20-F/A 1 file001.htm FORM 20-F/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20–F/A

(Amendment No. 1)


	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR


	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR


	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-50544

LIPMAN ELECTRONIC ENGINEERING LTD.

(Exact name of Registrant as specified in its charter
and translation of Registrant's name into English)

ISRAEL

(Jurisdiction of incorporation or organization)

11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act. None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Ordinary Shares, par value NIS 1 per share

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2004, the Registrant had outstanding 28,484,796 Ordinary Shares, par value NIS 1 per share.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark which financial statement item the Registrant has elected to follow.

Item 17 Item 18

EXPLANATORY NOTE

THIS AMENDMENT NO. 1 TO FORM 20-F IS BEING FILED FOR THE PURPOSE OF AMENDING AND RESTATING (A) ITEM 7 (SPECIFICALLY, THE "MAJOR SHAREHOLDERS" SUBSECTION) TO CORRECT THE AMOUNT PREVIOUSLY REPORTED FOR THE TOTAL NUMBER OF SHARES BENEFICIALLY OWNED BY OUR DIRECTORS AND OFFICERS AND TO PROVIDE ADDITIONAL INFORMATION IN THE FOOTNOTES TO THE TABLE AND (B) ITEM 19 TO ATTACH OUR AMENDED AND RESTATED ARTICLES OF ASSOCIATION AS AN EXHIBIT.

THIS AMENDMENT NO. 1 DOES NOT REFLECT EVENTS OCCURRING AFTER THE FILING OF THE ORIGINAL FORM 20-F AND DOES NOT MODIFY OR UPDATE THE DISCLOSURE THEREIN IN ANY WAY OTHER THAN FOR THE PURPOSES SET FORTH ABOVE. AS A RESULT, THIS AMENDMENT NO. 1 CONTINUES TO SPEAK AS OF FEBRUARY 23, 2005.

PART I

Unless the context otherwise requires, "Lipman," "us," "we" and "our" refer to Lipman Electronic Engineering Ltd. and its subsidiaries.


ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table shows the number of our ordinary shares beneficially owned by (1) the only shareholders known to us as of February 14, 2005, to beneficially own more than 5% of our outstanding ordinary shares and (2) all of our directors and executive officers as a group. The number of ordinary shares used in calculating the percentage for each person listed below includes the shares underlying options or warrants held by such person that are exercisable within 60 days.

The shareholders listed below do not have any different or special voting rights from any other shareholders of our company. Except where otherwise indicated, we believe, based on information furnished by the owners, that the beneficial owners of the ordinary shares listed below have sole investment and voting power with respect to such shares.


Identity of Person or Group				Amount Owned				Percent of Class
Mivtach Shamir Holdings Ltd.					4,765,108				17.9	%
Meir Shamir					4,765,108	⁽¹⁾			17.9	%
Mez-Op Holdings Ltd⁽²⁾					2,130,000	⁽³⁾			8.0	%
Ishay Davidi					2,130,000	⁽⁴⁾			8.0	%
Zand International Holding Inc.⁽⁵⁾					2,670,000				10.0	%
Jana Partners LLC⁽⁶⁾					1,766,846				6.6	%
All directors and executive officers as a group (18 people)					7,473,016	⁽⁷⁾			27.8	%

(1)

Shares beneficially owned represents 4,765,108 shares owned by Mivtach Shamir Holdings Ltd., all of which Meir Shamir, a director of Lipman for more than three years, may be considered to beneficially own. In accordance with a pledge agreement, Mivtach Shamir Holdings has pledged 500,000 of its shares to Bank Leumi LC Israel Ltd., which may become a beneficial owner of the pledged shares upon the occurrence of specified events.


(2)	Mez-Op Holdings Ltd. is owned by affiliates of First Israel Mezzanine Investors, or FIMI.

(3)

Shares beneficially owned includes (a) 1,886,570 shares directly owned by Mez-Op Holdings; and (b) 243,430 shares beneficially owned by Mez-Op Holdings in accordance with voting trusts between Mez-Op Holdings and four other shareholders granting Mez-Op Holdings the right to vote 243,430 shares directly owned by them. Mez-Op Holdings has pledged the 2,130,000 shares it owns to Bank Hapoalim Ltd. to secure a loan for $9 million. Upon the occurrence of specified

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	events, Bank Hapoalim Ltd. may become a beneficial owner of the pledged shares and the shares that may be purchased upon exercise of the pledged option.


(4)	Shares beneficially owned consists of 2,130,000 shares beneficially owned by Mez-Op Holdings Ltd., all of which Ishay Davidi, a director of Lipman since September 2002, may be considered to beneficially own.


(5)	Zand International Holdings Inc. is a company organized under the laws of Panama and is owned by Zand Trust of Gibraltar (a complex trust).


(6)	Information is based on a Schedule 13G/A, dated January 31, 2005, filed with the Securities and Exchange Commission by Jana Partners LLC.


(7)	Shares beneficially owned includes 309,000 shares issuable upon exercise of options.

To our knowledge, the significant changes in the percentage ownership of our shares held by our major shareholders during the past three years are as follows:

In November 2003, Meir Shamir sold 80,000 shares in the Tel Aviv Stock Exchange.

Zand International Holding Inc. purchased, in public transactions on the Tel Aviv Stock Exchange, 21,276 ordinary shares during January 2003, an aggregate of 17,240 ordinary shares during March and April 2003 and 37,794 ordinary shares during August 2003.

On August 13, 2002, Aharon Lipman, Rami Lipman and Zeev Kopf entered into a share purchase agreement pursuant to which they sold an aggregate of 2,700,000 of our ordinary shares, or approximately 12.3% of our outstanding ordinary shares, consisting of 1,200,000 ordinary shares from Aharon Lipman, 1,000,000 ordinary shares from Rami Lipman and 500,000 ordinary shares from Zeev Kopf to Mez-Op Holdings, which is owned by affiliates of FIMI.

In addition, under the share purchase agreement, Aharon Lipman, Rami Lipman and Zeev Kopf granted Mez-Op Holdings the option to purchase up to 842,106 additional ordinary shares, consisting of 279,920 shares from Aharon Lipman, 345,800 shares from Rami Lipman and 216,386 shares from Zeev Kopf, at $9.50 per share. The price per share is subject to adjustment to be equal to the average closing price over a 90-day period immediately following September 10, 2004 multiplied by 115%, provided that the share price shall not be less than $8.04 per share or greater than $10.04 per share and is further subject to adjustment based on: (1) subdivisions or combinations of the ordinary shares; (2) cash dividends; and (3) any right offerings. After adjusting for the cash dividends paid on December 26, 2002, June 12, 2003 and September 8, 2004, the exercise price is currently $10.001 per share. On October 28, 2004, Mez-Op assigned the option to Clal Finance Batucha Investment Ltd., an Israeli brokerage house, for a total consideration of US $19,654,754, of which US $8,421,929 was paid directly by Clal to Aharon Lipman, Rami Lipman and Zeev Kopf and US $11,232,825 was paid to Mez-Op itself, representing a price per share of approximately US $23.34.

In September 2002, Mez-Op Holdings sold an aggregate of 308,572 ordinary shares, as well as options to purchase an aggregate of 96,238 ordinary shares from Aharon Lipman, Rami Lipman and Zeev Kopf to four individuals, one of whom was Mordechai Gorfung, one of our directors. Mr. Gorfung purchased from Mez-Op Holdings 96,428 ordinary shares as well as an option to purchase an aggregate of 30,074 additional ordinary shares from Aharon Lipman, Rami Lipman and Zeev Kopf. Pursuant to a voting trust, Mez-Op Holdings retained all voting rights related to the shares sold to the individuals and any additional shares that the four individuals may acquire upon exercise of the options. Accordingly, Mez-Op Holdings may be considered the beneficial owner of these shares.

Mivtach Shamir Holdings sold 930,000 shares and Mez-Op Holdings sold 570,000 shares in our initial public offering in January 2004.

Aharon Lipman sold 255,000 shares on August 31, 2004 to a European bank.

Rami Lipman sold 200,000 shares on October 28, 2004, and 55,000 shares on November 7, 2004, to a European bank.

According to filings with the U.S. Securities and Exchange Commission, during 2004, Jana Partners LLC purchased 1,776,846 of our ordinary shares.

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Shareholders' Agreement Between Mivtach Shamir Holdings and Mez-Op Holdings

Mivtach Shamir Holdings and Mez-Op Holdings entered into a shareholders' agreement in August 2002 which requires them to vote all of the ordinary shares owned or otherwise held by them to elect (i) two members designated by Mez-Op Holdings, (ii) three members designated by Mivtach Shamir Holdings, (iii) Aharon Lipman and Rami Lipman, subject to the approval of each of them, and (iv) subject to applicable law, two external directors mutually acceptable to both Mivtach Shamir Holdings and Mez-Op Holdings. Jacob Perry, Meir Shamir and David Rubner are designees of Mivtach Shamir Holdings and Ishay Davidi and Mordechai Gorfung are designees of Mez-Op Holdings. As a result, they currently control significant decisions affecting us.

In addition, during the first five years of the agreement, if either party desires to sell or otherwise transfer any or all of the ordinary shares owned or otherwise held by it that is equal to or more than five percent of our outstanding ordinary shares, then the selling party must offer the ordinary shares to the other party at the same price the selling party seeks to receive from a third party.

Also, under this agreement, subject to applicable law, Mivtach Shamir Holdings and Mez-Op Holdings have agreed to use their best efforts to cause us to distribute cash dividends to our shareholders during each of the five years commencing July 1, 2002 out of all current profits, up to an annual amount (net of Israeli taxes) of $4.5 million per year. This agreement to cause dividend distributions terminates on the date the aggregate amount of dividends we shall have distributed after July 1, 2002 equals $22.5 million. Neither we nor any shareholder other than Mivtach Shamir Holdings and Mez-Op Holdings has the right to enforce the rights and obligations of the parties under this agreement.

Subject to their agreement to cause dividend distributions as described above and applicable law, Mivtach Shamir Holdings and Mez-Op Holdings also agreed to use their best efforts to cause our shareholders' equity to be equal to at least 50% of our total assets at the end of each fiscal period, in each case, not less than $55.5 million.

This agreement terminates upon the disposition of more than 60% of the ordinary shares held by either Mivtach Shamir Holdings or Mez-Op Holdings on the date of the agreement. We are not a party to this agreement.

B. RELATED PARTY TRANSACTIONS

We own 18.6% of the outstanding shares of Wizcom Ltd. and Meir Shamir is a director of Wizcom. In addition, Meir Shamir beneficially owns 13.9% of the outstanding shares of Wizcom through Mivtach Shamir Holdings Ltd. Aharon Lipman is also a director of Wizcom. Under our agreement with Philips Semiconductors, we and Wizcom are permitted but are not obligated to perform each others' obligations to purchase ASICs under the agreement. We do not intend to assume any obligations of Wizcom under the agreement.

On February 10, 2005, we and Mivtach Shamir entered into an agreement with a third party to sell all our shares in Wizcom for aggregate consideration of approximately $ 2.2 million, of which we would receive approximately $ 1.3 million. The consummation of the purchase of our Wizcom shares is subject to the approval by the shareholders of Wizcom to the purchase of a private company owned by the third party.

In November 2003, we entered into a registration rights agreement with Mivtach Shamir Holdings and Mez-Op Holdings. This agreement, which was subject to shareholder approval, was approved by our shareholders in January 2004. Pursuant to this agreement Mivtach Shamir Holdings and Mez-Op Holdings may, subject to the conditions set forth in the agreement, require us on an aggregate of three occasions to register our ordinary shares under the Securities Act. Mivtach Shamir Holdings and Mez-Op Holdings will also have piggyback registration rights. We have agreed to pay all expenses incurred in connection with a registration, other than underwriting commissions for shares to be sold. We have also agreed to indemnify Mivtach Shamir Holdings and Mez-Op Holdings against certain liabilities, including liabilities under the Securities Act, in connection with any registration statement filed pursuant to this agreement. This agreement will remain in effect until all shares owned by these

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two shareholders can be sold within a six month period without registration under the provisions of Rule 144. We do not have any other contractual obligations to register our ordinary shares.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable

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ITEM 19. EXHIBITS


(b)	Exhibits:

The following exhibits are filed as part of this Annual Report on Form 20-F:


EXHIBIT NO.				EXHIBIT
1.1				Memorandum of Association of Registrant.*
1.2				Amended and Restated Articles of Association of Registrant.
2.1				Registration Rights Agreement, dated November 18, 2003, by and among Lipman Electronic Engineering Ltd., Mivtach Shamir Holdings Ltd. and Mez-Op Holdings Ltd.*
4.1				Lease Agreement, dated as of March 17, 2002, between Lipman Electronic Engineering Ltd. and Mivnei Ta'asiya Ltd. (English translation).*
4.1A				Addendum to Lease Agreement, dated as of January 16, 2005, between Lipman Electronic Engineering Ltd. and Mivnei Ta'asiya Ltd. (English translation).**
4.2				Management Contract, dated as of April 4, 2003, between Lipman Electronic Engineering Ltd. and Jacob Perry Management Services Ltd. (English translation).*
4.3				Shareholders Agreement, dated as of August 13, 2002, between Mivtach Shamir Holdings Ltd. and Mez-Op Holdings Ltd.*
4.4				Purchase Agreement, dated June 1, 2003, among Seiko Instruments GmbH, RCM LTD and Lipman Electronic Engineering Ltd.†*
4.5				Lipman Electronic Engineering Ltd. Stock Option Plan (2003) (English Translation).*
4.6				Framework Agreement, dated April 29, 2003, among Philips Semiconductors, Avnet ASIC Israel Ltd., Wizcom Technologies Ltd. and Lipman Electronic Engineering Ltd.†*
4.7				Lipman Electronic Engineering Ltd. Stock Option Plan (2004) (English Translation).*
4.7A				Lipman Electronic Engineering Ltd. Stock Option Plan (November 2004) (Incorporated by reference to the Registrant's Registration Statement on Form S-8 (File No. 333-122374), filed on January 28, 2005).
4.7B				Lipman Electronic Engineering Ltd. Global Employee Share Purchase Plan. **
4.7C				Lipman Electronic Engineering Ltd. U.S. Employee Share Purchase Plan. **
4.8				Reseller Agreement between TASQ Technology, Inc. and Lipman U.S.A. Inc., dated November 26, 1999, and Addendum No. 4 thereto, dated December 18, 2002.†*
4.9				Form of Underwriting Agreement.*
4.10				Share Purchase Agreement, dated October 3, 2004, between Lipman Electronic Engineering Ltd. and the shareholders of Dione Ltd. **
4.11				Manufacture and Supply Agreement dated March 6, 2002, between Dione Ltd. and Wincor Nixdorf PTE. **††
8.0				List of significant subsidiaries.**
12.1				Certification of Isaac Angel, President and Chief Executive Officer of Lipman Electronic Engineering Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2				Certification of Mike Lilo, Chief Financial Officer of Lipman Electronic Engineering Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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EXHIBIT NO.				EXHIBIT
13.1				Certification of Isaac Angel, President and Chief Executive Officer of Lipman Electronic Engineering Ltd., pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2				Certification of Mike Lilo, Chief Financial Officer of Lipman Electronic Engineering Ltd., pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
14(a)				Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global.


†	Certain portions of this exhibit have been omitted pursuant to an order granting confidential treatment by the United States Securities and Exchange Commission. The omitted non-public information has been filed with the United States Securities and Exchange Commission.


††	Certain portions of this exhibit have been omitted pursuant to a request for an order granting confidential treatment by the United States Securities and Exchange Commission.


*	Incorporated herein by reference to Registrant's Registration Statement on Form F-1 (File No. 333-111849) filed on January 12, 2004.


**	Incorporated by reference to the Registrant's Annual Report on Form 20-F for the fiscal year ended December 31, 2004 filed on February 23, 2005.

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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.

LIPMAN ELECTRONIC ENGINEERING LTD.

By: /s/ Isaac Angel
Name: Isaac Angel
Title: President and Chief Executive Officer
Date: March 24, 2005

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