Exhibit 3.3
THE COMPANIES ACT - 1999
A COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
SAIFUN SEMICONDUCTORS LTD.
PRELIMINARY
1. The regulations contained in the Second Supplement to the Companies
Ordinance shall not apply to this Company.
2. In these Articles, unless the context otherwise requires, the terms
below shall have the following meaning attached to them:
2.1. AGREEMENT A means the Share Purchase and Shareholders
Agreement by and between the Company, the
Founder and the investors listed in
Schedule A to these Articles.
2.2. AGREEMENT B means The Share Purchase Agreement by and
between the Company and the investors
listed on Schedule B to these Articles.
2.3. AS CONVERTED BASIS means as if all classes of shares of the
Company have been converted into Ordinary
Shares.
2.4. THE COMPANY means the Company whose name is set forth
above.
2.5. THE COMPANIES ACT means the Israeli Companies Act 1999, as
may be amended from time to time.
2.6. FOUNDER means ▇▇. ▇▇▇▇ ▇▇▇▇▇.
2.7. FULLY DILUTED BASIS means as if all outstanding options and
warrants and convertible instruments or
any other similar rights, agreements or
commitments and all other similar rights
of any Person to receive shares in the
Company have been exercised in full, all
ungranted options under the ESOP deemed
granted and exercised; and after
conversion of all shareholders' loans to
equity (to the extent there are any such
loans).
2.8. INTERESTED PARTY means any "Interested party" as such term
is defined in the Israeli Securities Law
of 1968 (the "SECURITIES LAW") and any
officer or director of the Company or any
Person owning
shares of the Company (excluding
employees solely under stock option or
share purchase plans) or any member of
the family or affiliate of such officer,
director or shareholder, Person
controlled by it or Person controlling it
or Person under common control with it.
2.9. IPO means an initial public offering of the
Company's securities.
2.10. THE OFFICE means the registered office of the
Company, as may be form time to time.
2.11. OFFICER shall be taken to include any Director,
General Manager, Managing Director,
Assistant Managing Director, Assistant
General Manager, any person actually
holding such powers in the Company
regardless of their title, and any other
functionary in the Company, regardless of
his formal title, as long as he is
defined in the Act as an officer of the
Company.
2.12. ORDINARY SHARES means the Ordinary Shares of the Company,
NIS 0.01 par value each.
2.13. PERSON means an individual, corporation,
partnership, joint venture, trust or
unincorporated organization.
2.14. PREFERRED A SHARES means the Class A Preferred Shares of the
Company, NIS 0.01 par value each.
2.15. PREFERRED B SHARES means the Class B Preferred Shares of the
Company, NIS 0.01 par value each.
2.16. PREFERRED SHARES means the Class A Preferred Shares and
the Class B Preferred Shares of the
Company.
2.17. THE REGISTER means the register of shareholders to be
kept in accordance with Section 127 of
the Companies Act, or, if the Company
shall have any branch register(s) - any
such branch register(s) as the case may
be.
2.18. SHAREHOLDERS means Preferred A shareholders, Preferred
B shareholders and Ordinary shareholders.
2.19. SPECIAL RESOLUTION means a vote approved by 75% of the
voting Shareholders, where a legal quorum
is present.
2.20. STRATEGIC INVESTOR means any business entity, which adds to
the prospects of the Company a material
value beyond the purchase price of its
shares.
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2.21. TOWER means Tower Semiconductor Ltd.
2.22. TOWER AGREEMENT means the Agreement between the Company
and Tower dated October 9, 1997.
2.23. ORIGINAL ISSUE PRICE means the price actually paid by each
respective shareholder for each Preferred
Share of the Company held by such
shareholder.
2.24. MAJOR SHAREHOLDERS means (i) thirty four (34) Shareholders
with the highest percentage of
shareholding in the Company, excluding
Shareholders falling within Section 15A
(b)(1), (2) and (3) of the Securities
Law; and (ii) any Shareholders falling
within Section 15A (b)(1), (2) and (3) of
the Securities Law; but excluding in any
event holders of Ordinary shares holding
less than 1% of the Company's issued and
outstanding share capital.
Words and expressions defined in the Memorandum of Association of the
Company shall have the meanings therein defined.
Subject to the provisions of this Article 2, in these Articles, unless
the context otherwise requires, expressions defined in the Companies
Act, or any modifications or amendments thereof in force at the date
at which these Articles become binding upon the Company, shall have
the meanings so defined; and words importing the singular shall
include the plural, and vice versa, and words importing the masculine
gender shall include females, and words importing persons shall
include bodies corporate.
SHARE CAPITAL
3. [Intentionally Omitted]
4. The share capital of the Company is NIS 2,000,000 (two million New
Israeli Shekels) divided into 193,600,000 Ordinary Shares par value
NIS 0.01 each, 4,000,000 Preferred A Shares of NIS 0.01 par value each
and 2,400,000 Preferred B Shares of NIS 0.01 par value each.
5. The rights and privileges attached to the shares of the Company are as
follows:
5.1. The Ordinary Shares of the Company shall have the following
rights:
5.1.1. To receive notices of meetings;
5.1.2. To attend the Company's general meeting and vote thereat,
either in person or by a proxy;
5.1.3. To receive dividends, subject to the terms and conditions
of Article 5.2.3 herein;
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5.1.4. To participate in the residue of the Company's assets
remaining after liquidation, winding up or Deemed
Liquidation, subject to the terms and conditions of Article
5.2.1 herein.
5.2. The Company covenants that the Preferred Shareholders shall have
the following rights and privileges:
5.2.1. Liquidation Preference. (A) In the event of (i) any
dissolution or liquidation of the Company; (ii) any
bankruptcy, insolvency or creditors' arrangement proceeding,
under any companies, bankruptcy or insolvency or similar
law, whether voluntary or involuntary, is commenced by or
against the Company; or (iii) a receiver, a liquidator or a
trustee in a creditors' arrangement has been appointed to
Company's assets; or (B) unless otherwise agreed by the
holders of at least two thirds (2/3) of the Preferred
Shares, upon any event of sale of all or substantially all
of the assets or shares of the Company or a merger or
acquisition of the Company pursuant to which the
shareholders of the Company will not be the majority
shareholders of the surviving entity (a "DEEMED LIQUIDATION
EVENT"), any assets of the Company available for
distribution (including securities or any other assets
received by the Company or its shareholders in such Deemed
Liquidation Event) ("DISTRIBUTABLE ASSETS") shall be
distributed pursuant to the following order of preference:
5.2.1.1. The holders of the Preferred B Shares shall be
entitled to receive, prior to and in preference to any
payments to any of the holders of any other classes of
shares including Ordinary Shares and Preferred A
Shares, an amount in US Dollars per Preferred B Share
calculated as follows (the "PREFERRED B LIQUIDATION
AMOUNT"): (A) if the value of the Distributable Assets
("COMPANY VALUE") is less than US $500 million, then
each holder of the Preferred B Shares shall be entitled
to receive at its discretion, for each Preferred B
Share, prior to and in preference to payments to all
other shareholders, an amount equal to either: (i) the
Original Issue Price (adjusted for any event of share
combination or subdivision, issuance of bonus shares,
stock splits or any other recapitalization of the
Company's shares (a "RECAPITALIZATION EVENT") plus of
28% (twenty eight percent) or (ii) its pro rata share
among all shareholders of the Company (B) if the
Company Value is between US$500 million and US$750
million, each holder of the Preferred B Shares shall be
entitled to receive for each Preferred B Share, prior
to and in preference to payments to the holders of
Preferred A Shares and Ordinary Shares , an amount
equal to 128% (one hundred twenty eight percent) of the
amount reflecting its proportionate holding in the
Company (for example, assuming the holders of the
Preferred B Shares hold 10% of the share capital of the
Company and the
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Company Value is US$500 million, they will be entitled
to receive US$64 million); (C) if the Company Value
exceeds US$750 million, each holder of the Preferred B
Shares shall be entitled to receive, prior to and in
preference to payments to the holders of Preferred A
Shares and Ordinary Shares, an amount reflecting its
proportionate holding in the Company but in any event
not less than the maximum amount to which it is
entitled under sub-clause (B) above, i.e not more than
US$96 million.
5.2.1.2. If after payment of the Preferred B Liquidation
Amount is paid in full to the holders of Preferred B
Shares there remain any Distributable Assets, they
shall be distributed to the holders of Preferred A
Shares as follows (the "PREFERRED A LIQUIDATION
AMOUNT"): (A) If by the time of the Deemed Liquidation
Event the holders of Preferred A Shares have not
exercised the options granted to them under the
agreement dated March 24 1998 ("Options"), the
following will apply: (i) if the value of the
Distributable Assets is less than US$ 50 million, the
holders of the Preferred A Shares shall be entitled to
receive prior to and in preference to payments to the
holders of Ordinary Shares a sum which shall be the
lower of US$6 million or all of the remaining
Distributable Assets. (ii) if the value of the
Distributable Assets is between US$50 million and
US$100 million, the holders of the Preferred A Shares
shall be entitled to receive prior to and in preference
to payments to the holders of Ordinary Shares a sum
which shall be 12% of the remaining Distributable
Assets, or (B ) If by the time of the Deemed
Liquidation Event, the holders of Preferred A Shares
have exercised the Options, the following will apply:
(i) if the value of the Distributable Assets is less
than US$50 million, the holders of the Preferred A
Shares shall be entitled to receive prior to and in
preference to payments to the holders of Ordinary
Shares a sum which shall be the lower of US$9 million
or all of the remaining Distributable Assets; (ii) if
the value of the Distributable Assets is between US$50
million and US$100 million, the holders of the
Preferred A Shares shall be entitled to receive prior
to and in preference to payments to the holders of
Ordinary Shares a sum which shall be the combination of
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US$3 million plus 12% of all the remaining
Distributable Assets.
5.2.1.3. Any remaining Distributable Assets or securities
shall be distributed pro-rata to the holders of
Ordinary Shares of the Company to the exclusion of the
holders of Preferred A Shares and Preferred B Shares.
5.2.1.4. Notwithstanding the provisions of sub-Article
5.2.1.3 above, the Preferred A Shareholders may elect
(by decision of majority f the Preferred A
Shareholders) to forgo the provisions of sub-Article
5.2.1.2 above, and in such case all of the remaining
Distributable Assets of the Company then available for
distribution shall be distributed pro-rata among the
holders of the Preferred A Shareholders and Ordinary
Shares, in proportion to their respective shareholdings
in the Company on an as-converted basis to the
exclusion of the holders of Preferred B Shares.
5.2.2. Voting Rights. The holders of the Preferred Shares shall
be entitled to vote in all shareholders meetings, and each
of them shall have votes in the number of Ordinary Shares
into which such Preferred Shares held by it could then be
converted, calculated on an As Converted basis.
5.2.3. Dividend Participation. In the event that any dividends or
other distributions, whether in cash or in securities or
other assets, shall be declared or distributed by the
Company, each holder of the Preferred B Shares shall be
entitled to receive for each Preferred B Share, prior to and
in preference to distributions to any of the other
Shareholders, an amount equal to the amount to which such
Preferred B Shares holder is entitled pursuant to the
provisions of Section 5.2.1 above. Subject to such
preference, the holders of Preferred A Shares shall be
entitled to participate in any such distribution pro-rata on
an as converted basis.
5.2.4. The holders of the Preferred Shares shall have conversion
rights as follows (the "CONVERSION RIGHTS"):
5.2.4.1. Right to Convert
(a) Each Preferred Share shall be convertible, at the
option of the holder of such share, at any time after
the date of issuance of such share, into such number of
fully paid and non-assessable Ordinary Shares of the
Company as is determined by dividing
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the applicable Original Issue Price for such share by
the Conversion Price at the time in effect for such
share. The initial Conversion Price per Preferred Share
shall be the Original Issue Price for such share. The
Conversion Price for the Preferred Shares shall be
subject to adjustment as set forth in Sections 5.2.4.3
- 5.2.4.6, as applicable.
(b) Each Preferred Share shall automatically be
converted into fully paid and non-assessable Ordinary
Shares: (i) at any time, by the vote of the holders of
majority holders of that same certain class of
Preferred Shares, as applicable; or (ii) automatically
upon an IPO or a merger or acquisition of the Company
pursuant to which the shareholders of the Company will
not be the majority shareholders of such new entity.
5.2.4.2. Mechanics of Conversion
Upon conversion by any holder of Preferred Shares of
the same into Ordinary Shares the holder shall
surrender the certificate or certificates thereof at
the office of the Company and shall give written notice
to the Company of the election to convert the same. The
Company shall, as soon as practicable thereafter, issue
and deliver to such holder of Preferred Shares a
certificate or certificates for the number of Ordinary
Shares to which such holder is entitled. Such
conversion shall be deemed to have been made
immediately prior to the close of business on the date
of such surrender of the Preferred Shares to be
converted, and the person or persons entitled to
receive the Ordinary Shares issuable upon such
conversion shall be treated for all purposes as the
record holder or holders of such Ordinary Shares as of
such date.
5.2.4.3. Conversion Price Adjustments of Preferred B Shares.
5.2.4.3.1. The Conversion Price of each Preferred B
Share shall be subject, from time to time, to the
following Anti Dilution adjustment: Until the
earlier of (i) 24 months after the Closing of
Agreement B or (ii) IPO, upon each issuance by the
Company of any Additional Shares (as defined
below), after the date upon which any of the
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Preferred B Shares were first issued (the first
issuance date is referred to as the "Purchase
Date"), without consideration or for a
consideration per share less than the Conversion
Price for the Preferred B Shares in effect
immediately prior to the issuance of such
Additional Shares, the Conversion Price for the
Preferred B Shares in effect immediately prior to
each such issuance shall be reduced to a price
determined on a "weighted average" basis, as set
forth in EXHIBIT A hereto.
5.2.4.3.2. In the case of the issuance of options to
purchase or rights to subscribe for Additional
Shares, or securities by their terms convertible
into or exchangeable for Additional Shares or
options to purchase or rights to subscribe for
such convertible or exchangeable securities
(collectively, "Options"), the aggregate maximum
number of Additional Shares deliverable upon
exercise (assuming the satisfaction of any
conditions to exercisability, including without
limitation the passage of time, but without taking
into account potential anti dilution adjustments),
conversion or exchange, as the case may be, of
such Options, shall be deemed to have been issued
at the time of the actual issuance of the shares
deliverable upon exercise, conversion or exchange,
as the case may be, of such Options at a
consideration equal to the consideration, if any,
received by the Company for such Options upon the
issuance of such Options plus any additional
consideration payable to the Company pursuant to
the terms of such Options (without taking into
account potential anti dilution adjustments) for
the Additional Shares covered thereby.
5.2.4.3.3. "Additional Shares" shall mean shares of any
class issued (or deemed to have been issued
pursuant to Article 5.2.4.3.2.) by the Company
after the Purchase Date other than shares issued:
(i) to employees,
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consultants and directors (excluding the Founder)
in the framework of the ESOP approved by the
Board; (ii) issuances of shares constituting up to
10% of the issued and outstanding share capital of
the Company to a strategic investor (which means
any business entity, which adds to the prospects
of the Company a material value beyond the
purchase price of its shares, which, has entered
or simultaneously with the investment in the
Company enters into a commercial agreement with
the Company, which agreement is deemed by the
Board as materially contributing to the Company's
research & development, marketing, distribution or
sales); (iii) in exchange for the acquisition of
another entity, line of business or technology; or
(vi) a Recapitalization Event of the Company's
shares capital.
5.2.4.4. Conversion Price Adjustments of Preferred Shares.
Without derogating from any of the aforesaid, the
Conversion Price of each Preferred Share shall be
subject, from time to time, to the following
adjustment:
5.2.4.4.1. In the case of the issuance of Additional
Shares for a consideration in whole or in part
other than cash, the consideration other than cash
shall be deemed to be an integral part of the
consideration paid and shall be deemed to be the
fair value thereof.
5.2.4.4.2. If the Company shall subdivide or combine
its Ordinary Shares, the Conversion Price shall be
proportionately reduced, in case of subdivision of
shares, or shall be proportionately increased in
the case of combination of shares.
5.2.4.4.3. If the Company at any time shall pay a
dividend payable in additional Ordinary Shares or
other securities or rights convertible into, or
entitling the holder thereof to receive directly
or indirectly, additional Ordinary Shares
(hereinafter
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referred to as "Ordinary Share Equivalents"), then
the Conversion Price shall be adjusted as at the
date the Company shall fix as the record date for
the purpose of receiving such dividend (or if no
such record date is fixed, as at the date of such
payment), to that price determined by multiplying
the Conversion Price in effect immediately prior
to such record date (or if no such record date is
fixed then immediately prior to such payment) by a
fraction, (a) the numerator of which shall be the
total number of Ordinary Shares outstanding and
those issuable with respect to such Ordinary Share
Equivalents being determined from time to time in
the manner provided for deemed issuance in Article
5.2.4.3.2.) immediately prior to such dividend,
and (b) the denominator of which shall be the
total number of Ordinary Shares outstanding and
those issuable with respect to such Ordinary Share
Equivalents (determined as aforesaid) immediately
after such dividend (plus, in the event that the
Company paid cash for fractional shares, the
number of additional shares which would have been
outstanding had the Company issued fractional
shares in connection with such dividend).
5.2.4.4.4. No adjustments of the Conversion Price for
the Preferred Shares shall be made in an amount
less than one cent per share.
5.2.4.4.5. No adjustment of the Conversion Price shall
be made pursuant to Article 5.2.4.3 if it has the
effect of increasing the Conversion Price above
the Conversion Price in effect immediately prior
to such adjustment.
5.2.4.5. Other Distributions
In the event the Company shall declare a distribution
payable in securities of other Persons, evidence of
indebtedness issued by the Company or other Persons,
assets (including cash dividends) or options
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or rights then, in each such case for the purpose of
this Article 5.2.4.5., the holders of the Preferred
Shares shall be entitled to receive such distribution
in respect of their holdings, on an As Converted Basis
as of the record date for such distribution.
5.2.4.6. Recapitalization
If at any time or from time to time there shall be a
Recapitalization of the Ordinary Shares, provision
shall be made so that the holders of the Preferred
Shares shall thereafter be entitled to receive upon
conversion of the Preferred Shares the number of
Ordinary Shares or other securities or property of the
Company or otherwise, to which a holder of Ordinary
Shares deliverable upon conversion of the Preferred
Shares would have been entitled immediately prior to
such Recapitalization. In any such event all Conversion
Rights shall be adjusted as applicable.
5.2.4.7. No Impairment
The Company will not, by amendment of its Articles of
Association or through any reorganization,
recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be
observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying
out of all the provisions of this Article 5.2.4. and in
the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights
of the holders of the Preferred Shares against
impairment.
5.2.4.8. No Fractional Shares and Certificates as to
Adjustments
(a) No fractional shares shall be issued upon
conversion of the Preferred Shares, and the number of
Ordinary Shares to be issued shall be rounded to the
nearest whole share.
(b) Upon the occurrence of each adjustment of the
Conversion Price of Preferred Shares pursuant to this
Article 5.2.4, the Company, at its expense, shall
promptly compute such adjustment in accordance with the
terms hereof and prepare and furnish to
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each holder of Preferred Shares a certificate setting
forth each adjustment and showing in detail the facts
upon which such adjustment is based. The Company shall
furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment, (ii) the
Conversion Price at the time in effect, and (iii) the
number of Ordinary Shares and the amount, if any, of
other property which at the time would be received upon
the conversion of a Preferred Share.
5.2.4.9. Reservation of Shares Issuable Upon Conversion
The Company shall at all times reserve and keep
available out of its authorized but unissued Ordinary
Shares, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of its
Ordinary Shares as shall from time to time be
sufficient to effect the conversion of all outstanding
Preferred Shares.
SHARES
6. Subject to Article 106 herein, the Company may issue shares with such
preferred or deferred rights of redemption or other special rights or
such restrictions, whether in regard to dividends, voting, repayment
of share capital or otherwise, all such rights to be determined by the
Company from time to time by special resolution.
7. Subject to Article 106 herein, if at any time the share capital of the
Company is divided into different classes of shares, the rights
attached to any class, unless otherwise provided by the terms of issue
of the shares of that class, may be modified, abrogated or otherwise
dealt with by the Company, with the consent in writing of the
holder(s) of three-fourths (3/4) of the issued shares of that class.
8. The provisions of these Articles relating to General Meetings and to
the convening thereof and to notices in respect thereof and to
resolutions to be passed thereat shall mutatis mutandis apply to every
separate General Meeting referred to in Article 7; The provision of
Articles 64 and 66 below with regard to quorums at General Meetings
shall apply as well to such separate General Meetings.
9. The shares of the Company shall be under the control of the Board of
Directors, who may allot them or otherwise dispose of them to such
persons, on such terms and conditions, and either at a premium or at
par, or subject to the provisions of the Companies Law, at a discount
and at such times as the Board of Directors may deem fit, and with
full power to give to any person the call of any shares either at par
or at a premium or, subject as aforesaid, at a discount, during such
time and for such consideration as the Board of Directors may deem
fit, provided, however, that unless otherwise agreed by the Board of
Directors of the Company:
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9.1. Prior to an IPO, prior to issuance of any shares by the Company,
except as provided below, the Company shall offer to the Major
Shareholders to participate in such issue, and each Major
Shareholder shall be granted the preemptive right to purchase a
number of shares from the new issue - on equal terms of allotment
- so as to maintain its percentage shareholding in the Company,
always provided that such shareholder is not in default of
payment due from it in respect of the shares held by it.
The above preemptive right shall not apply in case of issuance of
shares to: (i) employees, consultants and directors (excluding
the Founder) in the framework of an incentive stock option plan,
and (ii) a Strategic Investor.
9.2. The details of every new offer of shares shall be delivered to
all of the Major Shareholders ("Offerees"), which are entitled to
receive an offer in accordance with Article 9.1. above ("Issuance
Notice"). Each of the Offerees shall notify the Company within 14
days of receipt of the Issuance Notice, whether it/he wishes to
purchase the shares to which it is entitled and whether it/he
wishes to participate in the purchase of the surplus shares that
are not taken by a party entitled to them and who did not deliver
to the Company a notice of his desire to purchase them.
10. If by the conditions of allotment of any share, the whole or any part
of the price thereof shall be payable by installments, every such
installment shall, when due, be paid to the Company by the registered
holder of the share for the time being or from time to time or by his
administrators.
11. [Intentionally Reserved]
12. Save as herein otherwise provided, the Company shall be entitled to
treat the registered holder of any share as the absolute owner
thereof, and, accordingly, shall not, except as ordered by a Court of
competent jurisdiction, or as by statute required, be bound to
recognize any equitable or other claim to or interest in such share on
the part of any other person.
SHARE CERTIFICATES
13. The certificates of title to shares shall be issued under the seal of
the Company if the same exists and shall bear the signatures of two
Directors, or of any other person or persons authorized by the Board
of Directors.
14. Every shareholder shall be entitled to one certificate for all the
shares of each class registered in his name, and if the Board of
Directors so approves (upon payment of the amount which may from time
to time be fixed by the Board of Directors), to several certificates,
each for one or more of such shares. Every certificate of shares shall
specify the denoting numbers of the shares in respect of which it is
issued and may also state the amount paid-up thereon.
15. The certificate of shares registered in the names of two or more
persons shall be delivered to the person first named on the Register
in respect of such co-ownership.
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16. If a share certificate is defaced, lost or destroyed, it may be
renewed on payment of such fee, if any, and on such terms as to
evidence such lost or destruction, as the Board of Directors may
reasonably think fit.
CALLS
17. The Board of Directors may from time to time make such calls as it
deems fit upon the shareholders in respect of all moneys unpaid on the
shares held by them respectively, and not by the conditions of
allotment thereof made payable at fixed times, and each shareholder
shall pay the amount of every call so made to him to the persons and
at the time and place appointed by the Board of Directors.
18. A call may be made payable by installments and/or under other terms,
and shall be deemed to have been made when the resolution of the Board
of Directors authorizing such call was passed.
19. Seven days' notice of any call shall be given, specifying the time and
place of payment, and to whom such call shall be paid, provided that
before the time for payment of such call the Board of Directors may,
by notice in writing to the shareholders, revoke the same or extend
the time for payment thereof.
20. If by the terms of issue of any share or otherwise any amount is made
payable at any fixed time or by installments at fixed times, whether
on account of the amount of the share or by way of premium, every such
amount or installment shall be payable as if it were a call duly made
by the Board of Directors and of which due notice had been given, and
all the provisions herein contained in respect of such calls shall
apply to such amount or to such installment.
21. Joint holders of a share shall be jointly and severally liable to pay
all calls in respect of such share.
22. If the amount of any call or installment is not paid on or before the
due date for payment thereof, then the person who is for the time
being the owner of the share on which the call was made or the
installment became due shall pay interest on the said amount at the
maximum rate permissible under the law for the time being, or at such
lesser rate as may be fixed by the Board of Directors from time to
time and linkage differentials to a foreign currency or other index,
as determined by the Board of Directors, all as from the date of
payment until the sum is actually paid. The Board of Directors shall,
however, be at liberty to waive the payment of interest and/or
linkage, wholly or in part.
23. If the Board of Directors thinks fit, it may receive from any
shareholder willing to advance the same, any amounts due on account of
all or any of his shares which have not yet been called or in respect
of which the date of payment has not yet fallen due, and, unless
otherwise agreed with such shareholder, the Board of Directors may pay
him interest on all or any of the amounts so advanced, up to the date
when same would, if not paid in advance, have fallen due at such rate
of interest as may be agreed upon between the Board of Directors and
such shareholder, and the Board of Directors may at any time repay any
amount so advanced by giving such shareholder a three months' prior
notice in writing.
14
FORFEITURE AND LIEN
24. If any shareholder fails to pay any call or installment or any other
payment towards the Company in respect of shareholders' loan or other
financing provided by the shareholders on or before the day appointed
for payment of the same, the Board of Directors may at any time
thereafter, as long as the said call or installment or payment remains
unpaid, serve a notice on such shareholder requiring him to pay the
same, together with any interest and Linkage differentials as
aforesaid that may have accrued and all expenses that may have been
incurred by reason of such non-payment.
25. The notice shall name a day (not being less than seven days from the
date of the notice) and a place or places on and at which such call or
installment and such interest, said linkage differentials and expenses
as aforesaid are to be paid. The notice shall also state that in the
event of non-payment at or before the time and at the place appointed,
the shares in respect of which the call was made or installment is
payable as well as the shares held by the shareholder at that time or
thereafter will be liable to be forfeited.
26. If the requisitions of any such notice as aforesaid are not complied
with, any share in respect of which such notice has been given may, at
any time thereafter, before payment of all calls or installments,
interest, said linkage differentials and expenses, due in respect
thereof, be forfeited by a resolution of the Board of Directors to
that effect. Such forfeiture shall include all dividends declared in
respect of the forfeited shares and not actually paid before the
forfeiture.
27. Any share so forfeited shall be the property of the Company, and the
Board of Directors may, subject to the provisions hereof, sell,
reallot and otherwise dispose of the same as it may deem fit.
28. Any shareholder whose shares have been forfeited shall cease to be a
shareholder in respect of the forfeited shares, but shall,
notwithstanding, be liable to pay, and shall forthwith pay, to the
Company, all calls, installments, interest and expenses owing upon or
in respect of such shares at the time of forfeiture, together with
interest and said linkage differentials thereon from the time of
forfeiture until payment, at the maximum rate of interest permissible
under the law for the time being, and the Board of Directors may
enforce the payment of such moneys, or any part thereof, if it so
thinks fit, but shall not be under any obligation to do so.
29. The Board of Directors may at any time, before any share so forfeited
shall have been sold, reallotted or otherwise dispose of, annul the
forfeiture on such conditions as it thinks fit.
30. The Company shall have a first and paramount lien upon all the shares
registered in the name of each shareholder, and upon the proceeds of
sale thereof, for his debts, liabilities and engagements arising from
any cause whatsoever, solely or jointly with any other person, to or
with the Company, whether the period for the payment fulfillment or
discharge thereof shall have actually arrived or not and no equitable
interest in any share shall be created except upon the footing and
condition that Article 11 hereof is to have full effect. Such lien
shall extend to all dividends from time to time declared in respect of
such shares. Unless otherwise provided, the registration by the
Company of a transfer of
15
shares shall be deemed to be a waiver on the part of the Company of
the lien (if any) on such shares.
31. For the purpose of enforcing such lien, the Board of Directors may
sell the shares subject thereto in such manner as it thinks fit; but
no sale shall be made until the period for the fulfillment or
discharge of the debts, liabilities and engagements as aforesaid shall
have arrived, and until notice in writing of the intention to sell
shall have been served on such shareholder, his executors or
administrators, and default shall have been made by him or them in the
payment, fulfillment or discharge of such debts, liabilities or
engagements for seven days after such notice.
32. The net proceeds of any such sale, after payment of the costs thereof,
shall be applied in or towards satisfaction of the debts, liabilities
or engagements of such shareholder (including debts, liabilities and
engagements which have not yet fallen due for payment or satisfaction)
and the residue (if any) shall be paid to the shareholder, his
executors, administrators or assigns.
33. Upon any sale after forfeiture or for enforcing a lien in exercise of
the powers hereinbefore given, the Board of Directors may appoint some
person to execute an instrument of transfer of the shares sold and
cause the purchaser' s name to be entered in the register in respect
of the shares sold, and the purchaser shall not be bound to see to the
regularity of the proceedings, or to the application of the purchase
money, and after his name has been entered in the register in respect
of such shares, 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 against the Company exclusively.
TRANSFER AND TRANSMISSION
34. Any transfer of shares in the Company shall be subject to the
following provisions:
SALE OF SHARES IN THE COMPANY
35. Right of First Refusal
Until IPO, in every sale or transfer or other disposition of shares in
the Company, the selling or transferring shareholder (hereinafter the
" Offeror") shall be obligated to offer them first to all Major
Shareholders (the "Offerees") under identical terms and as specified
hereinbelow. Notwithstanding the above, in case of the transfer of
ordinary shares between ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ Sycamore Ltd., the
aforesaid right shall not apply if and to the extent one of them
elects to acquire the other's shares.
A transfer of shares in the Company shall not be permitted except
subject to the obligation of the transferee to fulfill all of the
transferor's obligations according to this Article.
36. Notice of Offer
The Offeror shall send a written offer to all of the Offerees, which
offer shall include the following details:
36.1. The number of shares for sale or transfer (hereinafter "the
Offered Shares").
16
36.2. The entity and/or the person to whom the Offeror wishes to sell
or transfer the Offered Shares (hereinafter "the Buyer").
36.3. The price of the Offered Shares, which shall be paid by the
Buyer, the terms of payment and credit, and any other term
related to the sale or transfer.
(hereinafter: "Notice of Offer")
The Offerees undertakes not to make contact with the Buyer so long as
all of the proceedings hereunder have not been completed.
37. Notice of Purchase
Each Offeree may notify the Offeror in writing, with a copy to the
Company, within 21 days of receipt of the Notice of Offer, of its/his
desire to purchase the Offered Shares, according to one of the
following possibilities:
37.1. All or more than the Offered Shares;
37.2. Part of the Offered Shares.
All at the price and under the terms set in the Notice of Offer
(hereinafter: "Purchase Notice").
38. Lack of response: If by the end of a 21-day period for giving a
Purchase Notice no Purchase Notices have been received, then the
Offeror will be free, during the following 90 days, to sell the
Offered Shares to the Buyer at a price that shall not be less than the
price indicated in the Notice of Offer and under terms not better than
those specified in the Notice of Offer. In such event the Company
shall give its consent to the transfer subject to the provisions of
Article 48 below.
39. A Purchase Notice to purchase the entire quantity of the Offered
Shares: If Purchase Notices have been received for a total number of
shares equal to the number of all the Offered Shares, the contract
between the parties shall be created and the Offeree/s must purchase
the number of shares indicated in the Purchase Notice submitted by
them, and the Offeror must sell the Offered Shares to the Oferree/s.
In the event that the total number of shares for which Purchase
Notices have been received is higher than the total number of Offered
Shares, the Offerees shall be entitled to purchase, each the number of
Offered Shares to which it is entitled, calculated on a pro rata
basis.
40. Offers for a quantity less than the offered quantity: If Purchase
Notices are received regarding a total number of shares that is less
than the quantity of The Offered Shares, it shall be deemed a lack of
response as specified in Article 38 above; however, the Offeror may,
at his sole discretion, sell all of the shares for which Purchase
Notices have been received to the Offeree/s, and the provisions of
Article 38 above shall apply with regard to the shares that were not
acquired, accordingly.
41. Desire to participate: An Offeree who desires to participate in the
Offeror's sale of shares to the Buyer shall be entitled to give a
participation notice instead of a notice to purchase. The
participation notice shall include the number of shares which the
Offeree desires to sell in accordance with Article 49 below
(hereinafter: the "Participation Notice").
17
42. Acquisition Notice
In the event of an offer to acquire the entire quantity of the Shares
Offered, or in the event that the Offeror decides as aforesaid in
Article 40 that he wishes to sell to the Offeree as stated in Article
40 only part of the shares, the Offeror shall send, within seven (7)
days after the last date for submitting Purchase Notice, a notice to
the Offeree (hereinafter: "Acquisition Notice") which will indicate
that the Purchase Notice has been received and which will specify the
number of shares that will be acquired by the Offeree and the amount
that the Offeree has to pay the Offeror.
43. Exceptions to the Duty to Offer
Notwithstanding the aforesaid, and without derogating from Articles 35
- 40 above, there shall be no restriction upon the transfer of shares
in each of the following instances, provided that the transferee is
not competing with the Company business and subject to the
transferee's agreeing to be bound by any agreement with other
shareholders which binds the transferor:
43.1. A transfer to a corporation in which the transferor holds over
76% of the voting rights and/or the right to appoint not less
than 76% of the directors.
43.2. If the shares will be held by an individual, a transfer to a
relative of the individual as defined in Article 76 of the Income
Tax Ordinance.
43.3. Notwithstanding anything to the contrary herein, each of the
holders of the Preferred Shares shall be entitled to transfer and
assign all or a part of its Shares, together with the
corresponding rights and obligations thereunder: (a) to a
corporate entity which controls, is controlled by, or is under
common control with such holder, or to a Person who is under the
same management as the holder, or to one or more of its
shareholders, directors, officers or limited or general partners,
or to entities that manage or co-manage, directly or indirectly,
the holder or any of its general or limited partners or
affiliates thereof; and (b) to any other holder of Preferred
Shares of its own class; all free of any right of first refusal
or similar right of any other shareholder of the Company, whether
set forth herein or in an agreement.
44. [Intentionally Omitted].
45. [Intentionally Omitted].
46. In every instance of a transfer as set forth in Article 43
hereinabove, transferee shall be entitled to transfer the shares back
to transferor.
47. [Intentionally Omitted].
48. Restrictions on Transfer
Notwithstanding the foregoing the Board of Directors may refuse a
transfer of shares in the Company in the event of:
48.1. A transfer to a competitor of the Company.
18
48.2. A transfer to an entity which has been convicted, or the
directors of which have been convicted, of criminal offenses of
moral turpitude, or there is a concern that an action of said
character will be filed against them.
The provision concerning first refusal rights shall apply to every
transfer of shares in the Company including the part of the shares of
the transferor, and including a gift or testamentary disposition or a
sale by a receiver or liquidator or trustee in bankruptcy. The
provision concerning first refusal rights shall also apply to a
transfer of shares from the transferee to additional transferees.
49. Co-Sale Rights
The following provisions shall apply to dispositions of shares by the
Founder:
49.1. Tower shall have the following Tag Along Rights:
If at any time prior to an IPO, Founder and/or Eitan Sycamore
Ltd. wish to sell in one or more transactions, more than 25%
(twenty five percent) of their combined shares in the Company and
Tower does not exercise it's right to first refusal as set forth
in Articles 35-42 above, Founder and Eitan Sycamore Ltd.
undertake to then notify Tower in writing of its option to
exercise its Tag Along Rights, including a description of the
material terms of the proposed sale. Tower shall advise Founder
in writing within 10 business days of receiving the notice
whether it wishes to exercise its Tag Along Rights, and this
decision shall be irrevocably binding on Tower for a period of 6
months following its notification to Founder.
For the purposes of this Sub-article 49.1 Tag Along Rights means
Tower's right to require and Founder and Eitan Sycamore Ltd.'s
obligation to provide as part of a proposed sale of their shares
in that the Company that Tower shall be given the right to sell
shares in such sale pro rata to the holdings of Tower in the
Company, and on the same terms and conditions as the sale by
Founder and/or Eitan Sycamore Ltd.
49.2. If the Founder desires to sell, transfer or otherwise dispose of
any of his shares in the Company, the Preferred Shareholders
shall have the right to participate in such transactions pro rata
to their holdings of the issued and outstanding share capital of
the Company (on an as-converted basis), as set forth below.
If at any time prior to IPO the Founder desires to sell, assign,
transfer, pledge, grant any right in or otherwise dispose of any
of his shares in the Company (collectively, in this Sub-article,
"TRANSFER") pursuant to the terms of a bona fide offer received
from a third party (in this Sub-article, the "BUYER") or
otherwise, the Founder shall promptly give the Preferred
Shareholders written notice thereof, which shall fully describe
the proposed Transfer (the "CO-SALE OFFER"), and the Preferred
Shareholders or any one of them shall have the right to require,
within fourteen days of receipt of the Co-Sale Offer, as a
condition to such Transfer described therein, that the Buyer
shall purchase from each Preferred Shareholder at the same price
per share and on the same terms and conditions as involved in
such Transfer by the Founder, a percentage of the shares
(regardless of whether they consist of Preferred or Ordinary
Shares, and on an as-converted basis) proposed to be acquired by
the Buyer (in this Sub-article, the "TRANSACTION
19
SHARES") expressed by a fraction, the numerator of which is the
number of shares then held by each such Preferred Shareholder, on
an as-converted basis, and the denominator of which is the sum of
(i) the aggregate number of shares then held by all Preferred
Shareholders which exercised their right to participate in the
Transfer hereunder, on an as-converted basis, plus the shares of
Tower to the extent it exercises its right of participation as
set forth in Article 49.1 above, and (ii) the number of shares
then held by the Founder, all multiplied by 100 (such percentage
shall be referred to as the "PREFERRED SHAREHOLDERS CO-SALE PRO
RATA PERCENTAGE").
In the event that one or more of the Preferred Shareholders shall
elect to participate in such Transfer, each such Preferred
Shareholder communicate in writing such election to the Founder
within the aforesaid period of time, and, if the Transfer to the
Buyer is consummated, such Preferred Shareholder shall be
entitled to and shall Transfer to the Buyer as part thereof its
Preferred Shareholders Co-Sale Pro Rata Percentage of the
Transaction Shares, at the same price per share and on the same
terms and conditions as set forth in the Co-Sale Offer. If a
Preferred Shareholder did not respond to a Co-Sale Offer within
the aforesaid time period, it shall be deemed to be waiving its
right to participate in such Transfer.
If none of the Preferred Shareholders elected to participate in
such Transfer, then the Founder shall be entitled to sell or
transfer the Transaction Shares to the Buyer at any time within
90 days thereafter. Any such Transfer shall be at not less
favorable terms and conditions to the Founder than those
specified in the Co-Sale Offer. Any Shares not sold within such
90-day period shall continue to be subject to the requirements of
this Article 49.
49.3. For the purposes of Article 49 shares held by an entity
controlled (directly or indirectly) by the Founder and/or
relative or affiliate shall be treated as shares held by the
Founder.
49.4 Any sale or transfer of shares by the Founder of up to 5% of his
holdings in the Company at the closing of the Agreement B shall
not grant the holders of Preferred Shares the Co-Sale rights
described in this Article 49.
49A. Bring Along. Until an IPO, in the event that shareholders of the
Company holding at least 80% of the Company's issued and outstanding
share capital on a fully diluted and on as converted basis shall elect
to sell all of their shares to a third party (the "Proposing
Shareholders") then all remaining shareholders (the "Remaining
Shareholders") shall be obligated, if so demanded by the Proposing
Shareholders, to sell all of their shares in the Company to such third
party at the same price and upon the same terms and conditions as the
Proposing Shareholders. Proceeds received under this section shall be
distributed among the Shareholders of the Company in accordance with
distribution instructions set forth in Article 5.2 herein with respect
to an event of Deemed Liquidation.
20
50. No transfer of shares shall be registered unless a proper instrument
of transfer has been submitted to the Company, coupled with the
certificate for the shares to be transferred. As long as the
transferee is not registered in the Register in respect of the shares
transferred to him, the rights and obligations of the registered owner
of the shares shall in no way be affected by the attempt to transfer.
51. The instrument of transfer of any share shall be in writing in the
following form or in any other form approved by the Board of Directors
of the Company and shall be signed by the transferor and transferee,
or a representative:
I, the undersigned, of _________ in consideration of the sum of
NIS ___ paid to me by _______ of _____ (hereinafter called the
"Said Transferee") do hereby transfer to the Said Transferee the
share (or shares) numbered _ in ________ Ltd., to hold unto the
Said Transferee, executors, administrators, and assigns, subject
to the several conditions on which I held the same at the time of
the execution thereof, and I, the Said Transferee, do hereby
agree to take the said share (or shares) subject to the
conditions aforesaid.
As witness our hands the _ day of
Witness to the Signatures
52. [Intentionally Omitted].
53. The executors and administrators of a deceased sole holder of a share,
or, if there are no executors or administrators, the persons
beneficially entitled as heirs of a deceased sole holder, shall be the
only persons recognized by the Company as having any title to the
share.
54. The Company may recognize the receiver or liquidator of any
shareholder in winding-up or dissolution, or the trustee in bankruptcy
or any official receiver of a bankrupt shareholder as being entitled
to the shares registered in the name of such shareholder.
55. The Company may, by Special Resolution:
55.1. consolidate and divide its share capital into shares of larger
amount than its existing shares;
55.2. divide, by sub-division of its existing shares, of any of them,
the whole or any part of its share capital into shares of smaller
amount than is fixed by the Memorandum of Association, subject,
nevertheless, to the provisions of paragraph (d) of Section 144.1
of the Companies Ordinance;
55.3. cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person;
55.4. reduce its share capital in any manner and with and subject to
any incident authorized, and consent required, by law.
BORROWING POWERS
21
56. The Board of Directors may from time to time, at its discretion,
borrow or secure the payment of any sums of money for the purposes of
or in connection with Company's affairs.
57. The Directors may secure the repayment of such sum or sums in such
manner, at such times and upon such terms and conditions in all
respects as they think fit, and, in particular, by the issue of bonds,
perpetual of redeemable debentures, debenture stock, or any mortgages,
charges, of other securities on the undertaking of the whole or any
part of the property of the Company, both present and future,
including its uncalled capital for the time being and its called but
unpaid capital.
GENERAL MEETINGS
58. 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 Annual General Meeting) and at such time and place as the
Board of Directors may fix.
59. All General Meetings, other than Annual General Meeting, shall be
called "Extraordinary General Meetings". The Board of Directors may,
whenever it deems fit, convene an Extraordinary General Meeting, and
shall be obligated to do so upon a requisition in writing in
accordance with Section 63 of the Companies Act.
60. [Intentionally Omitted].
61. Where it is proposed to pass any resolution including a Special
Resolution, case seven (7) days' prior notice, specifying the place,
the day and the hour of the meeting and the general nature of every
matter on the agenda, shall be given to all shareholders entitled to
receive notice of General Meetings by notice as hereinafter provided.
Provided that if all shareholders entitled to receive notice of
General Meetings agree, a General Meeting at which it is proposed to
pass a Special Resolution, or any other meeting, may be held if less
than 7 (seven) days' or three (3) days' notice, as applicable, is
given.
62. The accidental omission to give notice of a meeting to, or the
non-receipt of notice by, any shareholder, may invalidate the
proceedings at any meeting.
63. Any resolution in writing signed by all shareholders of the Company
entitled to vote at General Meetings or to which all said shareholders
have given their written consent, by letter, or fax or telegram or
telex or electronic mail or by other media, shall be deemed to have
been unanimously adopted by a meeting duly convened and held.
PROCEEDINGS AT GENERAL MEETINGS
64. No business shall be transacted at a General Meeting unless the
requisite quorum is present at the commencement of the meeting, and no
resolution shall be adopted unless the requisite quorum is present
when the resolution is voted upon.
65. Save as herein otherwise provided, the presence of a majority of the
shareholders including shareholders holding the majority in interest
of the Preferred B Shares shall constitute a quorum for general
meetings.
22
66. If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting shall be postponed to the same
date, time and place one week following. At such postponed meeting a
quorum shall be formed by the present shareholders.
67. The Chairman, if any, of the Board of Directors shall preside as
Chairman at every General Meeting of the Company. If there is no such
Chairman or if at any meeting he is not present within fifteen (15)
minutes after the time appointed for holding the meeting or is
unwilling to act as Chairman, the shareholders present shall elect one
of the shareholders to be Chairman. The Chairman of any General
Meeting of the Company shall not be entitled to a casting vote.
68. Ordinary resolutions shall be adopted if approved by the holder(s) of
a majority of shares held by the shareholder(s) present at the General
Meeting whether personally or by proxy.
69. Special Resolutions shall be adopted if approved by the holder(s) of
75% (seventy five percent) of the shares held by the shareholder(s)
present at the General Meeting whether personally or by proxy.
70. Subject to Article 69 above and subject to Article 106 below, all
resolutions adopted by the General Meeting shall be taken by a
majority vote.
71. [Intentionally Reserved].
72. [Intentionally Reserved].
73. A declaration by the Chairman of the meeting that a resolution has
been adopted unanimously, or adopted by a particular majority, or has
been rejected, and an entry to that effect in the minutes 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.
74. The Chairman of a General Meeting may adjourn the same from time to
time and from place to place, and the Chairman shall do so if the
meeting so demands; but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the
meeting from the adjournment took place. A notice of the adjournment
and of the matters to be included in the agenda of the adjourned
meeting shall be given to all shareholders entitled to receive notices
of General Meetings.
74A. The General Meeting, through a Special Resolution, may amend the
Company's Memorandum of Association and Articles of Association unless
stipulated otherwise herein.
VOTES OF SHAREHOLDERS
75. Every shareholder, present in person or by proxy, shall upon a poll,
have such number of votes equal to the aggregate number of shares
issued in the class held by him, on an as converted basis.
76. [Intentionally Omitted].
77. Shareholders may vote either personally or by proxy, or, if the
shareholder is a corporation, by a representative by a duly authorized
proxy.
23
78. The instrument appointing a proxy shall be in writing under the hand
of the appointer or of his attorney duly authorized in writing, or, if
such appointer is a corporation by a duly authorized representative in
the following form or in any other form which may be approved by the
Board of Directors of the Company:
I, _____ of _________being a shareholder of _______ Ltd. , hereby
appoint of as my proxy to vote for me and on my behalf at the
(ordinary or extraordinary as the case may be) General Meeting of
the Company to be held on the _ day of _ and at any adjournment
thereof.
Signed this _ day of
The appointment may be by facsimile transmission.
79. In case of joint holders the vote of the senior who tenders a vote
whether in person or by proxy, shall be accepted to the exclusion of
the votes of the other joint holders; and for this purpose seniority
shall be determined by the order in which the names stand in the
Register.
80. No shareholder shall be entitled to vote at any General Meeting unless
all calls or other sums then due and payable by him in respect of his
shares in the Company have been paid.
81. The instrument appointing a proxy and the power of attorney or other
authority, if any, under which it is signed or a notarially certified
copy of that power or authority shall be deposited at the registered
office of the Company not less than twenty four (24) hours before the
time for holding the meeting at which the person named in the
instrument proposes to vote. The chairman of the meeting shall be
entitled to waive such requirement of deposit of twenty-four hours
before the meeting in his sole discretion.
82. A vote given in accordance with the terms of an instrument of
appointment of attorney or proxy shall be valid notwithstanding the
previous death of the principal, or revocation of the appointment, or
transfer of the share in respect of which the vote is given, provided
no intimation in writing of the death, revocation or transfer shall
have been received at the office or by the Chairman of the meeting
before the vote is given.
THE BOARD OF DIRECTORS
83. Until an IPO, the number of members of the Board of Directors of the
Company ("Board") shall be not less than 3 and not more than 7
members.
84.
84.1. The holders of the majority of the Preferred A Shares and
Preferred B Shares are entitled each to appoint and replace from
time to time one (1) member of the Board, by a written notice to
the Company..
84.2. Dr. ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ shall represent Tower on the Board until
such time as the Tower Agreement is terminated or Tower holdings
in the Company are reduced to less than 3% of the issued and
outstanding share capital of the Company. In the
24
event that Dr. ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ resigns of otherwise terminates
his membership on the Board, or in the event that he ceases to be
employed by Tower, and Tower holds 5% or more of the issued and
outstanding share capital of the Company, the Company and Tower
will appoint a mutually agreed upon Board member as his
replacement. Such director will maintain its position as long as
Tower holds 5% or more of the issued and outstanding share
capital of the Company.
84.3. The remaining members of the Board will be appointed by a
general meeting of the holders of the Ordinary Shares excluding:
(i) Tower and (ii) the holders of the Preferred Shares.
85. In addition to the appointment of one director, the holders of the
Preferred A Shares will be entitled to appoint one observer, and such
observer will be invited to attend the meetings of the Board (without
the right to vote thereat) and will receive all written information as
a regular member of the Board.
The right of the holders of Preferred A Shares to appoint a director
and an observer to the Board and the right of the holders of Preferred
B Shares to appoint a director will expire if each such class's
holdings in the Company, respectively, are reduced to less than 4% (on
an as-converted basis). In the event that the shareholding of each
class of Preferred Shares is reduced below 4% but then increases to 4%
or more again, the right of the such class of Preferred Shares to
appoint a director (and if applicable, an observer) to the board shall
be reinstated immediately thereupon.
86. The remuneration of the Directors - if any - shall be set from time to
time in decisions adopted by the Company in General Meetings.
87. A Director may appoint in writing, at any time, any other director to
act as a substitute director in his stead at any meeting or meetings
of the directors at which that director is unable to be present. Any
director so appointed shall be entitled to exercise all the powers and
authorities of the director who appointed him, and shall comply with
all the duties imposed on that director. Such appointment may be by
facsimile transmission.
88. [Intentionally reserved].
89. [Intentionally reserved].
90. [Intentionally reserved].
91. A person who has ceased to be a member of the Board of Directors shall
be eligible for re-appointment.
92. If any member of the Board of Directors is not appointed, or if the
office of a member of the Board of Directors is vacated, the
continuing members of the Board of Directors may, as long as their
number does not fall below the quorum, act in every matter. If the
number of Directors falls below quorum, they shall not act except in
emergency.
93. The office of a member of the Board of Directors shall, ipso facto, be
vacated upon the happening of any of the following events:
93.1. Upon his death, or, if the Director is a Company, upon its
winding-up;
93.2. If he be found lunatic or become of unsound mind;
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93.3. If he becomes bankrupt;
93.4. If he resigns his office by notice in writing to the Company;
93.5. If he is removed from office under Article 84.
94. A member of the Board of Directors shall not be required to hold any
qualification share.
95. No member of the Board of Directors shall be disqualified by his
office from holding any office or place of profit under the Company or
under any company in which the Company shall be a shareholder or
otherwise interested, or from contracting with the Company either 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 member of the Board of Directors shall be in any way
interested, be avoided, nor shall any member of the Board of Directors
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 member of the Board of Directors
holding that office or of the fiduciary relations thereby established,
but it is declared that the nature of his interest must be disclosed
by him at the meeting of the Board of Directors at which the contract
or arrangement is first taken into consideration, if his interest then
exists, or in any other case at the first meeting of the Board of
Directors after the acquisition of his interest.
96. [Intentionally Reserved]
97. The members of the Board of Directors and their substitutes, if any,
shall not be paid remuneration or fees out of the funds of the Company
unless the General Meeting so decides and at the rate determined by
the general Meeting but may be reimbursed for expenses.
PROCEEDINGS OF THE BOARD OF DIRECTORS
98. The Board may meet together, upon at least 7 days prior notice, and
adjourn their meetings and otherwise regulate their meetings and
proceedings as they think fit. Notwithstanding, the Board shall meet,
in any event at least every calendar quarter. A director shall be
entitled to waive this notice requirement. The attendance of a
director at a meeting of the Board shall in itself constitute such a
waiver.
99. Quorum. The presence of a majority of the directors including one of
the directors appointed by the Preferred Shareholders shall constitute
a quorum for meetings of the Board. Notwithstanding the aforesaid, if
within half an hour of the time arranged for a Board meeting or for a
general meeting, respectively, no quorum is present, such meeting
shall stand adjourned to the same day of the following week, at the
same hour and in the same place, or in the event that such a day is
not a business day, then to the first business day thereafter, and in
such adjourned meeting if no quorum is present within half an hour of
the time arranged, the present directors or shareholders (as
applicable) shall be deemed a quorum.
100. [Intentionally Omitted]
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101. No business shall be transacted at a meeting of the Board of Directors
unless the requisite quorum is present at the commencement of the
meeting, and no resolution shall be adopted unless the requisite
quorum is present when the resolution is voted upon.
102. The Board of Directors may from time to time elect one of its members
to be Chairman of the Board of Directors, remove such Chairman from
office and appoint another in his place.
103. The Chairman of the Board of Directors shall take the chair 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 appointed for the meeting, or if he is unwilling to take the
chair, the Directors present shall choose one of their number to the
Chairman of such meeting. Such chairman shall have no second vote.
104. A meeting of the Board of Directors at which a quorum is present shall
be competent to exercise all the authorities, powers and discretion by
or under the regulations of the Company for the time being vested in
or exercisable by the Board of Directors generally.
105. Subject to Article 106 below, Subject to any applicable mandatory law,
all resolutions and actions of the Board shall be taken by a majority
vote.
106. Notwithstanding the aforesaid, until the consummation of the IPO any
action or resolution of the Company's general meeting, or of the
Company's Board of Directors, as applicable, regarding any of the
following issues shall require the affirmative consent of:
106.1. the majority holders of the Preferred B Shares or of the
Preferred B Director: Change the terms and provisions of the
Preferred B Shares or any other term or condition of the Articles
of Association of the Company so as to affect adversely the
rights of the Preferred B Shares.
106.2. the majority holders of the Preferred A Shares or the Preferred
A Director: Change the terms and provisions of the Preferred A
Shares or any other term or condition of the Articles of
Association of the Company so as to affect adversely the rights
of the Preferred A Shares.
106.3. a majority of 70% of the holders of the Preferred A Shares and
the Preferred B Shares, as one group:
106.3.1. Any material transaction with any officer, director,
shareholder or any other Interested Party, except for
transactions with Tower, M Systems - Flash Disk Pioneers
Ltd. and Infineon AG, between the Company and such entities;
106.3.2. Liquidation, dissolution, winding-up, or any other event
which means or entails the cessation of the operations of
the Company as an on-going independent business entity; and
106.3.3. Issuance of share capital, or options, or warrants to
purchase shares, or other securities ranking senior to the
Preferred A Shares and/or to the Preferred B Shares, or
increase in the number of authorized securities beyond those
specified in Agreement B and in the Amended Articles (As
defined therein)- if such increase
27
adversely affects the rights and privileges of the holders
of the Preferred A and/or B Shares.
107. A resolution in writing signed by all members of the Board of
Directors or to which all members of the Board of Directors have
agreed in writing or fax or by cable or telex or electronic mail shall
be as valid and effective for all purposes as if passed at a meeting
of the Board of Directors duly convened and held.
108. Meetings of the Board of Directors may be held through computer
network, telephone, radio or any other media of communication,
enabling the Directors to communicate with each other, in the presence
of all of them, provided due prior notice detailing the time and
manner of holding a given meeting is served (orally or otherwise) upon
all the Directors . Any resolution adopted by the Directors in such a
meeting will immediately be recorded in writing and signed by the
Chairman of the Board of Directors or the Chairman of the meeting, and
shall be valid as if adopted at a meeting of the Board of Directors
duly convened and held.
109. The Board of Directors may for any special matter delegate any of its
powers to committees consisting of one or several members, whether or
not such members are Directors, as the Board of Directors may deem
fit, and it may from time to time revoke such delegation. 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 that may be imposed on it by the
Board of Directors. The meetings and proceedings of any such Committee
of the Board of Directors, consisting of two (2) or more members,
shall be governed by the provisions herein contained for regulating
the meetings of the Board of Directors, so far as the same is
applicable thereto, and so far as not superseded by any regulation
made by the Board of Directors under this Article.
110. All acts done at any meeting of the Board of Directors, or of a
Committee of the Board of Directors, or by any person acting as a
Director, shall, notwithstanding that it may afterwards be discovered
that there was some defect in the appointment of such Directors or
members of a Committee of the Board of Directors or person acting as
aforesaid or any of them, or that they or any of them were
disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a Director or a member of such
Committee of the Board of Directors.
POWERS OF THE BOARD OF DIRECTORS
111. The management of the business of the Company shall be vested in the
Board of Directors, and the Board of Directors may exercise all such
powers and do all such acts and things as the Company is, by its
Memorandum of Association and/or its Articles of Association or under
the Law, authorized to exercise and do, and are not hereby or by
statute directed or required to be exercised or done by the Company in
General Meeting, but subject, nevertheless, to the provisions of the
Companies Act, and of these presents and any regulations or resolution
not being inconsistent with these presents made from time to time by
the Company in General Meeting; provided that no such regulation or
resolution shall invalidate any prior act done by or pursuant to the
directions of the Board
28
of Directors which would have been valid if such regulation or
resolution had not been made.
LOCAL MANAGEMENTS
112. The Board of Directors may from time to time provide for the
management and transaction of the affairs of the Company in any
specified locality, whether in Israel or abroad, in such manner as it
think fit, and the provisions contained in the next following Article
shall be without prejudice to the general powers conferred by this
Article on the Board of Directors.
113. The Board of Directors may from time to time and at any time,
establish any local board or agency for managing any of the affairs of
the Company in any such specified Locality, any may appoint any person
to be a member of such local board, or any manger or agent, and may
fix their remuneration. The Board of Directors may from time to time
and at any time, delegate to any person so appointed any of the
powers, authorities and discretion for the time being of any such
local board to continue in his office notwithstanding any vacancy
which may occur, and any such appointment or delegation may be made on
such terms and subject to such conditions as the Board of Directors
may think fit, and the Board of Directors may at any time remove any
person so appointed and may annul or vary any such delegation.
MANAGING DIRECTORS AND GENERAL MANAGERS
114. The Board of Directors may from time to time appoint one or more
persons, whether or not Directors, as Managing Director or General
Manager of the Company, either for a fixed term or without any
limitation as to the period for which he or they is or are to hold
office, and may from time to time (subject to any provisions of any
contract between him or them and the Company) remove or dismiss him or
them from office and appoint another or others in his or their place
or places.
115. The remuneration of a Managing Director or Director General shall from
time to time (subject to any contract between him and the Company) be
fixed by the Board of Directors.
116. The Board of Directors may from time to time entrust to and confer
upon a Managing Director or a General Manager for the time being such
of the powers exercisable under these presents by the Board of
Directors as it may think fit, and may confer such powers for such
time, and to be exercised for such objects and purposes, and upon such
terms and conditions, and with such restrictions, as it thinks
expedient; and it may confer such powers, either collectively with, or
to the exclusion of, and in substitution for, all or any of the powers
of the Board of Directors in that behalf; and may from time to time
revoke, withdraw, alter or vary all or any of such powers, all as the
Board of Directors may, from time to time, deem fit.
MINUTES
117. The Board of Directors shall cause minutes to be duly entered in books
provided for that purpose and which will also include:
29
117.1. the names of the Directors present at each meeting of the Board
of Directors and of any committee of the Board of Directors;
117.2. the names of the shareholders present at each General Meeting;
117.3. all directions given by the Board of Directors to any Committee
of the Board of Directors;
117.4. all proceedings and resolutions of General Meetings and of
meetings of the Board of Directors and Committees of the Board of
Directors.
118. Any minutes as aforesaid of a meeting of the Board of Directors, of a
meeting of a Committee of the Board of Directors or of a General
Meeting of the Company, if purporting to be signed by the Chairman of
such meeting or by the Chairman of the next succeeding meeting or by
the Chairman of such General Meeting, shall be accepted as prima facie
evidence of the matters therein recorded.
BRANCH REGISTERS
119. The Company may, subject to and in accordance with the provisions of
Section 138 of the Companies Act and to all orders and directions made
and/or to be made by virtue of the said Sections, or any of them, keep
branch registers in any place outside of Israel, as the Board of
Directors may deem fit, and, subject to the Requirements of the Law,
the Board of Directors may from time to time make and alter such
regulations as it may deem fit in connection with the keeping of such
branch registers.
THE STAMP AND THE RIGHT OF SIGNATURE
120. The Company shall have at least one rubber stamp, and the Board of
Directors shall provide for the safe custody of such rubber stamp.
121. The Board of Directors shall be entitled to authorize (and revoke such
authorization) any person or persons (even if he or they is or are not
Director(s) of the Company) to act and sign on behalf of the Company
in any given case or as general authority with or without limitations,
all as may be determined from time to time by the Board of Directors,
and the acts and signatures of such person or persons on behalf of the
Company shall bind the Company insofar as such person or persons acted
and signed within his or their powers as aforesaid.
122. The Company may exercise the powers conferred by Article 120 hereof
with regard to having a rubber stamp for use abroad, and such powers
shall be vested in the Board of Directors.
THE SECRETARY, OFFICERS, AND ATTORNEYS
123. The Board of Directors may from time to time appoint a Secretary to
the Company, as well as officers, personnel, agents and servants, for
fixed, provisional or special duties, as the Board of Directors may
from time to time deem fit, and may from time to time, in its
discretion, suspend the service of any one or more of such persons.
30
124. The Board of Directors may determine the powers and duties, as well as
the salaries and emoluments, of such persons, and may demand security
in such cases and at such amounts as it deems fit.
125. The Board of Directors may from time to time, and at any time, by
power of attorney, appoint any company, firm or person or body of
persons, whether nominated directly or indirectly by the Board of
Directors, to be the Attorney or Attorneys of the Company for such
purpose and with such powers, authorities and discretion (not
exceeding those vested in or exercisable by the Board of Directors
under these Articles), and for such period and subject to such
conditions as it thinks fit, and any such power of attorney may
contain such provisions for the protection and convenience of persons
dealing with any such Attorney as the Board of Directors may think
fit, and may also authorize any such Attorney to delegate all or any
of the powers, authorities and discretion vested in him.
DIVIDENDS AND RESERVE FUND
126. The Board of Directors may, before recommending any dividend, set
aside, out of the profits of the Company, such sums as it thinks
proper, as a reserve fund to meet contingencies, or for equalizing
dividends, or for special dividends, or for repairing, improving and
maintaining any of the property of the Company, and for such other
purposes as the Board of Directors shall, in its absolute discretion,
think conducive to the interests of the Company; and may invest the
several sums so set aside upon such investments (other than shares of
the Company) as it may think fit, and from time to time deal with and
vary such investments, and dispose of all or any part thereof for the
benefit of the Company, and may divide the reserve fund into such
special funds as it thinks fit, and employ the reserve fund or any
part thereof in the business of the Company, and without being bound
to keep the same separate from the other assets.
127. Subject to the rights of holders of shares with special rights as to
dividends (if there are any) and subject to the provisions of these
Articles as to the reserve fund, dividends shall be paid to the
shareholders of issued, outstanding and fully paid-up shares
proportionately, as the proportion of the number of their issued,
outstanding and fully paid-up shares to the total number of issued,
outstanding and fully paid-up shares in the Company as of the time of
the payment of the dividend, on pro rata basis.
128. The Company in General Meeting may declare a dividend to be paid to
the shareholders according to their rights and interests in the
profits, and may fix the time for payment; no dividend shall exceed
the amount recommended by the Board of Directors, but the Company, in
General Meeting, may declare a smaller dividend.
128A. The Board of Directors may from time to time pay to the shareholders
such interim dividend as may appear to the Board of Directors to be
justified by the profits of the Company.
129. A General Meeting declaring a dividend may resolve that such dividend
be paid, wholly or partly, by the distribution of specific assets,
and, in particular, by distribution of paid up shares, debentures, or
debenture stock of the Company, or paid-up shares, debentures, or
debenture stock of any other Company, or in any one or more of such
ways.
31
130. No dividend shall be paid otherwise than out of the profits of the
Company, and no dividend shall carry interest as against the Company.
131. Any General Meeting may resolve that any moneys, investments, or other
assets forming part of the undivided profits of the Company standing
to the credit of the reserve fund, or to the credit of the reserve
fund, or to the credit of the reserve fund for the redemption of
capital, or in the hands of the Company and available for dividends,
or representing premiums received on the issue of shares and standing
to the credit of the share premium account, be capitalized.
132. For the purpose of giving effect to any resolution under the two (2)
last preceding Articles, 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 asset, and may
determine that cash payments shall be made to any shareholder upon the
footing of the value so fixed, or that fractions of value less than
NIS 1 - (one New Israeli Shekel) may be disregarded in order to adjust
the rights of all parties, and may vest any such cash 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.
133. The Board of Directors may deduct from any dividend, bonus or other
amount to be paid in respect of shares held by any shareholder,
whether alone or together with another shareholder, any sum or sums
due from him and payable by him alone or together with any other
person to the Company on account of calls or the like.
134. If several persons are registered as joint holders of any share, any
one of them may give effectual receipts for any dividend payable on
the share.
BOOKS OF ACCOUNT
135. The Board of Directors shall cause accurate books of account to be
kept in accordance with the provisions of the Companies Act , or any
modification thereof for the time being in force. The books of account
shall be kept at the registered office of the Company, or at any place
or places, as the Board of Directors may deem fit, and they shall
always be open to inspection by members of the Board of Directors. No
member not being a member of the Board of Directors, shall have any
right of inspecting any account or book or document of the Company
except as conferred by law or authorized by the Board of Directors or
by the Company in General Meeting.
ACCOUNTS AND AUDITS
136. Once at least in every year the account of the Company shall be
examined and the correctness of the profit and loss account and
balance sheet ascertained by one or more duly qualified auditors.
137. The appointment, authorities, rights, salaries and duties of the
auditor or auditors shall be regulated by the law in force for the
time being.
NOTICES
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138. A notice may be given by the Company to any shareholder, either
personally or by letter, or telegram, or telex, or fax, or electronic
mail or by any other medium.
139. A notice may be given by the Company to the joint holders of a share
by giving notice to the joint holders named first in the register in
respect of the share.
140. Notice of every General Meeting shall be given in any manner
hereinbefore authorized to all holders of share and to every person
entitled to a share in consequence of death or bankruptcy or
winding-up, would have been entitled to receive notice of the meeting.
No other persons shall be entitled to receive notices of General
Meetings.
141. A notice shall be given by the Company to the persons entitled to a
share in consequence of the death, bankruptcy or winding-up of a
shareholder by sending it through the post in a prepaid letter
addressed to them by name, or by the title of the representatives of
the deceased, or trustee of the bankrupt or liquidator, or by any like
description, at the address, if any, in Israel or abroad, supplied for
the purpose by the person claiming to be so entitled, or - until such
address has been so supplied - by giving the notice in any manner in
which the same might have been given if the death, bankruptcy or
winding-up had not occurred.
INSURANCE AND INDEMNITY
142. The Company is authorized to the fullest extent permitted by the
Companies Act , as may be amended or supplemented in the future to:
142.1. procure directors' and Officers' liability insurance for the
following:
142.1.1. breach of duty or care by any Officer (as defined in the
Companies Act ) owed to the Company or any other person; and
142.1.2. breach of fiduciary duty by any Officer owed to the
Company to the extent that such Officer acted in good faith
and had a reasonable basis to assume that the action would
not prejudice the Company; and
142.1.3. any financial liability imposed on any Officer for the
benefit of a third party as a result of an act or omission
such Office ▇▇▇▇▇▇ committed as an Officer of the Company;
and
142.2. indemnify its Officers (as defined in the Companies Act) for
the following:
142.2.1. any financial liability imposed on any Officer for the
benefit of a third party by a judgment, including a
settlement or arbitration decision certified by the court,
as a result of an act or omission that such Officer
committed as an Officer of the Company; and
142.2.2. reasonable litigation expenses including legal fees
incurred by the Officer or which he is obliged to pay by
court order for:
a) a proceeding brought against him by the Company, on his
behalf or by a third party, or
b) a criminal proceeding in which he is acquitted, or
found guilty if the crime is defined as not
necessitating
33
criminal intent, provided that any such proceeding
related to an act or omission that such Officer
committed as an Officer of the Company; and
142.2.3. procure insurance for or indemnify any employee who is
not an Officer with respect to any of the matters set forth
in (a) and (b). The Company is authorized to exempt any or
all Officer from liability due to his breach of duty care
owed to the Company.
CONFIDENTIALITY AND NON-COMPETE
143. The shareholders undertakes to keep in strict confidence, and not to
use for any purpose whatsoever except for the benefit of the Company,
any and all information relating in any way to the Company and its
business which had been provided to such party by the Company, except:
(i) information which is or shall be in the public domain not due to
any act of a Shareholder in breach of law or agreement; (ii)
information which became or shall become known to a Shareholder prior
to disclosure by Company of such information to the Shareholder; (iii)
information which became or shall become known to a Shareholder from a
source other than Company other than by the breach of an obligation of
confidentiality owed to the Company; (iv) information that was or
shall be independently developed by a Shareholder; or (v) information
which a Shareholder is required to disclose under any applicable law.
Notwithstanding the aforesaid, in connection with periodic reports to
their shareholders or partners, the Shareholders may make general
statements, not containing technical information, regarding the nature
and progress of the Company's business, and may provide summary
financial information of the Company. In addition, in the event that
any Shareholder or its partners or parent companies (any such entity,
a "PARENT COMPANY") is or shall become publicly traded and/or
otherwise subject to certain disclosure duties under applicable
securities laws and regulations (including any regulations and rules
of stock exchanges), or any other laws and regulations, the Company
shall furnish it with financial statements and/or any other
information as such Shareholder or its Parent Company may require in
order to comply with any disclosure requirements under such laws and
regulations.
143A. The holders of Preferred Shares confirm that, in the event that any
of them shall invest in any entity which directly competes with the
Company's products, then, absent the Board's prior written approval,
the applicable Preferred Director shall not simultaneously serve as a
director of such entity which competes with the Company. It is agreed
that in the event a certain holder of Preferred Shares shall make an
equity investment in a company which is a competitor of the Company,
the applicable Preferred Director shall not be entitled to provide
such holder of Preferred Shares with any material concerning the
Company which is of a confidential nature. For the prevention of doubt
and for purposes of this Article 143A only, financial statements shall
not be regarded as confidential. Furthermore, for purposes of this
Article 143A, a Competitor shall be taken to mean any legal entity in
which the holder of Preferred Shares holds at least 5% of the equity
or a legal entity in which the holder of Preferred Shares has a
representative at the board of directors.
34
WINDING-UP
144. If the Company be wound up, the assets available for distribution
among the shareholders as such shall be distributed among the
shareholders in proportion to the capital paid-up, which ought to have
been paid-up at the commencement of the winding-up on the shares held
by them.
145. A resolution to liquidate the Company (as a voluntary liquidation)
shall be carried, only if 75% of the holders of Preferred Shares and
Ordinary Shares voted in favour including 70% of the holders of the
Preferred Shares.
35
EXHIBIT A
WEIGHTED AVERAGE CALCULATION
(P X a) + C'
P' = --------------
a + n
In which:
a = Number of Ordinary Shares outstanding immediately prior to the relevant
issue of Additional Shares, plus all Ordinary Shares issuable upon
conversion or exercise of all outstanding securities of the Company
convertible to or exercisable into Ordinary Shares.
n = Number of Additional Shares issued.
P = Conversion Price in effect immediately prior to such issuance.
C' = Total consideration paid for the Additional Shares.
P' = Adjusted Conversion Price
36