Strauss : Notice of convening special AGM to approve employment of stake holder's relative - English

CONVENIENCE TRANSLATION The Hebrew version is the binding version

STRAUSS GROUP LTD.

(The "Company")

January 3, 2019

Messrs	Messrs
The Israel Securities Authority	Tel Aviv Stock Exchange Ltd.
Via MAGNA	Via MAGNA
Dear Sir/Madam:

Re: Transaction Report and Notice of Convening of a Special General Meeting of Shareholders of the

Company

In accordance with the provisions of the Companies Law, 1999 (the "Companies Law"), the Securities Regulations (Periodic and Immediate Reports), 1970, the Companies Regulations (Written Votes and Position Statements), 2005 (the "Voting Regulations"), the Securities Regulations (Transaction between the Company and a Controlling Shareholder Therein), 2001 (the "Controlling Shareholder Regulations") and the Companies Regulations (Notice and Announcement of General Meetings and Class Meetings in Publicly Owned Companies and Addition of an Item to the Agenda), 2000, notice is hereby given of the convening of a Special General Meeting of the Shareholders of the Company, which shall be held on Monday, February 11, 2019 at 3:00 p.m. at the offices of the Company at 49 Hasivim Street, Petach Tikva (the "General Meeting" or the "Meeting").

1.

Item on the Agenda and Proposed Resolution

1.1

Approval of the employment terms of a relative of the controlling shareholder, who is employed by the Company and does not serve as an officer of the Company. It is proposed to approve the employment terms of Mr. Shawn Koffler, a relative (grandson) of Mr. Michael Strauss, controlling shareholder of the Company, who is employed by the Company and does not serve as an officer of the Company, as described in section 2 below.

Proposed resolution: "Approve the employment terms of Mr. Shawn Koffler, who is a relative of a controlling shareholder and who is employed by the Company and does not serve as an officer of the Company, as described in section 2 of the convening report".

2.

Information Required Pursuant to the Controlling Shareholder Regulations

• 2.1 Mr. Koffler has been employed by the Company since December 2018 in the marketing unit in the Israel Coffee Division. Mr. Koffler is part of the Israel Coffee marketing team. Following an overlap period, Mr. Koffler will perform part of the duties of Israel Coffee's e-Com director, who will be taking maternity leave, and will subsequently serve as a brand manager in the Israel Coffee Division.

• 2.2 Mr. Koffler holds a bachelor's degree in Economics and Management from the University of Miami in Florida, USA, and an MBA from IESE Business School in Barcelona, Spain.

• 2.3 Mr. Koffler possesses experience in marketing, inter alia in marketing projects at Unilever UK, and was in charge of marketing in the setup team of a Canadian startup (Nuuvera), which is engaged in medical cannabis.

• 2.4 The heads of Mr. Koffler's employment terms are as follows:

  • 2.4.1 Mr. Koffler will be employed in a full-time capacity.

  • 2.4.2 Salary and accompanying benefits: Mr. Koffler's monthly salary is NIS 12,500 (gross) and will be updated in accordance with extension orders pertaining to cost-of-living increments in the Israeli economy. In accordance with Company policy pertaining to employee compensation, pursuant to which a salary review is made each year for employees of the Company, the monthly salary will be raised at the end of one year's employment in his position as well as at the end of the following year, by 12% in relation to the salary for the last calendar month of the past year, with the approval of the Remuneration Committee (which may reduce all or part of the salary increase, and may not approve any salary increase at all)1. Mr. Koffler shall be entitled to social provisions, including provisions to a pension fund and/or managers' insurance, including loss of earning capacity, and to an advanced study fund, in accordance with his employment terms, and to accompanying benefits in accordance with the Company's procedures, including a Company car as customary for employees on the level in which he is employed and the costs of its maintenance (excluding tax expenses in respect of the value thereof) (it is noted that according to the Company's procedures, Mr. Koffler may waive the car and receive payment in lieu thereof), mobile phone and the costs of its maintenance (excluding tax expenses in respect of the value thereof), convalescence allowance (10 days), leave (17 workdays, which shall be updated according to Company policy) and sick leave (30 days a year up to a cumulative quota of 180 days).

1 It is emphasized that approval pursuant to this convening report does not create any right to the receipt of any of the compensation components enumerated in this report.

• 2.4.3 Annual incentive: The Company may award Mr. Koffler an annual incentive, determined according to the incentive plan in place in Israel for employees on his level.

  The incentive plan is based on the extent of accomplishment of financial targets (which are based on the goals of the unit to which Mr. Koffler is assigned) and the extent of accomplishment of functional targets (measurable personal goals set at the beginning of each calendar year according to the specific position). A score shall be awarded for the extent of accomplishment of each of the targets according to a "grading scale" of 1 to 5,

  and the amount of the incentive shall be determined according to the weighted score for the accomplishment of financial and functional targets. The target incentive for full accomplishment is 1.2 salaries, and the maximum incentive is 2.8 salaries.

• 2.4.4 Termination: Mr. Koffler's employment is for an indefinite period, and either party may terminate the employment relationship by giving thirty (30) days' advance notice to the

  counterparty at any time and for any reason (except for special circumstances, in which case the Company many terminate the employment relationship forthwith without advance notice, such as circumstances in which severance pay may be denied by law);

  the Company may shorten the advance notice period or agree that it be shortened at Mr.

  Koffler's request, according to his employment terms.

• 2.4.5 Following is an estimate of the compensation to be paid for a typical year (amounts refer to a period of one year):

Recipient's details				Compensation for services (in terms of cost to the Company) in NIS (according to the Company's non-GAAP management reports)
Name	Position	Job scope	% holding in equity	Total salary (a)	Bonus (b)	Share-based payment	Total
Shawn Koffler	Israel Coffee e-Com team; brand manager in the marketing unit in the Coffee Division	Full-time position	-	245,502	15,000	-	260,502

(a) Salary is in terms of the employer's cost to the Company, and includes accompanying benefits including social rights, social provisions and customary benefits. If the salary is raised after one year by the maximum rate of 12% the total salary will be NIS 269,006, and in the case of an additional pay raise, the total salary will be NIS 295,331.

(b)Calculated assuming an annual incentive at the amount of the target incentive (representing full accomplishment of targets) of 1.2 monthly salaries, and a monthly salary of NIS 12,500. If the salary is raised after the first year and second year, the target incentive will be NIS 16,800 and NIS 18,816, respectively.

• 2.5 Personal interest of the controlling shareholders of the Company and nature of their personal interest: As at the date of this report the controlling shareholders of the Company are Mr. Michael Strauss and Ms. Ofra Strauss, (indirectly) through their holdings in Strauss Holdings and through a direct holding of the Company's shares by Mr. Michael Strauss. To the best of the Company's knowledge, as at the date of this report Strauss Holdings holds approximately 57.64% of the issued and paid-up share capital of the Company and the voting rights therein, and Mr. Michael Strauss has a direct holding of approximately 0.02% of the issued and paid-up share capital of the Company and the voting rights therein. The controlling shareholders have a personal interest in the approval of the employment terms by virtue of their kinship with Mr. Koffler.

• 2.6 Personal interest of directors and nature of their personal interest: The directors who have a personal interest are Ms. Ofra Strauss and Mr. Adi Strauss, who are Mr. Koffler's aunt and uncle. For caution's sake only, a personal interest has been attributed to Mr. Gil Midyan by virtue of his kinship with Mr. Koffler (Mr. Gil Midyan is the cousin of Mr. Shawn Koffler's mother) and to Ms. Ronit Haimovitch, who is a director of Strauss Holdings. Said directors were not present at and did not participate in deliberations with regard to this transaction. It is noted that in light of said personal interest, the transaction was also approved in accordance with the provisions of section 270(1) of the Companies Law.

• 2.7 Method in which the consideration was determined: Mr. Koffler's employment terms were approved by the Remuneration Committee and the Board of Directors of the Company, as described below. The Remuneration Committee and Board of Directors were presented with the wage scale for the position of brand manager on the level relevant to Mr. Koffler's level, which was determined following a review of wage data applying to similar positions in FMCG companies and in the industry via participation in the wage surveys performed by Zviran Consulting & Surveys Ltd. Additionally, for purposes of Mr. Koffler's initial position on the e- Com team, wage scales of other marketing positions in Strauss Coffee Israel's marketing department were reviewed and his compensation determined following this comparative examination.

• 2.8 Approvals required: The Remuneration Committee and Board of Directors of the Company approved the transaction described in item 1 on the agenda at their meetings on December 16, 2018 and December 20, 2018, respectively. The abovementioned transactions require approval by the General Meeting of the Company, which is convened in accordance with this report.

• 2.9 Details pertaining to transactions of the type of the proposed transaction or similar thereto, signed in the past two years or which are still in effect on the date of approval by the Board of Directors: In the two years preceding the approval of the transaction contemplated in this report by the Board of Directors of the Company there were no similar transactions to the proposed transaction between the Company and the controlling shareholder or in which the controlling shareholder had a personal interest, and as at the date of this report there are no such transactions in effect, other than the following:

• (a) For information on exemption, insurance or undertakings to indemnify officers of the Company, including those who are among the controlling shareholders of the Company and their relatives, see regulation 29A in the Company's 2017 Periodic Report (the "2017 Periodic Report"), published on March 14, 2018 (reference no. 2018-01-019932), and Immediate Reports on the renewal of the grant of exemption of May 23, 2018 and July 9, 2018 (reference no. 2018-01-041586 and 2018-01-062109, respectively), which are incorporated herein by reference.

• (b) For information on the current engagement in the employment contract between the Company and Ms. Ofra Strauss, see regulation 22 in the chapter Additional Information on the Company in the 2017 Periodic Report.

• (c) For information on the terms of office of Mr. Adi Strauss as a director of the Company, see regulation 22 in the chapter Additional Information on the Company in the 2017 Periodic Report.

• 2.10 Names of the directors who participated in the deliberations of the Remuneration Committee and the Board of Directors of the Company

  2.10.1

  The meeting of the Remuneration Committee was attended by Ms. Dalia Narkys, Dr. Samer Haj-Yehia and Prof. Arie Ovadia.

  2.10.2 The meeting of the Board of Directors was attended by Dr. Samer Haj-Yehia, Ms. Galia

  Maor, Mr. David Mosevics, Ms. Dalia Narkys, Prof. Arie Ovadia, Prof. Joshua (Shuki) Shemer and Mr. Meir Shanie.

• 2.11 Justifications by the Remuneration Committee and the Board of Directors

  The Remuneration Committee and the Board of Directors of the Company approved Mr. Koffler's employment conditions, inter alia for the following reasons:

  • 2.11.1 Mr. Koffler holds a bachelor's degree in Economics and Management from the University of Miami in Florida, USA, and an MBA from IESE Business School in Barcelona, Spain, and accordingly, has a suitable education for the position.

  • 2.11.2 Mr. Koffler has held various positions in marketing, which include lead responsibility for marketing while building the brand and the marketing plan in the setup team of a Canadian startup (Nuuvera), which is engaged in medical cannabis; he was also a member of the marketing project management team at Unilever UK and a member of the management team of the 2016/7 ice-cream campaign and the launch of three new ice-cream products in the UK. These have equipped him with suitable experience for the position.