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EXHIBIT 3.2
ARTICLES OF ASSOCIATION
OF
CLICKSERVICE SOFTWARE LTD.
AMENDED AND RESTATED AS OF MARCH ___, 2000
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ARTICLES OF ASSOCIATION
OF
CLICKSERVICE SOFTWARE LTD.
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INTERPRETATION
1. In these Articles, the words in the first column of the following table
shall bear the meanings set opposite them respectively in the second
column thereof, if not inconsistent with the subject or context:
Words Meanings
The Company The above-named Company.
Companies Law The Companies Law 1999 (the "Companies
Law") and all orders and regulations issued
thereunder as amended from time to time,
including any law or statute replacing it.
The Statutes The Companies Law, the Securities
Law of 1968 and every other ordinance or law
for the time being in force concerning
companies and affecting the Company.
These Articles These Articles of Association, as
shall be amended from time to time.
Officer A Director, President, General Manager, Chief
Executive Officer, Vice President, Chief
Financial Officer, any other manager directly
subordinate to the President, and any person
who fills one of the said positions in the
Company, even if he carries a different
title.
Audit Committee As defined in the Companies Law.
The Office The registered office of the Company.
The Seal Any of (i) the rubber stamp of the
Company, (ii) the facsimile signature of the
Company, or (iii) the electronic signature of
the Company as approved by the Board of
Directors.
Shareholders Register The shareholders register required
to be kept according to the Companies Law and
any other shareholders register permitted to
be kept by the Company according to the
Companies Law.
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Month A Gregorian month.
NIS New Israeli Shekel
Writing Printing, lithography, photography and any
other mode or modes of representing or
reproducing words in a visible form.
Words importing the masculine gender shall include the feminine gender,
and words importing person shall include corporations.
Subject as aforesaid, any words or expressions defined in the Statutes
shall, except where the subject or context forbids, bear the same meanings
in these Articles.
PUBLIC COMPANY
3. The Company is a limited public company, consequently:
(a) no limitations will apply to the transfer of its shares;
(b) the number of shareholders will be unlimited;
(c) the Company may issue shares, debentures or any other securities
to the public.
(d) the liability of its shareholders is limited by shares.
SHARE CAPITAL
4. (a) The share capital of the Company is NIS two million (2,100,000),
divided into:
(i) 98,000,000 Ordinary Shares of NIS 0.02 nominal value each
("Ordinary Shares");
(ii) 2,000,000 Non-Voting Ordinary Shares of NIS 0.02 nominal
value each ("Non-Voting Ordinary Shares"), and
(ii) 5,000,000 Special Preferred Shares of NIS 0.02 nominal
value each ("Special Preferred Shares").
Except as otherwise provided herein, the shares of each class will rank
pari passu with all the other shares in that class.
(b) Each Ordinary Share entitles its holder to receive notice of, and
to participate in, all General Meetings of the Company, and to
one (1) vote in such meetings for every share, and the other
rights specified in these Articles.
(c) The Special Preferred Shares may be issued from time to time as
shares of one or more series, with such distinctive serial
designations as may be stated or expressed in the resolution or
resolutions providing for the issuance of such shares from time
to time
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adopted by the Board of Directors of the Company. In the
resolution or resolutions providing for the issuance of such
shares, the Board of Directors of the Company is expressly
authorized, without the need for shareholder action, to fix the
terms and preferences of the shares of such series, including
without limitation the dividend rate, number of shares, and the
terms upon which the shares are convertible into or exchangeable
for shares of any other class or classes.
(d) Each Non-Voting Ordinary Share will have the same rights as the
Ordinary Shares except that they will not have any voting rights
in the Company, including the right to receive notice of meetings
of shareholders and to participate in and vote at meetings of
shareholders.
Each Non-Voting Ordinary Share is convertible at any time after
issuance of such share at the option of the holder thereof and
without payment of any additional consideration into one (1)
fully-paid and non-assessable voting Ordinary Share, according to
the procedure set out below. Before any holder of Non-Voting
Ordinary Shares shall be entitled to convert the same into
Ordinary Shares to be converted, the holder shall deliver to the
Company written notice specifying the number of shares to be
converted. From and after the date on which the Company or its
transfer agent received such notice, shares included in such
notice shall be deemed converted as specified in the notice, and
the converting holder shall be deemed the owner and shall be
treated for all purposes as the record holder of the number of
Ordinary Shares into which such shares were converted. Promptly
after delivery of such written notice, the holder shall surrender
the certificate(s) therefor, duly endorsed, at the office of the
Company or of any transfer agent for such shares. The Company
shall, as soon as practicable thereafter, issue and deliver at
such office to such holder, certificate(s) for the number of
shares to which such holder shall be entitled as aforesaid.
AMENDMENT OF ARTICLES
5. These Articles (with the exception of Article 100 which may be amended
as provided therein) may be amended by a majority vote at a meeting of
shareholders of the Company, with the exception of Article 100 which may
be amended only by the affirmative vote of two - thirds of the
shareholders present (in person or by proxy) and voting on such
resolution at a General Meeting.
If the Company's shares are divided into classes of shares, then a
change that infringes on the rights of a class of shares shall be made
only with the approval of a General Meeting of that class; the
provisions of these Articles shall apply, mutatis mutandis, to the
adoption of decisions by a class meeting.
Notwithstanding the provisions of this Article , a change of these
Articles that obligates a shareholder to acquire additional shares or to
increase the extent of his liability shall not obligate the shareholder
without his consent.
SHARES
6. Subject to these Articles or to the terms of any resolution creating new
shares, the unissued shares in the registered share capital of the
Company from time to time shall be under the
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control of the Board of Directors, which shall have the power to allot
shares or otherwise dispose of them to such persons, on such terms and
conditions, and either at par or at a premium or, subject to the
provisions of the Statutes, at a discount, and at such times as the
Board of Directors may think fit, and the power to give to any person
the option to acquire from the Company any shares, either at nominal
value or at a premium or, subject as aforesaid, at a discount, during
such time and for such consideration as the Board of Directors may
determine.
7. If two or more persons are registered as joint holders of any share, any
one of such persons may give effectual receipts for any dividends or
other monies in respect of such share.
The Company shall not be required to recognize any holder of a share as
a holder other than the registered holder of such share.
8. Every shareholder registered in the Shareholders' Register shall be
entitled, without payment, to receive within thirty days after allotment
or registration of transfer (unless the conditions of issuance provide
for a longer interval), one certificate under the Seal for all the
shares registered in his name, and if the Board of directors so
approves, several certificates, each for one or more of such shares.
Each certificate shall specify the number and denoting numbers of the
shares in respect of which it is issued and may also specify the amount
paid up thereon; provided that, in the case of joint holders, the
Company shall not be bound to issue more than one certificate to all the
joint holders, and delivery of such certificate to one of them shall be
sufficient delivery to all. Every certificate shall be signed by one
Director and countersigned by the Secretary or some other person
nominated by the Board of Directors for this purpose.
9. If any share certificate shall be defaced, worn out, destroyed or lost,
it may be renewed on such evidence being produced, and such indemnity
(if any) being given as the Board of Directors shall require and (in the
case of defacement or wearing out) upon delivery of the old certificate
and, in any case, upon payment of such sum not exceeding NIS 50 (fifty
New Israeli Shekels) as the Board of Directors may from time to time
require.
10. The Company may, directly or indirectly, purchase its own shares subject
to the provisions of the Companies Law. If the Company purchases its own
shares, such shares will not have any rights as long as they are owned
by the Company.
11. (a) A subsidiary or some other corporate body under the Company's
control (in this Article: "ACQUIRING CORPORATE BODY") may acquire
shares of the Company subject to the provisions of the Companies
Law, on condition that the subsidiary's Board of Directors or the
Directors of the acquiring corporate body determined that - had
the acquisition been made by the Company - it would have been
permitted by the provisions of the Companies Law.
(b) If the Company's shares were acquired by a subsidiary or by an
acquiring corporate body, such shares shall not grant voting
rights as long as they are owned by the subsidiary or by the
acquiring body corporate.
(c) If a prohibited distribution (as defined in Section 301 to the
Companies Law) was made, then the refund specified in Section 310
to the Companies Law shall be made to the subsidiary or to the
acquiring body corporate and the provisions of Section 311 shall
apply, mutatis mutandis, to the Directors of the subsidiary and
to the Directors of the
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acquiring body corporate. However, if the Company's Board of
Directors determined that the distribution is permitted, then the
responsibility shall be that of the Company's Directors, as
provided in Section 311 to the Companies Law.
(d) Notwithstanding the provisions of Sub-article (a), acquisition by
a subsidiary or by an acquiring corporate body that is not wholly
owned by the Company constitutes a distribution in an amount
equal to the amount of the acquisition, multiplied by the
proportion of rights in the subsidiary's capital or in the
capital of the acquiring corporate body held by the Company.
TRANSFER OF SHARES
12. No transfer of shares shall be registered unless a proper writing or
instrument of transfer (in any customary form or any other form
satisfactory to the Board of Directors) has been submitted to the
Company (or its transfer agent), together with the share certificate(s)
and such other evidence of title as the Board of Directors may
reasonably require. Until the transferee has been registered in the
Shareholders Register (which the Company guarantees to perform promptly
from submission to it of the foregoing) in respect of the shares so
transferred, the Company may continue to regard the transferor as the
owner thereof.
13. The Board of Directors may refuse, without giving any reasons therefor,
to register any transfer of shares where the Company has a lien on the
shares, constituting the subject matter of the transfer, but fully
paid-up shares may be transferred freely and such transfers do not
require the approval of the Board of Directors.
All instruments of transfer shall remain in the custody of the Company,
but any such instrument which the Board of Directors refused to register
shall be returned to the person from whom it was received, if such
request be made by him.
14. The Transfer Records and the Shareholders Register and Debenture Holders
(if any) Register and Debenture Stock Holders (if any) Register and
other securities (if any) Register of the Company may be closed during
such time as the Board of Directors may deem fit, not exceeding, in the
aggregate, thirty (30) days in each year.
TRANSMISSION OF SHARES
15. In the case of the death of a shareholder, or a holder of a debenture,
the survivor or survivors, where the deceased was a joint holder, and
the executors and/or administrators and/or the legal heirs of the
deceased where he was a sole or only surviving holder, shall be the only
persons recognized by the Company as having any title to his shares or
his debentures, but nothing herein contained shall release the estate of
a deceased joint holder from any liability in respect of any share or
any debenture jointly held by him.
16. Any person who becomes entitled to a share or a debenture in consequence
of the death or bankruptcy or any shareholder may, upon producing such
evidence of title as the Board of Directors shall require, with the
consent of the Board of Directors, be registered himself as holder of
the share or the debenture or, subject to the provisions as to transfers
herein contained, transfer the same to some other person.
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17. A person entitled to a share or a debenture by transmission shall be
entitled to receive, and may given a discharge for, any dividends or
interest or other monies payable in respect of the share or debenture,
but he shall not be entitled in respect of it to receive notices of, or
to attend or vote at meetings of the Company or, save as aforesaid, to
exercise any of the rights or privileges of a shareholder or a holder of
a debenture unless and until he shall become a shareholder in respect of
the share or a holder of the debenture.
ALTERATIONS OF CAPITAL
18. Subject to the provisions of the Companies Law, the Company may from
time to time by a majority vote at a meeting of shareholders of the
Company:
(a) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares; or
(b) cancel registered share capital that has not yet been issued, on
condition that there are no undertakings of the Company -
including conditional undertakings to issue such shares; or
(c) divide its share capital or any part thereof into shares of
smaller amount than is fixed by its Articles of Association by
sub-division of its existing shares or any of them , and so that
as between the resulting shares, one or more of such shares may,
by the Resolution by which such sub-division is effected, be
given any preference or advantage as regards dividend, return of
capital, voting or otherwise over the others or any other shares;
or
(d) reduce its share capital and any capital redemption reserve fund
in any way that may be considered expedient.
19. The Company may, subject to the Companies Law, issue redeemable shares
and redeem the same according to the terms and conditions which the
Company shall determine.
INCREASE OF CAPITAL
20. The Company may from time to time by a majority vote at a meeting of
shareholders, whether all the shares for the time being authorized shall
have been issued or all the shares for the time being issued shall have
been fully called up or not, increase its share capital by the creation
of new shares; such new capital to be of such amount and to be divided
into shares of such respective amounts and (subject to any special
rights for the time being attached to any existing class of shares) to
carry such preferential, deferred or other special rights (if any) or to
be subject to such conditions or restrictions (if any) in regard to
dividend, return of capital, voting or otherwise as the General Meeting
deciding upon such increase directs.
21. Except so far as otherwise provided by or pursuant to these Articles or
by the conditions of issuance, any new share capital shall be considered
as part of the original ordinary share capital of the Company, and shall
be subject to the same provisions with reference to liens, transfer,
transmission and otherwise as the original share capital.
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MODIFICATION OF CLASS RIGHTS
22. If, at any time, the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by
the terms of issuance of the shares of that class) may be varied with
the consent in writing of the holders of all the issued shares of that
class, or with the sanction of a majority vote at a meeting of the
shareholders passed at a separate meeting of the holders of the shares
of the class. The provisions of these Articles relating to General
Meetings shall apply, mutatis mutandis, to every such separate General
Meeting. Any holder of shares of the class present in person or by proxy
may demand a secret poll.
23. Unless otherwise provided by the conditions of issuance, the enlargement
of an existing class of shares, or the issuance of additional shares
thereof, shall not be deemed to modify or abrogate the rights attached
to the previously issued shares of such class or of any other class.
BORROWING POWERS
24. The Board of Directors may from time to time, in its discretion, cause
the Company to borrow or secure the payment of any sum or sums of money
for the purposes of the Company, and may secure or provide for the
repayment of such sum or sums in such manner, at such times and upon
such terms and conditions in all respects as it sees fit and, in
particular, by the issuance of bonds, perpetual or redeemable
debentures, debenture stock, or any mortgages, charges or other
securities on the undertaking, or the whole or any part of the property
of the Company, both present and future, including units uncalled or
called but unpaid capital for the time being.
POWERS OF THE GENERAL MEETING
25. Without derogating from the authority of the General Meeting pursuant to
these Articles, the Company's decisions on the following matters shall
be adopted at a General Meeting:
(1) any changes in these Articles;
(2) exercise of the powers of the Board of Directors in accordance
with the provisions of Section 52(a) of the Companies Law;
(3) appointment of the Company's Auditor;
(4) appointment of External Directors, in accordance with the
provisions of the Companies Law;
(5) approval of acts and transactions that require approval by the
General Meeting under the provisions of Articles 255 and 268 to
275 of the Companies Law;
(6) the increase and reduction of the registered share capital, in
accordance with the provisions of Articles 286 and 287 to the
Companies Law;
(7) a merger, as specified in Article 320(a) to the Companies Law.
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GENERAL MEETINGS
26. (a) General Meetings shall be held at least once in every calendar
year at such time, not being more than fifteen months after the
holding of the last preceding General Meeting, and at such time
and place as may be determined by the Board of Directors. Such
Annual General Meetings shall be called "Annual Meetings", and
all other General Meetings of the shareholders shall be called
"Special Meetings". The Annual Meeting shall receive and consider
the Directors' Report, the Financial Statements, appoint
auditors, elect directors, and transact any other business which,
under these Articles or by the Companies Law, may be transacted
at a General Meeting of the Company, provided that notice of such
other business was given to shareholders in accordance with the
provisions of these Articles. At a General Meeting, decisions
shall be adopted only on matters that were specified on the
agenda.
(b) Any reference in these Articles to a "General Meeting" will be
either a General Meeting or a Special Meeting, according to the
context.
27. The Board of Directors may, whenever it deems necessary, and shall upon
such requisition in writing as is provided by Section 63(b) of the
Companies Law, convene a General Meeting. Any such request must state
the purposes for which the meeting is to be called, be signed by the
requesting shareholders, and must be deposited at the Office. Such
request may consist of several documents in like form, each signed by
one or more requesting shareholder.
28. Unless a longer period for notice is prescribed by the Companies Law, at
least ten (10) days and not more than sixty (60) days notice of any
General Meeting shall be given, specifying the place, the day and the
hour of meeting and, in the case of special business, the nature of such
business, shall be given in the manner hereinafter mentioned, to such
shareholders as are under the provisions of these Articles, entitled to
receive notices from the Company. Notices shall be given by mail or by
personal delivery to every registered shareholder of the Company, to his
address as described in the Shareholders Register of the Company or such
other address as designated by him in writing for this purpose. Provided
that the accidental omission to give such notice to, or the non-receipt
of such notice by, any such shareholder shall not invalidate any
resolution passed or proceeding held at any such meeting and, with the
consent of all the shareholders for the time being entitled to receive
notice of meetings, a meeting may be convened upon a shorter notice or
without notice, and generally in such manner as such shareholders may
approve. Such consent may be given at the meeting or retrospectively
after the meeting. If the shareholder did not provide the Company any
address for the delivery of notices, the shareholder shall be deemed to
have waived his right to receive notices.
29. Only shareholders of record as reflected on the Company's Share Register
at the close of business on the date fixed by the Board of Directors as
the record date determining the then shareholders who will be entitled
to vote, shall be entitled to notice of, and to vote, in person or by
proxy, at a General Meeting and any postponement or adjournment thereof.
The Board of Directors will fix the record date of not less than ten
(10) nor more than sixty (60) days before the date of the General
Meeting.
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PROCEEDINGS AT GENERAL MEETINGS
30. No business shall be transacted at any General Meeting unless a quorum
is present when the meeting proceeds to business. The quorum at any
Meeting shall be two shareholders present in person or by proxy, holding
or representing at least thirty three percent (33%) of the total voting
rights in the Company. A company being a shareholder shall be deemed to
be personally present for the purpose of this Article if represented by
its representative duly authorized in accordance with Article 42.
31. If, within half an hour from the time appointed for the holding of a
General Meeting, a quorum is not present, the meeting shall stand
adjourned to the same day in the next week at the same time and place,
or any time and hour as the Board of Directors shall designate and state
in a notice to the shareholders entitled to vote at the original
meeting, and if, at such adjourned meeting, a quorum is not present
within half an hour from the time appointed for holding the meeting any
two shareholders present in person or by proxy shall constitute a
quorum. Notwithstanding the aforesaid, if a General Meeting was convened
at the demand of shareholders as permitted by Section 63(b) of the
Companies Law, then a quorum at such adjourned meeting shall be present
only if one or more shareholders are present who held in the aggregate
at least 5% of the issued share capital of the Company and at least 1%
of the voting rights in the Company or one or more shareholders who hold
in the aggregate at least 5% of the voting rights in the Company.
32. (a) At every General Meeting, a chairman shall be elected for that
meeting.
(b) The election of the meeting's chairman shall be held at the
beginning of the meeting's discussions, which shall be opened by
the chairman of the Board of Directors or by a Director whom the
Board of Directors authorized to do so.
33. The chairman may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn any meeting
from time to time and from place to place as the meeting shall
determine. Whenever a meeting is adjourned pursuant to the provisions of
this Article for more than seven days, notice of the adjourned meeting
shall be given in the same manner as in the case of an original meeting.
Save as aforesaid, no shareholder shall be entitled to any notice of an
adjournment, or of the business to be transacted at an adjourned
meeting. No business shall be transacted at any adjourned meeting other
than the business which might have been transacted at the meeting from
which the adjournment took place.
VOTES OF SHAREHOLDERS
34. Except as otherwise provided in these Articles, any resolution at a
General Meeting shall be deemed adopted if approved by the holders of a
majority of the voting rights in the Company represented at the meeting
in person or by proxy and voting thereon. In the case of an equality of
votes, either on a show of hands or a poll, the chairman of the meeting
shall not be entitled to a further or casting vote.
35. At all General Meetings, a resolution put to a vote at the meeting shall
be decided on a show of hands unless, before or upon the declaration of
the result of the show of hands, a poll in writing be demanded by the
chairman (being a person entitled to vote), or by at least two
shareholders present, in person or by proxy, holding at least 5% of the
issued share capital of
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the Company and, unless a poll be so demanded, a declaration by the
chairman of the meeting that a resolution has been carried, or has been
carried unanimously or by a particular vote, or lost, or not carried by
a particular vote, shall be conclusive, and an entry to that effect in
the Minute Book of the Company shall be conclusive evidence thereof,
without proof of the number or proportion of the votes recorded in favor
of or against such resolution.
36. If a poll be demanded in manner aforesaid, it shall be taken forthwith,
and the result of the poll shall be deemed to be the resolution of the
meeting at which the poll was demanded. The demand of a poll shall not
prevent the continuance of a meeting for the transaction of any business
other than the question on which a poll has been demanded.
37. Any shareholder which is not a natural person may, by resolution of its
directors or other governing body, authorize such person as it thinks
fit to act as its representative at any General Meeting, and the person
so authorized to the satisfaction of the Company shall be entitled to
exercise the same powers on behalf of such company, which he represents
as that company could exercise if it were an individual shareholder.
38. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, every shareholder shall have one vote for
each share of which he is the holder, whether on a show of hands or on a
poll.
39. If any shareholder be a lunatic, idiot, or non compos mentis, he may
vote by his committee, receiver, curator bonis or other legal curator,
and such last-mentioned persons may give their votes either personally
or by proxy.
40. If two or more persons are jointly entitled to a share then, in voting
upon any question, the vote of the senior person who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other registered holders of the share and, for this
purpose, seniority shall be determined by the order in which the names
stand in the Shareholders Register.
41. Votes may be given either personally or by proxy. A proxy need not be a
shareholder of the Company.
42. (a) The instrument appointing a proxy shall be in writing in the
usual common form, or such form as may be approved by the Board
of Directors, and shall be signed by the appointor or by his
attorney duly authorized in writing or, if the appointor is a
corporation, the corporation shall vote by its representative,
appointed by an instrument duly signed by the corporation.
(b) The instrument appointing a proxy shall be deemed to include
authorization to demand a poll or to vote on a poll on behalf of
the appointor.
43. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the
principal, or revocation of the proxy, or transfer of the share in
respect of which the vote is given, unless an intimation in writing of
the death, revocation or transfer shall have been received at the Office
before the commencement of the meeting or adjourned meetings at which
the proxy is used.
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44. The instrument appointing a proxy shall be deposited at the Office or at
such other place or places, whether in Israel or elsewhere, as the Board
of Directors may from time to time, either generally or in a particular
case or class of cases prescribe, at least forty-eight (48) hours before
the time appointed for holding the meeting or adjourned meeting at which
the person named in such instrument proposes to vote; otherwise, the
person so named shall not be entitled to vote in respect thereof; but no
instrument appointing a proxy shall be valid after the expiration of
twelve months from the date of its execution.
45. Subject to the provisions of the Companies Law, a resolution in writing
(approved by letter, telex, facsimile or otherwise) by all the
shareholders, in person or by proxy, for the time being entitled to vote
at a General Meeting of the Company, shall be as valid and as effectual
as a resolution adopted by a General Meeting duly convened, held and
constituted for the purpose of passing such resolution.
46. A shareholder will be entitled to vote at the Meetings of the Company by
several proxies appointed by him, provided that each proxy shall be
appointed with respect to different shares held by the appointing
shareholder. Every proxy so appointed on behalf of the same shareholder
shall be entitled to vote as he sees fit.
47. No person shall be entitled to vote at any General Meeting (or be
counted as a part of the quorum thereof) unless all calls then payable
by him in respect of his shares in the Company shall have been paid.
DIRECTORS POWERS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS
48. (a) Without derogating from the authority of the General Meeting
pursuant to these Articles and the Companies Law, the Board of
Directors shall formulate the Company's policy and shall
supervise the exercise of the General Manager's office and his
acts, and as part thereof it -
(1) shall determine the Company's plans of activity, the
principles for financing such plans and the order of
priority among them;
(2) shall examine the Company's financial situation and set
the framework of credit which the Company may take;
(3) shall determine the organizational structure and the
compensation policy of employees;
(4) may decide to issue a series of debentures;
(5) is responsible for the preparation and approval of the
financial reports according to Section 171 to the
Companies Law;
(6) shall report to the Annual Meeting about the state of the
Company's affairs and on its business results, as required
by Section 173 to the Companies Law;
(7) shall appoint and dismiss the General Manager, as provided
by Section 250 to the Companies Law;
(8) shall decide on the acts and transactions that require its
approval in accordance with these articles or under the
provisions of Sections 255 and 268 to 275 to the Companies
Law;
(9) may issue shares and securities convertible into shares up
to the limit of the Company's registered share capital,
under the provisions of Section 288 to the Companies Law;
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(10) may decide on a distribution according to Sections 307 and
308 to the Companies Law;
(11) shall express its opinion on a special purchase offer,
according to Section 329 to the Companies Law.
(b) The powers of the Board of Directors under this Article cannot be
delegated to the General Manager.
DIRECTORS
49. The Board of Directors of the Company shall consist of a minimum of two
(2) and a maximum of eleven (11) Directors.
50. (a) Except for External Directors (as defined in the Companies Law),
all directors shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly
equal in number as possible, one class to hold office initially
for a term expiring at the 2001 Annual Meeting of the Company,
another class to hold office initially for a term expiring at the
2002 Annual Meeting of the Company, and another class to hold
office initially for a term expiring at the 2003 Annual Meeting
of the Company, with the members of each class to hold office
until their successors have been duly elected and qualified. At
each Annual Meeting following the 2001 Annual Meeting, the class
of directors whose term expires at that meeting shall be elected
to hold office for a term expiring at the Annual Meeting of the
Company held in the third year following the year of their
election and until their successors have been duly elected and
qualified.
(b) Any director or directors may be removed from office at any time,
but only for "cause" and only by the affirmative vote of (i) the
holders of the majority of the Ordinary Shares present in person
or by proxy and voting thereon, or (ii) a majority of the Board
of Directors. For purposes of this clause (b): "cause" shall mean
the willful and continuous failure of a director substantially to
perform such director's duties to the Company (other than any
such failure resulting from incapacity due to physical or mental
illness) or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the Company.
(c) The Company shall appoint External Directors as and to the extent
required by, and they shall hold office according to, the
Companies Law, as long as the Company is required by the
Companies Law to appoint External Directors.
51. (a) No person shall be nominated for the office of a director at a
General Meeting, except for directors whose term of office
expired at the time the General Meeting was convened, persons
nominated for the office of a director by the Board of Directors,
and as provided for in Article 51(b).
(b) Any shareholder entitled to receive notice of and vote at a
General Meeting desiring to propose a nominee for director to be
elected at an Annual General Meeting of Shareholders has to
deliver notice to the Secretary, at the Company's principal
offices, not later than ninety (90) days prior to the date of the
annual General Meeting at which meeting such election is to
occur, whichever date is later. The
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notice shall set forth: (i) the name and address, as they appear
on the Company's share register, of the shareholder proposing
such nominee, (ii) the identity and background of the nominee,
(iii) the class and number of shares of the Company beneficially
owned by such shareholder, (iv) a representation that such
shareholder is a shareholder of record and intends to appear by
person or by proxy at such General Meeting to bring the General
Meeting the nominee specified in the notice, (v) a brief
description of the reasons for wanting to nominate such nominee
as a director, (vi) any material interest that the shareholder
has in the election of such nominee and (vii) the written consent
of the nominee to be elected as a director of the Company.
52. The Directors in their capacity as such, shall be entitled to receive
remuneration and reimbursement of expenses incurred by them in the
course of carrying out their duties as Directors.
53. The office of a Director shall be vacated, ipso facto:
(a) upon his resignation by written notice signed by him and
delivered to the Office;
(b) if he becomes bankrupt or enters into an arrangement with his
creditors;
(c) if he is or becomes of unsound mind;
(d) if he be relieved of his office as provided in Article 50(b)
hereof;
(e) if he is prevented by applicable law from serving as a director
of the Company.
(f) if the Board of Directors terminate his office according to
Section 231 of the Companies Law;
(g) if court order is given according to Section 233 of the Companies
Law.
54. (a) Subject to the provisions of the Companies Law, no Director shall
be disqualified by virtue of his office from holding any office,
or deriving any profit from any other office in the Company or
from any company in which the Company shall be a shareholder or
otherwise interested, or from contracting with the Company as a
vendor, purchaser or otherwise.
(b) Transactions entered into by the Company in which an office
holder of the Company has a personal interest, directly or
indirectly, will be valid in respect of the Company and the
office holder only if approved by the Company's Board of
Directors and, if such transactions are "irregular transactions"
as defined in the Companies Law, only if approved in accordance
with the requirements of the Companies Law.
55. A Director who has a personal interest in a matter which is brought for
discussion before the Board of Directors may participate in said
discussion, provided that he shall neither vote in nor attend
discussions concerning the approval of the activities or the
arrangements. If said Director did vote or attend as aforesaid, the
approval given to the aforesaid activity or arrangements shall be
invalid.
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56. In the event of one or more vacancies on the Board of Directors, the
continuing Directors may continue to act as long as the Board of
Directors consists of at least a majority of the total number of
Directors elected. However, in the event that the remaining Directors
are not a majority of the total number of Directors elected, the
remaining Director or Directors may call for the convening of a General
Meeting for the purpose of the election of Directors.
57. Subject to the limitation on the number of Directors as specified in
Article 49, the Board of Directors may, at any time and from time to
time, appoint any other person as a Director, whether to fill a vacancy
or to add to their number. Any Director so appointed shall hold office
until the next Annual Meeting at which the term of the class to which
they have been elected expires, and may be re-elected.
58. In case of any increase in the number of directors, the additional
director or directors, and in case of any vacancy in the Board of
Directors due to a death, resignation, removal, disqualification or any
other cause, the successors appointed according to Article 57 to fill
the vacancies shall be elected by a majority of the directors then in
office.
CONVENING THE BOARD OF DIRECTORS
59. (a) The Chairman of the Board of Directors may convene a meeting of
the Board of Directors at any time.
(b) The Board of Directors shall hold a meeting on a specified
subject on the demand of two Directors, or if the Board of
Directors consists of up to five Directors one Director;
(c) The Chairman of the Board of Directors shall convene the Board of
Directors upon a demand said in Sub-article (b) of this Article
59 or if Section 122(d) to the Companies Law applies, due to a
notice or report from the General Manager or due to a notice from
the Auditor of the Company under Section 169 to the Companies
Law.
(d) If a meeting of the Board of Directors was not convened within 14
days after the date of a demand pursuant to Sub-article (b) of
this Article 59, or after the date of a notice or report of the
General Manager according to Section 122(d) to the Companies Law,
or after notice of the Auditor under Section 169 to the Companies
Law, then each of those persons enumerated in Sub-articles (b)
and (c) may convene a meeting of the Board of Directors, which
shall discuss the subject specified in the demand, notice or
report, as the case may be.
MEETINGS OF THE BOARD OF DIRECTORS AND THEIR CONDUCT
60. The agenda of a meeting of the Board of Directors shall be set by the
Chairman of the Board of Directors, and it shall include:
(1) subjects determined by the Chairman of the Board of Directors;
(2) subjects determined as said in Section 98 to the Companies Law;
(3) any subject which a Director or the General Manager requested at
a reasonable time before the meeting was convened - of the
Chairman of the Board of Directors to include in the agenda
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61. (a) Notice of a meeting of the Board of Directors shall be delivered
to all its members at a reasonable time before the meeting, but
not later than forty eight (48) hours prior to the time set for
any such meeting,
(b) A notice under Sub-article (a) shall be delivered to the
Director's address that was given to the Company in advance, and
in it shall be stated the time of the meeting and the place where
it will convene, as well as reasonable details on all the
subjects on the agenda.
62. Notwithstanding the provision of Article 61 hereto, the Board of
Directors may - with the consent of all the Directors - convene for a
meeting without notice.
GENERAL MANAGER
63. The Board of Directors will appoint one or more persons as General
Manager, and they will be titled as President or Chief Executive Officer
(CEO) or Chief Operating Officer (COO). The Board of Directors may from
time to time remove or discharge him or them from office (subject to the
provisions of any agreement between any such person and the Company) and
appoint another or others in his or their place or places.
64. The Board of Directors may from time to time appoint one or more Vice
Presidents for certain functions, to carry out duties delegated to him
(them) by the President, CEO or COO.
65. To the extent permitted by the Companies Law, the Board of Directors may
from time to time confer upon and delegate to a President, CEO, COO or
other Executive Officer then holding office, such authorities and duties
of the Board of Directors as they may deem fit, and they may delegate
such authorities and duties for such period and for such purposes and
subject to such conditions and restrictions which they consider in the
bests interests of the Company, and they may delegate such authorities
and duties without waiving the authorities of the Board of Directors
with respect thereto and it may from time to time revoke, cancel and
alter such authorities and duties in whole or in part.
66. The remuneration of a President, CEO, COO or other Executive Officer
shall be fixed by the Board of Directors, taking into consideration any
agreement between him and the Company, and it may be in whole or in
part, in the form of salary, share options, or commissions or profit
sharing or a combination thereof.
DIRECTOR'S ACTS AND AUTHORITIES
67. The management of the business of the Company shall be vested in the
Board of Directors, which may exercise all such powers and do all such
acts and things as the Company is authorized to exercise and do, and are
not hereby or by law required to be exercised or done by the Company in
a General Meeting. The authority conferred on the Board of Directors by
this Article 67 shall be subject to the provisions of the Companies Law,
of these Articles and any regulation or resolution consistent with these
Articles adopted from time to time by the Company in a General Meeting,
provided, however that no such regulation or resolution shall invalidate
any prior act done by or pursuant to a decision of the Board of
Directors which would have been valid if such regulation or resolution
had not been adopted.
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68. The Directors may postpone their meetings and otherwise regulate them as
they shall deem fit. The quorum for the dispatch of business by the
Board of Directors shall be determined by the Directors and, if not so
determined, shall be the majority of the Directors then holding office.
69. A resolution in writing signed or otherwise approved in writing (by
letter, telegram, telex, facsimile, electronic mail or otherwise) by all
the Directors then in office shall be as valid and as effectual as a
resolution adopted by the Board of Directors at a meeting of the Board
of Directors duly convened and held.
70. Members of the Board of Directors, or of any committee designated by the
Board of Directors, may participate in a meeting of the Board of
Directors, or of any committee, by means of a telephone conference or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation
in a meeting shall constitute attendance in person at the meeting.
71. (a) The Board of Directors shall elect a Chairman for the meeting and
fix the term of his office. The CEO shall not serve as Chairman
of the Board of Directors and vice versa unless the holders of
two thirds of the voting rights in the Company represented in
person or by proxy and voting on such resolution at a General
Meeting, who are not controlling shareholders of the Company or
their representatives and who are present at the vote, adopt a
decision to appoint the Chairman of the Board of Directors as the
CEO, for a period not exceeding three years after the date of the
adoption of the decision.
(b) In the event that a Chairman was not elected or if the Chairman
should fail to be present at a meeting fifteen (15) minutes after
the time set for its convening, the remaining Directors shall
elect one of those present to be Chairman of the meeting.
(c) All questions that arise at meetings of the Board of Directors
shall be decided by a majority of votes. In the event of a tie
vote, the Chairman of the Board of Directors shall cast the
deciding vote.
72. Any meeting of the Board of Directors at which a quorum is present shall
have the authority to exercise all or part of the authorities, powers of
attorney and discretion invested at such time in the Directors or
regularly exercised by them.
73. Subject to the Companies Law, the Board of Directors may delegate its
authorities in whole or in part to committees as it shall deem fit, and
it may from time to time revoke such delegation. Any committee so
created must, in exercising the authorities granted to it, adhere to all
the instructions of the Board of Directors given from time to time
and/or to the provisions of the Companies Law.
74. All acts done bona fide at any meeting of the Board of Directors, or of
a committee of the Board of Directors or by any person(s) acting as
Director(s) shall, notwithstanding that it may afterwards be discovered
that there was some defect in the appointment of the participants in
such meeting or any of them or any person(s) acting as aforesaid, or
that they or any of them or any person(s) acting as aforesaid, or that
they or any of them were disqualified, be as valid as if there were no
such defect or disqualification.
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75. The Board of Directors shall cause proper Minutes to be kept of the
following:
(a) the names of all the Directors present at any meeting of the
Board of Directors and at any meeting of a committee of the Board
of Directors;
(b) all proceedings and resolutions of General Meetings of the
Company, Board of Directors' meetings and Committees of the Board
of Directors' meetings.
Any Minutes as aforesaid, if purporting to be signed by the Chairman of
such meeting or by the Chairman of the next succeeding meeting, shall be
accepted as prima facie evidence of the matters therein recorded.
76. [Reserved.]
SHAREHOLDERS REGISTERS
77. Subject to, and in accordance with, the provisions of the Companies Law,
the Company may cause Shareholder Register to be kept at any place in
Israel and may cause a copy of the Shareholder Register to be kept
outside Israel as the Board of Directors may think fit and, subject to
all applicable legal requirements, the Board of Directors may from time
to time adopt such rules and procedures as it may think fit in
connection with the keeping of such registers. In addition to the
Shareholders Register, the Company shall also keep a Register of
Substantial Shareholders as defined in the Companies Law.
SECRETARY
78. The Board of Directors may from time to time appoint a Secretary to the
Company as it deems fit, and may appoint a temporary Assistant Secretary
who shall act as Secretary for the term of his appointment.
RIGHTS OF SIGNATURE - STAMP AND SEAL
79. (a) Authorization to sign on behalf of the Company and thereby bind
it shall be made and granted from time to time by the Board of
Directors. The Company shall have at least one rubber stamp. The
Company shall be bound by the signature of the aforesaid
appointees if appearing together after its stamp or printed name.
(b) The Board of Directors may provide for a seal. If the Board of
Directors so provides, it shall also provide for the safe custody
thereof. Such seal shall not be used except by the authority of
the Board of Directors and in the presence of the person(s)
authorized to sign on behalf of the Company, who shall sign every
instrument to which such seal is affixed.
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DIVIDENDS
80. Subject to any preferential, deferred, qualified or other rights,
privileges or conditions attached to any special class of shares with
regard to dividends, the profits of the Company available for dividend
and resolved to be distributed shall be applied in payment of dividends
upon the shares of the Company in proportion to the amount paid up or
credited as paid up per the nominal value thereon respectively. Unless
not otherwise specified in the conditions of issuance of the shares, all
dividends with respect to shares which were not fully paid up within a
certain period, for which dividends were paid, shall be paid
proportionally to the amounts paid or credited as paid on the nominal
value of the shares during any portion of the abovementioned period.
81. The Board of Directors may declare a dividend to be paid to the
shareholders according to their rights and interests in the profits, and
may fix the record date for eligibility and the time for payment.
82. The Directors may from time to time pay to the shareholders on account
of the next forthcoming dividend such interim dividends as, in their
judgment, the position of the Company justifies.
83. A transfer of shares shall not pass the right to any dividend declared
thereon after such transfer and before the registration of the transfer.
84. Notice of the declaration of any dividend, whether interim or otherwise,
shall be given to the holders of registered shares in the manner
hereinafter provided.
85. Unless otherwise directed, any dividend may be paid by check, bank
transfer or warrant, sent through the post to the registered address of
the shareholder or person entitled or, in the case of joint registered
holders, to that one of them first named in the register in respect of
the joint holding. Every such check shall be made payable to the order
of the person to whom it is sent. The receipt by the person whose name,
at the date of the declaration of the dividend, appears in the register
of shareholders as the owner of any share or, in the case of joint
holders, of any one of such joint holders, shall be a good discharge to
the Company of all payments made in respect of such share. All dividends
unclaimed for one year after having been declared may be invested or
otherwise used by the Directors for the benefit of the Company until
claimed. No unpaid dividend or interest shall bear interest as against
the Company.
86. The Board of Directors may determine that, a dividend may be paid,
wholly or partly, by the distribution of specific assets of the Company
or by distribution of paid-up shares, debentures or debenture stock or
any other securities of the Company or of any other companies or in any
one or more of such ways in the manner and to the extent permitted by
the Companies Law.
PROHIBITED DISTRIBUTION
87. (a) If the Company made a prohibited distribution as defined in the
Companies Law, then the shareholder must return to the Company
whatever he received, unless he did not know and did not need to
know that the distribution carried out was prohibited.
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(b) It is assumed that a shareholder in the Company, who at the time
of the distribution is not a Director, General Manager or
controlling member of the Company, did not know and did not need
to know that the distribution carried out was a prohibited
distribution.
88. If the Company carried out a prohibited distribution, then every person
who was a Director at the time of the distribution shall be treated as a
person who thereby committed breach of trust against the Company, unless
he proved one of the following:
(1) that he opposed the prohibited distribution and took all
reasonable steps to prevent it;
(2) that he exercised reasonable reliance on information under which
- had it not been misleading - the distribution would have
permitted;
(3) that under the circumstances of the case he did not know and did
not need to know of the distribution.
MERGER
89. A merger requires approval by the Board of Directors and by the General
Meeting, in accordance with the provisions of the Companies Law.
90. (a) The Board of Directors of the Company, while considering whether
to approve the merger, shall discuss and determine taking the
Company's financial situation into account - whether in its
opinion there is a reasonable suspicion that in consequence of
the merger the merged Company will not be able to meet the
Company's obligations to its creditors.
(b) If the Board of Directors determined that there is a suspicion as
said in Sub-article (a), then it shall not approve the merger.
91. If each of the Boards of Directors of the merging companies approved the
merger, then they shall jointly draw up a proposal for the approval of
the merger (hereafter: merger proposal) and sign it.
92. (a) The Company shall deliver the merger proposal to the Companies
Registrar within three days after the General Meeting was called.
(b) The Company shall inform the Companies Registrar of the General
Meetings decision within three days after the decision was
adopted, shall inform him that the notice was given to the
creditors under Section 318 to the Companies Law, and shall also
deliver to the Registrar a copy of the Court decision under
Sections 319 to 321 to the Companies Law within three days after
the said decision was given.
ACCOUNTS
93. The Board of Directors shall cause accurate books of account to be kept
in accordance with the provisions of the Companies Law and of any other
applicable law. Such books of account shall be kept at the Registered
Office of the Company, or at such other place or places as the
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Board of Directors may think fit, and they shall always be open to
inspection by all Directors. No shareholder not being a Director shall
have any right to inspect any account or book or other similar document
of the Company, except as conferred by law or authorized by the Board of
Directors of the Company.
94. At least once in every fiscal year the accounts of the Company shall be
audited and the correctness of the profit and loss account and balance
sheet certified by one or more duly qualified auditors.
95. The appointment, authorities, rights and duties of the auditor(s) of the
Company shall be regulated by the applicable law.
NOTICES
96. (a) A notice or any other document may be served by the Company upon
any shareholder either personally or by sending it by prepaid
mail in Israel (by air mail if sent to a place outside Israel,
other than the U.S. or Canada, or by first class mail if sent
within the U.S. or Canada) addressed to such shareholder at "his"
address as reflected on the Company's Shareholders Register or
such other address as he may have designated in writing for the
receipt of notices and other documents. Any written notice or
other document shall be deemed to have been served forty-eight
(48) hours after it has been mailed (seven (7) days if sent to a
place or mailed at a place outside of Israel, forty-eight (48)
hours if sent within the U.S. or Canada), or when actually
received by the addressee if sooner than forty-eight (48) hours
or seven (7) days, as the case may be, after it has been mailed,
or when actually tendered in person to such shareholder (or to
the Secretary or the President of the Company, as the case may
be); provided, however, that such notice or other document
mentioned above may be sent by facsimile and confirmed by
registered mail as aforesaid, and such notice shall be deemed to
have been given twenty-four (24) hours after such facsimile has
been sent or when actually received by such shareholder (or by
the Company), whichever is earlier. If a notice is, in fact,
received by the addressee, it shall be deemed to have been duly
served when received, notwithstanding that it was defectively
addressed or failed in some respect to comply with the provisions
of this Article.
(b) Unless otherwise specified in bearer share warrants, the holders
of such warrants shall not be entitled to receive notice of any
General Meeting of the Company, and the Company is under no
obligation to give notice of General Meetings to a person
entitled to a share by virtue of its delivery to him, unless he
is duly registered as a shareholder.
(c) All notices to be given to the shareholders shall, with respect
to any shares to which persons are jointly entitled, be given to
whichever of such persons is named first in the Shareholders
Register, and any notice so given shall be sufficient notice to
the holders of such shares.
(d) Any shareholder whose address is not described in the
Shareholders Register, and who shall not have designated in
writing an address for the receipt of notices, shall not be
entitled to receive any notice from the Company.
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(e) Any notice or other document served upon or sent to any
shareholder by publication in accordance with these Articles
shall, notwithstanding that he be then deceased or bankrupt, and
whether or not the Company has notice of his death or bankruptcy,
be deemed to be duly served or sent in respect of any shares held
by him (either alone or jointly with others) until some other
person is registered in his stead as the holder or joint holder
of such shares, and such service or sending shall be a sufficient
service on or sending to his heirs, executors, administrators or
assigns and all other persons (if any) interested in such share.
(f) Where a given number of days' notice, or notice extending over
any period, is required to be given, the day of service shall be
counted in such number of days or other period.
RECONSTRUCTION
97. On any sale of the undertaking of the Company, the Board of Directors or
the liquidators on a winding-up may, if authorized by a majority vote at
a meeting of shareholders, accept fully paid up shares, debentures or
securities of any other company, whether Israeli or foreign, either then
existing or to be formed, for the purchase, in whole or in part, of the
property of the Company, and the Board of Directors (if the profits of
the Company permit), or the liquidators (on a winding-up), may
distribute such shares or securities, or any other property of the
Company, amongst the shareholders without realization, or vest the same
in trustees for them, and the shareholders of the Company at any General
Meeting may provide for the distribution or appropriation of the cash,
shares or other securities, benefits or property, in accordance with the
legal rights of the shareholders or contributors of the Company, and for
the valuation of any such securities or property at such price and in
such manner as the meeting may approve, and all holders of shares shall
be bound to accept and shall be bound by any valuation or distribution
so authorized, and waive all rights in relation thereto, save only in
the case the Company is proposed to be, or is, in the course of being
wound up, such statutory rights (if any) under the provisions of the
Statutes as are incapable of being varied or excluded by these presents.
INDEMNITY AND INSURANCE OF OFFICERS
98. The Company may, to the maximum extent permitted by the Companies Law:
(a) enter into a contract for the insurance of the liability, in
whole or in part, of any of its Officers,
(b) may indemnify an Officer of the Company post factum; and
(c) may indemnify an Officer of the Company in advance for the
following events:
(i) Any financial obligation imposed on an Officer in favor of
a third party by a court judgment, including a compromise
judgment approved by court (provided that the Company
approved the compromise in advance) or an arbitrator's
award approved by court (provided that it was given
pursuant to arbitration agreed to by the Company in
advance), for an act or omission performed by an Officer
in his capacity as an Officer; and
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(ii) reasonable legal expenses, including attorneys' fees,
expended by or charged to an Officer or adjudicated
against an Officer by a court in a proceeding commenced
against an Officer by the Company or on its behalf or by
another person, or in a criminal charge from which an
Officer was acquitted, or in a criminal charge that does
not require intent, in which an Officer was convicted, all
for an act or omission performed in his capacity as an
Officer.
Such indemnity shall apply in certain foreseeable events and up
to a feasible amount under the circumstances, as determined by
the Board of Directors.
WINDING-UP
99. If the Company shall be wound up, whether voluntarily or otherwise, the
liquidators may, subject to the provision of the Statutes, divide among
the shareholders in specie any part of the assets of the Company and
may, with like sanction, vest any part of the assets of the Company in
trustees upon such trusts, for the benefit of the shareholders, as the
liquidators with like sanction shall think fit.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
100. Notwithstanding any other provision of these Articles, the Company shall
not engage in any business combination with any interested shareholder
for a period of three years following the time that such shareholder
became an interested shareholder, unless:
(a) prior to such time the Board of Directors of the Company approved
either the business combination or the transaction which resulted
in the shareholder becoming an interested shareholder, or
(b) upon consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the interested
shareholder owned at least 85% of the voting shares of the
Company outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors
and also officers and (ii) employee share plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer, or
(c) at or subsequent to such time the business combination is
approved by the Board of Directors and authorized at a General
Meeting, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting shares which is not
owned by the interested shareholder.
(d) A shareholder becomes an interested shareholder inadvertently and
(i) as soon as practicable diverts itself of ownership of
sufficient shares so that the shareholder ceases to be an
interested shareholder; and (ii) would not, at any time within
the three - year period immediately prior to a business
combination between the Company and such shareholder, have been
an interested shareholder but for the inadvertent acquisition of
ownership; or
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(e) The business combination is proposed prior to consummation or
abandonment of and subsequent to the earlier of the public
announcement or the notice required hereunder of a proposed
transaction which (i) constitutes one of the transactions
described in the second sentence of this paragraph; (ii) is with
or by a person who either was not an interested shareholder
during the previous three years or who became an interested
shareholder with the approval of the Company's Board of
Directors; and (iii) is approved or not opposed by a majority of
the members of the Boards of Directors then in office who were
directors prior to any person becoming an interested shareholder
during the previous three years or were recommended for election
or were elected to succeed such directors by a majority of such
directors. The proposed transactions referred to in the preceding
sentences are limited to (x) a merger or consolidation of Company
(except for merger in respect of which no vote of shareholders of
the Company is required according to the Companies Law); (y) a
sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions),
whether as part of a dissolution or otherwise of assets of the
Company or of any direct or indirect majority-owned subsidiary of
the Company (other than to any direct or indirect wholly owned
subsidiary or to the Company) having an aggregate market value
equal to 50% or more of either that aggregate market value of all
of the assets of the Company determined on a consolidated basis
or the aggregate market of all the outstanding shares of the
Company; or (z) a proposed tender or exchange offer for 50% or
more of the outstanding voting shares of the Company. The Company
shall give not less than 20 days notice to all interested
shareholders prior to the consummation of any of the transaction
described in clause (x) or (y) of the second sentence of this
paragraph.
As used in this Article only, the term:
(1) "affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, is
controlled by or is under common control with another
person.
(2) "associate" when used to indicate a relationship with any
person, means (I) any corporation, partnership,
unincorporated association or other entity of which such
person is a director, officer or partner or is, directly
or indirectly, the owner of 20% or more of any class of
voting shares, (ii) any trust or other estate in which
such person has at least a 20% beneficial interest or as
to which such person serves as trustee or in a similar
fiduciary capacity, and (iii) any relative or spouse of
such person, or any relative of such spouse, who has the
same residence as such person.
(3) "business combination" when used in reference to the
Company and any interested shareholder of the Company,
means:
(i) any merger or consolidation of the Company or any
direct or indirect majority owned subsidiary of the
Company with (A) an interested shareholder, or (B)
with any other corporation, partnership,
unincorporated association or other entity if the
merger or consolidation is caused by an interested
shareholder and as a result of such merger or
consolidation Sub-article (a) of this Article 100
is not applicable to the surviving entity;
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(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions), except
proportionately as a shareholder of such Company to
or with the interested shareholder, whether as part
of a dissolution or otherwise, of assets of the
Company or of any direct or indirect majority owner
subsidiary of the Company, which assets have an
aggregate market value equal to 10% or more of
either the aggregate market value of all of the
assets of the Company determined on a consolidated
basis or the aggregate market value of all of the
outstanding shares of the Company.
(iii) any transaction which results in the issuance or
transfer by the Company or by any direct or
indirect majority-owned subsidiary of the Company
of any shares of the Company or of such subsidiary
to the interested shareholder, except (A) pursuant
to the exercise, exchange or conversion of
securities exercisable for or convertible into
shares of the Company or any such subsidiary, which
securities were outstanding prior to the time that
the interested shareholder became such, (B)
pursuant to a dividend or distribution paid or
made, or the exercise, exchange or conversion of
securities exercisable for, exchangeable for or
convertible into shares of the Company or any such
subsidiary, which security is distributed pro rata
to all holders of a class or series of shares of
the Company subsequent to the time the interested
shareholder became such, (C) pursuant to an
exchange offer by the Company to purchase shares
made on the same terms to all holders of said
shares or (D) any issuance or transfer of shares by
the Company; provided, that in no case under
(B)-(D) above shall there be an increase in the
interested shareholder's proportionate share of the
shares of any class or series of the Company or of
the voting shares of the Company.
(iv) any transaction involving the Company or any direct
or indirect majority owned subsidiary of the
Company which has the effect directly or indirectly
of increasing the proportionate share of the shares
of any class or series or securities convertible
into the shares of any class or series of the
Company or of any such subsidiary which is owned by
the interested shareholder except as a result of
immaterial changes due to fractional share
adjustments or as a result of any purchase or
redemption of any shares not caused, directly or
indirectly, by the interested shareholder; or
(v) any receipt by the interested shareholder of the
benefit, directly or indirectly (except
proportionately as a shareholder of such Company),
of any loans, advances, guarantees, pledges or any
other financial benefits (other than those
expressly permitted in subparagraphs (i)-(iv)
above) provided by or through the Company or any
direct or indirect majority owned subsidiary.
26
(4) "control" including the term "controlling," "controlled
by" and "under common control with," means the possession,
directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person,
whether through the ownership of voting shares, by
contract or otherwise. A person who is the owner of 20% or
more of the outstanding voting shares of any company,
partnership, unincorporated association or other entity
shall be presumed to have control of such entity.
Notwithstanding the foregoing, a presumption of control
shall not apply where such person holds voting shares in
good faith and not for the purpose of circumventing this
Article as an agent, bank, broker, nominee, custodian or
trustee for one or more owners who do not individually or
as a group have control of such entity.
(5) "interested shareholder" means any person (other than the
Company and any direct or indirect majority owner
subsidiary of the Company) that (i) is the owner of 15% or
more of the outstanding voting shares of the Company, or
(ii) is an affiliate or associate of the Company and was
the owner of 15% or more of the outstanding voting shares
of the Company at any time within the three year period
immediately prior to that date on which it is sought to be
determined whether such person is an interested
shareholder and the affiliates and associates of such
person, or (iii) any person whose ownership of shares in
excess of the 15% limitation set forth herein is the
result of action taken solely by the Company provided that
such person shall be an interested shareholder if
thereafter such person acquires additional voting shares
of the Company, except as a result of further corporate
action not caused, directly or indirectly, by such person.
For the purpose of determining whether a person is an
interested shareholder, the voting shares of the Company
deemed to be outstanding shall include shares deemed to be
owned by the person through application of paragraph (8)
of this Sub-article but shall not include any other
unissued shares of the Company which may be issuable
pursuant to any agreement, arrangement or understanding,
or upon exercise of conversion rights, warrants or
options, or otherwise.
(6) "person" means any individual, company, partnership,
unincorporated association or other entity.
(7) "share" means with respect to the Company shares of its
capital and with respect to any other entity any equity
interest.
(8) "voting shares" means any class or series entitled to vote
generally in the election of directors of the Company and
generally.
(9) "owner" including the terms "own" and "owned," when used
with respect to any share, means a person that
individually or with or through any of its affiliates or
associates:
(i) beneficially owns such share, directly or
indirectly; or
(ii) has (A) the right to acquire such share (whether
such right is exercisable immediately or only after
the passage of time) pursuant to
27
any agreement, arrangement or understanding or upon
the exercise of conversion rights, warrants or
options, or otherwise, provided, however, that a
person shall not be deemed the owner of share
tendered pursuant to a tender or exchange; or (B)
the right to vote such share pursuant to any
agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the
owner of any share because of such person's right
to vote such share if the agreement, arrangement,
or understanding to vote such share arises solely
from a revocable proxy or consent given in response
to a proxy or consent solicitation made to 10 or
more persons: or
(iii) has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent as
described in item (b) of clause (ii) of this
paragraph) or disposing of such share with any
other person that beneficially owns or whose
affiliates or associates beneficially own, directly
or indirectly, such share.
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