Exhibit A
A Contract
Entered into and signed in Tel-Aviv on the 17th of September, 1997
Between: Macpell Industries Ltd.
of 00 Xxxxxxx Xxxxxx
(hereinafter - "Macpell")
of the first part
And: 1 Discount Investment Company Ltd.
of 14, Simtat Bet Hashoeva, Tel-Aviv 65814
2. PEC Israel Economic Corporation
000 Xxxxx Xxxxxx
XXX XX 00000
(hereinafter collectively - "the Discount Group")
of the second part
And: Tabriz Anstalt Ltd.
Represented by advocate Xxxxxxx Xxxxxxxxxx
of 00, Xxxxx Xx'xx Xxxxxx, Xxx-Xxxx
(hereinafter - "Tabriz")
of the third part
(Macpell, Discount Group and Tabriz collectively - "the parties")
And Oranim (Securities) Ltd.
Of 14, Simtat Bet Hashoeva, Tel-Aviv
(hereinafter - "the Trustee")
of the fourth part
Whereas the parties are holders of shares in Tefron Ltd., a company
registered in Israel (hereinafter "the Company"), which is about
to make a public offering in the USA;
And whereas the majority of the shares in Tefron are held by Macpell and such
holding confers upon it control in the Company and the right to
appoint the majority of the members of the Board of Directors of
the Company;
And whereas the parties agree to act jointly with respect to their holdings in
the Company and regulate the relationship between them as
shareholders in the Company after the public offering, all as set
out in this Contract below;
Now, therefore, it has been declared, stipulated and agreed between the parties
as follows:
1. 1.1 The following expressions in this Contract shall have the meaning
set opposite them as set out below:
1.1.1 "Holder of Interest in the Company" - within its meaning
in the Securities Law, 5728-1968.
1.1.2 "the Company" - Tefron Ltd. (Pub.C. 00-0000000)
1.1.3 "Shares under the Contract" - the number of ordinary
shares of a nominal value of NS 1 each of the Company out
of the shares held by the parties, as specified in clause
2, which will be transferred to the Trustee as provided
in clause 3.2 below, including all the bonus shares which
the Company will distribute in respect thereof during the
term of this Contract as provided in clause 4.3 below.
1.1.4 "Control" - within its meaning in the Securities Law,
5728-1968.
1.2 The Preamble and the annexes to this Contract form an integral
part thereof.
1.3 The headings of the clauses in this Contract are designed for
convenience only and they are not to be considered for the
interpretation of the Contract.
2. Declarations
2.1 Macpell declares that as of the date of execution of this
Contract, it is the holder of 5,138,880 ordinary shares of a
nominal value of NS 1.- each of the Company.
2.2 Each one of the individuals of the Discount Group declares that as
of the date of execution of this Contract, it is the holder of
1,309,910 ordinary shares of a nominal value of NS 1.- each of the
Company. (The Discount Group holds collectively 2,619,820 ordinary
shares of a nominal value of NS 1.- each).
2.3 Tabriz declares that as of the date of execution of this Contract,
it is the holder of 2,317,533 ordinary shares of a nominal value
of NS 1.- each of the Company.
2.4 In order to eliminate any doubt, it is hereby expressly stated
that the provisions of this Contract will apply only to the Shares
under the Contract as specified in sub-clause 3.2 and 3.4 below.
3. Obligations of the Parties
3.1 The parties hereby appoint the Trustee to hold the Shares under
the Contract in its name on trust for them, and by their signing
this Contract they also instruct the Trustee to act as specified
for it under the provisions in this Contract. The Trustee agrees
to hold the Shares under the Contract and act in respect thereof
as provided in this Contract. The Trustee may, but is not
obligated to, act in respect of the Shares under the Contract in
any manner whatsoever, except for cases expressly prescribed in
this Contract.
3.2 Upon the execution of this Contract. Macpell, the Discount Group
and Tabriz, severally, shall deliver to the Trustee an instrument
of transfer of shares duly signed by that party in respect of the
Shares under the Contract specified in respect of that party in
annex 3.2, together with a resolution of the Board of Directors of
the Company approving the transfer of the shares and accompanied
by a share certificate in respect of the said shares, if any such
share certificates were issued. Immediately after the coming into
force of this Contract, the parties shall cause the registration
of the Trustee in the Company's Register as the holder of the
Shares under the Contract.
The parties shall cause the delivery of appropriate statements to
the Registrar of Companies, of the transfer of the Shares under
the Contract in the name of the Trustee as aforesaid.
3.3 During the whole term of this Contract, the Shares under the
Contract shall be registered in the name of the Trustee, and the
Trustee only shall be entitled to vote in respect thereof at the
general meetings of the Company.
3.4 At the end of the term of the Contract as specified in clause 9
below, the Trustee shall transfer to each one of the parties the
shares which each one of them had transferred thereto as provided
in clause 3.2 above and all the bonus shares allotted to the
Trustee in respect of such shares as provided in clause 4.3 below.
3.5 So long as this Contract is in force pursuant to the provisions of
clause 9 below, each one of the parties and/or any of the
individuals of the parties shall not sign any additional agreement
with respect to cooperation in voting in the Company in respect of
the Shares under the Contract.
The parties are aware that there is a voting agreement among the
individuals of the Discount Group, whereunder they will coordinate
and unite their voting power in the companies held by them,
including the Company, and the said prohibition in this clause
above shall not apply in respect of any agreement between them
regarding the manner of their voting in the Company as aforesaid.
4. Dividend, Bonus shares
4.1 All dividends in cash payable by the Company or all the rights
issued in respect of the Shares under the Contract, which are held
by the Trustee for any of the individuals of the parties, shall be
transferred to the party for whom such shares are held as
aforesaid.
4.2 The Trustee may instruct the Company to pay the dividend or issue
the rights directly to those entitled thereto. The parties shall
do their utmost so that the Company shall perform direct payment
of the dividend or a direct issue of the rights as instructed by
the Trustee.
4.3 If the Company allots bonus shares in respect of the Shares under
the Contract , such bonus shares shall be added to the shares of
the parties held by the Trustee, and it shall hold them for the
benefit of each party or any one of the individuals of the
parties, at such rate of distribution as such party or any of the
individuals of the parties is entitled to receive in respect of
the shares held by the Trustee for him on trust.
5. Voting at a General Meeting
5.1 The parties agree to cooperate between them in all matters
relating to their votes at the general meetings of the Company,
and as prescribed in this clause and in clause 6 below.
5.2 If notice is given of the holding of a meeting of the shareholders
of the Company (hereinafter "the General Meeting"), a preliminary
meeting of the parties to this Contract shall be convened in order
to coordinate the manner of voting on the subjects on the agenda
and on questions arising at the general meeting (hereinafter -
"the Preliminary Meeting").
5.3 The Preliminary Meeting shall be held at the offices of the
Company, at 17:00 hours, seven business days before the date
prescribed for holding the general meeting. The date and place of
the Preliminary Meeting may be changed with the consent of the
parties.
5.4 No business shall be transacted at any Preliminary Meeting, unless
all the parties and the Trustee are present in person or by proxy.
Each one of the parties may appoint a proxy by letter, facsimile
or electronic mail, The Trustee's representative shall act as
chairman of the meeting and record the minutes of the meeting but
shall have no voting right at the Preliminary Meeting.
5.5 If a quorum is not present for the opening of the Preliminary
Meeting as provided in clause 5.4 above, the Preliminary Meeting
shall stand adjourned to the first business day following the date
appointed in sub-clause 5.3 above, at the same place and time at
which the original Preliminary Meeting was said to be held
(hereinafter - "the Adjourned
Meeting"). If at the Adjourned Meeting a quorum is not present as
provided in clause 5.4 above, then, any of the individuals of the
parties present at the Adjourned Meeting shall be a quorum and
entitled to transact the business and the subjects for which the
Preliminary Meeting was convened.
5.6 The persons present at the Preliminary Meeting shall consider each
one of the subjects and matters which are about to be placed on
the agenda of the general meeting and try to formulate in respect
thereof a unified position and a unified manner of voting. At the
Preliminary Meeting, each one of the parties shall have one vote
in respect of each Share under the Contract transferred by it to
the Trustee and the bonus shares allotted in respect thereof as
provided in clause 3.2 and clause 4.3 Resolutions which require a
simple majority at a general meeting shall be passed by a simple
majority at the Preliminary Meeting, and resolutions which require
at general meeting a special majority, shall be passed by the
Preliminary Meeting by such special majority as is required at the
general Meeting. Resolutions shall be passed by the parties
present and voting.
At the conclusion of the Preliminary Meeting, the Trustee's
representative shall record the minutes of the resolutions passed
thereat. The minutes of the meeting signed by the Trustee's
representatives shall be conclusive evidence of the truth of the
contents therein.
5.7 The Trustee shall use its voting power in respect of the Shares
under the Contract in order to vote at the general meeting
according to the resolutions of the Preliminary Meeting as
recorded in the said minutes. If at the Preliminary Meeting a
resolution is not passed by the majority required as aforesaid in
respect of the manner of voting in respect of the said shares on
any subject put to the vote at the general meeting, the Trustee
shall vote at the general meeting against the passing of the
resolution on the said subject.
5.8 Notwithstanding the aforesaid, if any one of the subjects on the
agenda of the general meeting is the approval of a transaction in
which any holder of interest in the Company has a personal
interest therein, the Trustee shall give each one of the parties a
power of attorney to vote at its discretion with respect to such
subject (and not with respect to the other subjects on the agenda)
in respect of the shares held by the Trustee to the benefit of
such party.
5.9 A resolution signed by each one of the parties by cablegram,
facsimile or electronic mail, shall be as valid and effective for
all purposes whatsoever as if passed at a Preliminary Meeting duly
convened and shall be deemed as a resolution of the Preliminary
Meeting for all intents and purposes.
6. Election of Directors
6.1 Notwithstanding the aforesaid in clause 5 above, at the general
meeting of the Company, the Trustee shall use its voting power in
respect of the Shares under the Contract for the purpose of
electing Directors, in the manner specified in this clause 6
below.
6.2 The number of Directors on the Board of Directors of the Company
shall be fixed by the parties by consent, subject to the
limitations prescribed in the Articles of Association of the
Company. Until otherwise decided, the number of the members of the
Board of Directors shall not exceed eight (8).
6.3 Each one of the parties shall recommend the appointment of the
Directors, as follows:
6.3.1 Macpell - 5 Directors
6.3.2 Discount Group - 2 Directors, who meet the criteria
required under the Rules of the Stock Exchange in the USA
in order to be considered as External Directors.
6.3.3 Tabriz - 1 Director.
6.4 At the Preliminary Meeting to be convened before the date of he
general meeting, at which the election of the Directors in the
Company will be placed on the agenda, each party shall deliver to
the other party a list of Directors recommended by it.
6.5 The names of the persons recommended to be Directors shall be
included in the minutes of the meeting of the Preliminary Meeting,
and the Trustee shall use its voting power in respect of the
Shares under the Contract for the election of the persons
recommended as aforesaid to be Directors of the Company.
6.6 It is hereby agreed that if the Company is requested to appoint
Directors from Among the Public pursuant to Israeli law
(hereinafter - D.F.A.P."), the following provisions shall apply:
6.6.1 The number of Directors to be recommended by each one of
the parties shall be increased so that Macpell will
recommend eight (8) Directors, the Discount Group will
recommend three (3) Directors and Tabriz will recommend
two (2) Directors.
6.6.2 In addition to the provisions in clause 6.6.1, Macpell
shall recommend one candidate to be a D.F.A.P. and
Discount Group jointly with Tabriz shall recommend one
candidate to be a D.F.A.P. The names of the candidates to
be D.F.A.P.s shall be included in the minutes of the
Preliminary Meeting, and the
Trustee shall use its voting power in respect of the
Shares under the Contract for voting at the general
meeting for the election of the candidates for the
D.F.A.P.s on the Board of Directors of the Company.
7. Vacancy of Office of Director
7.1 If the office of a Director recommended by any one of the parties,
is vacated for any reason whatsoever, the parties agree that upon
the request of the party as aforesaid, a general meeting of the
Company shall be convened and/or caused to be convened for the
purpose of electing another Director in his place, pursuant to the
recommendation of such party as aforesaid. Such election shall be
governed, mutatis mutandis, by the provisions of clause 6 above
7.2 Should any one of the parties wish to remove from office any
Director elected upon his recommendation, it shall give written
notice thereof to the Trustee and the other parties to this
Contract, and upon the request of such party, the parties shall
convene and/or cause the convening of a general meeting for the
purpose of removing the Director from his office as aforesaid. The
Trustee shall use its voting power in respect of the Shares under
the Contract for voting at the general meeting for the removal
from office of the Director as aforesaid.
7.3 If the office of a Director vacated is fulfilled or if a Director
ceases to hold office, as the case may be, according to the
request of the party as provided in clause 7.1 or 7.2 above within
15 days of his request, same will make it unnecessary to convene a
general meeting particularly for such purpose.
8. Transfer of Shares
8.1 Each one of the parties undertakes that during the whole term of
the Contract, it will not transfer, sell, charge by way of a fixed
charge nor grant to any third party any right whatsoever in
respect of the Shares under the Contract. This clause shall not be
interpreted in any way as restricting any party from including the
Shares under the Contract in a floating charge on its assets now
or hereafter.
8.2 Any transfer to a corporation in which the transferor has control
or to any body having control of the transferor or any transfer to
another corporation controlled by a body having control of the
transferor corporation or any transfer between the parties to this
Agreement, shall not be deemed to be a transfer of shares for the
purpose this clause, provided that the transferee undertakes in
writing the provisions of this Contract in full. A transfer of
control in the transferee company, either directly or indirectly,
shall be deemed to be a transfer of shares for the purpose of this
Contract.
8.3 Macpell and the Discount Group have no objection to Tabriz
transferring its Shares under the Contract (in whole or in part)
to Zigi Xxxxxxxxxx or Xxxx Xxxxxxx or a company under the
exclusive control of each one of them (hereinafter - "the
Transferee Company"), provided that:
(1) The transferee assumes all the obligations of Tabriz
under this Contract, mutatis mutandis, as the case may
be, and
(2) If the transferee is a Transferee Company, the relevant
holder of control shall undertake in advance to Macpell
and the Discount Group that, so long as this Contract is
in force, it will neither sell nor charge its shares in
the Transferee Company. A transfer of control in the
transferee company, either directly or indirectly, shall
be deemed to be a transfer of the shares for the purpose
of this Contract.
9. Term of Contract
This Contract shall come into force upon the execution thereof and shall
be in force until the end of three years from the date of the public
offering of the shares of the Company, provided that the offering as
aforesaid is effected by 31.12.97. This Contract shall be automatically
extended for two additional years, unless one of the parties gives at
least thirty (30) days' notice to the others before the termination of
the term of the Contract that it does not agree to the extension of the
Contract.
Notwithstanding the aforesaid, by written notice of Macpell to the other
parties, this Contract shall be terminated 180 days after Macpell's
notice as aforesaid.
If the public offering is not effected by 31.12.97, the shareholders
undertake to replace forthwith thereafter the Articles of Association of
the Company by the Articles of Association that had existed immediately
before its replacement towards the public offering. Immediately after the
passing of the resolution as aforesaid, the Trustee shall restore to each
one of the parties the Shares under the Contract held at the time by the
Trustee for such party, and this Contract shall be terminated.
10. The Trustee
The parties or any one of them shall have no demand and/or claim of any
kind and class and for any reason whatsoever against the Trustee, with
respect to the holding of the Shares under the Contract on trust and/or
with respect to the performance of its duties under this Contract, except
for the case of the Trustee's act or omission committed with gross
negligence, maliciously or otherwise than in good faith. The parties
and/or any of them shall indemnify the Trustee for any expense, loss
and/or damage caused to or incurred by the Trustee in respect of any
demand and/or claim made or brought against it in
respect of the holding on trust of the Shares under the Contract and/or
in respect of the performance of its duties as a Trustee under this
Contract.
11. Miscellaneous
11.1 The provisions of this Contract shall apply to the parties, their
successors and heirs.
11.2 The parties shall take all the additional steps (including
performance of payments, payments of expenses, signing of
additional documents and the presentation of all the approvals)
required for the application and implementation of this Contract,
according to its letter and spirit.
11.3 This Contract exhausts the agreements between the parties in
respect of all the matters referred to in this Contract, and there
shall be no effect to any negotiations, declaration, presentation,
obligation and/or consent made or given, if any, either in writing
or orally, either expressly or impliedly, between the parties
prior to the execution of this Contract. Save as therein expressly
stated, this Contract does not derogate from any of the provisions
of the Agreement between the parties dated 30.6.93. It is agreed
that the right of first refusal and the tag along right to sell
under clauses 8.4.1 and 8.4.2 of the Agreement of 30.6.93 shall
continue to apply subject to the necessary adjustments, also after
the Company's issue of securities to the public, in respect of the
Company's shares held by Macpell and the Discount Group
respectively, so long as they are held as aforesaid.
11.4 No modification in this Contract or in any of its provisions shall
have any effect unless made in writing and signed by all the
parties to this Contract.
11.5 The conduct of any one of the parties shall not be deemed as a
waiver of any of its rights under this Contract or under any law,
and/or as a waiver of or consent on its part to any breach
whatsoever or any failure to comply with any condition whatsoever,
unless the waiver or the consent is made expressly and in writing.
11.6 Notices under this Contract shall be in writing and sent by air
mail, by personal delivery or by facsimile, at the addresses of
the parties as specified in the Preamble to this Contract.
Any notice delivered personally or transmitted by facsimile, shall
be deemed to have been received by the addressee on the first
business day following the day on which it is delivered or
transmitted, as the case may be, and any notice sent by registered
mail shall be deemed to have been received by the addressee three
business days after the date of delivery thereof for mailing at a
post office in Israel, if sent to an address in the country in
which the notice has been delivered to a post office as aforesaid,
or at the end of seven days, if sent at an address in a country
other than that in which the notice has been delivered to a post
office as aforesaid.
In witness whereof the parties hereto have hereunto set their hand:
(-) (-)
---------------------------------- ---------------------------------
Macpell Industries Ltd. Discount Investments Ltd.
(-) (-)
---------------------------------- ---------------------------------
pp./ Tabriz Anstalt Ltd. PEC Israel Economic corporation
Xxxxxxx Xxxxxxxxxx, advocate
under a general power of attorney
(-)
----------------------------------
Oranim (Securities) Ltd.
Annex 3.2
Shares under the Contract
Macpell Industries Ltd. - 3,759,610 ordinary shares of a n.v. of
NS 1.- each of the Company
Discount Investment Company Ltd. - 958,331 ordinary shares of a n.v. of
NS 1.- each of the Company
PEC Israel Economic corporation - 958,331 ordinary shares of a n.v. of
NS 1.- each of the Company
Tabriz Anstalt Ltd. - 1,695,510 ordinary shares of a n.v. of
NS 1.- each of the Company
(-) Xxxxxxx Xxxxxxxxxx
advocate
pp./ Tabriz Anstalt Ltd.
Discount Investment Company Ltd. (-)
Oranim (Securities) Ltd. (-)
Macpell Industries Ltd. (-)
00-00 Xxxxxxxx Xxxxxx, Xxx-Xxxx
00000,Xxx: 0000000
