MATTERS SUBMITTED TO
SHAREHOLDERS
ITEM 1
ELECTION OF DIRECTORS
Background
At
the Shareholders Meeting, the shareholders will elect directors to serve on our Board of
Directors. Our Articles of Association provide for a Board of Directors consisting of not
less than four and no more than twelve members, as may be determined from time to time at
a general meeting of our shareholders. The directors (other than the external directors)
are elected annually at our annual meeting of shareholders and remain in office until the
next annual meeting, unless a director has previously resigned, vacated his/her office, or
was removed in accordance with our Articles of Association. In addition, our Board of
Directors may elect additional directors to the Board of Directors. Pursuant to the
Israeli Companies Law, 1999 (the “
Companies Law
”), at least two external
directors must serve on the Board of Directors for a period of three (3) years each,
unless their office is vacated earlier in accordance with our then current articles of
association and the Companies Law, or extended for one additional three (3) year term.
On
March 30, 2008, three members of our Board, Yuval Cohen, Shmoulik Barashi and Eli Blatt,
resigned their position as members of our Board of Directors following the sale of the
ordinary shares and a majority of the warrants to purchase ordinary shares held by the
Fortissimo Entities to Kanir and Nechama Investments. Pursuant to our Articles of
Association, our Board members appointed Shlomo Nehama, Anita Leviant and Ran Fridrich as
directors, to serve until the next general meeting of our shareholders. The Board of
Directors is currently composed of the following seven directors: Shlomo Nehama, Ran
Fridrich, Hemi Raphael, Oded Akselrod, Anita Leviant, Lauri A. Hanover and Alon Lumbroso.
Shlomo Nehama, Ran Fridrich, Hemi Raphael, Oded Akselrod and Anita Leviant are standing
for reelection. Lauri A. Hanover and Alon Lumbroso are external directors whose current
service term shall expire in November 2009.
We
are unaware of any reason why any of the nominees, if elected, should be unable to serve
as a member of our Board of Directors. If any of the nominees are unable to serve, Ran
Fridrich and Yosef Zylberberg, the persons named in the proxy, or either one of them, will
vote the shares represented thereby “
FOR
” the election of other nominees
proposed by our Board of Directors. All nominees listed below have advised the Board of
Directors that they intend to serve as members of the Board of Directors if elected.
Pursuant
to the requirements of Section 224B(a) of the Companies Law, each of the director nominees
provided us with a “Declaration of Competence” prior to the mailing of this
proxy statement. Such declarations are available for review at our offices, at the address
set forth above, during regular business hours.
The
following information is supplied with respect to each person nominated and recommended to
be elected by our Board of Directors and is based upon our records and information
furnished to the Board of Directors by the nominees.
- 4 -
The
nominees for directors are:
Name
|
Age
|
|
Position with the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Shlomo Nehama
(1)
|
53
|
|
Chairman of the Board and Director
|
|
Ran Fridrich
(1)
|
55
|
|
Director
|
|
Hemi Raphael
|
57
|
|
Director
|
|
Oded Akselrod
(2)
|
62
|
|
Director
|
|
Anita Leviant
|
54
|
|
Director
|
|
(1)
|
Member
of the Company’s Stock Option & Compensation Committee.
|
|
(2)
|
Member
of the Company’s Audit Committee.
|
Shlomo
Nehama
has served as a director and Chairman of the Board of Ellomay since March 2008.
From 1998 to 2007, Mr. Nehama served as the Chairman of the Board of Bank Hapoalim B.M.,
one of Israel’s largest banks. In 1997, together with the late Ted Arison, he
organized a group of American and Israeli investors who purchased Bank Hapoalim from the
State of Israel. From 1992 to 2006, Mr. Nehama served as the Chief Executive Officer of
Arison Investments. From 1982 to 1992, Mr. Nehama was a partner and joint managing
director of Eshed Engineers, a management consulting firm. Mr. Nehama is a graduate of the
Technion — Institute of Technology in Haifa, Israel, where he earned a degree in
Industrial Management and Engineering. Mr. Nehama received an honorary doctorate from the
Technion for his contribution to the strengthening of the Israeli economy.
Ran
Fridrich
has served as a director of Ellomay since March 2008. Mr. Fridrich is the
co-founder and executive director of Oristan, Investment Manager, an investment manager of
CDO Equity and Mezzanine Funds and a Distress Fund, established in June 2004. In addition,
Mr. Fridrich is a consultant to Capstone Investments, CDO Repackage Program, since January
2005. In January 2001 Mr. Fridrich founded the Proprietary Investment Advisory in Israel,
an entity focused on fixed income securities, CDO investments and credit default swap
transactions, and served as its investment advisor through January 2004. Prior to that,
Mr. Fridrich served as the chief executive officer of two packaging and printing Israeli
companies, Lito Ziv, a public company, from 1999 until 2001 and Mirkam Packaging Ltd. from
1983 until 1999. Mr. Fridrich also serves as a director of Cargal Ltd. since September
2002. Mr. Fridrich is a graduate of the Senior Executive Program of Tel Aviv University.
Hemi
Raphael
has served as a director of Ellomay since June 2006. Mr. Raphael is an
entrepreneur and a businessman involved in various real estate and financial investments.
Mr. Raphael also serves as a director of Cargal Ltd. since May 2004. Prior thereto, from
1984 to 1994, Mr. Raphael was a partner at the law firm of Goldberg Raphael & Co. Mr.
Raphael holds an LLB degree from the School of Law at the Hebrew University of Jerusalem
and he is a member of the Israeli Bar Association and the California Bar Association.
Oded
Akselrod
has served as a director of Ellomay since February 2002. Mr. Akselrod was the
general manager of the Investment Corp. of United Mizrahi Bank Ltd., a wholly owned
subsidiary of United Mizrahi Bank Ltd. that was merged into United Mizrahi Bank Ltd. on
October 2004. Prior to joining the Investment Corp. of United Mizrahi Bank, from 1994 to
1997, Mr. Akselrod held the position of general manager of Apex-Leumi Partners Ltd. as
well as Investment Advisor of Israel Growth Fund. Prior thereto, from 1991 to 1994, Mr.
Akselrod served as general manager of Leumi & Co. Investment Bankers Ltd. Mr. Akselrod
began his career in various managerial positions in the Bank Leumi Group including: member
of the management team of Bank Leumi, deputy head of the international division, head of
the commercial lending department of the banking division, member of all credit committees
at the Bank, assistant to Bank Leumi’s CEO and head of the international lending
division of Bank Leumi Trust Company of New York. Mr. Akselrod holds a Bachelor’s
degree in Agriculture Economics from Hebrew University, Jerusalem and an MBA degree from
Tel Aviv University. Mr. Akselrod is also a director of Gadish Global Ltd., Gadish
Investments in Provident Funds Ltd., Gadish Global Financial Services (2007) Ltd., Geva
Dor Investments Ltd., Shalag Industries Ltd. and Psagot Investment House Ltd.
- 5 -
Anita
Leviant
has served as a director of Ellomay since March 2008. Ms. Leviant heads LA
Global Consulting, a practice specializing in consulting and leading global and financial
projects and cross border transactions. For a period of twenty years, until 2005, Ms.
Leviant held several senior positions with Hapoalim Banking group including EVP Deputy
Head of Hapoalim Europe and Global Private Banking and EVP General Global Counsel of the
group, and served as a director in the overseas subsidiaries of Bank Hapoalim. Prior to
that, Ms. Leviant was an associate in GAFNI & CO. Law Offices in Tel Aviv where she
specialized in Liquidation, Receivership and Commercial Law and was also a Research
Assistant to the Law School Dean in the Tel Aviv University specialized in Private
International Law. Ms. Leviant holds a LL.B degree from Tel Aviv University Law School and
is a member of both the Israeli and the New York State Bars. Ms. Leviant currently serves
as Deputy Chairman of the Israel-British Chamber of Commerce, chairman of the Capital
Markets Committee and as a member of the advisory board of Private Courts to Israel Ltd.
Information
about our external directors:
Lauri
A. Hanover
has served as an external director of Ellomay since November 2003. Ms.
Hanover serves as Chief Executive Officer of Gross, Kleinhendler, Hodak, Halevy and
Greenberg & Co. since January 2008. Prior to that, she served as senior vice president
and chief financial officer of Lumenis Ltd. from 2004 through 2007 and as the corporate
vice president and chief financial officer of NICE Systems Ltd. from 2000 to 2004. She
previously served as executive vice president and chief financial officer of Sapiens
International Corporation N.V., from 1997 to 2000. From 1984 to 1997, Ms. Hanover served
in a variety of financial management positions, including corporate controller, at Scitex
Corporation Ltd. and from 1981 to 1984 as financial analyst at Philip Morris Inc.
(Altria). Ms. Hanover holds a Bachelor’s degree in finance from the Wharton School of
Business and a Bachelor-of-Arts degree from the College of Arts and Sciences, both of the
University of Pennsylvania. Ms. Hanover also holds a Master’s degree in business
administration from New York University. Ms. Hanover qualifies as an external director
according to the Companies Law.
Alon
Lumbroso
has served as an external director of Ellomay since November 2006. Mr.
Lumbroso serves as the Chief Executive Officer of Larotec Ltd. since the end of 2005. Mr.
Lumbroso previously served as Chief Executive Officer of Mindguard Ltd., from 2003 to
2004. From 2000 to 2003, Mr. Lumbroso served as the managing director of the European
subsidiary of Creo, Inc. Prior to that, Mr. Lumbroso served in a various executive
positions, including VP Operations, VP Marketing and managing director of the Asian
Pacific subsidiary of Scitex Corporation. In his positions with Scitex Corporation and
Creo, Mr. Lumbroso was responsible for sales, marketing and service of prepress and
digital printing equipment, including wide format digital printers. Mr. Lumbroso serves as
the Chairman of Bioexplorers Ltd. and as a director of Larotec Ltd. Mr. Lumbroso holds an
MBA from Bar Ilan University and a B.Sc. in Industrial Engineering from Tel-Aviv
University. Mr. Lumbroso qualifies as an external director according to the Companies Law.
- 6 -
Salaries,
fees, commissions and bonuses paid with respect to all of our directors and senior
management as a group (including the members of our senior management who left during
2008) in the fiscal year ended December 31, 2007 was $2.8 million, out of which an amount
of $0.2 million was related to pension, retirement and other similar benefits.
Required Vote
The
approval of this proposal requires the affirmative vote of a majority of the ordinary
shares of the Company voted in person or by proxy at the Shareholders Meeting.
Proposal
At
the Shareholders Meeting, our Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to elect each of Shlomo Nehama, Ran Fridrich, Hemi Raphael, Oded Akselrod and Anita
Leviant, as directors of the Company to hold office until the next annual meeting of the
Company’s shareholders and until their respective successors are duly elected and
qualified.”
Shareholders
may specify the names of the directors for which they wish to withhold their vote on the
attached proxy card. Upon the receipt of a properly signed and dated proxy and unless
otherwise instructed in the proxy, either of the persons named in the enclosed proxy will
vote the shares represented thereby
“FOR
” the above-mentioned proposal.
- 7 -
ITEM 2
REAPPOINTMENT OF
INDEPENDENT AUDITORS
Background
Shareholders
will be asked to reappoint Kost Forer Gabbay & Kasierer, a member of Ernst & Young
Global, as our independent auditors for the year ending December 31, 2008 and to authorize
the Board of Directors, following the approval of the Audit Committee, to approve their
fees in accordance with the volume and nature of their services. Kost Forer Gabbay &
Kasierer have been our independent auditors since 1995.
The
following table sets forth the fees paid by us and our subsidiaries to Ernst & Young
during 2006 and 2007:
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(in thousands of U.S. dollars)
|
|
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2006
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
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Audit Fees
(1)
|
|
|
$
|
263
|
|
$
|
242
|
|
|
Audit-Related Fees
|
|
|
|
-
|
|
|
-
|
|
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Tax Fees
(2)
|
|
|
$
|
74
|
|
$
|
157
|
|
|
All Other Fees
|
|
|
|
-
|
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-
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|
|
|
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Total
|
|
|
$
|
337
|
|
$
|
399
|
|
|
|
|
|
|
|
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(1)
|
Professional
services rendered by our independent registered public accounting firm for the audit of
our annual financial statements or services that are normally provided by the accountants
in connection with statutory and regulatory filings or engagements.
|
|
(2)
|
Professional
services rendered by our independent registered public accounting firm for
international and local tax compliance and tax advice services, including
approved enterprise issues and expatriate individual tax calculations.
|
Required Vote
The
approval of this proposal requires the affirmative vote of a majority of the ordinary
shares of the Company voted in person or by proxy at the Shareholders Meeting.
Proposal
At
the Shareholders Meeting, our Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to reappoint Kost Forer Gabbay & Kasierer (a member of Ernst & Young Global) as
the independent auditors of the Company for the fiscal year ended December 31, 2008, and
until the next annual meeting of shareholders, and that the Board of Directors, following
the approval of the Audit Committee, be, and it hereby is, authorized to approve the
payment of fees of said independent auditors, considering the volume and nature of their
services.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, either of the persons named in the enclosed proxy will vote the shares represented
thereby
“FOR”
the above-mentioned proposal.
- 8 -
ITEM 3
APPROVAL OF A
ONE-FOR-TEN REVERSE SHARE SPLIT AND CORRESPONDING
AMENDMENTS TO THE COMPANY’S
MEMORANDUM AND ARTICLES OF ASSOCIATION
Background
Our
ordinary shares were traded on the NASDAQ National Market between October 1995 and July
2003. Due to our failure to meet the minimum price per share requirement, in July 2003 we
transferred our ordinary shares to the NASDAQ Capital Market, where they were traded until
May 2005. As a result of our failure to comply with the minimum stockholders’ equity
requirement for continued listing, our ordinary shares were delisted from the NASDAQ
Capital Market on May 19, 2005 and are currently quoted in the over-the-counter market in
the “Pink Sheets” under the symbol “EMYCF.PK.”
Following
the consummation of the sale of our wide-format printing business to Hewlett-Packard
Company (the “
HP Transaction
”), as of the date hereof we meet the minimum
NASDAQ Global Market stockholders’ equity initial listing requirement. However, we
cannot at this time list our shares on the NASDAQ Global Market due to various reasons,
among which are our lack of operations and the fact that our ordinary shares have traded
at prices ranging between $0.47 and $0.75 in the period January 1, 2008 – October 30,
2008 and therefore we do not currently meet the minimum NASDAQ Global Market bid price
initial listing requirement.
Our
Board of Directors believes that a one-for-ten reverse share split, whereby ten of our
ordinary shares, NIS 1.00 nominal value each (the “
Old Ordinary Shares
”)
will be replaced by one ordinary share, NIS 10.00 nominal value (the “
New Ordinary
Share
”), is the only effective way to increase our share price to over $5.00 in
order to comply with the minimum bid price initial listing requirements of the NASDAQ
Global Market. Our intention at this time is to implement the reverse share split prior to
the closing of a business combination and to attempt to list our shares on the NASDAQ
Global Market in conjunction with the closing of such business combination. Therefore, our
Board of Directors will be authorized to determine the timing of the reverse share split
and also to determine not to implement the reverse share split, all based on our Board of
Directors’ judgment of our best interests.
We
cannot predict if and when our ordinary shares will begin trading on the NASDAQ Global
Market or any other NASDAQ market and cannot assure you that following the reverse share
split the market price per each of our ordinary shares will either exceed or remain in
excess of the $5.00 per share minimum bid price as required to meet the initial listing
requirements for the NASDAQ Global Market. In addition, we cannot predict whether, or
assure you that, we will otherwise meet the initial listing requirements and thereafter
the continued listing requirements of the NASDAQ Global Market.
- 9 -
Risks
Associated with the Reverse Share Split
While
our Board of Directors believes that the potential advantages of the reverse share split
outweigh the risks associated with such reverse split, if we do effect a reverse share
split we cannot assure you:
|
|
—
|
That
the market price per New Ordinary Share will rise in accordance with the reverse split
ratio (i.e. will be equal to ten times the market price per Old Ordinary Share);
|
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—
|
That
the reverse share split will result in a per New Ordinary Share price that will attract
brokers or investors who do not trade in lower-priced stocks;
|
|
|
—
|
That
the liquidity of our ordinary shares will not be adversely impacted by the reduced number
of outstanding New Ordinary Shares following the reverse share split;
|
|
|
—
|
That
implementing the reverse share split will not be perceived in a negative manner by
investors, analysts or other stock market participants; and
|
|
|
—
|
That
the reverse share split will not result in some shareholders owning “odd-lots” of
less than 100 of our New Ordinary Shares, potentially resulting in higher brokerage
commissions and other transaction costs than the commissions and costs of transactions in
“round-lots” of even multiples of 100 shares.
|
The
market price of our New Ordinary Shares will also be primarily determined by our financial
performance and future investments and other factors beyond our control, such as the
performance of the Israeli economy and of the global economy, all of which are unrelated
to the number of shares outstanding.
Principal
Effects of the Reverse Share Split
The
reverse share split will reduce the number of our authorized shares from 170,000,000 to
17,000,000, reduce the number of issued and outstanding shares from 73,786,428 to
approximately 7,378,650 (the exact number will be determined based on the results of
rounding of fractional shares) and the nominal value of each of our ordinary shares will
be increased from NIS 1.00 to NIS 10.00. In addition, all outstanding options and warrants
entitling the holders thereof to purchase our ordinary shares will enable such holders to
purchase, upon exercise of their options or warrants, one-tenth
(
1
/
10
) of the number of ordinary shares that such holders would
have been able to purchase upon exercise of their options or warrants immediately
preceding the reverse share split at an exercise price equal to ten (10) times the
exercise price specified before the reverse share split, resulting in approximately the
same aggregate price being required to be paid upon exercise thereof as would have been
required to be paid upon exercise thereof immediately preceding the reverse share split;
and the number of shares reserved for issuance(including shares underlying outstanding
options) under our 1998 Share Option Plan for Non-Employee Directors and 2000 Stock Option
Plan will be reduced to one-tenth (
1
/
10
) of the number of shares
currently reserved for issuance under such plans from 665,833 shares to 66,583 shares and
from 7,272,028 shares to 727,203 shares, respectively.
- 10 -
The
reverse share split will be effected simultaneously for all of our Old Ordinary Shares,
and the exchange ratio of one New Ordinary Share for ten Old Ordinary Shares will be the
same for all of our ordinary shares. The reverse share split will affect all of our
shareholders uniformly and will not affect any of our shareholders’ percentage
ownership interests, except to the extent that the reverse share split results in any of
our shareholders owning a fractional share (see “Fractional Shares” below). New
Ordinary Shares issued pursuant to the reverse share split will remain fully paid and
non-assessable.
Fractional
Shares
In
order to avoid the expense and inconvenience of issuing fractional shares, no fractional
shares will be issued as a result of the reverse share split. Instead, all fractional
shares which are one-half share or more will be increased to the next higher whole number
of shares and all fractional shares which are less than one-half share will be decreased
to the next lower whole number of shares.
Certain
U.S. Federal Income Tax Consequences
The
following is a summary of certain U.S. federal income tax consequences arising from the
reverse share split. This summary is based upon current law, including the United States
Internal Revenue Code of 1986, as amended (the “
Code
”), Treasury
Regulations promulgated thereunder, administrative pronouncements and judicial decisions
relating thereto, all of which are subject to change or differing interpretations,
possibly on a retroactive basis. This summary is limited to U.S. federal income tax law,
and does not consider estate or gift tax consequences, the alternative minimum tax, U.S.
state or local tax consequences, or taxation under the laws of any other jurisdiction.
This summary is further limited to holders that hold our Old Ordinary Shares as capital
assets within the meaning of Section 1221 of the Code, and does not address all aspects of
U.S. federal income taxation that may be relevant to holders in light of their particular
circumstances (e.g., persons who acquired our Old Ordinary Shares as compensation or
persons who hold our Old Ordinary Shares as part of a straddle, “hedge” or
“conversion transaction” with other investments) or to certain types of holders
subject to special treatment under the U.S. federal income tax laws, such as dealers in
securities or currencies, tax-exempt plans and organizations, real estate investment
trusts, regulated investment companies, life insurance companies, banks or other financial
institutions, grantor trusts, certain former citizens or long-term residents of the United
States, persons that have a functional currency other than the U.S. dollar and persons
that own directly or by attribution at least 10% of our voting power. Accordingly,
shareholders are urged to consult with their own tax advisors to determine the tax
consequences applicable to their individual situations. The U.S. federal income tax
treatment of a partner in a partnership (or other entity classified as a partnership for
U.S. federal income tax purposes) that holds our Old Ordinary Shares generally will depend
on such partner’s particular circumstances and on the activities of the partnership.
Partners in such partnerships should consult their own tax advisors.
Generally,
the reverse share split will not result in the recognition of gain or loss for U.S.
federal income tax purposes. The total adjusted tax basis of the aggregate number of New
Ordinary Shares will be the same as the total adjusted basis of the aggregate number of
Old Ordinary Shares held by a shareholder immediately prior to the reverse share split and
the holding period of the New Ordinary Shares after the reverse share split will include
the holding period of the Old Ordinary Shares held prior to the reverse share split. No
gain or loss will be recognized by us as a result of the reverse share split.
- 11 -
The
tax advice contained herein was not intended or written to be used, and it cannot be used,
for the purpose of avoiding U.S. federal tax penalties that may be imposed on you.
Further, the tax advice in this document was written to support the promotion or marketing
of the transaction or matter discussed herein. You and any other person reading the tax
advice in this document should seek advice based on your, his or her particular
circumstances from an independent tax advisor.
Certain
Israeli Tax Consequences
The
following discussion summarizing certain Israeli income tax consequences is based on the
Israeli Income Tax Ordinance [New Version], 1961, as amended, and the policy of the
Israeli Tax Authority as currently in place, and is for general information only.
Shareholders are urged to consult their own tax advisors to determine the particular
consequences to them.
Generally,
a reverse share split will be viewed for Israeli tax purposes as a sale of the Old
Ordinary Shares held by each shareholder, with the consideration being the New Ordinary
Shares received as a result of the reverse share split. Therefore, the reverse share split
will generally be viewed as a tax event for Israeli tax purposes and will result in the
recognition of gain or loss for Israeli income tax purposes, unless an applicable
exemption is provided in Israeli tax law or under an applicable treaty for the prevention
of double taxation which exists between the State of Israel and the country of residence
of the shareholder. However, we approached the Israeli Tax Authority in order to obtain an
advanced tax ruling, prior to the implementation of the reverse share split, which will
provide that the reverse share split will not be viewed as a “tax event” for
Israeli tax purposes for us and for our shareholders. We cannot assure you that we will be
able to obtain this ruling and, in the event such ruling is obtained, whether or not it
will be subject to certain conditions and limitations. We expect that our Board of
Directors will take the fact that a ruling was not obtained or that conditions and
limitations are included in a ruling that was obtained into consideration when resolving
when, and if, to implement the reverse share split.
Exchange
of Share Certificates
If
our shareholders approve the reverse share split, then following a decision of our Board
of Directors to effect the reverse share split, we will file an amendment to Section 4 of
our Memorandum of Association and Article 4 of our Articles of Association with the
Israeli Registrar of Companies, so that they comply with the reverse share split being
effected. Such amendment shall state the time that the reverse share split will become
effective (the
“Effective Date
”). Beginning at the Effective Date, each
certificate representing Old Ordinary Shares will be deemed for all corporate purposes to
evidence ownership of the New Ordinary Shares (at a quantity equal to one-tenth of the
number stated on the certificate representing Old Ordinary Shares).
- 12 -
As
soon as practicable after the Effective Date, our shareholders will be notified that the
reverse share split has been effected. We expect that our transfer agent, Continental
Stock Transfer & Trust Company, will act as exchange agent for purposes of
implementing the exchange of stock certificates. Holders of Old Ordinary Shares will be
asked to surrender to the exchange agent certificates representing Old Ordinary Shares in
exchange for certificates representing New Ordinary Shares in accordance with the
procedures to be set forth in the letter of transmittal that will be delivered to our
shareholders. No new certificates will be issued to a shareholder until such shareholder
has surrendered such shareholder’s outstanding certificate(s), together with the
properly completed and executed letter of transmittal, to the exchange agent. Any Old
Ordinary Shares submitted for transfer, whether pursuant to a sale, other disposition or
otherwise, will, subject to the fulfillment of regulatory conditions and our requirements,
automatically be exchanged for New Ordinary Shares, pursuant to the reverse share split
ratio. Each certificate representing New Ordinary Shares issued in connection with the
reverse share split will continue to bear any legends that were borne by the surrendered
certificates representing the Old Ordinary Shares. SHAREHOLDERS SHOULD NOT DESTROY ANY
STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
Required Vote
Pursuant
to Section 24(1) of the Companies Law, the approval of this proposal requires the
affirmative vote of 75% of the ordinary shares of the Company voted in person or by proxy
at the Shareholders Meeting (due to the fact that it requires the amendment of our
Memorandum).
Proposal
At
the Shareholders Meeting, the Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to effect a reverse share split of the Company’s Ordinary Shares (on the effective
date to be determined by the Board) where each ten Ordinary Shares NIS 1.00 nominal value
per share will be consolidated into one single Ordinary Share of NIS 10.00 nominal value,
such that the registered share capital of the Company will be divided into 17,000,000
Ordinary Shares NIS 10.00 nominal value each, ranking pari passu in all respects, as
recommended by the Board of Directors. All fractional shares which are one-half share or
more will be increased to the next higher whole number of shares and all fractional shares
which are less than one-half share will be decreased to the next lower whole number of
shares. Concurrently with the reverse share split, it is hereby resolved to amend Article
4 of the Company’s Articles of Association and Section 4 of the Company’s
Memorandum of Association accordingly, to comply with the reverse share split effected. To
authorize the Company’s Board of Directors to determine the timing of the reverse
share split and also to determine not to implement the reverse share split, all based on
the Company’s Board of Directors’ judgment of the Company’s best
interests.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, either of the persons named in the enclosed proxy will vote the shares represented
thereby
“FOR”
the above-mentioned proposal.
- 13 -
ITEM 4
APPROVAL OF PAYMENT OF
DIRECTORS’ FEES TO THE COMPANY’S DIRECTORS
Background
As
previously approved by our shareholders, we currently pay Oded Akselrod and our external
directors, Lauri A. Hanover and Alon Lumbroso, an annual payment of $8,000 and additional
payments of $500 per meeting and $250 per committee meeting (together, the
“Directors’ Fees
”). As approved by our shareholders, these directors
and any of our current and future non-executive directors are also entitled to receive an
annual grant of options to purchase 10,000 ordinary shares under the terms and conditions
set forth in our 1998 Non-Employee Director Share Option Plan (the
“
Directors’ Options
”).
Pursuant
to the Companies Law, the terms of compensation of members of our Board of Directors
require the approval of our Audit Committee, Board of Directors and shareholders. Our
Audit Committee and our Board of Directors approved, and recommend that our shareholders
approve, the payment of Directors’ Fees to Anita Leviant and to any future directors,
commencing upon the date of their respective appointment. This proposal does not apply to
Shlomo Nehama, Ran Fridrich and Hemi Raphael, all of whom are members of our Board and
director nominees, who will be compensated pursuant to the Management Services Agreement
discussed in Item 6 below and who have, in connection with such Management Services
Agreement, waived their right to receive the Directors’ Fees and the Directors’
Options.
Required Vote
The
approval of this proposal requires the affirmative vote of a majority of the ordinary
shares of the Company voted in person or by proxy at the Shareholders Meeting.
Proposal
At
the Shareholders Meeting, the Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to approve the payment of an annual amount of $8,000 and additional payments of $500 per
meeting and $250 per committee meeting to Anita Leviant and to any future directors of the
Company, as applicable, commencing upon the date of their respective appointment.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, either of the persons named in the enclosed proxy will vote the shares represented
thereby
“FOR”
the above-mentioned proposal.
- 14 -
ITEM 5
APPROVAL OF
INDEMNIFICATION, EXEMPTION AND LIABILITY INSURANCE
TO SHLOMO NEHAMA AND RAN FRIDRICH
Background
Pursuant
to the Companies Law, the provision of indemnification, exemption and liability insurance
to members of our Board of Directors requires the approval of our Audit Committee, Board
of Directors and our shareholders. At our shareholders meeting held on October 27, 2005,
our shareholders approved, among other things, the procurement and maintenance of
directors and officers liability insurance covering our directors serving from time to
time, the entering into indemnification agreements, a form of which was attached as
Exhibit E to the proxy statement filed with the SEC on October 14, 2005 (the
“
October 2005 Proxy Statement
”), with our then current and future
directors and the granting of exemption letters, a form of which was attached as Exhibit F
to the October 2005 Proxy Statement, to our then existing and future directors. However,
as certain of the members of our Board of Directors may be deemed to be “controlling
shareholders,” the provision to them of indemnification, exemption and liability
insurance is brought before our shareholders again.
Our
Audit Committee and Board of Directors approved, and recommend that our shareholders
approve, the entering into indemnification agreements with, the provision of exemptions to
and the inclusion in our current and future directors and officers liability insurance
policy of, Messrs. Shlomo Nehama and Ran Fridrich, all in accordance with the previously
approved and existing arrangements with the current members of our Board of Directors.
Messrs. Nehama and Fridrich were appointed as members of our Board of Directors in March
2008 and are director nominees, and the foregoing resolution, if approved, will provide
them with the indemnification, exemption and liability insurance, all effective as of the
date of their initial appointment.
Required Vote
Mr.
Shlomo Nehama, our Chairman of the Board and a director nominee, and Mr. Ran
Fridrich, a member of our Board of Directors and a director nominee, are each
deemed to be our “controlling shareholders” for purposes of Section
268 of the Companies Law due to holdings of Nechama Investments and Kanir as
set forth above, their respective positions with such entities and the 2008
Shareholders Agreement. Therefore, pursuant to Sections 270(4) and 275 of the
Companies Law, the approval of this proposal at the Shareholders Meeting with
respect to Messrs. Nehama and Fridrich requires the approval of our Audit
Committee, Board of Directors and the affirmative vote of a majority of our
ordinary shares voted in person or by proxy at the Shareholders Meeting, which
is also required to satisfy at least one of the following conditions: (i) the
shares voting in favor of the matter include at least one-third of the shares
voted by shareholders who do not have a personal interest in the matter or (ii)
the total number of shares voted against the matter does not exceed 1% of the
Company’s outstanding voting rights.
Pursuant
to Section 276 of the Companies Law, all shareholders are asked to indicate on the
enclosed proxy card whether or not they have a personal interest in the approval of this
proposal. Under the Companies Law, a “personal interest” of a shareholder (i)
includes a personal interest of any member of the shareholder’s immediate family (or
spouses thereof) or a personal interest of a company with respect to which the shareholder
(or such a family member thereof) serves as a director or the chief executive officer,
owns at least 5% of the shares or has the right to appoint a director or the chief
executive officer and (ii) excludes an interest arising solely from the ownership of
shares in our Company. Mr. Nehama, Nechama Investments and Kanir all have a “personal
interest” in the approval of this proposal with respect to Messrs. Nehama and
Fridrich.
- 15 -
In
connection with the procurement of directors’ liability insurance to Messrs. Shlomo
Nehama and Ran Fridrich, we intend to utilize an exemption that is available under the
Relief Regulations. Regulation 1B(5) of the Relief Regulations provides that in the event
the Audit Committee and Board of Directors determine that: (i) the insurance provided to
the controlling shareholder is upon terms identical to those provided to our other
officers and directors, (ii) is on market conditions and (iii) is not likely to materially
effect our profitability, assets or liabilities, shareholders approval will not be
required. In connection with the provision of liability insurance discussed herein, our
Audit Committee and Board of Directors approved and confirmed the conditions set forth in
the Relief Regulations. Nevertheless, pursuant to Regulation 1C(a) of the Relief
Regulations, one or more of our shareholders holding at least 1% of our issued share
capital or voting rights have the right to oppose, in writing, such determination of the
Audit Committee and Board of Directors. ANY OPPOSITION MUST BE RECEIVED BY US NO LATER
THAN 14 DAYS FOLLOWING THE PUBLICATION OF THIS PROXY STATEMENT. In the event of such
opposition, then the procurement of directors’ liability insurance for Messrs. Shlomo
Nehama and Ran Fridrich will require shareholders’ approval, by the special majority
detailed above. Accordingly, the approval of the procurement of directors’ liability
insurance for Messrs. Shlomo Nehama and Ran Fridrich will only be presented for
shareholder approval at the Shareholders Meeting if so required by one or more
shareholders as explained above. If shareholder approval is not required under the Relief
Regulations, then any votes and abstentions submitted on a proxy for Proposal 5 will only
be taken into account with respect to such portion of this proposal that is not subject to
the exemptions available under the Relief Regulations.
Proposal
At
the Shareholders Meeting, the Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to approve the Company’s entry into indemnification agreements with, the provision of
exemptions to and the inclusion in our current and future directors and officers liability
insurance policy of, Messrs. Shlomo Nehama and Ran Fridrich, all in accordance with the
previously approved and existing arrangements with the current members of our Board of
Directors, as amended from time to time, effective as of the date of their initial
appointment to serve on the Company’s Board of Directors.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, either of the persons named in the enclosed proxy will vote the shares represented
thereby
“FOR”
the above-mentioned proposal.
- 16 -
ITEM 6
APPROVAL OF MANAGEMENT SERVICES AGREEMENT AMONG THE
COMPANY, MEISAF BLUE & WHITE HOLDINGS LTD. AND KANIR JOINT
INVESTMENTS (2005) LIMITED PARTNERSHIP
Background
Following
the sale of all of our ordinary shares and a majority of the warrants to purchase our
ordinary shares held by the Fortissimo Entities and the resignation of the Fortissimo
representatives from our Board of Directors in March 2008, the Management Services
Agreement between Fortissimo Capital Fund GP, LP and us (the
“Fortissimo
Management Agreement
”) was terminated.
It
is now proposed that we enter into a Management Services Agreement, substantially in the
form attached hereto as
Exhibit A
(the “
Management Services
Agreement
”), with Meisaf Blue & White Holdings Ltd.
(“
Meisaf
”), an Israeli company wholly-owned by Mr. Shlomo Nehama, our
Chairman of the Board and a controlling shareholder and with Kanir, another controlling
shareholder who currently has two representatives on our Board of Directors, Messrs. Hemi
Raphael and Ran Fridrich.
Following
the consummation of the HP Transaction, our efforts are concentrated on identifying and
evaluating suitable business opportunities and strategic alternatives, including through
the acquisition of all or part of an existing business, pursuing business combinations or
otherwise. These efforts have been, and are expected to continue to be, conducted and
overseen by Messrs. Nehama, Fridrich and Raphael. In connection with such efforts and
services and the Board services provided to us by Messrs. Nehama, Raphael and Fridrich,
our Audit Committee and Board of Directors approved, and recommend that our shareholders
approve, the entering into the Management Services Agreement, effective as March 31, 2008,
the day following the termination date of the Fortissimo Management Agreement.
The
following is a brief summary of the key terms of the Management Services Agreement:
Meisaf
and Kanir, through their employees, officers and directors, will assist us in connection
with the process of identifying and evaluating opportunities to acquire operations,
otherwise provide us with management services and advise and provide assistance to our
management concerning our affairs and business. It is further agreed that the management
services will be provided primarily by Messrs. Nehama, Fridrich and Raphael.
In
addition, the Management Services Agreement notes that Kanir’s and Meisaf’s
representatives on our Board of Directors, Messrs. Nehama, Fridrich and Raphael, or other
affiliates of such entities, serve and will continue to serve on our Board of Directors.
In providing the Board services, the directors and the Chairman of the Board will be
subject to any and all fiduciary and other duties applicable to them under law and under
our Articles of Association and they are required to dedicate as much time as reasonably
necessary for the proper performance of such services.
- 17 -
In
consideration of the performance of the management services and the Board services, we
have agreed to pay to Meisaf and Kanir, in equal parts, an aggregate annual fee in the
amount of $250,000, to be paid on a quarterly basis. Meisaf and Kanir will also be
entitled to receive reimbursement for reasonable out-of-pocket business expenses borne by
them in connection with the provision of the services, as customary in the Company. In
connection with the Management Services Agreement, the Board representatives of Kanir and
Mr. Nehama waived any director fees and options to purchase our ordinary shares they may
be entitled to as a result of their service on our Board of Directors.
The
Management Services Agreement will remain in effect until the earlier of: (i) the second
anniversary of the effective date of the Agreement or (ii) the termination of service of
either of the Kanir and Nechama Investments affiliates on our Board of Directors. Any
revision or amendment of the Management Services Agreement, or extension of its term, will
require the approvals set forth under applicable law and our Articles of Association.
Required Vote
Mr.
Shlomo Nehama, our Chairman of the Board and a director nominee, Kanir, one of
our shareholders, and Messrs. Fridrich and Raphael, who are members of our
Board of Directors and director nominees, are each deemed to be our “controlling
shareholders” for purposes of Section 268 of the Companies Law due to
holdings of Nechama Investments and Kanir as set forth above, their respective
positions with such entities and the 2008 Shareholders Agreement. The
Management Services Agreement may be deemed to be an “extraordinary
transaction” in which such “controlling shareholders” have a
“personal interest”, whether due to the fact that they are parties to
the Management Services Agreement in the case of Kanir or due to the fact that
they control a party to the Management Services Agreement in the case of Mr.
Nehama. Therefore, pursuant to Sections 270(4) and 275 of the Companies Law,
the approval of this proposal requires the approval of our Audit Committee,
Board of Directors and the affirmative vote of a majority of our ordinary
shares voted in person or by proxy at the Shareholders Meeting, which is also
required to satisfy at least one of the following conditions: (i) the shares
voting in favor of the matter include at least one-third of the shares voted by
shareholders who do not have a personal interest in the matter or (ii) the
total number of shares voted against the matter does not exceed 1% of our
outstanding voting rights.
Pursuant
to Section 276 of the Companies Law, all shareholders are asked to indicate on the
enclosed proxy card whether or not they have a personal interest in the approval of this
proposal. Under the Companies Law, a “personal interest” of a shareholder (i)
includes a personal interest of any member of the shareholder’s immediate family (or
spouses thereof) or a personal interest of a company with respect to which the shareholder
(or such a family member thereof) serves as a director or the chief executive officer,
owns at least 5% of the shares or has the right to appoint a director or the chief
executive officer and (ii) excludes an interest arising solely from the ownership of
shares in our Company. Mr. Nehama, Nechama Investments and Kanir all have a “personal
interest” in the approval of this proposal.
- 18 -
Proposal
At
the Shareholders Meeting, the Board of Directors will propose that the following
resolution be adopted:
“RESOLVED,
to approve the Management Services Agreement between the Company, Meisaf and Kanir,
substantially in the form attached to the Proxy Statement as
Exhibit
A
.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, either of the persons named in the enclosed proxy will vote the shares represented
thereby
“FOR”
the above-mentioned proposal.
- 19 -
ITEM 7
CONSIDERATION OF THE
ANNUAL FINANCIAL STATEMENTS
Background
As
required by the Companies Law, our independent auditors’ report and audited
consolidated financial statements for the fiscal year ended December 31, 2007, will be
presented for discussion at the Shareholders Meeting.
Our
audited financial statements for the year ended December 31, 2007 are included in our 2007
Annual Report on Form 20-F, which was filed with the SEC on June 30, 2008. The 2007 Annual
Report is also available on our website at
http://www.ellomay.com
. You may also
read and copy this report at the SEC’s public reference room at 100 F Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. Our reports to the SEC are also available to the public at the
SEC’s website at
http://www.sec.gov
.
This item will not
involve a vote of the shareholders.
- 20 -
ITEM 8
(Shareholders’
Proposal)
APPROVAL OF THE
AMENDMENT AND RESTATEMENT OF THE COMPANY’S
ARTICLES OF ASSOCIATION
Background
Section
66(b) of the Companies Law entitles one or more of our shareholders, holding at least one
percent (1%) of our outstanding voting rights, to request that our Board of Directors
include a matter on the agenda of a future shareholders’ meeting, provided that such
proposal is appropriate to be discussed in such meeting.
We
received a request pursuant to the aforementioned Section 66(b) from Nechama Investments
and Kanir to include the amendment and restatement of our Articles of Association on the
agenda of the Shareholders Meeting. Pursuant to the Companies Law, the amendment of our
Articles of Association requires the approval of our shareholders. Therefore, in
compliance with the Companies Law, at the Shareholders Meeting, our shareholders will be
presented with a proposal to adopt the Second Amended and Restated Articles of Association
attached hereto as
Exhibit B
and to adopt the resolution set forth
below. The attached Second Amended and Restated Articles of Association are marked to show
the changes proposed compared to our current Articles of Association
The
proposed amendments to our Articles of Association include, among others, the following:
|
|
—
|
Changing
the quorum required for shareholders meetings from two or more shareholders holding more
than 33
1
/
3
% of the voting rights of the Company to two or more shareholders holding more
than 25% of the voting rights of the Company in general meetings, and from one or more
shareholders holding more than 33
1
/
3
% of the voting rights of the Company to two or more
shareholders of the Company in adjourned general meetings;
|
|
|
—
|
Including amendments and updates to the provisions concerning notices of general meetings
(including, but not limited to, reducing the minimal notice period from twenty one (21)
days to fourteen (14) days and providing that a notice published in one international wire
services shall be deemed to have been duly given on the date of such publication);
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|
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—
|
Providing
that, for so long as the 2008 Shareholders Agreement is in effect, at the written request
of any two directors with respect to certain proposed actions or transactions of the
Company (including certain related party transactions, amendments to our Memorandum or
Articles of Association, any merger or consolidation of the Company, material change in
the scope of our business, the voluntary liquidation or dissolution of the Company,
approval of annual budget or business plan and material deviations therefrom and any
change in signatory rights on behalf of the Company), such action or transaction shall
require the approval of the general meeting by a resolution supported by members vested
with at least 50.1% of the outstanding shares of the Company, or by such higher approval
threshold as may be required by applicable law;
|
- 21 -
|
|
—
|
Reducing
the maximum number of members of our Board of Directors from twelve (12) to eight (8);
|
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|
—
|
Including
an exception to the determination that the Chairman of the Board shall have no casting
vote by providing that this will be the case unless Mr. Shlomo Nehama holds such position
and Nechama Investments, together with its Affiliates (as defined in the proposed
Articles), holds at least 25.05% of our outstanding shares, and further providing that in
the event the Chairman of the Board elects to exercise his casting vote then: (a) prior
to such exercise, Nechama Investments shall be required to trigger the “Buy Me Buy
You” mechanism in the 2008 Shareholders Agreement and the relevant Board resolution
will remain pending until the consummation of the sale of the shares in accordance with
such mechanism and (b) in the event that three directors so require, the relevant Board
resolution shall be conditioned upon the approval of the Company’s general meeting.
The amendments also provide that upon the transfer of Restricted Shares (as defined in
the 2008 Shareholders Agreement) by Kanir to a third party in accordance with the terms
of the 2008 Shareholders Agreement, the casting vote of the Chairman of the Board shall
expire; and
|
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|
—
|
Attaching
the 2008 Shareholders Agreement as Exhibit A to the Articles of Association (as
previously noted, the 2008 Shareholders Agreement was filed with the SEC on an amendment
to Schedule 13D on March 31, 2008).
|
The
foregoing description of some of the proposed amendments is only a summary, and
shareholders are urged to review the full text of the proposed amendments, which is
attached hereto as
Exhibit B
.
We
are obligated by the Companies Law to include this proposal on the agenda of the
Shareholders Meeting. Our Board of Directors does not express an opinion as to the vote in
connection with this proposal.
Required Vote
The
approval of amendments to our Articles of Association generally requires the affirmative
vote of a majority of the ordinary shares of the Company voted in person or by proxy at
the Shareholders Meeting. However, as more fully described above, one of the proposed
amendments entails, upon the occurrence of certain circumstances, a requirement that the
holders of 50.1% of our outstanding shares approve certain corporate actions and
transactions, including a revision of our Articles of Association. Therefore, pursuant to
Section 20(b) of the Companies Law, such portion of the proposed amendments is required to
be approved by the affirmative votes of the holders of 50.1% of the outstanding voting
power of the Company as of the Record Date.
- 22 -
Proposal
At
the Shareholders Meeting, Nechama Investments and Kanir propose that the following
resolution be adopted:
“RESOLVED,
to approve and adopt the Second Amended and Restated Articles of Association of the
Company as set forth on
Exhibit B
of the Proxy Statement.”
Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, the persons named in the enclosed proxy will
“ABSTAIN”
from voting
the shares represented thereby in connection with the above-mentioned proposal.
- 23 -
PROPOSALS OF
SHAREHOLDERS
Any
of our shareholders who intends to present a proposal at a shareholders’ meeting must
satisfy the requirements of the Companies Law. Under the Companies Law, only shareholders
who severally or jointly hold at least one percent (1%) of our outstanding voting rights
are entitled to request that our Board of Directors include a proposal, in a future
shareholders’ meeting, provided that such proposal is appropriate to be discussed in
such meeting.
OTHER BUSINESS
The
Board of Directors is not aware of any other matters that may be presented at the
Shareholders Meeting other than those mentioned in the attached Company’s Notice of
Annual Meeting of Shareholders. If any other matters do properly come before the
Shareholders Meeting, it is intended that Ran Fridrich and Yosef Zylberberg, the persons
named as proxies, or either one of them, will vote the shares in accordance with his
discretionary authority and best judgment.
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|
By Order of the Board of Directors,
/s/ Shlomo Nehama
——————————————
Shlomo Nehama
Chairman of the Board of Directors
|
Herzliya, Israel
November 2008
- 24 -
Exhibit A
MANAGEMENT SERVICES
AGREEMENT
This Management Services Agreement
(this “
Agreement
”) is entered into on___________, 2008, by and among
Ellomay Capital Ltd., a company registered under the laws of the State of Israel (the
“
Company
”), Kanir Joint Investments (2005) Limited Partnership, a limited
partnership registered under the laws of the State of Israel (“
Kanir
”)
and Meisaf Blue & White Holdings Ltd., a company registered under the laws of the
State of Israel (“
Meisaf
” and, together with Kanir, the “
Service
Providers
”).
|
WHEREAS,
|
following the consummation of the sale of the Company’s business to Hewlett-Packard
Company on February 29, 2008 (the “
HP Transaction
”), the Company has
commenced the process of identifying and evaluating suitable business opportunities and
strategic alternatives (the “
New Operations Process
”);
|
|
WHEREAS,
|
on March 2008, following the sale by affiliates of Fortissimo Capital Fund GP, LP (“
Fortissimo
”)
of ordinary shares and warrants exercisable into ordinary shares of the Company to Kanir
and S. Nechama Investments (2008) Ltd. (“
S. Nechama
”), a company under
common control with Meisaf, and the changes to the composition of the Company’s
Board of Directors (the “
Board
”), the Management Services Agreement
between the Company and Fortissimo, dated as of September 26, 2005 was terminated;
|
|
WHEREAS,
|
following the termination of the Fortissimo Management Services Agreement, Kanir and
Meisaf have actively participated in the management of the Company, including in the
aforementioned New Operations Process, and intend to continue to do so; and
|
|
WHEREAS,
|
the Company desires to retain management services and Board services from the Service
Providers pursuant to the terms and conditions set forth in this Agreement, and the
Service Providers agree to provide such services to the Company on such terms and
conditions.
|
NOW, THEREFORE,
in
consideration of the covenants and conditions hereinafter set forth, the parties hereby
agree as follows:
|
|
1.1.1.
|
The
Service Providers, through their employees, officers and directors, will assist
the Company in all aspects of the New Operations Process, including, but not
limited to, any activities to be conducted in connection with the
identification and evaluation of the business opportunities, the negotiations
and the integration and management of any new operations and will conduct
regular meetings and discussions with members of the Company’s management,
to assist and advise them on such matters and on any other matters concerning
the affairs and business of the Company and render such other management
services and advise as may be agreed to from time to time by the Company and
the Service Providers (together, the “
Management Services
”).
|
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1.1.2.
|
In
rendering the Management Services hereunder, the Service Providers shall
cooperate with the Company and utilize professional skill and diligence to
provide the expertise required in connection with such services. The Service
Providers shall dedicate as much time as will be reasonably necessary for the
proper performance of the Management Services.
|
|
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1.1.3.
|
It
is hereby agreed by the parties hereto that the Management Services will be
provided primarily by Messrs. Menahem Raphael and Ran Fridrich, who are sole
shareholders and directors of Kanir Investments Ltd., the general partner in
Kanir and who are members of the Board and by Mr. Shlomo Nehama, the sole
shareholder and director of S. Nechama and Meisaf and who is a member and
serves as Chairman of the Board.
|
|
|
1.2.1.
|
Until
their respective successors are duly elected and qualify, Messrs. Shlomo
Nehama, Ran Fridrich and Menahem Raphael currently serve, and in the future
other affiliate of the Service Providers may serve, as members of the Board of
Directors of the Company (the “
Directors
”) and Mr. Shlomo
Nehama (“
Nehama
”) serves as the Chairman of the Board of
Directors of the Company (the “
Chairman
”). The Directors and
the Chairman will be active members of the Board and will serve in committees
of the Board of which they are appointed (the services rendered by the
Directors and the Chairman pursuant to this Agreement will be referred
hereinafter as the “
Board Services
”).
|
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1.2.2.
|
In
his capacity as Chairman, Nehama shall (a) preside at meetings of the Board and
as chairman of the general meetings of the shareholders of the Company and (b)
carry out all other duties vested with the Chairman under law and/or the Company’s
Amended and Restated Articles of Association, as amended and restated from time
to time (the “
Articles
”).
|
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|
1.2.3.
|
For
the avoidance of doubt, it is clarified that in serving as members of the
Board, the Directors, including the Chairman, shall not be employees of the
Company, nor shall the payment of the Management Fee by the Company create
employee-employer relations between the parties hereto or entitle the Directors
to any social benefits.
|
|
|
1.2.4.
|
In
providing the Board Services, the Directors shall be subject to any and all
fiduciary and other duties applicable under law and under our Articles upon
members of the Board of Directors, and with respect to the Chairman, also
duties applicable upon the person holding position of chairman of the board of
directors. The Directors, including the Chairman, shall dedicate as much time
as will be reasonably necessary for the proper performance of the Board
Services.
|
|
|
1.3.
|
The
parties hereto acknowledge that the Service Providers are active in other
businesses, whether alone or with third parties and that they may continue to
so act during the term of this Agreement; provided, however, that no conflict
of interest arises between such other activities and the provision of the
Management Services and Board Services pursuant to this Agreement. The Service
Providers undertake to immediately notify the Company in writing in the event
an actual or potential conflict of interest arises.
|
2
|
|
2.1.
|
In
consideration of the performance of the Management Services and the Board
Services hereunder, the Company shall pay to the Service Providers an aggregate
annual management services fee in the amount of two hundred fifty thousand
United States dollars (US$250,000) (the “
Management Fee
”), to
be paid in equal quarterly installments of thirty one thousand two hundred
fifty United States dollars (US$31,250) to each of Kanir and Meisaf. Each
quarterly installment shall be paid not later than the seventh (7
th
)
day of each calendar quarter for services rendered during the preceding
calendar quarter.
|
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|
2.2.
|
The
Company will reimburse the Service Providers for reasonable out-of-pocket
business expenses borne by the Service Providers or any of their employees,
directors or officers in connection with the provision of the Management
Services and the Board Services as customary in the Company, against the
submittal of the relevant invoices, receipts and other required documentation
to the Company.
|
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|
2.3.
|
All
payments under this Agreement shall be made against the issuance of valid
invoices furnished by the Service Providers to the Company. Value Added Tax
(“
VAT
”) pursuant to applicable law shall be added to all
payments hereunder.
|
|
|
2.4.
|
Except
for VAT, the Management Fee shall be inclusive of all taxes that may be
incurred by the Company and/or the Service Providers in connection with the
payment thereof, and any such taxes shall be borne by the Service Providers
and, in the event required, withheld by the Company from the Management Fee.
Furthermore, the Management Fee is the full and final compensation for the
provision of the Management Services and the Board Services and shall be in
lieu of any and all payments that are due to the Directors, including the
Chairman, in their capacity as members of the Board or any of its committees to
which they are appointed, including the right to receive the options to
purchase ordinary shares of the Company in accordance with the Company’s
1998 Share Option Plan for Non-Employee Directors.
|
|
|
3.
|
CONFIDENTIAL
INFORMATION
|
|
|
3.1.
|
The
Services Providers agree that any and all Confidential Information (as defined
below), which may be provided by the Company or by third parties in connection
with the Company to the Services Providers or any of their directors, officers,
employees or affiliates under this Agreement is, and shall be, the sole
property of the Company or of such third party, and that the Service Providers
will keep and will ensure that their aforementioned representatives will keep
in confidence all such Confidential Information, and not use, divulge or
disclose any Confidential Information to any third party, except for the
purposes of this Agreement.
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3.2.
|
For
purposes hereof, “
Confidential Information
” means confidential
and proprietary information concerning the business and financial activities of
the Company, including, but not limited to, prospective investments,
negotiations, financial position, operations, budgets, patents, patent
applications, trademarks, copyrights and other intellectual property, and
information relating to the same, technologies and products, know how,
inventions, research and development activities, trade secrets, and also
confidential commercial information such as information relating to customers,
suppliers, marketing plans, etc. and shall also include information of the same
nature with respect to third parties, which the Company may obtain or receive
from third parties or which may be provided to the Service Providers or their
representatives in connection with the Company. “Confidential
Information” shall not include information generally known to the public,
information which was known to the Service Providers prior to the date hereof,
information disclosed to the Service Providers by a third party who is not
bound by any obligation of confidentiality to the Company or to the third party
the subject of such Confidential Information or information required to be
disclosed by a competent court or administrative order or other applicable law;
provided, however, that in the event information is so required to be
disclosed, the Service Providers will immediately inform the Company of the
requirement in order to enable the Company or the respective third party to
seek an appropriate protective order or other remedy, to consult with the
Service Provider with respect to taking steps to resist or narrow the scope of
such request or legal process, or to waive compliance, in whole or in part,
with the terms of this Section.
|
3
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4.
|
TERM
AND TERMINATION
. This Agreement shall be deemed effective as of
March 31, 2008 (the “
Effective Date
”) and shall continue to
remain in effect until the earlier of: (i) the second anniversary of the
Effective Date or (ii) the termination of service of either of the Kanir and S.
Nechama affiliates on the Board of the Company.
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5.
|
INDEPENDENT
CONTRACTOR
. The Service Providers and their representatives,
including, but not limited to, their agents, employees and affiliates are
independent contractors of the Company and are not agents or employees of, and
have no authority to bind the Company by contract or otherwise. Each of the
Service Providers will be solely responsible to any payments it is required to
pay its representatives pursuant to applicable law. The Service Providers will
perform the Management Services under the general direction of the Company.
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6.1.
|
Entire
Agreement
. This Agreement contains the entire agreement of the parties with
relation to the subject matter hereof, and cancels and supersedes all prior and
contemporaneous negotiations, correspondence, understandings and agreements
(oral or written) of the parties relating to such subject matter.
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6.2.
|
Amendment
.
This Agreement may not be modified or amended except by mutual written
agreement of the parties.
|
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6.3.
|
No
Waiver
. No failure, delay of forbearance of either party in exercising any
power or right hereunder shall in any way restrict or diminish such party’s
rights and powers under this Agreement, or operate as a waiver of any breach or
nonperformance by either party of any terms of conditions hereof.
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6.4.
|
Assignment
.
Except as provided herein, this Agreement shall not be assigned by a party
hereof to a third party without the other party’s prior written consent
and any attempt to effect an assignment of this Agreement or any portion
thereof without obtaining such consent shall be null and void.
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6.5.
|
Severability
.
In case any one or more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein
|
4
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|
6.6.
|
Notices
.
Any notice under this Agreement shall be in writing and shall be deemed to have
been duly given for all purposes: (a) seven (7) days after it is mailed by
registered mail; (b) upon the transmittal thereof by telecopier; or (c) upon
the manual delivery thereof, to the following addresses
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|
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Ellomay Capital Ltd.
Ackerstein Towers
11 Hamenofim St.
P.O.Box 2148
Herzliya 46120, Israel
Fax: 09-950-2942
Attn: Chief Executive Officer
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c/o Erdinast, Ben Nathan & Co., Advocates
Museum Tower - 13th floor
4 Berkowitz St.
Tel Aviv 64238, Israel
Fax: 03-777-0101
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Meisaf Blue & White Holdings Ltd.
90 HaChashmonaim St.
Tel Aviv 67133, Israel
Fax: 03-566-4443
Attn: Mr. Shlomo Nehama
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;
or to such other address as the party specifies in writing.
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6.7.
|
Specific
Performance
. The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in equity.
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6.8.
|
Counterparts
.
This Agreement may be executed in multiple counterparts, including, without
limitation, by facsimile signature, which taken together shall constitute a
single document.
|
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|
6.9.
|
Governing
Law
. This Agreement shall be governed and enforced in accordance with the
laws of the State of Israel and any dispute arising out of or in connection
with this Agreement is hereby submitted to the sole and exclusive jurisdiction
of the competent courts in Tel Aviv, Israel.
|
[SIGNATURE PAGE TO
FOLLOW]
5
[SIGNATURE PAGE]
IN WITNESS WHEREOF
, the
parties have signed this Management Services Agreement as of the date first set forth
above.
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ELLOMAY CAPITAL LTD.
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By:
|
_________________
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|
Name:
|
[____________]
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|
Title:
|
Director
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By:
|
_________________
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|
Name:
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|
Title:
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KANIR JOINT INVESTMENTS (2005) LIMITED PARTNERSHIP
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By: Kanir Investments Ltd., its general partner
|
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By:
|
_________________
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Name:
|
Menahem Raphael
|
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Title:
|
Director
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By:
|
_________________
|
|
Name:
|
Ran Fridrich
|
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Title:
|
Director
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MEISAF BLUE & WHITE HOLDINGS LTD.
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By:
|
_________________
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|
Name:
|
Shlomo Nehama
|
|
Title:
|
Director
|
I agree to those terms of this
Agreement applicable to me, as Chairman of the Board:
________________________
Shlomo Nehama
6
Exhibit B
THE COMPANIES LAW
A
COMPANY LIMITED BY SHARES
SECOND
AMENDED AND
RESTATED ARTICLES OF
ELLOMAY CAPITAL LTD.
I PRELIMINARY
|
|
1.1.
|
In these Articles the following terms shall bear the meaning ascribed to them
below:
|
|
|
“Affiliate”
is defined in Article 25.5.1 herein.
|
|
|
“Alternate
Director
” defined in Article 37.1 herein.
|
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|
The
“
Articles
” shall mean the articles of association contained in the
Articles, as originally registered and as they may from time to time be amended.
|
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|
The
“
Board
” shall mean the Company’s Board of Directors.
|
|
|
The
“
Company
”shall mean the above named company.
|
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|
“Control”
is
defined in Article 25.5.1 herein.
|
|
|
“
Determining
Majority
” as defined in Article 6 herein.
|
|
|
“
External
Director
” as defined in the Law.
|
|
|
“
Extraordinary
Meetings
” as defined in Article 21.1 herein.
|
|
|
“
Iska Chariga
” as defined in the Law.
|
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|
The
“
Law
” shall mean the Companies Law, 5759 – 1999, as the same may be
amended from time to time, and all the rules and regulations promulgated thereunder.
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|
The
“
Memorandum
” shall mean the Memorandum of Association of the Company, as
originally registered and as it may from time to time be amended.
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|
“
Obligation
” as
defined in Article 13.1 herein.
|
|
|
“Officer”
is
defined in Article 25.5.1 herein.
|
|
|
The
“
Ordinance
” shall mean the Companies Ordinance [New Version], 5743-1983,
as the same may be amended from time to time.
|
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|
The
“
Register of Members
” shall mean the Company’s Register of Members.
|
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|
“
Registered
Holder
” as defined in Article 10 herein.
|
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|
“
Securities
” as
defined in Article 18 herein.
|
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|
“
Shareholders
Agreement
” shall mean the Shareholders Agreement, dated as of March 24, 2008,
between Kanir Joint Investments (2005) Limited Partnership (“
Kanir
”)
and S. Nechama Investments
(2008) Ltd. (“
Nechama Investments
”), a
copy of which is attached hereto as Exhibit A.
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Terms
and expressions used in the Articles and not defined herein, shall bear the same meaning
as in the Law.
|
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1.2.
|
Sections
2, 3, 4, 5, 6, 7, 8 and 10 of the Interpretation Law, 5741-1981, shall
apply, mutatis mutandis, to the interpretation of the Articles.
|
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1.3.
|
The
captions in the Articles are for convenience only and shall not be deemed a
part hereof or affect the interpretation of any provision hereof.
|
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|
The Name of the Company shall be Ellomay Capital Ltd., and in Hebrew:
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3.1.
|
The
objective of the Company shall be to undertake any lawful activity,
including any objective set forth in the Memorandum (for as long as it is
in effect).
|
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3.2.
|
The
purpose of the Company is to operate in accordance with commercial
considerations with the intention of generating profits. Such
considerations may take into account, amongst others, public interest and
the interests of the Company’s creditors and employees. In addition,
the Company may contribute reasonable amounts for any suitable purpose
even if such contributions do not fall within the business considerations
of the Company. The Board may determine the amounts of the contributions,
the purpose for which the contribution is to be made, and the recipients
of any such contribution.
|
II SHARE CAPITAL
|
|
The
Company’s authorized share capital will be NIS 170,000,000 divided into 170,000,000
ordinary shares of the Company, nominal value NIS 1.00 each.
|
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|
The
liability of the shareholders of the Company for the indebtedness of the Company shall be
limited to payment of the nominal value of such shares.
|
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6.
|
Alteration
of Share Capital
|
|
|
The
Company may, from time to time, by a resolution approved at a General Meeting by such
majority as is required to amend these Articles (as set forth in Article 25 below), or
,
if higher,
such majority as shall be required to amend the Memorandum (for as long as
it is still in force) (collectively, a “
Determining
Majority
”):
|
|
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6.1.
|
Increase
its share capital in an amount it considers expedient by the creation of
new shares. The power to increase the share capital may be exercised by the
Company whether or not all of the shares then authorized have been issued
and whether or not all of the shares theretofore issued have been called
up for payment. Such resolution shall set forth the amount of the
increase, the number of the new shares created thereby, their nominal
value and class, and may also provide for the rights, preferences of
deferred rights that shall be attached to the newly created shares and the
restrictions to which such shares shall be subject;
|
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6.2.
|
Consolidate all or any of its issued or unissued share capital and divide same
into shares of nominal value larger than the one of its existing shares;
|
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6.3.
|
Subdivide all or any of its issued or unissued share capital, into shares of
nominal value smaller than the one of its existing shares; provided, however,
that the proportion between the amount paid and the amount unpaid on each share
which is not fully paid-up shall be retained in the subdivision;
|
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6.4.
|
Cancel any shares which, as at the date of the adoption of the resolution, have
not been issued or agreed to be issued, and thereby reduce the amount of its
share capital by the aggregate nominal value of the shares so canceled;
|
III SHARES
|
7.
|
Rights
Attached to Shares
|
|
|
7.1.
|
Subject to any contrary provisions of the Memorandum (for as long as it is in
effect) or the Articles, same rights, obligations and restrictions shall be
attached to all the shares of the Company regardless of their denomination or
class.
|
|
|
7.2.
|
If at any time the share capital is divided into different classes of shares,
the rights attached to any class may be modified or abrogated by a resolution
adopted by a Determining Majority at a General Meeting and by the adoption of a
resolution, supported by a Determining Majority, approving same modification or
abrogation at a General Meeting of the holders of the shares of such class.
|
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The
provisions of the Articles relating to General Meeting of the Company shall apply,
mutatis mutandis, to any separate General Meeting of the holders of the shares of a
specific class, provided, however, that the requisite quorum at any such separate General
Meeting shall be one or more members present in person or by proxy and holding not less
than thirty three and one third percent (33
1
/
3
%) of the issued shares of such class.
|
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7.3.
|
The
creation of additional shares of a specific class, or the issuance of
additional shares of a specific class, shall not be deemed, for purposes
of article 7.2, a modification or abrogation of rights attached to shares
of such class or of any other class.
|
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Issuance
of shares of the Company shall be under the control of the Board, who shall have the
exclusive
authority to issue the Company’s shares or grant options to acquire shares, to
such persons and on such terms and conditions as the Board may think fit
, or to
delegate such authority in accordance with the Law
.
|
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9.1.
|
Each member shall be entitled, not later than 60 days from the date of issuance
or the date of transfer, to receive from the Company one share certificate in
respect of all the shares of any class registered in his name on the Register of
Members or, if approved by the
Board
Company
, several share
certificates, each for one or more of such shares.
|
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9.2.
|
Each share certificate issued by the Company shall be numerated, denote the
class
and serial numbers
of the shares represented thereby and the name
of the owner, thereof as registered on the Register of Members, and may also
specify the amount paid-up thereon
,
.
A share certificate
shall be signed
by
on behalf
the Company
by the person or
persons
authorized by the Board
.
|
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|
9.3.
|
A share certificate denoting two or more persons as joint owners of the shares
represented thereby shall be delivered to any one of the persons named on the
Register of Members in respect of such joint ownership.
|
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|
9.4.
|
A share certificate defaced or defective, may be replaced upon being delivered
to the Company and being canceled. A share certificate lost or destroyed may be
replaced upon furnishing of evidence to the satisfaction of the Board proving
such loss or destruction and subject to the submission to the Company of an
indemnity letter and/or securities as the Board may think fit.
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|
A
member requesting the replacement of a share certificate shall bear all expenses incurred
by the Company in connection with the provisions of this Article.
|
|
|
The
Company shall be entitled to treat the person registered in the Register of Members as
the holder of any share, as the absolute owner thereof (a “
Registered Holder
”)
and shall also treat any other person deemed as a holder of shares pursuant to the Law,
as an owner of shares.
|
|
|
11.1.
|
The
Board may, from time to time, make calls upon members to perform payment of
any amount of the consideration of their shares not yet paid, provided
same amount is not, by the terms of issuance of same shares, payable at a
definite date. Each member shall pay to the Company the amount of every
call so made upon him at the time(s) and place(s) designated in such call.
Unless otherwise stipulated in the resolution of the Board, each payment
with respect to a call shall be deemed to constitute a pro-rata payment on
account of all of the shares in respect of which such call was made.
|
|
|
11.2.
|
A call may contain a demand for payment in installments.
|
|
|
11.3.
|
A call shall be made in writing and shall be delivered to the member(s) in
question not less than fourteen (14) days prior to the date of payment
stipulated therein. Prior to the due date stipulated in the call the Board may,
by delivering a written notice to the member(s), revoke such call, in whole or
in part, postpone the designated date(s) of payment or change the designated
place of payment.
|
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|
11.4.
|
If, according to the terms of issuance of any share, any amount is due at a
definite date, such amount shall be paid on same date, and the holder of the
same share shall be deemed, for all intents and purposes, to have duly received
a call in respect of such amount.
|
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|
11.5.
|
The joint holders of a share shall be bound jointly and severally to pay all
calls in respect thereof. A call duly made upon one of the joint holders shall
be deemed to have been duly made upon all of the joint holders.
|
|
|
11.6.
|
Any amount not paid when due shall bear an interest from its due date until its
actual payment at a rate equal to the then prevailing rate of interest for
unauthorized overdrafts as charged by Bank Hapoalim Ltd, unless otherwise
prescribed by the Board.
|
|
|
The
provisions of this Article 11.6 shall in no way deprive the Company of, or derogate from
any other rights and remedies the Company may have against such member pursuant to the
Articles or any pertinent law.
|
|
|
11.7.
|
The Board may agree to accept prepayment by any member of any amount due with
in
respect to his shares, and may direct the payment of interest for such
prepayment at a rate as may be agreed upon between the Board and the member so
prepaying.
|
|
|
11.8.
|
Upon the issuance of shares of the Company,
The
the
Board
may stipulate similar or different terms with respect to the payment of the
consideration thereof by their respective holders.
|
|
12.
|
Forfeiture
and Surrender
|
|
|
12.1.
|
If any member fails to pay when due any amount payable pursuant to a call, or
interest thereon as provided for herein, the Company may, by a resolution of the
Board, at any time thereafter, so long as said amount or interest remains
unpaid, forfeit all or any of the shares in respect of which said call had been
made. All expenses incurred by the Company with respect to the collection of any
such amount of interest, including, inter-alia, attorney’s fees and costs
of legal proceedings, shall be added to, and shall constitute a part of the
amount payable to the Company in respect of such call for all purposes
(including the accrual of interest thereon).
|
|
|
12.2.
|
Upon the adoption of a resolution of forfeiture, the Board shall cause the
delivery of a notice thereof to the member in question. Same notice shall
specify that, in the event of failure to pay the entire amount due within the
period stipulated in the notice (which period shall be not less
the
than
thirty (30) days), same failure shall cause, ipso
facto, the forfeiture of the shares. Prior to the expiration of such period, the
Board may extend the period specified in the notice of forfeiture or nullify the
resolution of forfeiture, but such nullification shall not estop nor derogate
from the power of the Board to adopt a further resolution of forfeiture in
respect of the non-payment of said amount.
|
|
|
12.3.
|
Whenever shares are forfeited as herein provided, all dividends theretofore
declared in respect thereof and not actually paid shall be deemed to have been
forfeited together with the shares.
|
|
|
12.4.
|
The Company, by a resolution of the Board, may accept the voluntary surrender by
any member of all or any part of his shares.
|
|
|
12.5.
|
Any share forfeited or surrendered as provided herein shall thereupon constitute
the property of the Company, and may be resold. Such shares that have not yet
been resold shall be considered dormant shares.
|
|
|
12.6.
|
Any member whose shares have been forfeited or surrendered shall cease to be a
member in respect of the forfeited or surrendered shares, but shall,
notwithstanding, be obligated to pay to the Company all amounts at the time of
forfeiture or surrender due to the Company with respect thereof, including
interest and expenses as aforesaid until actual repayment, whether the maturity
date of same amounts is on or prior to the date of forfeiture or surrender or at
any time thereafter, and the Board, in its discretion, may enforce payment of
such amounts or any part thereof, unless such shares have been resold in which
event the provisions of the Law shall apply. In the event of such forfeiture or
surrender, the Company, by a resolution of the Board, may accelerate the
maturity date(s) of any or all amounts then owed to the Company by same member
and not yet due, however, arising whereupon all of such amounts shall forthwith
become due and payable.
|
|
|
The
Board may, at any time before any share so forfeited or surrendered shall have been
reissued or otherwise disposed of to a third party, nullify the forfeiture or the
acceptance of the surrender on such conditions as it thinks fit, but such nullification
shall not estop nor derogate from the power of the Board to re-exercise its powers of
forfeiture pursuant to this Article 12.
|
|
|
13.1.
|
The Company shall have, at all times, a first and paramount lien upon all the
shares registered in the name of each member on the Register of Members, upon
all the dividends declared in respect of such shares and upon the proceeds of
the sale thereof, as security for his obligations. For the purposes of this
Article 13 and of Article 14, the term “Obligation” shall mean any and
all present and future indebtedness owed to the Company by a member with respect
to his shares, however arising, whether such indebtedness is absolute or
contingent, joint or several, matured or unmatured, liquidated or
non-liquidated.
|
|
|
13.2.
|
Shall a member fail to fulfill any or all of his Obligations, the Company may
enforce the lien, after same member was provided with a period of fourteen (14)
days to fulfill the Obligations so breached.
|
|
|
13.3.
|
A member shall be obliged to reimburse the Company for all expenses thereby
incurred with respect to the enforcement of a lien upon same member’s
shares, and such obligation shall be secured by the shares which are subject to
same lien.
|
|
14.
|
Sale
of Shares after Forfeiture or Surrender or in Enforcement of Lien
|
|
|
14.1.
|
Upon any sale of shares after forfeiture or surrender or in the course of
enforcement of a lien, the Company may appoint any person to execute an adequate
instrument of transfer or any other instrument required to effect the sale, and
shall be entitled to register the purchaser on the Register of Members as the
holder of the shares so purchased. The purchaser shall not be obliged to check
the regularity of the proceedings of forfeiture, surrender or enforcement of a
lien or the use that was made consideration thereby paid with respect to the
shares.
|
|
|
As
of the entry of the purchaser’s name in the Register of Members in respect of such
shares, the validity of the sale shall not be rebutted, and the sole remedy of any person
aggrieved by the sale shall be in damages, and against the Company solely.
|
|
|
14.2.
|
The net proceeds of any such sale, after payment of the selling expenses, shall
serve for repayment of the Obligations of the respective member, and the balance
if any shall be paid to the member, his inheritors, the executors of his will,
the administrators of his estate, and to persons on his behalf.
|
|
15.
|
Redeemable
Securities
|
|
|
Subject to the Law, the Company may issue redeemable securities and redeem the same.
|
|
16.
|
Effectiveness
of Transfer of Shares
|
|
|
A
transfer of title to shares of the Company, whether voluntarily or by operation of law,
shall not confer upon the transferee any rights towards the Company as a Registered Holder
unless and until such time as the transfer has been registered in the Register of Members.
|
|
17.
|
Procedure
on Voluntary Transfer of Shares
|
|
|
A
person desiring to be registered as a Registered Holder, shall deliver to the Company an
instrument of transfer of shares according to which he is the transferee accompanied by a
notice to the effect, in a form to be prescribed by the Board, duly executed by such
person and the transferor, and subject to the prior fulfillment of the provisions of
Article 18 below, the Board shall instruct the registration of same in the Register of
Members.
|
|
|
18.1.
|
The
transfer of shares of the Company and any other securities issued by the
Company and owned by a Registered Holder (in this Article 18, hereinafter,
“
Securities
”) shall be made in writing in a conventional
manner or as established by the Board; it may be effected by the signature
of the transferor only, on the condition that an appropriate share
transfer deed shall be submitted to the Company.
|
|
|
18.2.
|
Shares
Securities
that are not paid up in full or are
subject to any lien or pledge may not be transferred unless the transfer is
approved by the Board, which may at its sole discretion withhold its approval
without having to show grounds.
|
|
|
18.3.
|
Any transfer of
shares
Securities
that are not paid up in
full shall be subject to the signature of the transferee and the signature of a
witness in verification of the authenticity of the signatures on the share
transfer deed.
|
|
|
18.4.
|
The transferor shall be deemed to be the Registered Holder of the transferred
Securities until the name of the transferee is entered in the Register of
Members.
|
|
|
18.5.
|
The share transfer deed shall be submitted to the office for registration
together with the certificates to be transferred and such other evidence as the
Company may require with regard to the transferor’s title or right to
transfer the Securities. The share transfer
deeds
deed
shall
remain with the Company after
their
its
registration.
|
|
|
18.6.
|
The Company may demand payment of a transfer registration fee at a rate to be
determined by the Board from time to time.
|
|
|
18.7.
|
The Board may close the Register of Members for a period no longer than 30 days
every year.
|
|
|
18.8.
|
Upon the death of a Registered Holder of Securities of the Company, the Company
shall recognize the guardians, administrators of the estate, executors of the
will, and in the absence of such persons, the inheritors of the deceased person
as the only ones entitled to be registered as the Registered Holders of
Securities of the Company, subject to proof of their rights in a manner
established by the Board.
|
|
|
18.9.
|
In the event of the deceased member being a Registered Holder of a Security
jointly with other persons, the surviving member shall be considered the sole
Registered Holder of said Securities, upon the approval of the Company, without
exempting the estate of the deceased joint holder from any of the obligations
relating to the jointly held Securities.
|
|
|
18.10.
|
A person acquiring a right to a Security by virtue of his being a guardian or
administrator of the estate or inheritor of the deceased member, or receiver,
liquidator or trustee in liquidation proceedings regarding a corporate member,
or by any operation of law, may be subject to submission of such proof of
entitlement as the Board may establish be entered as the Registered Holder of
the respective Security or transfer the Security subject to the provisions of
the Articles with regard to such transfer.
|
|
|
18.11.
|
A person acquiring a Security as a result of a transfer by operation of law
shall be entitled to dividends and other rights in respect of the Security and
also to receive and certify the receipt of dividends and other sums of money in
connection with the said Security; however, such person shall not be entitled to
receive notices of the convening of General Meetings of the Company or to
participate or vote therein or to exercise any right conferred by the Security
with the exception of the aforementioned rights, pending the registration of
such person in the Register of Members.
|
|
|
The
Board may issue
number of
shares
,
and other securities
,
convertible or exercisable into shares,
up to
issued by the Company shall not
exceed
a maximum amount equal to the registered share capital of the Company; for this
purpose, securities convertible or exercisable into shares, shall be considered as having
been converted or exercised on the date of issuance.
|
IV GENERAL MEETINGS
|
|
20.1.
|
An Annual Meeting shall be held once in every calendar year at such time (within
a period of not more than fifteen (15) months after the last preceding Annual
Meeting) and at such place as may be determined by the Board.
|
|
|
20.2.
|
The Annual Meeting shall:
|
|
|
20.2.1.
|
Discuss
the audited financial statements of the Company for the last fiscal year;
|
|
|
20.2.2.
|
Appoint
auditors and establish their remuneration, or empower the Board to
establish their remuneration;
|
|
|
20.2.3.
|
Appoint
the directors as stipulated in Article 32 below, and establish their
remuneration;
|
|
|
20.2.4.
|
Discuss
any other business to be transacted at a General Meeting according to the
Articles or by operation of law.
|
|
21.
|
Extraordinary
Meeting
|
|
|
21.1.
|
All
General Meetings other than Annual Meetings shall be called “Extraordinary
Meetings”.
|
|
|
21.2.
|
The
Board may, whenever it thinks fit, convene an Extraordinary Meeting, and
shall be obligated to do so upon receipt of a requisition in writing in
accordance with Section 63 of the Law.
|
|
|
21.3.
|
Members
of the Company shall not be authorized to convene an Extraordinary Meeting
except as provided in Section 64 of the Law.
|
|
22.
|
Notice
of General Meetings
|
|
|
22.1.
|
Prior
to any General Meeting
,
a written notice thereof shall be
delivered
to all Registered Holders and to
all other persons entitled to
attend thereat, and shall be otherwise
made public as required by Law.
Such notice shall specify the place, the day and the hour of the General
Meeting, the agenda of the meeting and
the proposed resolutions and
such
other
documents
information
required under law. The notice will be
delivered
published
not
less then
fourteen (14)
twenty-one (21)
days prior to any General Meeting.
The
Company shall not be required to deliver notice to each shareholder,
except
as may be specifically required by Law.
|
|
|
22.2.
|
The accidental omission to give notice of a General Meeting, or the
non-receipt of a notice by a
member entitled to receive notices of
General Meeting, shall not invalidate the proceedings of such
a General
Meeting.
|
|
|
22.3.
|
A
member entitled to receive notices of General Meeting may waive such right
before such meeting of
expost, and shall be deemed to have
waived such right with respect to any General Meeting at which
he
was present, in person or by proxy.
|
|
|
22.2.
|
Any
written notice or other document may be served by the Company upon any
member either personally or by sending it by prepaid mail
addressed to such member at his address as described in the
Register of Members or such other address as he may have designated
in writing for the receipt of notices and other documents.
|
|
|
22.3.
|
Notwithstanding
anything to the contrary herein, notice by the Company of a General
Meeting which is published in one international wire service
shall be deemed to have been duly given on the date of such
publication.
|
|
|
23.1.
|
Two or more members present in person or by proxy and holding shares conferring
in the aggregate more than
thirty three and one
third
twenty-five
percent (
33 1/3
25
%) of
the total voting power attached to the shares of the Company, shall constitute a
quorum at General Meetings. No business shall be considered or determined at a
General Meeting, unless the requisite quorum is present when the General Meeting
proceeds to consider and/or determine same business.
|
|
|
23.2.
|
If within half an hour from the time appointed for the General Meeting a quorum
is not present, the General Meeting shall, if convened upon requisition under
Section 64 of the Law, be dissolved, but in any other case it shall stand
adjourned on the same day, in the next week, at the same time and place. The
requisite quorum at an adjourned General Meeting shall be
one
any two
or more members, present in person or by
proxy,
holding not less than thirty three and a third percent (33 1/3%) of
the
total voting power attached to the shares of the Company
. At an
adjourned General Meeting the only businesses to be considered shall be those
matters which might have been lawfully considered at the General Meeting
originally called if a requisite quorum had been present, and the only
resolutions to be adopted are such types of resolutions which could have been
adopted at the General Meeting originally called.
|
|
|
The
Chairman, of the Board, or if there is no such chairman, or if he is not present, any
other person appointed by the members present, shall preside as Chairman at a General
Meeting of the Company. The Chairman of any General Meeting shall have no additional or
casting vote.
|
|
25.
|
Adoption
of Resolution at General Meetings
|
|
|
25.1.
|
A resolution
, including, but not limited to, a resolution to amend these
Articles and to approve a merger
of the Company,
shall be deemed
adopted at a General Meeting if the requisite quorum is present and the
resolution is supported by members present, in person or by proxy, vested with
more than fifty percent (50%) of the total voting power attached to the shares
whose holders were present, in person or by proxy, at such General Meeting and
voted thereon, or such other percentage as is
set forth in
required
by
these Articles or
as required by
by the
Law.
|
|
|
25.2.
|
Any resolution to amend these Articles or to approve a merger of the Company,
shall be deemed
adopted at a General Meeting if supported by members,
participating in person or by proxy, vested
with a Determining Majority,
which shall be more than fifty percent (50%) of the total voting power
attached to the shares whose holders participated, in person or by proxy, at
such General Meeting.
|
|
|
25.2.
|
25.3.
Any proposed resolution put to vote at a General Meeting shall be decided
by a poll.
|
|
|
25.3.
|
25.4.
Subject to approval by a General Meeting at which the requisite quorum is
present, the chairman is obligated at the request of the General Meeting, to
adjourn the General Meeting, and the adjourned meeting shall convene at such
date and place as is decided by the General Meeting. If the General Meeting is
adjourned by more than twenty-one (21) days, a notice of the adjourned meeting
shall be given in the manner set forth in
sections
Sections
67
through 69 of the Law. An adjourned meeting may only transact such business as
left unfinished at the original meeting.
|
|
|
25.4.
|
25.5.
A declaration by the Chairman of the General Meeting that a proposed
resolution has been adopted or rejected, shall constitute conclusive evidence
of the adoption or rejection, respectively, of same resolution, and no further
proof verifying the contents of such declaration or the number or proportion of
the votes recorded in favor of or against such resolution shall be required.
|
|
|
25.5.
|
Notwithstanding
anything to the contrary herein, for so long as the Shareholders Agreement is
in effect, at the written request of any two directors with respect to
any proposed action or transaction described below, such action or
transaction shall require the approval of the General Meeting by a
resolution supported by members present, in person or by proxy, vested
with at least 50.1% of the outstanding shares of the Company, or by such higher
approval threshold as may be required by Law:
|
|
|
25.5.1.
|
any
transaction of the Company or of a subsidiary of the Company with (i) an
Officer of the Company or a nominee to become a director of the Company,
(ii) a shareholder of the Company which owns 5% or more of its
outstanding share capital, (iii) a family member of the first degree of
any of the foregoing persons or (iv) an Affiliate of any of the
foregoing. “
Officer
” shall have the meaning of
“office holder” under the Law. “
Affiliate
” shall
mean, with respect to any party, any person (a) in which such party,
directly or indirectly, owns at least majority interest (both economic
and voting), (b) which directly or indirectly owns a majority interest
(both economic and voting) in such party, or (c) which, directly or
indirectly, is in Control of or is Controlled by such party. “
Control
” shall
mean, with respect to a person that is a corporation, the ownership,
directly or indirectly, of voting securities of such person carrying
more than 50% of the voting rights attaching to all voting securities of
such person which are sufficient, if exercised, to elect a majority of
its board of directors, and in relation to a person that is a partnership, limited
partnership, business trust or other similar entity, the ownership, directly or
indirectly, of voting securities of such person carrying more than 50%
of the voting rights attaching to all voting securities of the person or
the ownership of other interests entitling the holder to exercise
control and direction over the activities of such person;
|
|
|
25.5.2.
|
any
amendment to the Memorandum or these Articles;
|
|
|
25.5.3.
|
any
merger or consolidation of the Company;
|
|
|
25.5.4.
|
any
material change in the Company’s scope of business;
|
|
|
25.5.5.
|
the
voluntary liquidation or dissolution of the Company;
|
|
|
25.5.6.
|
approval
of the Company’s annual budget and business plan, and any material
deviation therefrom; and
|
|
|
25.5.7.
|
any
change of the signatory rights on behalf of the Company.
|
|
|
26.1.
|
Subject
to the provisions of Article 27.1 below and subject to any other provision
hereof pertaining to voting rights attached or not-attached to shares of
the Company, whether in general or in respect of a specific matter or
matters, every member shall have one vote for each share registered in his
name on the Register of Members, regardless of its denomination or class.
|
|
|
26.2.
|
In
case of equality of votes, the resolution shall be deemed to have been
rejected.
|
|
27.
|
Attendance
and Voting Rights at General Meeting
|
|
|
27.1.
|
Unless
provided otherwise by the terms of issue of the shares, no member shall be
entitled to be present or vote at a General Meeting (or be counted as part of
the quorum thereat) unless all amounts due as at the date designated for
same General Meeting with respect to his shares were paid.
|
|
|
27.2.
|
A
corporate body being a member of the Company and entitled to vote and/or
attend at a General Meeting may exercise such rights by authorizing any
person, whether in general or for a specific General Meeting, to be
present and/or vote on its behalf. Upon the request of the Chairman of the
General Meeting, a writing evidence of such authorization and its validity
(in a form acceptable to the Chairman) shall be furnished thereto.
|
|
|
27.3.
|
A
member entitled to vote and/or attend at a General Meeting may appoint a
proxy, whether is general or for a specific General Meeting, to exercise
such rights, in a form approved by the Board.
|
|
|
27.4.
|
The
instrument appointing a proxy shall be delivered to the Company not later
than forty-eight (48) hours before the time designated for the General
Meeting at which the person named in the instrument proposes to vote
and/or attend.
|
|
|
27.5.
|
A
member entitled to vote and/or attend at a General Meeting and is legally
incapacitated, may exercise such rights by his custodian.
|
|
|
27.6.
|
If
two or more persons are registered as joint owners of any share, the right to
attend at a General Meeting, if attached to such share, shall be conferred
upon all of the joint owners, but the right to vote at a General Meeting
and/or the right to be counted as part of the quorum thereat, if attached
to such share, shall be conferred exclusively upon the senior amongst the
joint owners attending the General Meeting, in person or by proxy; and for
this purpose seniority shall be determined by the order in which the names
appear on the Register of Members.
|
|
|
27.7.
|
The
voting on the terms of the instrument of proxy shall be legal even in case
of prior death or incapacity or bankruptcy of the principal, and in
respect of a corporate principal, in case of its winding up or revocation
of the instrument of proxy or transfer of the respective share, unless a
notice in writing of such death or incapacity or bankruptcy or winding up
or revocation of share transfer shall have been received by the Register
of Members.
|
|
|
The
written notice of revocation of the proxy shall be valid if signed by the principal and
received by the Register of Members not later than one hour before the start of voting.
|
|
|
27.8.
|
No
proxy shall be valid after the expiry of 12 months from the date of its issue.
|
V BOARD OF DIRECTORS
|
|
28.1.
|
The
Board shall be vested with the exclusive authority to exercise all of the
Company’s powers which are not, by Law, the Memorandum (for as long
as it is in effect), the Articles or any applicable law, required to be
exercised by the General Meeting, the General Manager, or any other organ
of the Company as such term is defined in the Law.
|
|
|
28.2.
|
The
Board shall set the policy guidelines for the Company and shall supervise
the performance and activities of the General Manager.
|
|
29.
|
Exercise
of Powers of the Board
|
|
|
29.1.
|
The
powers conferred upon the Board shall be vested in the Board as
a
collective
body, and not in each one or more of the directors individually, and all
such powers may be exercised by the Board by adopting resolutions in
accordance with the provisions of the Articles.
|
|
|
29.2.
|
A
Except
as otherwise required by these Articles, a
resolution shall be deemed
adopted at a meeting of the Board if supported by a majority of the
directors attending such meeting and
voting
entitled to vote
thereon.
The Chairman of the Board shall have no casting
vote.
, except as set
forth in Article 41.2.
|
|
|
29.3.
|
The
Board may hold meetings using any means of communication, provided that all
of the directors participating can simultaneously hear one another.
|
|
|
29.4.
|
The
Board may adopt resolutions without convening a meeting, as provided in the
Law.
|
|
30.
|
Committees
of Directors
|
|
|
30.1.
|
The
Board may, subject to Section 112 of the Law, delegate any or all of its
powers to committees, each consisting of two or more directors, one of
which shall be an External Director, and it may, from time to time, revoke
or alter the powers so delegated.
Without
derogating from the
generality of the foregoing, subject to the Law, the Board may
delegate
to a committee its power to approve the terms of compensation of
officers.
Each committee shall, in the exercise of the powers so delegated,
conform to any regulations and conditions prescribed by the Board upon the
delegation or at any other time. Each resolution adopted by a committee
within the powers delegated to it by the Board shall be deemed to have
been held by the Board.
|
|
|
30.2.
|
The
Board will appoint from among its members an audit committee. All External
Directors shall be members of the audit committee.
|
|
|
30.3.
|
The
provision of the Articles with respect to the meetings of the Board, their
convening and adoption of resolutions thereat shall apply, mutatis
mutandis, to the meetings of any such committee, unless otherwise
prescribed by the Board.
|
|
|
Unless
otherwise prescribed by a resolution adopted at a General Meeting, the Board shall
consist of not less
then
than
four (4) nor more
then twelve (12
than
eight (8
) directors (including the External Directors appointed as required under the
Law).
|
|
32.
|
Appointment
and Removal of Directors
|
|
|
32.1.
|
The
directors shall be elected annually at a General Meeting as aforesaid and
shall remain in office until the next Annual Meeting at which time they
shall retire, unless their office is vacated previously as stipulated in
the Articles, provided however that the External Directors shall be
appointed, and shall remain in office, as prescribed in the Law.
|
|
|
32.2.
|
The
elected directors shall assume office on the day of their election.
|
|
|
32.3.
|
A
retiring director may be reelected. Pending the convening of an Annual Meeting
at which the directors are to retire from office, all directors shall
remain in office until the convening of the Annual Meeting of the Company
except in case of prior vacation of a director’s office according to
the Articles.
|
|
|
32.4.
|
If
no directors are elected at the Annual Meeting, all the retiring directors
shall remain in office pending their replacement by a General Meeting of
the Company.
|
|
|
32.5.
|
Except
with regard to a director whose tenure of office expires upon the
convening of a General Meeting or a person recommended by the Board to
serve as director, no motions for appointment of a candidate as a director
shall be made unless a notice in writing signed by a member of the Company
(other than the candidate himself) who is entitled to participate in and
vote at the meeting, stating the intent of the said member to propose a
candidate for election to the office of director, together with a document
in writing by the candidate expressing his consent to be so elected, shall
have been received at the office of the Company within a period of not
less than forty-eight (48) hours and not more than forty-two (42) days
before the appointed date of the General Meeting.
|
|
|
32.6.
|
The
General Meeting may, by way of a resolution, remove a director from office
before the expiry of his tenure, and appoint another person to serve as
director of the Company in his place, and also appoint a number of
directors in the event of the number of directors having decreased below
the minimum established by the General Meeting.
|
|
|
32.7.
|
The
provisions of this Article 32 shall not apply to External Directors, whose
appointment and removal shall be pursuant to the relevant provisions of
the Law.
|
|
33.
|
Qualification
of Directors
|
|
|
No
person shall be disqualified to serve as a director by reason of his not holding shares in
the Company or by reason of his having served as director in the past.
|
|
|
The
provisions of this
section 32
Article 33
shall not apply to External
Directors, whose qualifications are as set forth in the relevant provisions of the Law.
|
|
34.
|
Vacation
of Director’s Office
|
|
|
The
office of a director shall be vacated:
|
|
|
34.2.
|
On the date at which he is declared a bankrupt;
|
|
|
34.3.
|
On the date he is declared legally incapacitated;
|
|
|
34.4.
|
On the date stipulated therefor in the resolution of his election or the notice
of his appointment, as the case may be;
|
|
|
34.5.
|
On the date stipulated therefor in the resolution or notice of his removal or on
the date of the delivery of such notice to the Company, whichever is later;
|
|
|
34.6.
|
On the date stipulated therefor in a written notice of resignation thereby
delivered to the Company or upon its delivery to the Company, whichever is
later.
|
|
|
34.7.
|
If he is convicted in a final judgment of an offence of a nature which
disqualifies a person from serving as a director, as set forth in the Law.
|
|
|
34.8.
|
If a court of competent jurisdiction decides to terminate his office, in
accordance with the provisions of the Law, in a decision or judgment for which
no stay of enforcement is granted.
|
|
35.
|
Remuneration
of Directors
|
|
|
The
directors shall be entitled to remuneration by the Company for their services as
directors. The remuneration may be established as a global sum or as a fee for
participation in meetings. In addition to such remuneration, every director shall be
entitled to a refund of reasonable expenses for travel, per diem money, and other expenses
related to the discharge of his duties as a director.
|
|
|
The
provisions of this
section 34
Article 35
shall not apply to External
Directors, whose remuneration shall be in accordance with the relevant provisions of the
Law.
|
|
36.
|
Conflict
of Interests
|
|
|
36.1.
|
Subject to the provisions of the Law, the Company may consider and approve,
by a resolution of the
Board, each of the following transactions, which
are not detrimental to the best interests of the
Company:
|
|
|
36.1.1.
|
a
transaction to which the Company is a party to, and in which an officer of the
Company
has an interest; or
|
|
|
36.1.2.
|
a
transaction between the Company and officer of the Company; or
|
|
|
36.1.3.
|
such
other transactions that require special approval pursuant to the Law.
|
|
|
Notwithstanding
the foregoing, in the event of an extraordinary transaction (“
Iska Chariga
” as
defined in the Law) or the approval of the terms of service or employment
(including any waiver,
insurance or indemnification) of an officer of the Company,
such transaction shall require such
additional approval as stipulated by the Law.
Any officer shall not participate in the meeting of
the Board or audit committee
(whichever applicable), where such resolution is considered and shall
not vote in
such meeting, unless the majority of the members of the Board or audit committee shall
have an interest in the approval of the transaction, in which case such
transaction must also be
approved by the General Meeting.
|
|
|
The
approval of any transaction that involves a conflict of interest with an Officer shall be
approved in accordance with the Law and these Articles.
|
|
|
37.1.
|
Subject
to the approval of the Board, a director may, by delivering a written
notice to the Company, appoint an alternate for himself (hereinafter
referred to as “
Alternate Director
”), remove such
Alternate Director and appoint another Alternate Director in place of any
Alternate Director appointed by him whose office has been vacated for any
reason whatsoever. The appointment of the Alternate Director shall be for
an indefinite period and for all purposes, unless restricted to a specific
period, to a specific meeting or act of the Board, to a specific matter or
in any other manner, and same restriction was specified in the appointment
instrument or in a written note delivered to the Company.
|
|
|
37.2.
|
Any notice delivered to the Company pursuant to Article 37.1 shall become
effective on the date specified therefor therein or upon delivery thereof to the
Company or upon approval of the Board, whichever is later.
|
|
|
37.3.
|
An Alternate Director shall be vested with all rights and shall bear all
obligations of the director who appointed him, provided, however, that he shall
not be entitled to appoint an alternate for himself (unless the instrument
appointed him expressly provides otherwise), and provided further that the
Alternate Director shall have no standing at any meeting of the Board or any
committee thereof whereat the director who appointed him is present.
|
|
|
37.4.
|
The following may not be appointed nor serve as an Alternate Director: (i) a
person not qualified to be appointed as a director, (ii) an actual director, or
(iii) another Alternate Director.
|
|
|
37.5.
|
The office of an Alternate Director shall be vacated under the circumstances,
mutatis mutandis, set forth in Article 34, and such office shall further be ipso
facto vacated if the director who appointed such Alternate Director ceases to be
a director.
|
|
|
38.1.
|
Subject to Articles 40 and 41 below, the Board may meet, adjourn its meeting and
otherwise determine and regulate such meetings and their proceedings as it deems
fit.
|
|
|
38.2.
|
Upon the vacation of the office of a director, the remaining directors may
continue to discharge their functions until the number of remaining directors
decreases below the minimum established in the Articles. In the latter case the
remaining directors may only act to convene a General Meeting of the Company.
|
|
|
38.3.
|
The
Board, by unanimous approval of all
directors
then in office,
may
at any time appoint any person to serve as director as replacement for a
vacated office or in order to increase the number of directors, subject to
the condition that the number of directors shall not exceed the maximum
established in these Articles. Any so appointed director shall remain in
office until the next
General
Annual
Meeting, at which
he may be reelected.
|
|
39.
|
Convening
Meetings of the Board
|
|
|
39.1.
|
The
Chairman of the Board may, at any time, convene a meeting of the Board, and
shall be obliged to do so (i) at least once every three months, (ii) upon
receipt of a written demand from any one director, or (iii) in accordance
with
section
Section
122(4) or 169 of the Law. In the event there
is no such Chairman or a meeting of the Board was not convened to a date
which is no later then ten (10) days following delivery of such written
demand or receipt of the relevant notice or report, any of the
abovementioned directors may convene a meeting of the Board.
|
|
|
Convening
a meeting of the Board shall be made by delivering a notice thereof to all of the
directors within a reasonable length of time prior to the date thereof. Such notice shall
specify the exact time and place of the meeting so called and a reasonably detailed
description of the all of the issues on the agenda for such meeting.
|
|
|
39.2.
|
A
resolution adopted at a meeting of the Board, which had not convened in
accordance with the necessary requirements set forth in the Law or these
Articles may be invalidated in accordance with the applicable provisions
of the Law.
|
|
|
39.3.
|
A
director may waive his right to receive prior notice of any meeting, in
general or in respect of a specific meeting, and shall be deemed to have
waived such right with respect to any meeting at which he was present.
|
|
|
A
majority of the number of directors then in office
and entitled to participate in the
discussion
shall constitute a quorum at meetings of the Board, except if and as
otherwise required in accordance with the Law. No business shall be considered or
determined at any meeting of the Board unless the requisite quorum is present when the
meeting proceeds to consider or determine same business.
|
|
41.
|
Chairman
of the Board
|
|
|
41.1.
|
The
Board may from time to time elect one of its members to be the Chairman
of the Board, remove such Chairman from office and appoint another in
his place. However, the General Manager shall not serve as the
Chairman of the Board, nor shall the Chairman of the Board be vested
with the powers designated to the General Manager, except in
accordance with
section
Section
121(3) of the Law.
The Chairman of the Board shall preside at every meeting of the
Board, but if there is no such Chairman, or if he is not present or he is
unwilling to take the chair at any meeting, the directors present
shall elect one of their members to be chairman of such meeting.
|
|
|
41.2.
|
The
Chairman of the Board shall have no casting vote
.
,
unless (i) the Chairman of the Board is
then Mr. Shlomo Nehama
and (ii) Nechama Investments, together with any Affiliates thereof,
then
holds at least 25.05% of the outstanding shares of the
Company. Notwithstanding the foregoing, in
case Mr. Shlomo
Nehama elects to exercise his casting vote in respect of a specific
resolution
brought before the Board (the “
Triggering
Resolution
”), then (a) prior to such exercise, Nechama
Investments
shall be required to trigger the “Buy Me Buy You” mechanism
set forth in Section 6 of
the Shareholders Agreement as an
Offering Party (as defined in the Shareholders Agreement),
whereby
the Triggering Resolution will be pending until the consummation of
the sale of the
Restricted Shares (as defined in the
Shareholders Agreement) of one party to the Shareholders
Agreement
to the other party of the Shareholders Agreement in accordance with
such “Buy Me Buy
You” mechanism; and (b) in the event that three (3)
directors of the Company so require, the
Triggering Resolution
shall be conditioned upon the approval of the General Meeting
pursuant to
Article 25.1. Upon a transfer of the Restricted
Shares by Kanir to third party in accordance with
the terms of the Shareholders
Agreement, the casting vote of the Chairman of the Board shall
expire.
|
VI GENERAL MANAGER
|
|
42.1.
|
The
Board shall appoint one or more persons, whether or not directors, as
General Manager(s) of the Company, either for a definite period or without
any limitation of time, and may confer powers, authorities and rights
and/or impose duties and obligations upon such person or persons and
determine his or their salaries as the Board may deem fit and subject to
the provisions of the Law.
Subject to the Law, the Board may
delegate to the
General Manager its power to approve the terms of compensation of
other
officers.
|
VII MINUTES OF THE
BOARD
|
|
43.1.
|
The
proceedings of each meeting of the Board and meeting of committee of the
Board shall be recorded in the minutes of the Company. Such minutes shall
set forth the names of the persons present at every such meeting and all
resolutions adopted thereat and shall be signed by the chairman of the
meeting.
|
|
|
43.2.
|
All
minutes approved and signed by the chairman of the meeting or the Chairman
of the Board, shall constitute prima facie evidence of its contents.
|
VIII INTERNAL AUDITOR
|
|
44.1.
|
The
Board shall appoint an internal auditor in accordance with the provisions of
the Law.
|
|
|
44.2.
|
The
Internal Auditor shall submit to the audit committee a proposal for an
annual or periodic work program for its approval. The Audit Committee
shall approve such proposal subject to the modifications which it
considers necessary.
|
|
|
44.3.
|
The
General Manager shall be in charge of and supervise the Internal auditor’s
performance of its obligations.
|
IX DIVIDENDS AND
PROFITS
|
45.
|
Declaration
of Dividends
|
|
|
45.1.
|
The Board may, from time to time, subject to the provisions of the Law, declare
a dividend at a rate as the Board may deem considering the accrued profits of
the Company as set forth in its financial statements, and provided that the
payment of such dividends will not reasonably prevent the Company from meeting
its current and expected liabilities.
|
|
|
45.2.
|
Subject to any special or restricted rights conferred upon the holders of shares
as to dividends, all dividends shall be declared and paid in accordance with the
paid-up capital of the Company attributable to the shares in respect of which
the dividends are declared and paid. The paid-up capital attributable to any
share (whether issued at its nominal value, at a premium or at a discount),
shall be nominal value of such share. Provided, however that if the entire
consideration for same share was not yet paid to the Company, the paid-up
capital attribute thereto shall be such proportion of the nominal value as the
amount paid to the Company with respect to the share bears to its full
consideration, and further provided the amounts which have been prepaid on
account of shares and the Company has agreed to pay interest thereon shall not
be deemed, for the purposes of this Article, to be payments on account of such
shares. In the event no amount has been paid with respect to any shares
whatsoever, dividends may be declared and paid according to the nominal value of
the shares.
|
|
|
45.3.
|
Notice of the declaration of dividends shall be
delivered to all those
entitled to such dividends
published
as required by
applicable law
.
|
|
46.
|
Rights
to Participate in the Distribution of Dividends
|
|
|
46.1.
|
Subject to special rights with respect to the Company’s profits to be
conferred upon any person pursuant to these Articles and the Law, all the
profits of the Company may be distributed among the members entitled to
participate in the distribution of dividends.
|
|
|
46.2.
|
Notwithstanding
for foregoing, a holder of shares shall not be attributed with the right
to participate in the distribution of dividends
which were declared for
a period preceding
the record
date for which preceded
the
date of
the actual
issuance
of such shares
.
|
|
47.
|
Interest
on Dividends
|
|
|
The
Company shall not be obligated to pay, and shall not pay interest on declared dividends.
|
|
|
Subject
to Article 49, a declared dividend may be paid by wire transfer or a check made to the
order of the person entitled to receive such dividend (and if there are two or more
persons entitled to the dividend in respect of the same share — to the order of any
one of such persons) or to the order of such person as the person entitled thereto may
direct in writing. Same check shall be sent to the address of the person entitled to the
dividend, as notified to the Company.
|
|
|
Upon
the recommendation of the Board, dividends may be paid, wholly or partly, by the
distribution of specific assets of the Company and/or by the distribution of shares and/or
debentures of the Company and/or of any other company, or in any combination of such
manners.
|
|
50.
|
Setting-Off
Dividends
|
|
|
The
Company’s obligation to pay dividends or any other amount in respect of shares, may
be set-off by the Company against any indebtedness, however arising, liquidated or
non-liquidated, of the person entitled to receive the dividend.
|
|
|
The
provisions contained in this Article shall not prejudice any other right or remedy vested
with the Company pursuant to the Articles or any applicable law.
|
|
|
51.1.
|
Dividends
unclaimed by the person entitled thereto within thirty (30) days after the
date stipulated for their payment, may be invested or otherwise used by the
company, as it deems fit, until claimed; but the Company shall not be
deemed a trustee in respect thereof.
|
|
|
51.2.
|
Dividends
unclaimed within the period of seven (7) years from the date stipulated
for their payment, shall be forfeited and shall revert to the Company,
unless otherwise directed by the Board
.
|
|
|
52.1.
|
The
Board may, before recommending the distribution of dividends, determine to
set aside out of the profits of the Company or out of an assets
revaluation fund and carry to reserve or reserves such sums as it deems
fit, and direct the designation, application and use of such sums. The
Board may further determine that any such sums which it deems prudent not
to distribute as dividends will not be set aside for reserve, but shall
remain as such at the disposal of the Company.
|
|
|
52.2.
|
The
Board may, from time to time, direct the revaluation of the assets of the
Company, in whole or in part, and the creation of an assets revaluation
fund out of the revaluation surplus, if any.
|
|
53.
|
Capitalization
of Profits
|
|
|
53.1.
|
The
Board may capitalize all or any part of the sums or assets allocated to the
credit of any reserve fund or to the credit of the profit and loss account
or being otherwise distributable as dividends (including sums or assets
received as premiums on the issuance of shares or debentures), and direct
accordingly that such sums or assets be released for distribution amongst
the members who would have been entitled thereto if distributed by way of
dividends and in the same proportion; provided that same sums or assets be
not paid in cash or in specie but be applied for the payment in full or in
part of the unpaid consideration of the issued shares held by such members
and/or for the payment in full of the consideration (as shall be
stipulated in said resolution) for shares or debentures of the Company to
be issued to such members subsequent to the date of said resolution,
credited as fully paid up.
|
|
|
53.2.
|
In
the event a resolution as aforesaid shall have been adopted, the Board shall
make all adjustments and applications of the moneys or assets resolved to
be capitalized thereby, and shall do all acts and things required to give
effect thereto. The Board may authorize any person to enter into agreement
with the Company on behalf of all members entitled to participate in such
distribution, providing for the issuance to such members of any shares or
debentures, credited as fully paid, to which they may be entitled upon
such capitalization or for the payment on behalf of such members, by the
application thereto of the proportionate part of the money or assets
resolved to be capitalized, of the amounts or any part thereof remaining
unpaid on their existing shares, and any agreement made under such
authority shall be effective and binding upon all such members.
|
X ACCOUNTING BOOKS
|
|
54.1.
|
The
Board shall cause the Company to hold proper accounting books and to prepare
an annual balance sheet, a statement of Profit and Loss, and such other
financial statements as the Company may be required to prepare under law.
|
|
|
The accounting books of the Company shall be held at the office or at a place deemed fit by
the Board, and they shall be open to inspection by the directors.
|
|
|
54.2.
|
The
Board may determine at its sole discretion the terms on which any of the
accounts and books of the Company shall be open to inspection by members,
and no member (other than a director) shall be entitled to inspect any
account or ledger or document of the Company unless such right is granted
by law or by the Board.
|
|
|
54.3.
|
At
least once a year, the Board shall submit to the Annual Meeting financial
statements for the period from the previous statement as required by Law.
The balance sheet shall be accompanied by an auditors’ report
and
a report by the Board on the position of the Company
,
if
available.
|
|
|
54.4.
|
The
Company shall not be required to send copies of its financial statements to
members
.
|
XI BRANCH REGISTERS
|
55.
|
Authority
to keep Branch Registers
|
|
|
The
Company may keep branch registers in any reciprocal state.
|
|
56.
|
Provisions
in respect of keeping Branch Registers
|
|
|
Subject
to the provisions contained in the Law, the Board shall be authorized to make such rules
and procedures in connection with the keeping of branch registers as it may, from time to
time, think fit.
|
XII SIGNATURES
|
57.
|
The
Company’s Signature
|
|
|
57.1.
|
A
document shall be deemed signed by the Company upon the fulfillment of the
following:
|
|
|
57.1.1.
|
It
bears the name of the Company in print;
|
|
|
57.1.2.
|
It
bears the signature of one or more persons authorized therefor by the Board;
and
|
|
|
57.1.3.
|
The
act of the person authorized by the Board as aforesaid was within its
authority and without deviation therefrom.
|
|
|
57.2.
|
The
signatory rights on behalf of the Company shall be determined by the Board.
|
|
|
57.3.
|
An
authorization by the Board as provided in Article 57.2 may be for a specific
matter, for a specific document or for a certain sort of document or for
all the Company’s documents or for a definite period of time or for
an unlimited period of time, provided that any such authority may be
terminated by Board, at will.
|
|
|
57.4.
|
The
provisions of this Article shall apply both to the Company’s documents
executed in Israel and the Company’s documents executed abroad.
|
XIII NOTICES
|
|
58.1.
|
Notices
pursuant to the Law, the Memorandum and the Articles shall be made in the
manner prescribed by the Board from time to time.
|
|
|
58.2.
|
Unless
otherwise prescribed by the Board, all notices shall be made in writing
and shall be sent by mail.
|
|
|
59.1.
|
Each
member and each director shall notify the Company in writing of his address
for the receipt of notices, documents and other communications relating to
the Company, its business and affairs.
|
|
|
59.2.
|
Any
notice, document or other communication shall be deemed to have been
received at the time received by the addressee
or at its address
,
or if sent by registered mail
to same address —
,
within
seven
three
(
7
3
) days from its
dispatch, whichever is earlier.
|
|
|
59.3.
|
The
address for the purposes of Article 59.2 shall be the address furnished
pursuant to Article 59.1, and the address of the Company for the purposes
of Article 59.2 shall be its registered address or principal place of
business.
|
XIV INDEMNITY AND
INSURANCE
|
60.
|
Indemnity
of Officers
|
|
|
60.1.
|
The
Company may, from time to time and subject to any provision of law, indemnify
an Officer in respect of a liability or expense set out below which is imposed
on him or incurred by him as a result of an action taken in his capacity as an
Officer of the Company:
|
|
|
60.1.1.
|
monetary
liability imposed on him in favor of a third party by a judgment, including a
settlement or a decision of an arbitrator which is given the force of a
judgment by court order;
|
|
|
60.1.2.
|
reasonable
litigation expenses, including legal fees, incurred by the Officer as a result
of an investigation or proceeding instituted against such Officer by a
competent authority, which investigation or proceeding has ended without the
filing of an indictment or in the imposition of financial liability in lieu of
a criminal proceeding, or has ended in the imposition of a financial obligation
in lieu of a criminal proceeding for an offence that does not require proof of
criminal intent (the phrases “proceeding that has ended without the filing
of an indictment” and “financial obligation in lieu of a criminal
proceeding” shall have the meanings ascribed to such phrases in Section
260(a)(1a) of the Companies Law); and
|
|
|
60.1.3.
|
reasonable
litigation expenses, including legal fees, which the Officer has incurred or is
obliged to pay by the court in proceedings commenced against him by the Company
or in its name or by any other person, or pursuant to criminal charges of which
he is acquitted or criminal charges pursuant to which he is convicted of an
offence which does not require proof of criminal intent.
|
|
|
60.2.
|
The
Company may, from time to time and subject to any provision of the law:
|
|
|
60.2.1.
|
Undertake
in advance to indemnify an Officer of the Company for any of the following:
|
|
|
(i)
|
any
liability as set out in Article 60.1.1 above, provided that the undertaking
to indemnify is limited to the classes of events which in the opinion of
the Board can be anticipated in light of the Company’s activities at
the time of giving the indemnification undertaking, and for an amount
and/or criteria which the Board has determined are reasonable in the
circumstances and, the events and the amounts or criteria that the Board
deem reasonable in the circumstances at the time of giving of the
undertaking are stated in the undertaking; or
|
|
|
(ii)
|
any
liability stated in Article 60.1.2 or 60.1.3 above;
|
|
|
60.2.2.
|
indemnify
an Officer after the occurrence of the event which is the subject of the
indemnity.
|
|
|
The
Company may enter into an agreement for the insurance of the liability of an
officer
Officer
, in whole or in part, with respect to any liability
which may imposed upon such
officer
Officer
as a result of an act
performed by same
officer
Officer
in his capacity as an
officer
Officer
of the Company, for any of the following:
|
|
|
61.1.1.
|
A
breach of a cautionary duty toward the Company or toward another person;
|
|
|
61.1.2.
|
A
breach of a fiduciary duty toward the Company, provided the
officer
Officer
acted
in good faith and has had reasonable ground to assume that the act would not be
detrimental to the Company;
|
|
|
61.1.3.
|
A
monetary liability imposed upon an
officer
Officer
toward
another.
|
|
|
Subject
to the provisions of the Companies Law, including the receipt of all approvals as required
therein or under any applicable law, the Board may resolve in advance to exempt an
officer
Officer
from all or part of such
officer
Officer
’s responsibility or liability for damages caused
to the Company due to any breach of such
officer
Officer
’s duty
of care towards the Company.
|
XV WINDING UP
|
62.
|
Distribution
of Assets
|
|
|
If
the Company be wound up, then, subject to provisions of any applicable law and to any
special or restricted rights attached to a share, the assets of the Company in excess of
its liabilities shall be distributed among the members in proportion to the paid-up
capital of the Company attributable to the shares in respect of which such distribution
is being made. The paid-up capital attributable to any share (whether issued at its
nominal value, at a premium or at a discount), shall be a nominal value of such share,
provided, however, that if the entire consideration for same share was not yet paid to
the Company, the paid-up capital attributable thereto shall be such proportion of the
nominal value as the amount paid to the Company with respect to the share bears to its
full consideration.
|
