Document:

EX-10.1

 

Exhibit 10.1

P.O. Box
291, St. Peter Port, Guernsey, GY1 3RR, British Isles

	 	 	 
	Telephone 

Fax Phone

	 	+44 1481 729 980

+44 1481 729 982

7 February 2008

The Directors

Vazon Energy Limited

PO Box 144

St. Peter Port

Guernsey

GY1 3HX

Dear Sirs

Termination of Appointment of Non- Executive Director and Non-Executive Chairman

We refer
to the agreement between CanArgo Energy Corporation (“CanArgo”) and Vazon Energy Limited
(“VEL”) dated 26 September 2007 upon which VEL procured the services of Dr David Robson (the
“Consultant”) to act as non-executive Director and non-executive Chairman of the Board of CanArgo
(the “Agreement”).

The Agreement provides that it shall at any time be capable of termination upon the expiry of six
months’ written notice given by either party to the other party. CanArgo has the right under the
Agreement to make payment to VEL, in lieu of notice.

We note
that such six months’ notice to terminate the Agreement has been agreed by both parties
effective 7 February 2008.

We confirm that the Agreement shall be terminated with immediate effect on 7 February 2008 (the
“Termination Date’’) and we will make payment to VEL of UK£30,000 in lieu of notice within 5
business days of the Termination Date.

We further
confirm that the 1,800,000 share options held by the Consultant pursuant to CanArgo’s
Long Term Stock Incentive Plans will remain valid and be exercisable until 31 December 2008 under
the terms of such plans. These options comprise the following:

1,500,000 options under the 2004 LTSIP at an exercise price of $0.65 (issued 24th
September 2004), and:

300.000 options under the 2004 LTSIP at an exercise price of $1.00 (issued 27th July 2005)

CanArgo Energy Corporation — Page 1

Registered Office: 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808, USA

 

 

The parties agree, that save as set out in the Agreement and this letter, from the
Termination Date neither party shall have any further claim against the other for any
costs, demands, loss or damages arising under the Agreement or any claim for
compensation in respect of termination of the Agreement.

We ask that VEL procure that the Consultant also resigns from other Directorships which the
Consultant may hold with CanArgo Group companies, and we will forward to VEL suitable
resignation letters forthwith.

Each party agrees to sign, execute, deliver and undertake all such actions as may be reasonably
required by the other party to carry out and give effect to the terms and intentions of this
letter. We will issue a Press Release, mutually agreed by the Consultant in accordance with our
obligations (agreed release attached).

This letter shall be governed by and construed in accordance with the laws of the Island of
Guernsey.

Please confirm your agreement to the terms set out above by signing and returning the enclosed
copy of this letter.

Yours faithfully

For and on behalf of

CanArgo Energy Corporation

                                                                                

Agreed for and on behalf of

Vazon Energy Limited

CanArgo Energy Corporation — Page 2

Registered Office: 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808, USA

 

 

FOR IMMEDIATE RELEASE IN EUROPE & NORTH AMERICA

NON-EXECUTIVE CHAIRMAN STEPS DOWN

February
7, 2008 — Guernsey,  Channel Islands — CanArgo Energy Corporation (“CanArgo” or the
“Company”) (OSE: CNR, AMEX: CNR) today announced that Dr. David Robson has tendered his resignation
from the positions of Non-Executive Chairman and Non-Executive Director of the Board of CanArgo
with immediate effect. Dr. Robson is stepping down in order to focus on the development of Tethys
Petroleum Limited (“Tethys”) of which he is Chairman, President and Chief Executive Officer. Dr.
Robson informed the Company on January 21, 2008 of his intention not to stand for re-election as a
Director of the Company at the next Annual Meeting of Stockholders because of potential conflicts
of interest With his duties and workload with Tethys. In light of this, and following a meeting of
the Board, the Board asked Dr. Robson to stand down at this point in time.

Vincent McDonnell will become acting Chairman of the Board in addition to his duties as President
and Chief Executive Officer. The resignation of Dr. Robson means that the Company now needs to
appoint only one new independent director to the Board in order to regain compliance with the
American Stock Exchange continued listing rule.

Vincent
McDonnell,  President and Chief Executive Officer said “I would like to thank David for his
invaluable input to the development of CanArgo and his very significant contribution to the
Company over the last eleven years. I wish him every success in the future.”

The
matters discussed in this press release include forward-looking
statements, which are subject
to various risks, uncertainties and other factors that could cause actual results to differ
materially from the results anticipated in such forward-looking statements. Such risks,
uncertainties and other factors include the uncertainties inherent in oil and gas development and
production activities, the effect of actions by third parties including government officials,
fluctuations in world oil prices and other risks detailed in the Company’s reports on Forms 10-K
and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements are
intended to help shareholders and others assess the Company’s business prospects and should be
considered together with all information available. They are made in reliance upon the safe harbour
provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results
will be attained.

CanArgo Energy Corporation — Page 3

Registered Office: 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808, USAS-8

Exhibit 4.1  

AMENDED AND RESTATED
ARTICLES OF ASSOCIATION 

OF 

SILICOM LTD. 

A COMPANY LIMITED BY
SHARES 

PRELIMINARY 

	1.  	COMPANY
NAME  

	 	
The
name of the company is “Silicom Ltd.” (the “Company”).   

	2.  	INTERPRETATION  

	 	(a) 	In
these Articles, the following terms shall bear the meanings set forth below,
                    unless inconsistent with the subject or context. 

	 	
“Office
Holder” shall mean every director and every other person included in the definition
of “office holder” under the Companies Law, including the executive officers of
the Company.  

	 	
“External
Directors” shall mean directors appointed and serving in accordance with Sections
239 through 249 of the Companies Law.  

	 	
“Companies
Law” shall mean the Israeli Companies Law, 5759-1999, as amended and as may be
amended from time to time, and any regulations promulgated thereunder.  

	 	
“Articles”shall
mean these Amended and Restated Articles of Association as originally adopted or as
amended from time to time.  

	 	
“Office”shall
mean the registered office of the Company.  

	 	
“Year”and
“Month” shall mean a Gregorian month or year.  

	 	(b) 	Defined
terms used herein, but not defined, shall have the meaning given them in
                    the Companies Law. 

	 	(c) 	Unless
the subject or the context otherwise requires: words and expressions
                    importing the masculine gender shall include the feminine gender; and
words and                     expressions importing persons shall include bodies
corporate. 

	3.  	PUBLIC
COMPANY; LIMITED LIABILITY AND COMPANY OBJECTIVES  

	 	(a) 	The
Company is a Public Company, as such term is defined in the Companies Law. 

	 	(b) 	The
liability of the Company’s shareholders is limited and, accordingly,
                    the liability of each shareholder for the Company’s obligations
shall be                     limited to the payment of the nominal value of the shares
held by such                     shareholder, subject to the provisions of these Articles
and the Companies Law. 

	 	(c) 	The
Company’s objectives are to carry on any business and perform any act
                    which is not prohibited by law. The Company may also make
contributions of                     reasonable sums to worthy purposes even if such
contributions are not made on                     the basis of business considerations 

SHARE CAPITAL 

	4.  	SHARE
CAPITAL  

	 	(a) 	The
authorized share capital of the Company is one hundred thousand New Israeli
                    Shekels (NIS 100,000) divided into ten million (10,000,000) Ordinary
Shares,                     nominal value NIS 0.01 per share. 

	 	(b)	           The
Ordinary Shares all rank pari passu in all respects. 

	5.  	INCREASE
OF AUTHORIZED SHARE CAPITAL  

	 	(a) 	The
Company may, from time to time, by resolution of its shareholders, whether
                    or not all the shares then authorized have been issued and whether or
not all                     the shares theretofore issued have been called up for
payment, increase its                     authorized share capital by the creation of new
shares. Any such increase shall                     be in such amount and shall be
divided into shares of such nominal amounts, and                     such shares shall
confer such rights and preferences, and shall be subject to                     such
restrictions, as such resolution shall provide. 

	 	(b) 	Except
to the extent otherwise provided in such resolution, any new shares
                    included in the authorized share capital increased as aforesaid shall
be subject                     to all the provisions of these Articles which are
applicable to shares of the                     same class included in the existing share
capital. 

	6.  	SPECIAL
RIGHTS; MODIFICATION OF RIGHTS  

	 	(a) 	Subject
to the provisions of these Articles, and without prejudice to any                special
rights previously conferred upon the holders of existing shares in the
               Company, the Company may, from time to time, by resolution of its
shareholders,                provide for shares with such preferred or deferred rights or
rights of                redemption or other special rights and/or such restrictions,
whether in regard                to liquidation, dividends, voting, repayment of share
capital or otherwise, as                may be stipulated in such resolution provided
that any resolution with respect                to the issuance of shares will be made
only by the Board of Directors. 

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	 	(b) 	(i)	
If at any time the share capital is divided into different classes of
               shares, the rights attached to any class, unless otherwise provided by
these                Articles, may be modified or abrogated by the Company, by a
resolution of the                shareholders, subject to the consent in writing of the
holders of a majority of                the issued shares of such class or the adoption
of a resolution passed at a                separate General Meeting of the holders of the
shares of such class. 

	 	(ii) 	The
provisions of these Articles relating to General Meetings shall, mutatis
               mutandis, apply to any separate General Meeting of the holders of the
shares                of a particular class, provided, however, that the requisite quorum
at any such                separate General Meeting shall be two or more members present
in person or by                proxy and holding not less than thirty three and a third
percent (33 1/3%) of                the issued shares of such class.  

	 	(iii) 	Unless
otherwise provided by these Articles, the enlargement of an authorized
               class of shares, or the issuance of additional shares thereof out of the
               authorized and unissued share capital, shall not be deemed, for purposes
of this                Article 6(b), to modify or abrogate the rights attached to
previously issued                shares of such class or of any other class.  

	7.  	CONSOLIDATION,
SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL  

	 	(a) 	The
Company may, from time to time, by resolution of its shareholders (subject,
                    however, to the provisions of Article 6(b) hereof and to applicable
law): 

	 	(i) 	consolidate
and divide all or part of its issued or un-issued authorized share                capital
into shares of a per share nominal value which is larger than the per
               share nominal value of its existing shares;  

	 	(ii) 	subdivide
its shares (issued or un-issued) or any of them, into shares of                smaller
nominal value;  

	 	(iii) 	cancel
any shares which, at the date of the adoption of such resolution, have                not
been taken or agreed to be taken by any person, and diminish the amount of
               its share capital by the amount of the shares so canceled; or  

	 	(iv) 	reduce
its share capital in any manner, subject to any consent required by law.  

	 	(b) 	With
respect to any consolidation of issued shares into shares of a larger
                    nominal value per share, and with respect to any other action which
may result                     in fractional shares, the Board of Directors may settle
any difficulty which may                     arise with regard thereto, as it deems fit,
and, in connection with any such                     consolidation or other action which
could result in fractional shares, may,                     without limiting its
aforesaid power: 

	 	(i) 	determine,
as to the holder of shares so consolidated, which issued shares shall                be
consolidated into a share of a larger nominal value per share;  

	 	(ii) 	allot,
in contemplation of or subsequent to such consolidation or other action,
               shares or fractional shares sufficient to preclude or remove fractional
share                holdings;  

	 	(iii) 	redeem,
in the case of redeemable preference shares, and subject to applicable
               law, such shares or fractional shares sufficient to preclude or remove
               fractional share holdings; and/or  

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	 	(iv) 	cause
the transfer of fractional shares by certain shareholders of the Company
               to other shareholders thereof so as to most expediently preclude or remove
any                fractional shareholdings, and cause the transferees of such fractional
shares to                pay the transferors thereof the fair value thereof, and the
Board of Directors                is hereby authorized to act in connection with such
transfer, as agent for the                transferors and transferees of any such
fractional shares, with full power of                substitution, for the purposes of
implementing the provisions of this                sub-Article 7(b)(iv).  

SHARES 

	8.  	ISSUANCE
OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES  

	 	(a) 	Share
Certificates shall be issued under the corporate seal of the Company and
                    shall bear the signature of one Director, or of any other person or
persons so                     authorized by the Board of Directors. 

	 	(b) 	Each
shareholder shall be entitled to one or several numbered certificates for
                    all the shares of any class registered in his name, each for one or
more of such                     shares. Each certificate shall specify the serial
numbers of the shares                     represented thereby and may also specify the
amount paid up thereon. 

	 	(c) 	A
share certificate registered in the names of two or more persons shall be
                    delivered to the person first named in the Shareholder Register in
respect of                     such co-ownership. 

	 	(d) 	A
share certificate which has been defaced, lost or destroyed, may be replaced,
                    and the Company shall issue a new certificate to replace such
defaced, lost or                     destroyed certificate upon payment of such fee, and
upon the furnishing of such                     evidence of ownership and such indemnity,
as the Board of Directors in its                     discretion deems fit. 

	9.  	REGISTERED
HOLDER  

	 	
Except
as otherwise provided in these Articles, the Company shall be entitled to treat the
registered holder of each share as the absolute owner thereof, and accordingly, shall not,
except as ordered by a court of competent jurisdiction, or as required by statute, be
obligated to recognize any equitable or other claim to, or interest in, such share on the
part of any other person. 

	10.  	ALLOTMENT
OF SHARES  

	 	
The
un-issued shares from time to time shall be under the sole control of the Board of
Directors, who shall have the power to allot, issue or otherwise dispose of shares to such
persons, on such terms and conditions (including inter alia terms relating to calls
as set forth in Article 12(f) hereof), and either at par or at a premium, or, subject to
the provisions of the Companies Law, at a discount and/or with payment of commission, and
at such times, as the Board of Directors deems fit, and the power to give to any person
the option to acquire from the Company any shares, either at par or at a premium, or,
subject as aforesaid, at a discount and/or with payment of commission, during such time
and for such consideration as the Board of Directors deems fit. 

4

	11.  	PAYMENT
IN INSTALLMENTS  

	 	
If
pursuant to the terms of allotment or issue of any share, all or any portion of the price
thereof shall be payable in installments, every such installment shall be paid to the
Company on the due date thereof by the then registered holder(s) of the share or the
person(s) then entitled thereto. 

	12.  	CALLS
ON SHARES  

	 	(a) 	The
Board of Directors may, from time to time, as it, in its discretion, deems
                    fit, make calls for payment upon shareholders in respect of any sum
which has                     not been paid up in respect of shares held by such
shareholders and which is not                     pursuant to the terms of allotment or
issue of such shares or otherwise, payable                     at a fixed time, and each
shareholder shall pay the amount of every call so made                     upon him or
her (and of each installment thereof if the same is payable in
                    installments), to the Company at the time(s) and place(s) designated
by the                     Board of Directors, as any such time(s) may be thereafter
extended or place(s)                     changed. Unless otherwise stipulated in the
resolution of the Board of Directors                     (and in the notice hereafter
referred to), each payment in response to a call                     shall be deemed to
constitute a pro rata payment on account of all the                     shares in
respect of which such call was made. 

	 	(b) 	Notice
of any call for payment by a shareholder shall be given in writing to
                    such shareholder not less than fourteen (14) days prior to the time
of payment                     fixed in such notice, and shall specify the time and place
of payment. Prior to                     the time for any such payment fixed in a notice
of a call given to a                     shareholder, the Board of Directors may in its
absolute discretion, by notice in                     writing to such member, revoke such
call in whole or in part, extend the time                     fixed for payment thereof,
or designate a different place of payment. In the                     event of a call
payable in installments, only one notice thereof need be given. 

	 	(c) 	If
pursuant to the terms of allotment or issue of a share or otherwise, an
                    amount is made payable at a fixed time (whether on account of such
share or by                     way of premium), such amount shall be payable at such
time as if it were payable                     by virtue of a call made by the Board of
Directors and for which notice was                     given in accordance with
paragraphs (a) and (b) of this Article 12, and the                     provisions of
these Articles with regard to calls (and the non-payment thereof)
                    shall be applicable to such amount (and the non-payment thereof). 

	 	(d) 	Joint
holders of a share shall be jointly and severally liable to pay all calls
                    for payment in respect of such share and all interest payable
thereon. 

	 	(e) 	Any
amount called for payment which is not paid when due shall bear interest
                    from the date fixed for payment until actual payment thereof, at such
rate (not                     exceeding the then prevailing debitory rate charged by
leading commercial banks                     in Israel), and payable at such time(s) as
the Board of Directors may prescribe. 

	 	(f) 	Upon
the allotment of shares, the Board of Directors may provide for differences
                    among the allottees of such shares as to the amounts and times for
payment of                     calls in respect of such shares. 

5

	13.  	PREPAYMENT  

	 	
With
the approval of the Board of Directors, any shareholder may pay to the Company any amount
not yet payable in respect of his shares, and the Board of Directors may approve the
payment by the Company of interest on any such amount until the same would be payable if
it had not been paid in advance, at such rate and time(s) as may be approved by the Board
of Directors. The Board of Directors may at any time cause the Company to repay all or any
part of the money so advanced, without premium or penalty. Nothing in this Article 13
shall derogate from the right of the Board of Directors to make any call for payment
before or after receipt by the Company of any such advance. 

	14.  	FORFEITURE
AND SURRENDER  

	 	(a) 	If
any shareholder fails to pay an amount payable by virtue of a call, or
                    interest thereon as provided for in accordance herewith, on or before
the day                     fixed for payment of the same, the Board of Directors may at
any time after the                     day fixed for such payment, so long as such amount
(or any portion thereof) or                     interest thereon (or any portion thereof)
remains unpaid, resolve to forfeit all                     or any of the shares in
respect of which such payment was called for. All                     expenses incurred
by the Company in attempting to collect any such amount or                     interest
thereon, including, without limitation, attorney’s fees and costs
                    of legal proceedings, shall be added to, and shall, for all purposes
(including                     the accrual of interest thereon), constitute a part of,
the amount payable to                     the Company in respect of such call. 

	 	(b) 	Upon
the adoption of a resolution as to the forfeiture of a shareholder’s
                    share, the Board of Directors shall cause notice thereof to be given
to such                     shareholder, which notice shall state that, in the event of
the failure to pay                     the entire amount so payable by a date specified
in the notice (which date shall                     be not less than fourteen (14) days
after the date such notice is given and                     which may be extended by the
Board of Directors), such shares shall be ipso                     facto  forfeited,
provided, however, that, prior to such date, the Board of                     Directors
may nullify such resolution of forfeiture, but no such nullification
                    shall prevent the Board of Directors from adopting a further
resolution of                     forfeiture in respect of the non-payment of the same
amount. 

	 	(c) 	Without
derogating from Articles 54 and 59 hereof, whenever shares are forfeited
                    as herein provided, all dividends, if any, theretofore declared in
respect                     thereof and not actually paid shall be deemed to have been
forfeited at the same                     time. 

	 	(d) 	The
Company, by resolution of the Board of Directors, may accept the voluntary
                    surrender of any share not fully paid for. 

	 	(e) 	Any
share forfeited or surrendered as provided herein, shall become the property
                    of the Company, and the same, subject to the provisions of these
Articles, may                     be sold, re-allotted or otherwise disposed of as the
Board of Directors deems                     fit. 

	 	(f) 	Any
shareholder whose shares have been forfeited or surrendered shall cease to
                    be a shareholder in respect of the forfeited or surrendered shares,
but shall,                     notwithstanding, be liable to pay, and shall forthwith
pay, to the Company, all                     calls, interest and expenses owing upon or
in respect of such shares at the time                     of forfeiture or surrender,
together with interest thereon from the time of                     forfeiture or
surrender until actual payment, at the rate prescribed in Article
                    12(e) above, and the Board of Directors, in its discretion, may, but
shall not                     be obligated to, enforce the payment of such moneys, or any
part thereof. In the                     event of such forfeiture or surrender, the
Company, by resolution of the Board                     of Directors, may accelerate the
date(s) of payment of any or all amounts then                     owing to the Company by
the shareholder in question (but not yet due) in respect                     of all
shares owned by such shareholder, solely or jointly with another. 

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	 	(g) 	The
Board of Directors may at any time, before any share so forfeited or
                    surrendered shall have been sold, re-allotted or otherwise disposed
of, nullify                     the forfeiture or surrender on such conditions as it
deems fit, but no such                     nullification shall prevent the Board of
Directors from re-exercising its powers                     of forfeiture pursuant to
this Article 14. 

	15.  	LIEN  

	 	(a) 	Except
to the extent the same may be waived or subordinated in writing, the
                    Company shall have a first and paramount lien upon all the shares
registered in                     the name of each shareholder (without regard to any
equitable or other claim or                     interest in such shares on the part of
any other person), and upon the proceeds                     of the sale thereof, for his
debts, liabilities and engagements to the Company                     arising from any
amount payable by such shareholder in respect of any unpaid or                     partly
paid share, whether or not such debt, liability or engagement has
                    matured. Such lien shall extend to all dividends from time to time
declared or                     paid in respect of such share. Unless otherwise provided,
the registration by                     the Company of a transfer of shares shall be
deemed to be a waiver on the part                     of the Company of the lien (if any)
existing on such shares immediately prior to                     such transfer. 

	 	(b) 	The
Board of Directors may cause the Company to sell a share subject to such a
                    lien when the debt, liability or engagement giving rise to such lien
has                     matured, in such manner as the Board of Directors deems fit, but
no such sale                     shall be made unless such debt, liability or engagement
has not been satisfied                     within fourteen (14) days after written notice
of the intention to sell shall                     have been served on such shareholder,
his executors or administrators. 

	 	(c) 	The
net proceeds of any such sale, after payment of the costs thereof, shall be
                    applied in or toward satisfaction of the debts, liabilities or
engagements of                     such member in respect of such share (whether or not
the same have matured), and                     the residue (if any) shall be paid to the
shareholder, his executors,                     administrators or assigns. 

	16.  	SALE
AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN  

	 	
Upon
any sale of a share after forfeiture or surrender or for enforcing a lien, the Board of
Directors may appoint any person to execute an instrument of transfer of the share so sold
and cause the purchaser’s name to be entered in the Shareholder Register in respect
of such share. The purchaser shall be registered as the shareholder and shall not be bound
to see to the regularity of the sale proceedings, or to the application of the proceeds of
such sale, and after his name has been entered in the Shareholder Register in respect of
such share, the validity of the sale shall not be impeached by any person, and the remedy
of any person aggrieved by the sale shall be in damages only and against the Company
exclusively. 

	17.  	REDEEMABLE
SHARES  

	 	
The
Company may, subject to applicable law, issue redeemable shares and redeem the same.  

7

TRANSFER OF SHARES 

	18.  	REGISTRATION
OF TRANSFER  

	 	(a) 	No
transfer of shares shall be registered unless a proper writing or instrument
                    of transfer (in any customary form or any other form satisfactory to
the Board                     of Directors) has been submitted to the Company (or its
transfer agent),                     together with the share certificate(s) and such
other evidence of title as the                     Board of Directors may reasonably
require. Until the transferee has been                     registered in the Shareholder
Register (or with the transfer agent) in respect                     of the shares so
transferred, the Company may continue to regard the transferor                     as the
owner thereof. The Board of Directors, may, from time to time, prescribe
                    a fee for the registration of a transfer. 

	 	(b) 	The
Board of Directors may, in its discretion to the extent it deems necessary,
                    close the Shareholder Register for registrations of transfers of
shares during                     any year for a period determined by the Board of
Directors, and no registrations                     of transfers of shares shall be made
by the Company during any such period                     during which the Shareholder
Register is so closed. 

	19.  	RECORD
DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION  

	 	(a) 	Notwithstanding
any provision of these Articles to the contrary, and to allow                     the
Company to determine the shareholders entitled to notice of, or to vote at,
                    any Annual or Extraordinary General Meeting or any adjournment
thereof, or to                     express consent to or dissent from any corporate
action in writing without a                     meeting, or entitled to receive payment
of any dividend or other distribution or                     allotment of any rights, or
entitled to exercise any rights in respect of, or to                     take or be the
subject to, any other action, the Board of Directors may fix, a
                    record date, which shall not be more than forty (40) days, or any
longer period                     required under the Companies Law, nor less than four
(4) days, or any longer                     period required under the Companies Law,
before the date of such meeting or                     other action. A determination of
shareholders of record entitled to notice of or                     to vote at a meeting
shall apply to any adjournment of the meeting: provided,                     however,
that the Board of Directors may fix a new record date for the adjourned
                    meeting. 

	 	(b) 	Any
shareholder or shareholders of the Company holding, at least (i) five
                    percent (5%) of the issued share capital of the Company and one
percent (1%) of                     the voting rights in the issued share capital of the
Company or (ii) five                     percent (5%) of the voting rights in the issued
share capital of the Company,                     may, pursuant to the Companies Law,
request that the Board of Directors include                     a subject in the agenda
of a General Meeting to be held in the future. Any such                     request must
be in writing, must include all information related to subject                     matter
and the reason that such subject is proposed to be brought before the
                    General Meeting and must be signed by the shareholder or shareholders
making                     such request. In addition, subject to the Companies Law and
the provisions of                     Article 39, the Board of Directors may include such
subject in the agenda of a                     General Meeting only if the request has
been delivered to the Secretary of the                     Company not later than sixty
(60) days and not more than one hundred and twenty                     (120) days prior
to the General Meeting in which the subject is to be considered                     by
the shareholders of the Company. Each such request shall also set forth: (a)
                    the name and address of the shareholder making the request; (b) a
representation                     that the shareholder is a holder of record of shares
of the Company entitled to                     vote at such meeting and intends to appear
in person or by proxy at the meeting;                     (c) a description of all
arrangements or understandings between the shareholder                     and any other
person or persons (naming such person or persons) in connection                     with
the subject which is requested to be included in the agenda; and (d) a
                    declaration that all the information that is required under the
Companies Law                     and any other applicable law to be provided to the
Company in connection with                     such subject, if any, has been provided.
Furthermore, the Board of Directors,                     may, in its discretion to the
extent it deems necessary, request that the                     shareholders making the
request provide additional information necessary so as                     to include a
subject in the agenda of a General Meeting, as the Board of                     Directors
may reasonably require. 

8

TRANSMISSION OF SHARES 

	20.  	DECEDENTS’SHARES  

	 	(a) 	In
case of death of a registered holder of a share registered in the names of
                    two or more holders, the Company may recognize the survivor(s) as the
sole                     owner(s) thereof unless and until the provisions of Article
20(b) have been                     effectively invoked. 

	 	(b) 	Any
person becoming entitled to a share in consequence of the death of any
                    shareholder, upon producing evidence of the grant of probate or
letters of                     administration or declaration of succession (or such other
evidence as the Board                     of Directors may reasonably deem sufficient),
shall be registered as a                     shareholder in respect of such share, or
may, subject to the regulations as to                     transfer herein contained,
transfer such share. 

	21.  	RECEIVERS
AND LIQUIDATORS  

	 	(a) 	The
Company may recognize any receiver, liquidator or similar official appointed
                    to wind-up, dissolve or otherwise liquidate a corporate shareholder,
and a                     trustee, manager, receiver, liquidator or similar official
appointed in                     bankruptcy or in connection with the reorganization of,
or similar proceeding                     with respect to a shareholder or its
properties, as being entitled to the shares                     registered in the name of
such member. 

	 	(b) 	Such
receiver, liquidator or similar official appointed to wind-up, dissolve or
                    otherwise liquidate a corporate shareholder and such trustee,
manager, receiver,                     liquidator or similar official appointed in
bankruptcy or in connection with the                     reorganization of, or similar
proceedings with respect to a shareholder or its                     properties, upon
producing such evidence as the Board of Directors may deem                     sufficient
as to his authority to act in such capacity or under this Article,
                    shall with the consent of the Board of Directors (which the Board of
Directors                     may grant or refuse in its absolute discretion), be
registered as a shareholder                     in respect of such shares, or may,
subject to the regulations as to transfer                     herein contained, transfer
such shares. 

GENERAL MEETINGS 

	22.  	ANNUAL
GENERAL MEETING  

	 	(a) 	An
Annual General Meeting shall be held once in every calendar year at such time
                    (within a period of not more than fifteen (15) months after the last
preceding                     Annual General Meeting) and at such place, either within or
without the State of                     Israel, as may be determined by the Board of
Directors. 

9

	 	(b) 	Subject
to the provisions of these Articles, the function of the Annual General
                    Meeting shall be to elect the members of the Board of Directors; to
receive the                     financial statements; to appoint the Company’s
auditors and to fix their                     remuneration and to transact any other
business which, in accordance with these                     Articles or the Companies
Law, are to be transacted at a General Meeting. 

	23.  	EXTRAORDINARY
GENERAL MEETINGS  

	 	
All
General Meetings other than Annual General Meetings shall be called “Extraordinary
General Meetings”. The Board of Directors may, whenever it thinks fit, convene an
Extraordinary General Meeting, at such time and place, within or out of the State of
Israel, as may be determined by the Board of Directors, and shall be obliged to do so upon
a requisition in writing in accordance with Section 63 of the Companies Law. In addition,
the Board of Directors may, whenever it thinks fit, postpone or cancel an Extraordinary
General Meeting. 

	24.  	NOTICE
OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE  

	 	(a) 	Not
less than twenty-one (21) days’ prior notice, or thirty-five (35)
                    days’ prior notice to the extent required under regulations
promulgated                     under the Companies Law, shall be given of every General
Meeting. Each such                     notice shall specify the place and the day and
hour of the meeting and the                     general nature of each item to be acted
upon thereat, said notice to be given to                     all members who would be
entitled to attend and vote at such meeting. Anything                     therein to the
contrary notwithstanding, with the consent of all members                     entitled to
vote thereon, a resolution may be proposed and passed at such                     meeting
although a lesser notice than hereinabove prescribed has been given. 

	 	(b) 	The
accidental omission to give notice of a meeting to any member, or the
                    non-receipt of notice sent to such member, shall not invalidate the
proceedings                     at such meeting. 

	 	(c) 	Notwithstanding
anything to the contrary in this Article 24, and subject to any
                    applicable stock exchange rules or regulations, notice of a General
Meeting need                     not be delivered to shareholders, and notice by the
Company of such General                     Meeting that is published in two daily
newspapers in Israel shall be deemed to                     have been duly given on the
date of such publication to any shareholder whose                     address, as listed
in the Register of Shareholders (or as designated in writing                     for the
receipt of notices and other documents), is located in the State of
                    Israel, and notice by the Company of a General Meeting which is
published in one                     daily newspaper in New York, New York, USA or in one
international wire service,                     shall be deemed to have been duly given
on the date of such publication to any                     shareholder whose address, as
registered in the Register of Shareholders (or as                     designated in
writing for the receipt of notices and other documents), is                     located
outside of Israel. 

	25.  	MANNER
OF MEETING  

	 	
The
Board may, in its absolute discretion, resolve to enable persons entitled to attend a
General Meeting to do so by simultaneous attendance and participation at the principal
meeting place and a satellite meeting place or places anywhere in the world and the
shareholders present in person, by proxy or by written ballot at satellite meeting places
shall be counted in the quorum for and entitled to vote at the General Meeting in
question, and that meeting shall be duly constituted and its proceedings valid, provided
that the chairman of the General Meeting is satisfied that adequate facilities are
available throughout the General Meeting to ensure that shareholders attending at all the
meeting places are able to: 

10

	 	(a) 	participate
in the business for which the meeting has been convened; 

	 	(b) 	hear
all persons who speak (whether by the use of microphones, loudspeakers
                    audio-visual communications equipment or otherwise) in the principal
meeting                     place and any satellite meeting place(s); and 

	 	(c) 	be
heard by all other persons so present in the same way. 

PROCEEDINGS AT GENERAL
MEETINGS 

	26.  	QUORUM  

	 	(a) 	No
business shall be transacted at a General Meeting, or at any adjournment
                    thereof, unless the quorum required under these Articles for such
General                     Meeting or such adjourned meeting, as the case may be, is
present when the                     meeting proceeds to business. 

	 	(b) 	In
the absence of contrary provisions in these Articles, two or more
                    shareholders (not in default in payment of any sum referred to in
Article 32(a)                     hereof), present in person or by proxy and holding
shares conferring in the                     aggregate more than thirty three and a third
(33 1/3 %) percent of the voting                     power of the Company, shall
constitute a quorum of General Meetings. 

	 	(c) 	If
within half an hour from the time appointed for the meeting a quorum is not
                    present, the meeting, if convened upon requisition under Sections 64
or 65 of                     the Companies Law, shall be dissolved, but in any other case
it shall be                     adjourned to the same day in the next week, at the same
time and place, or to                     such day and at such time and place as the
Chairman may determine. No business                     shall be transacted at any
adjourned meeting except business which might                     lawfully have been
transacted at the meeting as originally called. 

	 	(d) 	The
Board of Directors may determine, in its discretion, the matters that may be
                    voted upon at the meeting by proxy or written ballot in addition to
the matters                     listed in Section 87(a) to the Companies Law. 

	27.  	CHAIRMAN  

	 	
The
Chairman of the Board of Directors, shall preside as Chairman at every General Meeting of
the Company. If at any meeting the Chairman is not present within fifteen (15) minutes
after the time fixed for holding the meeting or is unwilling to act as Chairman, the
Co-Chairman shall preside at the meeting. If at any such meeting both the Chairman and the
Co-Chairman are not present or are unwilling to act as Chairman, the shareholders present
shall choose someone of their number to be Chairman. The office of Chairman shall not, by
itself, entitle the holder thereof to vote at any General Meeting nor shall it entitle
such holder to a second or casting vote (without derogating, however, from the rights of
such Chairman to vote as a shareholder or proxy of a shareholder if, in fact, he is also a
shareholder or proxy). 

11

	28.  	ADOPTION
OF RESOLUTIONS AT GENERAL MEETINGS  

	 	(a) 	A
resolution, including a resolution to amend these Articles, shall be deemed
                    adopted if approved by the holders of a majority of the voting power
represented                     at the meeting in person or by proxy or by written ballot
and voting thereon. 

	 	(b) 	Every
question submitted to a General Meeting shall be decided by a show of
                    hands, but the Chairman of the Meeting may determine that a
resolution shall be                     decided by a written ballot. A written ballot may
be implemented before the                     proposed resolution is voted upon or
immediately after the declaration by the                     Chairman of the results of
the vote by a show of hands. If a vote by written                     ballot is taken
after such declaration, the results of the vote by a show of                     hands
shall be of no effect, and the proposed resolution shall be decided by
                    such written ballot. 

	 	(c) 	A
declaration by the Chairman of the meeting that a resolution has been carried
                    unanimously, or carried by a particular majority, or lost, and an
entry to that                     effect in the minute book of the Company, shall be
conclusive evidence of the                     fact without proof of the number or
proportion of the votes recorded in favor of                     or against such
resolution. 

	 	(d) 	Notwithstanding
any of the other provisions of these Articles, any resolution to
                    consummate a Merger, as defined in Section 1 of the Companies Law,
shall require                     the approval of the holders of a majority of the voting
power of the Company.                     For the avoidance of doubt, any amendment to
this Article 28(d) shall require                     the approval of the holders of a
majority of the voting power of the Company. 

	29.  	RESOLUTIONS
IN WRITING  

	 	
A
resolution in writing signed by all shareholders of the Company then entitled to attend
and vote at General Meetings or to which all such shareholders have given their written
consent (by letter, telegram, telex, facsimile, e-mail or otherwise) shall be deemed to
have been unanimously adopted by a General Meeting duly convened and held. 

	30.  	POWER
TO ADJOURN  

	 	(a) 	The
Chairman of a General Meeting at which a quorum is present may, with the
                    consent of the holders of a majority of the voting power represented
in person                     or by proxy and voting on the question of adjournment (and
shall if so directed                     by the meeting), adjourn the meeting from time
to time and from place to place,                     but no business shall be transacted
at any adjourned meeting except business                     which might lawfully have
been transacted at the meeting as originally called. 

	 	(b) 	It
shall not be necessary to give notice of an adjournment, whether pursuant to
                    Article 26(c) or Article 30(a), unless the meeting is adjourned for
twenty-one                     (21) days or more in which event notice thereof shall be
given in the manner                     required for the meeting as originally called. 

	31.  	VOTING
POWER  

	 	
Subject
to the provisions of Article 32(a) and subject to any provision hereof conferring special
rights as to voting, or restricting the right to vote, every shareholder shall have one
vote for each share held by him of record, on every resolution, without regard to whether
the vote thereon is conducted by a show of hands, by written ballot or by any other means. 

12

	32.  	VOTING
RIGHTS  

	 	(a) 	No
shareholder shall be entitled to vote at any General Meeting (or be counted
                    as a part of the quorum thereat), unless all calls and other sums
then payable                     by him in respect of his shares in the Company have been
paid, but this Article                     32(a) shall not apply to separate General
Meetings of the holders of a                     particular class of shares pursuant to
Article 6(b). 

	 	(b) 	A
company or other corporate body being a shareholder of the Company may duly
                    authorize any person to be its representative at any meeting of the
Company or                     to execute or deliver a proxy on its behalf. Any person so
authorized shall be                     entitled to exercise on behalf of such
shareholder all the power which the                     latter could have exercised if it
were an individual shareholder. Upon the                     request of the Chairman of
the meeting, written evidence of such authorization                     (in form
acceptable to the Chairman) shall be delivered to him. 

	 	(c) 	Any
shareholder entitled to vote may vote either in person or by proxy (who need
                    not be a shareholder of the Company), or, if the shareholder is a
company or                     other corporate body, by a representative authorized
pursuant to Article 32(b). 

	 	(d) 	If
two or more persons are registered as joint holders of any share, the vote of
                    the senior who tenders a vote, in person or by proxy, shall be
accepted to the                     exclusion of the vote(s) of the other joint
holder(s). For the purpose of this                     Article 32(d), seniority shall be
determined by the order of registration of the                     joint holders in the
Shareholder Register. 

PROXIES 

	33.  	INSTRUMENT
OF APPOINTMENTS  

	 	(a) 	An
instrument appointing a proxy shall be in writing and shall be substantially
                    in the following form: 

	 	
"I,
[insert name of shareholder] of [insert address of shareholder],
                      being a member of Silicom Ltd. (the "Company"), hereby appoint
[insert                       name of proxy] or [insert address of proxy] as my proxy to
vote for me                       and on my behalf at the [Annual / Extraordinary]
General Meeting of the                       Company to be held on the ___ day of
_______, 20__ and at any                       adjournment(s) thereof. 

	 	
Signed
this ____ day of ___________, 20__. 

	 	
_____________________

                      (Signature of Appointor)" 

	 	
or
in any usual or common form or in such other form as may be approved by the Board of
Directors, including appointment by telephone, Internet or any other electronic means.
Such proxy shall be duly signed by the appointor or such person’s duly authorized
attorney or, if such appointor is a company or other corporate body, under its common
seal or stamp or the hand of its duly authorized agent(s) or attorney(s).  

13

	 	(b) 	The
instrument appointing a proxy (and the power of attorney or other authority,
                    if any, under which such instrument has been signed) shall either be
presented                     to the Chairman at the meeting at which the person named in
the instrument                     proposes to vote or be delivered to the Company (at
its Registered Office, at                     its principal place of business, or at the
offices of its registrar or transfer                     agent, or at such place as the
Board of Directors may specify) not less than two                     (2) hours before
the time fixed for such meeting, except that the instrument                     shall be
delivered (i) twenty-four (24) hours before the time fixed for the
                    meeting where the meeting is to be held in the United States of
America and the                     instrument is delivered to the Company at its
Registered Office or principal                     place of business, or (ii) forty-eight
(48) hours before the time fixed for the                     meeting where the meeting is
to be held outside of the United States of America                     and Israel and the
instrument is delivered to the Company’s registrar or                     transfer
agent. Notwithstanding the above, the Chairman shall have the right to
                    waive the time requirement provided above with respect to all
instruments of                     proxies and to accept any and all instruments of proxy
received prior to the                     beginning of a General Meeting. 

	34.  	EFFECT
OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF APPOINTMENT  

	 	(a) 	A
vote cast in accordance with an instrument appointing a proxy shall be valid
                    notwithstanding the prior death or bankruptcy of the appointing
member (or of                     his attorney-in-fact, if any, who signed such
instrument), or the transfer of                     the share in respect of which the
vote is cast, unless written notice of such                     matters shall have been
received by the Company or by the Chairman of such                     meeting prior to
such vote being cast. 

	 	(b) 	An
instrument appointing a proxy shall be deemed revoked (i) upon receipt by the
                    Company or the Chairman, subsequent to receipt by the Company of such
                    instrument, of written notice signed by the person signing such
instrument or by                     the member appointing such proxy canceling the
appointment thereunder (or the                     authority pursuant to which such
instrument was signed) or of an instrument                     appointing a different
proxy (and such other documents, if any, required under                     Article 33(b)
for such new appointment), provided such notice of cancellation or
                    instrument appointing a different proxy were so received at the place
and within                     the time for delivery of the instrument revoked thereby as
referred to in                     Article 33(b) hereof, or (ii) if the appointing
shareholder is present in person                     at the meeting for which such
instrument of proxy was delivered, upon receipt by                     the Chairman of
such meeting of written notice from such member of the                     revocation of
such appointment, or if and when such shareholder votes at such
                    meeting. A vote cast in accordance with an instrument appointing a
proxy shall                     be valid notwithstanding the revocation or purported
cancellation of the                     appointment, or the presence in person or vote of
the appointing shareholder at                     a meeting for which it was rendered,
unless such instrument of appointment was                     deemed revoked in
accordance with the foregoing provisions of this Article 34(b)                     at or
prior to the time such vote was cast. 

14

BOARD OF DIRECTORS 

	35.  	POWERS
OF BOARD OF DIRECTORS  

	 	(a) 	General.
The management of the business of the Company shall be vested in                     the
Board of Directors, which may exercise all such powers and do all such acts
                    and things as the Company is authorized to exercise and do, and are
not by these                     Articles or by law required to be exercised or done by
the Company by action of                     its shareholders at a General Meeting. The
authority conferred on the Board of                     Directors by this Article 35
shall be subject to the provisions of the Companies                     Law, these
Articles and any regulation or resolution consistent with these
                    Articles adopted from time to time by the Company by action of its
shareholders                     at a General Meeting, provided, however, that no such
regulation or resolution                     shall invalidate any prior act done by or
pursuant to a decision of the Board of                     Directors which would have
been valid if such regulation or resolution had not                     been adopted. 

	 	(b) 	Borrowing
Power. The Board of Directors may from time to time, at its
                    discretion, cause the Company to borrow or secure the payment of any
sum or sums                     of money for the purposes of the Company, and may secure
or provide for the                     repayment of such sum or sums in such manner, at
such times and upon such terms                     and conditions as it deems fit, and,
in particular, by the issuance of bonds,                     perpetual or redeemable
debentures, debenture stock, or any mortgages, charges,                     or other
securities on the undertaking or the whole or any part of the property
                    of the Company, both present and future, including its uncalled or
called but                     unpaid capital for the time being. 

	 	(c) 	Reserves.
The Board of Directors may, from time to time, set aside any
                    amount(s) out of the profits of the Company as a reserve or reserves
for any                     purpose(s) which the Board of Directors, in its absolute
discretion, shall deem                     fit, including without limitation,
capitalization and distribution of bonus                     shares, and may invest any
sum so set aside in any manner and from time to time                     deal with and
vary such investments and dispose of all or any part thereof, and
                    employ any such reserve or any part thereof in the business of the
Company                     without being bound to keep the same separate from other
assets of the Company,                     and may subdivide or redesignate any reserve
or cancel the same or apply the                     funds therein for another purpose,
all as the Board of Directors may from time                     to time think fit. 

	36.  	EXERCISE
OF POWERS OF BOARD OF DIRECTORS  

	 	(a) 	A
meeting of the Board of Directors at which a quorum is present shall be
                    competent to exercise all the authorities, powers and discretion
vested in or                     exercisable by the Board of Directors, whether in person
or by any other means                     by which the Directors may hear each other
simultaneously. 

	 	(b) 	A
resolution proposed at any meeting of the Board of Directors shall be deemed
                    adopted if approved by a majority of the Directors present when such
resolution                     is put to a vote and voting thereon. 

	 	(c) 	The
Board of Directors may adopt resolutions without holding a meeting of the
                    Board of Directors, provided that all of the Directors then in office
and                     lawfully entitled to vote thereon shall have agreed to vote on
the matters                     underlying such resolutions without convening a meeting
of the Board of                     Directors. If the Board of Directors adopts
resolutions as set forth in the                     immediately preceding sentence,
minutes including such resolutions, including a                     resolution to vote on
such matters without convening a meeting of the Board of                     Directors,
shall be prepared and the Chairman of the Board of Directors (or in
                    his or her absence the Co-Chairman) will sign such minutes. 

15

	37.  	DELEGATION
OF POWERS  

	 	(a) 	The
Board of Directors may, subject to the provisions of the Companies Law,
                    delegate any or all of its powers to committees, each consisting of
one or more                     persons (who are Directors), and it may from time to time
revoke such delegation                     or alter the composition of any such
committee. Any Committee so formed (in                     these Articles referred to as
a “Committee of the Board of                     Directors”), shall, in the
exercise of the powers so delegated, conform to                     any regulations
imposed on it by the Board of Directors. The meetings and                     proceedings
of any such Committee of the Board of Directors shall, mutatis
                    mutandis, be governed by the provisions herein contained for
regulating the                     meetings of the Board of Directors, so far as not
superseded by any regulations                     adopted by the Board of Directors under
this Article. Unless otherwise expressly                     provided by the Board of
Directors in delegating powers to a Committee of the                     Board of
Directors, such Committee shall not be empowered to further delegate
                    such powers. 

	 	(b) 	Without
derogating from the provisions of Article 51, the Board of Directors may
                    from time to time appoint a Secretary to the Company, as well as
officers,                     agents, employees and independent contractors, as the Board
of Directors deems                     fit, and may terminate the service of any such
person. The Board of Directors                     may, subject to the provisions of the
Companies Law, determine the powers and                     duties, as well as the
salaries and emoluments, of all such persons, and may                     require
security in such cases and in such amounts as it deems fit. 

	 	(c) 	The
Board of Directors may from time to time, by power of attorney or otherwise,
                    appoint any person, company, firm or body of persons to be the
attorney or                     attorneys of the Company at law or in fact for such
purpose(s) and with such                     powers, authorities and discretions, and for
such period and subject to such                     conditions, as it deems fit, and any
such power of attorney or other appointment                     may contain such
provisions for the protection and convenience of persons                     dealing with
any such attorney as the Board of Directors deems fit, and may also
                    authorize any such attorney to delegate all or any of the powers,
authorities                     and discretion vested in him. 

	38.  	NUMBER
OF DIRECTORS  

	 	
The
Board of Directors of the Company shall consist of not less than two (2) nor more than
eight (8) Directors. 

	39.  	ELECTION
AND REMOVAL OF DIRECTORS  

	 	(a) 	Directors
shall be elected at the Annual General Meeting or an Extraordinary
                    Meeting of the Company by the vote of the holders of a majority of
the voting                     power represented at such meeting in person or by proxy
and voting on the                     election of directors. 

16

	 	(b) 	Nominations
for the election of Directors may be made by the Board of Directors
                    or a committee appointed by the Board of Directors or by any
shareholder holding                     at least (i) five percent (5%) of the outstanding
voting power in the Company                     and one percent (1%) of the outstanding
voting power in the Company or (ii) five                     percent (5%) of the
outstanding voting power in the Company. However, and                     without
limitation of Sections 63 or 64 of the Companies Law, any such
                    shareholder may nominate one or more persons for election as
Directors at a                     General Meeting only if a written notice of such
shareholder’s intent to                     make such nomination or nominations has
been given to the Secretary of the                     Company not later than (i) with
respect to an election to be held at an Annual                     General Meeting of
shareholders, ninety (90) days prior to the anniversary date                     of the
immediately preceding annual meeting, and (ii) with respect to an
                    election to be held at a Extraordinary General Meeting of
shareholders for the                     election of Directors, at least ninety (90) days
prior to the date of such                     meeting. Each such notice shall set forth:
(a) the name and address of the                     shareholder who intends to make the
nomination and of the person or persons to                     be nominated; (b) a
representation that the shareholder is a holder of record of                     shares
of the Company entitled to vote at such meeting and intends to appear in
                    person or by proxy at the meeting to nominate the person or persons
specified in                     the notice; (c) a description of all arrangements or
understandings between the                     shareholder and each nominee and any other
person or persons (naming such person                     or persons) pursuant to which
the nomination or nominations are to be made by                     the shareholder; and
(d) the consent of each nominee to serve as a Director of                     the Company
if so elected and a declaration signed by each of the nominees
                    declaring that there is no limitation under the Companies Law for the
                    appointment of such a nominee and that all the information that is
required                     under the Companies Law to provided to the Company in
connection with such an                     appointment has been provided. The Chairman
of the meeting may refuse to                     acknowledge the nomination of any person
not made in compliance with the                     foregoing procedure. 

	 	(c) 	The
General Meeting may, by a vote of the holders of at least a majority of the
                    voting power represented at the meeting, remove any Director(s) from
office, and                     elect Directors instead of Directors so removed or fill
any Vacancy (as defined                     in Article 41), however created, in the Board
of Directors unless such Vacancy                     was filled by the Board of Directors
under Article 41. 

	 	(d) 	In
the event of any contradiction between the provisions of this Article 39 and
                    the provisions of the Companies Law relating to the election and term
of                     External Directors, the applicable provisions of the Companies Law
shall govern,                     and the External Directors shall be elected and hold
office in accordance with                     the provisions of the Companies Law. 

	40.  	QUALIFICATION
OF DIRECTORS  

	 	
No
person shall be disqualified to serve as a Director by reason of his not holding shares in
the Company or by reason of his having served as a Director in the past. 

	41.  	CONTINUING
DIRECTORS IN THE EVENT OF VACANCIES  

	 	
In
the event that one or more vacancies is created in the Board of Directors, including
without limitation, a situation in which the number of Directors is less than the minimum
number permitted under Article 38 (a “Vacancy”), the continuing Directors may
continue to act in every matter, and, may appoint Directors to temporarily fill any such
Vacancy, provided, however, that if the number of Directors is less than two (2), they may
only act in (i) an emergency; or (ii) to fill the office of director which has become
vacant; or (iii) in order to call a General Meeting of the Company for the purpose of
electing Directors to fill any or all Vacancies, so that at least two (2) Directors are in
office as a result of said meeting. Notwithstanding the foregoing, in the event of Vacancy
of an External Director, the Company shall call a General Meeting to elect a new External
Director or take such other action as required under the Companies Law. 

17

	42.  	VACATION
OF OFFICE  

	 	(a) 	The
office of a Director shall be vacated, ipso facto, upon his or her
                    death, or if he or she be found lunatic or become of unsound mind, or
if he or                     she becomes bankrupt, or if the Director is a company, upon
its winding-up, or                     if he is found by a court guilty of any of the
felonies listed in Section 226 of                     the Companies Law. 

	 	(b) 	The
office of a Director may also be vacated by the written resignation of the
                    Director. Such resignation shall become effective on the date fixed
therein, or                     upon the delivery thereof to the Company, whichever is
later. Such written                     resignation shall include the reasons that lead
the Director to resign from his                     office. 

	43.  	REMUNERATION
OF DIRECTORS  

	 	
A
Director shall be paid remuneration by the Company for his services as Director to the
extent such remuneration shall have been approved by the Company in accordance with the
Companies Law. 

	44.  	CONFLICT
OF INTEREST  

	 	
Subject
to the provisions of the Companies Law, no Director shall be disqualified by virtue of his
office from holding any office or place of profit in the Company or in any company in
which the Company shall be a shareholder or otherwise interested, or from contracting with
the Company as vendor, purchaser or otherwise, nor shall any such contract, or any
contract or arrangement entered into by or on behalf of the Company in which any Director
shall be in any way interested, be voided, nor, other than as required under the Companies
Law, shall any Director be liable to account to the Company for any profit arising from
any such office or place of profit or realized by any such contract or arrangement by
reason only of such Director’s holding that office or of the fiduciary relations
thereby established, but the nature of his interest, as well as any material fact or
document, must be disclosed by him at the meeting of the Board of Directors (or a
Committee of the Board of Directors) at which the contract or arrangement is first
considered, if his interest then exists, or, in any other case, at no later than the first
meeting of the Board of Directors (or a Committee of the Board of Directors) after the
acquisition of his interest. 

	45.  	ALTERNATE
DIRECTORS  

	 	(a) 	Subject
to the provisions of the Companies Law and subject to the approval of
                    the Board of Directors, a Director may appoint an alternate (in these
Articles                     referred to an: “Alternate Director”). A person
that is not qualified                     to serve as a Director or a person that is
serving as a Director or Alternate                     Director shall not be appointed to
serve as an Alternate Director. 

	 	(b) 	An
Alternate Director shall be deemed for all intents and purposes as the
                    Director which appointed him as his alternate, and he shall be
entitled to be                     present at meetings of the Board of Directors and/or
Committees of the Board of                     Directors, to participate and vote
thereat, as was the Director that appointed                     him was entitled. 

	 	(c) 	A
Director that appointed an Alternate Director may, subject to the provisions
                    of the Companies Law, cancel the appointment at any time.
Furthermore, the                     office of an Alternate Director shall be vacated,
whenever the office of the                     Director that appointed him ceases to
serve as a Director of the Company. 

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	 	(d) 	Any
appointment of an Alternate Director or cancellation of the appointment, as
                    aforementioned, shall be done by written notice which shall be
delivered to the                     Alternate Director and to the Company, and shall
come into force after delivery                     of the letter of appointment or
cancellation as aforesaid, or on the date                     specified in the letter of
appointment or letter of cancellation, whichever the                     later. 

PROCEEDINGS OF THE
BOARD OF DIRECTORS 

	46.  	MEETINGS  

	 	(a) 	The
Board of Directors may meet and adjourn its meetings and otherwise regulate
                    such meetings and proceedings as the Directors think fit. 

	 	(b) 	Any
Director may at any time, and the Secretary, upon the request of such
                    Director, shall, convene a meetings of the Board of Directors, but
not less than                     two (2) days’ notice shall be given of any
meetings so convened. Notice of                     any such meeting shall be given to
all the Directors and may be given orally, by                     telephone, in writing
or by mail, email or facsimile. Notwithstanding anything                     to the
contrary herein, failure to deliver notice to a director of any such
                    meeting in the manner required hereby may be waived by such Director,
and a                     meeting shall be deemed to have been duly convened
notwithstanding such                     defective notice if such failure or defect is
waived prior to action being taken                     at such meeting, by all Directors
entitled to participate at such meeting to                     whom notice was not duly
given as aforesaid. 

	47.  	RESOLUTIONS
IN WRITING  

	 	
A
resolution in writing signed by the Chairman of the Board of Directors, or of a Committee
of the Board of Directors, provided that all the members of the Board of Directors or such
Committee have agreed to adopt such resolution without convening a meeting, shall be valid
for every purpose as a resolution adopted at a Board of Directors’ or Committee
meeting, as the case may be, that was duly convened and held. In place of a Director the
aforesaid resolution may be signed and delivered by his attorney. 

	48.  	QUORUM  

	 	
Until
otherwise unanimously decided by the Board of Directors, a quorum at a meeting of the
Board of Directors shall be constituted by the presence in person or by telephone
conference of half (50%) of the Directors then in office who are lawfully entitled to
participate in the meeting, including Alternate Directors, if there is a meeting at which
an appointing Director is not present. No business shall be transacted at a meeting of the
Board of Directors unless the requisite quorum is present (in person or by telephone
conference or by other means by which all directors may hear and be heard) when the
meeting proceeds to business. 

	49.  	CHAIRMAN
OF THE BOARD OF DIRECTORS  

	 	
The
Board of Directors may from time to time, elect one of its members to be the Chairman of
the Board of Directors, and another of its members as Co-Chairman, remove such Chairman
and Co-Chairman from office and appoint others in their place. The Chairman of the Board
of Directors shall preside at every meeting of the Board of Directors, but if there is no
such Chairman, or if at any meeting he is not present within fifteen (15) minutes of the
time fixed for the meeting or if he is unwilling to take the chair, the Co-Chairman shall
preside. If both the Chairman and the Co-Chairman are not present within such fifteen (15)
minutes or are unwilling to take the chair the Directors present shall choose one of their
number to be the Chairman of such meeting. 

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	50.  	VALIDITY
OF ACTS DESPITE DEFECTS  

	 	
All
acts done bona fide at any meeting of the Board of Directors, or of a Committee of
the Board of Directors, or by any person(s) acting as Director(s), shall, notwithstanding
that it may afterwards be discovered that there was some defect in the appointment of the
participants in such meetings or any of them or any person(s) acting as aforesaid, or that
they or any of them were disqualified, be as valid as if there were no such defect or
disqualification. 

CHIEF EXECUTIVE
OFFICER AND PRESIDENT 

	51.  	CHIEF
EXECUTIVE OFFICER AND PRESIDENT  

	 	
The
Board of Directors may from time to time appoint one or more persons, whether or not
Directors, as Chief Executive Officer or Officers, General Manager or Managers, or
President of the Company and may confer upon such person(s), and from time to time modify
or revoke, such title(s) and such duties and authorities of the Board of Directors as the
Board of Directors may deem fit, subject to such limitations and restrictions as the Board
of Directors may from time to time prescribe. Unless otherwise determined by the Board of
Directors, the Chief Executive Officer shall have authority with respect of the management
of the Company in the ordinary course of business. Such appointment(s) may be either for a
fixed term or without any limitation of time, and the Board of Directors may from time to
time (subject to the provisions of the Companies Law and of any contract between any such
person and the Company) fix his or their salaries and emoluments, remove or dismiss him or
them from office and appoint another or others in his or their place or places. 

MINUTES 

	52.  	MINUTES  

	 	(a) 	Minutes
of each General Meeting and of each meeting of the Board of Directors or
                    of any Committee of the Board of Directors shall be recorded and duly
entered in                     books provided for that purpose, and shall be held by the
Company at its                     principal place of office or its Registered Office or
such other place as shall                     have been determined by the Board of
Directors. Such minutes shall, in all                     events, set forth the names of
the persons present at the meeting and all                     resolutions adopted
thereat. 

	 	(b) 	Any
minutes as aforesaid, if purporting to be signed by the Director presiding
                    over the meeting, shall constitute prima facie evidence of the
matters recorded                     therein. 

DIVIDENDS 

	53.  	DECLARATION
OF DIVIDENDS  

	 	
The
Board of Directors may, subject to the applicable provisions of the Companies Law, from
time to time declare, and cause the Company to pay, such dividend as may appear to the
Board of Directors to be justified by the profits of the Company. The Board of Directors
shall determine the time for payment of such dividends, both interim and final, and the
record date for determining the shareholders entitled thereto. 

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	54.  	FUNDS
AVAILABLE FOR PAYMENT OF DIVIDEND  

	 	
No
dividend shall be paid otherwise than out of the profits of the Company.  

	55.  	AMOUNT
PAYABLE BY WAY OF DIVIDENDS  

	 	
Subject
to the provisions of these Articles and subject to any rights or conditions attached at
that time to any share in the capital of the Company granting preferential, special or
deferred rights or not granting any rights with respect to dividends, the profits of the
Company which shall be declared as dividends shall be distributed according to the
proportion of the nominal value paid up on account of the shares held at the date so
appointed by the Company, without regard to the premium paid in excess of the nominal
value, if any. No amount paid or credited as paid on a share in advance of calls shall be
treated for purposes of this Article as paid on a share. 

	56.  	INTEREST  

	 	
No
dividend shall carry interest as against the Company.  

	57.  	PAYMENT
IN SPECIE  

	 	
Upon
the determination of the Board of Directors, the Company (i) may cause any monies,
investments, or other assets forming part of the undivided profits of the Company,
standing to the credit of a reserve fund, or to the credit of a reserve fund for the
redemption of capital, or in the hands of the Company and available for dividends, or
representing premiums received on the issuance of shares and standing to the credit of the
share premium account, to be capitalized and distributed among such of the shareholders as
would be entitled to receive the same if distributed by way of dividend and in the same
proportion, on the footing that they become entitled thereto as capital, or may cause any
part of such capitalized fund to be applied on behalf of such shareholders in paying up in
full, either at par or at such premium as the resolution may provide, any unissued shares
or debentures or debenture stock of the Company which shall be distributed accordingly or
in payment, in full or in part, of the uncalled liability on all issued shares or
debentures or debenture stock if such liability exists, on a pro rata  basis; and
(ii) may cause such distribution or payment to be accepted by such shareholders in full
satisfaction of their interest in the said capitalized sum. 

	58.  	IMPLEMENTATION
OF POWERS UNDER ARTICLE 57  

	 	
For
the purpose of giving full effect to any resolution under Article 57, and without
derogating from the provisions of Article 7(b) hereof, the Board of Directors may settle
any difficulty which may arise in regard to the distribution as it thinks expedient, and,
in particular, may issue fractional certificates, and may fix the value for distribution
of any specific assets, and may determine that cash payments shall be made to any members
upon the footing of the value so fixed, or that fractions of less value than the nominal
value of one share may be disregarded in order to adjust the rights of all parties, and
may vest any such cash, shares, debentures, debenture stock or specific assets in trustees
upon such trusts for the persons entitled to the dividend or capitalized fund as may seem
expedient to the Board of Directors. 

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	59.  	DIVIDEND
ON UNPAID SHARES  

	 	
Without
derogating from Article 54 hereof, the Board of Directors may give an instruction which
shall prevent the distribution of a dividend to the registered holders of shares, the full
nominal amount of which, has not been paid up. 

	60.  	RETENTION
OF DIVIDENDS  

	 	(a) 	The
Board of Directors may retain any dividend or other monies payable or
                    property distributable in respect of a share on which the Company has
a lien,                     and may apply the same in or towards satisfaction of the
debts, liabilities, or                     engagements in respect of which the lien
exists. 

	 	(b) 	The
Board of Directors may retain any dividend or other monies payable or
                    property distributable in respect of a share in respect of which any
person is,                     under Article 20 or 21, entitled to become a member, or
which any person, is,                     under said Articles, entitled to transfer,
until such person shall become a                     member in respect of such share or
shall transfer the same. 

	61.  	UNCLAIMED
DIVIDENDS  

	 	
All
unclaimed dividends or other moneys payable in respect of a share may be invested or
otherwise made use of by the Board of Directors for the benefit of the Company until
claimed. The payment by the Directors of any unclaimed dividend or such other moneys into
a separate account shall not cause the Company to be a trustee in respect thereof. The
principal (and only the principal) of an unclaimed dividend or such other moneys shall be,
if claimed, paid to the person entitled thereto. 

	62.  	MECHANICS
OF PAYMENT  

	 	
The
Board of Directors may fix the mechanics for payment of dividends as it deems fit.
However, if nothing to the contrary is provided in the resolution of the Board of
Directors, then all dividends, or other moneys payable in cash in respect of a share, may
be paid by check or warrant sent through the post to, or left at, the registered address
of the person entitled thereto or by transfer to a bank account specified by such person
(or, if two or more persons are registered as joint holders of such share or are entitled
jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, to
the joint holder whose name is registered first in the Shareholder Register or his bank
account or the person who the Company may then recognize as the owner thereof or entitled
thereto under Article 20 or 21 hereof, as applicable, or such person’s bank account),
or to such person and at such other address as the person entitled thereto may by writing
direct. Every such check or warrant shall be made payable to the order of the person to
whom it is sent, or to such person as the person entitled thereto as aforesaid may direct,
and payment of the check or warrant by the banker upon whom it is drawn shall be a good
discharge to the Company. 

	63.  	RECEIPT
FROM A JOINT HOLDER  

	 	
If
two or more persons are registered as joint holders of any share, or are entitled jointly
thereto in consequence of the death or bankruptcy of the holder or otherwise, any one of
them may give effectual receipts for any dividend or other moneys payable or property
distributable in respect of such share. 

22

ACCOUNTS 

	64.  	BOOKS
OF ACCOUNT  

	 	
The
Board of Directors shall cause accurate books of account to be kept in accordance with the
provisions of the Companies Law and of any other applicable law. Such books of account
shall be kept at the Registered Office of the Company, or at such other place or places as
the Board of Directors may think fit, and they shall always be open to inspection by all
Directors. No member, not being a Director, shall have any right to inspect any account or
book or other similar document of the Company, except as conferred by law or authorized by
the Board of Directors or by resolution of the shareholders of the Company. 

	65.  	AUDIT  

	 	
At
least once in every fiscal year the accounts of the Company shall be audited and the
correctness of the profit and loss account and balance sheet certified by one or more duly
qualified auditors. 

	66.  	AUDITORS  

	 	
The
appointment, authorities, rights and duties of the auditor(s) of the Company, shall be
regulated by applicable law, provided, however, that in exercising its authority to fix
the remuneration of the auditor(s), the shareholders by resolution in a General Meeting
may act (and in the absence of any action in connection therewith shall be deemed to have
so acted) to authorize the Board of Directors or a Committee of the Board of Directors to
fix such remuneration subject to such criteria or standards, if any, as may be provided in
such resolution, and if no such criteria or standards are so provided, such remuneration
shall be fixed in an amount commensurate with the volume and nature of the services
rendered by such auditor(s). 

BRANCH REGISTERS 

	67.  	BRANCH
REGISTERS  

	 	
Subject
to and in accordance with the provisions of Sections 130 to 139, inclusive, of the
Companies Law and to all orders and regulation issued thereunder, the Company may cause
branch registers to be kept in any place outside Israel as the Board of Directors may
think fit, and, subject to all applicable requirements of law, the Board of Directors may
from time to time adopt such rules and procedures as it may think fit in connection with
the keeping of such branch registers. 

INSURANCE, INDEMNITY
AND EXEMPTION 

	68.  	INDEMNITY,
INSURANCE AND EXEMPTION  

	 	(a) 	Subject
to the provisions of the Companies Law, the Company may resolve in
                    advance to exempt an Office Holder of the Company from all or any of
his                     liability for damage in consequence of a breach of the duty of
care                     vis-à-vis the Company. 

	 	(b) 	Subject
to the provisions of the Companies Law, the Company may enter into a
                    contract to insure the liability of an Office Holder of the Company
for an                     obligation imposed upon him in consequence of an act done in
his capacity as an                     Office Holder, in any of the following cases: 

23

	 	
(i)
          a breach of the duty of care vis-à-vis the Company or vis-à-vis
          another person;  

	 	
(ii)
            a breach of the fiduciary duty vis-à-vis the Company, provided that
the           Office Holder acted in good faith and had reasonable basis to believe that
the           act would not harm the Company;  

	 	
(iii)
            a monetary obligation imposed on him in favor of another person;  

	 	
(iv)
            any other incident for which it is or shall be permitted by law to insure the
          liability of an Office Holder.  

	 	(c) 	Subject
to the provisions of the Companies Law –

	 	
(i)
            The Company may give an undertaking in advance to indemnify an Office Holder
of           the Company for an obligation or expense as specified in sub-Article (d)
below,           imposed on or incurred by him in consequence of an act or omission to
act in his           capacity as an Office Holder, provided that the undertaking with
respect to           obligations specified in sub-Article (d)(i) below is limited to
events which in           the Board of Directors’ opinion are foreseeable in view of
the           Company’s activity at the time of the indemnity undertaking, and to an
          amount or degree which the Board of Directors has determined is reasonable in
          the circumstances of the case (hereinafter: “an indemnification
          undertaking”).  

	 	
(ii)
            Without derogating from the provisions of sub-Article (c)(i) above, the
Company           may indemnify an Office Holder of the Company retroactively, for an
obligation           or expense as specified in sub-Article (d) below, imposed or
incurred on him in           consequence of an act done in his capacity as an Office
Holder in the Company.  

	 	(d) 	The
indemnification undertaking or indemnity, as mentioned in sub-Article (c)
                    above, may be given for an obligation or expense as specified in
sub-Articles                     (d)(i) to (d)(iv) below, imposed on or incurred by the
Office Holder of the                     Company in consequence of an act or omission to
act in his capacity as an Office                     Holder, as follows: 

	 	
(i)
            A monetary liability imposed by the Office Holder of the Company pursuant to
a           judgment in favor of another person, including a judgment imposed on such
Office           Holder in a compromise or an arbitration decision that was approved by a
court           of law;  

	 	
(ii)Reasonable
litigation expenses, including attorneys’ fees, incurred by the Office Holder of the
Company due to an investigation or a proceeding instituted against the Office Holder by
an authority competent to administrate such an investigation or proceeding, and that was
“finalized without the filing of an indictment against the Office Holder” (as
defined in the Companies Law) and without any “financial obligation imposed on the
Office Holder in lieu of criminal proceedings” (as defined in the Companies Law); or
that was “finalized without the filing of an indictment against the Office Holder” but
with “financial obligation imposed on the Office Holder in lieu of criminal
proceedings” with respect to an offence that does not require proof of criminal
intent;  

24

	 	
(iii)
            Reasonable litigation expenses, including attorneys’ professional fees,
          incurred by the Office Holder of the Company or which he is ordered to pay by a
          court in proceedings filed against him by the Company or on its behalf or by
          another person, or in a criminal indictment of which he is acquitted, or in a
          criminal indictment of which he is convicted of an offence that does not
require           proof of criminal intent.  

	 	
(iv)
            Any other obligation or expense for which it is or shall be permitted by law
to           indemnify an Office Holder of the Company.  

	 	(e) 	Any
amendment to the Companies Law adversely affecting the right of any Office
                    Holder to be indemnified or insured pursuant to this Article 68 shall
be                     prospective in effect, and shall not affect the Company’s
obligation or                     ability to indemnify or insure an Office Holder for any
act or omission                     occurring prior to such amendment, unless otherwise
provided by the Companies                     Law. 

	 	(f) 	The
provisions of this Article 68 are not intended, and shall not be interpreted
                    so as to restrict the Company, in any manner, in respect of the
procurement of                     insurance and/or indemnification and/or exculpation,
in favour of any person who                     is not an Office Holder, including,
without limitation, any employee, agent,                     consultant or contractor of
the Company who is not an Office Holder. 

WINDING UP 

	69.  	WINDING
UP  

	 	
If
the Company is wound up, then subject to applicable law and to the rights of the holders
of shares with special rights upon winding up, the assets of the Company available for
distribution among the shareholders shall be distributed to them in proportion to the
respective holdings of the shares in respect of which such distribution is being made. 

RIGHTS OF SIGNATURE,
STAMP, AND SEAL 

	70.  	RIGHTS
OF SIGNATURE, STAMP, AND SEAL  

	 	(a) 	The
Board of Directors shall be entitled to authorize any person or persons (who
                    need not be Directors) to act and sign on behalf of the Company, and
the acts                     and signature of such person(s) on behalf of the Company
shall bind the Company                     insofar as such person(s) acted and signed
within the scope of his or their                     authority. 

	 	(b) 	The
Board of Directors may provide for a seal. If the Board of Directors so
                    provides, it shall also provide for the safe custody thereof. Such
seal shall                     not be used except by the authority of the Board of
Directors and in the                     presence of the person(s) authorized to sign on
behalf of the Company, who shall                     sign every instrument to which such
seal is affixed. 

25

NOTICES 

	71.  	NOTICES  

	 	(a) 	Any
written notice or other document may be served by the Company upon any
                    shareholder either personally or by sending it by prepaid mail
(airmail if sent                     internationally) addressed to such member at his
address as described in the                     Shareholder Register. Any written notice
or other document may be served by any                     shareholder upon the Company
by tendering the same in person to the Secretary or                     the General
Manager or Chief Executive Officer of the Company at the principal
                    office of the Company or by sending it by prepaid registered mail
(airmail if                     posted outside Israel) to the Company at it Registered
Address. Any such notice                     or other document shall be deemed to have
been served two (2) business days                     after it has been posted (seven (7)
business days if posted internationally), or                     when actually tendered
in person, to such shareholder (or to the Secretary or                     the General
Manager or the Chief Executive Officer), whichever is earlier.                     Notice
sent by email or facsimile shall be deemed to have been served two
                    business days after the notice is sent to the addressee, or when in
fact                     received, whichever is earlier, notwithstanding that if it was
defectively                     addressed or failed, in some other respect, to comply
with the provisions of                     this Article 71(a). 

	 	(b) 	All
notices to be given to the shareholders shall, with respect to any share to
                    which persons are jointly entitled, be given to whichever of such
persons is                     named first in the Shareholder Register, and any notice so
given shall be                     sufficient notice to the holders of such share. 

	 	(c) 	If
requested by the Company, each shareholder shall provide the Company with the
                    shareholder’s full street and mailing address, as well, if
available with                     facsimile number and email address. Any shareholder
whose address is not set out                     in the Shareholder Register, and who
shall not have designated in writing                     delivered to the Company an
address for the receipt of notices, shall not be                     entitled to receive
any notice from the Company. 

26

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