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- ii -

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On May 2, 2018, following approval by our Compensation Committee, our Board of Directors resolved that, subject to the approval of their respective re-elections as directors of the Company, each of Messrs. Ben-Arie and Bendoly shall be entitled to receive an equity grant, comprised of a total of four thousand three hundred and sixty six (4,366) Restricted Share Units (the "Directors' RSUs"), equal to the equity grant proposed for our external directors, as described in Item B below.

 

If approved by our shareholders, the Directors' RSUs shall be granted on the date of the Meeting (the "Grant Date"), subject to the approval of the Company's 2018 Share Incentive Plan (the "2018 Plan") by the Israeli tax authority prior to such time. The Directors’ RSUs shall vest over a period of three (3) years, on a quarterly basis, with one twelfth (1/12) of the total amount granted vested each calendar quarter, beginning three (3) months following the Grant Date, and then on each of the following calendar quarters. The Directors' RSUs will be granted under the 2018 Plan and under the Capital Gains Route of Section 102(b)(2) of the Israeli Income Tax Ordinance (the "Ordinance").

 

The annualized value of the proposed equity grant for each of Messrs. Ben-Arie and Bendoly, using the fair value as of the date of its approval by the Board (May 2, 2018), is approximately ten thousand (10,000) USD.

 

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On May 2, 2018, following approval by our Compensation Committee, our Board of Directors resolved that, subject to the approval of their respective re-elections as external directors of the Company, each of Ms. Gabi Heller and Mr. Rafi Koriat shall be entitled to receive an equity grant equal to the Directors' RSUs.

 

If approved by our shareholders, the Directors' RSUs shall be granted on the Grant Date, subject to the approval of the 2018 Plan by the Israeli tax authority prior to such time. The Directors’ RSUs shall vest over a period of three (3) years, on a quarterly basis, with one twelfth (1/12) of the total amount granted vested each calendar quarter, beginning three (3) months following the Grant Date, and then on each of the following calendar quarters. These Directors' RSUs will be granted under the 2018 Plan and under the Capital Gains Route of Section 102(b)(2) of the Ordinance.

 

The annualized value of the proposed equity grant for each of Ms. Gabi Heller and Mr. Rafi Koriat, using the fair value as of the date of its approval by the Board  (May 2, 2018), is approximately ten thousand (10,000) USD.

 

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The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal, in person, by proxy or by electronic voting, is necessary for the approval of the re-election of Mr. Rafi Koriat and Ms. Gabi Heller as external directors and for the approval of their equity grant. In addition, the shareholders' approval must either include at least a majority of the Shares voted by shareholders who are not controlling shareholders nor are they shareholders who have a personal interest in the approval of the proposal, or the total Shares of non-controlling shareholders and non-interested shareholders voted against this proposal must not represent more than two percent (2%) of the outstanding Shares (the "Special Majority").

Under the Companies Law, in general, a person will be deemed to be a controlling shareholder if that person has the power to direct the activities of the company, otherwise than by reason of being a director or other office holder of the company, and a person is deemed to have a personal interest if any member of the shareholder's immediate family, or the immediate family of a shareholder's spouse, has a personal interest in the adoption of the proposal. In addition, you are deemed to have a personal interest if a company, other than Camtek, which is affiliated with you, has a personal interest in the adoption of the proposal. Such company is a company in which you or a member of your immediate family serves as a director or CEO, has the right to appoint a director or the CEO, or owns five percent (5%) or more of the outstanding shares. However, you are not deemed to have a personal interest in the adoption of the proposal if your interest in such proposal arises solely from your ownership of our shares, or to a matter that is not related to a relationship with a controlling shareholder.

 

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General

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Required Vote

The affirmative vote of holders of the majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy, by proxy card or by electronic voting, is required for the approval of the foregoing resolution. In addition, the shareholder approval must also include the Special Majority (as defined above). The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not he or she is a controlling shareholder or has a personal interest in the proposed resolution. For a complete discussion regarding "control" and "personal interest", and how to indicate whether you are a controlling shareholder or have personal interest in this proposed resolution, please see Item B above, under the caption "Required Vote".

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If the adoption of the Amended Policy is not approved by our shareholders, then the current Compensation Policy shall continue to be in full force and effect until November 2, 2019 - which is the end of the three (3)-year period that commenced on November 3, 2016, the date of its most recent adoption by our shareholders.

 

Required Vote

The affirmative vote of holders of the majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy, by proxy card or by electronic voting, is required for the approval of the foregoing resolution. In addition, the shareholder approval must also include the Special Majority (as defined above). The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not he or she is a controlling shareholder or has a personal interest in the proposed resolution. For a complete discussion regarding "control" and "personal interest", and how to indicate whether you are a controlling shareholder or have personal interest in this proposed resolution, please see Item B above, under the caption "Required Vote".

It is proposed that at the Meeting the following resolution be adopted:

 

The Board recommends a vote "FOR" approval of the proposed resolution.

Under the Companies Law, arrangements regarding the compensation of Office Holders of a publicly traded company should generally be consistent with the company's compensation policy. Notwithstanding the foregoing, the compensation committee and board of directors may, in certain circumstances, approve an arrangement regarding the compensation of Office Holders that deviates from the compensation policy, provided that such arrangement is approved by a Special Majority of the company's shareholders.

 

In light of the extraordinarily challenging work plan set by the Company for the next four (4) years, our Board of Directors deemed it advisable to retain motivate and incentivize applicable Company key employees, who are expected by the Company to be of essence in achieving the challenging targets set under such work plan; accordingly, our Board has approved a general framework for a special one-time performance based equity grant, in a total scope equal to approximately one point eight percent (1.8%) of the Company's issued and outstanding share capital, to certain key employees of the Company (the "Employees Equity Grant"), which is partially linked to the continuous achievement by the Company of the growth and profitability targets under such work plan. The grant date of such Employees Equity Grant shall be the date of the Board's final approval thereof (May, 2, 2018), following and subject to the approval of the 2018 Plan by the Israeli tax authority. In connection with its approval of such framework for the Employees Equity Grant, and following the approval by our Compensation Committee, our Board of Directors further resolved to recommend to our shareholders to approve a special one-time equity grant to our Office Holders (excluding our CEO), the majority of which is also linked to the continuous achievement by the Company of its long term growth and profitability targets under the aforementioned four (4) year work plan, and to the creation of long term shareholder value, as further detailed below (the "Office Holders Equity Grant").

 

The Office Holders Equity Grant shall be comprised of a total of two hundred and forty two thousand, three hundred and fifty eight (242,358) Restricted Share Units (collectively with the PRSUs (as defined below) - the "RSU(s)"), to be granted to our Office Holders (excluding our CEO), namely, Mr. Moshe Eisenberg, our Vice President ("VP") – Chief Financial Officer ("CFO"), Mr. Ramy Langer, our VP - Chief Operating Officer ("COO") and Ms. Orit Geva-Dvash, our VP - Human Resources ("HR"), all under terms further detailed below.

 

If approved by our shareholders, the RSUs under the Office Holders Equity Grant shall be granted on the Grant Date, subject to the approval of the Company's 2018 Plan by the Israeli tax authority prior to such time. Under the Office Holders Equity Grant, each of our VP CFO and VP COO shall receive ninety eight thousand, two hundred and fifty three (98,253) RSUs, and our VP HR shall receive forty five thousand, eight hundred and fifty two (45,852) RSUs. The annualized value of the Office Holders Equity Grant, using the fair value as of the date of its approval by the Board (May 2, 2018), is approximately one-hundred and sixty nine thousand (169,000) USD for each of our VP CFO and VP COO, and approximately seventy nine thousand (79,000) USD for our VP HR.

 

The RSUs shall vest over a period of four (4) years with one fourth (1/4) of the total amount granted vested each year, beginning upon the first anniversary of the Grant Date, and then on each of the three (3) subsequent anniversaries thereafter (the "Time-Based Vesting").

 

In addition to the Time-Based Vesting, 70% of the RSUs granted t to our VP CFO and VP COO shall be subject to performance based vesting criteria (the "Performance-Based Vesting"), and fifty percent (50%) of the RSUs granted to our VP HR shall be subject to Performance Based Vesting (the "PRSU(s)"). The performance criteria and general framework of the PRSUs (the "PRSU Framework") have been determined by our Compensation Committee and Board, based on the following principles:

 

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The RSUs shall be granted under the 2018 Plan, and under the Capital Gains Route of Section 102(b)(2) of the Ordinance, and any vested portion thereof may be exercised for a term of seven (7) years from the Grant Date, after which they shall expire and terminate and become null and void.

 

Upon the closing of a "Corporate Transaction" (as such term is defined under the 2018 Plan) (a "Corporate Transaction")the Performance-Based Vesting element shall no longer be applicable, such that the RSUs shall remain subject to Time-Based Vesting only.

 

Further, upon the closing of a Corporate Transaction and in certain cases of a change in control of the Company, as shall be detailed in the relevant Notice of Grant, the Time Based Vesting of fifty percent (50%) of the RSUs granted and not yet vested shall be accelerated, so that these RSUs shall become fully vested upon the completion of such Corporate Transaction or change in control. The remaining fifty percent (50%) of the RSUs granted but not yet vested shall be subject to a double trigger acceleration mechanism such that if following the closing of a Corporate Transaction (i) the Office Holder is not offered to continue to be employed by the Company (or the surviving entity following a merger) in a comparable or more senior functions, duties or responsibilities and/or on comparable or favorable terms; (ii) within twelve (12) months following the closing of said Corporate Transaction the Office Holder's employment with the Company (or the surviving entity following merger) is terminated by the Company not for Cause (as such term is defined in such Office Holder’s applicable employment agreement); or (iii) within twelve (12) months following the closing of said Corporate Transaction the Office Holder's employment with the Company (or the surviving entity following a merger) is terminated by the Office Holder due to an adverse change (other than an insignificant change) to the Office Holder's functions, duties or responsibilities and/or terms of employment (collectively, the "Double Trigger") - then, under such Double Trigger circumstances, such Office Holder shall be entitled to acceleration of the Time-Based Vesting of his or her remaining (50%) RSUs, so that these RSUs shall become fully vested upon the completion of the Corporate Transaction.

 

The proposed Office Holders Equity Grant is not covered by the Compensation Policy; it is intended to be a special, one-time award that is granted outside of the Office Holders' regular annual compensation terms, and is not intended to reflect the Company's regular policy for compensating its Office Holders.

 

 

Our Compensation Committee and Board believe that the proposed Office Holders Equity Grant is in the Company's best interests and is appropriate and suitable, considering, among others, the importance of motivating and incentivizing our Office Holders through the grant of equity, a compensation element which includes vesting over a total of four (4) years, thus having a long term incentive value, while taking into account the interests of the Company's investors and the effect of such equity grant on the dilution of our shareholders. Further, looking forward to the ambitious goals set by the Company for the next four (4) years, our Compensation Committee and Board believe that the Performance-Based Vesting forming part of the PRSU Framework, provides an essential and challenging performance incentive for the Company's Office Holders, who are entrusted by the Company to achieve such goals and an effective retention tool, in critical times.

 

When reaching their conclusion, our Compensation Committee and Board of Directors analyzed all factors and considerations detailed under our Compensation Policy, including comparable industry data, data of peer companies in our industry, the responsibilities and duties performed by each of our Office Holders, the estimation of each of our Office Holders expected contribution and the importance of each of them to the future growth and profitability of the Company. In addition, our Compensation Committee and Board of Directors reviewed the equity compensation received by office holders of peer-group companies, in accordance with a benchmarking prepared by a reputable consultancy firm, and noted that the annualized fair value of the proposed Office Holders Equity Grant is below the median level of the annualized fair value of equity granted to office holders of such peer-group companies.

 

Required Vote

 

The affirmative vote of the holders of a majority of the Shares represented and voting on these proposals at the Meeting in person, in person or by proxy, by proxy card or by electronic voting, is required for the approval of the foregoing resolution. In addition, the shareholders' approval must also include the Special Majority. The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not he or she is a controlling shareholder or has a personal interest in the proposed resolution. For a complete discussion regarding "control" and "personal interest", and how to indicate whether you are a controlling shareholder or have personal interest in this proposed resolution, please see Item B above, under the caption "Required Vote".

 

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Following the approval of our Compensation Committee, our Board resolved, subject to shareholder approval, to approve that the CEO Base Salary and related benefits shall remain without change, as previously approved, subject to the specific amendments detailed below.

 

In accordance with his current employment terms, Mr. Amit dedicates ninety percent (90%) of his time to his role as our CEO and is entitled to a gross annual base salary of $313,133 (including social benefits) (the "CEO Base Salary"), to an On Target Cash Plan which shall not exceed the cap set under our Compensation Policy (currently, six (6) monthly base salaries, and under the Amended Policy, if approved, nine (9) monthly base salaries), and to all other benefits forming part of his total compensation. In addition, as Mr. Amit resides in Asia, close to the Company's primary markets in Asia and the Far East, he is entitled to receive benefits granted to employees of the Company who relocated to Asia, such as flights, housing and health insurance.

 

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The CEO Equity Grant shall be comprised of a total of one hundred and sixty three thousand, seven hundred and fifty-five (163,755 RSUs), one hundred percent (100%) of which will be performance based, to be granted to our CEO, all under the terms of the PRSU Framework and as further detailed herein below.

 

If approved by the shareholders, the PRSUs under the CEO Equity Grant shall be granted at the Grant Date, subject to the approval of the 2018 Plan by the Israeli tax authority prior to such time. The annualized value of the CEO Equity Grant, using the fair value as of the date its approval by the Board (May 2, 2018), is two hundred and eighty one thousand (281,000) USD.

 

The PRSUs shall be subject to the Time-Based Vesting and the Performance-Based Vesting, as detailed in Item E above.

 

The PRSUs shall be granted under the Company’s 2018 Plan, and any vested portion thereof may be exercised for a term of seven (7) years from the Grant Date, after which they shall expire and terminate and become null and void.

 

Upon the closing of a Corporate Transaction, the Performance-Based Vesting element shall no longer be applicable, such that the PRSUs shall remain subject to Time-Based Vesting only.

 

Further, the RSUs shall be subject to a Double Trigger acceleration mechanism, such that under Double Trigger circumstances only, our CEO shall be entitled to acceleration of the Time-Based Vesting of his PRSUs. It being clarified that under circumstances of a Corporate Transaction that do not constitute Double Trigger circumstances, there shall be no acceleration of the Time-Based Vesting of the RSUs under the CEO Equity Grant.

 

The proposed CEO Equity Grant is not covered by the Compensation Policy; it is intended to be a special, one-time award that is granted outside of the CEO's regular annual compensation terms, and is not intended to reflect the Company's regular policy for compensating its CEO.

 

 

In addition, our Compensation Committee and Board believe that although, as mentioned above, Mr. Amit may be deemed (together with a third party) to control the Company (as a result of a voting agreement relating to a majority of the voting equity of the Company's parent company, Priortech, pursuant to which Mr. Amit may be deemed to control Priortech, and indirectly control the Company), as the percentages of Company’s shares beneficially owned by him, directly and indirectly (see the table above under BENEFICIAL OWNERSHIP OF SECURITIES BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT), are relatively low, such deemed control of the Company should not derogate from the importance of incentivizing the CEO through the grant of equity bearing an adequate value. It is therefore in the Company's best interests, and is appropriate and suitable, to motivate and incentivize our CEO through the grant of equity, a compensation element which includes vesting over a total of four (4) years, thus having a long term incentive value, while taking into account the interests of the Company's investors and the effect of the equity grant on the dilution of our shareholders. Further, looking forward to the ambitious goals set by the Company for the next four (4) years, our Compensation Committee and Board believe that the Performance-Based Vesting forming part of the PRSUs Framework, provides an essential and challenging performance incentive for the Company's CEO, who is entrusted by the Company to lead the achievement of such goals.

 

Required Vote

 

The affirmative vote of the holders of a majority of the Shares represented and voting on these proposals at the Meeting in person, in person or by proxy, by proxy card or by electronic voting, is required for the approval of each of the foregoing resolutions. In addition, the shareholders' approval must also include the Special Majority. The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not he or she is a controlling shareholder or has a personal interest in the proposed resolution. For a complete discussion regarding "control" and "personal interest", and how to indicate whether you are a controlling shareholder or have personal interest in this proposed resolution, please see Item B above, under the caption "Required Vote".

 

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The Board recommends a vote “FOR" approval of the proposed resolution.

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[1]

Audit fees for the year ended December 31, 2017 were for professional services rendered for the integrated audit of the Company's annual consolidated financial statements and its internal controls over financial reporting (2016 audit of consolidated financial statements) and services that are normally provided by independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

[2]	Tax fees relate to tax compliance, planning and advice.

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I.

Overview

 

1.

Definitions

 

2.

Policy Global Guidelines

 

2.1.

Our Company provides automated solutions dedicated for enhancing production processes and yield in semiconductor fabrication and packaging and printed circuit board and IC substrates industries. Our Company's innovations have made it a technological leader in dozens of countries around the world.

 

2.2.

Our vision and business strategy is directed towards growth, profitability, innovation, success in future goals, all with a long term perspective.

 

2.3.

The Company’s success in fulfilling its long term vision and strategy is much reliant on the excellence of its human resources through all levels. Thus, we believe that the company’s ability to achieve its goals requires us to recruit, motivate and retain high quality and experienced leadership team and directors.

 

 

2.4.

Therefore, we believe in creating a comprehensive, customized compensation policy for our Office Holders (the "Policy"), which shall enable us to attract and retain highly qualified Executives. Moreover, the Policy shall motivate our Executives to achieve ongoing targeted results in addition to a high level business performance in the long term, all, without encouraging excessive risk taking.   The Policy is intended to align between the importance of incentivizing Office Holders to reach personal targets and the need to assure that the overall compensation meets our Company's long term strategic performance and financial objectives.

 

2.5.

The policy provides our Compensation Committee and our Board of Directors with adequate measures and flexibility, to tailor each of our Executive's compensation package based, among others, on geography, tasks, role, seniority, and capability.

 

2.6.

The Policy shall provide the Board of Directors with guidelines as to exercising its discretion under the Company’s equity plans.

 

2.7.

The Policy is guided by the applicable principles set forth in the Law.

 

3.

Principles of the Policy

 

3.1.

The Policy shall guide the Company’s management, Compensation Committee and Board of Directors with regard to the Office Holders' compensation.

 

3.2.

The Policy shall be reviewed from time to time by the Compensation Committee and the Board of Directors, to ensure its compliance with applicable laws and regulations as well as market practices, and its conformity with the Company’s targets and strategy. As part of this review, the Board of Directors will analyze the appropriateness of the Policy in advancing achievement of its goals, considering the implementation of the Policy by the Company during previous years.

 

3.3.

Any proposed amendment to the Policy shall be brought up to the approval of the Shareholders of the Company and the Policy as a whole shall be re-approved by the Shareholders of the Company at least every three years, or as otherwise required by Law.

 

3.4.

The approval procedures of Terms of Office and Employment as well as back-up data shall be documented in detail and such documentation shall be kept in the Company’s offices for at least seven years following approval.

 

3.5.

The compensation of each Office Holder shall be taxed and subject to mandatory or customary deductions and withholdings, in accordance with the applicable local laws.

 

3.6.

The Company's CEO shall be entitled to approve non-material changes (i.e. not exceeding 5% of the aggregate value of the Total Cash Compensation for such calendar year) in the Terms of Office and Employment of Executives subordinate to the CEO, without seeking the approval of the Compensation Committee.

 

 

II.	Executive Compensation

 

1.

When examining and approving the Executives' Terms of Office and Employment, the Compensation Committee and Board members shall review the following factors, and shall include them in their considerations and reasoning:

 

1.1.

Executive’s education, skills, expertise, professional experience and specific achievements.

 

1.2.

Executive’s role and scope of responsibilities and in accordance with the location in which such Executive is placed.

 

1.3.

Executive’s previous compensation.

 

1.4.

The Company’s performance and general market conditions.

 

1.5.

The ratio between Executive’s compensation, including all components of the Executive’s Terms of Office and Employment, and the compensation (including all components thereof) of the Company’s employees, in particular with regard to the average and median ratios, and the effect of such ratio on work relations inside the Company as defined by the Law.

 

1.6.

Comparative information, as applicable, as to former Executives in the same position or similar positions, as to other positions with similar scopes of responsibilities inside the Company, and as to Executives in peer companies globally spread. The peer group shall include not less than 10 companies similar in parameters such as, among others, revenue, market cap, field of operation, annual income, number of employees, country of operation etc'. The comparative information, as applicable, shall address the base salary, target cash incentives and equity and will rely, as much as possible, on reputable industry surveys.

 

2.

The compensation of each Executive shall be composed of, some or all, of the following components:

 

i.

Fixed components, which shall include, among others: base salary and benefits as may be customary under local customs.

 

ii.

Variable components, which may include: cash incentives and equity based compensation.

 

iii.

Separation package;

 

iv.

Directors & Officers (D&O) Insurance, indemnification; and

 

v.

Other components, which may include: change in control, relocation benefits, leave of absence, etc.

 

 

3.

Our philosophy is that our Executives’ compensation mix shall comprise of, some or all, of the following components: annual base salary, performance-based cash incentives and long-term equity based compensation,  all in accordance with the position and responsibilities of each Executive, and taking into account the purposes of each component, as presented in the following table:

 

4.

The compensation package shall be reviewed with each Executive as may be required from time to time, but at least once every three years.

 

 

5.

Base Salary:

 

5.1.

The base salary is intended to provide annual cash income based on the level of responsibility, individual qualities, past performance inside the Company, and past experience inside and outside the Company.

 

5.2.

The Company shall determine the Company's comparative peer groups as set forth above, such that the base salary of each Executive shall be determined, among others, based on a comparison to such benchmark.

 

5.3.

Our Compensation Committee and Board of Directors may determine, from time to time, the target percentile, and/or range of precentiles, that our Executives' base salary shall meet, with respect to the peer group companies as aforesaid.

 

5.4.

The annual base salary for each Executive shall be determined by our Compensation Committee and Board of Directors, but in no event shall exceed: (i) with respect to the CEO- USD 350,000; and (ii) with respect to other Executives- USD 220,000.

 

5.5.

The value of the annual base salary in the compensation of each of our Executives shall be designed, not to be more than 70 % of such Executive's Total Compensation.

 

6.

Benefits

 

6.1.

Benefits granted to Executives shall include any mandatory benefit under applicable law, as well as:

 

6.1.1.

Pension plan/ Executive insurance as customary in each territory.

6.1.3.

An Executive will be entitled to sick days and other special vacation days (such as recreation days), in accordance with local standards and practices.

 

6.1.4.

An Executive may be entitled to vacation days (or redemption thereof), in correlation with the Executive’s seniority and position in the Company (generaly up to 25 days annualy), subject to the minimum vacation days requirements per country of employmentas well as  the local national holidays.

 

6.1.5.

Additional benefits, which their aggregate value for each of our Executives shall not exceed 10% of such Executive's annual base salary (excluding with respect to relocation).

 

7.

Variable Components

 

7.1.

When determining the variable components as part of an Executive's compensation package, the contribution of the Executive to the achievement of the Company and business unit's goals, revenues, profitability and other key performance indicators ("KPIs") shall be considered, taking into account the Company and the business unit’s long term perspective and the Executive’s position.

 

7.2.

Variable compensation components shall be comprised of cash components which shall be mostly based on measurable criteria and on equity components, all taking into consideration a long term perspective.

 

7.3.

The Board of Directors shall have the discretion to reduce or cancel any cash incentive.

 

8.

Cash Incentives

 

8.1.

Variable Cash Incentive Plan

 

8.1.1.

The cash incentive plan is an incentive cash payments to the Executives that vary based on the Company and business unit’s performance and on their individual performanceand contribution of the Executive to the Company.

 

8.1.2.

For each calendar year, our Compensation Committee and Board of Directors shall adopt a cash incentive plan (the "Cash Plan") which will set forth, for each Executive,  targets which form such Executive's on target Cash payment, (which shall be referred to as the “On Target Cash Plan”), and the rules or formula for calculation of the Cash Plan payment once actual achievements are known.

 

8.1.3.

The Compensation committee and Board of Directors may include in the Cash Plan predetermined thresholds, caps, multipliers, accelerators and deccelerators to corelate an Executive’s Cash Plan payments with actual achievements.

 

 

8.1.4.

The On Target Cash Plan of each Executive shall be calculated based on such Executive’s base salary, and shall not exceed: (i) with respect to the CEO- 6 9 monthly base salaries; and (ii) with respect to other Executives-  4  6 monthly base salaries.

 

8.1.5.

The annual Cash Plan payment for each Executive in a given year shall be capped as determined by our Board of Directors, but in no event shall exceed: (i) with respect to the CEO- 9 13.5 monthly base salaries; and (ii) with respect to other Executives- 6 9 monthly base salaries.

 

8.1.6.

In the event that in a given year the Company's NON GAAP Net Profit shall be less than US$2,000,000, (or a higher amount in the event determined so by the Board in a given year) - no annual Cash Plan payment shall be paid to Executives.

 

8.1.7.

At least 50% of the targets shall be measurable. Such targets may be with respect to Company, business unit and individual level and may include, among others, one or more of the following, with respect to the Executive:

 

·

Company's/ business unit's Revenues

 

·

Company's/ business unit's Operating Income

 

·

Pre-tax profits above previous fiscal year

 

·

Company's/ business unit's Bookings

 

·

Collection

 

·

Customer satisfaction

 

·

KPIs

 

·

EPS

 

All financial targets mentioned above may use either GAAP or NON-GAAP measurements.   A portion of up to 50% of the targets may be based on non-measurable criteria, provided however that with respect to the CEO such portion shall not exceed 3 monthly base salaries of the CEO. Such non-measurable criteria will be concluded, among others, by assessing the Executive's performance during the year, the contribution of the Executive to the achievement of the Company's goals, evaluation of the Executive by the CEO/Board of Directors, as relevant.

 

8.1.8.

The targets, as well as their weight and cap, shall be determined in accordance with the Executive’s position, the Executive’s individual roles, and the Company and business unit’s long term and short term targets. The measurable targets shall include at least two financial targets, one of which shall be the Company's NON GAAP Net Profit, together weighing at least: (i) 50% of the On Target Cash Plan for headquarters Executives (such as CFO, VP Operations , VP HR etc.) and (ii)  40% of the On Target Cash Plan of other Executives (such as, business unit VP etc).   With respect to an Executive managing a business unit - at least 30% of the On Target Cash Plan shall be measurable target based on such Executive's unit and personal targets

 

 

8.1.9.

The Board of Directors shall be authorized, under circumstances it deems exceptional, when the Company's targets are amended during a particular year, to determine whether, and in which manner, such amendment shall apply to the On Target Cash Plan Adjustment to the Company and/or business unit objective targets may be made, when applicable, following major acquisitions, divesture, organizational changes or material change in the business environment.

 

8.2.

Change In Control Cash  Payment   Our Compensation Committee and Board of Directors shall be authorized to grant an Executive, in connection with an event of a change in control   a cash payment of up to 6 monthly base salaries of such Executive.

 

9.

Equity Based Compensation

 

9.1.

The Company shall grant its Executives, from time to time, equity based compensation, which may include any type of equity, including without limitation, any type of shares, options, restricted share units (RSUs), share appreciation rights, restricted shares or other shares based awards (“Equity Based Components”), under any existing or future equity plan (as may be adopted by the Company), and subject to any applicable law.

 

9.2.

The Company believes that it is not in its best interest to limit the exercise value of Equity Based Components.

 

9.3.

When determining grants of Equity Based Components to Executives, the Compensation Committee and the Board of Directors shall take into account the interests of the Company’s investors and the effect of such grants on the dilution of its shareholders.

 

9.4.

Our equity based components shall be in accordance with and subject to the terms of our existing or future equity plan and shall vest in installments, throughout a period which shall not be shorter than 3 years with at least a 1 year cliff taking into account adequate incentives in a long term perspective.

 

9.5.

In the event of a change in control, unvested options may be accelerated as determined by the Board of Directors and the governing equity plan.

 

9.6.

The total yearly Equity Value at the time of grant with respect to any Executive shall not exceed 100% of such Executive's annual base salary

 

9.7.

The Company shall balance the mixture of Equity Based Components taking into account the importance of motivating its Executives as well as its shareholders’ interest in limiting dilution.

 

 

10.

Separation Package

 

10.1.

The following criteria shall be taken into consideration when determining Separation Package: the duration of employment of the Executive, the terms of employment, the Company’s performance during such term, the Executive’s contribution to achieving the Company’s goals and revenues and the retirement’s circumstances.

 

10.2.

As a guideline, the notice period for the termination of an Executive shall not exceed three months (or payment in lieu of such notice). In special circumstances, our Compensation Committee and Board of Directors shall be authorized to increase the notice period (or the payment in lieu such notice) by up to additional 3 months.

 

10.3.

Other than payments required under any applicable law, local practices, vesting of outstanding options, transfer or release of pension funds, manager's insurance policies, etc. - the maximum Separation Package of each Executive shall not exceed the value of a onetime Total Cash Compensation of such Executive's. Separation Package shall include any payment and/or benefit paid to an Executive in connection with such Executive's separation, all as defined in section 1 of the Law.

 

11.

Others

 

11.1.

Relocation– additional compensation pursuant to local practices and law may be granted to an Executive under relocation circumstances. Such benefits shall include reimbursement for out of pocket one time payments and other ongoing expenses, such as housing allowance, car or transportation allowance, home leave visit, participation in children tuition fee etc., all as reasonable and customary for the relocated country and in accordance with the Company's relocation practices, approved by the Compensation Committee and Board of Directors.

 

11.2.

Our Compensation Committee and our Board of Directors may approve, from time to time, with respect to any Executive, if they deem to be required under special circumstances or in case of an exceptional contribution to the Company, including in cases of retention or attraction of an Executive, the grant of a onetime cash incentive, of up to 50% the Executive's annual base salary.

 

12.

Clawback Policy

 

12.1.

In the event of a restatement of the Company’s financial results, we shall seek reimbursement from our Office Holders of, and the Office Holder shall be required to repay to us any payment made due to erroneous restated data, with regards to each Office Holder’s Terms of Office and Employment that would not otherwise have been paid. The reimbursement shall be limited to such payments made during the 3-year period preceding the date of restatement. The above shall not apply in case of restatements that reflect the adoption of new accounting standards, transactions that require retroactive restatement (e.g., discontinued operations), reclassifications of prior year financial information to conform to the current year presentation, or discretionary accounting changes.

 

12.2.

Our Compensation Committee and Board of Directors shall not be authorized to seek recovery to the extent that (i) to do so would be unreasonable or impracticable or; (ii) there is low likelihood of success under governing law versus the cost and effort involved;.

 

 

III.	Director Remuneration:

 

Our non-executive directors may be entitled to remuneration composed of cash compensation which includes annual fee and meeting participartion fee, as well as equity based compensation, as an incentive for their contribution and efforts as directors of the Company.

 

In setting the compensation of our non-executive Directors, the Compensation Committee shall consider, among others, parameters it deems necessary in order to attract and retain highly skilled and experienced Directors.

 

1.

Cash Compensation:

 

1.1.

The Company’s non-executive (non- controlling) directors shall be entitled to receive an equal cash fee per year and per meeting in accordance with the amounts set forth in the Law.

 

1.2.

The Company's non-executive Chairman of the Board of Directors shall be entitled to receive (i) an annual base salary which shall in no event exceed US$250,000.

 

1.3.

The On Target Cash Plan of the Company's non-executive Chairman of the Board of Directors shall not to exceed two thirds of the Company's non-executive Chairman's annual base salary. The annual Cash incentive actually paid to the Company's non-executive Chairman of the Board of Directors in a given year shall not exceed 80% the non-executive's Chairman's annual base salary.

 

1.4.

Company’s non-executive directors shall be reimbursed for their reasonable expenses incurred in connection with attending meetings of the Board of Directors and of any Committees of the Board of Directors, all in accordance with the Law.

 

2.

Equity Based Compensation

 

2.1.

Each of the Company’s non-executive (non- controlling) directors may be entitled to receive equity based compensation per year, which shall be approved by the shareholders of the Company, in accordance with applicable law which value shall not exceed USD 30,000.

 

2.2.

The Company's non-executive Chairman of the Board of Directors shall be entitled to receive equity based compensation which total annual Equity Value at the time of grant, shall not exceed, 40% of his of his annual base salary.

 

2.3.

The equity based compensation of each of the Company’s non-executive directors shall vest in quarterly installments.

 

2.4.

Equity based compensation granted to our non-executive directors shall be granted under the existing or future equity plan of the Company.

 

3.

Outside Directors' Compensation:

 

3.1.

The compensation of our outside directors shall be determined and capped in accordance with the fixed and maximum annual and participation fees specified in the Law section 4-5 of the Companies Regulations (Rules regarding Compensation and Expense Reimbursement of outside Directors) -2000).

 

 

IV.	Indemnification, Insurance and Exemption

 

1.

The Office Holders shall be entitled to the same directors and officer’s indemnification and exemption of up to the maximum amount permitted by law, directors and officer’s liability insurance as shall be approved at the Compensetion Committee, the Board of Directors and our shareholders , all in accordance with any applicable law and the Company’s articles of association.

 

2.

We shall be authorize to provide our directors and officers with a liability insurance policy which aggregare coverage of $1030,000,000, plus 20% additional coverage for claims-related costs, and the premium shall be up to US$70210,000.

 

3.

Our Compensation Committee shall be authorized to increase the coverage purchased, and/or the premium paid for such policies, by up to 20% in any year, as compared to the previous year, or cumulatively for a number of years, without an additional shareholders' approval, if and to the extent permitted under the Law.

 

V.

General

 

1.

The Compensation Committee and our Board of Directors shall be authorized to approve a deviation of up to 10% from any limits, caps or standards detailed in this Policy, and such deviation shall be deemed to be in alignment with this Policy.

 

2.

This Policy is set as guidance for the Company's relevant organs, with respect to matters involving the compensation of its Office Holders, and is not intended to, and shall not confer upon any of the Office Holders, any rights with respect to the Company.

1.	Interpretation And Definitions

 

1.1	In these Articles each term specified below shall have the definition appearing beside it, except if the context otherwise dictates.

 

including

including without limitation

 

The Companies Law

the Companies Law, 5759-1999, as shall be in effect from time to time, and the Regulations.

 

The Office

the registered office of the Company.

 

Majority

(1)   with respect to voting at meetings of the Shareholders - a simple majority determined in accordance with the voting rights attached to the Shares; provided, however, that abstaining votes are not counted;

 

(2)    with respect to voting at meetings of the Board of Directors or any committee thereof - a simple majority determined in accordance with the number of voting Directors; provided, however, that abstaining votes are not counted.

 

Officer

an Office Holder (“Noseh Misra”), as defined in the Companies Law.

 

Presence of a Shareholder [at a General Meeting]

the presence of a Shareholder in person or by proxy.

 

Proxy Card

as the term is used in the Companies Law (“Ktav Hatzba'ah”) or any other applicable law.

 

The Regulations

Regulations promulgated under the Companies Law, as shall be in effect from time to time.

 

Share Certificate

(“Te’udat Menaya”) as the term is used in the Companies Law.

 

1.2	Capitalized terms contained in these Articles shall have the meanings assigned to them herein; capitalized terms not defined herein shall have the meaning assigned thereto in the Companies Law, as shall be in effect from time to time.

 

1.3	Sections 4,5,6,7,8 and 10 of the Interpretation Law, 5741-1981, shall apply, mutatis mutandis, to the interpretation of these Articles.

 

1.4	The captions contained in these Articles are for convenience only and shall not be deemed a part hereof or affect the interpretation or construction of any provision hereof.

 

2.	The Name Of The Company

 

In Hebrew:

קמטק בע"מ

 

In English:

Camtek Ltd.

 

3.	The Objectives Of The Company And Its Purpose

 

3.1	The Company may conduct any legal business.

 

3.2	The Company may contribute a reasonable amount for a worthy cause, even if such contribution is not within the framework of the Company’s business considerations.

 

4.	The Authorized Share Capital Of The Company

 

4.1	The authorized share capital of the Company is NIS 1,000,000, divided into 100,000,000 Ordinary Shares of NIS 0.01 each. All Ordinary Shares issued by the Company shall be issued in registered form.

 

4.2

The rights attached to the Ordinary Shares will be all the rights in the Company, and Ordinary Shares shall entitle the holders thereof to vote at shareholders’ meetings and to participate, parri passu and in accordance with the nominal value of the Ordinary Shares held by such Shareholder, in distributions of dividends and in distributions of funds and surplus assets in the liquidation of the Company.

 

4.3

The Company may, by resolution adopted by a Majority of the Shareholders voting at the General Meeting, increase the authorized share capital of the Company, and may cancel authorized share capital that has not been issued if there is no undertaking of the Company, including a contingent undertaking, to issue such shares.

 

4.4

Subject to the provisions of the Companies Law, the Company may, by a resolution adopted by a Majority of the Shareholders voting at the General Meeting, amend the rights attached to all or any of its authorized share capital, whether issued or not, create new classes of shares, and/or attach different rights to each class of shares, including special or preferential rights and/or different rights from those attached to the existing shares, including redeemable shares, deferred shares, et cetera.

 

4.5	The Company may, by resolution adopted by a Majority of the Shareholders voting at a General Meeting, consolidate, divide and/or redistribute the share capital of the Company to shares without any par value and/or to shares with a higher or lower par value and/or to different classes of shares.

 

5.	Liability Of The Shareholders

 

5.1

The liability of a Shareholder for the obligations of the Company will be limited to the amount of the consideration (including the premium) for which his shares were issued to him, but not less than the par value of such shares; except in the event that said shares have been issued to him lawfully for a consideration which is below the par value, in which event his liability will be limited to the amount of the consideration for which said shares were issued to him.

 

5.2	The Company may not alter the liability of a Shareholder or obligate him to acquire additional shares, without his consent.

 

6.	Amending The Articles

 

6.1	The Company may amend these Articles by resolution of the Majority of the Shareholders voting at a Special Meeting, except as otherwise provided in the Companies Law.

 

6.2	Any amendment to these Articles will become effective on the date of the resolution adopting such amendment, unless the Companies Law or said resolution provides that such amendment will come into force at a later time.

 

6.3	The Company may not amend a provision contained in these Articles requiring a special majority to amend or to change these Articles or any provision hereof, except by a resolution of the General Meeting adopted by that majority.

 

7.	Transactions With An Officer or A Controlling Person

 

Subject to the provisions of the Companies Law, the Company may enter into a transaction with an Officer and/or a Controlling Person, or with another person with respect to which the Officer and/or the Controlling Person has a Personal Interest, provided that such transaction does not adversely affect the interests of the Company.

 

8.	Exemption, Insurance And Indemnification

 

8.1	Granting an Exemption from the Duty of Care

 

The Company may grant an Officer, in advance, an exemption from his liability, in whole or in part, for damages resulting from a breach of his duty of care to the Company, subject to and in accordance with the provisions of the Companies Law, and provided that the Company shall not exempt any Officer from liability arising from any of the following:

 

(a)

a breach of the duty of loyalty, except, to the extent permitted by the Companies Law, for a breach of a duty of loyalty to the Company while acting in good faith and having reasonable cause to assume that such act would not prejudice the interests of the Company;

 

(b)

a breach of the duty of care made intentionally or recklessly (“pzizuth”), unless committed through mere negligence;

 

(c)

any Action taken with the intention of making an unlawful personal gain; or

 

(d)

a fine, civil fine, financial sanction or monetary settlement in lieu of criminal proceedings (“Kofer”) imposed on such Officer.

 

8.2

Insurance

 

(1)

The Company may, subject to and in accordance with the provisions of the Companies Law, enter into an insurance policy to insure all or part of the liability of any Officer imposed upon him by virtue of an Action taken by him in his capacity as an Officer, with respect to any of the following:

 

(i)

Breach of duty of care to the Company, or to another person;

 

(ii)

Breach of duty of loyalty to the Company, provided the Officer acted in good faith and had reasonable grounds to assume that such act would not adversely affect the interests of the Company.

 

(iii)

A financial obligation imposed upon the Officer in favor of another person.

 

(2)

Without derogating from the aforementioned, subject to the provisions of the Companies Law and the Securities Law, 5728-1968 (the "Securities Law"), the Company may also enter into a contract to insure an Officer, in respect of each of the following:

 

(i)

Expenses, including reasonable litigation expenses and legal fees, incurred by an Officer in relation to a proceeding instituted against such Officer: (1) pursuant to the provisions of Chapter H'3 ("Imposition of Financial Sanctions by the Israeli Securities Authority") of the Securities Law, or (2) pursuant to the provisions of Chapter H'4 ("Imposition of Administrative Enforcement Measures by the Administrative Enforcement Committee") of the Securities Law, or (3) pursuant to the provisions of Chapter I'1 ("Arrangement for the Avoidance of taking or Cessation of  Proceedings, subject to Conditions") of the Securities Law; and

 

(ii)

Payment to an injured party, pursuant to section 52ND(a)(1)(a) of the Securities  Law.

 

8.3	Indemnification

 

(a)

Subject to the provisions of the Companies Law and the Securities Law, the Company may indemnify an Officer with respect to liabilities or expenses, as specified below, imposed on or incurred by him as a result of an Action taken in his capacity as an Officer, as follows:

 

(1)

A financial liability imposed upon him in favor of another person by a court judgment, including a judgment given by way of compromise, or an arbitration award approved by court;

 

(2)

Reasonable litigation expenses, including attorney's fees, incurred by the Officer or imposed upon him by a court, in a claim filed against him by the Company or on the Company’s behalf, or by another person, or in connection with a criminal charge from which he was acquitted, or a criminal charge in which he was convicted of an offense that does not require proof of criminal intent (mens rea);

 

(3)

Reasonable litigation expenses, including attorney’s fees, incurred by him as a result of an investigation or proceeding instituted against him by a competent authority, which concluded without the filing of an indictment against him and without the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require proof of criminal intent or in connection with a financial sanction (the phrases "proceeding concluded without the filing of an indictment" and "financial liability in lieu of criminal proceeding" shall have the meaning ascribed to such phrases in section 260(a)(1a) of the Companies Law);

 

(4)

Expenses, including reasonable litigation expenses and legal fees, incurred by an Officer in relation to a proceeding instituted against such Officer: (1) pursuant to the provisions of Chapter H'3 ("Imposition of Financial Sanctions by the Israeli Securities Authority") of the Securities Law, or (2) pursuant to the provisions of Chapter H'4 ("Imposition of Administrative Enforcement Measures by the Administrative Enforcement Committee") of the Securities Law, or (3) pursuant to the provisions of Chapter I'1 ("Arrangement for the Avoidance of taking or Cessation of Proceedings, subject to Conditions") of the Securities Law; and

 

(5)

Payment to an injured party, pursuant to section 52ND(a)(1)(a) of the Securities Law.

 

(b)

The total aggregate indemnification amount that the Company shall be obligated to pay to all of its Officers, shall not exceed an amount equal to twenty five percent (25%) of the shareholders' equity at the time of the indemnification.

 

(c)

The Company may undertake to indemnify an Officer as aforesaid, (i) prospectively, provided that in respect of Article 8.3(a)(1), the undertaking is limited to events which in the opinion of the Board of Directors are foreseeable in light of the Company's actual operations when the undertaking to indemnify is given, and to an amount or criteria set by the Board of Directors as reasonable under the circumstances, and further provided that such events and amount or criteria are set forth in the undertaking to indemnify, and (ii) retroactively.

 

The provisions of Articles 8.1, 8.2 and 8.3 above are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance and/or in respect of indemnification (i) in connection with any person who is not an Officer, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Officer, and/or (ii) in connection with any Officer to the extent that such insurance and/or indemnification is not specifically prohibited under law; provided that the procurement of any such insurance and/or the provision of any such indemnification shall be approved by the Audit Committee of the Company.

 

9.	Securities Of The Company

 

9.1

General

 

The Company may have shares of different classes, redeemable Securities, Debentures, Secured Debentures, Series of Debentures or other Securities.

 

9.2	Redeemable Securities

 

(a)

The Company may create and/or issue redeemable Securities.

 

(b)

The Company may attach to redeemable securities the characteristics of shares, including voting rights and/or rights to participate in profits of the Company and/or the right to receive dividends or bonus shares and/or other rights, or additional rights attached to the shares of the Company.

 

(c)

The Company may redeem redeemable Securities in an amount, at the times, in the form, and from the sources specified by resolution of the Company.

 

(d)

Redeemable Securities will not be deemed part of the equity of the Company, unless the right of the Company to redeem such Redeemable Securities has been limited to the winding-up of the Company after having satisfied all of the obligations of the Company to its creditors. In the event that the right of redemption has been limited as aforesaid, the provisions of sub-Article (c) above will not apply, and the Company may redeem such Redeemable Securities in the same fashion as it may acquire shares of the Company.

 

10.	Issuance Of Securities

 

10.1	The issuance of shares and other Securities shall be in the authority of the Board of Directors, subject to the provisions of the Companies Law.

 

10.2	The Board of Directors may issue shares and convertible Securities up to the limit of the authorized share capital of the Company, assuming the conversion of all convertible Securities at the time of their issuance.

 

10.3	The Board of Directors may issue shares for cash or for other consideration, against immediate or subsequent payment.

 

10.4

The Board of Directors may issue Debentures, Secured Debentures or Series of Debentures, within the scope of its authority to borrow on behalf of the Company. The aforesaid does not preclude the authority of the General Manager or any other person designated for such purpose by the Board of Directors to borrow on behalf of the Company and to issue Debentures, promissory notes, or bills of exchange within the limits of his authority.

 

10.5	The Board of Directors will not issue a share the consideration for which is not to be paid in full in cash, unless the consideration for the shares has been detailed in a written document.

 

10.6	The Board of Directors may issue shares at a price below their par value, subject to the provisions of the Companies Law.

 

10.7

The Company may, by resolution of the Board of Directors, pay a commission for underwriting and/or subscription and/or consent to subscribe and/or to underwrite shares or Securities of the Company, whether conditional or not. Such commission may be paid in cash and/or in shares and/or other Securities, or any combination thereof.

 

10.8	The Board of Directors will arrange for the registration of the issuance of shares in the Shareholders Register immediately upon their issuance.

 

11.	Share Certificate

 

11.1

A Shareholder registered in the Shareholders Register may receive from the Company, with respect to the fully paid-up shares registered in his name in the Shareholders Register, one (1) Share Certificate confirming such Shareholder's ownership in the shares registered in his name, or, if approved by the Board of Directors, several Share Certificates each for one or more of such shares.

 

11.2	A Share Certificate will be issued bearing the signatures of those persons authorized to sign on behalf of the Company.

 

11.3	A Share Certificate in the name of two or more persons will be delivered to the person whose name appears first in the Shareholders Register.

 

11.4	In the event that a Share Certificate is lost, defaced or spoiled, a new one may be issued in its place once the Shareholder requesting the replacement has fulfilled the conditions with respect to proof of the aforesaid, indemnification, etc., as determined by the Board of Directors.

 

11.5	The Board of Directors will determine the amount of the fee to be paid to the Company for issuing more than one Share Certificate to each Shareholder and/or for exchanging a Share Certificate.

 

11.6	The Board of Directors of the Company will specify the form, the content and the method of preparing or printing the Company's Share Certificates, except where the aforesaid is specified by the Regulations.

 

12.

Reserved

 

13.	Calls on Shares

 

13.1.

The Board may, from time to time, at its discretion, make calls upon Shareholders in respect of any sum unpaid on their shares (hereinafter: an “Obligation”) which has become due or which is not, by the terms of issuance of which shares, payable at a fixed time. Each Shareholder shall pay to the Company the amount of every call so made upon him at the time(s) and place(s) designated in such call. A call may contain a call for payment in installments.

 

13.2

Notice of any call shall specify the amount of the Obligation and shall be given in writing to the Shareholder(s) in question not less than fourteen (14) days prior to the time of payment as fixed therein, provided that at any time before the due date of any such payment the Board may, by a notice to the Shareholder(s), revoke such call, or postpone the designated date(s) of payment.

 

13.3	The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call duly made upon one of the joint holders shall be deemed to have been duly made upon all of the joint holders.

 

13.4

If under the terms of issue of any share or otherwise, the payment in respect of such share is to be made in whole or in part by installments, whether such payment is at premium or at nominal value, then each such installment shall be paid to the Company on the due date for payment thereof, and it a call shall be deemed made by the Company with proper notice on such shares with respect to each such installment, and the provisions in these Articles which concern the call on shares shall be applicable to such installments.

 

13.5

Any Obligation shall bear interest from the date on which it is payable until actual payment thereof at a rate equal to the then prevailing rate of interest for unauthorized overdrafts as charged by Bank Leumi Le-Israel B.M. Notwithstanding the aforementioned, the Board of Directors may waive the interest payments in whole or in part.

 

13.6

The Board of Directors may, upon adoption of a resolution to such effect, allow any Shareholder to prepay any amount not yet payable in respect of his shares, and may approve the payment of interest for such prepayment at a rate as may be agreed upon between the Board and the shareholder so prepaying.

 

13.7	The provision of this Article 13 shall in no way derogate from any rights or remedies the Company may have pursuant to these Articles or any applicable law.

 

14.	Charge, Forfeiture and Surrender

 

14.1

The Company shall have a charge, first in rank, over all the shares which are registered in the name of a shareholder but which are not fully paid, as well as over the proceeds from their sale, for the purpose of securing an Obligation of such a shareholder to the Company, whether personally or jointly with others, whether or not payment is due. The above mentioned charge shall apply to all the dividends declared from time to time on such shares, unless otherwise decided by the Board.

 

14.2	The Board of Directors may, upon the adoption of a resolution to such effect, forfeit any shares issued with respect to which an Obligation exists and has not been paid by its due date, and following such forfeiture may sell the forfeited shares.

 

16.	Transfer Of Shares

 

16.1	Shares and other Securities of the Company may be transferred subject and pursuant to the provisions of this Article 16.

 

16.2	Subject to the provisions of this Article 16, fully paid shares may be transferred without approval of the Board of Directors.

 

16.3	A share may be transferred in whole only, and not in part; however, if a share(s) has joint owners, any of the joint owners may transfer his rights in the share(s).

 

16.4

A transfer of shares shall require the delivery to the Company of a share transfer deed signed by the transferor and the transferee. If the Board of Directors does not refuse or decline to register such transfer of shares in accordance with the provisions of these Articles, the Company will register the transfer of shares in the Shareholders Register as soon as is practicable. The transferor will remain a the owner of the shares to be transferred, until the name of the transferee is recorded in the Shareholders Register as the owner of the shares.

 

16.5	A share transfer deed will be in the form specified below or such similar or other form approved by the Board of Directors.

 

Share Transfer Deed

 

We, the undersigned, _____________________ of _____________ _________________ (hereinafter: the “Transferor”) hereby transfer to ______________ of _____________________________________ (hereinafter: the “Transferee”)  _______ Shares of NIS  ___ each in the undertaking called Camtek Ltd. to hold unto the Transferee, subject to the conditions under which we held the same immediately before the execution hereof, and we, the Transferee, do hereby agree to accept and take the said Shares subject to the conditions aforesaid.

 

In Witness Whereof we have affixed our signature on this ___ day of the month of ________ year 20__.

 

Signature of the Transferor _______________

 

Witness to the signature: _________________

 

Signature of the Transferee _______________

 

Witness to the signature: _________________

 

16.6	The Board of Directors may:

 

(a)

refuse to transfer a share with respect to which an Obligation exists;

 

(b)

suspend the registration of share transfers in the 10 (ten) days prior to convening a General Meeting;

 

(c)

decline to recognize a share transfer deed until a Share Certificate for the shares transferred, or other proof that the Board of Directors may demand in order to clarify the ownership of the transferor, shall be attached to the shares being transferred;

 

(d)

decline to transfer shares until the Company has been paid a transfer fee as specified by the Board of Directors.

 

16.7

All Share Transfer Deeds will be delivered to the Company at the Office. A Share Transfer Deed which is recorded in the Shareholder Register will remain with the Company, and any Share Transfer Deed which the Board of Directors refuses or declines to approve will be returned, upon demand, to whomever delivered it to the Company, together with the Share Certificate, if delivered.

 

16.8	The person entitled to shares by an act of law is entitled to be recorded in the Shareholders Register as a Shareholder thereof.

 

17.	The Organs Of The Company And Their Authority

 

17.1	The organs of the Company are:

 

(1)

The General Meeting;

 

(2)

The Board of Directors; and

 

(3)

The General Manager, if the Company has appointed a General Manager.

 

17.2	The authorities of the different organs of the Company will be as specified in the Companies Law and in these Articles.

 

17.3	Each organ of the Company has all the ancillary rights required for implementing his or its authority.

 

17.4	An authority not assigned in these Articles or in the Companies Law to another organ of the Company may be exercised by the Board of Directors, which shall have a residual authority.

 

17.5	An action taken without authority or in excess of authority may be approved retroactively by the proper organ of the Company.

 

18.	General Meeting

 

18.1	The place of the General Meeting

 

(a)

The General Meeting will take place in Israel.

 

(b)

If the shares of the Company have been offered to the public outside of Israel or are registered or listed for trade outside of Israel, a General Meeting may also be conducted outside of Israel if the Board of Directors so resolves.

 

18.2	Participation in the General Meeting

 

(a)

Subject to the provisions of the Companies Law, a Shareholder may participate in the General Meeting.

 

(b)

A Shareholder entitled to participate in a General Meeting will be one who is a Shareholder at the date determined by the Board of Directors, subject to the Provisions of the Companies Law and the Regulations.

 

(c)

A Shareholder who is not registered in the Shareholders Register and who wishes to vote at a General Meeting shall prove to the Company his ownership in the shares, in the method specified in the Regulations.

 

(d)

A Shareholder who is the registered owner of more than one share of the Company may appoint different proxies for different shares of which he is the registered owner, provided that with respect to each specific share, only one person - who may be either the Shareholder or a duly appointed proxy - may be present and vote at any General Meeting.

 

 

(e)

A  company or other corporate  legal entity may authorize any person to be its representative at a General Meeting  byor execute and deliver a proxy on its behalf.

 

(f)

In the event a share is jointly owned, the joint owner whose name appears first in the Share Registry may participate in the General Meeting. If he is not present at the General Meeting, the joint owner whose name appears thereafter may participate in that General Meeting, and so forth.

 

(g)

A Shareholder shall designate a proxy by signing an instrument of proxy in the form specified below, or in a similar or customary form which is acceptable to the Board; or, if shares of the Company are traded outside of Israel, in a form which is in accordance with the applicable laws, rules or customs of the country and the stock market in which the Company’s shares are registered or listed for trade.

 

To: _________(the Company)

 

Appointment Of Proxy

 

I/we the undersigned, ____________ of ____________, the owner of _____ Ordinary Shares in the Company, hereby appoint __________, ID / Company No. __________, or in his absence ___________, ID No. ___________, as our proxy to participate and vote in the General Meeting of the Company convened for the __ day of __________, ____, and in any adjourned meeting, with respect to _______ of my aforesaid Ordinary Shares.

 

In witness whereof, we have affixed our signature on this ___ day of _________, 20__.

 

____________________

[Shareholder’s Signature]

 

(h)

The appointment of a proxy will be valid only if the proxy appointment notice is delivered to the Office or to another place specified by the Board of Directors  24 hours prior to the beginning of the meeting or presented to the Chairman at such meeting.

 

(i)

If both a Shareholder and his proxy are present at a General Meeting with respect to the same shares, the appointment of the proxy shall be void with respect to such shares.

 

(j)

A vote cast in accordance with the instructions contained in any instrument appointing a proxy shall be valid, notwithstanding the death of the grantor or the revocation of the proxy, unless notice in writing of the death or revocation had been received at the office of the Company, or by the chairman of the meeting, prior to the vote.

 

(k)

In the case of any dispute with respect to the right to participate in the General Meeting, the Chairman of the meeting will decide and his decision will be final and binding.

 

(l)

The Chairman of the General Meeting may prevent the participation therein of a person who is neither a Shareholder nor a proxy of a Shareholder, unless the General Meeting shall otherwise resolve. The General Meeting may resolve to prohibit the participation of a person who is neither a Shareholder nor a proxy of a Shareholder.

 

18.3	Annual Meeting

 

(a)

Convening an Annual Meeting

 

(1)

The Company will conduct each year an Annual Meeting (to the extent required by the Companies Law, no later than 15 (fifteen) months following the previous Annual Meeting).

 

(2)

If the Board of Directors does not convene an Annual Meeting as aforesaid, any Shareholder or Director may apply to the court to order that a Meeting be convened.

 

(3)

If it is impractical to convene an Annual Meeting or to conduct it in the manner fixed in these Articles and/or the Companies Law, the court may, upon application by the Company, by a Shareholder entitled to vote at the General Meeting or by a Director, order that the Meeting be convened and conducted in the manner specified by the Board of Directors.

 

(b)

Agenda

 

(1)

The agenda of an Annual Meeting will include a discussion of the audited financial statements and the report of the Board of Directors, and may also include the following:

 

(i)

the appointment of Directors;

 

(ii)

the appointment of an Auditor;

 

(iii)

any other matter specified by the Board of Directors;

 

(iv)

any matter requested by shareholders of the Company holding at least 1% of the voting rights of the Company, provided that the matter is appropriate;

 

(2)

Resolutions may be adopted at an Annual Meeting only in those matters specified in the agenda.

 

18.4	Special Meetings

 

(a)

Convening a Special Meeting:

 

(1)

The Board of Directors will convene a Special Meeting:

 

(i)

upon its resolution to such effect;

 

(ii)

upon a demand made by the lesser of (a) 2 (two) Directors or (b) one-fourth of the Directors then serving;

 

(iii)

upon a demand made by Shareholders holding shares constituting at such time at least: (a) 5% (five percent) of the issued share capital and 1% (one percent) of the voting rights of the Company; or (b) 5% (five percent) of the voting rights of the Company;

 

(2)

If a demand is made to the Board of Directors to convene a Special Meeting as aforesaid, it will convene such Meeting within 21 (twenty-one) days from the date of the demand, to a date specified in the invitation which will be not earlier than 21 (twenty-one) days and not later than 35 (thirty-five) days from the date of publishing the notice of the General Meeting, or from such other date specified in the Regulations with respect to General Meetings in which it is possible to vote by way of Proxy Card.

 

(3)

In the event that the Board of Directors fails to convene the Special Meeting, then the Director(s) who demanded the meeting, or part of the demanding Shareholder(s) that hold at least half of the voting rights of such demanders, may convene the Special Meeting; provided, however, that the meeting will not take place later than 3 (three) months from the date of the demand for such meeting.

 

A Special Meeting as aforesaid will take place, insofar as possible, in the same fashion as a General Meeting convened by the Board of Directors.

 

In the event such a meeting has been convened, the Company shall bear the reasonable expenses necessary to convene the meeting which were incurred by the Director or the demanders, as the case may be, and the Directors responsible for not convening the meeting will reimburse those expenses to the Company.

 

(b)

Agenda

 

(1)

The agenda at a Special Meeting will be set by the Board of Directors; and if the Special Meeting is convened upon demand as specified in sub-Article(a) above, those matters specified by the Directors or Shareholders who demanded that the Special Meeting be convened shall be included in the agenda, provided that such matters are suitable, in accordance with the Companies Law and these Articles, to be included in the agenda of a General Meeting.

 

(2)

Only matters included on the agenda will be discussed at a Special Meeting.

 

18.5	Notice of a General Meeting and the Date for its Publication

 

(a)

The form of notice of a General Meeting:

 

(1)

The notice of a General Meeting shall include:

 

(i)

the agenda;

 

(ii)

proposed resolutions;

 

(iii)

with respect to a General Meeting in which it is possible to vote by way of Proxy Card- arrangements to vote by way of Proxy Card;

 

(iv)

if the shares of the Company are traded or listed for trade outside of Israel – any other matter that is required under the laws, rules or customs of the country and the stock market in which the Company’s shares are registered or listed for trade.

 

The aforesaid will be as determined by the Board of Directors, unless provisions with respect thereto are set forth in the Regulations and/or in any applicable other law, regulations or rules.

 

(2)

A General Meeting may adopt a resolution different from that specified in the notice, if so provided under a Regulation.

 

(b)

Publication of notice of a General Meeting.

 

(1)

The Company shall not be required to deliver or serve notice ("Hodaa") of General Meeting or any adjournment thereof to any Shareholder.

 

(2)

Without derogating from the provisions of Article 18.5(b)(1) above, and subject to applicable law and stock exchange rules and regulations, the Company will publicize the convening of a General Meetings in any manner reasonably determined by the Company and any such publication shall be deemed to have been duly made, given and delivered to all shareholders on the date on which it is first made, posted, filed or published, as applicable. The date of publication in respect of a General Meeting as set forth in this Article, and the date of the meeting, shall be counted as part of the days comprising any notice period with respect to such General Meeting.

 

18.6

Quorum

 

(a)

No discussion shall be held in a General Meeting unless a quorum is present at the beginning of the meeting.

 

(b)

A quorum for a General Meeting is the presence, within one half an hour from the time specified for commencing the meeting, of at least 2 (two) Shareholders who hold in the aggregate at least 25% of the voting rights of the Company.

 

(c)

If a share is jointly owned, the joint owner’s name that appears first in the Shareholders Register will attend the General Meeting. If he does not attend, the joint owner whose name appears thereafter may attend the General Meeting, and so forth.

 

(d)

deleted

 

 

(f)

If a quorum is not present within one half hour of the time specified for the commencement of the General Meeting, the General Meeting will be adjourned for one week to the same day, the same hour and the same place, or to a later date if so specified in the notice of the General Meeting.

 

(g)

If a quorum is not present within one half hour from the time set for commencing the adjourned General Meeting the General Meeting will take place regardless of whether a quorum is present; provided, however, that if the General Meeting was convened upon Shareholders' demand under Article 18.4(a)(1)(iii) above, and a quorum is not present within one half hour from the time set for the commencement of the adjourned General Meeting, the General Meeting will not take place unless the minimum Shareholders required to demand the convening of a Special Meeting under Article 18.4(a)(1)(iii) above are present.

 

18.7	Validity Notwithstanding Defect

 

(a)

Subject to any applicable law, a resolution adopted by the General Meeting shall be valid and have full force and effect notwithstanding any defect in the notice, convening, procedure or conduct of the General Meeting in which it was adopted, unless and until such resolution is cancelled by the court at the request of a Shareholder, in accordance with the provisions of Section 91 of the Companies Law.

 

(b)

With respect to a defect in the time, place or manner in which a General Meeting was convened, a Shareholder who arrived at that General Meeting despite the defect shall not petition the court for the cancellation of a resolution adopted at such General Meeting.

 

18.8	The Chairman of the Meeting

 

(a)

A Chairman shall be elected for a General Meeting.

 

(b)

The election of the Chairman, if any, of a General Meeting shall take place at the beginning of the General Meeting, which will be opened by the Chairman of the Board of Directors, or by any other Director or Officer of the Company which may be designated for this purpose by the Board of Directors, shall preside as Chairman of the General Meeting.

 

(c)

The Chairman of the General Meeting will not have a casting vote.

 

18.9	Postponing a General Meeting

 

(a)

A General Meeting at which a quorum is present may adjourn the meeting, or the discussion or resolution in any item on the agenda for the meeting, to another time or place to be specified.

 

(b)

At an adjourned General Meeting, the only matters to be discussed will be those matters on the agenda of the General Meeting with respect to which no resolutions have been adopted.

 

(c)

In the event the General Meeting is adjourned for more than 21 (twenty-one) days, the Company shall provide notices of the adjourned General Meeting in same manner required hereunder for the convening of a General Meeting.

 

(d)

If at the adjourned General Meeting a quorum is not present within one half hour from the time set for the commencement of the meeting, the General Meeting will take place regardless of the number or aggregate voting power of the Shareholders present.

 

18.10

Voting at the General Meeting

 

(a)

Persons entitled to vote at the General Meeting:

 

(1)

Subject to the provisions of the Companies Law and these Articles, a Shareholder entitled to participate in a General Meeting may vote at that General Meeting.

 

(2)

No shareholder shall be entitled to vote at a General Meeting with respect to a specific share, unless he has paid all calls and all amounts then due by him in respect of the said share.

 

(3)

With respect to voting for jointly owned shares, the joint owner whose name first appears in the Shareholders Register will be entitled to vote; if he is not present, the joint owner appearing thereafter who attends the meeting may vote, and so forth.

 

(4)

In the event of disputes with respect to voting rights, the Chairman of the meeting shall prevail and his decision shall be final and binding.

 

(b)

Voting at General Meetings

 

(1)

Subject to special rights, conditions, privileges and/or restrictions which may be attached to a specific class of shares, each holder of share(s) which entitle their holder to vote, shall have one vote for each share held by him.

 

(2)

A Shareholder may vote at a General Meeting in person or by proxy, with respect to each share held by him which entitles him to vote, in accordance with Article 18.2(d) above. A shareholder who is entitled to participate and vote at a General Meeting in respect of more than one share may vote on a resolution in one direction (in favor of, against, or abstain) in respect of any part of his shares, and on the same resolution, in other directions in respect of any other part or parts of his shares.

 

(3)

In addition (a) a Shareholder may vote by way of Proxy Card in accordance with the provisions of the Companies Law or any other applicable law, on the matters specified therein, and provided it is completed and returned to the Company in accordance with its terms ; and (b) a Shareholder who holds shares through member of the Tel Aviv Stock Exchange ("TASE"), may vote electronically via the electronic voting system of the Israel Securities Authority, upon terms and instructions received from the TASE member through which the Shareholder holds his or her shares.

 

(4)

Subject to the provisions of the Companies Law and these Articles, all resolutions at a General Meeting will be adopted by a count of votes, in which a Majority of votes cast are in favor of the adoption of the resolution.

 

(5)

The announcement of the Chairman of the meeting that a resolution has been adopted or rejected, unanimously or by a certain majority, will be prima facie proof thereof.

 

18.11

Minutes of a General Meeting

 

(a)

The Company will prepare, at the Chairman's responsibility, minutes of the proceedings at a General Meeting; these minutes shall be signed by the Chairman of the General Meeting.

 

(b)

Minutes signed by the Chairman of the General Meeting will be deemed prima facie proof of their content.

 

(c)

A Shareholder may review the  minutes of the General Meeting and receive, upon his request, copies of such minutes.

 

19.	The Board Of Directors

 

19.1	The duties and authorities of the Board of Directors will be as provided in the Companies Law and in these Articles.

 

19.2	The number of the members of the Board of Directors shall be as set from time to time by resolution of the General Meeting, provided that there will  be no fewer than 5 (five) nor more than 10 (ten) Directors (including External Directors, as such term is defined in the Companies Law).

 

19.3	Appointment of Directors

 

(a)

A Director, who is not an External Director, will be appointed by the Annual Meeting and will serve until the conclusion of the next Annual Meeting. A Director appointed by a General Meeting shall commence serving at the conclusion of the General Meeting in which he or she was appointed, unless a later date for the commencement of his or her tenure was specified in the resolution by which he was appointed.

 

(b)

The Board of Directors may appoint a Director to fill the place of a Director whose appointment has expired during the term, and may appoint a Director(s) if the number of Directors then serving falls below the minimum number specified in Article 19.2 above. A Director so appointed shall commence his tenure from the date of his appointment, and will serve until the end of the next General Meeting following his appointment, which has on its agenda the appointment of Directors and in which Directors are appointed; such a Director may be reappointed by such General Meeting.

 

(c)

In the event that the tenure of a Director expires, or that the number of Directors then serving shall fall beneath the minimum number set forth in Article 19.2 above, the Board of Directors may continue to act, provided that the number of Directors then serving shall be no fewer than half of said minimum number of Directors. In the event that the number of serving Directors shall fall below half of the minimum number set forth in Article 19.2 above, the Board of Directors shall act only in an emergency and in order to convene a General Meeting for the election of Directors.

 

19.4

RESERVED

 

19.5	The expiration of the term of a Director

 

The term of a Director shall expire in any of the following instances and any other instance provided under the Companies Law:

 

(a)

Upon his death.

 

(b)

If he is found to be non compos mentis.

 

(c)

Upon his resignation.

 

(d)

Upon his removal by a resolution of the General Meeting of the Company.

 

(e)

In the event he or she has been declared bankrupt; or if a legal entity - it has adopted a resolution of voluntary liquidation or winding-up, or a liquidation order has been issued with respect thereto.

 

19.6	Alternate Director

 

(a)

A Director may appoint, dismiss and/or replace an individual who is qualified to serve as a director and who is not then a Director, as an Alternate Director. The appointment, replacement and/or dismissal of an Alternate Director shall be by written notice by the appointing Director either to the Company or to the Chairman of the Board of Directors of the Company. Upon the expiration or termination of the tenure of the appointing Director, the tenure of the Alternate Director appointed by him will also expire.

 

(b)

An Alternate Director will not be entitled to participate or vote at a meeting of the Board of Directors at which the appointing Director is present.

 

(c)

An Alternate Director shall have all the rights and obligations of the appointing Director, excluding the right to appoint an Alternate Director.

 

19.7	The Chairman of the Board of Directors

 

(a)

Subject to the Companies Law, the Board of Directors may appoint a Chairman of the Board of Directors from amongst its members, by a resolution adopted by a Majority of votes.

 

(b)

The term of office of the Chairman of the Board shall be until the earlier of the termination of his tenure as a director and the adoption of a resolution as to the termination of his office as Chairman.

 

(c)

The Board of Directors may appoint a deputy and/or alternate Chairman of the Board of Directors.

 

(d)

The Chairman of the Board of Directors shall conduct the meetings of the Board of Directors and sign the minutes of the meeting. In the event that the Chairman of the Board of Directors is not present at a meeting of the Board of Directors or is unable to fulfill his position, his position will be filled by the Deputy Chairman of the Board of Directors (if a Deputy Chairman of the Board of Directors has been appointed), who shall then have the authority of the Chairman of the Board of Directors.

 

(e)

If both the Chairman of the Board of Directors and Deputy Chairman of the Board of Directors (if a Deputy Chairman of the Board of Directors has been appointed) are absent from a meeting of the Board of Directors, the Board of Directors shall appoint at the commencement of the meeting one of its members to chair the meeting and to sign the minutes of the meeting.

 

Neither the Chairman of the Board of Directors nor another Director appointed to chair a meeting of the Board of Directors, including the alternate or Deputy Chairman, shall have an additional or casting vote.

 

19.8	Meetings of the Board of Directors

 

(a)

Convening meetings of the Board of Directors and their location

 

(1)

The Board of Directors will convene meetings as dictated by the needs of the Company, and at least once every three (3) months.

 

(2)

Each meeting of the Board of Directors shall be held in the registered Office of the Company, unless the Board of Directors otherwise resolves.  If a meeting of the Board of Directors shall take place outside of Israel, the Company will bear travel and other reasonable expenses of the Directors incurred due to their participation in the meeting.

 

(3)

The Chairman of the Board of Directors may convene a meeting of the Board of Directors at any time, subject to sub-Article (c) below.

 

(4)

The Chairman of the Board of Directors shall convene a meeting of the Board of Directors without delay, subject to sub-Article (c) (1) below, upon the demand of any two Directors, or if the Board of Directors has at such time five or fewer serving Directors – upon the demand of one Director.

 

(b)

The Agenda at Board Meetings

 

(1)

The Agenda of the meetings of the Board of Directors shall be specified by the Chairman of the Board of Directors and will include all of the following:

 

(a)

matters specified by the Chairman of the Board of Directors, if any;

 

(b)

any matter which a Director or the General Manager has requested that the Chairman of the Board of Directors include in the Agenda of that meeting, within a reasonable time prior to the scheduled meeting of the Board of Directors;

 

(c)

a matter for the discussion and/or resolution of which a Director has requested to convene a meeting of the Board of Directors;

 

(2)

The Agenda at a meeting of the Board of Directors which is to be convened, in accordance with the provisions of the Companies Law, by a Director and/or by the General Manager and/or by the Auditor, shall include those matters for discussion and/or resolution of which said meeting of the Board of Directors has been convened.

 

(c)

Notices of Meetings of the Board of Directors

 

(1)

Notice of the meeting of the Board of Directors shall be given to each Director orally or in writing, a reasonable time prior to the time of the meeting but not less than 48 hours prior to that meeting; provided, however, that in urgent cases, and with the approval of the majority of the members of the Board of Directors, the Board of Directors may convene without giving any prior notice.

 

(2)

The time and place at which the meeting will be convened will be specified in the notice in reasonable detail, in addition to the items on the agenda of said meeting.

 

(3)

Notice of the meeting of the Board of Directors shall be given to each Director at his last address provided by him to the Company.

 

(4)

At the meeting of the Board of Directors, only matters specified on the agenda will be discussed, unless all of the Directors are present at the meeting and have agreed to discuss a matter not on the Agenda.

 

(d)

Participation in meetings of the Board of Directors

 

(1)

Subject to the provisions of the Companies Law and these Articles, any Director and/or Alternate Director, as the case may be, may participate in the meetings of the Board of Directors.

 

(2)

The General Manager may participate in Meetings of the Board of Directors and so may an Officer or another person invited to participate by the Chairman of the Board of Directors, by a Director and/or by the Board of Directors.

 

(3)

Notwithstanding the above, the Board of Directors shall be entitled to prevent any person who is not a Director or an Alternate Director from being present at meetings of the Board of Directors.

 

(e)

Quorum

 

(1)

The quorum required to commence a meeting of the Board of Directors shall be a majority of the members of the Board of Directors then serving who are not prevented under the Companies Law from participating in the meeting, but in no event less than two Directors.

 

(2)

No discussion shall be held at a meeting of the Board of Directors unless at the beginning of the meeting a quorum is present.

 

(3)

If within one-half hour from the time set for commencing the meeting of the Board of Directors, a quorum is not present, the meeting will be adjourned to the following day at the same place and at the same time. If at such adjourned meeting of the Board of Directors a quorum is not present within a half an hour from the time set for commencing said adjourned meeting, the meeting may be held, and resolutions may be adopted, regardless of the number of participants.

 

(f)

Postponing a Meeting of the Board of Directors

 

(1)

At a meeting of the Board of Directors in which a quorum is present, the Board of Directors may resolve to adjourn the meeting to another time. At an adjourned meeting as aforesaid, only those items which were on the agenda for the original meeting but with respect to which no resolution was adopted, may be discussed.

 

(2)

If a meeting of the Board of Directors is adjourned, the Company shall notify all of those Directors who were not present at such meeting, of the postponement.

 

(3)

In the event that a meeting of the Board of Directors has been adjourned as aforesaid for more than 7 (seven) days, the Company will notify all of the Directors of the adjourned meeting.

 

(g)

Voting and the Adoption of Resolutions at Meetings of the Board of Directors

 

(1)

Each Director shall have 1 (one) vote.

 

(2)

Resolutions of the Board of Directors will be adopted by a Majority of all of the Directors voting with respect thereto.

 

(h)

Minutes of the Board of Directors

 

(1)

The Company shall prepare, at the responsibility of the Chairman of the Board of Directors, minutes of all of the procedures of the Board of Directors; these minutes shall be signed by the Chairman of the meeting.

 

(2)

Minutes approved and signed by the Chairman of the Board of Directors or by the Chairman of the meeting shall be prima facie proof of the contents thereof.

 

(i)

Holding Meetings of the Board of Directors by Telecommunications

 

(1)

The Board of Directors may hold meetings by any means of telecommunications, including video or telephone conference, provided that all of the Directors participating may hear each other simultaneously.

 

(2)

All participants in a meeting by telecommunications shall be deemed present at the meeting of the Board of Directors.

 

(j)

Adopting a Resolution of the Board of Directors without Meeting

 

(1)

The Board of Directors may adopt resolutions without convening a Meeting, providing that all of the Directors entitled to participate in and vote at the meeting have agreed thereto.

 

(2)

In the event a resolution has been adopted without convening as aforesaid, the Chairman of the Board of Directors, and if there is no Chairman, the Director who initiated the resolution, shall record the minutes of such resolution and affix thereto the signatures of all of the Directors. Those minutes shall be deemed to be minutes of the Meeting of the Board of Directors.

 

(k)

Validity Notwithstanding Defect

 

Subject to any applicable law, a resolution adopted by the Board of Directors shall be valid and have full force and effect notwithstanding any defect in the notice, convening, procedure or conduct of the meeting in which it was adopted.

 

19.9	Committees of the Board of Directors

 

(a)

The Board of Directors may establish committees and appoint members thereto from amongst the members of the Board of Directors (hereinafter: “Committees of the Board of Directors”).

 

(b)

Subject to the provisions of the Companies Law and these Articles, the Board of Directors may delegate its authority to Committees of the Board of Directors and determine the framework of the authority and the actions of the Committees of the Board of Directors.

 

(c)

A resolution adopted, or an action taken, by a Committee of the Board of Directors with respect to a matter which the Board of Directors has delegated to it, shall be deemed a resolution adopted or an action taken by the Board of Directors.

 

(d)

Committees of the Board of Directors shall report to the Board of Directors regarding their resolutions or recommendations requiring Board of Directors' approval, a reasonable time prior to the meeting of the Board of Directors in which they are brought for discussion and approval.

 

(e)

Subject to sub-Article 20.4 below, procedural provisions applying to the Board of Directors will also apply to Committees of the Board of Directors, mutatis mutandis.

 

(f)

Resolutions of the Committees of the Board of Directors, other than Audit Committee, shall be adopted by a Majority of the votes of the Directors participating in the vote.

 

(g)

Subject to sub-Article 20.4 below, minutes of the Committees of the Board of Directors shall be prepared, signed and kept in the same manner as minutes of the Board of Directors, mutatis mutandis.

 

(h)

Subject to the Companies Law, the Board of Directors may cancel a resolution of a Committee of the Board of Directors and may revoke the delegation of authority, in whole or in part, to Committees of the Board of Directors; provided that any cancellation or revocation as aforesaid will not derogate from a resolution upon which the Company has acted in connection with a third party who is not aware of its cancellation or revocation.

 

19.10

Miscellaneous

 

(a)

Actions taken by or pursuant to resolutions of the Board of Directors, by a Committee of the Board of Directors or by any person serving as a Director shall be valid and effective notwithstanding that it is subsequently discovered that there was a defect in the appointment of the Directors or the aforesaid Committee, or all or part of the Directors were unqualified, as if each of the Directors had been properly and legally appointed and all of them were qualified to serve as Directors, or as if the Committee had been appointed lawfully.

 

(b)

The General Meeting may approve any Action taken by the Board of Directors without authority or in excess of authority; and from the time of approval, such approved Action shall be deemed taken within the authority of the Board of Directors.

 

(c)

The Board of Directors may approve any Action within the scope of its authority, which was taken by a Committee of the Board of Directors without authority or in excess of authority; and from the time of approval, such approved Action shall be deemed taken within the authority of the Committee of the Board of Directors.

 

20.	Audit Committee

 

20.1	The Board of Directors shall appoint from amongst its members an Audit Committee of at least three members designated by the Board of Directors, in which most members shall be Independent Directors, as such term is defined in the Companies Law, and each of the External Directors shall be a member.

 

20.2	The chairman of the Audit Committee shall be an External Director.

 

20.3	Resolutions of the Audit Committee, shall be adopted by a Majority of the votes of the Directors participating in the vote, provided that such Majority shall consist of Independent Directors, out of which at least one director shall be an External Director.

 

20.4	The duties and authorities of the Audit Committee, shall be as provided by applicable law and/or applicable rules of any stock exchange on which the shares of the Company are traded. Procedural requirements applying to the Audit Committee shall be as provided in the Companies Law

 

21.	The General Manager

 

21.1	The Company shall appoint one or more General Managers to the Company.

 

21.2	The General Manager will be appointed and/or dismissed by the Board of Directors. The terms of the General Manager’s employment shall be decided in accordance with the applicable procedure required under the Companies Law.

 

21.3	The General Manager shall be responsible for the general management of the Company’s affairs, within the framework of the policies set by the Board of Directors, and subject to the directives of the Board of Directors.

 

21.4	The General Manager shall have all management and executive authorities of the Company not assigned in these Articles or under the Companies Law to another organ of the Company.

 

21.5	The General Manager shall report to the Board of Directors.

 

21.6

The Board of Directors may direct the General Manager how to act in a given matter; and should the General Manager fail to execute such a directive, the Board of Directors may then exercise the authority required to implement the directive in his stead. Without derogating from the aforesaid, The Board of Directors may assume any authority otherwise given to the General Manager, for a specific purpose or for a specific period of time which shall not exceed the necessary period of time required under the circumstances.

 

21.7	In the event that the General Manager is unable to exercise his authority, the Board of Directors may appoint a Director to exercise such authority in his stead for as long as such exercise is necessary under the circumstances.

 

22.	Internal Auditor

 

22.1	The Board of Directors shall appoint an Internal Auditor, upon the recommendation of the Audit Committee.

 

22.2	The Internal Auditor shall report to the Chairman of the Board of Directors.

 

22.3	The duties and authorities of the Internal Auditor shall be as provided in the Companies Law.

 

23.

Auditor

 

23.1	Appointment of an Auditor

 

(a)

The Company will appoint a certified accountant to be an Auditor. The Company may appoint several Auditors to conduct the audit jointly.

 

(b)

An Auditor will be appointed at each Annual Meeting and will serve in his position until the end of the following Annual Meeting, or until a later time determined by the General Meeting, provided that an Auditor shall serve no longer than until the end of the third Annual Meeting after the Annual Meeting in which he was appointed. An Auditor who has completed a period of appointment as aforesaid may be reappointed.

 

(c)

In the event the position of Auditor has become vacant and the Company does not have an additional Auditor, the Board of Directors shall convene a Special Meeting as soon as possible to appoint an Auditor.

 

(d)

The position, authorities and duties of the Auditor shall be as provided in the Companies Law. The Audit Committee of the Company shall have the authority to

 

24.

Secretary

 

24.1	The Board of Directors may appoint a Secretary to the Company, may dismiss the Secretary and appoint another in his stead, and may determine the remuneration and terms of service thereof.

 

24.2

The Secretary will prepare and conduct the minutes, documents, books of records, registers and reports which the Company must maintain and/or safe keep and/or submit to the Registrar of Companies or any other authority, and will fulfill the duties assigned to him by the Board of Directors. The Secretary of the Company may sign on behalf of the Company documents and reports to be submitted to the Registrar of Companies.

 

25.	Rights Of Signature And Stamp Of The Company

 

25.1	The Board of Directors will determine the stamp and/or seal of the Company.

 

25.2	The Board of Directors will designate the persons authorized to sign on behalf of the Company and the form of signature.

 

25.3	Without derogating from the aforesaid, documents and/or reports or notices to the Registrar of Companies may also be signed by the Secretary.

 

26.	Financial Reports

 

26.1	The Company will keep books of account and will prepare Financial Reports as required under any applicable law.

 

26.2	The Audited Financial Reports will be approved by the Board of Directors as provided under any applicable law.

 

27.	Dividends And Bonus Shares

 

27.1

General

 

(a)

A Shareholder shall be entitled to receive only such dividends and/or bonus shares as the Company may resolve to distribute, if any.

 

(b)

The distribution of dividends and the issuance of bonus shares shall be within the authority of the Board of Directors.

 

(c)

The Shareholders entitled to a dividend and/or bonus shares, as the case may be, shall be those Shareholders who are Shareholders at the time of  the adoption of the resolution to distribute such dividend or bonus shares, or at such later date as may be provided in such resolution (hereinafter: the “Ex-dividend Date”).

 

(d)

Dividends and/or bonus shares distributed by the Company will be distributed pro rata to the par value of each share.

 

(e)

Notwithstanding the aforesaid, in the event that the Company has shares with different rights, dividends and/or bonus shares distributed by the Company will be distributed in accordance with the rights attached to its shares with respect to dividend and/or bonus shares.

 

(f)

In the event that a Shareholder has not rendered payment to the Company in full of the consideration then due to the Company for the Shares issued to him, he will be entitled to a dividend and/or bonus shares with respect only to a number of shares proportionate to the amount paid or credited as of the Ex-Dividend Date, pro rata temporis, on account of the consideration then due.

 

27.2	Distribution of Dividends

 

(a)

The Company may distribute dividends subject to and in accordance with the provisions of the Companies Law.

 

(b)

Where a share with respect to which a dividend is to be distributed is jointly owned, any dividend distributed by the Company with respect to such jointly-owned share will be paid to that joint owner whose name appears first in the Share Registry.

 

27.3	Distribution of Bonus Shares

 

(a)

Subject to the provisions of the Companies Law, the Board of Directors may issue bonus shares.

 

(b)

In the event that bonus shares are distributed, the Company shall convert to share capital, by resolution of the Board of Directors, a portion of its profits and/or premium paid to it on shares and/or from any other source included in its equity in accordance with the latest Financial Statements, an amount equal to the par value of the Bonus Shares.

 

(c)

As part of any resolution with respect to the distribution of Bonus Shares, the Board of Directors will empower a person to sign the allotment agreement of Bonus Shares on behalf of the Shareholders.

 

28.	The Office

 

28.1	The Company shall maintain a registered office in Israel, to which any notice to the Company may be submitted (hereinafter: the “Office”).

 

28.2	Subject to Article 28.1 above, the Company may change the address of the Office, as may be determined from time to time by the Board of Directors.

 

29.	The Shareholders Register

 

29.1	The Company will maintain a Shareholders Register and a Material Shareholders Register in accordance with the Companies Law.

 

29.2	The Shareholders Register will be prima facie proof of the content thereof in the case of any conflict between the content of the Shareholders Register and that of any Share Certificate.

 

29.3	All reports received by the Company under the Securities Law with respect to the shareholdings of Material Shareholders will be kept in the Material Shareholders Register.

 

29.4	Modifying and Amending the Shareholders Register

 

The Company shall change the registration of ownership of shares in the Shareholders Register and, where applicable, in the Material Shareholders Register, in any of the following cases:

 

(a)

The Company has received a Share Transfer Deed in accordance with Article 16 hereinabove, and the Board of Directors has not declined to transfer the shares.

 

(b)

It has been proven to the Company that the conditions for transferring the shares have been fulfilled.

 

(c)

The Board of Directors is convinced that there is an error in the content of the Shareholders Register.

 

(d)

Any other circumstances constituting sufficient cause, in accordance with these Articles or the Companies Law, to record a change in the Shareholders Register, including assignment of the shares by operation of law.

 

(e)

The Company has received a court order to change the Shareholders Register.

 

29.6	Additional Shareholders Register outside Israel

 

The Company may maintain an additional Shareholders Register outside of Israel, in which case the Company shall record in its primary Shareholders’ Register the number of shares recorded in the aforesaid additional Shareholders Register and, if such shares are numbered, the serial numbers of those shares recorded in said additional Shareholders Register. Other procedures regarding said additional Shareholders Register shall be determined by the Board of Directors, to the extent they are not set forth in the Regulations.

 

29.7	Inspecting the Shareholders Register

 

The Shareholders Register and the Material Shareholders Register shall be open for inspection by any person.

 

30.	Directors Register

 

The Company will maintain a Directors Register, which shall contain a listing of the names and addresses of the Directors of the Company and their Alternates, in accordance with the Companies Law.

 

31.	Encumbrances Register

 

31.1	The Company will maintain an Encumbrances Register which will include:

 

(a)

Encumbrances placed upon specific assets of the Company.

 

(b)

Floating charges on the Company’s enterprise and property.

 

31.2	The Encumbrances Register will be kept at the Office, together with copies of any documents creating or placing an encumbrance.

 

31.3	The Encumbrances Register, together with copies of the documents set forth in Article 31.2 above, will be open for inspection, free of charge, by any Shareholder or creditor of the Company.

 

31.4

The Encumbrances Register will be open for inspection by any person other than a Shareholder of creditor of the Company, for a fee in such amount as may be determined by the Company from time to time, provided however that the amount of such fee shall not exceed the maximum amount specified in the Regulations..

 

32.	The Register Of Secured Debenture Holders

 

32.1	The Company will maintain a Register of Secured Debenture Holders, in which the name of each Secured Debenture Holder, the amount of any Debenture, the interest thereupon, the date of payment thereof and the encumbrance given as security for the Debenture, will be entered.

 

32.2	The Debenture Holders Register will be maintained in the Office, together with a copy of a Debenture from each Series of Debentures issued by the Company.

 

32.3

The Debenture Holders Register and copies of Debentures as provided in 32.2 above will be open for inspection by Shareholders and Debenture Holders; provided, however, that the Board of Directors may resolve to close same for a period or periods of time not exceeding, in the aggregate, 30 (thirty) days in each calendar year.

 

33.

Notices

 

33.1

Notices to shareholders and other documents delivered to the Shareholders registered in the Shareholders Register (hereinafter: “Notices”) shall be delivered to such Shareholders personally, by mail or facsimile transmission, or by electronic mail, to the address recorded in the Shareholders Register.

 

33.2

A Notice delivered personally shall be deemed received by the Shareholder upon its delivery. A Notice sent by facsimile transmission or by electronic mail shall be deemed received by the Shareholder on the business day following the day on which it was sent. A Notice sent by mail shall be deemed received by a Shareholder whose address is in Israel 72 hours after its delivery or, if the address of a Shareholder is outside of Israel, within 120 hours after the Notice is delivered to a post office in Israel.

 

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