cohen and Menashe shall transfer USD $100,000 to EVS as a loan, as specified in the Owner's Loans section below.

 

	 	 	
5.

 

	
Cohen and Menashe shall consent to postponing the payment of their salaries up to an aggregate amount of USD $100,000, and this amount will be considered a loan as specified in the Owner's Loans section below.

 

	 	 	
6.

	
$112,000 held in EVS's account in the Bank and of $28,000 in ScanMaster's account, shall be applied to the repayment of your debts to the Bank, at the Bank's discretion.

 

	 	 	
7.

 

	
The Debtors shall undertake to sign agreements with the Bank which shall replace any previous agreement by no later than June 30, 2006

 

	 	 	
8.

	
The Debtors shall undertake to sign an agreement with Bank Leumi LeIsrael Ltd. settling their debts in that Bank no later than June 30, 2010.

 

  

  

  

 

	
Owner's Loans

	 	
As of the signing of the Agreement and until all of the Debtor's obligations to the Bank are repaid, the owner's loans will not be repaid without the Bank's prior written consent.

 

Notwithstanding the above, Cohen and Menashe shall be entitled to the repayment of their loan, subject to EVS fulfilling all of its obligations to the Bank, according to the following terms:

 

	 	 	1.	
In connection with the postponing of the payment of their salaries up to an aggregate amount of USD $100,000, this shall be repaid commencing July 2011 in 3 equal monthly payments.

 

	 	 	2.	
In connection with the USD $100,000 loan, this shall be repaid in one of the 2 following options:

 

	 	 	 	a.	
Commencing July 1, 2012 subject to the 5 Year Loan being repaid and USD $196,000 of principal out of the 10 Year Loan being repaid.

 

	 	 	 	b.	
Commencing 2013 subject to the fulfillment of the following conditions in the aggregate:

 

	 	 	 	 	i.	
60 days before the date of repayment, EVS shall request the Bank's consent for the repayment, along with a certified external auditor's confirmation

 

	 	 	 	 	ii.	
The Bank shall consent to the repayment subject to the auditor's confirmation confirming the fulfillment of the following conditions in the aggregate:

 

	 	 	 	 	 	1.	
Existence of net profit for distribution

 

	 	 	 	 	 	2.	
Existence of positive cash flow from ongoing operations

 

	 	 	 	 	 	3.	
The Repayment amount shall not exceed 50% of the net profit for distribution and/or the positive cash flow from ongoing operations, the lower of the two, and in any case shall not exceed the outstanding loan amount.

 

	 	 	 	 	 	4.	
The auditor's confirmation provides that EVS' tangible share capital is greater than zero.

 

	
Validity

	 	
This letter will be valid until no later than June 30, 2010, and if until this date, the conditions mentioned in the Bank Consent to the Sale section above are not fulfilled, the Bank's consent in connection with this letter is cancelled.

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