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EXHIBIT 2.
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This exhibit is a fair and accurate English translation of a foreign language
document.
/s/ AVI RUIMI
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Avi Ruimi
SHAREHOLDERS AGREEMENT
Entered into and signed in Tel-Aviv on the 28th of December, 1999
Between: ARWOL HOLDINGS LTD.
Priv.C. ▇▇-▇▇▇▇▇▇-▇
c/o Ravilan, Wolowelsky, Dienstein & Co., advocates
76, Shderot ▇▇▇▇▇▇▇▇▇, Tel-Aviv
(hereinafter - "Owner "A" or "▇▇▇▇▇▇▇")
of the first part;
And: MR. AVI RUIMI
and/or a corporation under his control
of 46, Shderot ▇▇▇▇▇▇▇▇▇, Tel-Aviv
(hereinafter - "Owner "B" or "Ruimi")
of the second part;
Whereas Owner "A" is the holder of 12,183,671 shares in the company of
Macpel Industries Ltd., (hereinafter - "the Company") and Owner
"B" is the holder of 110,286 shares in the company;
And whereas on 28th of December, 1999, an agreement was signed
between Owner "A" and Owner "B", whereunder Owner "B" will
acquire from Owner "A" 3,987,700 shares in the Company
(hereinafter - "the Sale Agreement"), partly forthwith and
partly subject to checking of propriety;
And whereas the parties wish to prescribe, define and regulate in
this Agreement the relationships between them as shareholders
in the Company;
NOW, THEREFORE, IT HAS BEEN STIPULATED AND AGREED BETWEEN THE PARTIES AS
FOLLOWS:
1. PREAMBLE, HEADINGS AND INTERPRETATION
1.1 The preamble to this Agreement forms an integral part
thereof.
1.2 The headings of the clauses are inserted for reference only,
and they shall not be used for interpretation.
1.3 In this Agreement, the following expressions shall have the
meaning set opposite them:
"Shares"- includes rights to shares and other securities.
"Holding" - within its meaning in the Securities Law,
5728-1968.
"Control" - within its meaning in the Securities Law,
5728-1968.
"Stock Exchange" - The Stock Exchange In Tel-Aviv Ltd.
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"The Shares under the Agreement" - means all the shares
presently held by the parties to this Agreement in the Company
and/or through corporations under their full control,
including those acquired by Ruimi from ▇▇▇▇▇▇▇ under the Sale
Agreement, including such shares as shall be received by them
in consequence of the realization of convertible securities
presently held by them in the Company and in consequence of a
distribution of bonus shares in respect of the shares as
aforesaid.
2. RETENTION OF HOLDINGS
2.1 During the first three (3) years from the date of execution of
this Agreement and thereafter, the owners undertake one to the
other, that the rate of the holdings of each one of them of
the shares of the Company shall not be reduced below 50% of
the rate of the holdings on the date of execution of this
Agreement, without receiving the written consent of the other
parties to this Agreement.
2.2 Should Owner "A" sell his shares as provided in clause 2.3
below, the limitation specified in the commencement of this
sub-clause shall be applied to the rate of holdings of Owner
"A" after the said sale and of the transferee subsequent
thereto.
2.3 The sale of up to 50% of ▇▇▇▇▇▇▇'▇ shares to Mr. Zigi
▇▇▇▇▇▇▇▇▇▇ (and/or a corporation under his control) will not
be deemed to be a "sale" or "transfer" under this Agreement,
and will not be limited pursuant to the provisions of
sub-clause 2.1 above, will not confer the right of refusal and
the tag along right as provided in clause 3 below, provided
that during the first two years after the date of execution of
this Agreement, it is made at a price (in dollars) of at least
3,5024 per share, adjusted to the distribution of dividends
and/or other capital changes in the course of those two years,
if any.
3. RIGHT OF FIRST REFUSAL AND RIGHT OF TAG ALONG THE SALE
3.1 GENERAL
(a) Each one of the owners who wishes to sell or transfer
the shares under the Agreement, in whole or in part,
shall be bound to offer to the other party or to each
one of the other parties to this Agreement (if any), in
proportion to the rate of their holdings of the share
capital of the Company as it is at that time
(hereinafter - "the Offeree"), a right of first refusal
or, alternatively, a right to tag along the sale, upon
conditions identical to the conditions under which the
Offeror wishes to sell or transfer his shares, as the
case may be, according to the procedure specified in
this clause 3 below.
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(b) No transfer of shares in the Company by the parties to
this Agreement shall be permitted, except in
consideration of payment of money (including cash or
credit).
(c) Subject to the receipt of the consent of the banks in
whose favor the shares under the Agreement were and/or
will be charged, and for the purpose of securing the
first refusal and the tag along right, the shares under
the Agreement shall be deposited with the Trust Company
of Bank Hapoalim Ltd. and/or such other trustee as
shall be agreed upon between the parties (hereinafter -
"the Trustee").
(d) Notwithstanding the provisions in clause 3.1 above. The
provisions of clause 3 of this Agreement shall not
apply to any sale or transfer by way of a gift to a
"relative" as defined in the Land Betterment Tax Law,
to a sale or transfer to a corporation controlled by
the transferor or, to ▇▇▇▇ ▇▇▇▇▇▇▇ - who jointly with
Zigi ▇▇▇▇▇▇▇▇▇▇ has the control thereof or a transfer
to the person having control of the transferor, or any
transfer or sale to another corporation controlled by
any person controlling the transferor's corporation or
any transfer between the parties to this Agreement, or
a transfer by way of inheritance; provided that the
transferee, whether a person or corporation, signs this
Agreement and undertakes all the transferor's
obligations.
(e) In order to eliminate any doubt, it is expressly stated
that a transfer from the owners to the Trustee shall
not be subject to the provisions of clause 3 of this
Agreement, provided that such transfer does not violate
the other provisions of this Agreement.
(f) "Transfer" for the purpose of this Agreement, includes
the creation of any charge or pledge, the grant of an
option to purchase, the right of first refusal, a right
of preference, an interest in dividends conferred by
the shares, or any other way for the transfer of the
economic or legal interest in the holding of the shares
of the Company, and the transfer of control in a
corporation holding shares of the Company; but excludes
the creation of a pledge or charge after the date of
execution of this Agreement in favor of a bank or any
other financial institution, the realization of which
will be subject to the right of first refusal
prescribed in this clause 3.
3.2 NOTICE OF OFFER
In any case in which any one of the owners wishes to sell any
of his shares in the Company, he shall send a written notice to
the other owners (hereinafter - "the Offeree"), containing the
following details (hereinafter - "Notice of Offer"):
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(a) The number of the shares to be sold or transferred
(hereinafter - "the Shares Offered").
(b) The body to which the Offeror wishes to sell or
transfer the Shares Offered (hereinafter - "the
Purchaser").
(c) The price of the Shares Offered to be paid by the
Purchaser and the terms of payment and the credit, if
any.
3.3 NOTICE OF PURCHASE AND TAG ALONG NOTICE
(a) The Offeree may give to the Offeror written notice,
within seven (7) days from the date of delivery of the
Notice of Offer, of his wish to purchase the Shares
Offered at such price and upon such conditions as were
set out in the Notice of Offer (hereinafter - "the
Notice of Purchase").
(b) Where more than one Offeree gave a Notice of Purchase,
the Offeror shall give notice thereof to each one of
the Offerees within 3 days from the receipt of the
second Notice of Purchase (hereinafter - Notice of Many
Recipients"), and each Offeree shall be entitled to
choose between the revocation of the Notice of Purchase
and the remaining thereof with the Offeror, so that in
any case, the Notice of Purchase will be deemed to have
been given for the purchase of such part of the Shares
Offered as is proportionate to the Offeree's share in
the Shares Offered that delivered Notice of Purchase.
The Offeree shall give notice of his decision to the
Offeror within 24 hours from the time of receipt of the
Notice of Many Recipients.
(c) As an alternative to giving Notice of Purchase, the
Offeree may notify the Offeror of his wish to tag along
the sale of the shares by the Offeror (hereinafter -
Tag Along Notice"). In such case, the said quantity
will be sold to the Purchaser, but the Shares Sold will
be taken from the shares of the selling owners in
proportion to the condition of their holdings of the
shares of the Company at that time.
(d) If by the end of the time for giving Notice of Purchase
as provided in sub-clause A. above, the Offeree will
not give to the Offeror a Notice of Purchase or a Tag
Along Notice, then, the Offeror shall be free, during
90 days from the end of the time as aforesaid, to sell
the Shares Offered to the Purchaser whose details were
given in the Notice of Offer, at such price as shall
not be different from the price stated in the Notice of
Offer, same being linked to the representative exchange
rate of the dollar and upon such conditions as are
identical to those set out in the Notice of Offer.
3.4 PURCHASER
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(a) An Offeree who gives Notice of Purchase, shall be bound
within thirty (30) days from the date of giving Notice
of Purchase, to pay to the Offeror the amount stated in
the Notice of Purchase, under the conditions of sale as
aforesaid, same being linked to the representative
exchange rate of the USA dollar until the date of
payment thereof. The Offeror shall deposit with the
Trustee the Shares Offered, simultaneously with the
giving of the Notice of Offer, by delivery of
instruments of transfer and such other documents as may
be required.
(b) The Trustee will hold the Shares Offered until he
receives a notice from the Offeror that he has been
paid all the amounts for the Shares Offered , whereupon
he shall transfer them to the Offeree.
3.5 Failure of shareholder to pay after Notice of Purchase
If by the end of the thirty (30) days mentioned in clause 3.4
above, the Offeree fails to pay the full amount stated in the
Notice of Purchase received by him, whilst the Offeror had
deposited the Shares Offered as set out in clause 3.4 above,
the Offeror shall be entitled to claim any remedy and/or
relief under this Agreement and/or under any law, including
the enforcement of the sale, and take against the violating
party such steps as he may deem fit, including the receipt
from the Offeree of the amount stated in the Notice of
Purchase or, as the case may be, the balance thereof, with
prevailing bank interest payable at Bank Leumi LeIsrael Ltd.
in respect of overdrafts or cost of living index linked
differentials, whichever is higher, as from the date of
sending the Notice of Purchase to the Offeror until payment in
fact.
4. JOINT VOTING AT GENERAL MEETINGS OF THE COMPANY
4.1 Subject to the provisions in clause 4.5 below, the parties to
this Agreement shall vote in respect of the shares under the
Agreement regarding all matters at the general meetings of the
shareholders of the Company pursuant to the provisions of this
clause 4, including at ordinary general meetings and
extraordinary general meetings. For the purpose of this
clause, all the shares held by the parties in the Company
shall be deemed to be part of the shares under the Agreement,
whether acquired before the date of execution of this
Agreement or thereafter, whether in a transaction on the Stock
Exchange or outside it. In order to secure the provisions of
clause 4, the shares under the Agreement will be deposited
with the Trustee, who shall act therewith and in respect
thereof in accordance with these provisions. If no Trustee is
appointed as aforesaid, the parties will act themselves
pursuant to the provisions of this clause 4.
4.2 The manner of the parties' vote at the general meetings will
be according to the resolution passed at a preparatory meeting
of the parties to this
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Agreement, to be held at the latest, 48 hours before the
general meeting which it precedes (hereinafter - "the
Preparatory Meeting"). The parties shall give to the Trustee a
power of attorney to vote in respect of the shares under the
Agreement pursuant to the resolution of the Preparatory
Meeting.
4.3 The resolutions at the Preparatory Meeting shall be passed by
a simple majority, whilst each one of the parties has a voting
power equal to his proportionate share in the shares of the
Company. In the case of equality of votes, the Trustee shall
vote at the general meeting against the resolution on the
agenda.
4.4 Notwithstanding the provisions in clause 4.3 above, the
Trustee shall vote in favor of the resolutions on the
following subjects, if placed on the general meeting's agenda,
only if at the Preparatory Meeting thereto, the resolution was
approved by a special majority of 75% of the votes at the
meeting.
(a) Commencement of a business field other than the field
of production and marketing of clothing and textile
products.
(b) Merger of the Company or a sale or lease or exchange or
a transfer in any other form of any material asset of
the Company.
(c) The acquisition, lease or sale of another material
company or any material asset.
(d) A resolution in respect of the winding up of the
Company.
(e) A resolution in respect of the allotment of shares in
the Company and/or the terms of the allotment, and the
increase of the share capital of the Company.
(f) A declaration of distribution of dividend, including
the sanctioning of an interim dividend.
4.5 Notwithstanding the aforesaid,, upon a vote in respect of the
appointment of Directors by the general meeting, the Trustee
shall vote according to the instructions of the parties as
follows:
(a) The number of Directors in the Company shall be 11.
(b) So long as the quantity of the shares held by ▇▇▇▇▇▇▇
and/or the corporations under his control, will be
larger than that held by Ruimi and/or corporations
under his control, the parties shall instruct the
Trustee to act for the appointment of Directors, as
follows: ▇▇▇▇▇▇▇ - up to 6; Ruimi - up to 3; Directors
on behalf of the Public (with the consent of the
parties) - 2.
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(c) In any other condition, each one of the parties shall
have the right to instruct the Trustee to act for the
appointment of a Director or Directors whose identity
will be determined by them out of all the Directors
whose appointment is placed on the agenda of the
general meeting, according to his proportional share in
the shares of the Company held by the parties.
Fractions of a right for the appointment of a Director
shall not be counted for this purpose. In order to
eliminate any doubt, "fractions of a right" in this
Agreement means: the remainder of the right left from
the right to appoint a whole number of Directors and/or
a Director.
(d) In the case in which any of the parties is vested with
fractions of a right, so that not all the Directors
whose appointment is placed on the agenda are
appointed, the remaining Directors shall be appointed
upon the recommendation of the holders of the right
fractions. The holder of the largest right fractions
will receive the right to determine the identity of the
additional Director, the holder of the second largest
right fractions will receive the right to determine the
identity of the second additional Director, if any, and
so forth until the appointment of the whole number of
Directors which the general meeting resolved to
appoint.
(e) In the case in which holders of equal right fractions
are entitled according to the mechanism in clause
4.5(d) above to determine the identity of the
additional Director (hereinafter - "Holders of Right
Fractions Equally Entitled"), each one of them shall be
entitled to instruct the Trustee to act for the
appointment of the additional Director whose identity
will be determined by them. In the case in which the
number of holders of right fractions equally entitled
exceeds the number of the Directors left to be
appointed, the holders of right fractions equally
entitled shall instruct the Trustee to appoint the
remaining Directors according to the agreement reached
between them.
(f) In any case, the identity of the Directors on behalf of
the Public (and upon the coming into force of the
Company Law, 5759-1999, - the External Directors),
shall be recommended by mutual consent of the parties
to this Agreement.
(g) Each one of the parties to this Agreement shall be
entitled to determine by himself the identity of the
candidates recommended by him for office on the Board
of Directors of the Company in respect of the number of
the Directors to which he is entitled as aforesaid, and
the Trustee shall vote in favor of such candidates at
all the general meetings of the shareholders of the
Company which are requested to approve their
appointment, without the need of approving their
identity at a Preparatory Meeting.
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(h) If and when the Board of Directors of the Company is
requested to appoint an additional Director to the
Company, the parties (subject to the provisions of the
law and the formation documents of the Company), shall
recommend the identity of such Director, pursuant to
the provisions of this clause 4.5 above.
4.6 It is hereby expressly stated that in any case, the right of
each one of the parties to this Agreement to elect at least
one Director will be secured so long as this Agreement is in
force, even though the method of calculation prescribed in
clause 4.5 above leads to the result that one of the parties
will no longer be entitled to recommend upon the election of a
Director.
4.7 Any change and/or modification and/or updating and/or
revocation and/or cancellation of existing voting agreements
as aforesaid, including the enforcement and/or exercise of any
right in respect thereof, shall require the unanimous
agreement of all the parties to this Agreement. A resolution
not to agree to the extension of the voting agreement dated
17th of September, 1997 with respect to Tefron Ltd.
(hereinafter - "the Tefron Voting Agreement"), shall be in
accordance with ▇▇▇▇▇▇▇'▇ exclusive discretion.
4.8 So long as the holdings, both direct and linked (including
through Macpel), of ▇▇▇▇▇▇▇ and/or corporations under his
control, in Tefron, are larger than the direct and linked
(including through Macpel) of Ruimi and/or corporations under
his control, in Tefron, the parties shall cause the Trustee,
by a voting agreement in respect of Tefron, to vote for the
purpose of the appointment of Directors in Tefron (hereinafter
- "Tefron"), as follows:
(a) So long as the Discount Group is a party to the voting
agreement, by Macpel - 5 Directors, 4 of which upon the
recommendation of ▇▇▇▇▇▇▇ and 1 - upon the
recommendation of Ruimi, 1 upon the recommendation of
Tavriz and 2 - upon the recommendation of Discount.
(b) If Ruimi acquires one third of the shares of Tavriz in
Tefron and Discount does not continue to be a party to
the voting agreement, 6 Directors shall hold office on
the Board of Directors of Tefron, of whom Ruimi will be
entitled to recommend to the Trustee the appointment of
2 Directors, and ▇▇▇▇▇▇▇ will be entitled to recommend
6 Directors; and if in such a situation, Tavriz remains
the holder of 2/3 (two thirds) of its shares in Tefron
at the time of the execution of this Agreement, the
number of Directors will be increased by 1, and Tavriz
will be entitled to recommend the identity of such
additional Director.
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(c) If Ruimi acquires one third of the shares of Tavriz in
Tefron and Discount continues to be a party to the
voting agreement, 9 Directors shall hold office on the
Board of Directors of Tefron, of whom Ruimi will be
entitled to recommend the appointment of 2 Directors,
▇▇▇▇▇▇▇ - 5 Directors and Discount - 2 Directors; and
if in such a situation, Tavriz remains the holder of
2/3 (two thirds) of its shares in Tefron at the time of
the execution of this Agreement, the number of
Directors will be increased by 1, and Tavriz will be
entitled to recommend the identity of such additional
Director.
(d) If Ruimi does not acquire one third of the shares of
Tavriz in Tefron and Discount does not continues to be
a party to the voting agreement, the provisions of
paragraph A above shall apply, but Discount shall not
be entitled to recommend the identity of the Directors
in Tefron.
(e) If Tefron is required to appoint Directors from among
the public and/or external Directors (hereinafter -
Additional Directors"), the number of the Directors in
Tefron will be increased by the number of the
Additional Directors. The Additional Directors shall be
appointed by agreement between the parties to this
Agreement. The provisions in this paragraph 4.8(e)
above are subject to the provisions of the Tefron
voting agreement.
In any other case, the distribution of the Directors on the Board of
Directors of Tefron shall reflect the direct and linked holdings
(including through Macpel) of the parties and/or corporations under
their control in Tefron, subject to the Tefron voting agreement.
5. DISTRIBUTION OF PROFITS, DIVIDENDS AND BONUS SHARES
The parties shall do their utmost as shareholders in the Company,
subject to the provisions of the law and the formation documents of the
Company, in order to cause the Board of Directors of the Company to
consider the determination of the policy of distribution of dividends
to its shareholders, in the course of which the option will be examined
of the distribution of a maximum dividend, having regard to the
business requirements of the Company from time to time.
6. FURTHER ACQUISITIONS IN THE COMPANY
The parties agree that the acquisition of any additional shares in the
Company shall, so long as this Agreement is in force, be made jointly.
The parties shall inform each other, as far as possible, prior to the
acquisition of shares by them in the Company, in order to give to the
other parties an opportunity to participate in the acquisition
according to the proportionate share of each one of the parties to the
Agreement, in the issued and paid up capital of the Company; and if
same is not possible, they shall inform them after the acquisition and
enable them to acquire a proportionate share of the quality of the
shares
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acquired, which is equal to the proportionate share of each shareholder
in the issued and paid up capital of the Company. This clause shall
apply also to companies controlled by the shareholders of the Company
and the holders of control of the shareholders in the Company.
7. TERM OF AGREEMENT
7.1 This Agreement shall come into force upon performance of the
second payment under the Sale Agreement (hereinafter - "the
Commencement Date of the Agreement"). However, if Ruimi does
not purchase the second half of the Shares Sold, as they are
defined in the Sale Agreement, clause 4.5(b) above shall be
amended so that "Ruimi - up to 3", shall be replaced by "Ruimi
- up to 1".
7.2 (a) The provisions of clause 3 above shall be in force for
6 years from the Commencement Date of the Agreement.
(b) The provisions of clause 6 above shall be in force for
3 years from the Commencement Date of the Agreement.
(c) All the other provisions of the Agreement shall be in
force for 12 years from the Commencement Date of the
Agreement.
7.3 In the event of the holdings of any one of the parties to this
Agreement in the Company, either directly or through a
corporation under his control, being reduced below 10% of the
total issued share capital of the Company for the time being
(hereinafter - "the party who sold part of his holdings"),
each one of the remaining parties shall be entitled to revoke
this Agreement with respect to the party who sold part of his
holdings.
7.4 The provisions of this Agreement shall be terminated also in
the case in which the quantity of the shares under the
Agreement is reduced below 25% of the issued and paid up
capital of the Company for a period of at least three (3)
months.
7.5 It is hereby agreed that any transfer of shares under the
Agreement, including the transfer of shares to Mr. Zigi
▇▇▇▇▇▇▇▇▇▇ as provided in clause 2.3 above, shall be improved
only on condition that the transferee will approve in writing
and without any reservation or condition, his consent to the
provisions of this Agreement as if he were originally a party
the Agreement, and will assume a proportionate part of the
rights and obligations under this Agreement, unless otherwise
agreed between the transferor and the transferee with respect
to the transfer of rights under this Agreement.
7.6 Notwithstanding the aforesaid, each party shall be permitted
to sell shares on the stock exchange, without being bound to
grant to the other party the right of refusal and the tag
along right as specified in clause 3 of this
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Agreement, and without the transferee being requested to give
his consent to the provisions of this Agreement, as follows:
to ▇▇▇▇▇▇▇ - up to 5% of the issued and paid up share capital
of the Company at the time of the transfer, and to Ruimi - up
to 4% of the issued and paid up share capital of the Company
at the time of the transfer.
8. MISCELLANEOUS
8.1 No party to this Agreement shall be prevented from demanding
the realization of his rights under the provisions of this
Agreement and/or under the law, even if he acquiesced and/or
refrained from making any claim for some time as aforesaid,
whether same relates to a breach of the Agreement by the other
party and/or a failure to comply with the Agreement and/or in
respect of any deviation from the provisions of the Agreement.
Moreover, no consent to any deviation and/or waiver of rights
should be inferred from mere inaction.
8.2 The parties shall take all the steps, including the signing of
additional documents if requested, which may be required for
the application and implementation of this Agreement according
to its wording and spirit.
8.3 Any modification, amendment of or addition to this Agreement
shall be made in writing and signed by the parties.
8.4 Israel law shall be the law applicable to this Agreement.
8.5 The addresses of the parties shall be as set out in the
preamble to this Agreement, and any notice sent by registered
mail to any of the parties at that address, shall be deemed as
having been received three (3) days after the sending thereof,
unless it is proved that it reached the other party prior
thereto.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE HEREUNTO SET THEIR HAND:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ AVI RUIMI
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▇▇▇▇▇▇▇ Ruimi
I, the undersigned, Arya ▇▇▇▇▇▇▇, hereby agree that if I acquire by myself or
through corporations under my control, any shares in Macpel and/or Tefron, I
and/or the corporation under my control will become a party to this Agreement.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
