Dear Employees

In the course of business we encounter daily ethical dilemmas that we must resolve.

With this in mind, we present you with the Code of Ethics of Danshar (1963) Ltd. Our intention is that it will serve a practical guide how to contend with challengesand resolve ethical dilemmas encountered routinelyin the course of our work.

The Code of Ethics provides us with a set of ethical standards, creates a uniform language and defines what the proper ethical conduct is, and what transgresses from it.

Over the years, Danshar (1963) Ltd. has gained an impressive reputation for its integrity and business culture,making it the duty of each and every one of us to nurture this reputation and protect it.

No codex can answer all the questions that may arise norcan it cover all the situations that may occur in the course of our current business and future events. Nonetheless, when a question of conduct does arise, this document should be thoroughly read and consulted with regard to the Company’s values.

When uncertain or in doubt we ask you to approach the person you report to directly or if necessary, to the internal controller for advice and personal instruction as to what your correct course of action should be.

Sincerely,

Yoel Adler

General Manager Danshar (1963) Ltd.

Danshar (1963) Ltd. – Code of Ethics

Between Us

  • We must behave responsibly and with dedication even when working passionately. We are committed to decency and to fulfilling our commitments and take full responsibility for our actions.
  • We are committed to creating a team of excellence where each member contributes to our success. We see ourselves as a community where mutual respect, trust, integrity and cooperation are shared by everyone. We thrive through integrity and exchange ideas in a spirit of responsiveness and acceptance.
  • We are committed to provide our employees a work environment that is free from threats or violence. We will not accept any form of harassment including sexual, physical, mental harassment or based on religious beliefs, origin or customs. We will not accept any form of persecution for any reason.
  • The Company has adopted a codex with regard to sexual harassment according to which, jointly with the Company regulations, we expect our employees to conduct themselves. The codex has been distributed to the employees and a copy is available for reference in the Human Resources department. The Company expects employees to help maintain a healthy, hygienic and safe environment and abide by the safety regulations.
  • The Company employees enjoy trust, respect and decent treatment. The Company is committed to provide employees a good, pleasant and safe work environment that encourages inspirational ideas and creative thought that promotes cooperation, while considering the benefit of the Company, its customers and our environment.

Our Customers and Us

  • We are committed to the satisfaction of our customers. We will adhereto the most proper behavior and respectfully represent the Company towards our clientele.
  • Our quality performance will be the reason for customers to choose and prefer us over the competition. We are committed to the highest standards of ourCompany’s products and will continue to invest efforts to improve them.
  • Relations with our customers are based on respect, integrity, professionalism and mutual trust.
  • We are committed to create quality products for our customers and end-users. The internal control system implemented by the Company is designed to guarantee adherence to internal standards and relevant regulations. We act to contribute to these standards through the highest quality of work.
  • We care for the safety of our customers when using our products. It is our highest priority and true commitment.
  • We are committed to comply with the proper requirementsfor marking productswherever we operate and guarantee that the product description will be sufficient and answer the needs of our clientele.

Company Assets and Us

  • We are committed to protecting our Company assets as part of our efforts to create long-term value for our shareholders. Employees must use Company assets responsibly,maintain them and usethem properly for the benefit of the Company.
  • It is the employees’duty to protect all the Company and manufacturing assets including intellectual property. Improper use of the Company assets including the intellectual property constitutes a breach of this code of ethics and may be considered unlawful,with significant consequences on the working relationship and may result in lawful civil or criminal action.
  • Business, technical and privateintellectual property pertaining to Company employees, customers and suppliers is considered confidential and must be protected.
  • Misappropriation, neglect and wastefulness of Company property constitute damage to the Company. Any suspicious conductor transgressionby a Company employee must be reported to his mangers for proper investigation. Collaboration with internal control systems: the Company manages and enforces an effective system of internal control to protect its assets and its intellectual property as well as the assets of its customers, suppliers and shareholders. Company employees must collaborate with the aforementioned control systems. Any transaction is subject to authorization from the appropriate executive level according to its subject matter, scope and nature. All the employees who are authorized to sell or purchase assets on behalf of the Company, including persons authorized to make commitments on behalf of the Company, must do so responsibly, and with reasonable discretion as lawfully required and in accordance with Company regulations, and may not exceed the scope of their authorization.
  • All directors, officers in the Company and employees must refrain from any relationships and interests that conflict or may be deemed to conflictwith the welfare of the Company. Employees will not exploit their position for any personal matter that is not related to their work and will decline any gifts and benefits whatsoever. Additionally, employees will avoid taking advantage of a business transaction for personal gain and benefit.
  • We regard to the strict management and maintenance of records with utmost importance, the Company expects its employees to register and report all information properly and accurately. Records include among others, reports and documents with regard to the Company activity that are intended for internal use and for transfer to third parties. All the books, reports, declarations and financial records must be managed lawfully and in accordance with the internal control regulations. Company records must be archived properly for a minimum of seven years as lawfully required. The contents therein (whether on paper, electronic files or email, or contained in any other form) may not be destroyed for any reason. An employee that does not abide by these requirements may face criminal charges. Errors that were made may not be covered up or misrepresented. On the contrary, errors should be exposed immediately and completely and be immediately corrected.

Restrictions onInside Information

  • Company stock (shares and options) are traded on the Tel-Aviv Stock Exchange (TASE).
  • The Securities Law forbids executing transactions on the stock exchange using inside information.
  • What is “inside information”? It is information pertaining to the development of the Company, changes in its status, expected developments or changes, or any other information that is not known to the general public and that if it was known could significantly influence the price of the Company shares.

An example: information with regard to a “large transaction” that is expected to be signed between the Company and a customer, that may in turn, increase the Company profits, will be considered “inside information” as long as its is not disclosed to the public at large, because it is expected that following the publication the price of the Company shares will rise. Similarly, information with regard to heavy loss by the Company is considered “internal information” until officially published, as such information may cause the decline in the price of the Company shares.

Other examples for inside information:

  • Propositions with regard to substantial mergers and acquisitions
  • The purchase or sale or substantial assets
  • Developments with regard to substantial legal procedures
  • Reorganization of the Company
  • Distribution of dividend
  • Financial data, financial results, forecasts or profits of the Company or its subsidiaries
  • Substantial changes in the composition of the senior management
  • Information pertaining to substantial decisions made by management
  • Substantial business information

When will information not be deemed “inside information”? At such a time as it is published. Example: Information published through the media, the stock exchanges web site or the web site of the Securities Authority. Thus, if information pertaining to a “large transaction” or “heavy losses” in the aforementioned examples was published on the web site of the stock-exchange or as part of a press release then it is no longer deemed “inside information”. Nevertheless, for information to be deemed publicly known, it is not enough that it was published sufficient time must pass for it to be digested by the market. Although the timing may change according to circumstances, a good rule of thumb is that information is not deemed public until the passing of two business days from its publication.

  • Forbidding the use of inside information means that it is forbidden to sell or buy stock (buy or sell shares for example) based on inside information, or forwarding such information to a third party, when there is a reasonable cause to believe that this person will use the information (to buy or sell stock).

It should be emphasized that the employee as well as his family are forbidden to use inside information for the purchase and sale of Company shares.

  • Thus, one should act with strict confidentiality with regard to any information reveled to you in the course of work and may not be used by you or your family to trade in Company shares based on such information, as well as transfer it to a member of your family, friend or any other person as a “tip”.
  • Use of inside information for the purpose of using it to trade in Company shares or as a “tip” to others, who may use it to trade in Company shares, is not only unethical, it may be illegal. A Company employee who breaches the regulationsfor using inside information may be punished in accordance with the criminal law or be liable according to civil lawand as a result may implicate the Company as well.
  • The Board of Directors of the Company will be entitled to draw a policy that defines and limits the scope for employees and senior officers in the Companywith regard to trading in Company shares, in order to help the Company abide by the regulations with reference to the use of inside information, and such policy will be distributed to all Company employees.

Any question that arises withregard to use of inside information or suspicion thereof may be addressed directly to the chairman of the Control Committee, Mr. Yossi Antverg at tel: 052-6099000 or via email: antverg1@zahav. net.il

  • Proactive prevention of ethical problems is an important part of our ethics. Should you suspect unethical conduct or a breach of our code of ethics you must report these suspicions. We encourage you to provide information related to such suspicions, regardless of the position held by the person suspected of breachingthem.
  • A mailbox for reporting suspicions or complaints with this regard is at everyone’s disposal at the Company secretariat office. Additionally, one may approach the chairman of the Company’s Control Committee Mr. Yossi Antverg
  • In order to help us address and clarify every report we prefer that you identify yourself and give your telephone number and any other contact details so that we may communicate with you concerning the complaint; nevertheless,anonymous reports will also be accepted.

The aforesaid in this code of conduct applies equally to both men and women.