ARTICLES OF ASSOCIATION
OF
TEFRON LTD.
A COMPANY LIMITED BY SHARES
PRELIMINARY
1. TABLE "A" EXCLUDED
------------------
The regulations contained in the second schedule to the Companies Ordinance
(New Version), 5743-1983 (the "Companies Ordinance") shall not apply to the
Company.
2. INTERPRETATION
--------------
In these Articles, the following words shall have the meanings, if not
inconsistent with the subject or context;
"The Company" - TEFRON LTD.
"The Companies Ordinance" or "The Statutes" - The Companies Ordinance, and
every other Israeli Ordinance or statute in force concerning companies
limited by shares and affecting the Company.
"These Articles" - These Articles of Association as originally adopted or
as amended from time to time by Special Resolution.
"The Office" - The current registered office from time to time of the
Company.
"Year" and "Month" - a Gregorian month or year.
"Office Holder" - a director, general manager, chief business manager,
president, executive vice president, vice president, other manager directly
subordinate to the general manager or any other person assuming the
responsibilities of any of the foregoing positions without regard to such
person's title.
"The Companies Law" - The Companies Law, 5759 - 1999, as will be in force
from time to time, and any regulations enacted thereof.
"In Writing" - in hand writing, print, typewriter, photocopy, telex,
facsimile or any other readable form.
"Person", "Man" or `Human Being" - including corporation.
"Corporation" - company, partnership, cooperative, ottoman association
amuta, and any body of persons, whether incorporated or not.
"Ordinary Majority' - a majority of the total voting power represented at
the meeting in person or by proxy, entitled to vote thereon and that voted
thereon, without taking into account the votes that abstained.
"Special Majority" - a majority of 75% (seventy five percent) of the total
voting power represented at the meeting in person or by proxy, entitled to
vote thereon and that voted thereon, without taking into account the votes
that abstained.
"Special Resolution" - a resolution adopted by a Special Majority.
"Shareholder" or "Member" - the holder of shares on the record date
determined according to section 182 of the Companies Law, if a record date
exists for that matter.
"Registered Shareholder" - a Shareholder registered in the Company's
register of shareholders.
"Unregistered Shareholder" - a Shareholder according to section 177(1) of
the Companies Law.
"Register" or "Register of Members" or "Shareholder's Register" - the
register of Shareholders that must be kept by the Company according to the
Companies Law.
Any term in these Articles of Association that was not defined in this
article 2, shall have the meaning known to that term according to the
Companies Law, unless inconsistent with the subject or context. The name of
the Company, its goals and objects and the liability if its shareholders
are as determined in the Company's Memorandum of Association.
2A. BUSINESS
--------
The Company may, at any time, carry on business in any field or type of
business permitted to the Company, whether explicit or implied, according
to its Memorandum of Association. The Company may cease to be engaged in
any such business, whether it began to be engaged in that business field or
type of business, and whether not.
2B CONTRIBUTIONS
-------------
The Company may contribute reasonable sums for worthy causes, even if the
contribution is not in the frame of the Company's business considerations.
The Board of Directors or whoever the Board of Directors delegated its
powers to for this purpose, will be authorized to determine, according to
its discretion, the amounts of the contributions, their purposes, the
entity receiving the contribution and any other condition connected
thereof.
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3. PUBLIC COMPANY
--------------
This Company is a Public Company, as such a term is defined in the
Companies Ordinance, and accordingly:
(a) fully paid-up shares may be transferred freely and such transfers do
not require the approval of the board of directors, however the board
of directors may refuse, without giving any reasons therefor, to
register any transfer of shares which have not been fully paid-up or
where the Company has a lien on the share, constituting the subject
matter of the transfer;
(b) the number of members of the Company for the time being shall not be
limited.
(c) the Company may issue shares, debentures or any other security to the
public;
SHARE CAPITAL
4. SHARE CAPITAL
-------------
(a) The authorized share capital of the Company is NIS 50,000,000 (fifty
million) divided into 49,995,500 (forty nine million nine hundred
ninety five thousand five hundred) Ordinary Shares, NIS 1.00 (one) par
value per share, and 4,500 (four thousand five hundred) Ordinary B
Shares, which are described in subparagraph 4. (d) below.
(b) The Ordinary Shares all rank pari passu in all respects.
(c) The Deferred Shares entitle their holders, upon the liquidation of the
Company, the par value of these shares but no other rights. The
Deferred Shares are non-transferable.
(d) Ordinary B Shares
(1) The holders of each Ordinary B Share shall only have the right to
dividends calculated on the basis of one one-thousandth (1/1000%)
percent of the Company's Annual "B" Shares Profit, as defined
below. For purpose of this section and the Ordinary B Shares, the
Company's Annual "B" Shares Profit shall be the profits from the
Company's ordinary business operations, thus excluding capital
gains and profits from nonrecurring activities in accordance with
the Company's consolidated Statement of Income, which ordinary
business profits shall be net of financing and taxes, but prior
to setoffs for prior year loss carry forwards commencing in 1995.
(2) Calculation of the Company's Annual "B" Shares Profit shall be
based on the Company's annual audited statements, approved by the
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Company's Board of Directors, for the relevant year, which shall
be presented in US Dollars.
(3) The Company's Ordinary B Shares may not be transferred, including
either by operation of law or by testamtary or intestated
descent, assigned, hypothecated, pledged, mortgaged, or otherwise
encumbered, and shall not be subject to a power of attorney or a
deed of transfer, whether immediate or in future, except that the
Ordinary B Shares may be transferred pursuant to an agreement
between the Company, the Trustee, and the holder of the Ordinary
B Shares seeking to make the transfer, which agreement was
entered into in connection with the issuance of the Ordinary B
Shares (the "Ordinary "B" Shares Agreement").
(4) In the event that a holder, or a person entitled to be a holder,
of Ordinary B Shares (hereafter the "Holder") is an employee of
the Company or is part of the Company's management, and such
employee's employment or management position with the Company
ceases, for any reason, including termination, the Holder's
Ordinary B Shares, whether held or to which the Holder is
entitled, shall be converted to Deferred Shares.
(5) Upon the consummation of the initial public offering of the
Company's Shares or in the event that the Company sells,
transfers, or issues its Ordinary Shares to anyone that is not a
holder of the Ordinary Shares of the Company as of November 24,
1996, the Ordinary B Shares shall automatically convert to
Deferred Shares.
(6) Notwithstanding the foregoing, the Ordinary B Shares shall bear
the right to their relative share of the profits of the Company
that are reflected in the Company's Statement of Income
immediately prior to the occurrence of either of the events
described in sub-paragraphs (4) and (5) above.
(7) Payment of dividends under this section shall only be made upon
the resolution of the Company's Board of Directors.
5. INCREASE OF AUTHORIZED SHARE CAPITAL
------------------------------------
(a) The Company may, from time to time, by Special Resolution (as defined
in Article 28(a) below), whether or not all the shares then authorized
have been issued and whether or not all the shares theretofore issued
have been called up for payment, increase its authorized share
capital. Any such increase shall be in such amount and shall be
divided into shares of such nominal amounts, and such shares shall
confer such rights and preferences, and shall be subject to such
restrictions, as the Special Resolution shall provide.
(b) Except to the extent otherwise provided in the Special Resolution, any
new shares included in the authorized share capital increased as
aforesaid shall be subject to all the provisions of these Articles
which are applicable to shares of the same class included in the
existing share capital (and, if such new shares are of the same class
as a class of shares included in the existing share capital,
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to all of the provisions which are applicable to shares of such class
included in the existing share capital).
6. SPECIAL RIGHTS; MODIFICATION OF RIGHTS
--------------------------------------
(a) Subject to the provisions of the Memorandum of Association of the
Company, and without prejudice to any special rights previously
conferred upon the holders of existing shares in the Company, the
Company may, from time to time, by Special Resolution, provide for
shares with such preferred or deferred rights or rights of redemption
or other special rights and/or restrictions, whether in regard to
dividends, voting, repayment of share capital or otherwise, as may be
stipulated in such Special Resolution.
(b) (i) If at any time the share capital is divided into different
classes of shares, the rights attached to any class, unless
otherwise provided by these Articles, may be modified or
abrogated by the Company, by Special Resolution, subject to
the consent in writing of the holders of seventy-five percent
(75%) of the issued shares of such class or the adoption of a
Special Resolution passed at a separate General Meeting of the
holders of the shares of such class.
(ii) The provisions of these Articles relating to General Meetings
shall, mutatis mutandis, apply to any separate General Meeting
of the holders of the shares of a particular class, provided
however, that the requisite quorum at any such separate
General Meeting shall be two or more members present in person
or by proxy and holding not less than twenty five (25%)
percent of the issued shares of such class.
(iii) Unless otherwise provided by these Articles, the enlargement
of an authorized class of shares, or the issuance of
additional shares thereof out of the authorized and unissued
share capital, shall not be deemed, for purposes of this
Article 6(b), to modify or abrogate the rights attached to
previously issued shares of such class or of any other class.
7. CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL
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(a) The Company may, from time to time, by Special Resolution (subject,
however, to the provisions of Article 6(b) hereof and to applicable
law):
(i) consolidate and divide all or part of its issued or unissued
authorized share capital into shares of a per share nominal
value which is larger than the per share nominal value of its
existing shares;
(ii) subdivide its shares (issued or unissued) or any of them, into
shares of smaller nominal value than is fixed by the
Memorandum of Association (subject, however, to the provisions
of Section 144(4) of the Companies Ordinance);
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(iii) cancel any shares which, at the date of the adoption of such
Special Resolution, have not been taken or agreed to be taken
by any person, and diminish the amount of its share capital by
the amount of the shares so canceled; or
(iv) reduce its share capital in any manner, and with and subject
to any incident authorized, and consent required, by law;
(b) With respect to any consolidation of issued shares into shares of a
larger nominal value per share, and with respect to any other action
which may result in fractional shares, the Board of Directors may
settle any difficulty which may arise with regard thereto, as it deems
fit, and, in connection with any such consolidation or other action
which could result in fractional shares, may, without limiting its
aforesaid power:
(i) determine, as to the holder of shares so consolidated, which
issued shares shall be consolidated into a share of a larger
nominal value per share.
(ii) allot, in contemplation of or subsequent to such consolidation
or other action, shares or fractional shares sufficient to
preclude or remove fractional share holdings;
(iii) redeem, in the case of redeemable preference shares, and
subject to applicable law, such shares or fractional shares
sufficient to preclude or remove fractional share holdings;
(iv) cause the transfer of fractional shares by certain
shareholders of the Company to other shareholders thereof so
as to most expediently preclude or remove any fractional
shareholdings, and cause the transferees of such fractional
shares to pay the transferors thereof the fair value thereof,
and the Board of Directors is hereby authorized to act in
connection with such fractional shares, with full power of
substitution, for the purposes of implementing the provisions
of this sub-Article 7(b)(iv).
8. ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES
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(a) Share Certificates shall be issued under the corporate seal of
the Company and shall bear the signature of one Director, or
of any other person or persons authorized therefor by the
Board of Directors.
(b) Each member shall be entitled to one or several numbered
certificate(s) for all the shares of any class registered in
his name, each for one or more of such shares. Each
certificate shall specify the serial numbers of the shares
represented thereby and may also specify the amount paid up
thereon.
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(c) A share certificate registered in the names of two or more
persons shall be delivered to the person first named in the
Register of Members in respect of such co-ownership.
(d) A share certificate which has been defaced, lost or destroyed,
may be replaced, and the Company shall issue a new certificate
to replace such defaced, lost or destroyed certificate upon
payment of such fee, and upon the furnishing of such evidence
of ownership and such indemnity, as the Board of Directors in
its discretion deems fit.
9. REGISTERED HOLDER
-----------------
9.1 Except as otherwise provided in these Articles, a Shareholder is the
registered holder of each share in the Company's Register, and whoever
is registered with a Stock Exchange member as entitled to shares of
the Company, and such shares are included amongst the shares
registered in the Company's Register in the name of a registration
company.
9.2 A Shareholder who is a trustee will be registered in the Register,
together with a reference to his trust, and will be deemed for any
matter connected with the Companies Law, as a shareholder. Without
derogating from the above, the Company will recognize the trustee, as
above, as a Shareholder, for all intents and purposes, and shall not
recognize any other person, including the beneficiary, as the owner of
any right in the share.
9.3 Without derogating from the above, and subject to these Articles of
Association, except for Shareholders according to articles 9.1 and 9.2
above, the Company shall not, except as ordered by a court of
competent jurisdiction, or as required by statute, recognize any other
Person as the owner of any right in a share or any part of a share and
the Company shall not be bound by and shall not recognize any
equitable or other claim to, or interest in, future or partial, in any
such share or any part thereof, on the part of any other person.
10. ALLOTMENT OF SHARES
-------------------
10.1 The unissued shares from time to time shall be under the control of
the Board of Directors, who shall have the power to allot, issue or
otherwise dispose of shares to such persons, on such terms and
conditions (including inter alia terms relating to calls as set forth
in Article 12(f) hereof), and either at par or at a premium, or,
subject to the provisions of the Companies Ordinance, at a discount
and/or with payment of commission, and at such times, as the Board of
Directors deems fit, and the power to give to any person the option to
acquire from the Company any shares, either at par or at a premium,
or, subject as aforesaid, at a discount and/or with payment of
commission, during such time and for such consideration as the Board
of Directors deems fit.
10.2 The Board of Directors may issue shares and other securities,
convertible or exercisable to shares, in an amount up to the Company's
registered share
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capital. For this matter, convertible securities that could be
converted or exercised into shares will be deemed converted or
exercised at the time of their issuance. Without derogating from the
above, the Board of Directors is entitled to issue the shares and the
other securities, as above, to grant alternative rights for their
purchase, including options or the purchase thereof in other ways, all
to whoever will be determined by the Board of Directors and at times,
prices and terms as determined by the Board of Directors, and to
determine any other instruction connected thereto, including
instructions concerning the ways to distribute the shares and the
securities issued by the Company between their purchasers, including,
in the event of excess subscription, and all, according to the
discretion of the Board of Directors.
10.3 Without derogating from the above, and subject to the Companies Law
and to these Articles of Association, the Board of Directors is
entitled to determine that the consideration for the shares shall be
paid in cash or in assets, including securities or any other way,
according to it's consideration, or that the shares shall be issued as
bonus shares or that the shares shall be issued in consideration equal
to or higher than their nominal value, whether in units or as stock,
all according to the terms and the time as determined by the Board of
Directors, according to it's consideration.
10.4 In the resolution to increase the registered share capital of the
Company, the general meeting may determine that, the new shares
included in the amount which increase the registered share capital
(the "New Shares") or any part thereof, shall be offered first, in
their nominal value or at a premium, to all the shareholders holding
shares at that time, at a rate proportional to the nominal value of
their shares in the Company or to determine other instructions
concerning the issuance and the allotment of the New Shares. But, if
the General Meeting has not so determined in its resolution to
increase the registered share capital of the Company, the Board of
Directors may offer the shares according to Article 10.2 above.
10.5 The Board of Directors is entitles to decide to pay underwriting
commissions or broker fees to any person, at the time of underwriting
or agreement to underwrite or achievement of underwriting or ensurence
of underwriting on shares, or debentures or other securities of the
Company. In any event of issuance of securities of the Company, the
Board of Directors is also entitled to determine the payment of
commissions, by means of cash, or shares of the Company, or other
securities issued by the Company, or any other way, or part of the
payment in one way and part in another, and all subject to any
applicable law.
11. PAYMENT IN INSTALLMENTS
-----------------------
If, pursuant to the terms of allotment or issue of any share, all or any
portion of the price thereof shall be payable in installments, every such
installment shall be paid to
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the Company on the due date thereof by the then registered holder(s) of the
share or the person(s) then entitled thereto.
12. CALLS ON SHARES
---------------
(a) The Board of Directors may, from time to time, as it, in its
discretion, deems fit, make calls for payment upon members in respect
of any sum which has not been paid up in respect of shares held by
such members and which is not pursuant to the terms of allotment or
issue of such shares or otherwise, payable at a fixed time. Each
member shall pay the amount of every call so made upon him (and of
each installment thereof if the same is payable in installments), to
the Company at the time(s) and place(s) designated by the Board of
Directors, as any such time(s) may be thereafter extended or place(s)
changed. Unless otherwise stipulated in a resolution of the Board of
Directors (and in the notice hereafter referred to), each payment in
response to a call shall be deemed to constitute a pro rata payment on
account of all the shares in respect of which such call was made.
(b) Notice of any call for payment by a member shall be given in writing
to such member not less than fourteen (14) days prior to the time of
payment fixed in such notice, and shall specify the time and place of
payment. Prior to the time for any such payment fixed in a notice of a
call given to a member, the Board of Directors may in its absolute
discretion, by notice in writing to such member, revoke such call in
whole or in part, extend the time fixed for payment thereof, or
designate a different place of payment. In the event of a call payable
in installments, only one notice thereof need be given.
(c) If pursuant to the terms of allotment or issue of a share or
otherwise, an amount is made payable at a fixed time (whether on
account of such share or by way of premium), such amount shall be
payable at such time as if it were payable by virtue of a call made by
the Board of Directors and for which notice was given in accordance
with paragraphs (a) and (b) of this Article 12, and the provisions of
these Articles with regard to calls (and the non-payment thereof)
shall be applicable to such amount (and the non-payment thereof).
(d) Joint holders of a share shall be jointly and severally liable to pay
all calls for payment in respect of such share and all interest
payable thereon.
(e) Any amount called for payment which is not paid when due shall bear
interest from the date fixed for payment until actual payment thereof,
at such rate (not exceeding the then prevailing interest rate charged
by leading commercial banks in Israel), and payable at such time(s) as
the Board of Directors may prescribe.
(f) Upon the allotment of shares, the Board of Directors may provide for
differences among the allottees of such shares as to the amounts and
times for payment of calls in respect of such shares.
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13. PREPAYMENT
----------
With the approval of the Board of Directors, any member may pay to the
Company any amount not yet payable in respect of his shares, and the Board
of Directors may approve the payment by the Company of interest on any such
amount until the same would be payable if it had not been paid in advance,
at such rate and time(s) as may be approved by the Board of Directors. The
Board of Directors may at any time cause the Company to repay all or any
part of the money so advanced, without premium or penalty. Nothing in this
Article 13 shall derogate from the right of the Board of Directors to make
any call for payment before or after receipt by the Company of any such
advance.
14. FORFEITURE AND SURRENDER
------------------------
(a) If any member fails to pay an amount payable by virtue of a call, or
interest thereon as provided for in accordance herewith, on or before
the day fixed for payment of the same, the Board of Directors may at
any time after the day fixed for such payment, so long as such amount
(or any portion thereof) or interest thereon (or any portion thereof)
remains unpaid, resolve to forfeit all or any of the shares in respect
of which such payment was called for. All expenses incurred by the
Company in attempting to collect any such amount or interest thereon,
including, without limitation, attorney's fees and costs of legal
proceedings, shall be added to, and shall, for all purposes (including
the accrual of interest thereon), constitute a part of, the amount
payable to the Company in respect of such call.
(b) Upon the adoption of a resolution as to the forfeiture of a member's
share, the Board of Directors shall cause notice thereof to be given
to such member, which notice shall state that, in the event of the
failure to pay the entire amount so payable by a date specified in the
notice (which date shall be not less than fourteen (14) days after the
date such notice is given and which may be extended by the Board of
Directors), such shares shall be ipso facto forfeited, provided,
however, that, prior to such date, the Board of Directors may nullify
such resolution of forfeiture, but such nullification shall not stop
the Board of Directors from adopting a further resolution of
forfeiture in respect of the non-payment of the same amount.
(c) Without derogating from Articles 54 and 59 hereof, whenever shares are
forfeited as herein provided, all dividends, if any, theretofore
declared in respect thereof and not actually paid shall be deemed to
have been forfeited at the same time.
(d) The Company, by resolution of the Board of Directors, may accept the
voluntary surrender of any share not fully paid for.
(e) Any share forfeited or surrendered as provided herein, shall become
the property of the Company, and the same, subject to the provisions
of these
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Articles, may be sold, re-allotted or otherwise disposed of as the
Board of Directors deems fit.
(f) 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 liable to pay, and shall forthwith pay, to
the Company, all calls, interest and expenses owing upon or in respect
of such shares at the time of forfeiture or surrender together with
interest thereon from the time of forfeiture or surrender until actual
payment, at the rate prescribed in Article 12(e) above, and the Board
of Directors, in its discretion, may, but shall not be obligated to,
enforce the payment of such moneys, or any part thereof. In the event
of such forfeiture or surrender, the Company, by resolution of the
Board of Directors, may accelerate the date(s) of payment of any or
all amounts then owing to the Company by the member in question (but
not yet due) in respect of all shares owned by such member, solely or
jointly with another.
(g) The Board of Directors may at any time, before any share so forfeited
or surrendered shall have been sold, re-allotted or otherwise disposed
of, nullify the forfeiture or surrender on such conditions as it deems
fit, but such nullification shall not stop the Board of Directors from
re-exercising its powers of forfeiture pursuant to this Article 14.
15. LIEN
----
(a) Except to the extent the same may be waived or subordinated in
writing, the Company shall have a first and paramount lien upon all
the shares registered in the name of each member (without regard to
any equitable or other claim or interest in such shares on the part of
any other person), and upon the proceeds of the sale thereof, for his
debts, liabilities and engagements to the Company arising from any
amount payable by such member in respect of any unpaid or partly paid
share, whether or not such debt, liability or engagement has matured.
Such lien shall extend to all dividends from time to time declared or
paid in respect of such share. Unless otherwise provided, the
registration by the Company of a transfer of shares shall be deemed to
be a waiver on the part of the Company of the lien (if any) existing
on such shares immediately prior to such transfer.
(b) The Board of Directors may cause the Company to sell a share subject
to such a lien when the debt, liability or engagement giving rise to
such lien has matured, in such manner as the Board of Directors deems
fit, but no such sale shall be made unless such debt, liability or
engagement has not been satisfied within fourteen (14) days after
written notice of the intention to sell shall have been served on such
member, his executors or administrators.
(c) The net proceeds of any such sale, after payment of the costs thereof,
shall be applied in or toward satisfaction of the debts, liabilities
or engagements of such member in respect of such share (whether or not
the same have matured),
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and the remaining balance (if any) shall be paid to the member, his
executors, administrators or assigns.
16. SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN
------------------------------------------------------------
Upon any sale of a share after forfeiture or surrender of for enforcing a
lien, the Board of Directors may appoint any person to execute an
instrument of transfer of the share so sold and cause the purchaser's name
to be entered in the Register of Members in respect of such share. The
purchaser shall be registered as the shareholder and shall not be bound to
see to the regularity of the sale proceedings, or to the application of the
proceeds of such sale, and after his name has been entered in the Register
of Members in respect of such share, the validity of the sale shall not be
impeached by any person, and the remedy of any person aggrieved by the sale
shall be in damages only and against the Company exclusively.
17. REDEEMABLE SHARES
-----------------
The Company may, subject to applicable law, issue redeemable shares and
redeem the same, according to the terms and the fashion determined by the
Board of Directors, at it's discretion.
18. CONVERSION OF SHARES INTO STOCK
-------------------------------
(a) The Board of Directors may, with the approval of the members
previously given by Special Resolution, convert any paid-up shares
into stock, and may, with like sanction, reconvert any stock into
paid-up shares of any denomination.
(b) The holders of stock may transfer the same, or any part thereof, in
the same manner and subject to the same regulations, as the shares
from which the stock arose might have been transferred prior to
conversion, or as near thereto as circumstances admit, provided,
however, that the Board of Directors may from time to time fix the
minimum amount of stock so transferable, and restrict or forbid the
transfer of fractions of such minimum, but the minimum shall not
exceed the nominal value of each of the shares from which such stock
arose.
(c) The holders of stock shall, in accordance with the amount of stock
held by them, have the same rights and privileges as regards
dividends, voting at meetings of the Company and other matters as if
they held the shares from which such stock arose, but no such right or
privilege, except participation in the dividends and profits of the
Company, shall be conferred by any such aliquot part of such stock as
would not, if existing in shares, have conferred that right or
privilege.
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(d) Such of the Articles of the Company as are applicable to paid-up
shares shall apply to stock, and the words "share" and "shareholder"
(or "member") therein shall include "stock" and "stockholder".
TRANSFER OF SHARES
19. REGISTRATION OF TRANSFER
------------------------
(a) 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 Register of Members in respect of the shares so
transferred, the Company may continue to regard the transferor as the
owner thereof.
(b) The Board of Directors may, in its discretion to the extent it deems
necessary, close the Register of Members for registrations of
transfers of shares during any year for a period determined by the
Board of Directors, and no registrations of transfers of shares shall
be made by the Company during any such period during which the
Register of Members is so closed.
20. RECORD DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION
------------------------------------------------------------
Subject to the Companies Law and any other applicable law, and
notwithstanding any provision of these Articles to the contrary, and to
allow the Company to determine the members entitled to notice of, or to
vote at, any Annual or Extraordinary General Meeting or any adjournment
thereof, or to express consent to or dissent from any corporate action in
writing without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to exercise
any rights in respect of, or to take or be subject to, any other action,
the Board of Directors may fix in advance, a record date, which shall not
be more than forty nor less than four days before the date of such meeting,
nor more than forty days prior to any other action. A determination of
members of record entitled to notice of or to vote at a meeting shall apply
to any adjournment or the meeting: provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
21. DECEDENTS' SHARES
-----------------
(a) In case of the death of a registered holder of a share registered in
the names of two or more holders, the Company may recognize the
survivor(s) as the sole owner(s) thereof unless and until the
provisions of Article 21(b) have been effectively invoked.
(b) Any person becoming entitled to a share in consequence of the death of
any shareholder, upon producing evidence of the grant of probate or
letters of administration or declaration of succession (or such other
evidence as the
- 13 -
Board of Directors may reasonably deem sufficient), shall be
registered as a member in respect of such share, or may, subject to
the regulations as to transfer herein contained, transfer such share.
22. RECEIVERS AND LIQUIDATORS
-------------------------
(a) The Company may recognize any receiver, liquidator or similar official
appointed to wind-up, dissolve or otherwise liquidate a corporate
member, and a trustee, manager, receiver, liquidator or similar
official appointed in bankruptcy or in connection with the
reorganization of, or similar proceeding with respect to a member or
its properties, as being entitled to the shares registered in the name
of such member.
(b) Such receiver, liquidator or similar official appointed to wind-up,
dissolve or otherwise liquidate a corporate member and such trustee,
manager, receiver, liquidator, or similar official appointed in
bankruptcy or in connection with the reorganization of, or similar
proceedings with respect to a member or its properties, upon producing
such evidence as the Board of Directors may deem sufficient as to his
authority to act in such capacity or under this Article, shall with
the consent of the Board of Directors (which the Board of Directors
may grant or refuse in its absolute discretion), be registered as a
member in respect of such shares, or may, subject to the regulations
as to transfer herein contained, transfer such shares.
23. GENERAL MEETING
---------------
Resolutions of the Company in the following matters shall be adopted by the
General Meeting:
23.1 Changes in the Company's Articles of Association or Memorandum of
Association.
23.2 Execution of the authorities of the Board of Directors by the General
Meeting. if the Board of Directors is incapable of executing it's
authorities and the execution of such authority is essential for the
proper administration of the Company, according to section 52(a) of
the Companies Law.
23.3 Appointment of the Company's auditors and their dismissal.
23.4 Election of the directors of the Company and their dismissal.
23.5 Confirmation of actions and transactions that require the approval of
the General Meeting according to sections 255 and 268 up to 275 of the
Companies Law.
- 14 -
23.6 The increase of the registered share capital and its decrease
according to sections 286 and 297 of the Companies Law and, changes in
the share capital according to article 7 hereof.
23.7 Merger according to section 320(a) of the Companies Law.
23.8 Any resolution that according to these Articles of Association, is
required to be adopted by the General Meeting
GENERAL MEETINGS
23A. ANNUAL GENERAL MEETING
----------------------
(a) An Annual General 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 General Meeting) and at such place, either
within or outside the State of Israel, as may be determined by the
Board of Directors.
(b) Subject to the provisions of these Articles, the function of the
Annual General Meeting shall be to elect the members of the Board of
Directors; to receive the Financial Statements, the ordinary reports
and accounts of the Company's directors and auditors; to approve final
annual (pursuant and subject to Articles 52, 53, 54 and 57) dividends;
to appoint the Company's auditors and to fix their remuneration; and
to transact any other business which under these Articles or the
Statutes are to be transacted at a General Meeting.
(c) Subject to any applicable law, all resolutions concerning all the
business that may come before the Annual General Meetings,
Extraordinary Meetings or any adjournments thereof, shall be adopted
by Members who either chose to attend and vote their shares in person
at such meetings or to vote thereon by means of a proxy.
24 EXTRAORDINARY GENERAL MEETINGS
------------------------------
All General Meetings other than Annual General Meetings shall be called
"Extraordinary General Meeting". The Board of Directors may, whenever it
thinks fit, convene an Extraordinary General Meeting, at such time and
place, within or out-side the State of Israel, as may be determined by the
Board of Directors, and shall be obliged to do so upon a request in writing
in accordance with Section 63(b) of the Companies Law.
25 NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE
---------------------------------------------------
(a) Not less than seven (7) days' prior notice shall be given of every
General Meeting, provided, however, that a Special Resolution shall
not be passed unless at least twenty one (21) days' prior notice shall
have been given of the meeting at which it is proposed to pass the
same unless all shareholders
- 15 -
entitled to vote agree on a shorter period. Each such notice shall
specify the place and the day and hour of the meeting, and the general
nature of each item to be acted upon thereat, said notice to be given
to all members who would be entitled to attend and vote at such
meeting. Anything therein to the contrary notwithstanding, with the
consent of all members entitled to vote thereon, a resolution may be
proposed and passed at such meeting although a lesser notice than
hereinabove prescribed has been given.
(b) The accidental omission to give notice of a meeting to any member, or
the non-receipt of notice sent to such member, shall not invalidate
the proceedings at such meeting.
PROCEEDINGS AT GENERAL MEETINGS
26 QUORUM
------
(a) No business shall be transacted at a General Meeting, or at any
adjournment thereof, unless the quorum required under these Articles
for such General Meeting or such adjourned meeting, as the case may
be, is present when the meeting proceeds to business.
(b) In the absence of contrary provisions in these Articles, two or more
members (not in default in payment of any sum referred to in Article
32(a) hereof), present in person or by proxy and holding shares
conferring in the aggregate not less than twenty five (25%) percent of
the voting power of the Company, shall constitute a quorum of General
Meeting.
(c) If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if convened upon requisition under
Section 63(b)(2) of the Companies Law, shall be dissolved, but in any
other case it shall be adjourned to the same day in the next week, at
the same time and place, or to such day and at such time and place as
the Chairman may determine with the consent of the holders of a
majority of the voting power present at the meeting in person or by
proxy and voting on the question of adjournment. No business shall be
transacted at any adjourned meeting except business which might
lawfully have been transacted at the meeting as originally called. At
such adjourned meeting (other than an adjourned separate meeting of a
particular class of shares as referred to in Article 6 of these
Articles), any two (2) members (not in default as aforesaid) present
in person or by proxy, and holding shares conferring in the aggregate
not less than twenty five (25%) percent of the voting power of the
Company, shall constitute a quorum.
27 CHAIRMAN
--------
The Chairman, if any, of the Board of Directors, shall preside as Chairman
at every General Meeting of the Company. If, at any meeting, the Chairman
is not present within fifteen (15) minutes after the time fixed for holding
the meeting or is unwilling to act as Chairman, the Co-Chairman shall
preside at the meeting. If at any
- 16 -
such meeting both the Chairman and the Co-Chairman are not present or are
unwilling to act as Chairman, the members present shall choose someone of
their number to be Chairman. The office of Chairman shall not, by itself,
entitle the holder thereof to vote at any General Meeting nor shall it
entitle such holder to a second or casting vote (without derogating,
however, from the rights of such Chairman to vote as a shareholder or proxy
of a shareholder if, in fact, he is also a shareholder or such proxy).
28 ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS
-------------------------------------------
(a) (i) An Ordinary Resolution shall be deemed adopted if approved by an
Ordinary Majority.
(ii) A Special or Extraordinary Resolution shall be deemed adopted if
approved by a Special Majority.
(b) Every question submitted to a General Meeting shall be decided by a
show of hands, but if a written ballot is demanded by any member
present in person or by proxy and entitled to vote at the meeting, the
same shall be decided by such ballot. A written ballot may be demanded
before the proposed resolution is voted upon or immediately after the
declaration by the Chairman of the results of the vote by a show of
hands. If a vote by written ballot is taken after such declaration,
the results of the vote by a show of hands shall be of no effect, and
the proposed resolution shall be decided by such written ballot. The
demand for a written ballot may be withdrawn at any time before the
same is conducted, in which event another member may then demand such
written ballot. The demand for a written ballot shall not prevent the
continuance of the meeting for the transaction of business other than
the question on which the written ballot has been demanded.
(c) A declaration by the Chairman of the meeting that a resolution has
been carried unanimously, or carried by a particular majority, or
lost, and an entry to that effect in the minute book of the Company,
shall be conclusive evidence of the fact without proof of the number
or proportion of the votes recorded in favor of or against such
resolution.
29 RESOLUTIONS IN WRITING
----------------------
A resolution in writing signed by all members of the Company then entitled
to attend and vote at General Meetings or to which all such members have
given their written consent (by letter, telegram, telex, facsimile or
otherwise) shall be deemed to have been unanimously adopted by a General
Meeting duly convened and held.
30 POWER TO ADJOURN
----------------
The Chairman of a General Meeting at which a quorum is present may, with
the consent of the holders of a majority of the voting power represented in
person or by proxy and voting on the question of adjournment (and shall if
so directed by the
- 17 -
meeting), adjourn the meeting from time to time and from place to place,
but no business shall be transacted at any adjourned meeting except
business which might lawfully have been transacted at the meeting as
originally called.
31 VOTING POWER
------------
Subject to provisions of Article 32(a) and subject to any provision hereof
conferring special rights as to voting, or restricting the right to vote,
every member shall have one vote for each share held by him of record, on
every resolution, without regard to whether the vote thereon is conducted
by a show of hands, by written ballot or by any other means.
32 VOTING RIGHTS
-------------
(a) No member shall be entitled to vote at any General Meeting (or be
counted as a part of the quorum thereat), unless all calls then
payable by him in respect of his shares in the Company have been paid,
but this Article 32(a) shall not apply to separate General Meetings of
the holders of a particular class of shares pursuant to Article 6(b).
(b) A company or other corporate body being a member of the Company may
duly authorize any person to be its representative at any meeting of
the Company or to execute or deliver a proxy on its behalf. Any person
so authorized shall be entitled to exercise on behalf of such member
all the power which the latter could have exercised if it were an
individual shareholder. Upon the request of the Chairman of the
meeting, written evidence of such authorization (in form acceptable to
the Chairman) shall be delivered to him.
(c) Any member entitled to vote may vote either in person or by proxy (who
need not be a member of the Company), or, if the member is a company
or other corporate body, by a representative authorized pursuant to
Article 32(b).
(d) If two or more persons are registered as joint holders of any share,
the vote of the senior who tenders a vote, in person or by proxy,
shall be accepted to the exclusion of the vote(s) of the other joint
holder(s). For the purpose of this Article 32(d), seniority shall be
determined by the order of registration of the joint holders in the
Register of Members.
PROXIES
33 INSTRUMENT OF APPOINTMENTS
--------------------------
(a) An instrument appointing a proxy shall be in writing and shall be
substantially in the following form:
"I _____________________ of ________________________
(Name of Shareholder) (Address of Shareholder)
- 18 -
being a member of TEFRON LTD. hereby appoint
_____________________ of ______________________
(Name of Proxy) (Address of Proxy)
as my proxy to vote for me and on my behalf at the General Meeting of
the Company to be held on the ____ day of _______, 199_ and at any
adjournment(s) thereof.
Signed this ____ day of ______, 199_.
or in any usual or common form or in such other form as may be
approved by the Board of Directors. Such proxy shall be duly signed by
the appointor or such person's duly authorized attorney or, if such
appointor is a company or other corporate body, under its corporate
seal or stamp or the hand of its duly authorized agent(s) or
attorney(s).
(b) The instrument appointing a proxy (and the power of attorney or other
authority, if any, under which such instrument has been signed) shall
either be presented to the Chairman at the meeting at which the person
named in the instrument proposes to vote or be delivered to the
Company (at its Registered Office, at its principal place of business,
or at the offices of its registrar or transfer agent, or at such place
as the Board of Directors may specify) not less than two (2) hours
before the time fixed for such meeting, except that the instrument
shall be delivered forty-eight (48) hours before the time fixed for
the meeting where the meeting is to be held outside of Israel and the
instrument is delivered to the Company's registrar or transfer agent.
Notwithstanding the above, the Chairman shall have the right to waive
the time requirement provided above with respect to all instruments of
proxies and to accept any and all instruments of proxy until the
beginning of a General Meeting.
34 EFFECT OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF
------------------------------------------------------------------
APPOINTMENT
-----------
(a) A vote cast in accordance with an instrument appointing a proxy shall
be valid notwithstanding the prior death or bankruptcy of the
appointing member (or of his attorney-in-fact, if any, who signed such
instrument), or the transfer of the share in respect of which the vote
is cast, unless written notice of such matters shall have been
received by the Company or by the Chairman of such meeting prior to
such vote being cast.
- 19 -
(b) An instrument appointing a proxy shall be deemed revoked (i) upon
receipt by the Company or the Chairman, subsequent to receipt by the
Company of such instrument, of written notice signed by the person
signing such instrument or by the member appointing such proxy
canceling the appointment thereunder (or the authority pursuant to
which such instrument was signed) or of an instrument appointing a
different proxy (and such other documents, if any, required under
Article 33(b) for such new appointment), PROVIDED such notice of
cancellation or instrument appointing a different proxy were so
received at the place and within the time for delivery of the
instrument revoked thereby as referred to in Article 33(b) hereof, or
(ii) if the appointing member is present in person at the meeting for
which such instrument of proxy was delivered, upon receipt by the
Chairman of such meeting of written notice from such member of the
revocation of such appointment, or if and when such member votes at
such meeting. A vote cast in accordance with an instrument appointing
a proxy shall be valid notwithstanding the revocation or purported
cancellation of the appointment, or the presence in person or vote of
the appointing member at a meeting for which it was rendered, unless
such instrument of appointment was deemed revoked in accordance with
the foregoing provisions of this Article 34(b) at or prior to the time
such vote was cast.
BOARD OF DIRECTORS
35 POWERS OF BOARD OF DIRECTORS
----------------------------
(a) GENERAL
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 by action of its members at a General Meeting. The authority
conferred on the Board of Directors by this Article 35 shall be
subject to the provisions of the Companies Ordinance, these Articles,
and any regulation or resolution consistent with these Articles
adopted from time to time by the Company by action of its members at 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.
(b) BORROWING POWER
The Board of Directors may from time to time, at 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 as it deems fit, and, in particular, by
the issuance of bonds,
- 20 -
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 its uncalled or called but unpaid capital for the time
being.
(c) RESERVES
The Board of Directors may, from time to time, set aside any amount(s)
out of the profits of the Company as a reserve or reserves for any
purpose(s) which the Board of Directors, in its absolute discretion,
shall deem fit, including without limitation, capitalization and
distribution of bonus shares, and may invest any sum so set aside in
any manner and from time to time deal with and vary such investments
and dispose of all or any part thereof, and employ any such reserve or
any part thereof in the business of the Company without being bound to
keep the same separate from other assets of the Company, and may
subdivide or redesignate any reserve or cancel the same or apply the
funds therein for another purpose, all as the Board of Directors may
from time to time think fit.
36 EXERCISE OF POWERS OF BOARD OF DIRECTORS
----------------------------------------
(a) A meeting of the Board of Directors duly convened and at which a
quorum is present shall be competent to exercise all the authorities,
powers and discretion vested in or exercisable by the Board of
Directors.
(b) A resolution proposed at any meeting of the Board of Directors shall
be deemed adopted if approved by a majority of the Directors present
when such resolution is put to a vote and voting thereon.
(c) The board of directors may adopt resolutions without actually
convening, provided that all the directors then in office entitled to
participate in a discussion and vote on a matter brought for
resolution have agreed to a resolution in writing (by letter,
facsimile, electronic mail or otherwise). A resolution adopted by the
board of directors without actually convening shall require the
approval of at least 75% of the members of the board of directors
entitled to vote thereon and thus approved, shall be deemed to have
been adopted by a meeting of the Board of Directors duly convened and
held.
37 DELEGATION OF POWERS
--------------------
(a) The Board of Directors may, subject to the provisions of the Companies
Ordinance, delegate any or all of its powers to committees, each
consisting of one or more persons (who are Directors), and it may from
time to time revoke such delegation or alter the composition of any
such committee. Any Committee so formed (in these Articles referred to
as a "Committee of the Board of Directors"), shall, in the exercise of
the powers so delegated, conform to any regulations imposed on it by
the Board of Directors. The meetings and proceedings of any such
Committee of the Board of Directors
- 21 -
shall, mutatis mutandis, be governed by the provisions herein
contained for regulating the meetings of the Board of Directors, so
far as not superseded by any regulations adopted by the Board of
Directors under this Article. Unless otherwise expressly provided by
the Board of Directors in delegating powers to a Committee of the
Board of Directors, such Committee shall not be empowered to further
delegate such powers.
(b) Without derogating from the provisions of Article 50, the Board of
Directors may from time to time appoint a Secretary to the Company, as
well as officers, agents, employees and independent contractors, as
the Board of Directors deems fit, and may terminate the service of any
such person. The Board of Directors may, subject to the provisions of
the Companies Ordinance, determine the powers and duties, as well as
the salaries and emoluments, of all such persons, and may require
security in such cases and in such amounts as it deems fit.
(c) The Board of Directors may from time to time, by power of attorney or
otherwise, appoint any person, company, firm or body of persons to be
the attorney or attorneys of the Company at law or in fact for such
purpose(s) and with such powers, authorities and discretions, and for
such period and subject to such conditions, as it deems fit, and any
such power of attorney or other appointment may contain such
provisions for the protection and convenience of persons dealing with
any such attorney as the Board of Directors deems fit, and may also
authorize any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
38 ELECTION OF DIRECTORS
---------------------
(a) The Board of Directors of the Company shall consist of such number of
Directors (not less than two (2) nor more than fifteen (15) as may be
fixed, from time to time, by ordinary Resolution of the Company.
(b) The Board of Directors may, from time to time, elect an additional
director or directors to the Company, whether to fill a vacancy,
however created, or as an additional director or directors, only that
the total number of directors may not be higher than the maximum
number determined in Article 38(a) hereof. A director thus elected,
would terminate his service at the first Annual General Meeting that
shall be held after his appointment, and could be re-elected as a
director.
(c) The General Meeting or the Board of Directors may determine that the
service term of a director elected by them, accordingly, may begin at
a date later than the date of such director's election as a director.
(d) The Company shall appoint at least two External Directors, and the
provisions of the Companies Law in this matter shall apply.
39 ELECTION AND REMOVAL OF DIRECTORS
---------------------------------
- 22 -
Directors shall be elected at the Annual General Meeting, Extraordinary
Meeting or General Meeting of the Company by the vote of the holders of a
majority of the voting power represented at such meeting in person or by
proxy and voting on the election of directors, and each Director shall
serve, subject to Article 42 hereof, and, with respect to a Director
appointed pursuant to Article 41 hereof, subject to such Article, until the
Annual General Meeting next following the Annual General Meeting or General
Meeting at which such Director was elected pursuant to this Article or
Article 41 hereof, or his earlier removal pursuant to this Article 39. The
holders of a majority of the voting power represented at a General Meeting
in person or by proxy and voting thereon at such Meeting shall be entitled
to remove any Director(s) from office, to elect Directors instead of
Directors so removed, or to fill any vacancy, however created, in the Board
of Directors.
40 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 a
Director in the past.
41 CONTINUING DIRECTORS IN THE EVENT OF VACANCIES
----------------------------------------------
In the event of one or more vacancies in the Board of Directors, the
continuing Directors may continue to act in every matter, and, pending the
filling of any vacancy pursuant to the provisions of Article 39, may
appoint Directors to temporarily fill any such vacancy, provided, however,
that if they number less than a majority of the number provided for
pursuant to Article 38 hereof, they may only act in an emergency or to fill
the office of director which has become vacant up to the minimum number or
in order to call a General Meeting of the Company for the purpose of
electing Directors to fill any or all vacancies, so that at least a
majority of the number of Directors provided for pursuant to Article 38
hereof are in office as a result of said meeting.
42 VACATION OF OFFICE
------------------
(a) The office of a Director shall be vacated, ipso facto, upon his or her
death, or if he or she be found lunatic or become of unsound mind, or
if he or she becomes bankrupt, or if the Director is a company, upon
its winding-up.
(b) The office of a Director shall be vacated by his, her or its written
resignation. Such resignation shall become effective on the date fixed
therein, or upon the delivery thereof to the Company, whichever is
later.
43 REMUNERATION OF DIRECTORS
-------------------------
A Director shall be paid remuneration by the Company for his services as
Director to the extent such remuneration shall have been approved by a
General Meeting of the Company.
44 CONFLICT OF INTEREST
--------------------
- 23 -
(a) Subject to the provisions of the Companies Ordinance, no Director
shall be disqualified by virtue of his office from holding any office
or place of profit in the Company or in any company in which the
Company shall be a shareholder or otherwise interested, or from
contracting with the Company as vendor, purchaser or otherwise, nor
shall any such contract, or any contract or arrangement entered into
by or on behalf of the Company in which any Director shall be in any
way interested, be avoided, nor, other than as required under the
Companies Ordinance, shall any Director be liable to account to the
Company for any profit arising from any such office or place of profit
or realized by any such contract or arrangement by reason only of such
Director's holding that office or of the fiduciary relations thereby
established, but the nature of his interest as well as any material
fact of document, must be disclosed by him at the meeting of the Board
of Directors at which the contract or arrangement is first considered,
if his interest then exists, or, in any other case, at no later than
the first meeting of the Board of Directors after the acquisition of
his interest.
(b) Subject to the Companies law, all actions executed by the Board of
Directors or by a committee of the Board of Directors or by any person
acting as a director or a member of a Committee of the Board or by the
General Manager, accordingly - shall be valid even if after their
execution it will be discovered that there was a certain flaw in the
appointment of the Board of Directors, the Committee, the Director,
the Committee's member or the General Manager, accordingly, or that
any one of the above officers was disqualified from serving at his
office.
(c) Subject to the Companies law, an officer holding shares of the Company
and having an interest or holding another office in any other
corporation, including a corporation in which the Company has an
interest or that holds shares of the Company, shall not disqualify the
officer from being an officer in the Company. Nor shall an officer of
the Company be disqualified from being an officer of the Company as a
result of the execution of an agreement between such an officer or any
such corporation and the Company in any matter and in any fashion.
(d) Subject to the Companies law, an officer shall be entitled to
participate and to vote in meetings concerning the approval of actions
or transactions in which he has personal interest.
(e) Subject to the Companies law, a transaction between the Company and an
officer of the Company or an entity controlling the Company or a
transaction between the Company and another person that an officer of
the Company or that an entity controlling the Company have personal
interest thereof, and which are not irregular transactions, shall be
approved in the following manner:
- 24 -
(i) Such a transaction, which is not irregular, shall be approved by
the Board of Directors or by the Audit Committee or by any other
entity authorized by the Board of Directors, whether according to
a specific resolution or to a general authorization, an
authorization to a certain category of transactions or an
authorization to a certain transaction.
(ii) The approval of transactions which are not irregular, as
aforesaid, may be made by granting a general approval to a
certain category of transactions or by approving one specific
transaction.
(f) Subject to the Companies law, a general notice given to the Board of
Directors by an officer or an entity controlling the Company,
concerning their personal interest in a certain entity, specifying
such personal interest, shall be deemed as the revelation by such
officer or controlling entity to the Company of such personal
interest, in connection with the entrance into a transaction which is
not irregular with any such entity
45 ALTERNATE DIRECTORS
-------------------
(a) A Director may, by written notice to the Company given in the manner
set forth in Article 45(b) below, appoint any individual (whether or
not such person is then a member of the Board of directors) as an
alternate for himself (in these Articles 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 an Alternate Director shall be subject to the consent
of the Board of Directors if the appointee is not then a member of the
Board of Directors. Unless the appointing Director, by the instrument
appointing an Alternate Director or by written notice to the Company,
limits such appointment to a specified period of time or restricts it
to a specified meeting or action of the Board of Directors, or
otherwise restricts its scope, the appointment shall be for all
purposes, and for a period of time concurrent with the term of the
appointing Director.
(b) Any notice to the Company pursuant to Article 45(a) shall be given in
person to, or by sending the same by mail to the attention of the
General Manager of the Company at the principal office of the Company
or to such other person or place as the Board of Directors shall have
determined for such purpose, and shall become effective on the date
fixed therein, or upon the receipt thereof by the Company (at the
place as aforesaid), whichever is later, subject to the consent of the
Board of Directors if the appointee is not then a member of the Board
of Directors, in which case the notice will be effective as of the
date of such consent.
(c) An Alternate Director shall have all the rights and obligations of the
Director who appointed him, provided however, that (i) he may not in
turn appoint an alternate for himself (unless the instrument
appointing him otherwise
- 25 -
expressly provides), and (ii) that an Alternate Director shall have no
standing at any meeting of the Board of Directors or any committee
thereof while the Director who appointed him is present, and (iii)
that the Alternate Director is not entitled to remuneration.
(d) Any natural person, whether or not he or she be a member of the Board
of Directors, may act as an Alternate Director. One person may act as
Alternate Director for several Directors, and in such event he or she
shall have a number of votes (and shall be treated as the number of
persons for purposes of establishing a quorum) equal to the number of
Directors for whom he acts as Alternate Director. If an Alternate
Director is also a Director in his own right, his rights as an
Alternate Director shall be in addition to his rights as a Director.
(e) An Alternate Director shall alone be responsible for his or her own
acts and defaults, and he or she shall not be deemed the agent of the
Director(s) who appointed him.
(f) The office of an Alternate Director shall be vacated under the
circumstances, mutatis mutandis, set forth in Article 42, and such
office shall ipso facto be vacated if the Director who appointed such
Alternate Director ceased to be a Director.
PROCEEDINGS OF THE BOARD OF DIRECTORS
46. MEETINGS
--------
(a) The Board of Directors may meet and adjourn its meetings and otherwise
regulate such meetings and proceedings as the Directors think fit.
(b) Any Director may at any time, and the Secretary, upon the request of
such Director, shall, convene a meeting of the Board of Directors, but
not less than two (2) days notice shall be given of any meetings so
convened. Notice of any such meeting shall be given to all the
Directors and may be given orally, by telephone, in writing or by
mail, telex, cablegram or facsimile. Notwithstanding anything to the
contrary herein, failure to deliver notice to a director of any such
meeting in the manner required hereby may be waived by such Director,
and a meeting shall be deemed to have been duly convened
notwithstanding such defective notice if such failure of defect is
waived prior to action being taken at such meeting, by all Directors
entitled to participate at such meeting to whom notice was not duly
given as aforesaid.
47. QUORUM
------
Until otherwise unanimously decided by the Board of Directors, a quorum at
a meeting of the Board of Directors shall be constituted by the presence in
person or by telephone conference of half (50%) of the Directors then in
office who are lawfully entitled to participate in the meeting. No business
shall be transacted at a meeting of
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the Board of Directors unless the requisite quorum is present (in person or
by telephone conference) when the meeting proceeds to business.
48. CHAIRMAN OF THE BOARD OF DIRECTORS
----------------------------------
The Board of Directors may from time to time, elect one of its members to
be the Chairman of the Board of Directors, and another of its members as
Co-Chairman, remove such Chairman and Co-Chairman from office and appoint
others in their place. The Chairman of the Board of Directors shall preside
at every meeting of the Board of Directors, but if there is no such
Chairman, or if at any meeting he is not present within fifteen (15)
minutes of the time fixed for the meeting or if he is unwilling to take the
chair, the Co-Chairman shall preside. If both the Chairman and the
Co-Chairman are not present within such fifteen (15) minutes or are
unwilling to take the chair the Directors present shall choose one of their
number to be the Chairman of such meeting.
49. VALIDITY OF ACTS DESPITE DEFECTS
--------------------------------
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
meetings 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.
CHIEF EXECUTIVE OFFICER AND PRESIDENT
50. CHIEF EXECUTIVE OFFICER AND PRESIDENT
-------------------------------------
The Board of Directors may from time to time appoint one or more persons,
whether or not Directors, as Chief Executive Officer or Officers, General
Manager or Managers, or President of the Company and may confer upon such
person(s), and from time to time modify or revoke, such title(s) and such
duties and authorities of the Board of Directors as the Board of Directors
may deem fit, subject to such limitations and restrictions as the Board of
Directors may from time to time prescribe. Unless otherwise determined by
the Board of Directors, the Chief Executive Officer(s) shall have authority
with respect of the management of the Company in the ordinary course of
business. Such appointment(s) may be either for a fixed term or without any
limitation of time, and the Board of Directors may from time to time
(subject to the provisions of the Companies Ordinance and of any contract
between any such person and the Company) fix his or their salaries and
emoluments, remove or dismiss him or them from office and appoint another
or others in his or their place or places.
MINUTES
51. MINUTES
-------
(a) Minutes of each General Meeting and of each meeting of the Board of
Directors shall be recorded and duly entered in books provided for
that
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purpose, and shall be held by the Company at its principal place of
office or its Registered Office or such other place as shall have been
determined by the Board of Directors. Such minutes shall, in all
events, set forth the names of the persons present at the meeting and
all resolutions adopted thereat.
(b) Any minutes as aforesaid, if purporting to be signed by the chairman
of the meeting or by the chairman of the next succeeding meeting,
shall constitute prima facie evidence of the matters recorded therein.
DIVIDENDS
52. DECLARATION OF DIVIDENDS
------------------------
The Board of Directors may from time to time declare, and cause the Company
to pay, such interim dividend as may appear to the Board of Directors to be
justified by the profits of the Company. The final dividend in respect of
any fiscal year shall be proposed by the Board of Directors and shall be
payable only after the same has been approved by Ordinary Resolution of the
Company, but no such resolution shall provide for the payment of an amount
exceeding that proposed by the Board of Directors for the payment of such
final dividend, and no such resolution or any failure to approve a final
dividend shall affect any interim dividend theretofore declared and paid.
The Board of Directors shall determine the time for payment of such
dividends, both interim and final, and the record date for determining the
shareholders entitled thereto.
53. FUNDS AVAILABLE FOR PAYMENT OF DIVIDEND
---------------------------------------
The Company may pay dividends subject to and according to the provisions of
the Companies Law.
54. AMOUNT PAYABLE BY WAY OF DIVIDENDS
----------------------------------
Subject to the provisions of these Articles and subject to any rights or
conditions attached at that time to any share in the capital of the Company
granting preferential, special or deferred rights or not granting any
rights with respect to dividends, the profits of the Company which shall be
declared as dividends shall be distributed according to the proportion of
the nominal value paid up on account of the shares held at the date so
appointed by the Company, without regard to the premium paid in excess of
the nominal value, if any. No amount paid or credited as paid on a share in
advance of calls shall be treated for purposes of this Article as paid on a
share.
55. INTEREST
--------
No dividend shall carry interest as against the Company.
56. PAYMENT IN SPECIE
-----------------
Upon the recommendation of the Board of Directors approved by Ordinary
Resolution of the Company, the Company (i) may cause any monies,
investments, or other assets forming part of the undivided profits of the
Company, standing to the credit of a reserve fund, or to the credit of a
reserve fund for the redemption of capital, or in the hands of the Company
and available for dividends, or representing
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premiums received on the issuance of shares and standing to the credit of
the share premium account, to be capitalized and distributed among such of
the shareholders as would be entitled to receive the same if distributed by
way of dividend and in the same proportion, on the basis that they become
entitled thereto as capital, or may cause any part of such capitalized fund
to be applied on behalf of such shareholders in paying up in full, either
at par or at such premium as the resolution may provide, any unissued
shares or debentures or debenture stock of the Company, which shall be
distributed accordingly or in payment, in full or in part, of the uncalled
liability on all issued shares or debentures or debenture stock if such
liability exists, on a pro rata basis, and (ii) may cause such distribution
or payment to be accepted by such shareholders in full satisfaction of
their interest in the said capitalized sum. In case of a stock dividend,
holders of each class of shares can receive shares of one class whether
such class existed prior thereto or was created therefor or shares of the
same class which conferred upon the holder the right to receive such
dividend.
57. IMPLEMENTATION OF POWERS UNDER ARTICLE 56
-----------------------------------------
For the purpose of giving full effect to any resolution under Article 56,
and without derogating from the provisions of Article 7(b) hereof, the
Board of Directors may settle any difficulty which may arise in regard to
the distribution as it thinks expedient, and, in particular, may issue
fractional certificates, and may fix the value for distribution of any
specific assets, and may determine that cash payments shall be made to any
members upon the basis of the value so fixed, or that fractions of less
value than the nominal value of one share may be disregarded in order to
adjust the rights of all parties, and may vest any such cash, shares,
debentures, debenture stock or specific assets in trustees upon such trusts
for the persons entitled to the dividend or capitalized fund as may seem
expedient to the Board of Directors. Where requisite, a proper contract
shall be filed in accordance with Section 291 of the Companies Law, and the
Board of Directors may appoint any person to sign such contract on behalf
of the persons entitled to the dividend or capitalized fund as may seem
expedient to the Board of Directors. Where requisite, a proper contract
shall be filed in accordance with Section 291 of the Companies Law, and the
Board of Directors may appoint any person to sign such contract on behalf
of the persons entitled to the dividend or capitalized fund.
58. DIVIDEND ON UNPAID SHARES
-------------------------
Without derogation from Article 54 hereof, the Board of Directors may give
an instruction which shall prevent the distribution of a dividend to the
registered holders of share the full nominal amount of which has not been
paid up.
59. RETENTION OF DIVIDENDS
----------------------
(a) The Board of Directors may retain any dividend or other monies payable
or property distributable in respect of a share on which the Company
has a lien, and may apply the same in or towards satisfaction of the
debts, liabilities, or engagements in respect of which the lien
exists.
(b) The Board of Directors may retain any dividend or other monies payable
or property distributable in respect of a share in respect of which
any person is,
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under Article 21 or 22, entitled to become a member, or which any
person, is, under said Articles, entitled to transfer, until such
person shall become a member in respect of such share or shall
transfer the same.
60. UNCLAIMED DIVIDENDS
-------------------
All unclaimed dividends or other moneys payable in respect of a share may
be invested or otherwise made use of by the Board of Directors for the
benefit of the Company until claimed. The payment by the Directors of any
unclaimed dividend or such other moneys into a separate account shall not
constitute the Company a trustee in respect thereof. The principal (and
only the principal) of an unclaimed dividend or such other moneys shall be,
if claimed, paid to a person entitled thereto.
61. MECHANICS OF PAYMENT
--------------------
The Board of Directors may fix the mechanics for payment of dividends as it
deems fit. However, if nothing to the contrary in the resolution of the
Board of Directors, then all dividends or other moneys payable in cash in
respect of a share may be paid by check or warrant sent through the post
to, or left at, the registered address of the person entitled thereto or by
transfer to a bank account specified by such person (or, if two or more
persons are registered as joint holders of such share or are entitled
jointly thereto in consequence of the death or bankruptcy of the holder or
otherwise, to the joint holder whose name is registered first in the
Register of Members or his bank account or the person who the Company may
then recognize as the owner thereof or entitled thereto under Article 21 or
22 hereof, as applicable, or such person's bank account), or to such person
and at such other address as the person entitled thereto may by writing
direct. Every such check or warrant shall be made payable to the order of
the person to whom it is sent, or to such person as the person entitled
thereto as aforesaid may direct, and payment of the check or warrant by the
banker upon whom it is drawn shall be a good discharge to the Company.
62. RECEIPT FROM A JOINT HOLDER
---------------------------
If two or more persons are registered as joint holders of any share, or are
entitled jointly thereto in consequence of the death or bankruptcy of the
holder or otherwise, any one of them may give effectual receipts for any
dividend or other moneys payable or property distributable in respect of
such share.
ACCOUNTS
63. BOOKS OF ACCOUNT
----------------
The Board of Directors shall cause accurate books of account to be kept in
accordance with the provisions of the Companies Ordinance 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 Board of
Directors may think fit, and they shall always be open to inspection by all
Directors. No member, 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 or by Ordinary
Resolution of the Company.
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64. AUDIT
-----
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.
65. AUDITORS
--------
The appointment, authorities, rights and duties of the auditor(s) of the
Company, shall be regulated by applicable law, provided, however, that in
exercising its authority to fix the remuneration of the auditor(s), the
members in General Meeting may, by Ordinary Resolution, act (and in the
absence of any action in connection therewith shall be deemed to have so
acted) to authorize the Board of Directors to fix such remuneration subject
to such criteria or standards, if any, as may be provided in such Ordinary
Resolution, and if no such criteria or standards are so provided, such
remuneration shall be fixed in an amount commensurate with the volume and
nature of the services rendered by such auditor(s).
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BRANCH REGISTERS
66. BRANCH REGISTERS
----------------
Subject to and in accordance with the provisions of Sections 138 to 139,
inclusive, of the Companies Law and to all orders and regulation issued
thereunder, the Company may cause branch registers to be kept in any place
outside Israel as the Board of Directors may think fit, and, subject to all
applicable requirements of law, 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 branch registers.
INDEMNITY AND INSURANCE
67. INDEMNITY AND INSURANCE
-----------------------
(a) Subject to the provisions of the Companies Ordinance, the Company may
enter into a contract for the insurance of the Liability, in whole or
in part, of any of its Office Holders with respect to: (i) a breach of
his duty of care to the Company or to another person; (ii) a breach of
his fiduciary duty to the Company, provided that the Office Holder
acted in good faith and had reasonable cause to assume that his act
would not prejudice the interests of the Company; or (iii) a financial
liability imposed upon him in favor of another person in respect of an
act performed by him in his capacity as an Office Holder of the
Company.
(b) The Company may indemnify an Office Holder against: (i) a financial
liability imposed on him in favor of another person by any judgment,
including a settlement or an arbitrator's award approved by a court in
respect of an act performed in his capacity as an Office Holder of the
Company, and (ii) reasonable litigation expenses, including attorneys'
fees, expended by such Office Holder or charged to him by a court, in
proceedings instituted against him by the Company or on its behalf or
by another person, or in a criminal charge, from which he was
acquitted, all in respect of an act performed in his capacity as an
Office Holder of the Company, and (iii) liabilities, obligations and
expenses in respect of which in the future the Company may be legally
permitted to indemnify under the Companies Ordinance.
(c) The Company may indemnify an Office Holder in accordance with the
provisions of article 67(b) for any liabilities and/or expenses
incurred by such an Office Holder. Such indemnification shall include
reasonable litigation expenses, as specified in Article 67(b) above,
that were incurred by or charged to such an Office Holder if convicted
in a criminal charge for an offense that does not require the proof of
criminal thought. In addition to the above, the Company may also
undertake to indemnify such an Office Holder in advance, for
liabilities and/or expenses that were not yet incurred, provided that
such a commitment shall be restricted to types of events that in the
opinion of the Board of Directors can be foreseen at the time that the
commitment is made and to an amount that the Board of Directors deems
reasonable, in view of the
- 32 -
circumstances. Such indemnification may include any other liability or
event permitted by any applicable law.
(d) The Company may release an Office Holder in advance from liability -
whether totally or partially - for damages arising from the breach of
the duty of such an Office Holder to act with due skill and care
towards the Company.
(e) Subject to the Companies law - the Company may indemnify any employee
of the Company who is not an Office Holder of the Company, from any
liability or expense imposed on such an employee in his capacity as an
employee of the Company, while defending from any litigation, whether
criminal or civil, that resulted, accordingly, by an acquittal or a
judgment in the employee's favor.
(f) The company may commit to indemnify such an employee, including in
advance, for any financial liability imposed on such an employee in
favor of another person in respect of an act performed bona fide in
his capacity as an employee of the Company.
(g) Subject to the Companies Law, these Articles of Association shall not
limit the Company in any way from entering into a contract for the
insurance, or the granting of exemptions or indemnification (i) in
connection with an Office Holder in the Company or any person
designated by the Company to serve as a director in another company in
which the Company has any interest or holds shares, directly or
indirectly ("a Director In Another Company"), to the extent that the
insurance, exemption or indemnification are not forbidden by any
applicable law, and (ii) in connection with whoever is not an Office
Holder in the Company or a Director In Another Company, including but
not limited to, employees, contractors and consultants
WINDING UP
68. WINDING UP
----------
If the Company is wound up, then subject to applicable law and to the
rights of the holders of shares with special rights upon winding up, the
assets of the Company available for distribution among the members shall be
distributed to them in proportion to the respective holdings of the shares
in respect of which such distribution is being made.
RIGHTS OF SIGNATURE, STAMP, AND SEAL
69. RIGHTS OF SIGNATURE, STAMP, AND SEAL
------------------------------------
(a) The Board of Directors shall be entitled to authorize any person or
persons (who need not be Directors) to act and sign on behalf of the
Company, and the acts and signature of such person(s) on behalf of the
Company shall bind the Company insofar as such person(s) acted and
signed within the scope of his or their authority.
- 33 -
(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.
(c) The Company may exercise the powers conferred by Section 102 of the
Companies Ordinance regarding a seal for use abroad, and such powers
shall be vested in the Board of Directors.
NOTICES
70. NOTICES
-------
(a) Any written notice or other document may be served by the Company upon
any member either personally or by sending it by prepaid mail (airmail
if sent internationally) addressed to such member at his address as
described in the Register of Members. Any written notice or other
document may be served by any member upon the Company by tendering the
same in person to the Secretary or the General Manager or Chief
Executive Officer of the Company at the principal office of the
Company or by sending it by prepaid registered mail (airmail if posted
outside Israel) to the Company at it Registered Address. Any such
notice or other document shall be deemed to have been served five (5)
business days after it has been posted (7) business days if posted
internationally), or when actually tendered in person, to such member
(or to the Secretary or the General Manager). Notice sent by
cablegram, telex, or facsimile shall be deemed to have been served two
business days after the notice is sent to the addressee, or when in
fact received, whichever is earlier, notwithstanding that it was
defectively addressed or failed, in some other respect, to comply with
the provisions of this Article 70(a).
(b) All notices to be given to the members shall, with respect to any
share to which persons are jointly entitled, be given to whichever of
such persons is named first in the Register of Members, and any notice
so given shall be sufficient notice to the holders of such share.
(c) All member whose address is not described in the Register of Members,
and who shall not have designated in writing delivered to the Company
an address for the receipt of notices, shall not be entitled to
receive any notice from the Company.
(d) Notwithstanding anything to the contrary contained therein, notice by
the Company of a General Meeting which is published in at least two
daily newspapers in the State of Israel within the time otherwise
required for giving notice of such meeting under Article 25 hereof and
containing the information required to be set forth in such notice
under such Article, shall be deemed to notice of such meeting duly
given, for purposes of these Articles, to any member of the Company.
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