Common use of Designation of Board Members Clause in Contracts

Designation of Board Members. 3.1. The Parties agree that, as of the Closing, they shall vote at Shareholders Meetings at which the agenda includes the composition of the Company’s Board of Directors (the “Board”) in accordance with the terms of Section 1 above. Notwithstanding the above, the Parties agree to use their voting and controlling power in order to have the members of the Board be designated in accordance with the terms of Sections 3.2 – 3.4 below; 3.2. (a) as long as Priortech holds at least 20% of the Company’s issued and outstanding share capital on an as-issued basis, it shall be entitled to designate three (3) directors; (b) as long as Priortech holds less than 20% but at least 15% of the Company’s issued and outstanding share capital on an as-issued basis, it shall be entitled to designate two (2) directors; (c) as long as Priortech holds less than 15% but at least 10% of the Company’s issued and outstanding share capital on an as-issued basis, it shall be entitled to designate one (1) director; and (d) in the event that Priortech holds less than 10% of the Company’s issued and outstanding share capital on an as-issued basis, it shall not be entitled to designate any directors; 3.3. (a) as long as Chroma holds more than 15% of the Company’s issued and outstanding share capital on an as-issued basis, it shall be entitled to designate two (2) directors; (b) as long as Chroma holds at least 10% but up to 15% of the Company’s issued and outstanding share capital on an as-issued basis, it shall be entitled to designate one (1) director; and (c) in the event that Chroma holds less than 10% of the Company’s issued and outstanding share capital on an as-issued basis, it shall not be entitled to designate any directors; and 3.4. In addition to the above, the Board shall be comprised of at least two (2) external directors, which shall serve in accordance with the provisions of the Companies Law, 1999.