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has a general manager or a chief business manager or another person who is ... amended, all if the provisions of regulation 8 do not apply to the decision. .... and the provisions of Article Two of Chapter One in Part Six of the Law;. (2) I am ...
Disclaimer: The Following is an unofficial translation, and not necessarily an updated one. The binding version is the official Hebrew text. Readers are consequently advised to consult qualified professional counsel before making any decision in connection with the enactment, which is here presented in translation for their general information only.

COMPANIES REGULATIONS Contents 5760-1999 Reporting Particulars of Registration and Forms 5761-2001 Fees 5760-2000 Notice of General Meetings and of Category Meetings in a Public Company 5766-2005 Written Votes and Position Papers 5760-1999 Proving Ownership of a Share in order to Vote at a General Meeting 5764-2004 Change of Resolution Specified in a Notice of a General Meeting 5760-2000 Rules on Honorarium and Expenses of Outside Directors 5767-2006 Matters that Do Not Constitute a Connection 5748-1987 Service of a Public Director in More Than Two Companies 5766-2005 Conditions and Criteria for Directors with Accounting and Financial Expertise and Directors with Professional Expertise 5761-1990 Reporting Obligation 5730-1970 Procedure for Registration of Assignment of a Right 5760-2000 Relaxations in Transactions with Interested Parties 5760-2000_Relaxations for Public Companies Whose Shares Are Registered for Trading on an Exchange Abroad 5762-2002 Transmission of Dividend through the Stock Exchange Clearing House 5761-2001 Approval of Distribution 5760-2000 Merger 5741-1981 Rules on the Appointment of Receivers and Liquidators and Their Compensation 5762-2002 Application for a Compromise or Arrangement 5747-1987 Liquidation 5768-2008 Applicability to Public Benefit Companies that are Government Companies or Government Subsidiaries

COMPANIES REGULATIONS (REPORTING, PARTICULARS OF REGISTRATION AND FORMS) 5760-1999 By my authority under sections 8, 44, 126(b), 141, 292(1) and 366 of the Companies Law 5759-1999 (hereafter - the Law) and under section 189 of the Companies Ordinance (New Version) 5743-1983 (hereafter – the Ordinance) and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Company registration and forms 1. (a) If a person desires to register a company, he shall submit an application to the Registrar according to Form 1 in the Schedule, in which all the required particulars have been filled in; to the application shall be attached a copy of the company's by-laws, as said in sections 8 and 23 of the Law and a declaration of each of the shareholders and of each of the first Directors, as specified in Forms 1 and 2 in the Schedule, whichever applies. (b) If a company's registered address is at the home of another person, then it shall also state the name of that person. (c) The names of the signatory on Forms 1 and 2, his ID number and his signatures on the Forms shall be certified by an advocate, who shall state that he cautioned the signatory about his declaration. Transfer of shares and allocation of shares 2. (a) Notices to the Registrar about transfers of shares and allocations of shares in a private company shall be drawn up according to Forms 3 and 4 in the Schedule, as the case may be; the signatory of the notice shall state on the Form that the reported act was entered in the Shareholders Register kept by the company under section 130 of the Law. (b) The name of the person who signed Forms 3 and 4, his ID number and his signature shall be verified by an advocate, who shall state that he cautioned the signatory about his statement. Cessation of auditor's service 3. A private company shall report to the Registrar the cessation of the service of an auditor and the appointment of an auditor as said in section 159 of the Law. Annual report 4. (a) A private company shall send the Registrar once a year an annual report in accordance with Form 5 in the Schedule, signed by the Chairman of the Board of Directors or by a Director so authorized by the Board of Directors; the annual report shall state, inter alia, that the company drew up financial reports that were audited by an auditor and were approved and signed by the Board of Directors, as said in sections 171 and 172 of the Law, and the 2

date in respect of which the balance sheet was drawn up as said in section 172 of the Law; the annual report shall also state that the provisions of section 174 of the Law were complied with, stating the date on which the last annual General Meeting was held, at which the reports were presented, unless the provisions of subregulation (b) apply to the company. (a1) The name of the person who signed Form 5, his ID number and his signature shall be verified by one of the following: (1) an advocate, who shall state that he cautioned the signatory about his statement; (2) the auditor who audited the financial reports of the report year and helped to prepare the report. (b) If a private company's by-laws provide that it does not have to hold annual meetings as said in section 61(a) of the Law and the company did not hold an annual meeting, then that shall be stated in the report, and there it shall also be stated whether the financial reports were sent to the shareholders, as said in section 61(b) of the Law, and the date on which they were sent. (c) If a private company is inactive and the provisions and conditions prescribed under section 158(a) of the Law apply to it, and if it decided – as provided in section 172(g) of the Law – that it does not have to submit financial reports, then that shall be stated in the annual report. (d) If, when its annual report is being dispatched, a private company has a general manager or a chief business manager or another person who is responsible for its current management, then it shall state his full particulars in the annual report in the place designated therefor on the Form. (e) If a company has a Director who is not an Israel resident or an Israel body corporate, then in the annual report it shall state that the particulars and documents in respect of that Director, which were required to be attached to the first report under regulation 16, have not changed; if any of the said particulars did change, then the company shall attach to the annual report the documents required under regulation 16 in respect of the first report. (f) A private company shall state the name of the company's auditor in its annual report; if the company does not have an auditor, then it shall state the length of time since it last had an auditor until the date of the annual report. (g) If a private company appointed an officer for the purposes of section 39 of the Law, or if it appointed a person responsible for the purposes of section 360(e) of the Law, then in its annual report it may state the name of the company officer authorized to report to the Registrar in the company's name and the name of the person responsible for compliance with the provisions and obligations said in section 354 of the Law. Notice of changes in the Board of Directors 3

5.

(a)

(b) (c) (d)

A private company shall inform the Registrar of changes that occurred in the composition of its Board of Directors according to Form 6 in the Schedule; the particulars of the Director who ceased to serve and the date on which he ceased to serve shall be stated on the Form, and also the particulars of the person who was appointed Director and the date of his appointment; if in accordance with section 221 of the Law it was decided that the Director's service shall begin later than the date of his appointment, then the date on which he begins to serve shall be stated in the notification. Repealed The person who signs the notification shall state whether or not the changes included in it were made in the Register of Directors kept by the company under section 224 of the Law. The name of the person who signed Form 6, his ID number and his signature shall be verified by an advocate, who shall state that he cautioned the signatory about his statement.

Increase or cancellation of registered capital 6. A private company shall report to the Registrar any increase of its registered share capital according to Form 7 in the Schedule, and it shall also report according to Form 8 in the Schedule cancellations of registered share capital, if a decision was adopted under section 278. Changes in the company's by-laws 7. (a) A company shall inform the Registrar of changes in its by-laws under section 20 of the Law and in its notification it shall state the date when the decision on the said change was adopted by the General Meeting, and also that the contents of the notification reflect the contents of the protocol; if the wording of a provision in the by-laws was changed and the entire provision was not repealed, then the company in its notification shall state the change and also the full text of the provision in the by-laws, as amended, all if the provisions of regulation 8 do not apply to the decision. (b) A public company shall report as said in subregulation (a) only about a change of name. Report to Registrar as report of a change of the by-laws 8. A lawful report on the appropriate form about an act in accordance with a decision of the General Meeting, which also constitutes a change of the company's by-laws, shall also be deemed a notification of the change of the by-laws, if it was sent by the time prescribed in section 21(b) of the Law. Change of address of registered office 9. A company shall report a change of address of its registered office to the Registrar according to Form 9 in the Schedule. 4

Change of category of company 10. If a private company became a public company and if a public company became a private company, then it shall report the change to the Registrar, as said in section 343(a) of the Law; if a public company became a private company, then in its notification it shall state who are the shareholders in the company who are registered in the Shareholders Register, the number of shares held by each of them, and – if there is more than one category of shares – the categories of shares. Authority of signatory and certification of signature 11. A person so authorized in a company shall sign every notice, report and Form submitted to the Registrar under these regulations, stating his name, his ID number and his position in the company, and he shall declare that he is an officer of the company authorized to report to the Registrar under section 39 of the Law. Registration of charge 12. (a) A company shall report to the Registrar according to Form 10 in the Schedule all particulars of mortgages and charges which it created, at the times prescribed therefor in the Ordinance. (b) When a charge is being registered under a sale or rental contract, a remark may be added to the said Form that the registration itself does not prove the intention of the parties to the agreement that the asset which is the subject of the agreement serve as surety for an obligation, as said in section 2(b) of the Pledges Law 57271967. Reports of a public company 13. The report of a public company, which was sent to the Registrar under section 36 of the Securities Law 5728-1968, which includes reports of changes which must also be reported under these regulations, shall be deemed a report lawfully made under these regulations; however, in addition thereto the Registrar may also demand a report under these regulations in respect of subjects which he shall specify in his demand. Amounts which a company may collect 14. The maximum amount that a company may collect for the provision of a copy of documents said in section 126(a) of the Law is NS1 per page, and it may link the said amount to the Consumer Price Index published by the Central Bureau of Statistics, if there was a change from the last index published before these regulations went into effect to the index last published before the date of the payment. Times for reports 15. If no other time was set for a report to the Registrar under these regulations, then it shall be made within 14 days after the date of the act or of the decision that must be reported. 5

Certification 16. (a) To its first report about an individual who is not an Israel resident, whose ID number is required, a company shall attach a true copy of his passport, certified according to one of the following: (1) under section 33 of the Evidence Ordinance (New Version) 5731-1971 (hereafter: Evidence Ordinance); (2) by a notary competent in the state in which the passport was issued; (3) by an advocate with an advocate's license in Israel; (4) by a qualified notary in the country of residence of the individual who is not an Israel resident. (b) To its first report about a body corporate incorporated abroad, whose ID number it is required to state, a company shall attach a true copy of the certificate of incorporation or registration of the body corporate in the state in which it was incorporated, together with certification of the existence of the body corporate at that time, certified according subregulation (a), together with a Hebrew or English translation approved by a notary and certified as aforesaid. (c) The annual report shall state that no changes occurred in respect of a Director under this regulation; if a change did occur in the said particulars, then the company shall report about him as if that were the first report, and the documents required under subregulations (a) and (b) shall be attached. (d) The advocate or auditor who certified a document under this regulation shall write his name, address, telephone and facsimile numbers and his license number on the form or document. Filling out a form incompletely is a violation of the obligation to report 17. If a company did not fill out a substantive particular in any of the Forms in the Schedule, it shall be deemed to have violated the obligation to submit reports as said in section 354, and the Registrar may impose a monetary sanction on it under Article Two of Chapter Four of the Law. Effect 18. These regulations are in effect from February 1, 2000. Validity 19. Regulations 5(b) and 6(b) of these regulations shall remain in effect until section 145 of the Law goes into effect under the provisions of section 377(2) of the Law. Amendment of Regulations from 5749 20. (a) Regulations 4, 5 and 6 and Schedule Two of the Companies Regulations (Fees, Particulars of Registration and Forms) 57491989 (hereafter: the previous regulations) shall be canceled. (b) The fees set in the previous regulations shall continue to be in effect until fees are set under this Law. 6

SCHEDULE FORM 1 (Regulation 1) To:

The Companies Registrar

Application for the Registration of a Company (Section 8 of the Companies Law 5759-1999 (hereafter: the Law)) Proposed name of the company1:_________________________________ I, the undersigned

____________________ _________ Last name

or

First name

2

__________________________________ _______ Name of body corporate

whose address is

______ ID Number

Incorporation number

3

__________________________________________ Country - Town - Street - House Number - Zip Code - Telephone

request that a company be registered in the above name or in another name approved by the Companies Registrar, whose registered office in Israel will be at the following address: _______________________________________________________ Town - Street - House Number - Zip Code

c/o (full name) _____________________P.O.B. _____ Town_______ and I here attach: 1. a copy of the by-laws signed by the first share holder(s) and certified by an advocate, as said in section 23(b) of the Law, to which are attached declarations by each of the initial shareholder(s), worded as follows: for individuals: that I am competent to found a company and to hold shares in it and am not subject to any legal restriction, inter alia under the Execution Law 5727-1967, the Bankruptcy Ordinance (New Version) 5740-1980, and section 7 of the Law; for bodies corporate: that the body corporate was lawfully registered and no lawful restriction was imposed on it. 2.

Declaration of the first Directors of their readiness to serve as Directors.

7

Footnotes will be found at the end of this form

8

Following are particulars of the company and of its by-laws: The company's objectives (check and specify as required): (1) ___ under section 32(1) of the Law – to engage in any legal occupation; (2) ___ under section 32(2) of the Law – to engage in any legal occupation, other than categories of occupations specified in the by-laws; (3) ___ under section 32(3) of the Law – to engage in occupations specified in the by-laws. (4) the company was founded only for public purposes specified in its bylaws and its by-laws prohibit it from distributing profits. The company's capital: Registered capital: ________ NS / no nominal value composed of ______ shares with no nominal value, or composed of ______ shares of ____ each, and also of the following categories:___________________ Shareholders' liability: (check the appropriate alternative and specify as required) (1) limited by shares______ (2) unlimited_________ – the company is a special professional company (auditors, advocates, private investigators)________ other company (specify)_____________ Signature4_______________

Date:_______

If the signatory does not hold an Israel ID card, then he shall state the number of his passport, the state where it was issued, and he shall attach a copy as said in regulation 16 of Companies Regulations (Reporting, Particulars of Registration and Forms) 5760-1999.

I, Advocate _________________ , hereby certify that _________whom I know personally / who identified himself to me by ID card number ______, after I cautioned him / her that he / she must declare the truth and that he/ she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date: _________________ Advocate's signature: ________________ Name: ____________________________ Address: __________________________ ID Number: ________________________ License number: ____________________ 1 2

3

The company's name may be stated in Latin or Arabic letters A person who does not hold an Israel ID card shall state the number of his passport and the state where it was issued and he shall attach a copy, as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999. If the shareholder is a body corporate, state the registration number of the body corporate; if the shareholder is a foreign body corporate, then it shall attach a copy of the Certificate of Incorporation and the certifications required as said in the said regulation 16. 9

4

If the shareholder is a body corporate, then a person authorized to sign on its behalf shall sign, stating the signatory's name and ID number.

10

FORM 2 (Regulation 1) To:

The Companies Registrar

Declaration of the First Directors (Section 8 of the Companies Law 5759-1999 (hereafter: the Law)) Proposed name of the company1:_________________________________ I, the undersigned _______________________

_________________

Last name

First name

or

_________ ID Number

__________________________________

2

________________

Name of body corporate

Incorporation number

3

whose address is:______________________________________________ Country - Town - Street - House Number - Zip Code - Telephone

hereby declare that – immediately after the company is registered and as long as no other competent organ has been appointed I shall act to enter my particulars in the Register of Directors kept under section 224 of the Law, and to enter the particulars of the shareholders in the Shareholders Register which is kept under sections 127 and 130 of the Law; in respect of an individual Director: (1) I am qualified to serve as a first Director of the aforesaid company and there is no legal restriction that prevents my doing so, including under Chapter Seven "A" of the Execution Law 5727-1967, section 42 of the Bankruptcy Ordinance (New Version) 5740-1980, section 7 of the Law and the provisions of Article Two of Chapter One in Part Six of the Law; (2) I am prepared to serve as a first Director of the company; in respect of bodies corporate: (1) the body corporate was lawfully registered and there is no restriction on its service, no liquidation order was made against it and no decision on voluntary winding up was adopted; (2) and the person who shall serve on its behalf under section 236 of the Law is:____________________ ____________ _________ Last name

First name

ID number2

([f we replace him we shall notify the company of the change, so that it will be registered in the Register of Directors as said in section 236(b) of the Law.) Date:_____________ _______________________

Signature

4

____________________________________________________________ Note: Advocate's certification and footnotes to this form on the next page

11

I, Advocate ____________________, hereby certify that ______________, whom I know personally / who identified himself to me by ID card number _______, after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date_______

1 2

3

4

Advocate's signature _____________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________

The company's name may be stated in Latin or Arabic letters A person who does not hold an Israel ID card shall state the number of his passport and the state in which it was issued and he shall attach a copy, as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 57601999. if the shareholder is a body corporate, then it shall state the registration number of the body corporate; if the shareholder is a foreign body corporate, then it shall attach a copy of the Certificate of Incorporation and the certifications required as said in the said regulation 16. If the signatory is a person who does not hold an Israel ID card, then the number of his passport and the state in which it was issued shall be stated and a certified copy shall be attached to this Form, as said in regulation 16 of the said regulations.

12

FORM 3 (Regulation 2) To: The Companies Registrar

Notice of Share Transfer in a Private Company (Section 140(6) of the Companies Law 5759-1999 (hereafter: the Law)) Name of Company:____________________ Company number:_______ Registered office and telephone number _________________________ Particulars of transferor of shares: _______ ____________________________________ ID number

Name of transferor Last name

____________ Date of transfer Year Month Day

First name

Name / category of shares

Share symbol (for use by Registrar)

Value of share* NS ag'

Number of shares transferred

____________________

___________

_________

_____________

_______

*if there is no nominal value, enter 0 (zero)

Particulars of transferee of the shares: _______

____________________________

_________________________

ID 1 number

Name of transferor Last name

Address State Town Street Number Zip

First name

I declare that the share transfer was recorded in the Shareholders Register kept by the company under section 130 of the Law and that the particulars in this notice are correct and complete. I also declare that I am an officer of the company, as said in section 39 of the Law. _________________ ______ __________ _____ ___________ Name of person who gives the notice

ID number

1

Position in the company

Date

Signature

I, Advocate _________________, hereby certify that ______________whom I know personally / who identified himself to me by ID card number _______, after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date_______

Advocate's signature _____________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________ 13

Note: Footnote to this form on the next page 1

A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and to the first report about him shall be attached a copy as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999. If the shareholder is a body corporate, then to the first report in respect of that body corporate shall be attached a copy of its registration certificate and the required certifications said in the said regulation 16.

14

FORM 4 (Regulation 2) To: The Companies Registrar

Share Allocation Report* (Section 140(5) of the Companies Law 5759-1999 (hereafter: the Law)) _______________________

____________

___________

Name of the Company

Date of Allocation

Company Number

Address of registered office and telephone number:____________________ ___________________________________________________________ Name / category of allocated shares allocated

Share symbol symbol (for use by Registrar)

Value** of share NS ag.

______________________

_________

______ ____

Number of shares issued against payment ___________

in full for cash

partial not for cash _________

____________

Value of allocated shares: NS _______ ag __ Shareholders to whom shares were allocated 1 Name ID Number _________________ _________________ _________________

Address State Town Street Number Zip code

Share symbol for use by Registrar)

Value Number Amount of of of shares payment share of this required category for each allocated hare ___________________ ________ ____ ____ _____ ___________________ ________ ____ ____ _____ ___________________ ________ ____ ____ _____

Allocation against cash ____________ Amount paid for each share: NS ______

Allocations not against cash _____________ Amount deemed paid for each share: NS____ Amount due therefor and payable: NS ______ Consideration received for the allocation: NS ________

[]

I certify that the share allocation was recorded in the Shareholders Register kept by the company under section 130 of the Law (check if true) [] I declare that I am an officer of the company, as said in section 39 of the Law. _____________ _______ ___________ ______ _____________ Name of person who fills out the Form

ID number

1

Position in the company

Date

Signature

________________________________________________________________________ 15

Note: The Advocate's certification and footnotes to this form will be found on the next page

I, Advocate _________________ , hereby certify that ____________whom I know personally / who identified himself to me by ID card number _______, after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date_______

Advocate's signature _____________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________

*

This Form must be sent to the Companies Registrar within 14 days of the actual allocation; if partially or wholly paid up shares were allocated not against cash, then a copy of the document that specifies the consideration for the share must be attached

**

For shares without nominal value, enter 0 (zero)

1

A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and to the first report about him shall be attached a copy as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999.. If the shareholder is a body corporate, then to the first report in respect of that body corporate shall be attached a copy of its registration certificate and the required certifications said in the said regulation 16.

16

FORM 5 (Regulation 4) To: The Companies Registrar

Annual Report of Private Company (Section 141 of the Companies Law 5759-1999 (hereafter: the Law))

___________________

________

_________________

_____

Name of the Company

Company Number

Address of Registered Office

Tel. Number

The annual meeting took place on1 _____________ The Report is up-to-date as of2 ________________ Composition of Share Capital Name of share and its nominal value (in respect of shares with nominal value)

Category of share

Number of shares in registered capital

___________________

_________

__________

Number of shares in allocated capital

_________

Shareholders and Shares in Their Possession Name of shareholder

ID 3 Number

___________ ______

Address

Category of share

Number of shares

Amount not yet paid for the shares

________ _______ _______

_______

Bearer Shares in Circulation Number of shares on each certificate ____________ ____________ ____________

Number of certificate ________ ________ ________

Total number of bearer shares in circulation ___________ Particulars about serving Directors 4

Director's name

ID Number Address

_____________ _____________ _____________

______ ______ ______

Date of appointment

___________________ _____________ ___________________ _____________ ___________________ _____________

Particulars about Directors who ceased to serve Director's name

ID Number

_____________ _____________ _____________

______ ______ ______

4

Date of cessation of service

___________ ___________ ___________

Check appropriate alternative [] []

The particulars about foreign Directors reported under regulation 16 have not changed Particulars about foreign Directors have changed and the documents required under regulation 16 are attached to the annual report 17

Compliance with provisions of section 171(c) of the Law [] The Board of Directors approved the financial reports; check if this is true Compliance with provisions of section 173 of the Law (Check appropriate alternative) [] The financial reports were presented to the last Annual Meeting, as required [] If under section 61(a) of the Law the company is not obligated to hold annual meetings, state whether the financial reports were sent to shareholders under section 61(b) of the Law [] The company is not obligated to submit financial reports to the annual meetings under section 172(g) of the Law Auditor (check and fill in the appropriate alternative) (1) The company has an auditor, as said in section 154 of the Law [ ] The auditor's name is _________________ and the address of his office is__________________(if the company has more than one auditor, specify the name of all persons who hold the position of auditor with the company). (2)] The company does not have an auditor [ ] The time up to this report, during which the company did not have an auditor, is ______ days. (3) The company is an inactive company, within the meaning of section 158(a), and its General Meeting decided not to appoint an auditor. [ ] Company Manager If the company has a manager, a general manager, a general business manager or an officer in charge of the company's general management, even if he bears a different title, then his name, address and ID number must be stated, and if there is more than one general manager, then the said particulars shall be specified for all of them – Name __________________ Address ______________________________ ID Number5 ___________Telephone at work ______________ Attach balance sheet A private company, to which the provisions of section 175 of the Law apply, shall attach the company's balance sheet, which is part of its financial reports. The person, if any, in charge of reports under section 360(e) of the Law: Name______________________________________ ID Number5 _____ Position in the company: _____________________ Officer authorized to report to the Registrar under section 39 of the Law: 6 18

Name______________________________________ ID Number5 _____ Position in the company: _____________________ Declaration by the company's Board of Directors under section 174 I declare in the name of the Board of Directors that the provisions of section 173(a) of the Law were complied with and the financial reports [ ] were presented to ____________ [ ] were sent to the shareholders on ______. (check appropriate alternative and fill in particulars) Signature and Declaration I hereby declare that the above particulars are correct and that I am a Director whom the company's Board of Directors authorized to sign this report Name _______________ID Number4 _____Signature ________________ I, Advocate _________________ , hereby certify that ____________whom I know personally / who identified himself to me by ID card number _______, after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date_______

Advocate's signature _____________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________

I, Auditor ___________________, who audited the company's financial reports for the report year and helped to prepare this report, hereby certify that _______________whom I know personally / who identified himself to me by ID card number _______, signed this document before me. Date_______ Auditor's signature _________________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________ ___________________________________________________________ 1

2

The last date on which a General Meeting was held; state below, in the appropriate place, whether the company is exempt of holding annual meetings under section 61 of the Law The day on which the report was signed, up to 14 days after the annual meeting. 19

3

If the shareholder does not have an Israel ID card, state the number of his passport and the country in which it was issued; if the shareholder is a body corporate, then state the number of the body corporate; to a company's first report in respect of a shareholder, attach certifications as said in regulation 16 of the Companies Regulations (Reporting, Particulars of Registration and Forms) 5760-1999. 4 If the Director does not have an Israel ID card, state the number of his passport and the country in which it was issued; if the Director is a body corporate, then state the number of the body corporate; to a company's first report in respect of a Director, attach certifications as said in the said regulation 16 5 A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and to a first report in his respect shall be attached a copy as said in regulation 16 of the said regulation. 6 A company may fill in the particulars in this section, but is not obligated to do so. ________________________________________________________________________

20

FORM 6 (Regulation 5) To: The Companies Registrar

Notice of Changes in the Board of Directors (Section 140(4) of the Companies Law 5759-1999 (hereafter: the Law)) Name of the Company

Company Number

Address of Registered Office

Tel. Number

___________________

________

_________________

_____

Particulars of Directors appointed Name of Director Last name First name

Director who is a body corporate

ID Address 1 Number Country, Town, Street Number, Zip

Date of appointment

_____________ _____________

________ ________

____ ____

_____ _____

____________________ ____________________

Date on which service began2 Name of Director

Day

____________________ ____________________

___ ___________ ___ ___________

Month

Year

____ ____

Particulars of Directors who serve on behalf of a body corporate Name of body corporate on whose behalf a Director was appointed

________ ________

Serving Director First name, Last name

______ _________ ______ _________

ID Number

Address State, Town, Street Number, Zip

____ ____

______________________ ______________________

Particulars of Directors who ceased to serve Name of Director Last name First name

Director who is a body corporate

ID Number Number

Date of change

___________ ______ ___________ ______

___________ _______ ___________ _______

_______ _______

The notice must be submitted within 14 days after the change The changes specified on this Form were ___/ were not ___entered in the Register of Directors under section 224 of the Law. Check appropriate alternative or add remarks ______________________________________ ___________________________________________________________ I declare that the above particulars are correct and that I am an officer of the company as said in section 39 of the Law. Name of person who filled out the form

ID Number

Position in the company

Date

Signature

________________

______

_____________ _______ _______________

________________________________________________________________________ 21

Note: For Advocate's certification and footnotes to this form, see next page

22

I, Advocate _________________ , hereby certify that ____________whom I know personally / who identified himself to me by ID card number _______, after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true, including the fact that he / she is authorized to sign in the name of the body corporate (if the application is by a body corporate) and signed it before me. Date_______

Advocate's signature _____________________ Name: _____________________________ Address: ___________________________ ID number: _________________________ License number: _____________________

__________________________________________________________________________ 1

2

Whoever does not have an Israel ID card, shall state the number of his passport and the country in which it was issued and to the first report a copy as said in regulation 16 of the Companies Regulations (Reporting, Particulars of Registration and Forms) 5760-1999 shall be attached. If the Director is a body corporate, then he registration number of the body corporate shall be stated; if it is a foreign body corporate, the to the first report a copy of the incorporation documents shall be attached, as said in the said regulation 16 This table must be filled out in respect of a company, to which section 221 of the Law applies and which decided that a Director's service shall begin at a later date than the date of his appointment.

23

FORM 7 (Regulation 6) To: The Companies Registrar

Notice of Increase of Capital (Sections 21(b), 140(1) of the Companies Law 5759-1999 (hereafter: the Law))

Name of the Company __________________________________

Company Number _________

Date of decision: Year:_______ Month: _______Day _____ Composition of increased capital Category / name of share nominal

Symbol of share (for use by Registrar)

Number of shares in this category

Value of share*

__________ __________ __________

_________ _________ _________

_________ _________ _________

_______ _______ _______

Total value

______ ______ ______

I declare that I am an officer of the company as said in section 39 of the Law. _______________

_______

Name of person who filled out the Form

ID Number Position in the company

* 1

1

___________

____ Date

____________ Signature

if the share has no nominal value, write 0 (zero) A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and – if this is the first report in his respect by the company – he shall attach a copy as said in regulation 16 of the Companies Regulations (Reporting, Particulars of Registration and Forms) 5760-1999.

24

FORM 8 (Regulation 6) To: The Companies Registrar

Notice of Cancellation of Registered Share Capital (Sections 21(b), 140(1) of the Companies Law 5759-1999 (hereafter: the Law)) Name of the Company__________________ Company Number____ Date of decision: Year:_____ Month ______ Day ____ Composition of canceled capital Category / name Symbol of of share share (for Use by Registrar)

Number of shares in this category

Value of share*

Total nominal value

_________ _________ _________

______ ______ ______

_____ _____ _____

______ ______ ______

________ ________ ________

I declare that I am an officer of the company as said in section 39 of the Law. ____________________ Name of person who filled out the Form

______ __________ ID Number Position in the company

______ Date

___________ Signature

*

if the share has no nominal value, write 0 (zero)

1

A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and – if this is the first report in his respect by the company – he shall attach a copy as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999.

25

FORM 9 (Regulation 9) To: The Companies Registrar

Notice of Address of Registered Office or of any Change of Address (Section 123 of the Companies Law 5759-1999 (hereafter: the Law)) Name of the Company ___________________ Company Number ______ hereby gives notice under section 123 of the Law that the company's registered office is located at the following address: Street

Number

Town

Zip

P.O. Box

___________ ____ __________ _____ c/o (full name): ___________________________ (stating a P.O. Box number alone does not suffice)

______

I declare that the above particulars are correct and that I am an officer of the company as said in section 39 of the Law. _________________ Name of person who filled out the Form

_____ ___________ 1 ID Number Position in the company

____ Date

______________ Signature

For use by Office: [ ] The address was entered in the Companies Register * 1 2

The Notice must be submitted within 14 days after a change of the address of the office Under regulation 1(b) the name of a person at the same address as the company's office must be stated A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and – if this is the first report in his respect by the company – he shall attach a copy as said in regulation 16 of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999.

26

FORM 10 (Regulation 12) To: The Companies Registrar

Particulars of Mortgage and Charges (Section 178 of the Companies Ordinance (New Version) 5743-1983) Name of the borrowing company: _________________________________

_______

Company

Number

Secured amount (in words) _____________________________________ Secured amount NS____ ___ag' Currency code ____Type of currency____ When created: Year______Month _____Day ______ Code: _______

Description of document: _______________________

Particulars of lenders: ID Number1 Particulars of lenders _______ __________________

Stamp duty ________

Amount of loan _______________

(NS ag') ________

Particulars of charged assets: Description of charged assets:__________________________________ ___________________________________________________________ Special conditions: If there is a restriction on additional charges, write "Y" [ ] Date of decision: Date of issue of series:

Year____ Month _______Day _____ Year____ Month _______Day _____

A remark may be entered here as provided in section 12(b) of the Companies Regulations (Reporting Particulars of Registration and Forms) 5760-1999: _________________________________________________ Remark on a prohibition or restriction in respect of the creation of other charges and special condition:___________________________________

1

A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued. In case of a body corporate, state the name of the body corporate. If the body corporate is a foreign body corporate, state its registration number in the country in which it was registered. 27

28

I hereby declare that the particulars that appear on this Form are correct and complete and that I am an officer of the company, as said in section 39 of the Law.2 ______________ Name of signatory

____ _________ ID Position in Number3 the company

_____ Date

____________ Signature

I declare that the particulars that appear on this Form are correct and complete.4 ______________ Name of signatory

2 3

4

____ _______ _____ ID Title Date Number3

_____________ Signature

To be signed by a company officer when the charge is registered by the company A person who does not have an Israel ID card shall state the number of his passport and the country in which it was issued, and – if this is the first report about him by the company – attach a copy as said in regulation 16 of the Companies Regulations (Reporting, Particulars of Registration and Forms) 5760-1999. To be signed by an interested party as said in section 186 of the Ordinance when the charge is registered according to section 186 of the Ordinance.

29

COMPANIES REGULATIONS (FEES) 5761-2001 By my authority under sections 44(6), 346 and 366 of the Companies Law 5759-1999 hereafter – the Law), and with approval by Inter-Ministerial Fees Committee, with approval by the Minister of Finance under section 39B of the Foundations of the Budget Law 5745-1985 and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Definition 1. In these regulations, "company" includes a foreign company. Registration fee 2. A registration fee for the company's registration, as said in section 9(a) of the Law, shall be as prescribed in the Schedule. Service fee 3. A fee specified in the Schedule shall be paid for acts and services of the Registrar, as the case may be. Merger fee 4. A fee prescribed for this purpose in the Schedule shall be paid for the submission of a merger proposal, as said in section 317(a) of the Law, by each of the merging companies. Annual fee 5. (a) The annual fee said in section 9(b) of the Law – (1) if paid until December 31of the year, it shall be as prescribed in the Schedule; (2) if paid until the end of February of that year, it shall be reduced, as specified in the Schedule; (3) if paid after the end of the year, then it shall be in its amount on the date of payment. (b) A company is not liable to an annual fee for the year in which it was first registered. Annual fee for company that ceased activity and is in voluntary liquidation proceedings 5A. (a) Notwithstanding the provisions of section 5, if a company ceased activity and submitted to the Registrar a report and notice under section 338 of the Companies Ordinance, then it is exempt of paying the annual fee or any monetary composition imposed for its non-payment, in respect of the years after the company ceased its activity, on condition that it delivered the following documents 30

to the Registrar: (1) certification from the Income Tax Commission that the company did not open an income tax file or that it closed an income tax file, stating the date on which the file was closed; a said certification shall be given in respect of the seven year period before the date on which the certification is issued; (2) certification from the Value Added Tax authorities that the company was not registered as liable to tax under the Value Added Tax Law 5736-1975, or that its said registration was canceled, stating the date on which the registration was canceled; a said certification shall be given in respect of the seven year period before the date on which the certification is issued; (3) an affidavit by the company's Directors, in which they declare that, as of the date stated in the affidavit, the company ceased its activity and that it does not keep bank accounts. (a1) If a company ceased its activity and its file has not yet been closed, may submit to the Registrar – instead of the certifications said in subregulation (a)(1) and (2) – the documents specified here: (1) certification by the auditing auditor that the company has ceased its activity, stating the date on which it ceased its activity, and the fact that it submitted to the Taxes Authority annual returns under section 131 of the Income Tax Ordinance, certified by an auditing auditor, in which it was stated that the company ceased its activity; the certification shall be for all the tax years, in respect of which the company applies for exemption from the annual fee or from monetary composition that was imposed because of its nonpayment (in this regulation: income tax returns); (2) copies of the income tax returns. (b) In this regulation, "the date on which the company ceased its activity" – the last of the dates stated in the documents specified in subregulation (a), and in respect of a foreign company – the said last date, in respect of the cessation of its activity in Israel. (c) Notwithstanding the provisions of subregulation (a), a foreign company is exempt of the annual fee and of composition imposed for its non-payment, even if it did not submit the report and notice under section 338 of the Companies Ordinance to the Registrar, provided that the conditions said in subregulation (a) and (a1), paragraphs (1) and (3), have been met. (d) If an application was submitted under section 369 of the Companies Ordinance to void the striking off of the company, in order to perform acts it must perform statutorily and not in order to continue its activity, then it is exempt of paying an annual fee or any composition imposed on it for its non-payment, in respect of 31

the years from the date on which the company ceased its activity and until the date on which striking off was voided, on condition that – after it had performed its said obligations – it submitted to the Registrar a report and notice under section 338 of the Companies Ordinance and submitted the documents specified in subregulation (a) and in subregulation (a1) to the Registrar. Annual fee for a cooperative house company 5B. (a) In this regulation, "cooperative house company" – a company, which owns a house to which the provisions of Chapter Six "A" of the Land Law 5729-1969 (hereafter: Land Law) apply, and which has no activity other than activity that stems from its ownership of the said house. (b) A cooperative house company that submitted a report and notice under section 338 of the Companies Ordinance to the Registrar is exempt of paying the annual fee or any monetary composition imposed for its non-payment, including annual fee and monetary composition in respect of years that preceded submission of the said report and notice. (c) If an application was submitted to void the striking off of the cooperative house company in accordance with section 369 of the Companies Ordinance in order to register the cooperative house, as defined in section 52 of the Land Law, then it is exempt of paying the annual fee and any monetary composition imposed on it for non-payment in respect of the years until the voidance of the striking off, if it submitted a report and notice to the Registrar under section 338 of the Companies Ordinance after it concluded its registration as a cooperative house. Applicability 5C. The exemption under these regulations shall only apply to annual fees that have not yet been paid. Linkage 6. (a) The amounts set in the Schedule shall change on January 1 of each year (hereafter: day of change) at the rate of increase of the new index over the basic index. (b) An amount changed as aforesaid shall be rounded to the nearest whole new shekel. (c) The Director General of the Ministry of Justice shall publish in a notice in Reshumot the text of the Schedule, as changed in consequence of the provisions of subregulations (a) and (b). (d) In this regulation – "index" – the Consumer Price Index published by the Central Bureau of Statistics; "new index" – the last index published before the day of change; "basic index" – the last index published before the preceding day of change, and in respect of the first day of change after these 32

regulations go into effect – the last index published before the day on which they went into effect. Repeal 7. Companies Regulations (Fees, Particulars of Registration and Forms) 5749-1989 are repealed Effect 8. These regulations shall go into effect on January 1, 2001. Transitional provisions 9. Notwithstanding the provisions of regulation 5(a)(2), a company may pay a reduced annual fee, as specified in the Schedule, during the two months after these regulations were first published.

33

SCHEDULE For –

NS

1. 2.

Company registration 2,244 Examining – a company file 41 the Companies register, for each company 41 register of charges, for each company 41 3. obtaining information through the computer, for each company up to 5 computer pages 41 for each additional page 2 4. verification, per page 2 5. photocopying, per page 2 6. certification of photocopy, per page 2 7. condensed information about companies, drawn up according to registration number, address, date of registration, keyword in the name or other identifying particular of the company, per company 6 8. submission of a merger proposal, for each merging company 2,244 9. annual fee 1,277 10. reduced annual fee 962 NOTE: The amounts in this Schedule are updated according to KT 6768, p.225, December 12, 2007 – Tr.

34

COMPANIES REGULATIONS (NOTICE OF GENERAL MEETINGS AND OF CATEGORY MEETINGS IN A PUBLIC COMPANY) 5760-2000 By my authority under sections 69, 75 and 366 of the Companies Law 57591999 (hereafter – the Law), after consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "General Meeting" includes a Category Meeting; "proof of ownership" – as defined in section 71 of the Law; "distribution site" – as defined in the Securities Regulations (Electronic Signature and Report) 5763-2003; "position paper" – as defined in section 88 of the Law; "ballot" – as defined in section 87 of the Law; "Written Vote Regulations" – the Companies Regulations (Written Votes and Position Papers) 5766-2005; "shares" – shares that give the right to vote at the company's General Meeting or Category Meeting. Delivering and publishing a notice 2. (a) Notice of a General Meeting of a public company (hereafter: the notice) shall be published at least 21 days before the General Meeting convenes. (a1) The notice shall be delivered to every shareholder who is entered in the Shareholders Register at least twenty-one days before the General Meeting convenes, unless the by-laws set another time or provide that no notice be delivered; (a2) Notwithstanding the provisions of subregulations (a) and (a1), the notice of a General Meeting, the agenda of which includes subjects specified in section 87 of the Law, shall be published at least 35 days before the General Meeting is convened, and it shall be delivered – if it is obligatory to deliver it under subregulation (a1) – at least 35 days before the General Meeting is convened. (b) Notwithstanding the provisions of subregulation (a), if the by-laws of a company provide that a notice said in subregulation (a1) shall not be given, and if the agenda of the General Meeting does not include subjects on which voting may be by ballots, as said in section 87 of the Law, then the notice may be published up to at least 14 days before the General Meeting convenes. (c) The notice shall be published and – if it is obligatory to deliver it under subregulation (a1) – it shall be delivered at least two days 35

before the determining date, within its meaning in section 182(b) of the Law (hereafter: the determining date); notice of a General Meeting, the agenda of which includes subjects specified in section 87 of the Law, shall be published or delivered – if under subregulation (a1) it is obligatory to deliver it – at least five days before the determining date How notice is published 3. The notice shall be published in at least two widely circulated daily newspapers, which appear in Hebrew; the company may publish it in any additional manner which it deems appropriate, including over the Internet. Contents of the notice 4. (a) In the notice shall be stated the type of the meeting, where and when the meeting will convene, a detailed list of the subjects on the agenda, the essence of the proposed resolutions, the majority required for adoption of the resolutions, and also the date for the determination of all shareholders' right to vote at the General Meeting, as said in section 182 of the Law; if the company determined that a postponed meeting be held at a time later than that prescribed in section 78(b) of the Law, then it shall state that date in the notice. (b) The notice shall include the telephone number and the address of the registered office of the company, and the times at which the full text of the proposed resolutions may be inspected; the company may add additional places for the said inspection, including an Internet address. (c) In the notice of a General Meeting of a public company, on the agenda of which are subjects on which it will be possible to vote by ballots as said in section 87 of the Law, the company shall state also the following: (1) the address of the distribution site and the internet site of the Tel Aviv Stock Exchange Ltd., where the text of the ballot and of position papers – within their meaning in section 88 of the Law – may be found; (2) that voting shall be performed on the second part of the ballot, as published on the distribution site; (3) that shareholders may approach the company directly and receive from it the text of the ballot and the position papers; (4) that the Exchange member send by electronic mail, free of charge, a link to the text of the ballot and the position papers at the distribution site to each shareholder who is not registered in the shareholders register and whose shares are registered with that Exchange member, if the shareholder announced that he desires that, on condition that the notice be given in respect of a certain securities account and before the determining date; 36

(5)

(6) (7) (8)

that a shareholder, whose shares are registered with an Exchange member, is entitled to receive proof of ownership from the Exchange member through whom he holds his shares, at the branch of the Exchange member or by mail to his address against postage alone, if he so requested, and that a request on this matter be made in advance for a certain securities account; the last date for delivering position papers to the company; the last date for delivering ballots to the company; in a company that allows voting over the internet – (a) statement of that fact and the address of the internet site, through which voting is possible, and the last date for voting over the internet; (b) statement of the internet address, to which the Exchange member may deliver the material he must deliver to the company under regulation 4(c)(1) of the Written Vote Regulations.

Other legal provision 5. If there are other legal provisions on the contents of the notice to be published in respect of the General Meeting of a public company, when its agenda includes a certain subject prescribed in that enactment, then the provisions of that other enactment shall apply to the notice. Effect 6. These regulations shall be in effect from February 1, 2000.

37

COMPANIES REGULATIONS (WRITTEN VOTES AND POSITION PAPERS) 5766-2005 By my authority under sections 89, 182(c) and 366 of the Companies Law 5759-1999 (hereafter – the Law), in consultation with the Minister of Finance and with the Securities Authority, and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Definitions 1. In these regulations – "proof of ownership" – as defined in section 71 of the Law; "General Meeting" – including an Category Meeting; "distribution site" – as defined in the Electronic Reporting Regulations; "Stock Exchange" – the Tel Aviv Stock Exchange Ltd.; "unregistered shareholder" – a shareholder under section 177(1) of the Law; "position paper" – within its meaning in section 88 of the Law; "decision to call a General Meeting" – whether by decision of the company's Board of Directors, as the result of a demand under section 65 of the Law, or under a Court order said in section 62 or 65 of the Law; "the determining date" –within its meaning in section 182(b) or (c) of the Law; "ballot" – within its meaning in section 87 of the Law; "shares" – shares that give the right to vote at a General Meeting or at a Category Meeting of the company; "shareholders register" – including the additional shareholders register, as defined in section 138(a) of the Law; "additional identifying particular" – an identifying particular of the shareholder designated by the Exchange member, such as the number of the account by which the shares are held, which the member desirous of voting over the internet shall key in when he votes; "control code" – a unique two-digit control code stated in the proof of ownership, which the Exchange member linked arbitrarily to a certain identification code; "identification code" – a unique identification code stated in the proof of ownership, which the Exchange member linked to a certain unregistered shareholder, in accordance with his shareholdings on the determining date; "closing price" – a price determined by the Exchange; "Electronic Reporting Regulations" – the Securities Regulations (Electronic Signature & Report) 5763-2003; "Immediate Report Regulations" – the Securities Regulations (Periodic & Immediate Reports) 5730-1970. 38

Applicability 2. (a) These regulations shall apply if a decision to call a General Meeting was adopted and its agenda includes any of the subjects enumerated in section 87(a)(1) to (5) of the Law, and also if a decision to call a General Meeting in a public company was adopted under section 350 of the Law; however, they shall not apply if – to the company's best knowledge when the decision to call the General Meeting was adopted – a controlling member of the company holds on the determining date for convening the General Meeting shares that give him the proportion required to adopt the decision that is on the agenda of the General Meeting, assuming that all other shareholders will participate in the vote and will vote against it. (b) The obligations of service on the Securities Authority and on the Stock Exchange shall not apply to a company, the shares of which were offered only to the public abroad, or are only listed for trading on an Exchange abroad. The determining date 3. The company shall set the determining date in the decision to call the General Meeting, on condition that that date is no more than forty and no less than twenty-eight days before the date of the General Meeting. Delivery of ballots and of proof of ownership to shareholders 4. (a) When a General Meeting has been called at a demand said in section 63(b) of the Law, then the persons at whose demand the Meeting was called shall give the company – at the time the demand is submitted – the text of a ballot. (b) On the day, on which notice that a General Meeting was called is published, the company shall submit the text of the ballot to the Securities Authority and to the Exchange in accordance with the Electronic Reporting Regulations. (c) An Exchange member – (1) shall submit to a company that permits voting over the internet – no later than five days after the determining date – a list that includes the identification code of each unregistered shareholder that holds securities through it and who each has the right to act in his securities account, together with the number of shares in respect of which he is entitled to vote and together with an additional identifying particular, and it shall not give the control code of the shareholders the company or to anybody else, unless there is a different provision in these regulations; (2) shall send by electronic mail free of charge – no later than five days after the determining date – a link to the ballot at 39

(d) (e)

(f) (g)

the distribution site to each unregistered shareholder that holds securities through it, unless the shareholder informed the Exchange member that he does not wish to receive a said link, or if he informed it that he wishes to receive ballots by mail, against the payment of mailing costs only. A shareholder may address the company directly and obtain from it free of charge the text of the ballot, or – with his consent – a link to the text if the ballot at the distribution site. In order to vote at a Meeting, an unregistered shareholder is entitled to receive the proof of ownership under regulation 2 from the branch office of the Exchange member, or by mail to his address against the payment only of postal charges, if he so requested. On the day notice of the General Meeting is published, the company shall send a ballot free of charge to the shareholders registered in the shareholders register. If, in respect of a certain General Meeting, a company publishes the ballot or a position paper by means additional to those stated in these regulations, then it must publish all the position papers that it received in connection with that Meeting by the same means.

Written vote or vote over the internet 5. (a) If an unregistered shareholder wishes to vote at a General Meeting without attending the General Meeting and without sending a proxy, then he may vote in writing in accordance with subregulation (b) or over the internet in accordance with subregulation (c), if the company decided to allow that. (b) When making a written vote the shareholder shall state on the second part of the ballot said in regulation 7 – which shall be drawn up according to the form in the Schedule – (hereafter: the form) how he votes, and he shall deliver it to the company or send it to the company by registered mail together with a proof of ownership, so that the ballot will reach the company's registered office no later than seventy-two hours before the time of the General Meeting. (c) A company may allow an unregistered shareholder, who appears on the list of identification codes said in regulation 4(c)(1), to vote over the internet instead of voting as said in subregulation (b), on condition that all the following hold true: (1) the company took all reasonable steps to make the information secure; for this purpose, " make the information secure" – use of reliable hardware and software systems, which provide reasonable protection against penetration, distortion interference or damage to the computer or the computer material, and which provides a reasonable level of availability and reliability; the company shall update the systems from time to time in order to meet the aforesaid 40

(d)

conditions, the Board of Directors shall supervise the performance of its instructions and shall – from time to time, and at least once a year – discuss information security in this context; (2) voting over the internet shall be by use of a form identical in content and appearance to the form submitted by the company to the Securities Authority and to the Exchange; (3) the vote over the internet can be retrieved, may be kept and an output may be produced from it, and it cannot be changed after the vote was made; (4) the Exchange members gave the company lists of the identification codes of shareholders and lists of the additional identifying particulars under regulation 4(c)(1); (5) it will be possible to vote beginning no later than six days after the determining date and until seventy-two hours before the time for convening the General Meeting; (6) it will not be possible to vote without keying the identification code, the control code and the additional identifying particular; (7) The company shall keep the information imparted to it under regulation 4(c)(1) confidential, except when there is a different provision in these regulations. If a shareholder registered in the shareholders register wishes to vote in writing, then he shall state the manner of his vote on the form and hand it in to the company or send it to it by registered mail, together with a photocopy of his ID card, a photocopy of his passport or a photocopy of its incorporation documents, so that the ballot reaches the company's registered office at least seventy-two hours before the time for convening the General Meeting.

Position papers 6. (a) The company may attach a position paper by the Board of Directors to the version of the ballot, which it submitted to the Securities Authority, to the Exchange and to the shareholders registered in the shareholders register. (b) Persons at whose demand the Board of Directors calls a General Meeting may deliver to the company – together with the demand – the text of a position paper; the company shall attach the text of the position paper submitted to it as aforesaid to the ballot delivered to the Securities Authority, to the Exchange and to the shareholders registered in the shareholders register. (c) Position papers by shareholders shall be submitted up to ten days after the determining date (hereafter: last date for sending position papers); the company shall deliver the text of position papers to the Securities Authority and to the Exchange in accordance with the Electronic Reporting Regulations no later than one day after the shareholder delivered it to the company; no 41

(d) (e)

(f)

(g)

(h)

later than five days after the last date for sending position papers by shareholders the company may deliver to the Securities Authority and to the Exchange, in accordance with the Electronic Reporting Regulations, a position paper that includes the reaction of the Board of Directors as said in section 88(c) of the Law; if the company set a determining date that is more than 28 days from the day for which the General Meeting is called, then it may send the position papers later, but at least twelve days before the day for which the General Meeting is called. Shareholders may request from the company and receive from it, free of charge, the position papers that it had received. Exchange members shall send links to the position papers at the distribution site by electronic mail at no charge to every unregistered shareholder who holds share through them no later than five days after they were published at the distribution site, unless the shareholder gave the notice said in regulation 4(c)(2), that he does wish to receive links or that he wishes to receive ballots by main, against the payment only of postal charges; when a shareholder has announced that he wishes to receive ballots by mail against the payment only of postal charges, then the Exchange member shall also send the position papers against the payment only of postal charges. The company shall send to the shareholders registered in the shareholders register every position paper, no later than five days after its receipt; a position paper that includes the reaction of the Board of Directors, as said in section 88(c) of the Law, shall be sent to the shareholders as aforesaid on the day it is submitted to the Securities Authority and the Exchange. A company may collect reasonable consideration, considering the costs of distribution, from share holders who sent it a position paper; if the position paper was submitted by one or several shareholders, who on the determining date had shares work NS 10,000 or more, at the Exchange closing price on the day before the determining date, then the amount collected by the company shall not exceed NS 200. The amounts stated in subsection (g) shall change on January 1 of each year (hereafter: day of change) at the rate of change of the new index over the basic index; for this purpose – "index – the Consumer Price Index published by the Central Bureau of Statistics; "the new index" – the index last published before the day of change; "the basic index" – the index last published before the day on which these regulations went into effect.

Text of the ballot 7. (a) A ballot shall be composed of two parts; the first part shall include the following particulars in this order: 42

(1) (2) (3)

(4) (5)

(6) (7) (8)

the company's name; the type of General Meeting, and where and when it will convene; a reasonably detailed exposition of every subject on the agenda – other than the appointment of Directors – to which the provisions of these regulations apply; a description of the nature of each subject shall appear next to it, specifying the major facts that must be known in order really to understand every matter that requires a vote by the General Meeting, and the text of each proposed decision, or a concise description of its main points shall be presented; a description required under this paragraph shall not be longer than 500 words in respect of each subject on the agenda, and no more than 1,500 altogether; the time and place when and where the full text of proposed resolutions may be studied; particulars, to the company's best knowledge, in respect of a candidate for Director who – (a) is not a serving Director of the company at the time the General Meeting convenes, as specified in regulation 26 of the Immediate Reporting Regulations; (b) serves as Directors in the company: (1) his name; (2) his membership in one or several Board of Directors committees; (3) the year in which he became a Director of the company; (4) each of the particulars required under regulation 26 of the Immediate Reporting Regulations, if it changed since the submission of the company's last periodic report; in this paragraph, "periodic report" – within its meaning in the Immediate Reporting Regulations; the statement that voting for each Director will be conducted separately, unless the by-laws provide differently; the majority required for adoption of a decision by the General Meeting in respect of each of the subjects of the agenda; in the case of a vote on the appointment of an external Director, as said in section 239(b) of the Law, on a change of the by-laws, as said in section 262(b) of the Law, on the approval of an exceptional transaction with a controlling member, as said in section 275 of the Law, or on the approval of a merger, as said in section 320(c) of the Law, and also in the case of a vote on the adoption of a resolution under section 121(c), if the company prescribed in its bylaws that said decisions may also be adopted by written votes – a statement that in Part "B" of the ballot there is a 43

(9)

(10)

(11) (12) (13) (14)

(15)

(16)

place to indicate whether there is or is not a connection, as required under the said sections, and for a description of the relevant connection, and also the explanation that – if the aforesaid is not indicated or the nature of the connection is not explained – the vote will not be taken into account; the statement that the ballot will be valid only if the unregistered shareholder's proof of ownership is attached, or – if the shareholder is entered in the company's books – only if a photocopy of his ID card, passport or incorporation documents is attached, and that it must be delivered to the company until seventy-two hours before the time for voting; if the company permits voting over the internet in accordance with regulation 5(c) – a statement that it is possible to vote over the internet instead of the vote under paragraph (9), without attaching proof of ownership, by keying the identification code and the control code that appear on the proof of ownership, and the additional identifying particular, and the internet address, by use of which voting is possible, and the first and last dates when it is possible to vote over the internet; the company's precise address for the delivery of ballots and position papers; the last date for the delivery of position papers to the company and the last date for delivery of Board of Directors responses to position papers; the address of the distribution site and of the Exchange internet site, where the ballots and position papers are; a statement that a shareholder is entitled to receive proof of ownership at the branch office of the Exchange member or by mail, if he so requested, and that a request for this purpose be given in advance for a certain securities account; a statement that an unregistered shareholder is entitled to receive from the Exchange member through whom he holds the shares, by electronic mail free of charge, a link to the text of the ballot and of position papers at the distribution site, unless he informed the Exchange member that does not wish to receive the said link or that he wishes to receive the ballots by mail against payment; his statement about ballots shall also apply to the receipt of position papers; a statement that one or several shareholders who hold shares that amount to 5% or more of all voting rights in the company, and also persons who hold aforesaid percentages of all voting rights that are not held by controlling partners in the company, as defined in section 268 of the Law, are entitled to examine the ballots as specified in regulation 10, and also the statement of the number of shares that constitutes the aforesaid 5%; a shareholder shall mark his 44

vote on each subject on the agenda on the form that is the second part of the ballot said in regulation 5(b). Note: No subregulation (b) of regulation 7 appears in the Hebrew original of this enactment – Tr. Text of position paper 8. (a) A position paper shall be drawn up in clear, concise, simple and understandable language, shall include no more than 500 words for each item on the agenda and not more than 1,500 words altogether. (b) If it is the position paper of a shareholder, then it shall include the shareholder's identity and how many shares he holds in the company; if the shareholder is a body corporate, then the identity of the controlling member of that body corporate shall also be stated to the shareholder's best knowledge, as well as additional holdings of the company's shares by that controlling member. (c) If a shareholder who submits a position paper cooperates with others in respect of voting at the General Meeting, either in general or on a certain matter on the agenda, then he shall state that in the position paper, specifying the cooperation arrangements and the identity of the shareholders with whom he cooperates; if the shareholder or another person with whom he cooperates has a personal interest in the outcome of a vote at the General Meeting, the nature of that personal interest shall be stated. (d) The position paper of shareholders, on whose demand the General Meeting was called under section 63(b)(2) of the Law, shall also include the fact that the Meeting was called on their demand. (e) The inclusion of particulars in a position paper does not derogate from reporting obligations under the Securities Law and under any statute. (f) The person who submits a position paper shall alone be responsible under any statute for the contents of position papers. Possibility of canceling ballots 9. Up to twenty-four hours before the time for convening the General Meeting, a shareholder may apply to the company's registered address and – after he has proved his identity to the satisfaction of the company's secretary or of another employee appointed for this purpose – withdraw his ballot and his proof of ownership, or cancel his vote under regulation 5(c); when he has done so, the shareholder shall be entitled to vote only in the course of the General Meeting. Checking ballots 10. (a) If, on the determining date, one or several shareholders held shares in a quantity that constituted 5% or more of all voting rights in the company, and also any person who holds the said 45

(b)

percentage of all voting rights not held by controlling members of the company, as defined in section 268 of the Law, then they have the right – in person or through delegates on their behalf – to check in the company's registered offices during regular working hours, after the General Meeting had met, the ballots and records of the internet votes that reached the company, and they may apply to the Exchange member and receive the list of control codes and identification codes of shareholders who voted over the internet, after they proved – to the Exchange member's satisfaction – their right to do so under this regulation. On application by a shareholder who on the determining date did not hold the number of shares said in subregulation (a), the Court may order the company to enable the shareholder to study some or all of the documents and records specified in subregulation (a), on conditions which it shall prescribe.

Results of voting by ballot 11. (a) The Board of Directors shall appoint a person on its behalf (hereafter: the appointee) to count the votes of shareholders who voted with ballots or over the internet. (b) The appointee shall draw up a report, specifying how shareholders voted, related to the existence of a connection said in regulation 7(a)(8), whenever those particulars are required; if voting was over the internet, then the date and time of the receipt of the vote, identification code, control code and the number of shares shall also be stated. (c) The appointee shall declare, by his signature on the report, that those are the results of the written vote; his identity shall be certified on the report by an advocate. (d) The report shall be presented to the General Meeting. (e) Ballots, internet voting records and the report shall be kept at the company's registered office for seven years after the date of the General Meeting. Dates 12. In these regulations – "date of service" – the date on which the ballots, position papers and certification of ownership reached their destination; "date of dispatch" – the date which the ballots, position papers and certification of ownership left the person who sent them. Obligations of Exchange member at the opening of a securities account 13. (a) When a securities account is opened, the Exchange member shall record that the shareholder wishes to receive a link to the ballots and position papers at the electronic mail distribution site free of charge, or ballots and position papers by mail against 46

(b)

postal charges, or that he does not wish that aforesaid ballots and position papers be sent to him; the Exchange member shall further record whether the shareholder wishes to receive proof of ownership by mail against payment only of postal charges; the shareholders' said instructions shall be given in respect of the securities account and not in respect of certain securities kept in the account; by his signature on a certain form the said shareholder shall certify his decision and that the possibilities specified in this regulation were brought to his knowledge. A shareholder may at any time change the instructions he gave when the account was opened, and the Exchange member shall act in accordance with the new instructions in respect of General Meetings, for which the determining date is later than the date of the change.

Effect 14. These regulations – except for regulation 13 – shall go into effect on April 2, 2006 (hereafter: day of effect) and they shall apply to General Meetings, for which the notice was published on the day of effect or thereafter; regulation 13 shall go into effect thirty days after its publication. (Date of publication: December 13, 2005 – Tr.) Transitional provisions 15. (a) Within thirty days after the publication of these regulations, an Exchange member shall send a notice by mail to shareholders, whose accounts were opened before the publication of these regulations, in which he requests the shareholder to give instructions said in regulation 13; if the shareholder does not respond, then the Exchange member shall send a link to position papers and ballots at the distribution site to the e-mail address in his possession; if the Exchange member does not have an e-mail address for the shareholder, then the shareholder shall be deemed to have given instructions in respect of that securities account that he does not wish , in general, to receive a said link, as long as he does not inform the Exchange member otherwise. (b) Notwithstanding the provisions of subregulation (a), a company may request of an Exchange member that he send ballots and position papers by mail to shareholders who did not respond to the Exchange member's notice, against payment agreed upon in advance between the parties and no later than ten days after the request; if the company requested as aforesaid, then all the position papers shall be sent to the shareholder.

47

SCHEDULE (Regulation 5(a)) Ballot – Part Two Companies Regulations (Written Voting and Position Papers) 5766-2005 (hereafter: the Regulations) Company's name ______________________________________________ Company's address for delivery and dispatch of ballots) _______________ ___________________________________________________________ Company's number ____________________________________________ Date and hour of the Meeting____________________________________ Type of Meeting______________________________________________ Determining date ______________________________________________

In Companies that allow voting over the internet, according to regulation 5(c) of the regulations: Internet site, through which voting is possible _________________________ (All the above to be filled out by the company)

Shareholder's particulars Shareholder's name ____________________________ID number _______ If the shareholder does not have an Israel ID card – Passport number ___________ Country of issue _________________ In effect until _______________ If the shareholder is a body corporate – Number of the body corporate _________ State of incorporation ________

In Companies that allow voting over the internet, according to regulation 5(2) of the regulations: Identification code ____________________________________________ Control code _________________________________________________ Additional identifying particular to be stated when voting ________________

48

Your vote:1 Number of subject on the agenda: __________ __________ __________ __________

for ____ ____ ____ ____

vote against ____ ____ ____ ____

on the appointment of an external Director (section 239(b) of the Companies Law) – are you a controlling member?2 [ ]yes [ ]no

___

___

___

on the approval of a transaction under sections 255 and 275 of the Companies Law – do you have a personal interest in the decision? 2 [ ] yes [ ] no

___

___

___

on the approval of a merger – are you the other merging company or a person who holds means of control, as said in section 320(c) of the Companies Law 2 [ ] yes [ ] no

___

___

___

on a change of by-laws in respect of indemnification or insurance (section 262(b) of the Companies Law - do you have a personal interest in the decision? 2 [ ] yes [no ] ___

___

___

on authorization of the chairman of the Board of Directors to serve also as general manager (section 121(c) of the Companies Law) are you a controlling member of the company [ ] yes [ ] no

___

___

___

Date ___________

Signature______________

abstain ____ ____ ____ ____

--------------------------------------------------------------------------------------------------------------For shareholders who hold shares through an Exchange member (under section 177(1)) – this ballot is valid only together with proof of ownership, except where voting is over the internet. For shareholders registered in the company's shareholders register – this ballot is valid only together with a photocopy of the ID card, passport or incorporation document. --------------------------------------------------------------------------------------------------------------* specify 1 no mark will be deemed abstention from vote on the said subject 2 if a shareholder does answer this question or marks "yes" and does not specify, then his vote will not be taken into account

49

COMPANIES REGULATIONS (PROVING OWNERSHIP OF A SHARE IN ORDER TO VOTE AT A GENERAL MEETING) 5760-1999 By my authority under sections 71 and 366 of the Companies Law 57591999 (hereafter – the Law) and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Manner of proving ownership 1. If a shareholder, within the meaning of the term in section 177(1) of the Law (hereafter: shareholder) is required to prove his ownership of a share in order to vote at a General Meeting, then he shall deliver to the company certification of his ownership of the share from the Exchange member with whom his right to the share is registered, on the determining date, as prescribed by section 182 of the Law (hereafter: the determining date); the certification shall include the particulars stated in regulation 2 and in the Form in the Schedule (hereafter: proof of ownership). Certifying ownership 2. (a) On application by a shareholder, the Exchange member with whom shares held by the shareholder are registered, shall issue proof of ownership at a suitable time, so that the shareholder will be able to vote at the General Meeting or to send a written ballot at the required time; the certification of the ownership shall be drawn up according to the Form in the Schedule, and the following particulars shall be specified in it: (1) the name and ID number of the shareholder; if the shareholder is a person who does not have an Israel ID card, then the number of his passport, the term of its validity and the country in which it was issued shall be stated; if the shareholder is a body corporate, then the registration number of the body corporate and the country in which it was incorporated shall be stated; (2) the determining date in respect of which the certification is being issued; (3) the name of the share, the number of shares and the category of the shares, if any, which are registered to the shareholder's credit with the Exchange member as of the date on which the certification is issued; (4) In a company that allows voting over the internet – (a) the unique identification code, which links the Exchange member to the shareholder according to his shareholdings on the determining date (hereafter: identification code), in accordance with the Companies 50

Regulations (Written Votes and Position Papers) 57662005 (hereafter: the Written Vote Regulations); (b) the unique control code, which links the Exchange member to a specific identification code under the Written Vote Regulations (hereafter: control code). (b) A proof of ownership shall be signed by the Exchange member who issues it. Shares lent for trading 3. Certification said in these regulations shall not be issued to a person whose shares are, on the determining date, lent for trading on the Exchange. Restriction on proof of ownership 4. (a) An Exchange member shall give a shareholder in respect of his holdings of the company's shares a single proof of ownership, which is true to the Exchange member's records as of the end of the determining date. (b) Notwithstanding the provisions of subregulation (a), if a shareholder gave a written declaration to the Exchange member, that he lost proof of ownership or that the proof of ownership had not reached him, then he may receive an additional proof of ownership in respect of his holdings of the company's shares, correct according to the Exchange member's records at the end of the determining date (hereafter: new proof of ownership). (c) The proof of ownership, in respect of which the shareholder declared as said in subregulation (b), shall be voided by the issue of the new proof of ownership. (d) When an Exchange member has issued a new proof of ownership, then he shall inform the company thereof before the date on which the General Meeting is held. (e) Exchange members may demand consideration for issuing new proof of ownership. Effect 5. These regulations shall go into effect on February 1, 2000.

51

SCHEDULE (Regulations 1 and 2) PROOF OF OWNERSHIP Company name_______________ Company number _____________

Exchange member ________________

Particulars of shareholder(s): (if the shares are held jointly by several shareholders, state their particulars) (1) Name of shareholder: ______________________________________ (2) ID Number _________ If the shareholder has no Israel ID card – Passport number ____________ Issuing country _____________ If the shareholder is a body corporate – Registration number__________ (3)

State of incorporation_________

Date in respect of which the proof of ownership is given: ____________

Particulars of the shares: (1) Name of security ________________ Face value (if any) ___________ Number on the Exchange _____________ (2)

Number of shares __________

(3)

Category of shares _________

Particulars for voting over the internet (1)

Identification code ___________

(2)

Control code

___________

Exchange member's signature ___________________

52

Date ________

COMPANIES REGULATIONS (CHANGE OF A RESOLUTION SPECIFIED IN THE NOTICE OF A GENERAL MEETING) 5764-2004 By my authority under sections 70 and 366 of the Companies Law 57591999 (hereafter – the Law) and with the approval of the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "General Meeting" – including a category meeting; "notice" – an invitation to or announcement of a General Meeting. Adoption of a resolution that differs from the text specified in the notice 2. If the text of a resolution was specified in a notice or if its main points were specified in it and readers were referred to the full text of the resolution in the agenda of the General Meeting, then the General Meeting may adopt a resolution that differs from the aforesaid specified text of the resolution, if the change is insignificant or if it only benefits the company, as compared to the aforesaid specified text of the resolution.

53

COMPANIES REGULATIONS (RULES ON HONORARIUM AND EXPENSES OF OUTSIDE DIRECTORS) 5760-2000 By my authority under sections 244(a), 284 and 366 of the Companies Law 5759-1999 (hereafter – the Law), in consultation with the Securities Authority and with the approval of the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "company" – a public company; "outside expert Director" – one of the following: (1) a Director with expertise in accounting and finance; (2) a Director who, because of his training, experience and qualifications is highly skilled and has deep understanding of the sphere of the company's main activity; the Director's skill and understanding shall be evaluated by the Board of Directors after the Director added to his declaration under section 241 of the Law a declaration about his training, experience and qualifications, as far as they are relevant to his said evaluation, and attached documents in support of his declaration; "grade" – one of the five grades of companies, as specified in Schedule One; "quarter" – a period of three months that ends on the last day of the third, sixth, ninth and twelfth month of the company's fiscal year. Honorarium according to grade 2. The annual honorarium and the participation honorarium, to which an outside Director is entitled from the company, shall be in accordance with the grade in which the company is classified, unless these regulations provide otherwise.. Determination of grade 3. A company's grade in each fiscal year shall be in accordance with its equity, as it appears in its audited balance sheet for the preceding year, and in a company that is an institutional body according to its said equity, plus the value of the assets it manages for others; for this purpose, "institutional body" – as defined in the Control Of Financial Services (Insurance) Law 5741-1961, as well as a fund manager, within its meaning in section 4 of the Joint Investment Trusts Law 5754-1994. Annual honorarium 54

4.

(a) (b) (c)

(d)

(e)

(f)

The company shall pay a person an annual honorarium for each fiscal year during which he serves as outside Director. The amount of an outside Director's annual honorarium shall be in the range specified in Schedule Two, and it shall be set and approved as said in sections 270(3) and 273 of the Law. The amount of annual honorarium paid by the company to each outside Director shall be identical; however, it is possible that an expert outside Director be paid a higher amount than that paid to an outside Director who is not an. expert outside Director, as said in regulation 5A, on condition that the amounts of annual honorarium paid to all expert outside Directors be equal. A candidate for outside Director shall be informed of the amount of the annual honorarium before his consent to serve as outside Director is obtained, and it shall be approved by the General Meeting by which he is appointed, unless under section 7 the amount of the honorarium does not require approval by the General Meeting, and it shall not change during the three year term of office under section 245 of the Law. The company shall pay each outside Director the amount of the annual honorarium for each year of his service; if a person served as outside Director during part of a fiscal year, then he shall be paid a proportional part for that year. The company shall pay the annual honorarium to each outside Director in four equal quarterly payments, at the beginning of each quarter in respect of the preceding quarter.

Honorarium for participation 5. (a) The company shall pay the outside Director a participation honorarium for his participation in each meeting of the Board of Directors and of Board of Directors committees, including the audit committee. (b) If the outside Director participated in a meeting held by means of communication media, as said in section 101 of the Law, then he company shall pay the outside Director a participation honorarium at the rate of 60% of the participation honorarium for a regular meeting; if a Board of Directors decision was adopted without an actual meeting, as said in section 103 of the Law, then he company shall pay the outside Director a participation honorarium at the rate of 50% of the participation honorarium for a regular meeting. (c) The amount of participation honorarium shall be within the range specified in Schedule Three, and it shall be set as said in sections 270(3) and 273 of the Law. (d) An outside Director is entitled to the participation honorarium if he participated in all or most of a meeting. (e) Repealed (f) The participation honorarium shall be paid to the outside Director not later than 30 days after the meeting or – at the Company's 55

(g)

decision – for all the meetings and the decisions adopted without meetings in which he participated during the preceding quarter. The provisions of regulations 4(c) and (d) shall apply to the participation honorarium, mutatis mutandis.

Additional honorarium for expert outside Directors 5A. In respect of the honorarium paid to an expert outside Director, Schedule two and Schedule Three shall be read as if the amounts stated there in the Column "maximum amount" had been replaced by the amounts stated in Schedule Four. Repayment of expenses 6. (a) The honorarium paid to an outside Director under these regulations includes all the expenses incurred by him in connection with his participation in a meeting held in the area of his residence; if the Board of Directors holds a meeting outside area of residence of an outside Director who participated in it, then the company shall refund him only his travel expenses; if the Board of Directors holds a meeting outside country of residence of an outside Director who participated in it, then the company shall refund him the expenses directly connected to that participation; the refund of expenses shall be in accordance with the criteria, according to which the company pays to every Director who is not an outside Director and is not a resident of the country where the meeting was held, in respect of the refund of expenses for participation in that meeting. (b) These regulation shall not deny the right of an outside Director to a refund of expenses incurred in the employment of an advisor under section 266 of the Law, or shall not prevent a company from bearing an external Director's expenses in respect of training necessary for the exercise of his position. Relaxations on approval of annual honorarium and participation honorarium 7. (a) If a company elected to pay an outside Director participation honorarium or annual honorarium in amounts within the range of between the amounts stated for the maximum amounts in Schedule Two and in Schedule 3, then the amount of annual honorarium and of the participation honorarium do not require approval in the manner prescribed in section 273 of the Law. (b) If a company elected to pay an outside Director participation honorarium or annual honorarium in amounts lower than the amounts stated in Schedule Two and in Schedule 3, then the honorarium shall be approved in the manner prescribed in section 273 of the Law. Linkage 8. (a) The amounts prescribed in Schedule One, in Schedule Two, in 56

(b) (c)

Schedule Three and in Schedule Four shall change on February 1 and on August 1 of each year (hereafter: day of change) at the rate of increase of the new index over the basic index. An amount increased as aforesaid shall be rounded off to the nearest amount that is a multiple of NS 5. In this regulation – "index" – the Consumer Price Index published by the Central Bureau of Statistics; "basic index" – the index published for December 2007; "new index" – the index last published before the day of change.

Proportional honorarium 8A. (a) In this regulation, "other Director" – a Director who is not an outside Director in the company, other than all the following: (1) a Director who is a controlling member; (2) a Director who holds an additional office in the company, or who currently provides services to it; (3) a Director who holds an office in a body corporate that is a controlling member of the company, or who currently provides services to it; (4) a Director who holds an office in a body corporate that is controlled by a controlling member of the company, or who currently provides services to it; (5) a Director who receives no honorarium from the Company; for the purposes of this paragraph, "honorarium" includes a honorarium in securities under section 8B. (b) A company may decide that the amount of the honorarium of an outside Director shall not be the honorarium said in regulations 4, 5 and 7 (hereafter: fixed honorarium), but an honorarium set in proportion to the honorarium of the other Directors of the company (hereafter: proportional honorarium), on condition that the following hold true: (1) the amount of honorarium shall not be less than the lowest amount stated in Schedule Two and in Schedule Three and not less than the lowest honorarium received by any other Director of the company and shall not be more than the average of the honorarium received by all the Directors of the company, and it shall be paid at the times when it is paid to the other Directors in the company, and in respect of an expert outside Director – with the addition of 33% to the average amount of the said honorarium; (2) the honorariums paid – (a) to all expert outside Directors in the company shall be identical; (b) to all outside Directors in the company who are not expert outside Directors shall be identical; (3) the company has at least two other outside Directors; (4) the proportional honorarium shall be set and approved as 57

(c)

(d)

said in sections 270(3) and 273 of the Law; if the proportional honorarium is more than 50% greater than the maximum amount stated in Schedules Two, Three or Four, as the case may be, then it shall be approved by the General Meeting under section 239(b) of the Law. If – because of a change in the composition of the Board of Directors – one of the conditions set in subregulation (b)(3) does not hold true for the company during the service of an outside Director who had been paid honorarium – (1) if the amount paid him was a fixed amount that does not change in the course of his service (hereafter: fixed amount), then the company shall continue to pay the honorarium that it paid the outside Director before the change in the composition of the Board of Directors; (2) if the honorarium was not a fixed amount, then the company shall pay the outside Director honorarium in the amount of the average of what was paid him in the six months before the change in the composition of the Board of Directors (hereafter: the average honorarium) or a honorarium to be set under regulations 4, 5 and 7 within three months after the date of the change, but the amount of the honorarium shall not be less than the average honorarium; A decision on the payment of a proportional honorarium and the manner of its determination under subregulation (b) shall be communicated to the candidate for the position of Director before he agrees to serve, shall be approved by the General Meeting at which he is appointed and shall not be changed throughout his three year term in office in according to section 245 of the Law.

Honorarium in securities 8B. (a) A company may decide that it will pay an outside Director, in addition to the fixed honorarium or the proportional honorarium, a honorarium in securities, on condition that the following hold true: (1) the securities are to be awarded as part of a remuneration program for all the Directors who are other Directors of the company and for additional officers; (2) the provisions of regulation 8A shall apply, mutatis mutandis, to a honorarium in securities; for this purpose, the quantity, realization conditions and price, the times and conditions of entitlement and other conditions of the securities shall be treated like the amount of the honorarium and paragraph (5) of the definition of "other Director" in section 8A(a) shall be read: "a Director who does not receive honorarium from the Company, including a honorarium in securities"; (3) a candidate for the position of an outside Director shall be informed of the decision to pay a honorarium in securities and of the manner in which that decision is to be made and of the amount of the honorarium in accordance with 58

(b)

paragraph (2) before his consent to serve in that position is obtained, it shall be approved by the General Meeting at which he is appointed under section 239(b) of the Law and it shall not be changed throughout his three year term in office, in accordance with section 245 of the Law. In this regulation, "securities" shares or the right to acquire shares, other than debentures convertible into shares.

Changing the honorarium when an outside Director is appointed 8C. Notwithstanding the provisions of regulations 4(d), 5(g), 8A(d), and 8B(a)(3), when a company appoints a new outside Director, it may – (1) change the honorarium set for a serving outside Director or the manner in which it is determined, on condition that the change is to the benefit of the serving outside Director; (2) determine that, at the end of the term of a serving outside Director, the outside Director that is being appointed be paid a lower honorarium than is paid to the serving outside Director, on condition that the outside Director that is being appointed be informed of the honorarium or of the new way of determining it before his consent to serve as an aforesaid Director is obtained. Companies the shares of which are listed for trading on an Exchange abroad 8D. These regulations shall not derogate from the amounts that a company may pay under regulation 5(f) of the Companies Regulations (Relaxations for Public Companies Whose Shares Are Registered for Trading on an Exchange Abroad) 5760-2000** Repeal 9. Companies Regulations (Rules on Honorarium and Expenses of Public Directors) 5748-1988 are repealed. Transitional provisions 10. An honorarium set for a public Director under the Companies Ordinance (New Version) 5743-1983 shall be treated like an honorarium set and approved under these regulations.

SCHEDULE ONE (Regulation 1 – Definition of "Grade") Equity (NS '000)

Grade

up to 37,489 from 37,489 to 74,978 59

A B

from 74,978 to 234,307 from 234,307 to 1,000,000 from 1,000,000 and up

60

C D E

SCHEDULE TWO (Regulation 4(b)) Company grade

Amount of Annual Honorarium (NS) Minimum Maximum amount amount

Fixed amount

A B C D E

18,300 22,500 31,700 45,000 58,500

25,000 31,700 42,600 59,100 76,800

31,700 40,800 53,500 73,200 95,100

SCHEDULE THREE (Regulation 5(c)) Grade of company A B C D E

Amount of Annual Honorarium (NS) Minimum Maximum amount amount 1,060 2,120 1,060 2,120 1,590 2,820 1,590 2,820 2,060 3,660

Fixed amount 1,590 1,590 2,200 2,200 2,860

SCHEDULE FOUR (Regulation 5A) Grade of company A B C D E

Amount of Honorarium to Expert Outside Director Maximum amount Maximum annual for participation (NS) amount (NS) 2,820 2,820 3,750 3,750 4,880

61

42,200 54,400 71,300 97,500 126,900

COMPANIES REGULATIONS (MATTERS THAT DO NOT CONSTITUTE A CONNECTION) 5767-2006 By my authority under sections 240(b) and 366 of the Companies Law 57591999 (hereafter: the Law), in consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Definitions 1. In these regulations – "candidate" – a candidate for the position of an outside Director; "honorarium regulations" – the Companies Regulations (Rules on Honorarium and Expenses of Outside Directors) 5760-2000. Service as Director in a company wholly controlled and owned by a company 2. A public company may appoint an outside Director as Director of a company wholly controlled and owned by the company in which he serves as outside Director (in these regulations: the subsidiaries), and that shall not be deemed a connection if all the following hold true: (1) the remuneration that the outside Director may receive each year for his service as outside Director of all or some of the subsidiaries (hereafter: remuneration for service in subsidiaries) shall not exceed an amount calculated according to the number of meetings in the subsidiaries, in which he participated, or the annual remuneration set in the honorarium regulations according to the grade of the public company, whichever is lower; the honorarium for participation in each meeting in a subsidiary shall not exceed the maximum amount set in the honorarium regulations in respect of companies of the grade of the subsidiary; (2) the candidate shall be informed of the decision on paying a honorarium for service in subsidiaries, the specification of subsidiaries in respect of which the honorarium will be paid, the amount of the honorarium, as well as the instances and the rate at which the honorarium will be increased under paragraph (3), before he consents to accept the assignment, and they shall not be changed throughout the entire three year term of service under section 245 of the Law, subject to regulation 28 of the honorarium regulations; (3) a decision about the payment of a honorarium for service in subsidiaries, as said in paragraph (2), may also apply to subsidiaries that have not yet been set up or acquired, on condition that – before the candidate is appointed – it is decided that, if a subsidiary is set up or acquired, the outside Director will be appointed Director of that subsidiary and will be paid a honorarium under these regulations; (4) the service of an outside Director as Director of a subsidiary – 62

(5)

(6)

other than a Director who receives no honorarium for his service in that subsidiary – shall not, without his consent, be interrupted before the end of the entire three year term under section 245 of the Law, or before the end of his term of service as outside Director, whichever is earlier; the provisions of regulations 4(c), 5(b), (d), (f) and 6 of the honorarium regulations apply, mutatis mutandis, to the honorarium for service in subsidiaries; in respect of the obligation to pay equal amounts of honorarium to all outside Directors, a change due to the number of subsidiaries in which he serves or their grade shall not deemed a different amount; the number of subsidiaries, in which an outside Director may serve as Director under these regulations is not greater than four.

Service in merged companies 3. If a person served as Director in any other body corporate that is a target company, then he shall not for that reason be deemed a person with a connection to the absorbing company after the companies' merger; in this regulation, "other body corporate" – as defined in section 240(b) of the Law. Connection to another body corporate while it was controlled by another person 4. If a person had a connection to a body corporate controlled by the controlling member of a public company only during a period in which the present controlling member was not the controlling member, then he shall nt be deemed a person who had a connection during two years before the appointment; in this regulation, " corporate controlled by the controlling member" – other than the public company or a body corporate under its control. Negligible connections 5. The existence of business or professional ties shall not constitute a connection, if all the following hold true: (1) the ties are negligible, both for the candidate and for the company; (2) the ties began before the date of the appointment; (3) based on the facts presented to it, the Audit Committee certified before the appointment that the condition in paragraph (1) is complied with; (4) the General Meeting was informed of the existence of said business or professional ties, as well as of the certification of the Audit Committee, before the appointment was approved.. Service as outside Director in a company controlled by the State 6. The existence of employment relations, business or professional ties between the State and a relative of an outside Director in a company controlled by the State shall not constitute a connection, if the 63

employment relations or the said business or professional ties are not in the field of the company's activity and are not connected supervision over the company or the arrangement of its activity. Transitional provisions 7. Notwithstanding the provisions of regulation 2(2), an outside Director may receive remuneration for service as Director of subsidiaries under these regulations, if he served as outside Director of the company immediately before these regulations went into effect, on condition that a decision on this matter was adopted at a General Meeting within four months after these regulations went into effect. (Day of publication: November 26, 2006 – Tr.)

64

COMPANIES REGULATIONS (SERVICE OF A PUBLIC DIRECTOR IN MORE THAN TWO COMPANIES) 5748-1987 By my authority under sections 96I of the Companies Ordinance (New version) 5743-1983 (hereafter – the Ordinance), I make these regulations: Service in a number of companies 1. If a person's activity as Director constitutes his sole or main permanent occupation, then the Committee set up under section 96F(a) of the Ordinance may – having taken the extent of his occupation as Director of companies into account – approve his service as public Director in three companies, in addition to the two companies said in section 96I of the Ordinance.

65

COMPANIES REGULATIONS (CONDITIONS AND CRITERIA FOR DIRECTORS WITH ACCOUNTING AND FINANCIAL EXPERTISE AND DIRECTORS WITH PROFESSIONAL EXPERTISE) 5766-2005 By my authority under sections 240(a1)(2), 241(c) and 366 of the Companies Law 5759-1999 (hereafter – the Law), in consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Director with accounting and financial expertise 1. A Director with accounting and financial expertise is a person who by his education, experience and capability has great skill in and understanding of business accounting subjects and financial reports, which enables him to understand the company's financial reports in depth and to lead the discussion of the way the financial data are presented; the Board of Directors shall evaluate a Director's accounting and financial skills, taken into account – inter alia – his education, experience and knowledge of the following subjects: (1) accounting problems and auditing problems characteristic of the branch of industry in which the company operates and of companies of the size and complexity of the company; (2) responsibilities of an auditor and the obligations imposed on him; (3) the preparation of financial reports and their approval under the Law and under the Securities Law Director with professional expertise 2. (a) A Director with professional expertise is a person for whom one of the following holds true: (1) he holds an academic degree in one of the following professions: economics, business administration, auditing, law, public administration; (2) he holds another academic degree or has completed other higher education studies, all within the main sphere of the company's activity or in a sphere relevant to the position; (3) he has at least five years experience in one of these, or he has at least five cumulative years of experience in two or more of these: (a) in a high ranking position in the business management of a body corporate with a significant volume of business; (b) in a high ranking public office or in a high ranking position in the public service; (c) in a high ranking position in the main sphere of activity of the company's activity. 66

(b)

The Board of Directors shall evaluate a candidate's professional qualification for serving as Director, as said in subregulation (a).

Declaration 3. (a) In the declaration under section 241 of the Law the candidate shall also declare his education and experience, as far as relevant, in order to examine whether the conditions and qualifications under these regulations apply, and he shall attach documents and certificates that support his declaration. (b) If the Board of Directors is required to evaluate the accounting and financial expertise of a Director, in order to comply with the minimum number prescribed under section 92(a)(12) of the Law, then the Director shall make the declaration as said in subregulation (a). Effect 4. These regulations shall go into effect thirty days after their publication. (Date of publication: December 20, 2005 – Tr.)

67

COMPANIES REGULATIONS (REPORTING OBLIGATION) 5761-1990 By my authority under section 96W of the Companies Ordinance (New Version) 5743-1983 (hereafter – the Ordinance) I make these regulations: Definitions 1. In these regulations – "company", "the Committee", "associated body corporate", "interested party" and "relative" – within their meaning in section 96A of the Ordinance; "public Director" – within its meaning in section 96B(c) of the Ordinance. Reports and times for their submission 2. A company shall submit a report to the Committee at its offices in Jerusalem, in which shall be full particulars about events specified below, as near as possible to the date on which the event occurred, or to the date on which its occurrence became known to the company, and not later than seven days after that date; and these are the events: (1) employment of a public Director – (a) a public Director or his relative became an employee of the company or an employee of a body corporate associated with it; (b) a public Director of the company maintains substantive ties with the company or with a body corporate associated with it, whether directly or through a body corporate in which he is an interested party; (c) the company or a body corporate associated with it regularly employs a public Director of the company, his partner or employer, in the provision of professional services for remuneration, whether directly or through a body corporate that regularly hires his services or in which the public Director is an interested party; (2) a Director of another company – (a) a public Director of the company was appointed Director or public Director in a body corporate associated to the company, it not being a parent company or a subsidiary, if the parent company's sole business is holding means of control of the subsidiary or if the subsidiary is wholly owned by the parent company; (b) to the company's best knowledge, a Director of the company or of a body corporate associated with it was appointed public Director in another company, a Director of which or of a body corporate associated with it serves as public Director 68

(3)

(4)

(5) (6)

in the company; to the company's best knowledge, a public Director was appointed to a position in the public service, which creates or is liable to create a conflict of interests with his position as public Director in that company, or a public Director in the company engages in an activity which creates or is liable to create a said conflict of interests; to the company's best knowledge, a public Director in the company holds shares in it or in a body corporate associated with it in excess of 5% of the issued capital of the company or of the associated body corporate, or of the voting power in them or of the power to appoint Directors in them; to the company's best knowledge, a public Director in the company ceased being an Israel resident; a public Director was absent from six consecutive meetings or from eight meetings in the course of one year of the Board of Directors or of the Audit Committee of which he is a member, or of a committee of which he is a member, which is authorized to use any power of the Board of Directors.

Effect 3. These regulations shall go into effect thirty days after their publication. (Date of publication: October 25, 1990 – Tr.)

69

COMPANIES REGULATIONS (PROCEDURE FOR REGISTRATION OF ASSIGNMENT OF A RIGHT) 5730-1970 By my authority under sections 220B and 243 of the Companies Ordinance I make these regulations: Notice of assignment 1. (a) If a person wishes to register the assignment of a right by a company for the purposes of section 220B1 of the Ordinance, then he shall deliver to the Companies Registrar (hereafter: Registrar) a notice of assignment, drawn up in accordance with the Form in the Schedule, or one as similar as possible, together with a number of copies equal to the number of parties. (b) To the notice shall be attached an affidavit by a company Director, drawn up in accordance with section 37 of the Evidence Ordinance, which supports the particulars stated in the notices and certifies that he is competent to make this affidavit in the company's name. Registration of notice 2. When the Registrar receives a notice of assignment he shall – (1) write on it the annual serial number, and the date and hour of its receipt; (2) enter the main points of the notice in the Register of Charges; (3) file the notice in the company's file. Inspection 3. Any person may inspect the documents and entries kept in the Registrar's Office under these Regulations in the presence and under the supervision of an employee of the Office, and he may obtain from the Registrar certification of copies of the said documents and entries. Fees 4. No fee shall be collected for the registration of a notice of assignment of a right; for any other act by the Registrar under these Regulations a fee of IL 1 shall first be paid. Effect 5. These Regulations shall be in effect from the day on which the Transfer of Obligations Law 5729-1969 went into effect.

70

SCHEDULE (Regulation 1) To be filled out in one original and a number of copies equal to the number of parties File Nr. ______/_______ Notice of the Assignment of a Right 1.

Name of assigning company: ________________________________ Registration number: ____________

2.

Registered address of the assignor: Town______________ Street __________________ Number _______

3.

Name and identification of assignee*: Last name _____________________________First name _________ Father's name ________ ID Number _______

4.

Private or business address of assignee: Town______________ Street __________________ Number _______

5.

Names of the debtors **: ___________________________________ ________________ Assignor's signature

________________ Assignee's signature

Where and when signed: ________________________

FOR OFFICE USE 1. 2. 3. 4.

Serial number in Register of Charges ______________ Notice was received in the Office on ________ at _____ Amount of fee collected _______ Receipt Nr. ________ Tax stamps attached _____ (strike out the superfluous) Remarks ________________________________________________ ________________________________________________________

Registrar's stamp________

* **

Registrar's signature___________________

if a body corporate, state its registered name a list may be attached; if the assignment is general, state the word "general".

71

COMPANIES REGULATIONS (RELAXATIONS IN TRANSACTIONS WITH INTERESTED PARTIES) 5760-2000 By my authority under sections 284 and 366 of the Companies Law 57591999 (hereafter – the Law), after consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee, I make these regulations: Relaxations on conflicts of interest between a public company and its controlling member 1. An exceptional transaction of a public company, as said in section 270(4) of the Law, shall not require approval by the General Meeting, if one of the following holds true for it and if the Audit Committee and the Board of Directors of any contracting party that is a public company certified that it holds true: (1) it extends an existing transaction (hereafter – additional transaction), on condition that the existing transaction between the same parties was approved under section 275 of the Law or under Securities Regulations (Restrictions in Connection with Conflicts of Interest Between a Listed Company and its Controlling Member) 5754-1994 (hereafter: the Securities Regulations), and that there was no real change in the conditions of the additional transaction and in the other necessary circumstances in comparison to the existing transaction, or that the change is only to the company's benefit; (2) the transaction only benefits the company; (3) it is a transaction of the public company with its controlling member or with another person in which the controlling member has a personal interest, and it corresponds to the conditions set for the framework transaction; in this paragraph – "the framework transaction" – a lawfully approved transaction, which makes it permissible to contract, in the ordinary course of business, transactions of the category prescribed in it and which specifies in advance the time and the other conditions of a said transaction; "lawfully approved" – approved under section 275 of the Law or under Securities Regulations, or an outline decision adopted by the Audit Committee, the Board of Directors and the General Meeting before May 23, 1998; (4) it is a transaction of the public company with its controlling member or with another person in which the controlling member has a personal interest, for the purposes of their transaction with another party or for the submission of a joint proposal for a 72

(5)

contract with another party, and its conditions in respect of the public company do not differ substantively from its conditions for the controlling member or the body corporate under his control, taking their proportional shares of the transaction into consideration; it is a transaction between companies under the control of the same controlling member or between the public company and its controlling member or between the public company and another person, in whom the controlling member has a personal interest, the contract being on market terms and in the ordinary course of business, and it does not cause injury to the interests of the company.

Relaxation in respect of contracts between a public company and a Director on terms of tenure and employment 1A. The contract between a public company and a Director, in respect of the terms of his tenure and employment, as defined in section 270(3) of the Law, shall not require approval by the General Meeting, if one of the following holds true for it and if the Audit Committee and the Board of Directors certified that it holds true: (1) the conditions said in regulation 1(2); (2) the remuneration paid to the Director does not exceed the maximum amount under regulations 4, 5 and 7 of the Companies Regulations (Rules on Honorarium and Expenses of Outside Directors) 5760-2000 (hereafter: the Honorarium Regulations). Relaxation in respect of a contract between public company and a controlling member who is its officer or employee, or with the relative of a controlling member 1B. The contract between a public company and a controlling member who also is an officer of it, or with a relative of a controlling member who also is an officer of it, in respect of the conditions of his tenure and employment, and if he is the company's employee and not its officer – in respect of the conditions of his employment by the company, as said in section 270(4) of the Law – shall not require approval by the General Meeting in respect of the contract with the controlling member, if one of the conditions said in paragraphs (1) to (5) holds true, and in respect of a contract with the controlling member's relative, if one of the conditions said in paragraphs (1), (3) to (5) holds true, and the Audit Committee and the Board of Directors certified that one of these holds true: (1) the conditions said in regulation 1(2); (2) the cost to the company does not exceed NS 20,000; relaxation under this paragraph may be afforded a controlling member only once in two years, whether as a single event or in installments, on condition that the other conditions of the controlling member's tenure and employment were not approved under this regulation because of the relaxation in paragraph (4), and the cumulative cost to the company in the course of two years does not exceed 73

the amount said in this paragraph; the amount set in this paragraph shall change on January 1 of each year (hereafter: day of change) at the rate of change of the new index over the basic index; for this purpose – "the new index" – the index last published before the day of change;

(3)

(4)

(5)

"the basic index" – the index last published before these regulations went into effect; the remuneration paid to the controlling member or to his relative, as a Director, does not exceed the lowest remuneration paid to any other Director in the company, and it does not exceed the maximum amount that may be paid to an outside Director under regulations 4, 5 and 7 of the Honorarium Regulations; the monthly remuneration paid to a controlling member or to his relative does not exceed the average wage in the economy, and it is reasonable, taking into consideration the extent of the employment, the nature of the position and the controlling member's or his relative's qualifications for the performance of the task; no more than two persons shall serve in or be employed by a company under this subregulation at the same time; the contract is in connection with the terms of insurance of the controlling member or of his relative, who is an officer of the company, on condition that the conditions of the contract are inferior or equal to the conditions of the contracts of the other officers in the company, it is on market terms and it is not likely to have a substantive effect on the company's profitability, property or obligations.

Opposition to relaxations 1C. (a) The relaxations under regulations 1 to 1B shall not apply to a public company, if one or more shareholders who hold at least 1% of the issued capital or of the voting rights in the company gave notice of their opposition to the grant of the aforesaid relaxation, on condition that the opposition was submitted to the company in writing no later than fourteen days after the day on which the public company submitted a report under the Securities Law about the adoption of the decision or submitted a report to correct the said report; in respect of a company that is not a reporting body corporate, as defined in the Securities Law – after the day on which the company reported the transaction specified in regulations 1 to 1B to its shareholders. (b) If opposition was submitted as said in subregulation (a), then the transaction requires approval according to the provisions of section 273 or 275 of the Law, as the case may be. Exceptional transaction of public company under Government control 2. The provisions of section 275 of the Law shall not apply to a contract 74

for an exceptional transaction – (1) between a bank and the State, whether direct or through a property company, the subject of which is cooperation; in this paragraph – "bank", "property company" – as defined in the Bank Shares Under Arrangement Law (Ad Hoc Provisions) 5754-1993; "cooperation" – within its meaning in section 33 of the Bank Shares Under Arrangement Law (Ad Hoc Provisions) 57541993; (2) between a public company under Government control and the State or a body corporate established by Law, if the provisions of the following subparagraphs (a) or (b) hold true: (a) a privatization decision was adopted in respect of the public company and the Ministerial Committee decided that – in order to prepare the company for privatization or in order to carry out the said Committee decision – it is necessary that the company enter into a contract for the transaction; the aforesaid Committee decision shall be adopted according to a proposal by the Government Companies Authority, submitted to the Ministerial Committee together with the opinion of the Government Companies Authority that the contract is necessary as aforesaid; in this subparagraph, "privatization", "privatization decision" and "Ministerial Committee" – as defined in the Government Companies Law 5735-1975; (b) the Government decided that the contract for the transaction is needed in order to protect national security, the State's foreign relations or some other vital matter of State; (3) between a public company controlled by the Government and another company controlled by the Government (hereafter: the other company), on condition that the other company does not control the public company and that no other company controls the public company and the other company. 3.

Repealed

75

COMPANIES REGULATIONS (RELAXATIONS FOR PUBLIC COMPANIES WHOSE SHARES ARE LISTED FOR TRADING ON AN EXCHANGE ABROAD) 5760-2000 By my authority under sections 364 and 366 of the Companies Law 57591999 (hereafter – the Law), after consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "foreign Law" – the Law of the country in which the shares had been offered to the public or in which the shares are registered for trading on an Exchange, including rules and guidelines in effect at that Exchange; "company abroad" – a public company, the shares of which were only offered to the public abroad or which are only registered for trading on an Exchange abroad; "duplicate company abroad" – a company abroad, and also a company that was a company abroad immediately before the Law went into effect, the shares of which also were registered for trading on an Exchange in Israel after the Law went into effect; "duplicate company" – a public company, the shares of which are registered for trading on an Exchange abroad and on an Exchange in Israel. Relaxation in respect of special purchase offer 2. The provisions of section 328 to 335 of the Law shall not apply to a duplicate company abroad or to a company that was a duplicate company immediately before the Law went into effect and which still is such, if – under the foreign Law – there are restrictions on the acquisition of any percentage whatsoever of control of a company or if the acquisition of any percentage of control of a company obligates the acquirer to make a purchase offer also to shareholders among the public. Relaxation on voting by ballot 3. (a) The obligation to send ballots under section 87 and position papers under section 88 of the Law to shareholders with addresses abroad shall not apply to a company abroad or to a duplicate company, if – in accordance with the foreign Law – the company supplies ballots and position papers to them on the subjects placed on the agenda of the General Meeting, including such in which the shareholder empowers an agent to vote in his name (hereafter: "foreign ballots). (b) The provisions of sections 87(b) and 88 of the Law shall not apply 76

(c)

(d) (e)

to a public company that is not a reporting body corporate, as defined in the Securities Law, if the Law of the foreign state obligates the company to deliver foreign ballots to its shareholders and to enable them to vote, to give a proxy and to express opinions on the subjects on the agenda of the General Meeting, on condition that the company so acts in respect of all its shareholders, including shareholders under section 177(1) of the Law. A company shall be treated as if it had delivered the foreign ballots to the shareholders under section 177(1) of the Law, if it delivered the foreign ballots to the Securities Authority and to the Stock Exchange under Securities Regulations (Electronic Signature and Report) 5763-2003, and if it classified them for reporting purposes as ballots or as position papers, as the case may be. The dates for reporting and delivery shall be according to the Law of the foreign state. Regulations 4(c), 6(e) and 15(b) of the Companies Regulations (Written Votes and Position Papers) 5766-2005 shall apply to Stock Exchange members in connection with the foreign ballots.

Relaxation on substantive private offerings 4. Section 274 of the Law shall not apply to a company abroad. Relaxations in respect of outside Director 5. (a) Repealed. (b) The Board of Directors of a company abroad or of a duplicate company may decide that a Director appointed before the Law went into effect and to whom the restrictions enumerated in section 240(b), (c) and (e) of the Law do not apply, shall be deemed an Outside Director under the Law, even if the provisions of section 240(d) of the Law do not apply to him, and even if – on the day on which the Law went into effect – he had served as Director of the company for a period of more than three months, and that until the end set for his term of office in section 245 of the Law; the appointment of a said Director shall not require approval by the General Meeting as said in section 239(b) of the Law. (c) Notwithstanding the provisions of section 377 of the Law on when the Law goes into effect, a duplicate company shall have to appoint Outside Directors under the Law only from August 1, 2000, and thereafter. (d) Repealed (e) A company abroad or a duplicate company may continue to pay a Director, who was appointed before the Law came into effect and who under subregulation (b) is to be treated like an Outside Director, the same amounts that it undertook to pay him before the Law went into effect, on condition that the amounts be 77

(f)

(g)

(h)

determined and approved as said in sections 270(3) and 273 of the Law at the company's next General Meeting. If, in respect of a honorarium paid to an outside Director by a company abroad or by a duplicate company, where the applicable Law of the foreign country imposes obligations or requirements in addition to the obligations or requirements prescribed by any statute due to his status as an independent Director, and if they impose additional burdens on him, then the Companies Regulations (Rules on Honorarium and Expenses of Outside Directors) 5760-2000 shall be read, as if the amounts stated in the columns "maximum amount" in Schedule Two said "115,400", and in Schedule Three "3,470. Notwithstanding the provisions of section 245 of the Law, a foreign company or a duplicate company, the shares of which are listed for trading on an Exchange said in Schedule Two of the Securities Law, may appoint the outside Director for additional periods, each of which shall not exceed three years, on condition that all the following hold true: (1) the Audit Committee and after it the Board of Directors agreed that – because of the outside Director's expertise and special contribution to the work of the Board of Directors and of its committees – the appointment for an additional term of the service is to the company's benefit; (2) the appointment for the additional term of service is made under section 239 of the Law; (3) the period during which the outside Director has served and the reasons of the Audit Committee and of the Board of Directors for extending the period of service were presented to the General Meeting before that was approved. Notwithstanding the provisions of sections 219(c) and 240(a1)(1) of the Law, the obligation to appoint an outside Director with accounting or financial expertise, within its meaning in section 240 of the Law, shall not apply to a company, the shares of which are listed for trading on an Exchange said in Schedule Two of the Securities Law, if in serves a Director with accounting or financial expertise who is an independent Director under the Law of the foreign country for purposes of service on the Audit Committee; all outside Directors of a said company shall at least be Directors with professional qualifications.

Relaxation on publication of notice of General Meeting 6. The provisions of the regulations under Companies Regulations (Publication of Notice of General Meetings and of Category Meetings in a Public Company) 5760-2000 in respect of the publication of notices in newspapers in Israel shall not apply to a company abroad; in a said company the notice of a general Meeting shall be made public in accordance with the foreign Law, or – if there are no provisions on this matter – as the company shall decide. 78

Relaxations in respect of the determining date 7. Notwithstanding the provisions of section 182(b) of the Law, if a company abroad or a duplicate company that delivers ballots for the General Meeting to its shareholders – including such in which the shareholder authorizes a representative to vote in his name – in accordance with the Law of the foreign country, then for that Meeting it may set a determining date within its meaning in section 182(b) of the Law, which shall not be more than forty days and not less than four days before the day on which the General Meeting convenes, on condition that – in respect of a duplicate company – notice of the General Meeting was published before the determining date. Effect 8. These regulations are in effect from February 1, 2000.

79

Disclaimer: The Following is an unofficial translation. The binding version is the official Hebrew text. Readers are consequently advised to consult qualified professional counsel before making any decision in connection with the enactment, which is here presented in translation for their general information only.

COMPANIES REGULATIONS (TRANSMISSION OF DIVIDEND THROUGH THE STOCK EXCHANGE CLEARING HOUSE) 5762-2002 By my authority under sections 305, 335 and 366 of the Companies Law 5759-1999 (hereafter – the Law), after consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "shareholder" – within its meaning in section 177(1) of the Law; "dividend" – includes bonus shares; "determining date" – the date said in section 182(a) of the Law; "company" – a company, the capital of which includes dormant shares; "business day" – a day on which most banks in Israel are open to the public; "dormant shares" – within their meaning in section 308, including shares said in sections 181, 333 and 340 of the Law; "stock exchange clearing house" – the clearing house of a stock exchange in Israel. Transmission of dividends 2. If a company transmits a dividend to its shareholders through the stock exchange clearing house, then it shall transfer to the clearing house through the registration company an amount that does not include dividends for holders of dormant shares, as far as they are known to it, on condition that – on the first business day after the determining date – it transmit to the registration company, to the stock exchange clearing house and to the exchange member through whom dormant shares are held a written notice that includes the following particulars: (1) the name of the exchange member through whom dormant shares are held; (2) the number of the account with the exchange member, in which the dormant shares are held; (3) the number of dormant shares on the determining date in each account in which dormant shares are held.

Saving of rights 3. Nothing in these regulations shall accord a right to receive a dividend to any person who is not entitled thereto under any statute, and they shall not derogate from the right to claim a dividend by a person entitled to receive it under any statute. Effect 4. These regulations shall go into effect 30 days after their publication. (Date of publication: January 31, 2002 – Tr.)

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COMPANIES REGULATIONS (APPROVAL OF DISTRIBUTION) 5761-2001 By my authority under sections 303(B), 305 and 366 of the Companies Law 5759-1999 (hereafter – the Law) and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations: Definitions 1. In theses regulations – "application for approval of distribution" – an application submitted to the Court in accordance with section 303 of the Law; "appropriate protection" – ways to assure payment of a debt to a creditor, including ways of providing surety not on behalf of the company; "index" – the Consumer Price Index published by the Central Bureau of Statistics; "business day" – a day on which most banks in Israel are open to the public; "debt" – an amount of money or a contractual undertaking to supply an asset or a service; "substantive creditor" – each of the following: (1) a person to whom, on the day of the notice under regulation 2(b), the company owes a debt that exceeds the amount of NS 100,000 or 15% of the company's equity, whichever is greater; (2) the trustee for certificates of obligation within their meaning in section 35A of the Securities Law 5728-1968 (hereafter: Securities Law), on condition that the total amount of that series of obligations is not less than the amounts specified in paragraph (1); the amount said in paragraph (1) will change on January 1 of each year (hereafter: day of change) at the rate of increase of the index last published before the day of change over the index last published before these regulations went into effect; "refusal" of a company – includes the absence of any response within the period set in these regulations. How creditors are given notice 2. (a) If a company submits an application for approval of a distribution, then on the day on which the application is submitted it shall publish a notice to its creditors – as specified in regulation 3 – in two Hebrew language daily newspapers that are widely distributed in Israel. 82

(b)

(c)

(d)

(e)

If a company has substantive creditors or secured creditors, then, within three business days after the application was submitted, it shall also send a notice by registered mail to each of the substantive creditors known to it and to each of the secured creditors known to it; the notice shall be drawn up as specified in regulation 3. If most of the company's substantive creditors are abroad, then it shall also publish a notice specified in regulation 3 in a newspaper widely circulated in the country in which is the largest number of its substantive creditors or on the company's Internet site. If the company offered certificates of obligation within their meaning in section 35A of the Securities Law to the public abroad, then it shall also publish a notice specified in regulation 3 in a newspaper widely circulated in the country in which it offered the certificates of obligation to the public. If the Court, to which the application for approval of a distribution was submitted, concludes that under the circumstances of the case the publication said in subregulations (a) to (d) is not sufficient, then it may order that notices be sent to additional creditors, and it may also prescribe additional ways of giving notice to creditors.

Contents of the notice 3. A notice to creditors said in regulation 2 shall include at least the following particulars: (1) the name of the company; (2) the telephone number and address of the company's registered office; (3) notice that an application for the approval of a distribution has been submitted and that the company's creditors have the right to apply to the Court and to oppose the application within thirty days or within a longer period, as the Court may prescribe; (4) the company's total equity, the total amount which the company wishes to distribute, stating the amount the company wishes to distribute not out of its profits; (5) notice that the full text of the application for approval of the distribution may be inspected and photocopied at the creditor's expense at the company's registered office and in additional places to be designated by the company, if it found it appropriate to do so; (6) the times when the application may be inspected; (7) particulars of the company's representative, from whom information may be obtained about proceedings and about decisions made by the Court, including information about the latest date for the submission of opposition against approval of the distribution, if the Court prescribed a date later than thirty days after submission of the application for approval of the distribution. 83

Report to Registrar 4. Without derogating from the aforesaid, a company that submitted an application for approval of a distribution shall – on the day on which the company submitted the application – deliver to the Registrar a notice that includes the particulars in regulation 3. Financial reports 5. (a) A company that submitted an application for approval of a distribution shall deliver – without delay – to its substantive creditors and secured creditors who so requested its last audited financial reports, including consolidated reports, in which the date of the included balance sheet is not more than six months earlier than the date on which the application for approval of the distribution was submitted, and if a period longer than six months passed since the date of balance sheet included in the financial reports, then the last surveyed reports shall also be included, on condition that the date of the balance sheet included in the surveyed reports not be more than five months earlier than the date on which the application for approval of the distribution was submitted. (b) The agreement of the company's auditor that his opinion or survey report of the audited or surveyed reports be delivered to creditors shall be attached to a private company's application for approval of a distribution. (c) Notwithstanding the provisions of subregulation (a), the Court may prescribe that the company be exempt of delivering its financial reports to substantive creditors and secured creditors, if it is satisfied that their delivery would harm the company; if the Court prescribed as aforesaid, then it shall make provisions on giving substantive creditors and secured creditors the right to inspect them, all as it shall prescribe; if the Court provided as aforesaid, then it shall make the right to inspect the financial reports conditional on the demand that the information in the financial reports not be used and not be imparted to any other person for any purpose other than the purpose, for which permission to inspect was given. (d) The company that submitted the application for the approval of a distribution shall deliver to any creditor who so requested – within ten days after the request – the financial reports specified in subregulation (a). (e) A company may make the delivery of its financial reports, as said in subregulation (a) or in subregulation (d) subject to the demand that the creditor assume an obligation toward it to use the information he will receive and to disclose it to any other person only for the purpose for which he received the information; if the creditor refuses to assume the said obligation; then he is barred from arguing in Court that the company refused to give him the 84

(f)

(g)

information he requested. A company may refuse a creditor's request under subregulation (d) if it is of the opinion that he has no direct need for it in order to form an opinion on whether there is a reasonable suspicion that the distribution will negate the company's ability to meet its existing and expected obligations when they mature, or if it is of the opinion that the request was not made in good faith or if the information includes a commercial secret or if it holds that disclosure of the information is liable to cause some other harm to the company. The Court shall not approve the application for distribution if the company refused to provide information as said in subregulation (d), unless it is satisfied that the application for approval of the distribution should not be rejected because information was not provided, because it is satisfied that there is no reasonable suspicion that the distribution will negate the company's ability to meet its existing and expected obligations when they mature; however, a company's refusal of a request for financial reports shall not be deemed grounds for not approving a distribution, if the creditor's debt was paid or if he was offered repayment of his debt and he refused or did not respond to the offer, or if he was given other appropriate protection in order to secure his rights.

Information for substantive creditors 6. (a) A substantive creditor or a secured creditor of a company that applied for approval of a distribution may request that the company give him any additional information, which he shall specify in his request and which he directly needs in order to make his decision on whether there is any reasonable suspicion that the distribution will negate the company's ability to meet its existing and expected obligations when they mature (hereafter: request for information). (b) A company may make the delivery of information subject to the creditor assuming the obligation toward the company to use the information received and to disclose it to any other person only for the purpose for which he received the information; if the creditor refuses to assume the said obligation, then he is barred from arguing in Court under subregulation (d) that the company refused to give him the information he requested. (c) A company may refuse a creditor's request under subregulation (a) if it is of the opinion that he has no direct need for it as said in subregulation (a) or if it is of the opinion that the request was not made in good faith or if the information includes a commercial secret or if it holds that disclosure of the information is liable to cause some other harm to the company; the company's reply to the creditor who requested information – including a refusal to provide it – shall be given within a period of not more than ten 85

(d)

days. The Court shall not approve an application for distribution if the company refused to provide information as said in subregulation (c), unless it is satisfied that the application for approval of the distribution should not be rejected because information was not provided, because it is satisfied that there are is no reasonable suspicion that the distribution will negate the company's ability to meet its existing and expected obligations when they mature; however, a company's refusal of a request for information shall not be deemed grounds for not approving a distribution, if the creditor's debt was paid or if he was offered repayment of his debt and he refused or did not respond to the offer, or if he was given other appropriate protection in order to secure his rights.

Effect 7. These regulations shall go into effect thirty days after their publication. (Date of publication: August 8, 2001 – Tr.)

86

COMPANIES REGULATIONS (MERGER) 5760-2000 By my authority under sections 318(b), 326 and 366 of the Companies Law 5759-1999 (hereafter – the Law), after consultation with the Securities Authority and with approval by the Knesset Constitution, Law and Justice Committee, I make these regulations: Definitions 1. In these regulations – "debt" – an amount of money or a contractual obligation to supply an asset or a service; "business day" – a day on which most banks in Israel are open to the public; "substantive creditor" – (1) a person to whom the company owes a debt, which on the announcement day exceeds an amount of NS 100,000 or an amount of 15% of the company's equity, whichever is greater; (2) the trustee for certificates of obligation, within their meaning in section 35A of the Securities Law 5728-1968, on condition that the total amount of that series of obligations is not less than the amounts specified in paragraph (1); the said amount shall be linked to the Consumer Price Index published by the Central Bureau of Statistics, and it shall change at the rate of change of the index, if the index last published before the date on which a merger proposal was signed was greater than the index last published before these regulations went into effect. Merger proposal 2. (a) A merger proposal, as said in section 317(a) of the Law, shall be drawn up as required by Form 1 in the Schedule, and it shall be submitted to the Registrar by each of the merging companies. (b) The merger proposal shall be signed by a Director of each of the merging companies, whom the Board of Directors of the company in which he serves authorized to do so, and the signatories' identity shall be certified by an advocate. (c) The Registrar shall not approve the merger of merging companies that did not comply with the requirements of Form 1 in the Schedule. Notice to creditors 3. (a) A merging company shall publish a notice to its creditors in two 87

(b)

(c)

(d)

(e)

Hebrew language daily newspapers that are widely circulated in Israel, and there it shall state that it submitted a merger proposal to the Companies Registrar and that they may study the proposal during ordinary working hours in the Registrar's office, in its registered office and in additional places determined by it, if it deemed it proper to do so, all as it shall prescribe in the notice. If a company has substantive creditors abroad or if its securities are listed for trading on an Exchange abroad, then it shall publish a notice said in subregulation (a) also in a widely circulated newspaper in the country in which most of its said substantive creditors are located or in which its securities are traded. Without derogating from the provisions of section 318 of the Law, not later than 14 business days after the merger proposal was sent to the Registrar the merging company shall send a notice to each of the substantive creditors known to it, and there it shall state that it submitted a merger proposal to the Companies Registrar and that It may be studied in additional places, if it set such places in the notice sent under subregulation (a), at the times set in the said notice. If a merging company has fifty or more employees, then the company shall give the notice published in newspapers under subsection (a) to the employee committee or post it in a clearly visible location at the place of work. The notice said in subregulation (a) shall be made public on the day on which the merger proposal is sent to the Registrar; notices said in subregulations (b) and (d) shall be sent or published, as the case may be, not later than three business days after the merger proposal was delivered to the Registrar.

Notice to trustee 4. In a company that offered certificates of obligation to the public, within their meaning in section 35A of the Securities Law 5728-1968, sending a merger notice to the trustee of that series of certificates shall be deemed a delivery of the merger notice to the holders of the certificates of obligation. Reporting the delivery of notice to creditors 5. Not later than three business days after the dispatch of notices to the creditors, the merging company shall give the Companies Registrar notice on Form 2 in the Schedule that it sent merger notices to its secured creditors, as said in section 318(a) of the Law, and that it gave notice its unsecured creditors in accordance with regulation 3. Financial reports 6. (a) A merging company shall give any creditor who so demands – within 14 days after the date of the demand – the last audited financial reports of each of the merging companies, the date of 88

(b)

each included balance sheet not being earlier than six months before the date on which the merger proposal was submitted, and if a period of more than six months elapsed since the date of a balance sheet included in the audited financial reports, then the last surveyed financial reports shall also be included, on condition that the date of the balance sheet in the surveyed reports not be earlier than five months before the date on which the merger proposal was submitted to the Registrar. The agreement of each merging company's auditor to the delivery of his opinion on the financial reports to the creditors shall be included in the merger proposal.

Information for substantive creditors 7. (a) A substantive creditor of a merging company may request from the merging company any additional information, which he shall specify in his request and which he requires in order to reach his conclusion about the merged company's ability to pay him its debts (hereafter: directly required information), inter alia including information specified below: (1) the identity of the persons who will be substantive shareholders in the merged company after the merger, to the company's best knowledge; (2) whether the provision of section 320(c) of the Law applies to the vote of the General Meeting of any of the merging companies, and a fully detailed list of the shareholders, in whose respect the said provision applies, to the company's best knowledge; (3) comments of the Board of Directors of a merging company about events or Board of Directors decisions since the date of the balance sheet included in the audited or surveyed financial reports, which in the Board of Directors' opinion may have a substantive effect on the data included in the financial reports; (4) a list of charges on the merging companies' assets, including obligations to create charges after and in consequence of the merger. (b) The company shall deliver the information requested by the creditor under this regulation, unless there are circumstances said in regulations 8 or 9, because of which the company is entitled not to provide the requested information. (c) The company's reply to the creditor who requested the information – including a refusal to provide it – shall be given within a period of not more than 21 days. Demand for confidentiality 8. (a) A merging company may make the delivery of information said in regulations 6 and 7 conditional on the demand that the creditor 89

(b)

assume an obligation toward it to make use of the received information and to give it to any other person only for the purpose for which he received the information, including the examination whether the merger would have an adverse effect on his rights as creditor of the merging company. If a creditor refused to assume the obligation said in this regulation, then he shall not be entitled to apply to the Court under regulation 9 and to argue that the company refused to give him the information he requested.

Refusal by the company to deliver information 9. (a) A company is entitled to refuse a creditor's request for information under regulation 6, if it believes that the information requested by the creditor is not information directly required by him as said in regulation 7(a), or if it believes that the request was not made in good faith or that there is a commercial secret or a patent in the requested financial reports or documents, or that disclosure of the reports or documents will otherwise have an adverse effect on the company's welfare. (b) A refusal to deliver information said in subregulation (a) shall constitute grounds for delay of the merger by the Court under section 319, unless the Court is satisfied that the merger should not be delayed because of the refusal to deliver the information, because it concluded that the provisions of section 319 do not apply or because it decided to issue other instructions, as said in that section; for purposes of this regulation, a company's refusal – including failure to respond within the time set in these regulations. (c) Notwithstanding the provisions of subregulation (b), a merging company's refusal toward a creditor who requested from it documents or financial reports shall not be deemed grounds for delaying the merger, if the debt of that creditor was paid or if his debt was offered to him in advance and he refused or did not respond to the offer, or if he was given other suitable protection for the assurance of his rights; in this regulation, "suitable protection" – ways of securing the creditor's debt, including by means of providing sureties not on behalf of the target company. Effect 10. These regulations shall go into effect on February 1, 2000.

90

SCHEDULE Form 1 (Regulation 2) Merger Proposal (Section 326 of the Companies Law 5759-1999) To the Companies Registrar 1.

Name of submitting company _____________________________ State whether it is the target company or the absorbing company.

2.

The Board of Directors of ____________________ decided on _____ at its lawfully convened meeting to approve the following resolution, after it determined – taking the merging companies' financial situation into account – that in its opinion there is no danger that, in consequence of the merger, the absorbing company will not be able to meet the company's obligations to its creditors.

3.

Particulars of the merger (The form must be filled out for each of the merging companies.) Absorbing company Target company

Name ______________________ ______________________

Number ________ ________

The consideration to be given shareholders of the target company (check the appropriate places and complete): (1) (a) in shares of the absorbing company – total quantity of shares ________ the total percentage of voting rights which the shares about to be allocated will give to the shareholders in the target company ____ and fully diluted ____ number of shares to be allocated for each share of the target company _______; (b) in other securities of the absorbing company: the category of the security and its terms (specify) __________ quantity of securities to be allocated for each share of the target company _________ (2) in cash – ________ the total amount of ______________(state the currency) 1; the amount to be paid for each share of the target company_______ (3) (a) In other consideration, which is neither cash, nor securities (specify):____________________________________________ ___________________________________________________________ 91

1

If the total amount is not known precisely because the total number of shares in full dilution in the target company is not known, then state the approximate amount

(b)

If the consideration is in securities of another company, state the company's name _____________________________________ category of the security ____________________ number of securities for each share of the target company ____ If the securities were not held or will not be held by the absorbing company immediately before the merger, then specify the consideration which the other company received from the absorbing company, if any was given _____________

To this application are attached: (a) The merger agreement or its main terms, specified as determined by the Boards of Directors of the merging companies. (b) The main reasons presented by each Board of Directors, specified as determined by the Boards of Directors of the merging companies. Name of Director authorized to sign by the Board of Directors of the target company ________________ ID Number ______ Signature___________ I, Advocate _______________, hereby certify that ___________, whom I know personally / who identified him(her)self by ID card number _____, after I cautioned him / her that he / she must say the truth and that he /she will be liable to penalties set by Law if he / she does not do so, he / she confirmed the correctness of the above particulars and signed the form before me. Date ___________ Advocate's Signature _____________________ Name _______________ Address _________________ ID Number _____ License Number ____________ Name of Director authorized to sign by the Board of Directors of the absorbing company ___________ID Number _____ Signature _________ I, Advocate _______________, hereby certify that ___________, whom I know personally / who identified him(her)self by ID card number _____, after I cautioned him / her that he / she must say the truth and that he /she will be liable to penalties set by Law if he / she does not do so, he / she confirmed the correctness of the above particulars and signed the form before me. Date _____________ Advocate's Signature _____________________ Name _______________ Address ___________________ ID Number ____ License Number ____________ ___________________________________________________________ 92

Form 2 (Regulation 5) Notification of Notice Given to Creditors (in accordance with section 317 of the Companies Law 5759-1999 (hereafter: the Law)) Name of company ___________________ Number of company ________ To the Companies Registrar We hereby beg to inform you that on _____________ the above company published in the newspaper ___________and in the newspaper __________ a notice to its creditors that a merger notice had been submitted, and that it complied with the provisions of section 318(a) of the Law and with the provisions of regulation 3 of the Companies Regulations (Merger) 57602000. _____________________ _______ _____________________ Name of Director of the absorbing ID Number company authorized for this purpose by the Board of Directors

Signature

I, Advocate ______________, hereby certify that ____________________, whom I know personally / who identified him(her)self by ID card number _____, after I cautioned him (her) that he (she) must say the truth and that he (she) will be liable to penalties set by Law if he (she) does not do so, he (she) confirmed the correctness of the above particulars and signed the form before me. Date _____________ Advocate's Signature ________________ Name _________________ Address ________________ ID Number _____ License Number _________

93

COMPANIES REGULATIONS (RULES ON THE APPOINTMENT OF RECEIVERS AND LIQUIDATORS AND THEIR COMPENSATION) 5741-1981 By my authority under sections 136(3), 137, 162(6)(b)(1), 163 and 258 of the Companies Ordinance (hereafter – the Ordinance) and with the approval of the Knesset Constitution, Law and Justice Committee I make these regulations:

CHAPTER ONE: DEFINITIONS Definitions 1. In these regulations – "the index" – the Consumer Price Index published by the Central Bureau of Statistics; "Companies Law" – the Companies Law 5759-1999; "special administrator" – a person appointed under section 318 of the Ordinance or a person appointed by the Court in proceedings under section 350 of the Companies Law as trustee for the implementation of a creditors' arrangement; "substantive creditor" – a person to whom the company owes a debt which – at the time of the application – exceeds the amount of NS 100,000 or an amount of 10% of all the company's unsecured debts, whichever is greater; "income receipts" – receipts from the sale of products or services, which are the business of the company under liquidation or receivership (hereafter: the company) and which are sold while it is being operated; "realization receipts" – receipts which are not income receipts and which are derived from the collection of debts, the sale of assets or any other receipt received by an appointee; "assets" include means of production, raw materials and stock in the process of production; "operation" – the current operation of the company's business; "appointee" – a receiver, temporary liquidator, liquidator appointed under the Ordinance or under the Companies Law, or a special administrator.

94

CHAPTER TWO: APPOINTMENT Qualifications for appointment 2. (a) the Court shall appoint – (1) to the position of receiver, temporary liquidator or liquidator under the Ordinance only a person who is a member of the Chamber of Advocates or holds an auditor's license in Israel; (2) to the position of special administrator a person whom the Court deemed to have proven experience in the management of a business or in economic, commercial or administrative subjects, such as is required for the performance of the post in that matter. (b) Under special circumstances and if the Court is convinced that it is essential to do so, then – on the recommendation of the Official Receiver – it may appoint to the position a person who – in the Court's opinion – has the necessary professional training for that position, even if he does not meet any of the conditions said in subregulation (a). (c) When the Court is about to appoint a person to a position, the Court shall also take into account his professional experience, his qualifications in respect of the special requirements of the position and his ability to bear the burden of the position. Conflict of interests 3. The Court shall not appoint a person to a position, if it found that his ties to the company, his standing in or towards it or his other affairs are liable to create a conflict of interests with the exercise of his position. Restrictions on appointments 4. If a person was proposed as candidate for a position, and if the Official Receiver believes – because of previous experience with the candidate or because of another reason – that he is not suitable to be appointed to the said position, then he shall so inform the Court and in his notice he shall specify his reasons therefor; the Court shall decide on the appointment after it has given the proponent and the candidate opportunities to present their arguments. List of appointments 5. On January 1, April 1, July 1 and October 1 of each year the General Secretary of the Court shall prepare a list, which specifies the names of the persons whom the Court appointed to positions only under these regulations during the preceding three months, stating in it the following particulars: the name of each of the persons appointed, his profession, the nature of the position, name of the company in respect of which the appointment was made, the date of the appointment, the name of the person who made the appointment and the number of the Court file; the list shall be sent to the Presidents of the Courts and to the Official 95

Receiver and shall be available at the Court Secretariats for inspection by the public; copies of the list shall be sent to the Chamber of Advocates and to the Chamber of Auditors in Israel.

CHAPTER THREE: REMUNERATION Application for pay 6. (a) The Court shall set the pay of the person appointed to a position (hereafter: the appointee) on his application. (b) The application shall be accompanied by the appointee's financial report, supported by an affidavit and audited; however, the Court may – for reasons that shall be recorded – exempt an appointee from the obligation to have the report audited as aforesaid.. (c) The respondent to the application for pay in a liquidation shall be the Official Receiver, and he may – in addition to his powers under any enactment – express his opinion about the report and advise the Court that hears the application on any question that is connected to it. (c1) The respondent to the application for pay in a receivership shall be the secured creditor; in the case of an application in proceedings under section 350 of the Companies Law, notice that the application was submitted shall be sent to every substantive creditor and to the Official Receiver, who have the right to appear and to express their stand on the application; the receiver must appear for the hearing about the application, when the secured creditor has received dividends of more than 90% of the amount of his debt. (d) The Court that hears the application may consult any person, and especially the audit committee, if such there is. (e) The appointee's pay shall be set according to the rules in regulations 7 to 11. Pay for management 7. (a) No more often than once in three months, pay for management shall be set for an appointee as a percentage of the income receipts received in cash during the period for which it is being set, as specified below: (1) in respect of the first NS 371,258 – 5%; (2) in respect of an additional NS 769,034 – 4%; (3) in respect of an additional NS 1,538,068 – 3%; (4) in respect of an additional NS 2,307,104 – 2%; (5) in respect of an additional NS 4,614,208 – 1%; (6) in respect of an additional NS 15,380,695 – 0.5 %; (7) in respect of each addition new shekel – 0.2%. NOTE: The monetary values presented in this and subsequent sections were last updated in KT 5764, p. 232, February 2, 2004 –Tr. 96

(a1) In addition to the pay set in subregulation (a), the Court may – after secured creditors and substantive creditors were given an opportunity to express their stand – determine special managerial pay for the appointee, which shall be paid out of the profit generated during the period for which he is to be paid; the Court may prescribe, at its discretion, that payment of the said pay be subject to approval by a majority – by value – of secured creditors, if any, and that it be paid out of the amount due to them, and it may also prescribe that it come out of the claims of the ordinary creditors, taking the dividends paid to them into consideration; in this regulation, "profit" – the operating profit generated from current operating receipts not derived from the sale of assets, less expenses, including management fees and current taxes; losses and interest generated before the liquidation began shall not be included in the calculation of the operating profit under this subsection, the amounts of the losses being linked to the index. (b) Pay under this regulation shall not be paid in respect of monies received as realization receipts. Realization pay 8. (a) Realization pay for an appointee shall be set as a percentage of realization receipts, as specified below, other than cash that was held by the company or stood to its credit on the day on which the appointee actually began to work, and other than money transferred to the appointee by another receiver or liquidator: (1) in respect of the first NS 53,036 – 20%; (2) in respect of an additional NS 530,360 – 10%; (3) in respect of an additional NS 2,651,800 – 5%; (4) in respect of every additional NS – 1%. (a1) If the debtor, a holder of the debtor's shares or any other person paid periodic payments to the appointee, then they shall be treated like realization receipts. (b) Notwithstanding the provisions of subregulation (a), the Court may set the pay under it on the differential cash value created to the company's credit, in consequence of its improvement by the appointee, if it concluded that the improvement was the result of a special effort exerted by the appointee for this improvement. (c) For purposes of this regulation, "cash" – includes debentures, shares and other negotiable documents and their earnings, which the company held or which stood to its credit immediately before the appointee began to work, or which were acquired for the company for purposes of investment during the period of the appointee's work. Pay according to actual distribution 8A. (a) If an appointee did not apply for pay as said in regulations 7 and 8, then he may apply for pay out of the total of claims which he 97

actually paid out to all creditors, in cash or in kind, as specified below: percentage of total proven claims actually paid out to all creditors (1) (2) (3) (4) (5) (6) (7) (8) (9)

(b)

(c)

80 and more 70 to 79 60 to 69 50 to 59 40 to 49 30 to 39 20 to 29 10 to 19 0 to 9

minimum and maximum pay as percentage of total claims available for dividends 11 to 12 10 to 11 9 to 10 7 to 9 5 to 7 4 to 5 3 to 4 2 to 3 not more than 2

Notwithstanding the provision in paragraph (1) of subregulation (a), the Court may – under special circumstances that shall be recorded and which were due to special efforts, many hours of work, proven success in the performance of the task and in the distribution of the property and completion of the task during an especially short period – adjudge to the appointee who acted as said in the aforesaid paragraph not more than 15% and not less than 12% of the total claims for distribution. Notwithstanding the provisions of subregulation (a), if – in the course of the performance of his task – an appointee received pay under regulations 7 and 8, then he may apply for pay under this regulation, on condition that the amounts paid to him under the said regulations be subtracted from his pay under this regulation.

Value added tax 9. (a) The pay shall be calculated from receipts without value added tax, except when a special proceeding was required for its collection and on export transactions. (b) Value added tax shall be added to the pay prescribed in these regulations. Examination of debt claims of employees 9A. An appointee shall be paid pay in the amount of NS 213 for each debt claim of an employee, which was submitted to him under section 189 of the National Insurance Law [Consolidated Version] 5755-1995. Restrictions on pay 10. (a) Notwithstanding the provisions of regulation 8, if a receiver realized property for a secured creditor, then his pay shall be 75% 98

(b)

(c)

of the amount prescribed in regulation 8. If a receiver or a temporary liquidator was appointed before the liquidation order, only in order to seize and conserve property, then the provisions of this Chapter shall not apply and his pay shall be set by the Court, taking the extent of his work into consideration. Appointees shall not get pay or any other consideration for their task in the company, either directly or indirectly, in addition to what is provided in these regulations, unless it is with the Court's approval; if an appointee received aforesaid pay without the Court's approval, then every creditor may apply to the Court that it be repaid to the company or distributed.

Professional services 11. (a) An appointee shall not be entitled to special pay for his professional services and it is deemed to be included in the remuneration that will be set in accordance with these rules. (b) Notwithstanding the provisions of subregulation (a), if the Court is satisfied that the appointee performed acts that go beyond his ordinary tasks, then the Court may adjudge him special pay therefor, at the minimum tariff in effect in the appointee's profession. (c) If the Court adjudged special pay under subregulation (b), then no pay for management and no realization pay shall be set for the appointee from the income or the monies received during the liquidation or receivership period in consequence of the special activities, in respect of which the special pay was adjudged to him. Employment of professionals 12. As part of his responsibility, an appointee shall employ any clerk, advocate, auditor, bookkeeper, economist, engineer, assessor or other professional only with advance approval by the Official Receiver or by the Court; if the expense for said employment is expected to reach NS 100,000 or more, then the secured creditors shall be given an opportunity to present their stand before permission is given. Reasons for increase or decrease of pay 13. (a) When the Court adjudges the appointee's pay it shall take into consideration the expenses incurred by the appointee while performing his task, and in each instance it shall also examine, at its discretion, the extent of the effort and trouble exerted by the appointee and the time until his task was completed, and in accordance therewith it may – for reasons that shall be recorded – reduce or increase his pay. (a1) If the appointee performed acts that significantly exceed the framework of the routine tasks for which the pay was set, then – if the Official Receiver applied to it to that end – the Court may set 99

(b) (c)

(d) (d)

for the appointee special pay for the said acts, taking into consideration the benefit derived therefrom by creditors and others who have an interest in the liquidation, If an appointee delayed the conclusion of his task without sufficient reason, then the Court may – for reasons that shall be recorded – reduce his pay. If the appointee ceases to perform his task before it was concluded and if before that he had been paid any amount on account of his pay, then the Court may – for reasons that shall be recorded – order him to return all or part of the amount paid to him, with the addition of linkage differentials, within their meaning in the Interest and Linkage Adjudication Law 5721-1961, from the day on which the amount was paid until its actual repayment. If a professional was employed as said in regulation 12 and if he was paid out of the company's funds, then the Court may deduct all or part of the amount paid from the appointee's pay. When a Court is about to increase or decrease the pay of an appointee, then it shall take into account amounts paid to the appointee – if any – under regulation 7(a1). (Note: this subsection (d) was inserted by the Amendment of Nov. 1, 2000; its designation apparently is in error – Tr.)

Times for payment 14. (a) In the course of the performance of the work the appointee shall be paid interim pay, which shall not exceed 50% of the estimated final pay, but the Court may, for reasons that shall be recorded, approve the payment of a greater proportion. (b) The final pay shall be paid when the appointee is released from his appointment. Linkage 15. (a) The amounts that constitute the basis for the calculation of pay under regulations 7(a), 8(a) and 9A shall be changed on January 1 of each year (hereafter: day of change), at the rate of increase of the new index over the basic index, on condition that the rate of change was more than 1%. (b) An amount increased as aforesaid shall be rounded to the nearest whole new shekel. (c) In this regulation – "basic index" – the index last published before the preceding day of change; "new index" – the last index published before the day of change. (d) The Official Receiver shall publish the text of regulations 7(a), 8(a) and 9A in accordance with the changes that occurred in them under the provisions of subregulations (a) and (b). (e) To the pay set for an appointee under regulation 6(a) shall be added linkage differentials in accordance with changes in the 100

index from the last index published before he submitted his application to the last index published before the pay is actually paid, unless the Court decided differently.

101

CHAPTER FOUR: MISCELLANEOUS PROVISIONS Repeal 16. In regulation 135 of the Companies Regulations (Liquidation) 1936, subregulations (1), (2) and (3) are repealed. Transitional provisions 17. The provisions of Chapter Three shall apply to every appointee who, on the day on which these regulations go into effect, has not yet received some or all of his pay for the performance of his task. Effect 18. Regulations 2(2), 3 and 4 shall go into effect on September 1, 1981.

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COMPANIES REGULATIONS (APPLICATION FOR A COMPROMISE OR ARRANGEMENT) 5762-2002 By my authority under sections 350 and 366 of the Companies Law 57591999 (hereafter: the Law) and with approval by the Knesset Constitution, Law and Justice Committee I make these regulations:

CHAPTER ONE: INTERPRETATION, APPLICABILITY, PUBLICATION AND WAYS OF SERVICE Definitions 1. In these Regulations – "Court" – the District Court, within whose jurisdiction the company's registered office or main place of business is located; "appointee" – a person appointed by the Court to perform the tasks said in regulation 14; "application for compromise or arrangement" – an application for a compromise or an arrangement under section 350(a) of the Law; "application to freeze proceedings" – an application for a freeze on proceeding order under section 350(b) of the Law; "the company" – a company, in respect of which an application for a compromise or arrangement has been made for a compromise or arrangement under these regulations between it and its creditors or share holders, or between it and a certain category of them; "the applicant" – unless these regulations provide otherwise – the person who submitted the application for compromise or arrangement under regulation 7; "link" – the existence of an employment relationship, of business or professional ties, whether in general or on a one-time basis, control and service as an officer; "without delay" – within a period of not more than 24 hours; "substantive creditor" – a secured creditor, and also a substantive creditor, as defined in Companies Regulations (Merger) 57602000; in the case of an application for a compromise or arrangement, the objective of which is the company's rehabilitation – a secured creditor, a trustee for certificates of obligation and also a substantive creditor, as defined in Companies Regulations (Rules on the Appointment of Receivers and Liquidators and Their Compensation) 5741-1981; "publication" – if the Court did not prescribe otherwise – (1) publication in three daily newspapers that are widely circulated in Israel, two of them in Hebrew and one in 103

Arabic; in respect of an application submitted under regulation 7 and of a notice on calling a meeting under regulation 25(b) – also publication in a daily newspaper in Russian, that is widely circulated in Israel;(see regulation 66 – Tr.) (3) if most of the company's substantive creditors are abroad – also in a newspaper widely circulated in the foreign country with the largest number of its substantive creditors or on the company's Internet site, and in respect of a company that offered certificates of obligation – also in a newspaper widely circulated in the foreign country in which the company offered its certificates of obligation; "interested party" – the company, the company's share holders, the company's creditors, guarantors of the company's debts and trustees for its certificates of obligation; "demand to correct the Share Holders Register" – a demand submitted under these Regulations by any share holder in the company or by a person recorded in the Share Holders Register without being entitled to be recorded, or not recorded even though he is entitled to be recorded, or who argues that in his regard the Register is incomplete or inaccurate, only in order to establish his entitlement to vote at the General Meeting, to determine his voting rights and to crystallize the compromise or arrangement; "debt claim" – a claim submitted under these Regulations by a creditor of the company, only for the purpose of establishing his right to vote at Meetings and of establishing his voting rights and in order to crystallize the compromise or arrangement; "certificates of obligation" – within their meaning in section 35A of the Securities Law; "Civil Law Procedure Regulations" – the Civil Law Procedure Regulations 5744-1984. (2)

Publication 2. (a) If a person submits an application under these Regulations to a Court – other than an ex parte application for a freeze of proceedings – then, on the day the application was submitted, he shall publish a notice that the application was submitted, and without delay he shall deliver to all interested parties, upon the receipt of a written demand, a copy of every application and of all the documents attached thereto, free of charge; the notice that an application was submitted shall be drawn up in accordance with Form 1 in the Schedule. (b) On application by a person who believes that he is liable to be injured by an application to the Court under these Regulations, the Court may order the company to deliver to him a copy of the application, as specified in subregulation (a). 104

Service 3. (a)

(b)

(c)

(d)

(e)

If an application – other than an ex parte application for a freeze of proceedings and for which nothing different was prescribed – was submitted to the Court under these Regulations, then the applicant shall serve it by registered mail, and he shall also serve notice that the application was submitted, drawn up according to Form 2 in the Schedule; when the time for hearing the application has been set, then the applicant shall serve the application and the summons to the hearing of his application by registered mail, and in it he shall state the time for the hearing, as set by the Court, and a notice drawn up according to Form 3 in the Schedule shall be attached. Service, as said in subregulation (a), shall be made no later than three days after the application was submitted, and if the time for the hearing has been set – no later than seven days before the time set for the hearing – (1) to the company; (2) to substantive creditors; (3) to every share holder on the list of share holders, that was attached to the application for the compromise or arrangement and if the company is a public company, then to its substantive share holders; (4) to the company's Employee Committee, if the company had fifty or more employees, and if there is no employee committee, then the summons to the hearing said in subregulation (a) shall be posted prominently in the work place. The provisions of subregulation (b) shall apply, unless the Court issued other instructions, and it may order that notices not be sent to creditors or the share holders, if there is no danger that they will suffer injury from the application or because of any other special reason, which shall be recorded. Wherever these Regulations impose an obligation to perform service on the applicant and the applicant in that proceeding is not the company, then the person on whom the obligation is incumbent shall supply the required documents or court documents to the company at the time set for service on the applicant. Wherever these Regulations impose the obligation to serve court documents or documents on creditors or share holders of the company, or to a category of them, that shall be done in reliance on the lists of creditors in the report on the company's assets and obligations or on the list of share holders in the company, which were submitted in accordance with these Regulations, and in reliance on other information known to the person responsible for the service. 105

Address for service 4. (a) The address for service on the company of court documents and other documents in accordance with these Regulations is the company's address. (b) The address of the Official Receiver for the service of court documents and other documents in accordance with these Regulations is his office within the jurisdiction of the Court before which the proceeding is heard, and in the case of a proceeding before the Supreme Court – the head office of the Official Receiver. (c) The addresses of the company's creditors or share holders for the service of court documents and other documents in accordance with these Regulations are the addresses stated in the report on the company's assets and obligations or in the list of share holders in the company or of substantive share holders in the company, as the case may be, or if proof of debt or evidence on the matter of the company's Register of Share holders was submitted, then the addresses stated in them, or any other address known to the person responsible for the service. Certification of service 5. As soon as possible after court documents, notices or other documents were served in accordance with these Regulations, the person responsible for the service under these Regulations shall submit to the Court the documents that prove service was actually performed; if service was on more than twenty persons – also a list of the addressees on whom the documents were served. Applicability of the Civil Law Procedure Regulations 6. The provisions of the Civil Law Procedure Regulations shall apply to proceedings under these Regulations, as long as they do not contradict the provisions of these Regulations, and mutatis mutandis as the case may be.

CHAPTER TWO: APPLICATION FOR A COMPROMISE OR ARRANGEMENT Article One: Submitting an Application for a Compromise or Arrangement and the Delivery of Information Application for a compromise or arrangement 7. (a) An application for a compromise or arrangement shall be submitted to the Court as a written application and all the following shall be specified in it: (1) a description of the company and its business, referring to 106

(2) (3)

(4)

(5)

(6)

the activity reflected by its consolidated financial reports, and the following matters shall also be specified, inter alia: (a) the branches of the economy in which the company is active, licensing, taxation and governmental supervision characteristics, as far as they are specific for the company; (b) characterization of the company's customers and the degree of its dependence on them, and descriptions of substantive contracts with customers, to whom the volume of sales exceeds 10% of all sales in the year that preceded submission of the application; the contractual ties may be described without naming the customers; (c) dependence on suppliers. including distributors, or dependence on raw material sources; (d) unique characteristics and risk factors of the company's activity in any branch of the economy in which it is active; the proposed compromise or arrangement and the reasons for it; the name of the receiver or liquidator, if one was appointed for the company or for its assets by decision of a Court or Execution Office, his appointment being in effect on the day the application is submitted; a description of the advantages, including the payments, to be derived from the compromise or arrangement by any officer of the company, whether by virtue of his position as an officer or by virtue of his being a share holder or creditor; the name of the individual who directly or indirectly controls the company, the extent of his holdings in the company, the types of securities held by him and his main occupation, including a detailed list of the bodies corporate through which he holds the company's shares, the size of their holdings in the company, the kinds of securities held by them and their main occupations; in respect of the company's holdings in other bodies corporate, which are substantive for the company's business (hereafter: substantive bodies corporate), the extent of its holdings in substantive bodies corporate, the kinds of securities held and the main occupations of the substantive bodies corporate shall be specified; also specified shall be the bodies corporate which the substantive bodies corporate control, the extent of their holdings, the kinds of securities held and their main occupations; the shares by categories, stating what the compromise or arrangement offers to share holders and the effect of the compromise or arrangement on their present rights, 107

(b)

including the rights they will be required to give up and a description of the rights offered to them instead; (7) the company's substantive creditors, the total debt owed them, the sureties for their debts, the total debt to nonsubstantive creditors of the company; (8) guaranties, pledges and other sureties given or proposed to be given to the company for purposes of the compromise or arrangement, with full identifying particulars of the guarantors; (9) particulars of the amounts paid for services and estimates of the cost of services and expenses that will become necessary because of the proposed compromise or arrangement; (10) if an appointee for implementation of the compromise or arrangement has been proposed – his particulars, his consent to serve as appointee, his proposed powers and responsibilities, the amounts proposed as payment for his activities and the activities for which he will be entitled to a refund of expenses, and – if he is a party with an interest in the company or is linked to an interested party or to a substantive creditor, then the link shall be specified; (11) any other substantive information of any kind whatsoever, which a reasonable creditor or a reasonable share holder needs in order to decide whether to agree to the proposed compromise or arrangement. All the following shall be attached to an application for a compromise or arrangement that is submitted to the Court: (1) a report on the company's assets and obligations, up-to-date as of the date on which the application is submitted, drawn up in accordance with Form 4 in the Schedule; (2) a detailed list of substantive agreements, to which the company is a party, up-to-date as of the date on which the application is submitted, drawn up in accordance with Form 5 in the Schedule; (3) a list of the legal proceedings, to which the company is a party, drawn up in accordance with Form 6 in the Schedule; (4) a detailed list of the officers of the company on the day on which the application is submitted, and of the company's officers who left during the year before the day on which the application is submitted, drawn up in accordance with Form 7 in the Schedule; (5) a Register of Share Holders and a Register of Substantive Share Holders, up-to-date as of the date on which the application is submitted; (6) the company's annual financial reports, including the consolidated reports, for the two years before the year in which the application is submitted, duly audited; if the 108

(c)

(d)

(e)

(f) (g)

balance sheet date in the last annual report antedates the date of submission of the application by more than six months, then the last surveyed reports shall also be attached, on condition that the balance sheet date in the surveyed report does not antedate the date of submission of the application for a compromise or arrangement by more than five months (hereafter, everything specified in this paragraph: the financial reports); The applicant may attach the financial reports said in subregulation (b)(6) in a closed envelope; if the applicant attached the financial reports in a closed envelope, then the reports shall not be available for inspection by the public, but the company shall deliver the financial reports without delay to substantive creditors or to the Official Receiver, if they so request; the company shall also deliver the financial reports within ten days to any creditor who so requests; the company may refuse the request of a non-substantive creditor, if it believes that he does not directly need the information in order to reach a decision on the application for the compromise or arrangement or if it believes that the request was not made in good faith or if the information includes a commercial secret or if it believes that revealing the information can be to the company's disadvantage. A substantive creditor or the Official Receiver may request of the company any additional information – which he shall specify in his request – that he directly needs in order to reach a decision on the application for the compromise or arrangement; the company may refuse the request of a substantive creditor, if it believes that he does not directly need the requested information in order to reach a decision or if it believes that the request was not made in good faith or if the information includes a commercial secret or if it believes that revealing the information can be to the company's disadvantage. The company may make delivery of the financial reports, as said in subregulation (b), or delivery of the additional information said in subregulation (d) conditional on the demand that the creditor assume toward it the obligation not to reveal the information to anybody else, except for the purpose for which he received it; if the creditor refused to do as aforesaid, then he shall not be able to apply to the Court and argue that the company refused to give him the information he requested. The facts specified in the application and in the documents attached to it, as said in subregulations (a) and (b), shall be supported by an affidavit. The provisions of paragraphs (3) to (10) in subregulation (a) and the provisions of subregulations (b) to (e) shall not apply to an application for a compromise or arrangement, the sole purpose of which is to change the articles of a company incorporated before 109

the Law went into effect; however, the Court may, for special reasons that shall be recorded, order that some or all of those provisions apply to an application, the subject of which is a change of articles. Exemption from submission of documents and particulars and from the delivery of information 8. The Court may exempt an applicant, for special reasons that shall be recorded, exempt the applicant from attaching particulars or from submitting some or all of the documents specified in regulation 7(a)(3) to (5), (8), (10) and 7(b), exempt an applicant who is not the company from submitting some or all of the documents specified in regulation 7, prescribe that other documents be submitted and other particulars be specified as the Court shall prescribe, and that in place of the aforesaid particulars or documents or in addition to them, and it may obligate the company to deliver the financial reports and the additional information to a creditor, notwithstanding the provisions of regulation 7(c) and (d); for special reasons that shall be recorded, the Court may also postpone delivery of some or all of the said documents to a date which it shall set. Notice to the Registrar 9. The applicant shall deliver to the Registrar, without delay, notice that the application was submitted.

Article Two: Proceedings after an Application for a Compromise or Arrangement Was Submitted Response by the company to the application 10. When an application for a compromise or arrangement was submitted by a person other than the company, then – no later than 21 days after the application for a compromise or arrangement was submitted – the company shall submit its response to the application to the Court, and it shall attach to it documents and other evidence that support it; on the same day the company shall serve a copy of its response on the applicant; the facts specified in the response shall be supported by an affidavit. Submission of opposition 11. If a person wishes to oppose an application for a compromise or arrangement, then he shall submit a writ of opposition to the Court, specifying in it the reasons for his opposition; the facts specified in the writ of opposition shall be supported by an affidavit; the writ of opposition shall be submitted to the Court no later than 21 days after the application for a compromise or arrangement was submitted; if an application for a compromise or arrangement was submitted by a 110

person other than the company, then the writ of opposition shall be submitted to the Court no later than 21 days after the company submitted its reaction under section 10; the person who submits a writ of opposition shall at the same time serve the reaction and a copy thereof on the applicant. Classification of share holders in a proposal for a compromise or arrangement 12. If an appointee proposes to convene meetings of categories according to the classification of share holders in the company's Share Holders Register or if he desires to propose a classification of creditors, then he shall submit particulars of the proposed classification to the Court; the particulars shall be submitted to the Court no later than seven days after his appointment and before the Court reaches the decision said in regulation 13. Decision to convene meetings 13. If the Court decided to order that meetings of creditors or meetings of share holders, as the case may be, be called by categories (hereafter: the meetings), then the provisions of Chapter Four shall apply to calling the meetings. Appointment of appointee 14. (a) At any time after the application under these Regulations was submitted, the Court may – on its own initiative or on the initiative of the applicant or of an applicant for a freeze of proceedings – (1) appoint an appointee, who shall have all the powers and responsibilities determined by the Court, which includes managing the company or supervising its management, safekeeping its assets, and also examining debt claims and claims to correct the Share Holders Register in the manner specified in Chapter Three; the Court shall appoint an appointee after it is satisfied that the candidate fits the position, because of his qualifications or his experience in reaching compromises or arrangements; (2) prescribe that the responsibility for calling meetings of creditors and share holders fall on the appointee or on the company, in the manner specified in Chapter Four; (3) prescribe that the appointee order the company to correct its Share Holders Register, as said in regulation 24(e); (4) issue instructions on the indemnification of the appointee and his insurance against liability or expenses, which are liable to be charged to him in consequence of acts he will perform by virtue of being the appointee, on condition that the following conditions are being met: (a) the indemnification shall be limited to a reasonable amount; 111

(b)

(b)

(c)

(d) (e)

(f) (g)

the indemnification is for a liability or expense specified in the paragraphs of section 260(a) of the Law; (c) the insurance is in respect of a responsibility imposed on him in each of the instances specified in section 261 of the Law; (d) the indemnification or the insurance shall not be given in the instances specified in section 263 of the Law; and also prescribe that the company bear the cost of the insurance and the indemnification; (5) order that the appointee provide surety to the Court's satisfaction, to secure his responsibility for the performance of his tasks. The applicant may propose a certain appointee to the Court; the applicant shall state the identifying particulars of the candidate for the position of appointee, his consent to serve as appointee, the proposed powers and responsibilities and the amounts proposed to be paid for his acts, including his expenses, if there is a difference between the amounts proposed and the Companies Regulations (Rules on the Appointment of Receivers and Liquidators and Their Compensation) 5741-1981. Before he is appointed, a candidate for the position of appointee shall declare, by affidavit, the existence of any link with the company, with any party with an interest in the company or with any substantive creditor – if there is any such link – and he shall also disclose if an indictment was brought against him for an offense under section 226 of the Law and if he was convicted by a final judgment for an offense said in that section. On application of the appointee, the Court may appoint a manager of the company and prescribe his powers. Unless the Court provided differently, the appointee shall be given every document or notice submitted to the Court, as well as every document or summons that must be served under these Regulations, at the time when they must be served, and the applicant shall also deliver to him copies of all the documents that were submitted to the Court in a said proceeding before the appointee was appointed; before an application for a compromise or arrangement was submitted, the person who applies for a freeze of proceedings shall deliver the aforesaid documents. The appointee may at any time apply to the Court for instructions, inter alia for instructions to prevent acts that would interfere with the compromise or arrangement. If a creditor, share holder or person who claims aforesaid rights was injured by an act or decision of the appointee, then he may apply to the Court within ten days after he learned of the act or decision, and – after the Court has given the appointee an opportunity to present his position – it may ratify, cancel or change the act or decision and issue any order on the matter, as it 112

(h)

finds appropriate. The provisions of these Regulations, which apply to an appointee in the company, shall apply to the company if no appointee was appointed for it.

113

CHAPTER THREE: DEBT CLAIMS AND CLAIMS TO CORRECT THE SHARE HOLDERS REGISTER Article One: Court Decision Setting a date for the submission and examination of claims 15. At any time after proceedings under these Regulations were initiated, the Court may – if it finds it necessary to do so – set a date for the submission of debt claims and of claims for correction of the Share Holders Register, as the case may be (hereafter: the claims), and it may prescribe how they shall be examined and approved for voting, according to the provisions of this Chapter. Publication and service of notice 16. (a) No later than 48 hours after he received the Court's decision, the appointee shall publish a notice on the submission of claims, drawn up according to Form 8 in the Schedule. (b) No later than three days after he learned of the Court's decision, the appointee shall serve on the substantive creditors or on the substantive share holders of the company, or on a category of them, as the case may be, a copy of the notice on the submission of claims, a copy of the Court's decision on the submission of claims, and a debt claim form or a form for a claim to correct the Share Holders Register.

Article Two: Submission of Claims Debt claims and claims to correct the Share Holders Register 17. (a) A debt claim submitted by a creditor who is not secured shall be submitted according to Form 9 in the Schedule, and evidence and documents to support the debt claim shall be attached to it; the facts specified in the debt claim and in the documents and evidence shall be supported by an affidavit by the creditor or by a person he authorized for that purpose. (b) A claim to correct the Share Holders Register shall be drawn up according to Form 10 in the Schedule, and evidence and documents to support the claim to correct the Share Holders Register shall be attached to it; the facts specified in the claim to correct the Share Holders Register, in the documents and in the evidence shall be supported by an affidavit. Debt claim by a secured creditor 18. A debt claim by a secured creditor shall be submitted according to Form 11 in the Schedule, the particulars of the surety held by the creditor, the date when it was given and when registered, shall be 114

stated in it and evidence to support the debt claimed shall be attached to it; the facts specified in the claim for the secured debt and in the documents and evidence shall be supported by an affidavit. Debt left open after surety was realized 19. When a surety has been realized, the creditor may claim the excess of the debt over the amount received from the realization, less the costs of realization. Date of revaluation of claims 20. If the Court did not prescribe otherwise, then the debt claims shall be revalued as of the date on which the application for compromise or arrangement was submitted or as of the date on which the application for a freeze of proceedings was submitted, whichever was earlier. Submitting the claims 21. (a) Claims shall be submitted to the appointee in two copies, at the time set therefor by the Court. (b) The Court may – for special reasons that shall be recorded – extend the time for submitting claims, if it is satisfied that the creditor or the share holder were not able to submit their claim by the time set. Expenses for debt claims 22. The creditors and the share holders shall bear the expenses of their claims, unless the Court decided to order otherwise because of special circumstances that shall be recorded. Right to view debt claims 23. A creditor who submitted a debt claim or a share holder who submitted a claim to correct the Share Holders Register, as well as any share holder, as the case may be, may – in coordination with the appointee – view and examine the claims of other creditors and share holders.

Article Three: Examining the Claims Examining the Claims 24. (a) The appointee shall examine every claim and – at a time prescribed by the Court – he shall decide whether to approve or dismiss it in whole or in part; if the appointee is in doubt whether to approve or dismiss a claim, then he shall mark it as an opposed claim and allow it to be voted on, on condition that, if the opposition to that claim prevails, then the vote on that claim will be voided; in order to examine the claims, the appointee may obtain any document needed for his examination from the company or 115

(b)

(c)

(d) (e)

(f)

(g)

from any officer or from the holder of any position in it. If a debt claim was submitted in respect of a conditional or indefinite debt, then the appointee shall decide what the chances are that the condition will be met or shall decide the value of the debt, as the case may be; if the appointee decides that it is impossible to establish a fair value for an indefinite debt, then that debt claim shall not be approved for voting; if the appointee decides that it is impossible to decide what are the chances that the condition of a conditional debt will be met, then he shall apply to the Court and the Court shall decide on the right of the creditor of the conditional debt to vote at the meeting. A decision by the appointee on a debt claim or on a claim to correct the Share Holders Register, as well as a decision of the Court under subregulation (b) is only meant to decide on the right of a creditor or of a share holder to vote at the meeting and it shall not constitute any decision about the debt or about the right to be registered in the Share Holders Register. Within the time prescribed by the Court the appointee shall deliver his decision to the person who submitted the claim, to the company, to the Court and to the applicant. Notwithstanding the provisions of subregulation (c), the Court may prescribe that – after the claims for correction of the Share Holders Register have been examined – the appointee order the company to correct the Share Holders Register. If a creditor or a share holder who submitted a claim, and also any person who had the right to submit a said claim was injured by a decision of the appointee, then he may apply to the Court for a change of the decision; an application by a creditor or share holder who submitted a claim shall be submitted no later than 15 days after the decision said in subregulation (d) was served on him; any other application shall be submitted no later than 15 days after the decision was served on the company; an application under this regulation shall not delay the times of Meetings, unless the Court ordered otherwise. If the Court changed any decision of the appointee, then it may order one or more additional Meetings to be held or issue any other order it deems correct and just under the circumstances of the case.

CHAPTER FOUR: CREDITOR AND SHARE HOLDER MEETINGS Calling meetings 25. (a) If the Court ordered that creditor or share holder meetings be held by their categories, then the appointee shall convene the 116

(b)

(c)

(d)

meetings in the manner and within the time set by the Court. The appointee shall, without delay, publish notice that the meetings will convene, drawn up in accordance with Form 12 in the Schedule; in a public company the notice of a General Meeting shall be drawn up according to Companies Regulations (Publication of Notice of General Meetings and of Category Meetings in a Public Company) 5760-2000. Not later than 20 days before the time set for the meetings, the appointee shall serve on the company's substantive creditors or on its substantive share holders or on categories thereof, as the case may be, the documents specified below: (1) a copy of the notice on convening the Meetings; (2) a copy of the Court's decision that the Meetings be convened; (3) a copy of the application for a compromise or arrangement and of all the documents attached thereto; (4) the text of the power of attorney for voting by proxy, drawn up according to Form 13 in the Schedule; (5) the text of the notice of agreement with or opposition to the compromise or arrangement, drawn up according to Form 14 in the Schedule; (6) any other information or document ordered by the Court. Within the said period the appointee shall deliver to the company the documents specified in paragraphs (1), (2), (3) and (6) of subregulation (c).

Meeting chairman 26. If an appointee was appointed for the company and if the Court did not order otherwise, then the appointee shall be the chairman of the Meetings. Protocol 27. A protocol shall be kept at each Meeting and it shall be signed by the chairman. Right to vote 28. (a) At Meetings of creditors only creditors whose claims were approved in accordance with these Regulations may vote. (b) At Meetings of share holders only share holders within the meaning of sections 176 and 177 of the Law may vote, or those whose claims for the correction of the Share Holders Register were approved under these Regulations. Voting procedure 29. (a) A creditor or share holder may vote in person or by proxy or by submitting a notice of his agreement or opposition to the compromise or arrangement. (b) A power of attorney for voting shall be drawn up as said in 117

(c)

regulation 25(c)(4), shall be signed by the creditor or share holder and shall be submitted to the person responsible for calling the Meeting, at the time set by him and published in the notice that the Meeting is being convened. A notice of agreement with or opposition to the compromise or arrangement shall be drawn up as said in regulation 25(c)(5), signed by the creditor or share holder and submitted in the manner in which a voting proxy is submitted.

Results of the vote 30. After the end of the meeting, the chairman shall as soon as possible deliver a copy of the protocol to the applicant, and he shall also deliver notice of the results of the vote to the Court, to which he shall attach a copy of the protocol of the meeting. Applicability of provisions to General Meetings 31. The provisions of Articles Three and Five in Chapter Two of Part Three of the Law shall apply to General Meetings under this Chapter, as far as they do not contradict these provisions, but the quorum shall not be smaller than that prescribed in section 78 of the Law.

CHAPTER FIVE: APPROVAL OF PROPOSAL FOR A COMPROMISE OR ARRANGEMENT Application to approve compromise or arrangement 32. The applicant shall submit the application for approval of a compromise or arrangement no later than 14 days after the end of the Meeting; a copy of the application shall be served on the company. Publication and service 33. (a) The applicant shall publish a notice that the application for approval of the compromise or arrangement was submitted in accordance with regulation 2. (b) The applicant shall submit the application for approval of the compromise or the arrangement in the manner prescribed in regulation 3; the application shall be served on the substantive creditors or on the substantive share holders or on a category of them, as the case may be, and to every other substantive creditor and substantive share holder, of whom the applicant learned later. Opposition to the application for approval of a compromise or arrangement 34. If a person wishes to oppose an application for approval of a compromise or arrangement, then he shall submit a writ of opposition to 118

the Court, specifying in it the reasons for the opposition; the facts stated in the writ of opposition shall be supported by an affidavit; the writ of opposition shall be submitted to the Court no later than ten days after the application was served on the objector, and if it was not obligatory to serve it on the objector, then no later than ten days after the notice about the application was published; if a date for the hearing has been set, then the application shall be submitted no later than five days before the time set for hearing the application for approval of the compromise or arrangement; a copy of the writ of opposition shall be served on the applicant and on any other person, as the Court ordered. Service of the Court's decision 35. (a) The applicant shall publish the Court's decision as soon as possible and not later than 48 hours after it came to his knowledge. (b) The applicant shall deliver copies of the Court's decision – as soon as possible and not later than three days after it came to his knowledge – to the company, to the Registrar, to every creditor and share holder on whom the application for approval of the compromise or arrangement was served in accordance with regulation 33(b) and to every other creditor or share holder, of whom the applicant learned later and who was entitled to receive an invitation to the aforesaid Meetings, unless the Court ordered otherwise. Change or cancellation of the Court's approval of an arrangement 36. A compromise or arrangement approved by the Court shall be treated like a judgment, but they can be changed or canceled with the Court's approval. Execution of compromise or arrangement 37. A compromise or arrangement may be executed through the Execution Office.

CHAPTER SIX: APPLICATION FOR A COMPROMISE OR ARRANGEMENT FOR THE REHABILITATION OF A COMPANY Article One: Submission of Application for a Compromise or Arrangement the Purpose of Which Is Rehabilitation of a Company Application for a compromise or arrangement the purpose of which is rehabilitation of a company 38. In an application for a compromise or arrangement, the objective of which is the company's rehabilitation, all the following shall be specified 119

in addition to the provisions of regulation 7: (1) the number of employees in the company one year before and immediately before the day on which the application was submitted; (2) a description of what the proposed compromise or arrangement offers to the creditors, by categories, and the effect of the compromise or arrangement on their rights, including the rights they will be required to waive and a description of the rights offered in their stead; (3) The plan proposed for the company's rehabilitation, how it is to be implemented, including sources of financing for the proposed plan and financing costs, the expected cash flow, the expected volume of production and its cost, the expected volume of sales and its cost, projected profit and loss, projected organizational changes, the times when the substantive events required to implement the plan will be carried out, the estimates and data on which the plan is based, as well as the estimates and data that support the conclusion that the plan is preferable to the present situation (hereafter: the rehabilitation plan); and all that while stating the date to which the estimate refers, the economic model used, and a breakdown of the facts, assumptions, calculations and forecasts on which the estimate is based; (4) the estimated amounts, which creditors and share holders would receive, if the company were to be in liquidation at the time, including the estimates and data on which the estimate is based; (5) the company's substantive assets, which were transferred during the six months before the day on which the application for the compromise or arrangement was submitted, their descriptions and values, the consideration paid for them and to whom they were transferred; (6) if the creditors also include share holders in the company, that shall be stated, with specifications of their holdings; (7) the identifying particulars of every person proposed to serve as officer of the company after the proposed compromise or arrangement has been approved, and – if he is a party with an interest or has a link to a party with an interest or to a substantive creditor – the link shall be specified, and the particulars of his service, pay and remuneration shall also be specified, including securities and any other consideration, whether direct or indirect; (8) particulars of creditors with links to the company; (9) a list of the legal proceedings, to which the company is party. Exemption from submission of documents 39. For special reasons that shall be recorded, the Court may exempt the applicant from specifying – in a proposal for a compromise or arrangement for purposes of the company's rehabilitation – some or all of the particulars said in regulation 8 and also of the particulars in 120

regulation 38(4), and it may require that other documents be submitted and other particulars specified, as the Court shall prescribe, and that instead of the said documents or in addition to them; the Court may also, for special reasons that shall be recorded, postpone delivery of all or of some of the said particulars to a time it shall set. Interim reports 40. (a) Every quarter year the appointee shall submit a report on the condition of the company, which shall include particulars of the substantive changes carried out in accordance with the rehabilitation plan submitted under regulation 38(3) of the Regulations and an up-date of the data presented in that plan; if the company is obligated to submit quarterly reports under any statute, then those reports also shall be attached. (b) The Court may, for special reasons that shall be recorded, exempt an appointee from submitting some or all of the particulars and documents specified in subregulation (a), and it may prescribe that other documents be submitted or other facts specified, as the Court shall order, instead of or in addition to the said documents; the Court may also. for special reasons that shall be recorded, postpone delivery of some or all of the said documents or of the said particulars to a time it shall set.

Article Two: Application for a Freeze of Proceedings Application for a freeze of proceedings 41. (a) An application for a freeze of proceedings, which is submitted to the Court, shall be supported by an affidavit and to it shall be attached – subject to regulation 42 – an application for a compromise or arrangement for the company's rehabilitation, with the documents attached thereto as specified in regulations 7 and 38. (b) An application for the freeze of proceedings shall, inter alia, include the following – (1) all the facts that relate to the application for a freeze of proceedings, the period in respect of which the freeze on proceeding is requested and the reasons why an order for a freeze of proceedings should be made; (2) particulars of the cash flow, the volume and costs of production, the extent and costs of marketing and organizational changes during the period of the freeze of proceedings; (3) the position taken by the substantive creditors, as far is known to the applicant. 121

(c)

The applicant for a freeze of proceedings shall, without delay, serve a copy of the application on the company, unless the Court exempted him from serving a said copy, for special reasons that shall be recorded. (d) If the Court did not order otherwise, then the provisions of this regulation and of regulation 42 shall also apply to an application to extend the period of the freeze of proceedings, as said in regulation 45(b), mutatis mutandis. Submitting an application for a freeze of proceedings without submitting a rehabilitation plan 42. (a) If the Court is satisfied that doing so will be helpful in formulating and approving a plan for a company's rehabilitation, then it may postpone the date for the submission of a rehabilitation plan within its meaning in regulation 38(3) for a period of not more than 30 days after the application for a freeze of proceedings was submitted, and it may postpone the said date for additional periods of not more than 30 days each, on condition that the rehabilitation plan be submitted no later than 120 days before the time set for the end of the freeze of proceedings period. (b) An application for a freeze of proceedings, which with the Court's permission is submitted without a rehabilitation plan, shall describe the steps taken and to be taken toward the formulation of a rehabilitation plan. (c) If an order for a freeze of proceedings was made as said in subregulation (a), then the person who applied for the freeze of proceedings shall submit the reports specified in regulation 40. Exemption from submission of documents and particulars 43. For special reasons that shall be recorded, the Court may exempt the applicant from specifying – in an application for a freeze of proceedings – some or all of the particulars said in regulations 8 and 39 and also of the particulars in regulation 41(b)(2), and it may prescribe that other documents be submitted and other particulars specified, as the Court shall prescribe, and that instead of the said documents or in addition to them; the Court may also, for special reasons that shall be recorded, postpone delivery of some or of all the said particulars to a time it shall set.

Article Three: Hearing the Application for a Freeze of Proceedings Response by the company and by objectors 44. (a) If an application for a freeze of proceedings was made by a person other than the company, and if the Court did not exempt the applicant from serving a copy of the application on the 122

(b)

company as said in regulation 41(c), then no later than three days before the time set for hearing the application the company shall deliver its stand on the application to the Court and to the person who applied for the freeze of proceedings, and to it shall be attached the documents and other evidence in its support; the facts specified in its stand and in the other documents shall be supported by affidavit. If the application for a freeze of proceedings was not made ex parte, or if an ex parte application for a freeze of proceedings was made, but the Court determined that the hearing not be ex parte, then the applicant shall publish the decision and deliver it as specified in regulations 2 and 3, and every person interested in opposing the application for a freeze of proceedings shall submit his objection no later than three days before the time set for hearing the application, and to it shall be attached the documents and other evidence that support it; the facts specified in the objection and in the other documents shall be supported by affidavit.

Setting a freeze of proceedings period and its extension 45. (a) When the Court weighs the length of the period of a freeze of proceedings, it shall weigh, inter alia, the benefit the company will derive from the requested length of the period of the freeze of proceedings, as against possible injury to the company's creditors. (b) The Court may, at any time, extend the period of a freeze of proceedings which it set, on condition that the total period not exceed the period prescribed in section 350(b) of the Law. (c) The provisions of this Article shall apply to hearings on the extension of the period of a freeze of proceedings, as said in subregulation (b), unless the Court ordered otherwise. Service and publication of freeze of proceedings order 46. (a) When freeze of proceedings order has been made, then the applicant for the freeze of proceedings shall publish the order no later than three days after the day on which he was served notice that the order was issued. (b) The applicant for the freeze of proceedings shall, without delay, serve copies of the order on the company's substantive creditors and on the Registrar or inform them in some other manner that the order was issued, as the Court shall order. Statement on the company's documents 47. When a freeze of proceedings order has been made, that fact shall be stated on every invoice, goods order or business letter, on which the company's name appears, and also on every report or notice, which the company must submit or publish under any statute. 123

Article Four: Application to Cancel a Freeze of Proceedings Order Issued ex Parte Application to cancel a freeze of proceedings order issued ex parte 48. An application to cancel a freeze of proceedings order issued in ex parte proceedings shall be submitted to the Court no later than seven days after the freeze of proceedings order was served on the applicant, and the documents and other evidence that support it shall be attached to it; the facts specified in the application and in the other documents shall be supported by affidavit; the person who applies that the freeze of proceedings order be canceled shall, without delay, serve a copy of the application to the person who applied for the freeze of proceedings and to the company. Reply and reactions to application to cancel 49. No later than three days before the time set for hearing the application to cancel, the company and the person who applied for the freeze of proceedings order shall submit to the Court their reply to the application to cancel, and to it they shall attach the documents and other evidence that support the reply; the facts specified in the reply and in the other documents shall be supported by affidavit; copies of their reply shall be served, without delay, on the applicant for the cancellation. Serving and publishing order to cancel a freeze of proceedings 50. (a) If an order that cancels a freeze of proceedings order made ex parte is issued, then the applicant for the freeze of proceedings order shall publish the order no later than three days after notice that the order had been made was served on him. (b) The applicant for the freeze of proceedings shall, without delay, serve copies of the order that cancels the freeze of proceedings to the company's substantive creditors and to the Registrar, or he shall inform them in some other manner that the order was issued, as the Court shall order.

Article Five: Creditor's Application to Realize Surety Creditor's application to realize surety 51. (a) A creditor's application to realize a charged asset or to concretize a floating charge or the application of a holder of a floating charge to realize an asset that was concretized under section 350(f) of the Law (hereafter: application to realize surety) shall be submitted to the Court with the documents and other evidence that support the application and prove his right to the asset and 124

(b)

(c)

the amount of the debt; the evidence and facts specified in the application and in the attached documents shall be supported by affidavit; the applicant to realize a surety shall, without delay, serve a copy of the application on the applicant and on the applicant for a freeze of proceedings, as the case may be. A creditor's application said in subregulation (a) shall not be decided ex parte, unless the Court is satisfied, for special reasons that shall be recorded, that because of the nature and quality of the charged asset there is a risk that a hearing in the presence of both parties may cause substantive damage to the applicant's rights. A creditor's application said in subregulation (a) shall be decided as soon as possible, taking the type of surety and other circumstances of the matter into account.

Replies and reactions to the application 52. (a) The company and the applicant for the freeze of proceedings shall submit to the Court their reply to the application to realize a surety, attaching to it the documents and other evidence that support it; the evidence and facts specified in the application and in the documents shall be supported by affidavit; copies of the replies shall be served on the applicant to realize the surety, to the person who applied for the freeze of proceedings and to the applicant, as the case may be. (b) The replies shall be submitted no later than three days before the time set for hearing the application. Service of the Court's decision and objections 53. (a) The Court's decision on an application to realize a surety, given ex parte, as well as a decision that approves an application to realize a surety shall be served by the person who applied for realization of the surety, without delay, on the company, on the person who applied for the freeze of proceedings, if that is not the company, and on the company's substantive creditors; the Court's decision to dismiss an application to realize a surety, given ex parte, shall be served by the person who applied for realization of the surety on the company and on the person who applied for the freeze of proceedings, if that is not the company, all if the Court did not order otherwise. (b) If a person was injured by a decision of the Court to approve an application to realize a surety – other than a person who was entitled to submit his reply under regulation 52 – may, within 72 hours after the decision was served, apply to the Court that it cancel the decision. Application for a compromise or arrangement for the company's rehabilitation, after a liquidation order was issued 125

54. In the case of an application for a compromise or arrangement, the objective of which is the company's rehabilitation and which was submitted after a liquidation order had been issued, the applicant is exempt of submitting the documents specified in regulation 7(b)(1), (2) and (6); however, the Court may, for special reasons that shall be recorded, order that the said documents be submitted.

126

CHAPTER SEVEN: APPOINTMENT OF EXPERTS AND ADDITIONAL DOCUMENTS Appointment of expert by the Court 55. (a) In proceedings under these Regulations the Court has the right to appoint one or several experts, including persons trained in economics, auditing, business administration or the Law, to give their opinions on applications for compromise or arrangement or on applications for a freeze of proceedings, in accordance with the provisions of Chapter Eleven of the Civil Law Procedure Regulations, which shall apply, mutatis mutandis as the case may be. (b) The company shall bear the remuneration and expenses of the experts, unless the Court prescribed differently. (c) Any candidate for appointment as an expert shall specify by affidavit, before he is appointed, any link he may have to a party with an interest in the company or to a substantive creditor, to the extent that any such exists. Additional particulars and documents 56. The Court may, at any time and for special reasons that shall be recorded, order that – in addition to the documents and particulars that must be delivered under these Regulations – additional documents and particulars, that are required for a fair and effective hearing, be delivered to the Court; the Court may order that the additional documents and particulars be served on the parties.

CHAPTER EIGHT: THE OFFICIAL RECEIVER AND THE SECURITIES AUTHORITY Participation of the Official Receiver and of the Securities Authority in proceedings 57. (a) If he deems it right to do so, the Official Receiver may submit his position on a proceeding for a compromise or arrangement, which under these Regulations aims at the rehabilitation of a company, or he may appear and participate in the hearing, if he deems it right to do so. (b) The Court may order that the Official Receiver or the Securities Authority present their stand on any proceeding under these Regulations. (c) If the Court ordered as said in subregulation (b), then the Official Receiver and the Securities Authority may submit their stand by a written notice alone or by appearing at the hearing, unless the Court prescribed in what manner their stand should be submitted. 127

(d)

If the Official Receiver or the Securities Authority submitted their stand or appeared at the hearing under this regulation, then every document or notice submitted to the Court or to others, as well as every summons to a hearing shall be served on them when they must be served under these Regulations, and the applicant shall also deliver to them copies of all the documents submitted to the Court in the said proceeding before their participation in the proceeding; if the application for compromise or arrangement has not yet been submitted, then the said documents shall be delivered by the applicant for the freeze of proceedings.

Delivery of documents to the Official Receiver 58. The applicant of an application that aims at the rehabilitation of the company and the applicant for a freeze of proceedings shall, without delay, deliver a copy of their applications to the Official Receiver when it is submitted to the Court, and also the Court's decision, when that is handed down. Payment to the Official Receiver 59. The Official Receiver may request of the Court that he be paid for acts he performed or for expenses he incurred in connection with a proceeding; the Court may order that the Official Receiver be paid, and it may determine who shall make the payment.

CHAPTER NINE: MISCELLANEOUS Extensions 60. The Court may, for special reasons that shall be recorded, extend any time for the performance of some act, which is set in these Regulations, unless they include a different provision. Preparation of forms 61. If any of the forms in the Schedule include a demand for documents, then – for purposes of the hearing before it – the Court may order that additional particulars be provided, as shall be stated in the order. Joining a party to a proceeding 62. At any person's request, the Court may join him as a party to the proceeding in progress before it, if it concludes that there is a danger that person will be injured by a decision taken in that proceeding or if it appears that his joining may help to achieve an arrangement or compromise, and it also may – even at its own initiative – order a said person to be joined. 128

Information 63. Information that relates to applications under these Regulations shall not be delivered by the company or by the appointee in a manner that discriminates between creditors and share holders or within those groups, unless these Regulations or the Court provide differently. Saving of statutes 64. The provisions of these Regulations shall not derogate from an obligation under any statute to disclose, publish or report. Effect 65. These Regulations shall go into effect 30 days after their publication. (Date of publication: June 27, 2002 – Tr.) Ad hoc provision 66. Paragraph (2) in the definition of "publication" in regulation 1 shall remain in effect until July 15, 2007.

129

Form 1 (Regulation 2(a)) In the District Court in _____________________ Notice That an Application under the Companies Regulations (Application for a Compromise or Arrangement) 5762-2002 Was Submitted to the Court In the matter of ____________________________________________ Ltd. Company number ________ Its address ___________________________________________________ The company is represented by ______________________________, Adv. Tel: _____________ Fax: _____________ Address:_____________________________________________________ Applicant's name:1 ____________________________________________ The applicant is represented by _____________________________, Adv. Tel: _____________ Fax: _____________ Address:_____________________________________________________ Notice is hereby given that today (state the date) ________________, an application for _____________________________________was submitted to the District Court in _________________. A copy of the application and of all the documents attached to it will be provided, free of charge, to any interested party, upon receipt of its written request. Under Regulation ____, any person who wishes to oppose the application shall submit his opposition to the Court until ________. 1

if the company is not the applicant

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Form 2 (Regulation 3(a)) In the District Court in _______________ Publication of Notice That an Application Was Submitted to the Court under the Companies Regulations (Application for a Compromise or Arrangement) 5762-2002 In the matter of _____________________________________________ Ltd. Company number ________ Its address ___________________________________________________ The company is represented by _____________________________, Adv. Tel: ______________ Fax: ______________ Address:____________________________________________________ Applicant's name:1 ____________________________________________ The applicant is represented by _______________________________, Adv. Tel: ______________ Fax: ______________ Address:_____________________________________________________ Notice is hereby given that today (state the date) ______________, an application for _____________________________________________was submitted to the District Court in ___________. A copy of the application is here attached. The documents attached to it will be provided, free of charge, to any interested party upon receipt of its written request. Under Regulation ______ , any person who wishes to oppose the application shall submit his opposition to the Court until ___________. 1

if the applicant is not a company

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Form 3 (Regulation 3(a)) In the District Court in ___________________ To __________________ __________________ In the matter of ____________________________________ Ltd. Company number _________ Its address __________________________________________ The company is represented by _____________________, Adv. Tel: _____________ Fax: _____________ Notice of Summons to a Hearing Notice is hereby given that the application of the company / of the applicant for a compromise or arrangement under Companies Regulations (Application for a Compromise or Arrangement) 5762-2002 (hereafter: the Regulations) will be heard before the honorable Judge ____________________at the District Court in _______________ on ___________, at _____ o'clock. Every creditor or participant of the company, who wishes to express his stand on the application, may appear at the time of the hearing, in person or by a representative. Under the provisions of regulation 11 of the Regulations, opposition to the application must be submitted to the Court in writing, no later than on _____ _________ , and a copy thereof shall be served on the company and on the applicant (if the company is not the applicant). If a creditor or share holder is interested in a copy of the application for compromise or arrangement, then he may apply to the company / the applicant or his representative and receive a copy from them. Date:_______

___________________________ Signature of person who gives the notice

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Form 4 (Regulation 7(b)(1)) In the District Court in ________________ In the matter of ____________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by _____________________, Adv. Tel: _____________ Fax: _____________ REPORT OF ASSETS AND OBLIGATIONS Part One: Assets and Rights 1.

Real estate (attach up-to-date registration extract / lease contract / rental contract)

Particulars Type of asset block / book parcel / subparcel / page nature of the right % of the right the registered owners address of the asset date of acquisition acquisition cost (NS) present value INS) additional ) 1. Name owners ) address and their ) 2. Name addresses) address charges where charge is registered to the credit of address amount

First Asset _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

Second Asset _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

Third Asset _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________

from date

_______

_______

_________

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2.

Shares and rights in bodies corporate (attach condensed company registrations) No. Name of body Owner of Specify Name and title corporate shares / rights shares / rights of officer in the body corporate on behalf of the applicant 1. _________ __________ __________ _________________ 2. _________ __________ __________ _________________ 3. _________ __________ __________ _________________

3.

Business stock on hand State the company's total stock on hand, correct as of _____________

No. Name of Unit Quantity Purchase item price (NS)

Total cost

1. 2. 3.

_______ ___ ______ _______ ___ ______ _______ ___ ______

______ ______ ______

4.

Vehicles (attach ownership documents and charge documents) (also specify leased vehicles and heavy equipment registered with the Registrar of Engineering Equipment)

________ ________ ________

Particulars ___________ License number ___________ Make ___________ Year ___________ Registered owners ___________ Use of vehicle ___________ Charges ___________ where charges are registered ____ to the credit of ___________ to secure a debt of ___________ dated ___________ value of vehicle according to most recent price list _________

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Remarks ____________ ____________ ____________

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

___________ ___________

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5.

The company's entitlements to receive money and other assets (receivables, rental fees, etc.)

(Column headings:) Number 1 Full name of debtor` ______ Full address with zip code ______ Amount of debt when it was created (NS) / date of creation ______ Amount of debt as of the day on which application was submitted (NS) ______ From what does the debt stem ______ Collateral held by the company to secure the debt: ______ nature of the charge ______ amount secured (NS) ______

2 3 4 5 6 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

Part Two: Debts and Sureties 1.

Unsecured creditors

(Column headings:) Number Full name of creditor and his representative Full address with zip code Amount of debt when it was created (NS) / date of creation Amount of debt as of the day on which application was submitted (NS) From what does the debt stem Collateral the company gave to secure the debt: nature of the charge amount secured (NS)

1

2

3

4

5

6

______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

135

2.

Creditors with preferential rights

(Column headings:) Number Full name of creditor and his representative Full address with zip code Amount of debt when it was created (NS) / date of creation Amount of debt as of the day on which application was submitted (NS) From what does the debt stem Collateral the company gave to secure the debt: nature of the charge amount secured (NS)

3.

1

2

3

4

5

6

______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

Employees of the company

(Column headings:) Number 1 Full name ______ Full address with zip code ______ Date employment by the company began, description of assignment ______ Amount of debt when it was created (NS) / date of its creation ______ Amount of debt as of day on which application is submitted______ From what does the debt stem (wages, severance pay, convalescence pay, etc. ______ Collateral the company gave the employee to secure the debt ______ nature of the charge ______ amount secured (NS) ______

2 3 4 5 6 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

136

4.

Guaranties given by the company to secure its debts (secured creditors) (Attach photocopies of guaranties)

Particulars Guaranty A Creditor's name ___________ Address ___________ Amount of guaranty ___________ (NS) when given ___________ Date of signature ___________ The guarantee (main debtor) _________ Guarantee's address ___________ (1) Name _________ Additional Address ________ guarantors (2) Name _________ Address ________

5.

Guaranty B __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________

Guaranty C ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Guaranties given by officers and / or share holders of the company to secure the company's debts (Attach photocopies of guaranties)

Particulars Guaranty A Creditor's name ___________ Address ___________ Amount of guaranty ___________ (NS) when given ___________ Date of signature ___________ The guarantee (main debtor) _________ Guarantee's address ___________ (1) Name _________ Additional Address ________ guarantors (2) Name _________ Address ________

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Guaranty B __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________

Guaranty C ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Part Three: Bank Accounts and Insurance 1.

Bank accounts Specify all accounts (foreign currency, securities, benefits, savings, etc.); attach last account page.

(Column headings) Number Name of Bank Number of branch Type of account Account number Account holder Additional signatories Balance (NS) on date of application 2.

Account B ________ ________ ________ ________ ________ ________

Account C _________ _________ _________ _________ _________ _________

________

________

_________

Charge cards Specify all charge cards that debit the company's account, and the names of people who hold those cards and accordingly can debit the company according to them. Attach last account page.

(Column headings) Number Name of cardholder Issuing company Card number Account number Expiration date of card Number of bank, branch and account debited by card 3.

Account A ________ ________ ________ ________ ________ ________

Account A ________ ________ ________ ________ ________

Account B ________ ________ ________ ________ ________

Account C _________ _________ _________ _________ _________

________

________

_________

Insurance Include all kinds of insurance carried by the company (and also insurance of officers and employees) and attach photocopies of the policies.

(Column headings) Number Name of insurance company Name of insurance agent Type of insurance Policy number Insurance period

Policy A ________ ________ ________ ________ ________ 138

Policy B ________ ________ ________ ________ ________

Policy C _________ _________ _________ _________ _________

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Affidavit I, the undersigned ____________________, ID No. ________, who submits this report, share holder / holder of the position of ___________ in the company, hereby declare that, to the best of my knowledge, the report I hereby submit to the Court – including all its pages and attachments – is accurate, complete and up-to-date as of ___________. Date:___________

____________________ Signature

Certification I, the undersigned hereby certify that on ___________ appeared before me Mr. / Ms. ______________, whom I identified according to ID card No._________ / whom I know personally, and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. Date:___________

____________________ Signature

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Form 5 (Regulation 7(b)(2)) In the District Court in _______________ In the matter of ____________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by _____________________, Adv. Tel: _____________ Fax: _____________ SUBSTANTIVE AGREEMENTS TO WHICH THE COMPANY IS A PARTY Attach copies of the agreements. Number Type of agreement (rental, lease, employment, franchise, etc.) Parties to the agreement Date of signature Expiration date Value (NS) / remarks, etc. Parties to the agreement

Agreement A ________ ________ ________ ________ ________ ________

Agreement B Agreement C ________ ________ ________ ________ ________ ________

_________ _________ _________ _________ _________ _________

Affidavit I, the undersigned ____________________, ID No. ________, who submits this report, share holder / holder of the position of ___________ in the company, hereby declare that, to the best of my knowledge, the report I hereby submit to the Court – including all its pages and attachments – is accurate, complete and up-to-date as of ___________. Date:___________

Signature ____________________

Certification I, the undersigned hereby certify that on ___________ appeared before me Mr. / Ms. ______________, whom I identified according to ID card No._________ / whom I know personally, and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. Date:___________

Signature ____________________ 141

Form 6 (Regulation 7(b)(3)) In the District Court in _______________ In the matter of ____________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________

SUBSTANTIVE LEGAL PROCEEDINGS TO WHICH THE COMPANY IS A PARTY Part One: Actions against the Company Attach copies of the writ of claim and the writ of defense and of every judgment or other decision handed down. Number Court File number Creditor / plaintiff and his representative Nature of proceeding Stage of the proceeding reached Amount of debt (NS) Collateral given to secure the debt

Case A ________ ________

Case B ________ ________

Case C _________ _________

________ ________

________ ________

_________ _________

________ ________

________ ________

_________ _________

________

________

_________

142

Part Two: Execution proceedings against the company Attach copies of the form that opened the proceeding and of all substantive decisions made by the Head of the Execution Office Number Execution Office File number Creditor / successful plaintiff and his representative Judgment, promissory notes or other Amount of debt (NS) Collateral given to secure the debt

Case A ________ ________

Case B ________ ________

Case C _________ _________

________

________

_________

________ ________

________ ________

_________ _________

________

________

_________

Part Three: Actions brought by the Company Attach copies of the writ of claim and the writ of defense and of every judgment or other substantive decision handed down. Number Court File number Defendant and his representative Nature of the proceeding Stage the proceeding has reached Amount of debt (NS) Collateral given to secure the debt

Case A ________ ________

Case B ________ ________

Case C _________ _________

________ ________

________ ________

_________ _________

________ ________

________ ________

_________ _________

________

________

_________

Part Four: Execution proceedings brought by the company Attach copies of the form that opened the proceeding and of all substantive decisions made by the Head of the Execution Office Number Execution Office File number Debtor and his representative Judgment or promissory notes Amount of debt (NS) Collateral given to secure the debt

________ ________ ________ ________ ________ ________

________ ________ ________ ________ ________ ________

_________ _________ _________ _________ _________ _________

________

________

_________

143

Affidavit I, the undersigned ____________________, ID No. ________, who submits this report, share holder / holder of the position of ___________ in the company, hereby declare that, to the best of my knowledge, the report I hereby submit to the Court – including all its pages and attachments – is accurate, complete and up-to-date as of ___________. Date:___________

Signature ____________________

Certification I, the undersigned hereby certify that on ___________ appeared before me Mr. / Ms. ______________, whom I identified according to ID card No._________ / whom I know personally, and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. Date:___________

Signature ____________________

144

Form 7 (Regulation 7(b)(4)) In the District Court in _______________ In the matter of ___________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________ LIST OF OFFICERS OF THE COMPANY List all officers of the Company, including officers who left their positions during the year before the date of the application (CEO, CFO, Auditor, Legal Adviser, etc.). If the appointment was approved by a General Meeting, attach a copy of the minutes of the Meeting. Number Description of position Name and ID number of officer Appointed by a decision of the company on Concluded his assignment on Address Telephone / fax

Officer A ________ ________

Officer B ________ ________

Officer C _________ _________

________ ________ ________ ________

________ ________ ________ ________

_________ _________ _________ _________

Affidavit I, the undersigned ____________________, ID No. ________, who submits this report, share holder / holder of the position of ___________ in the company, hereby declare that, to the best of my knowledge, the report I hereby submit to the Court – including all its pages and attachments – is accurate, complete and up-to-date as of ___________. Date:___________

Signature ____________________

Certification I, the undersigned hereby certify that on ___________ appeared before me Mr. / Ms. ______________, whom I identified according to ID card No._________ / whom I know personally, and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. 145

Date:___________

Signature ____________________

146

Form 8 (Regulation 16(a)) In the District Court in _______________ In the matter of ___________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________ NOTICE OF DATE FOR SUBMISSION OF DEBT CLAIMS AND DEMANDS TO CORRECT THE SHARE HOLDERS REGISTER In accordance with the decision of the Honorable Court in File Number_____, dated ____________, I hereby announce that every creditor or share holder who claims a debt of the company must submit his debt claim or his demand to correct the Share Holders Register to ________________, the appointee, at _______________________, no later than on_________. If any creditor of share holder did not receive a copy of the proposal for the arrangement, debt claim form and additional documents, he may obtain them from the company's office or from its representative. Date:___________

Signature ____________________

147

Form 9 (Regulation 17(a)) In the District Court in _______________ In the matter of ____________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________ DEBT CLAIM (unsecured creditor) I, the undersigned __________________, ID No. ______,on behalf of the creditor __________________ (hereafter: the creditor) hereby declare that on _________ the company owed and it still owes the creditor the amount of NS_______ (_________________________) for __________________. Furthermore I declare that, to the best of my knowledge, neither I, nor any other person received all or any part of the amount of the aforesaid claim on the creditor's behalf and that the creditor holds no collateral whatsoever to secure payment of the aforesaid debt or part thereof. In evidence of the debt, the following documents are here attached: 1. ___________________________ 2. ___________________________ 3. ___________________________ Affidavit I, the undersigned, _______________, ID No. _____, hereby declare that all the facts I stated in the above debt claim are true. Date:___________

Signature ____________________

Certification I, the undersigned hereby certify that on ____________ appeared before me Mr. / Ms. ____________________, whom I identified according to ID card No. __________/ whom I know personally and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. Date:___________

Signature ____________________ 148

Form 10 (Regulation 17(b)) In the District Court in _______________ In the matter of ___________________________________ Ltd. Company number ___________ Its address ___________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________ DEMAND TO CORRECT THE SHARE HOLDERS REGISTER (share holder) I, the undersigned________________, ID No. _____,hereby declare that a transaction for the sale of shares of the type __________ took place on __________, but the transaction is not reflected in the company's Share Holders Register. Under the terms of the transaction, ______ shares of the type _______ were to be registered in the name of __________________________ In evidence of the claim, the following documents are here attached: 1. ______________________________ 2. ______________________________ Affidavit I, the undersigned, _________________, ID No. _____ , hereby declare that all the facts I stated in the above demand to correct the Share Holders Register are true. Date:___________

Signature ____________________

Certification I, the undersigned hereby certify that on ___________ appeared before me Mr. / Ms. ____________________,whom I identified according to ID card No. __________/ whom I know personally and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. 149

Date:___________

Signature ____________________

150

Form 11 (Regulation 18) In the District Court in _______________ In the matter of ___________________________________ Ltd. Company number ___________ Its address __________________________________________ The company is represented by _____________________, Adv. Tel: _____________ Fax: _____________ DEBT CLAIM (secured creditor) I, the undersigned _________________, ID No. _______,on behalf of the creditor _________________(hereafter: the creditor) hereby declare that on ___________ the company owed and it still owes the creditor the amount of NS_____ (___________________) for _________________________ Furthermore I declare that, to the best of my knowledge, neither I, nor any other person received all or any part of the amount of the aforesaid claim on the creditor's behalf and that the creditor holds no surety whatsoever to secure payment of the aforesaid debt or part thereof. As surety for the debt or of part thereof the creditor holds the following collateral: 1. _____________________ 2. _____________________ 3. _____________________ In evidence of the debt, the following documents are here attached: 1. _____________________ 2. _____________________ 3. _____________________

Affidavit I, the undersigned, _________________, ID No. _____, hereby declare that all the facts I stated in the above debt claim are true. Date:___________

Signature ____________________ 151

Certification I, the undersigned hereby certify that on ____________ appeared before me Mr. / Ms. ____________________, whom I identified according to ID card No. __________/ whom I know personally and – after I cautioned him / her that he / she must say only the truth and the whole truth, and that, if he / she does not do so, he / she will be liable to the penalties prescribed by Law – he / she affirmed that his / her aforesaid declaration is true and he / she signed it in my presence. Date:___________

Signature ____________________

152

Form 12 (Regulation 25(b)) In the District Court in _______________ In the matter of __________________________ Ltd. Company number ___________ Its address __________________________________ The company is represented by _____________________, Adv. Tel: _____________ Fax: _____________

ANNOUNCEMENT OF MEETINGS OF CREDITORS / SHARE HOLDERS In accordance with the decision of the Honorable Court in File Number______, dated _________, which ordered that creditors / share holders meetings be held for the approval of a compromise or arrangement with the company, I hereby announce that the following meetings will take place: A. B. C.

D. E.

The meeting of ordinary creditors will be held in ______________ at the following address ________________on____________, at______ o'clock; The meeting of secured creditors will be held in _______________ at the following address ________________on____________, at______ o'clock The meeting of share holders will be held in ______________ at the following address ________________ on____________, at______ o'clock The meeting of the company's employees will be held in ____________ at the following address ___________________ on____________, at______ o'clock Additional meetings will be specified in accordance with the Court's decision.

Every creditor / share holder who wants to participate a creditors' meeting / the General Meeting and express his opinion on the proposed arrangement must submit a claim for his debt / demand to correct the Share Holders Register no later than on _________at the office of the company or of its representative. If any creditor / share holder did not receive a copy of the proposal for the 153

arrangement, debt claim form, form to demand the correction of the Share

154

Holders Register, a form to agree to or oppose the arrangement, a power of attorney form for his representation at a meeting, and additional documents may obtain them from the office of the company or of its representative. Powers of attorney must be handed in to ________________ until _______ Agreement / opposition to the compromise or arrangement must be handed in to _______________ until _____. Date:___________

Signature ____________________

155

Form 13 (Regulation 25(c)(4)) In the District Court in _______________ In the matter of____________________________________ Ltd. Company number__________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________

POWER OF ATTORNEY I, the undersigned _______________, ID No._____, in the name of the creditor / share holder _______________hereby appoint ______________to be my representative at the creditors' meeting / General Meeting / share holders meeting, which will be held on ________and at every deferred meeting and to vote – [] []

for [ ] against the proposed arrangement / compromise at his discretion, as he will find appropriate under the circumstances and in the light of the data he was given and which he will be given at the creditors meeting / General Meeting.

Date:___________

Signature ____________________

Certification of Signature I, the undersigned, hereby certify that on _______Mr. / Ms.______________, whom I know personally, signed this power of attorney in my presence. Date:____________

____________________ Advocate

156

Form 14 (Regulation 25(c)(5)) In the District Court in _______________ In the matter of ____________________________________ Ltd. Company number___________ Its address __________________________________________ The company is represented by ______________________, Adv. Tel: _____________ Fax: _____________

CREDITOR'S AGREEMENT / OPPOSITION TO THE COMPROMISE OR ARRANGEMENT I, the undersigned, ____________, ID No. ______, in the name of the creditor / share holder ______________, hereby request of the chairman of the meeting to enter my stand on the compromise or arrangement proposed by the above company in the minutes, as follows: I have submitted debt claims in the amount of NS__________, and I am a – [] ordinary creditor [] secured creditor [] preferential creditor [] employee [] [] [] [] [] []

I hold shares in the amount of_________ I am in favor of accepting the company's proposal, as communicated to me. I oppose accepting the company's proposal, as communicated to me. I object to the following points of the proposal: __________________ _______________________________________________________ I agree to any change of the proposal, to which a majority of creditors in my category / a majority of share holders agree I oppose any change of the proposal, even if it may be of advantage to creditors / share holders

Certification of Signature I, the undersigned, hereby certify that on _______Mr. / Ms.______________, whom I know personally, signed this power of attorney in my presence. Date:____________

____________________ 157

Advocate

158

COMPANIES REGULATIONS (LIQUIDATION) 5747-1987 By my authority under sections 382 and 395 of the Companies Ordinance (New Version) 5743-1983 (hereafter – the Ordinance) and with the approval of the Knesset Constitution, Law and Justice Committee I make these regulations: CHAPTER ONE: INTERPRETATION AND APPLICABILITY Definitions 1. In these regulations – "Court" – the District Court, in whose area of jurisdiction the registered office or the main place of business of the company is located; "form" – a form , the text of which appears in the Schedule; "Official Receiver" – including the Deputy Official Receiver, the Vice Official Receiver and every official whom the Official Receiver authorized to use his powers under the Ordinance; "applicant" – whoever submitted an application for the liquidation of a company under Regulation 3; "liquidation" – the liquidation of a company by a Court or under its supervision, as the case may be; "Bankruptcy Ordinance" – the Bankruptcy Ordinance (New Version) 5740-1980; "Procedure Regulations" – the Civil Law Procedure Regulations 57441984; "Bankruptcy Regulations" – the Bankruptcy Regulations 5745-1985. Applicability of the Procedure Regulations 2. The provisions of the Procedure Regulations shall apply to liquidation proceedings, to the extent that they do not conflict with the provisions of these regulations and mutatis mutandis, as the case may be.

CHAPTER TWO: LIQUIDATION PROCEEDINGS Article One: Application for Liquidation Application for Liquidation 3. (a) An application for liquidation shall be submitted to the Court 159

according to Form 1 and it shall be supported by an affidavit; if the application was not submitted by the company, then the applicant shall serve a copy thereof on the company at its registered office. (b)

If the application was submitted by the company, then a report about the company's obligations and assets shall be attached to it, up-to-date as of the day on which the application is submitted and drawn up in accordance with Form 2; the Court may exempt the company from submitting the said report, if it decided to do so because of special reasons that shall be recorded.

Delivery to the Official Receiver and making a deposit 4. (a) The applicant shall deliver a copy of the application to the Official Receiver and he shall also deposit with him a deposit of NS 400, and any additional amount required by the Official Receiver or ordered by the Court, as advance toward covering the costs of the receiver. (b) An application for receivership shall not be accepted by the Court, unless certification from the Official Receiver is presented that the deposit and of the copy of the application have been received.. Right to receive copy of the application 5. A contributory in a company or a creditor thereof is entitled to receive from the applicant a copy of the liquidation application against payment of the costs of making the copy. Publication of notice 6. At least 14 days before the time set for hearing the application for liquidation, the applicant shall publish a notice on its submission and the date of its hearing, drawn up according to Form 3; the notice shall be published in Reshumot and in a daily newspaper published in Hebrew, but if the company's main business is conducted in the Arab sector, then publication shall be in a daily newspaper published in Arabic. Registrar's Certificate 7. The Court shall hear a liquidation application only after a certificate from the Registrar or by a Court official so empowered by the Registrar has been presented to it, confirming that the applicant complied with all provisions of the Regulations that relate to the submission of an application for liquidation. Notice of participation in the hearing 8. (a) No person shall be allowed to participate in any hearing on an application for liquidation, unless he informed the applicant at least seven days before the time set for the hearing that he intends to participate in it. 160

(b)

The applicant shall prepare a list of people who delivered notices said in subregulation (a) and deliver a copy thereof to the Court before the time set for the hearing; if no said notices were received, then the applicant shall so inform the Court in writing.

Opposition to application for liquidation 9. If a person wishes to oppose an application for liquidation, then he shall submit to the Court a Writ of Opposition supported by an affidavit, and in it he shall specify the grounds of the opposition; the Writ of Opposition shall be submitted at least seven days before the time set for hearing the application, and a copy thereof shall be served on the applicant. Replacement of applicants 10. If an applicant canceled his application for liquidation or abandoned its pursuit, then the Court may – at any stage of the hearings, on application by a creditor or contributory entitled to submit an application for liquidation (hereafter: new applicant) – order that the applicant be replaced and that hearing the application by the new applicant be continued. Refund of half the deposit 11. (a) If an applicant gave notice that he withdraws his application for liquidation or if his application was rejected by the Court, then the Official Receiver shall refund him half of the deposit, as well as any additional amount deposited by him under regulation 4, less expenses incurred by the Official Receiver. (b) If the Court ordered the applicant to be replaced under regulation 10, then the new applicant shall deposit with the Official Receiver the amounts refunded to the previous applicant.

Article Two: Temporary Liquidator – General Provisions Appointment of temporary liquidator before a liquidation order 12. A temporary liquidator shall be appointed under section 300(b) of the Ordinance on the application of a creditor, contributory or the Official Receiver, or even without any said application. Deposit 13. When a creditor or a contributory submitted an application for the appointment of a temporary liquidator, then the provisions of regulation 4 about the deposit and the additional amount, and the provisions of regulation 11 about their refund shall apply, mutatis mutandis. Appointment order 161

14. (a) (b)

A person shall not be appointed temporary receiver, unless he informed the Court of his consent thereto. In the appointment order the Court may prescribe the temporary receiver's powers and responsibilities; a copy of the order shall be delivered to the Official Receiver.

Article Three: Temporary Liquidator who is not the Official Receiver Obligations of a temporary liquidator who is not the Official Receiver 15. A temporary liquidator who is not the Official Receiver (hereafter in this Article: temporary liquidator) – (1) shall provide any surety acceptable to the Court to secure his responsibility for the assets in his charge and for everything that he receives in connection with those assets; (2) shall submit financial reports at the times and in the manner that will be prescribed by the Court; (3) shall pay any amount due from him as the Court shall order; (4) shall be responsible for any loss caused by him, either by malice or negligence, to the assets of which he is in charge. Enforcement of payment 16. If a temporary liquidator did not submit financial reports, did not pay any amount due from him or caused any loss to the assets of which he is in charge, then the Court may order his assets to be attached and sold, and the sale proceeds to be used to pay the amount due from him or to cover the loss which he caused; any balance of the sale proceeds shall be delivered to the temporary liquidator. Conclusion of assignment 17. When a temporary liquidator has concluded his assignment, then he shall deliver to the Court a report of his activities, including a financial report; the Official Receiver shall refund to the person who applied for the appointment the balance of the deposit and the additional amount deposited with him under regulation 13, which remain after the payment of all expenses.

Article Four: Liquidation Order Formulation and publication of order 18. (a) A liquidation order shall be drawn up according to Form 5, and the Court shall deliver three copies thereof to the Official Receiver. (b) Notice that the order has been made and on the dates of creditors' and contributories' meetings, drawn up according to 162

Form 6, shall be published in Reshumot and in a daily newspaper printed in Hebrew, and if the company's main business was in the Arab sector – also in a daily newspaper printed in Arabic, but the Official Receiver may decide not to publish any aforesaid notice, if he so deems proper under the circumstances.

Publication of order for liquidation under supervision of the Court 19. If an order for the liquidation of a company under the supervision of the Court has been made, then the applicant shall publish notice thereof in Reshumot or in some other manner, as the Court shall order, and he shall send copies of the order to the persons the Court orders and in the manner ordered by it. Entry of cautionary notice in Register kept under Law 20. On the application of the Official Receiver, the liquidator or the temporary liquidator, a person in charge of the registration of assets in a Register kept under Law shall check whether a company, against which a liquidation order has been issued, has rights in respect of any asset registered in that Register, and if he found that that is the case, then he shall enter a cautionary notice in the Register about the existence of the said order. Legal costs 21. (a) The legal costs involved in every proceeding up to the issue of a liquidation order shall be at the expense of the person who initiated the proceeding, unless the Court ordered otherwise. (b) When a liquidation order has been handed down on a creditor's application, then his costs shall be paid him out of the company's assets, in an amount to be set by the Court.

Article Five: Special Administrator Application for appointment of a Special Administrator 22. When the appointment of a Special Administrator is applied for under section 318 of the Ordinance, then the Official Receiver shall specify the reasons why the appointment is necessary. Obligations of the Special Administrator 23. The provisions that apply to a temporary liquidator under regulations 15 and 16 shall apply to a Special Administrator, mutatis mutandis. Final Report 163

24. A Special Administrator who concluded his service shall deliver a report of his activities to the Official Receiver, including a financial report.

164

CHAPTER THREE: REPORT ON THE CONDITION OF THE COMPANY'S BUSINESS Preparation of report 25. (a) A report of the condition of the company's business under section 292 of the Ordinance (in this Chapter: the report) shall be drawn up according to Form 7 and submitted to the Official Receiver in three copies. (b) The Official Receiver may demand from the person who submitted or prepared the report, or who participated in its preparation, additional and supplementary particulars, as well as documents likely to help in the examination of the report. Approval of expenses 26. The Official Receiver shall pay expenses incurred in the preparation of the report only if he approved them in advance, unless the Court decided differently. Waiver of report 27. The Court shall weigh waiving the report, as said in section 292(c) of the Ordinance, if an application to that end was submitted to it by an interested party and if the Official Receiver recommended acceding to the application.

CHAPTER FOUR: MEETINGS OF CREDITORS AND CONTRIBUTORIES First meetings 28. First meetings of creditors and of contributories shall be held as soon as possible after the liquidation order has been handed down, at the time and place set by the Official Receiver. Sending notices to creditors and contributories 29. As soon as possible the Official Receiver shall send a notice according to Form 8 about the time and place of the first meeting of creditors to every creditor whose name he knows to the address stated on his claim, and if he did not submit a claim – to the address stated in the report on the condition of the business or to any other address known to the Official Receiver; the Official Receiver shall also send a notice according to Form 9 about the time and place of the first meeting of contributories to every person who from the company's books appears to be a contributory; however, the validity of the said meetings not be 165

impaired if the notices were not sent or not received. Summons for officers 30. The Official Receiver or the liquidator, as the case may be, may send a summons to officers of the company to participate in a meeting of creditors or contributories; an officer who received a said summons must come to the meeting at the time and place stated in the summons. Decisions of meetings of creditors or contributories 31. Decisions at meetings of creditors or contributories shall be adopted by a majority of those present and voting in person or by proxy and representing a majority by value of claims by creditors and of rights of contributories, as the case may be. Applicability of Bankruptcy Regulations 32. The provisions of Chapter Three of the Bankruptcy Regulations shall apply to meetings of creditors or contributories, as far as they do not conflict with these regulations and mutatis mutandis.

CHAPTER FIVE: THE LIQUIDATOR Article One: Appointment and Responsibilities of Liquidator Proposals for appointment 33. (a) If a meeting of creditors was held and a decision was taken to propose a candidate for the post of liquidator, then within 30 days after the meeting the Official Receiver shall deliver a copy of the minutes of the meeting to the Court, together with his report of its outcome. (b) If opinions were divided at the creditors meeting, no candidate was proposed or the Official Receiver opposes the creditors' proposal, then the Official Receiver shall propose to the Court that it appoint another person to the post of liquidator. (c) The Court shall weigh the proposals brought before it as said in subregulations (a) and (b), and it shall decide on the appointment of a liquidator. Surety 34. The surety, which the liquidator will be required to provide under section 300(e) of the Ordinance shall be drawn up according to Form 4 and deposited with the Official Receiver. Transfer of assets to the liquidator 35. When a liquidator has been appointed, then the Official Receiver shall 166

transfer to him all the assets of the company which he holds, except for monies deposited in a bank determined by the Minister of Finance under section 311(a) of the Ordinance, but the Official Receiver may deduct all the expenses and fees due to him from the assets; if the assets were transferred to the liquidator without any aforesaid deduction, then the Official Receiver shall have a lien on them in the amount of the debt due to him. Authority to demand assets 36. The liquidator may demand of any person that he transfer to him any assets in his possession to which the company has any a priori rights, including balance sheets, account books and other documents, and the person who holds them shall transfer them to the liquidator within the time set in his demand. The liquidator as officer of the Court 37. The liquidator shall be an officer of the Court and under its supervision he shall use the powers and carry out the tasks said in section 382(1) of the Ordinance, Employment of advocate 38. If a liquidator employs an advocate, then he shall not pay him fees out of the company's assets, unless the Court so ordered.

Article Two: Hearings in Court Application for instructions 39. (a) A liquidator's request for instructions from the Court shall be submitted in writing. (b) A copy of the application shall be delivered to the Official Receiver not later than fifteen days before the day set for hearing the application. Application to the Court 40. An application to the Court by a party injured by an act or by a decision of the liquidator shall be submitted within thirty days after they learned of it.

Article Three: Bookkeeping and Reports Account books 41. (a) The liquidator shall keep the account books of the liquidation in accordance with customary accounting rules. 167

(b)

If the liquidator continues to manage the affairs of the company, then for that purpose he shall keep a special account according to the rules said in subregulation (a).

(c)

On the liquidator's application, the Official Receiver may order that the accounts said in subregulations (a) and (b) be kept jointly.

Depositing money in a bank account 42. (a) Depositing money in an account in a bank designated by the Minister of Finance, as said in sections 311(a) and 372 of the Ordinance, as well as payments out of that account shall be carried out through the Official Receiver at the liquidator's request. (b) If the liquidator was permitted to deposit the money in another bank, as said in section 311(a) of the Ordinance, then the liquidator shall open a separate bank account in his name as liquidator of the company and he shall deposit in it the monies received by him by virtue of his position as soon as possible after their receipt; payments out of that account shall be by checks signed by the liquidator, stating his said position. Audit of accounts 43. The Official Receiver shall appoint an auditor in order to audit the liquidator's accounts; when a said auditor has been appointed the liquidator shall deliver to him all the documentation and documents required for an audit of the report. Liquidator's reports 44. (a) A report, which the liquidator must submit under section 313 of the Ordinance, shall be drawn up according to Form 10. (b) Whenever he finds it necessary to do so, the Official Receiver may order the liquidator to deliver to him – within a time which he shall set – reports on monies which he received and which he paid, and about the progress of the liquidation, and that in addition to the report under subregulation (a). (c) If the liquidator declared that there were no receipts and no payments during a report period, then that declaration shall be treated like a report.

Article Four: Resignation, Dismissal and Release of Liquidator Liquidator's request to resign 45. (a) If a liquidator wishes to resign from his post, then he shall submit an application to that effect to the Official Receiver. 168

(b)

The Official Receiver may order the liquidator to give notice of his intention to resign to every contributory and to every creditor who proved his debt.

Decision to dismiss a liquidator 46. (a) Creditors of one sixth of the value of the claims may apply to the Official Receiver to call a creditors' meeting in order to discuss and to decide the question, whether it is in order to dismiss the liquidator from his position; when they have done so, they must deposit money in an amount to be decided by the Official Receiver in order to cover the costs involved in calling the meeting. (b) If the creditors' meeting adopted a resolution by the majority said in regulation 31, that it is in order to dismiss the liquidator from his position, then the Official Receiver shall submit a copy thereof to the Court. Final report 47. If a liquidator was dismissed or he requested to resign or to be released, then he shall deliver a final financial report to the Official Receiver , and he shall also deliver to him or to the new liquidator – if one was appointed – the account books and other documents that relate to the management of the company's assets. Certificate of release 48. When the Official Receiver is satisfied that the liquidator has fulfilled all his obligations under the Ordinance and the regulations, then he shall give him a certificate of release according to Form 11.

CHAPTER SIX: PRELIMINARY INTERROGATION AND PUBLIC INVESTIGATION Preliminary interrogation 49. After a liquidation order has been handed down, the Official Receiver may summon any Director or other officer of the company, in order to interrogate him about the condition of the company's business and obligations, and the person summoned must appear for the interrogation at the time and place set in the summons. Public interrogation 50. (a) If the Court decided to summon a person for public interrogation under section 298 of the Ordinance and set a time for it, then it shall send him a summons to appear for the interrogation at the 169

time and place there stated; the Official Receiver shall inform the contributories and also the creditors who submitted a debt claim of the time and place of the public interrogation; the notification shall be sent to them by mail or in any other manner the Official Receiver deems appropriate. (b)

If a person was summoned to be interrogated and did not appear, then the provisions of section 73 of the Courts Law (Consolidated Version) 5744-1984 shall apply to him.

CHAPTER SEVEN: DECLARATION OF PERSONAL LIABILITY Application to declare personal liability 51. (a) An application to the Court by the Official Receiver or the liquidator, that it declare that every Director of the company bears personal liability under section 373 of the Ordinance, or that it order a payment to be enforced under section 373 of the Ordinance, shall be accompanied by a survey, in which the facts on which the application is based shall be specified. (b) An application for relief said in subregulation (a), submitted on behalf of a creditor or a contributory, shall be accompanied by the applicant's affidavit in support of the facts included in it, and the Court may – at any time before the order is made – require the Official Receiver or the liquidator to submit a survey of the facts that relate to the said application. (c) An application under subregulations (a) or (b) shall be served on the respondent together with the summons to Court, and the respondent may submit an affidavit in response at least seven days before the date for hearing the application; when the Court hears the application it may order additional evidence to be brought in support of the application, as it deems necessary, including the hearing of witnesses. Protocol of the public interrogation as evidence 52. (a) If an application was submitted under sections 373 or 374 of the Ordinance after a public interrogation had been conducted, then the applicant may use the protocol of the interrogation as evidence against any person, but if the applicant intends to use the protocol of the interrogation as evidence against a person who was not interrogated publicly, then – at least 15 days before the application is heard – he most give him notice that he wishes to submit the protocol to the Court as evidence against him; a copy of the protocol shall be attached to the notice. (b) If the protocol or part thereof was submitted to the Court, then the 170

respondent may cross-examine the person, the protocol of whose public interrogation was submitted as aforesaid.

CHAPTER EIGHT: DEBT CLAIMS AND DISTRIBUTION OF DIVIDENDS Applicability of Bankruptcy Regulations 53. The provisions of Chapter Four of the Bankruptcy Regulations shall apply to the rights of creditors, to claims of debts and to the distribution of dividends upon the liquidation of a company, as far as they do not conflict with these regulations and mutatis mutandis; for this purpose, make the following changes: for "debtor" – read "company under liquidation", for "day on which the receivership order was made" – read "the determining date", within its meaning in section 54(e) of the Ordinance; for "trustee" – read "liquidator".

CHAPTER NINE: MUST NOT ACCEPT BENEFITS Appointee 54. The liquidator, receiver, a person appointed by a Court in a proceeding under section 350 of the Companies Law 5759-1999 (hereafter: the Companies Law) to the position of trustee for a creditors' arrangement or to any other position under that proceeding and special manager of a company must not – within the framework of his responsibilities in it – receive any pay, gift, consideration or other monetary benefit, whether directly or indirectly, other than the pay set for them by the Court under the Ordinance and its regulations. Audit committee member 55. A member of the audit committee, appointed under section 348 of the Ordinance, must not – for any act performed or service provided within the framework of managing the company's assets – receive any pay, gift, consideration or other monetary benefit, whether directly or indirectly, but the Court may, for special reasons that shall be recorded, allocate payments for special acts or services provided as aforesaid.

CHAPTER TEN: THE OFFICIAL RECEIVER 171

Article One: Auxiliary Tasks Auxiliary Tasks 56. The Official Receiver may impose on any State employee under his authority auxiliary tasks for the implementation of the Ordinance, and to that end he may delegate some of his powers to him. Article Two: Court Proceedings Applications to the Court by the Official Receiver 57. (a) The Official Receiver may apply to the Court for instructions on any matter related to the performance of his responsibilities. (b) An application by the Official Receiver to the Court may be verbal or in writing and even without affidavit, and it may be accompanied by a report by the Official Receiver; the Court shall accept the said report as prima facie proof of its contents. Appeal against decisions by the Official Receiver 58. An appeal against a decision of the Official Receiver shall be submitted to the Court within 30 days after the decision was served on the appellant. Service on the Official Receiver 59. (a) The Court shall not hold any proceeding under the Ordinance unless it is satisfied that a summons was served on the Official Receiver. (b) The Official Receiver's address for the service of Court documents is his office in the jurisdiction of the Court before which the proceeding is held, and in case of a proceeding before the Supreme Court – at the Official Receiver's main office in Jerusalem. The Official Receiver's stand 60. The Official Receiver may take a stand in respect of a proceeding before a Court by giving written notice only, without appearing for the hearing. Survey by the Official Receiver 61. If an application was made that the Court approve a compromise or arrangement, then the Official Receiver may – at least seven days before the time set for hearing the application – submit to the Court a survey on the matter of the compromise or arrangement, and on the management of the company's business by its managers and the reasons for their failure, and on any other matter which the Official Receiver believes should be brought to the knowledge of the Court. 172

The Official Receiver as liquidator 62. When the Official Receiver acts as liquidator, the Court shall take his place for purposes of any act and appointment by the Receiver and for the purpose of any permission that should have been given on his behalf, and every document which under these regulations must be submitted to the Receiver, the Receiver shall submit to the Court.

173

CHAPTER ELEVEN: MONEY, FEES AND EXPENSES Investing liquidation funds 63. For purposes of the investment of money included in the assets under liquidation, the provisions that apply to the Custodian General under section 10(c) and (d) of the Custodian General Law 5738-1978 shall apply to the Official Receiver, mutatis mutandis. Official Receiver fees 64. (a) When the Official Receiver serves as receiver, temporary liquidator or liquidator he shall be paid – mutatis mutandis – management fees, realization fees and actual distribution fees at the rates set for purposes of an appointee's pay in regulations 7 to 10 and 15 of the Companies Regulations (Rules on the Appointment of Receivers and Liquidators and Their Compensation) 5741-1981. (b) For supervision over the activities of a liquidator the Official Receiver shall be paid a supervision fee at the rate of 20% of the pay set for that liquidator; for supervision over the activities of a temporary liquidator, receiver, trustee for the implementation of an arrangement under section 350 of the Companies Law or for any other task under that section the Official Receiver shall be paid a supervision fee of 20% of the pay set for the said appointee. (c) If the Official Receiver held any position or performed any work that is not specified in these regulations, then for them he shall be paid a fee that the Court shall set at its discretion on the Official Receiver's application, to which shall be attached a detailed report of his activities. The Official Receiver's expenses 65. (a) The Official Receiver shall be paid – out of the company's assets – his expenses for travel and the preservation of assets, legal expenses and also every other reasonable expense incurred by him in the course of the receivership and management of the company's assets, including damages he had to pay because of any act or omission committed by him in good faith within the bounds of his responsibilities and powers. (b) If action was brought against the Official Receiver for the payment of costs or damages, then he shall inform the liquidator or the person who at that time holds the relevant company assets; from the date of the notice the assets shall serve as surety for the payment of the expenses. Order of payment of expenses 66. The expenses involved in the liquidation shall be paid in the following 174

order of preference: (1) (2)

(3) (4)

the expenses of realizing the company's assets; expenses incurred by the Official Receiver or his agents or which the undertook to incur in connection with the company or its assets, including the cost of publication in newspapers and in Reshumot; expenses incurred by the liquidator in the performance of his tasks and also his remuneration, as approved by the Court; legal expenses and fees which must be paid to the Official Receiver.

Payment of expenses where there are no assets 67. If a liquidation order was made against a company that has no assets, then the Official Receiver shall not be under any obligation to incur expenses in respect of the said order, unless the Court approved those expenses on application by the Official Receiver and on conditions prescribed by the Court,

CHAPTER TWELVE: SPECIAL PROVISIONS ON VOLUNTARY LIQUIDATION Reports to the Companies Registrar 68. If the voluntary liquidation of a company or its liquidation under supervision by the Court is not completed within one year after it was initiated, then – once a year and as long as the liquidation has not been completed – the liquidator must send a report on the proceedings and status of the liquidation to the Companies Registrar, drawn up in accordance with Form 10, as required by section 371 of the Ordinance. Unclaimed money 69. If the liquidator has in his possession or under his control money that was part of the assets of a company in voluntary liquidation, and if within six months after liquidation proceedings were concluded nobody claimed or demanded it, then the provisions of section 372 of the Ordinance shall apply.

175

CHAPTER THIRTEEN: MISCELLANEOUS Court fees 70. The fees set in Court Regulations (Fees) 5736-1976 shall be paid for every proceeding or matter in Court in connection with a liquidation. Title of Court document 71. The title of every Court document under the Ordinance shall include the name of the company concerned, and if a liquidation order was handed down for it, then the fact that it is under liquidation shall also be stated. Preparation of forms 72. Any form that should be drawn up in accordance with one of the forms in the Schedule shall be drawn up with the changes made necessary by the circumstances, and there is no obligation that it be a verbatim copy thereof; if the form includes the requirement to present documents, then the Court may – for purposes of the present hearing – order additional particulars to be provided, as will be prescribed in the order. Joining a party to a proceeding 73. The Court may join a creditor or a contributory to a proceeding in progress before it, if it believes that that person is liable to be injured by a decision that will be made in that proceeding. Faulty appointment 74. Any fault or error in the appointment or election of a receiver, liquidator or audit committee member shall not derogate from the validity from anything done by them in good faith as part of the position to which they were appointed or elected. Archiving account books 75. On application by the Official Receiver the Court may order that the account books and other documents of a company, which remained in the possession of the Official Receiver after the liquidation was concluded, be stored, sold or destroyed, or that they be disposed of otherwise. Repeal 76. Companies Regulations (Liquidation) 1936 are repealed. Applicability and effect 77. (a) These regulations shall go into effect 30 days after their publication. (b) These regulations shall also apply to matters, which on the day on which they went into effect were pending before a Court or the 176

Registrar, unless the Court or Registrar ordered otherwise. SCHEDULE Form 1 (Regulation 3(a)) Application for Liquidation File __________ in the District Court in ________________ in the matter of the company ______________________________________ The applicant _______________ ID Number _____ Place of residence ____________________________________________ Address for service of Court documents _____________________________________________________________ (town, street, house number, zip code)

The applicant is entitled to submit this application because he is a creditor / contributory / the Attorney General / the company itself* The Court is hereby requested to hand down an order for the liquidation of the company _______________________Ltd. (hereafter: the company), the particulars of which are as follows: Date of its registration with the Companies Registrar __________________ Registration number ___________ Address of its registered office ____________________________________ Its registered capital is NS _________, divided into ___ shares of NS __ each. Its paid up capital is NS ____________. The main purposes, for which the company was established, are _________ _____________________________________________________________ The grounds that justify the company's liquidation, as said in sections 257 and 258 of the Ordinance are (specify each of the grounds separately): ____________________________________________________________ ____________________________________________________________ The Court is requested to send a copy of this application to _____________ Date _______________

Signature __________________

_____________________________________________________________ *

cross out the superfluous 177

178

AFFIDAVIT I, the undersigned_________________, ID Nr. _____ , hereby declare that all the facts stated in my above application are the truth, the whole truth and only the truth. Signature ________________ I, the undersigned ____________________ ,hereby certify that on _______ appeared before me in my office at ____________ Mr. / Ms _____________, whom I know personally / whom I identified according to ID card number _____, and, after I cautioned him / her that he / she must say only the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true and signed it before me. _____________________ Signature of person before whom affidavit was made

Form 2 (Regulation 3(b)) File Nr. ______________ To the District Court in ______________ REPORT ON LIABILITIES AND ASSETS In the matter of the application for liquidation by __________________ Ltd. I, the undersigned_____________, who hold the position of ____________ in the company, hereby attach this Report on Liabilities and Assets to the company's application for liquidation: Debts to creditors (liabilities) ______

NS

secured creditors preferred creditors

______ ______

ordinary creditors total debts to creditors

______ ______

Total property Debts due to the company Value of collateral total assets

______

Surplus of assets over liabilities _____

surplus of liabilities over assets

Credits (assets

Total

Total 179

NS _____ _____ _____ _____

______

_____

180

Part One: Debts Specification of debts: CHARGES CREATED AS COLLATERAL FOR DEBTS (1) Nr.

(2)

(3)

Creditor's Address name

(4)

(5)

Amount of debt

(6)

when source was debt of debt created

(7) particulars of charged asset

(8) when was charge created

(9) value of collateral (NS)

__ ______ ______ _____ _____ ______ _________ ________ _____ __ ______ ______ _____ _____ ______ _________ ________ _____ __ ______ ______ _____ _____ ______ _________ ________ _____ Specification of Assets No.

Specification of asset

___ ______________ ___ ______________ ___ ______________

Number of items (NS)

Where located

Estimated Value

_________ _________ _________

_______________ _________ _______________ _________ _______________ _________

NOTES: 1. For real estate, also state block and parcel numbers 2. For bank accounts, state name of bank, branch and each account number separately. 3. For passenger cars, also state license number I, the undersigned ____________ , having been cautioned that I must say the truth and that I will be liable to penalties set by law if I do not do so, hereby declare that the report which I hereby submit to the Court is in all its parts accurate, complete and up-to-date as of to-day. Signature: ________________ I, the undersigned ____________________ , Adv.,hereby certify that on ________ appeared before me in my office at _______________ Mr. / Ms _____________, whom I know personally / whom I identified according to ID card number _____, and, after I cautioned him / her that he / she must say only the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true and signed it before me. _____________________ Signature of advocate 181

Form 3 (Regulation 6)

NOTICE THAT AN APPLICATION FOR THE LIQUIDATION OF A COMPANY WAS SUBMITTED TO THE COURT

In the District Court in ____________ File Nr. ________ in the matter of the liquidation of ______________________________ Ltd. Applicant: ____________________________________________________ Notice is hereby given that on _______ an application for the liquidation of the company ________________ Ltd. was submitted to the District Court in _________________, and that the application will be heard on _______at _______ o'clock/ Every creditor or contributory of the company, who intends to support or to oppose the grant of the liquidation order, may appear at the hearing – in person or by his advocate – after he has given the applicant notice of his intentions. The notice must be delivered to the applicant or sent by mail, so that they will reach the applicant at the address_____________________________ not later than at ______o'clock on _______. A copy of the liquidation order will be delivered to the creditor or contributory who so requested, against payment. Date _________________

Signature __________________

182

Form 4 (Regulations 15 and 34) In the District Court in _________________ ,

File ______

WRIT OF SURETY in the matter of the company _________________________________ Ltd. I, the undersigned, _________________________________, ID Nr. ______ Address ____________________________________________________ who was appointed to the position of liquidator / temporary liquidator* of the above company hereby undertake to pay the Official Receiver the amount of NS __________. To that amount shall be added the amount of linkage differentials to the consumer price index, at the index increase from the index last published before I signed this writ to the last index that will be published before the day of payment; the above amounts shall be paid by me at the Official Receiver's first demand, if it is found that one of the following occurred: 1. I did not perform one of my tasks or did not fulfill one of my obligations as liquidator / temporary liquidator* under the Companies Ordinance [New Version] 5743-1983; 2. I did not submit reports or accounts on time or in the manner prescribed by the Court or the Official Receiver; 3. I did not comply fully with orders of the Court or of the Official Receiver about the management of the company's assets; 4. I did not pay any amount due from me, as the Court ordered; 5. I maliciously or negligently caused a loss to the assets of the company under my management. Date ________

Signature __________________

___________________________________ *

cross out the superfluous

183

Form 5 (Regulation 18(a)) In the District Court in__________________,

File _____

ORDER FOR THE LIQUIDATION OF A COMPANY UNDER SUPERVISION BY THE COURT Before the Honorable Judge ______________ in the matter of the company _________________________________ Ltd., the address of its registered office being_____________________________ Upon the application of ________________________, dated ______, which was submitted to this Court, after hearing Adv. ______________________, who represents _______________, and after reading the application for liquidation and the declaration of ______________, which was submitted on ______ , and after notice of the application for liquidation was published in – 1. Yalkut Hapirsumin Nr. ____, page ____ , on ______ 2. the daily newspaper _________________, on ______ the Court orders: 1. that the above company be liquidated by the Court under the Companies Ordinance (New Version ) 5743-1983; 2. that the Official Receiver in ________________ be the temporary liquidator of the company; 3. that the officers of the company shall appear, immediately after they receive the liquidation order, in the office of the Official Receiver in _____________ in order to deliver all the necessary information about the company's business. Handed down on _________ in the presence of ____________________ __________________ Judge

184

Form 6 (Regulation 18(b)) In the District Court in ____________________ File _________ NOTIFICATION BY THE OFFICIAL RECEIVER THAT A LIQUIDATION ORDER HAS BEEN MADE AND ABOUT DATES OF MEETINGS OF CREDITORS AND CONTRIBUTORIES Name of the company ________________________________ in liquidation Address of its registered office ____________________________________ Date of liquidation order ______________ The first meeting of creditors will take place on________, at _______ o'clock Date

Time

at ________________. Place

The first meeting of contributors will take place on________, at _______ Date

Time

o'clock at ________________ . Place

Date of the first meeting of contributories: ___________________________ Date

Time

Place

______________________ Official Receiver

185

Form 7 (Regulation 25(a)) In the District Court in ______________

Date _________

REPORT ON THE STATE OF THE COMPANY'S BUSINESS In the matter of the company __________________________ in liquidation Debts to creditors (liabilities)NS

________

Assets NS

________

secured creditors (List A, Col. 4)

________

Total property (List D)

________

preferred creditors (List B, Col. 4) ________

Debts due to assets (List E)

________

ordinary creditors List C, Col. 4)

Value of collateral (List A, Col.8)

________ ________

________

total debts to creditors

________

total assets

surplus of assets over liabilities

________

surplus of liabilities over assets ______

Total

_______

Total

_______

I, the undersigned ___________________________, ID Nr,________, Address ______________________________________________________ hereby declare that the report which I hereby submit to the Court is to the best of my knowledge accurate, complete and up-to-date in all its parts as of the date of the liquidation order. Signature:_______________________ I, the undersigned _______________, hereby certify that _______________ whom I know personally / who identified himself / herself to me by ID card number _______, appeared before me at my office at ____________, and after I cautioned him / her that he / she must declare the truth and that he / she will be liable to penalties set by Law if he / she does not do so, declared that his / her above declaration is true and signed it before me. ________________________ Signature of person before whom affidavit was made

186

List A: Secured Creditors (1) (2) (3) (4) (5) (6) (7) (8) (9) Nr. Creditor's Address Amount when source particulars when value name of debt created of debt of charged was of asset charge surety created (NS) (1) _______ ________ ______ ______ _____ ________ _______ _____ (2) _______ ________ ______ ______ _____ ________ _______ _____ (3) _______ ________ ______ ______ _____ ________ _______ _____ (4) _______ ________ ______ ______ _____ ________ _______ _____ Total: ______ ____

(10) difference between value and debt ________ ________ ________ ________

______

List B: Preferred Creditors (1) (2) Nr. Creditor's name

(3) Address

(4) Amount of debt

(5) (6) (7) when source to be paid created of debt in full

(1) _________ (2) _________ (3) _________ (4) _________ Total:

___________ ___________ ___________ ___________

_______ _______ _______ _______ _______

_____ _____ _____ _____

______ ______ ______ ______

______ ______ ______ ______ ______

(8) To be paid as ordinary debt (transfer to List C) ________ ________ ________ ________ ________

List C: Ordinary Creditors (1) Nr. (1) (2) (3) (4) Total:

(2) Creditor's name _____________ _____________ _____________ _____________

(3) Address ______________ ______________ ______________ ______________

(4) Amount of debt _______ _______ _______ _______ _______

(5) when created _______ _______ _______ _______

(6) source of debt _____________ _____________ _____________ _____________

List D: Assets Nr. (1) (2) (3) (4)

Specification of asset ________________ ________________ ________________ ________________

Number of items ______ ______ ______ ______

Where located ___________________ ___________________ ___________________ ___________________

Estimated value (NS) _______ _______ _______ _______

NOTES: 1. For real estate, also state block and parcel numbers 2. For bank accounts, state name of bank, branch and each account number separately. 3. For passenger cars, state also license number

187

List E: Debts Due to the Company (1) Nr. (1) (2) (3) (4) Total

(2) Name of debtor ___________ ___________ ___________ ___________

(3) Address ________________ ________________ ________________ ________________

(4) Amount of debt (NS) ________ ________ ________ ________ ________

(5) When was the debt created __________ __________ __________ __________

List F: Account of Deficit (or Surplus) NS Assets: *surplus of assets over liabilities as of _______ ______ Income or profits from other sources (specify) ______

Total surplus of liabilities over assets

______

NS *surplus of liabilities over assets as of _______ bad debts (List E) interest and linkage payments sale at less than cost business loss other losses (specify) Total surplus of assets over liabilities

* strike out the superfluous

188

______ ______ ______ ______ ______ ______

Form 8 (Regulation 29) STATE 0F ISRAEL Ministry of Justice The Official Receiver Date __________ File Nr. ________ Peh Het _______ Tav Aleph______ To __________________________ re:

Notification of the first meeting of creditors of the company _______________________ Ltd in liquidation.

I hereby inform you that a meeting of creditors of the above company will take place on _______ , at ____ o'clock. On the agenda: Election of a candidate for the position of liquidator of the company and also candidates for members of the Audit Committee. The right to vote at the meeting shall be accorded only to creditors who will submit debt claims to the Official Receiver until ____________ If you wish to be represented at this meeting by a representative, then you also must submit a power of attorney to my office. Attached are forms for a debt claim and for a power of attorney, If there is no legal quorum at the above meeting, then a postponed meeting shall be held at the same place on _________, at _________ o'clock, and it shall be legal with any number of participants. Yours truly, ________________ Official Receiver

189

Form 9 (Regulation 29) STATE 0F ISRAEL Ministry of Justice The Official Receiver Date __________ File Nr. ________ Peh Het _______ Tav Aleph______ To _____________________ re:

Notification of the first meeting of contributories of the company _________________________ Ltd in liquidation.

I hereby inform you that a meeting of contributories of the above company will take place on_______, at ____ o'clock. On the agenda: Election of a candidate for the position of liquidator of the company and also candidates for members of the Audit Committee. The right to vote at the meeting shall be accorded only to creditors who will submit debt claims to the Official Receiver until ____________ Attached are forms for a power of attorney, If there is no legal quorum at the above meeting, then a postponed meeting shall be held at the same place on _________, at _________ o'clock, and it shall be legal with any number of participants.

Yours truly, _________________ Official Receiver

190

Form 10 (Regulation 44 or 68) In the District Court in ________________

File________

LIQUIDATOR'S REPORT UNDER SECTION 313 / 371* OF THE COMPANIES ORDINANCE in the matter of the company _________________________ Ltd., in voluntary liquidation / in liquidation under supervision* for the period from _______ until _______ Receipts

Payments

Date Particulars

NS

Date

Particulars

___ _____________ ___ _____________ ___ _____________

___ ___ ___

___ ___ ___

______________ ______________ ______________

NS

Total

___

Total

___ ___ ___ ____

Drawn up on _____________ Name and signature of liquidator _________________________

_______________________________________________________________ * cross out the superfluous

191

Form 11 (Regulation 48)

STATE OF ISRAEL Ministry of Justice The Official Receiver Date __________ File Nr. ________ LIQUIDATOR'S CERTIFICATE OF RELEASE in the matter of the company _____________________ Ltd., in liquidation Whereas

Mr. ________________________, ID Nr. ____, of ____________ was appointed on______ liquidator of the above company,

and whereas

on _______ he applied to be released from his position under section 316 of the Companies Ordinance (New Version) 5743-1983,

and whereas

Mr. __________________ submitted the reports about his activity as liquidator and the activity was examined and found to comply with the requirements of the Ordinance,

and whereas

I am satisfied that the liquidator met all his obligations under the Ordinance and the regulations under it,

therefore

I hereby release Mr._________________ from his position as liquidator of the company.

Handed down on _____________ ________________ Official Receiver

192

COMPANIES REGULATIONS (APPLICABILITY TO PUBLIC BENEFIT COMPANIES THAT ARE GOVERNMENT COMPANIES OR GOVERNMENT SUBSIDIARIES) 5768-2008 By my authority under section 345FF of the Companies Law 5759-1999 (hereafter – the Law) and with the approval of the Knesset Constitution, Law and Justice Committee I make these regulations: Definitions 1. In these regulations – "privatization decision" – as defined in the Government Companies Law; "Ministerial Committee" – as defined in the Government Companies Law; "Governmental public benefit company" – a company defined in section 345FF of the Law and listed in the Schedule; "Government Companies Law" – the Government Companies Law 5735-1975. Change of objective 2. Section 345E(c) to (f) of the Law shall not apply to a Governmental public benefit company; however, the Government shall change the objectives of a Governmental public benefit company only by a reasoned decision after it is satisfied that under the circumstances doing so is just and correct, having taken the company's objectives and activity before the change into consideration, and after it heard the opinion of the Attorney General; the said company shall send notice of the change under section 21(b) of the Law also to the Registrar of Endowments. Audit committee 3. Section 345H of the Law, except for subsections (e) and (g), shall not apply to a Governmental public benefit company. Honorarium of Director and of audit committee members 4. Section 345J of the Law shall not apply to a Governmental public benefit company, but a Director or audit committee member, as well as a body corporate under the control of any of these shall not provide – directly or indirectly – services for pay to a Governmental public benefit company otherwise than as Director or audit committee member, as the case may be; in this regulation, "control" – within its meaning in section 345J(a) of the Law. Appointing investigators 193

5.

Section 345R of the Law shall apply to a Governmental public benefit company, but wherever in that Law it says "Registrar of Endowments", read "Director of the Government Companies Authority".

Nonapplicability of provisions of the Law 6. (a) Section 345U of the Law shall not apply to the State as holder of shares in a Governmental public benefit company. (b) Notwithstanding the provisions of sections 345X (c) of the Law, the reports enumerated in the said section shall be approved by the Board of Directors of the Governmental public benefit company and not by the General Meeting. Restriction on applicability of provisions in case of privatization 7. If a privatization decision was made in respect of a Governmental public benefit company, then sections 345E and 345O(a) of the Law shall not apply to the acts required in order to implement the privatization decision, provided that the Registrar of Endowments was given an opportunity to present his stand to the Ministerial committee and that the draft decision was sent to him at least 21 days in advance. Voluntary liquidation 8. Notwithstanding the provisions of section 345S of the Law, a Governmental public benefit company may go into voluntary liquidation under the provisions of the Companies Ordinance and the Government Companies Law, and section 345T of the Law shall not apply to it. Effect 9. These regulations shall go into effect on December 21, 2007. SCHEDULE (Regulation 1) Governmental Public Benefit Companies 1. 2. 3. 4. 5. 6. 7.

Israel Maritime Education Company (maritime schools) Israel Community Centers Company Ltd. Levi Eshkol Green Village Ltd. Maritime Education and Training Authority Israel Sea and Lake Research Ltd. Sdeh Boker College Ayalon Park Ltd.

194