Exhibit 99.1
JACADA LTD.
8 Ha’sadna’ot Street
Herzliya Pituach 46728, Israel
October 11, 2016
Dear Shareholders:
You are cordially invited to attend our 2016 Annual General Meeting of Shareholders, or the Meeting, which will be held at 11:00 a.m. (Israel time) on Thursday, November 10, 2016, at our offices at 8 Ha’sadna’ot Street, Herzliya Pituach 46728, Israel, for the following purposes:
(1) Reelection of Ms. Tzvia Broida to the Jacada Ltd. (referred to as Jacada or the Company) Board of Directors, or the Board, as an external director under the Israeli Companies Law, 5759-1999, or the Companies Law, and as a Class II director under the Articles of Association of Jacada, or the Articles, for a three year term, until November 9, 2019.
(2) Approval of the acquisition by IGP Digital Interaction Limited Partnership, or IGP, of 261,287 newly-issued ordinary shares, par value 0.04 New Israeli Shekels per share, of Jacada, or ordinary shares, representing 5% of the issued and outstanding share capital of Jacada on a fully diluted basis, at a price per share of $5.25, in a private placement pursuant to a Securities Purchase Agreement, dated September 29, 2016, by and between Jacada and IGP (we refer to this private placement as the Acquisition). The approval of the Acquisition is required pursuant to Section 328(b)(1) of the Companies Law, as the purchase by IGP of the shares offered to it by the Company in the Acquisition will, together with the 1,040,000 ordinary shares previously purchased by IGP, result in aggregate holdings by IGP of 25% or more of the total voting power of the Company (a “control block” within the meaning of, the Companies Law), and prior to the Acquisition there is no shareholder of Jacada holding such “control block”.
(3) Election to the Board of Mr. Haim Shani to serve as a Class II director under the Articles.
(4) Approval of the expansion of the authorized size of the Board from its current size of six (6) members to nine (9) members, and an amendment to Article 39(c) of the Articles that increases the number of unclassified directors authorized to serve on the Board for a one-year term, from one annual general meeting of shareholders until the following annual general meeting of shareholders, from one (1) to three (3).
(5) Subject to the approval of Proposal 4, the election of Mr. Assaf Harel to serve as an unclassified director under the Articles for a one-year term, until the next annual general meeting of shareholders and until the due election and qualification of his successor.
(6) Subject to the approval of Proposal 4, the re-election of Mr. Ofer Timor to serve as an unclassified director under the Articles for a one-year term, until the next annual general meeting of shareholders and until the due election and qualification of his successor.
(7) Subject to his or their election pursuant to Proposal 3 and, if applicable, Proposal 5, the approval, for each of Mr. Haim Shani and, if applicable, Mr. Assaf Harel, of (i) his receipt of cash remuneration and reimbursement of expenses matching that paid to all other non-executive members of the Board, and in addition, to the extent any other Board member will be awarded options or other equity-based awards in excess of the pool of options to purchase up to 263,750 ordinary shares that has been previously designated for Board members (consisting of 233,750 currently granted options and an additional 30,000 options available for future grants), then each of Messrs. Shani and Harel shall also be entitled to awards of like tenor, (ii) his entry into an agreement with the Company for indemnification and exculpation with terms that match those to which all other Board members are entitled, and (iii) his inclusion in the Company’s director and officer liability insurance coverage.
(8) Approval of (i) the amendment and restatement of Article 67 of the Articles and (ii) our entry into a new form of director and officer indemnification agreement with our directors and officers, in each case so as to update the provisions thereof in light of changes to the Companies Law and other Israeli laws that allow for broader-based indemnification.
(9) Re-appointment of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as the independent auditors of the Company for the year ending December 31, 2016 and for such additional period until the next annual general meeting of shareholders, and to authorize the Board to fix the remuneration of the independent auditors based on the volume and nature of their services in accordance with Israeli law, such remuneration and the volume and nature of such services having been previously approved by the audit committee of the Board.
At the Meeting, the audited annual consolidated financial statements of Jacada for the fiscal year ended December 31, 2015 will also be presented to Jacada’s shareholders. The shareholders will furthermore transact such other business as may properly come before the Meeting or any adjournment thereof.
The Board has approved Proposals 1 through 9 above, and recommends that you vote in favor thereof.
The presence in person or by proxy of two or more shareholders possessing at least 331/3% of Jacada’s voting power will constitute a quorum at the Meeting. In the absence of a quorum within one half-hour of the scheduled time for the Meeting, the Meeting will be adjourned for one week and will be held on Thursday, November 17, 2016 at the same time and place. At such adjourned meeting, if within one half-hour from the time designated for the meeting a quorum is not present, the presence of at least two shareholders in person or by proxy (regardless of the voting power possessed by their shares) will constitute a quorum. Approval of each of the above proposals (other than Proposals 4 and 8) requires the affirmative vote of a majority of the ordinary shares present (in person or by proxy) and voting (not including abstentions) at the Meeting (or at any adjournment thereof). In addition to the simple majority described in the previous sentence, the re-election of Ms. Broida to serve as an external director and Class II director under Proposal 1 also requires that either:
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the majority voted in favor of her re-election includes a majority of the ordinary shares held by non-controlling shareholders who do not have a conflict of interest (referred to in the Companies Law as a “personal interest”) (other than a personal interest that does not derive from a relationship with a controlling shareholder) in her re-election that are voted at the Meeting, excluding abstentions; or
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the total number of ordinary shares held by non-controlling, non-conflicted shareholders (as described in the previous bullet-point) voted against her re-election does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Under the Articles, each of (i) the expansion of the authorized size of the Board, and the increase, from one to three, in the authorized number of unclassified directors who may serve a one-year term, pursuant to Proposal 4, and (ii) the updating amendment and restatement of the director and officer indemnification and insurance provisions of our Articles pursuant to Proposal 8, requires the approval of seventy-five percent (75%) of the ordinary shares present (in person or by proxy) and voting (not including abstentions and broker non-votes) on that proposal at the Meeting (or at any adjournment thereof).
The attached proxy statement further describes the proposals listed above. That proxy statement and the enclosed proxy card are being furnished to the Securities and Exchange Commission, or the SEC, in a Report of Foreign Private Issuer on Form 6-K, which may be obtained for free from the SEC’s website at www.sec.gov.
Shareholders who are unable to attend the Meeting in person are requested to complete, date and sign the enclosed proxy card and return it promptly in the pre-addressed envelope, so as to be received not later than four (4) hours in advance of the Meeting. No postage will be required if it is mailed in the United States to our United States transfer agent, American Stock Transfer & Trust Company. Shareholders who attend the Meeting in person may revoke their proxies and vote their ordinary shares at the Meeting.
If your ordinary shares in Jacada are held in “street name” (meaning held through a bank, broker or other nominee), you will be able to either direct the record holder of your shares on how to vote your shares or obtain a legal proxy from the record holder to enable you to participate and to vote your shares at the Meeting (or to appoint a proxy to do so).
Your proxy, if properly executed, will be voted in the manner directed by you. If no direction is made, your proxy will be voted “FOR” all proposals, except Proposal 1 (due to the required indication whether you have a conflict of interest in the approval of that proposal). If you attend the Meeting, you may vote in person and your proxy will not be used. Detailed proxy voting instructions are provided both in the attached proxy statement and on the enclosed proxy card.
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By Order of the Board,
Yossie Hollander
Chairman of the Board of Directors
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JACADA LTD.
8 Ha’sadna’ot Street
Herzliya Pituach 46728, Israel
Tel: +972-3-767-9360
PROXY STATEMENT
2016 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors, or the Board, of Jacada Ltd., hereinafter referred to as Jacada or the Company, to be voted at the 2016 Annual General Meeting of Shareholders of the Company, or the Meeting, and at any adjournment thereof, pursuant to the Notice of 2016 Annual General Meeting of Shareholders that was published by the Company on October 6, 2016. The Meeting will be held at 11:00 a.m. (Israel time) on Thursday, November 10, 2016, at the Company’s offices at 8 Ha’sadna’ot Street, Herzliya 46728, Israel.
This Proxy Statement, the attached cover letter from our Chairman of the Board, and the enclosed proxy card, are being mailed to shareholders on or about October 14, 2016.
You are entitled to vote at the Meeting if you held ordinary shares of our Company, par value 0.04 New Israeli Shekels per share, or ordinary shares, as of the close of business on October 10, 2016, the record date for the Meeting. You can vote your shares by attending the Meeting or by following the instructions under “Voting Procedure” below. Our Board urges you to vote your shares so that they will be counted at the Meeting or at any postponements or adjournments of the Meeting.
Date, Time and Place of Meeting
The Meeting will be held at 11:00 a.m. (Israel time) on Thursday, November 10, 2016, at the Company’s offices at 8 Ha’sadna’ot Street, Herzliya 46728, Israel.
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
Jacada is a company existing under the laws of the State of Israel. The solicitation of proxies pursuant to this Proxy Statement relates to securities of an Israeli issuer and is being effected in accordance with Israeli corporate laws and the regulations promulgated thereunder. The proxy solicitation rules under the Securities Exchange Act of 1934, as amended, or the Exchange Act, are not applicable to the Company or this solicitation and, accordingly, this solicitation is not being effected in accordance with such rules. Shareholders should be aware that disclosure requirements under Israeli laws may be different from such requirements under U.S. securities laws. Shareholders should also be aware that requirements under Israeli laws as they relate to Israeli corporations may differ from requirements under U.S. corporate and securities laws as they apply to U.S. corporations.
The enforcement by investors of civil liabilities under U.S. federal securities laws may be affected adversely by the fact that the Company exists under the laws of Israel and that some or all of its officers and directors are not residents of the United States and that all or a substantial portion of its assets may be located outside the United States. Shareholders may not be able to sue an Israeli company or its officers or directors in an Israeli court for violations of U.S. securities laws. It may be difficult to compel an Israeli company and its affiliates to subject themselves to a judgment by a U.S. court.
2016 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Purpose of the Meeting
At the Meeting, shareholders will be asked to consider and vote upon the following proposals:
(1) Reelection of Ms. Tzvia Broida to Jacada’s board of directors, or the Board, as an external director under the Israeli Companies Law, 5759-1999, or the Companies Law, and as a Class II director under the Articles of Association of Jacada, or the Articles, for a three year term, until November 9, 2019.
(2) Approval of the acquisition by IGP Digital Interaction Limited Partnership, or IGP, of 261,287 newly-issued ordinary shares, representing 5% of the issued and outstanding share capital of Jacada on a fully diluted basis, at a price per share of $5.25, in a private placement pursuant to a Securities Purchase Agreement, dated September 29, 2016, by and between Jacada and IGP (we refer to this private placement as the Acquisition). The approval of the Acquisition is required pursuant to Section 328(b)(1) of the Companies Law, as the purchase by IGP of the shares offered to it by the Company in the Acquisition will, together with the 1,040,000 ordinary shares previously purchased by IGP, result in aggregate holdings by IGP of 25% or more of the total voting power of the Company (a “control block” within the meaning of the Companies Law), and prior to the Acquisition there is no shareholder of Jacada holding such “control block”.
(3) Election to the Board of Mr. Haim Shani to serve as a Class II director under the Articles of Jacada.
(4) Approval of the expansion of the authorized size of the Board from its current size of six (6) members to nine (9) members, and an amendment to Article 39(c) of the Articles that increases the number of unclassified directors authorized to serve on the Board for a one-year term, from one annual general meeting of shareholders until the following annual general meeting of shareholders, from one (1) to three (3).
(5) Subject to the approval of Proposal 4, the election of Mr. Assaf Harel to serve as an unclassified director under the Articles for a one-year term, until the next annual general meeting of shareholders and until the due election and qualification of his successor.
(6) Subject to the approval of Proposal 4, the re-election of Mr. Ofer Timor to serve as an unclassified director under the Articles for a one-year term, until the next annual general meeting of shareholders and until the due election and qualification of his successor.
(7) Subject to his or their election pursuant to Proposal 3 and, if applicable, Proposal 5, the approval, for each of Mr. Haim Shani and, if applicable, Mr. Assaf Harel, of (i) his receipt of cash remuneration and reimbursement of expenses matching that paid to all other non-executive members of the Board, and in addition, to the extent other Board member will be awarded options or other equity-based awards in excess of the pool of options to purchase up to 263,750 ordinary shares that has been previously designated for Board members (consisting of 233,750 currently granted options and an additional 30,000 options available for future grants), then each of Messrs. Shani and Harel shall also be entitled to awards of like tenor, (ii) his entry into an agreement with the Company for indemnification and exculpation with terms that match those to which all other Board members are entitled, and (iii) his inclusion in the Company’s director and officer liability insurance coverage.
(8) Approval of (i) the amendment and restatement of Article 67 of the Articles and (ii) our entry into a new form of director and officer indemnification agreement with our directors and officers, in each case so as to update the provisions thereof in light of changes to the Companies Law and other Israeli laws that allow for broader-based indemnification.
(9) Re-appointment of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as the independent auditors of the Company for the year ending December 31, 2016 and for such additional period until the next annual general meeting of shareholders, and to authorize the Board to fix the remuneration of the independent auditors based on the volume and nature of their services in accordance with Israeli law, such remuneration and the volume and nature of such services having been previously approved by the audit committee of the Board.
At the Meeting, the audited annual consolidated financial statements of the Company for the fiscal year ended December 31, 2015 will also be presented to the Company’s shareholders. The shareholders will furthermore transact such other business as may properly come before the Meeting or any adjournment thereof.
Other than the proposals listed above, the Company is not aware of any other matter that will come before the Meeting. If any other matter properly comes before the Meeting, the persons designated as proxies intend to vote on such matter in accordance with the judgment of the Board.
Board Recommendation
The Board has approved Proposals 1 through 9 and recommends that you vote in favor thereof.
Voting Procedure
Only holders of record of our ordinary shares as of the close of business on October 10, 2016 are entitled to vote in person or by proxy at the Meeting. As of October 10, 2016, the record date for determination of shareholders entitled to vote at the Meeting, there were 4,198,789 ordinary shares issued and outstanding (excluding 1,111,796 ordinary shares held by the Company as treasury shares).
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Voting in Person. If your ordinary shares are registered directly in your name with the Company’s transfer agent (that is, you are a “registered shareholder”), you may attend and vote in person at the Meeting. If you are a beneficial owner of shares registered in the name of your broker, bank, trustee or nominee (that is, your shares are held in “street name”), you are also invited to attend the Meeting; however, to vote in person at the Meeting as a beneficial owner, you must first obtain a “legal proxy” from your broker, bank, trustee or nominee authorizing you to do so.
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Voting by Mail. You may submit your proxy by mail by completing, signing and mailing the enclosed proxy card in the enclosed, postage-paid envelope, or, for ordinary shares held in street name, by following the voting instructions provided by your broker, bank trustee or nominee. The proxy must be received by the Company’s transfer agent or at the Company’s registered office in Israel at least four (4) hours prior to the appointed time of the Meeting to be validly included in the tally of ordinary shares voted at the Meeting. If directions are not given or the directions provided are not in accordance with the options listed on a proxy card, such ordinary shares will be voted FOR all proposals (except for Proposal 1, due to the requirement to indicate whether you have a conflict of interest in the approval of that proposal (as described below under “Vote Required for Approval of the Proposals”)).
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Change or Revocation of Proxy
If you are a registered shareholder, you may change your vote at any time prior to the exercise of authority granted in the proxy by (i) delivering a written notice of revocation to the Company’s Secretary, at the address of the Company set forth herein, (ii) granting a new proxy bearing a later date, or (iii) attending the Meeting and voting in person. Attendance at the Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
If your shares are held in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee, or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your ordinary shares, by attending the Meeting and voting in person.
Quorum
Pursuant to the Company’s articles of association, as amended, or the Articles, the presence of at least two shareholders, holding at least 331/3% of the Company’s outstanding voting power, represented in person or by proxy at the Meeting, will constitute a quorum. If within half an hour from the time designated for the Meeting a quorum is not present, the Meeting will stand adjourned to the same day in the next week, at the same time and place (unless such day shall fall on a public holiday either in Israel or the United States, in which case the Meeting will be adjourned to the first day, not being a Friday, Saturday or Sunday, which follows such public holiday). If within half an hour from the time designated for the reconvened Meeting a quorum is not present, any two or more shareholders present personally or by proxy shall be deemed a quorum, and shall be entitled to deliberate and to resolve in respect of the matters for which the Meeting was convened.
Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner attends the Meeting but does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Brokers that hold shares in “street name” for clients (as described below) typically have authority to vote on “routine” proposals even when they have not received instructions from beneficial owners. The only item on the Meeting agenda that may be considered routine is Proposal 9 relating to the reappointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016; however, we cannot be certain whether this will be treated as a routine matter since our proxy statement is prepared in compliance with the Companies Law, rather than the rules applicable to domestic U.S. reporting companies. Therefore, it is important for a shareholder that holds ordinary shares through a bank or broker to instruct its bank or broker how to vote its shares, if the shareholder wants its shares to be voted on the proposals.
Unsigned or unreturned proxies, including those not returned by banks, brokers, or other record holders, will not be counted for quorum purposes.
Vote Required for Approval of the Proposals
The approval of each of the above proposals (other than Proposals 4 and 8) requires the affirmative vote of a majority of the ordinary shares present (in person or by proxy) and voting (not including abstentions and broker non-votes) at the Meeting (or at any adjournment thereof). Under the Articles, the approval of each of (i) the expansion of the authorized size of the Board and the increase, from one to three, in the authorized number of unclassified directors who may serve a one-year term, pursuant to Proposal 4, and (ii) the amendment and restatement of the director and officer indemnification and insurance provisions of our Articles pursuant to Proposal 8, requires the approval of seventy-five percent (75%) of the ordinary shares present (in person or by proxy) and voting (not including abstentions) on that proposal at the Meeting (or at any adjournment thereof).
In addition to the simple majority required for the approval of all proposals (other than Proposals 4 and 8), the approval of Proposal 1 (reelection of Ms. Tzvia Broida to serve a three-year term as an external director under the Companies Law and as a Class II director under the Articles) also requires that either of the following conditions be met:
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the majority voted in favor of the proposal includes at least a majority of the votes of non-controlling shareholders who also lack a conflict of interest (referred to as a “personal interest” under the Companies Law) in the approval of the proposal (other than a personal interest that does not derive from a relationship with a controlling shareholder) and who vote on the proposal (not including abstentions); or
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the total number of votes of such non-controlling, non-conflicted shareholders voting against the proposal does not exceed two percent (2%) of the aggregate voting rights in the Company.
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For purposes of Proposal 1, a “controlling shareholder” is any shareholder that has the ability to direct the Company’s activities (other than by means of being a director or other office holder of the Company). A person is presumed to be a controlling shareholder if it holds or controls, by itself or together with others, one-half or more of any one of the “means of control” of the Company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of the Company, or (ii) the right to appoint directors of the Company or its chief executive officer.
We are unaware of any shareholder that would be deemed to be a controlling shareholder of our Company as of the current time for purposes of the vote on Proposal 1.
A “personal interest” of a shareholder under the Companies Law (x) includes an interest of any members of the shareholder’s immediate family (or spouses thereof) or an interest of a company with respect to which the shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or has the right to appoint a director or the chief executive officer; and (y) excludes an interest arising solely from the ownership of ordinary shares of the Company. In determining whether a vote cast by proxy is disinterested, the “personal interest” of the proxy holder is also considered and will cause that vote to be excluded from the disinterested vote, even if the shareholder granting the proxy does not have a personal interest in the matter being voted upon.
Controlling shareholders and shareholders that have a conflict of interest are qualified to participate in the vote on Proposal 1; however, the vote of such shareholders may not be counted towards the majority requirement described in the first bullet point above and will not count towards the 2% threshold described in the second bullet point above.
A shareholder must inform our Company before the vote (or if voting by proxy, indicate on the proxy card) whether or not such shareholder has a conflict of interest in the approval of Proposal 1, and failure to do so disqualifies the shareholder from participating in the vote on Proposal 1. In order to confirm that you lack a conflict of interest in the approval of such proposal and in order to therefore be counted towards the special majority required for the approval of that proposal, you must check the box under Proposal/Item 1A on the accompanying proxy card when you record your vote on Proposal 1.
If you believe that you, or a related party of yours, is a controlling shareholder or has such a conflict of interest and you wish to participate in the vote for or against the reelection of Ms. Tzvia Broida as an external director and a Class II director, you should not check the box under Proposal/Item 1A on the enclosed proxy card and you should not vote on Proposal 1 via the proxy card. Instead, you should contact our General Counsel at (770) 776-2215 (Fax: (770) 810-4319), who will provide you with a separate proxy card that is designed for you so that you can submit your vote on Proposal 1. In that case, your vote will be counted towards the ordinary majority required for the approval of Proposal 1, but will not be counted towards the special majority required for approval of that proposal. If you hold your shares in “street name” (i.e., shares that are held through a bank, broker or other nominee) and believe that you are a controlling shareholder or have a conflict of interest, you may also contact the representative managing your account, who can then contact our General Counsel on your behalf.
In tabulating the voting results for the proposals, ordinary shares that constitute broker non-votes and abstentions are not considered votes cast on the proposals. As described above with respect to quorum requirements, unsigned or unreturned proxies, including those not returned by banks, brokers, or other record holders, will also not be counted for purposes of determining whether the requisite majorities have been achieved for the respective proposals.
Additional Information Regarding Our Board, Corporate Governance and Compensation of Our Officers and Directors
Item 6.B of our Annual Report on Form 20-F for the year ended December 31, 2015, which we filed with the Securities and Exchange Commission, or SEC, on April 21, 2016 (which we refer to as our 2015 Form 20-F), contains information regarding compensation paid to our directors and certain office holders (including our five most highly compensated office holders) in, or with respect to 2015. Item 6.C of our 2015 Form 20-F contains additional information regarding our Board, its committees and our corporate governance practices. We encourage you to review those Items of our 2015 Form 20-F (which we incorporate by reference herein) to obtain additional information regarding our Board.
Beneficial Ownership of Ordinary Shares by Certain Beneficial Owners and Management
The following table and related footnotes set forth certain information as of October 10, 2016 (unless otherwise indicated below), the record date for the Meeting, regarding the beneficial ownership of our ordinary shares by: (a) each of the Company’s directors; (b) each of the Company’s executive officers; and (c) all shareholders known by the Company to be the beneficial owners of 5% or more of the outstanding ordinary shares, who are referred to below as significant shareholders. Beneficial ownership reflected in the following table is calculated in accordance with the rules under Form 20-F promulgated by the SEC, under which an individual or entity is deemed to possess beneficial ownership with respect to a share if he, she or it directly or indirectly possesses or has the right to acquire, within 60 days, sole or joint voting or dispositive power, or the economic benefit of ownership, with respect to such share (whether via a contract, arrangement, understanding, relationship or otherwise). The percentages reflected below are based on 4,198,789 issued and outstanding ordinary shares (excluding 1,111,796 ordinary shares held by the Company as treasury shares) as of October 10, 2016, except where indicated that information is based on a Schedule 13G or 13D (or an amendment thereto), in which case the percentage is based solely on the information appearing in the relevant filing as of the date of such filing. Based on information furnished by the owners and except as otherwise noted, the Company believes that the beneficial owners of the shares listed below, have, or share with a spouse, voting and investment power with respect to such shares. Unless otherwise indicated below, the address of each person listed below is c/o Jacada Ltd., 8 Hasadnaot Street, Herzliya 46728, Israel.
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Number of Shares
Owned
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Percentage of Outstanding Shares
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Directors and Executive Officers
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Yossie Hollander (1),
Chairman of the Board of Directors
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541,003
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12.8
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%
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Gideon Hollander (2),
Director and Co-Chief Executive Officer
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422,497
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10.0
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%
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Ohad Zuckerman,
External Director
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27,500
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(3)
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*
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Tzvia Broida,
External Director
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6,250
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(3)
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*
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Barak Gablinger,
Director
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-
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*
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Ofer Timor
Director
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-
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*
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Guy Yair
Co-Chief Executive Officer
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225,000
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(3)
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5.1
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%
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Caroline Cronin,
Chief Financial Officer
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(3)
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*
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Significant Shareholders
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New Resources (4)
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230,000
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5.5
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%
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Gunar Anstalt (5)
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223,750
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5.3
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%
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Lloyd I. Miller, III (6)
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259,345
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6.2
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%
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Robert B. Ashton (7)
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294,212
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7.0
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%
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IGP Digital Interaction Limited Partnership (8)
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1,040,000
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24.8
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%
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* Represents less than one percent (1%).
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(1)
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Based on a Directors and Officers Questionnaire submitted to us by Mr. Yossie Hollander. Consists of 325,320 ordinary shares owned individually by Mr. Hollander, 75,668 ordinary shares owned by Mr. Hollander’s spouse and 125,015 ordinary shares owned individually by Dana Hollander Settlement 1991, LLC, a Nevada limited liability company, as to which Mr. Hollander is an income beneficiary of a trust holding a 99% membership interest therein. Includes 15,000 ordinary shares issuable pursuant to options held by Mr. Hollander which are exercisable within 60 days of the date hereof. Does not include 120,000 ordinary shares owned by Mr. Hollander’s mother, as Mr. Hollander disclaims beneficial ownership of such shares, and an aggregate of 387,400 ordinary shares owned indirectly by various trusts, as equity holders of certain foreign entities, as to which Mr. Hollander and/or his children, as beneficiaries of such trusts, may be deemed to have interests. Any such interest would be in an indeterminable number of the ordinary shares owned indirectly by such trusts. Mr. Hollander disclaims beneficial ownership of any ordinary shares so held by such trusts. We make no representation as to the accuracy or completeness of the information reported.
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(2)
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Based on a Directors and Officers Questionnaire submitted to us by Mr. Gideon Hollander. Consists of 391,247 ordinary shares owned individually by Mr. Hollander, and 31,250 ordinary shares issuable pursuant to options held by Mr. Hollander which are exercisable within 60 days of the date hereof. Does not include 120,000 ordinary shares owned by Mr. Hollander’s mother, as Mr. Hollander disclaims beneficial ownership of such shares. We make no representation as to the accuracy or completeness of the information reported.
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(3)
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These ordinary shares consist solely of shares issuable upon exercise of options vested currently or within 60 days of October 10, 2016.
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(4)
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Based on a Schedule 13G filed with the SEC on February 16, 2010. We make no representation as to the accuracy or completeness of the information reported. New Resources’ address is P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.
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(5)
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Based on a Schedule 13G filed with the SEC on February 23, 2010. We make no representation as to the accuracy or completeness of the information reported. Gunar Anstalt’s address is AeuleStrasse 5, FL-9490 Vaduz, Liechtenstein.
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(6)
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Based on Amendment No. 3 to Schedule 13D filed by Mr. Miller with the SEC on September 30, 2016. We make no representation as to the accuracy or completeness of the information reported. Mr. Miller’s address is 3300 South Dixie Highway, Suite 1-365, West Palm Beach, Florida, 33405.
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(7)
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Based on Amendment No. 4 to Schedule 13D filed by Robert B. Ashton and Kinetic Catalyst Partners LLC, or Kinetic, with the SEC on September 28, 2016. We make no representation as to the accuracy or completeness of the information reported. Mr. Ashton is the portfolio manager of Kinetic, and in this capacity has the legal power to direct the voting and disposition of the ordinary shares of the Company beneficially owned by Kinetic. The address of these shareholders is 6 Occom Ridge, Hanover, NH 03755.
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(8)
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Based on a Schedule 13D filed with the SEC on September 30, 2016. As the indirect controlling shareholders of the general partner of IGP, Haim Shani and Moshe Lichtman jointly have the legal power to direct the voting and disposition of the ordinary shares held by IGP. The address of this shareholder is Precede Building, Hakfar Hayarok, Ramat-Hasharon 47800, Israel.
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PROPOSAL 1
REELECTION OF EXTERNAL DIRECTOR AS CLASS II DIRECTOR
Background
In accordance with the terms of the Articles, our Board is divided into three classes, the members of each of which serve for a three year term and are elected on a staggered basis. In addition, our Articles provide for a fourth type of membership, which is unclassified, and whose member is elected on an annual basis. The classes of directorship, and the schedule for expiration of their respective terms of office, are summarized as follows:
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Class I directors— term expires at the annual meeting of shareholders to be held in 2018;
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Class II directors— term expires at the Meeting;
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Class III directors—term expires at the annual meeting of shareholders to be held in 2017; and
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Unclassified director(s)— term expires after one year, at each annual meeting of shareholders (including at the Meeting).
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The current composition of our Board is as follows: our Class I directors are Barak Gablinger and Ohad Zuckerman (the latter of whom also serves as an external director under the Companies Law); our Class II director is Tzvia Broida (who also serves as an external director); our Class III directors are Gideon Hollander and Yossie Hollander; and our unclassified director is Ofer Timor.
As indicated above, the three-year term of office of our Class II director (Ms. Tzvia Broida) expires at the Meeting.
In considering the identity of the nominees for election as directors at the Meeting, our Board sought to retain individuals who currently serve on our Board and who have accumulated significant familiarity with our Company and its industry (or related industries) and who are therefore well-positioned to maximize their contributions and insight towards the management of the Company. Our Board also considered the opportunity for our Company to add new individuals with fresh insight, who have been proposed by a prospective, significant, new investor as described below under Proposal 2. In order to achieve the foregoing goals, after due consideration and debate, our Board has determined to propose, and to recommend the approval of, the following to our shareholders:
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increases to: (i) the authorized size of the Board, from six members to nine members (inclusive of external directors and unclassified director(s)); and (ii) the number of unclassified members of the Board who serve a one-year term (until the next annual meeting of shareholders), from one to three, in each case as described under Proposal 4, so as to enable an increase in the functional size of our Board;
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the reelection or election, as applicable, of the following nominees to fill the following seats on the Board for the following terms (pursuant to the following numbered proposals):
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Ms. Tzvia Broida (as a Class II director and external director), for a three-year term, pursuant to this Proposal 1;
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Mr. Haim Shani, a nominee proposed by IGP, a prospective significant investor in our Company, as a Class II director, for a three-year term , pursuant to Proposal 3;
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Mr. Assaf Harel, an additional nominee proposed by IGP as an additional unclassified director, for a one-year term (until our next annual general meeting of shareholders), pursuant to Proposal 5, subject to the approval of Proposal 4; and
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Mr. Ofer Timor, the current unclassified member of the Board, who has been nominated by the Board for re-election for a one-year term (until our next annual general meeting of shareholders), pursuant to Proposal 6, subject to the approval of Proposal 4.
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The Companies Law requires that a person will not be elected and will not serve as a director in a public company if he or she does not have the required qualifications and the ability to dedicate an appropriate amount of time for the performance of his or her position as director of the company, taking into consideration, among other factors, the special needs and size of the company. The election of a director nominee at a general shareholders meeting of a public company may not be proposed unless the nominee has declared to the company, inter alia, that he or she complies with the above-mentioned requirements and details of his or her applicable qualifications are provided.
The proposed nominee under this Proposal 1 (Ms. Broida) has declared to the Company that she complies with the required qualifications under the Companies Law for appointment as a member of the Board of the Company, detailing her applicable qualifications, and that she is capable of dedicating the appropriate amount of time for the performance of her role as a member of the Board. She has furthermore provided an additional declaration as to her qualification as an external director under the Companies Law. Copies of her declarations are available for inspection at our offices at 8 Hasadnaot Street, Herzliya 46728, Israel.
If she is re-elected, we intend to continue to compensate Ms. Broida within the range provided in the Companies Law regulations governing the compensation of external directors, or the External Director Compensation Regulations, with regard to cash compensation, as is currently the case.
At the Meeting, it is intended that proxies that are signed and submitted by our shareholders to our Company (other than those directing the proxy holders to vote against Ms. Broida) will be voted for the re-election of Ms. Broida as a Class II director and external director for a three year term, until November 9, 2019. If elected, Ms. Broida shall hold office for that period of time, unless her office is earlier vacated under any relevant provision of the Articles and/or the Companies Law.
The biographical information for Ms. Broida, as well as for other continuing directors of the Company who are not subject to re-election at the Meeting, are as follows (biographical information for nominees recommended by the Board for election or re-election under Proposals 3, 5 and 6 can be found below in this Proxy Statement in the description of those proposals):
External Director/ Class II Director Nominee Under Proposal 1
Tzvia Broida joined us as an external director in December 2013. Ms. Broida has also served as Chief Financial Officer for Sensible Medical Innovations since March 2011. Prior to that, Ms. Broida was Chief Financial Officer at Jacada from January 2005 until May 2009, previously serving as our Vice President, Finance from March 2000 and in various positions at Jacada since August 1995.
Continuing Directors Not Subject to Reelection at the Meeting
Gideon Hollander was a co-founder of Jacada in 1990. Mr. Hollander has served as a director of our Company since January 2016, previously serving as the active Chairman of our Board of Directors between February 2012 and January 2016. Mr. Hollander also serves as our Chief Executive Officer since August 2011 (having shared the position, in the capacity of Co-Chief Executive Officer, between August 2011 and March 2012, and since August 2012). Mr. Hollander also previously served as our Chief Executive Officer from 1990 to December 2007 and our Chairman of our Board of Directors from January 2008 to August 2011, participating in an active role in the latter capacity from January 2011 to August 2011. From 1988 to 1990, Mr. Hollander worked in the area of research and development at Comverse Technology. From 1982 to 1987, Mr. Hollander served in various technology and management positions in an elite unit of the Israeli Defense Forces, where he specialized in expert systems and user interface design. Two of the projects that Mr. Hollander managed won the most prominent Israeli award for technological innovations. Gideon Hollander is Yossie Hollander’s brother.
Yossie Hollander has been a director of our Company since 1990 and has been the Chairman of our Board of Directors from November 1995 to December 2007 and again since January 2016. Mr. Hollander was a founder, and from 1983 to 1994 served as the Chief Executive Officer, of New Dimension Software Ltd., an enterprise system and management software company that was acquired by BMC Software in April 1999. Mr. Hollander is a member of the executive board of the Weizmann Institute of Science. He is on the board of councilors of the USC Dornsife College of Arts and Sciences and is a member of the Advisory board of the Cornell Atkinson Center for Sustainable Future. Yossie Hollander is Gideon Hollander’s brother.
Ohad Zuckerman has served as a director of our Company since December 2000. Mr. Zuckerman is the CEO of UniVerve Ltd., a renewable energy group, specializing in Waste-to-Energy and Microalgae-to-Biofuel. Between January 2000 and March 2008 Mr. Zuckerman served as the President & CEO of Zeraim Gedera Ltd., an agricultural company which specializes in breeding of vegetable varieties as well as in production and marketing to the seeds of such varieties worldwide. Prior to this position Mr. Zuckerman served as Zeraim Gedera’s Executive Vice President between 1998-2000 and as its Marketing Manager between 1990-1998. Between 1998 and 2002, Mr. Zuckerman served as a member of the board of directors at Maximal Innovative Intelligence Ltd., a provider of software for extracting information from data warehouses, which was sold to Microsoft.
Barak Gablinger was elected as a director of our Company in January 2016. Mr. Gablinger serves as the Vice President, Customer Delivery, at K2 View, an Israeli company. Prior to that, from November 2005 to April 2010, Mr. Gablinger served as the Director of Program Management at NICE Systems. From August 2001 to October 2005, he served as a Senior Product Manager at Amdocs, and, prior to that time, from August 1996 to August 2001 served as a Group Leader at Amdocs.
Proposed Resolution for Proposal 1
It is proposed that at the Meeting the following resolution be adopted pursuant to Proposal 1:
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“RESOLVED, that Ms. Tzvia Broida be, and hereby is, re-elected to serve as an external director under the Companies Law and a Class II director under the Company’s Articles for an additional term of three years, until November 9, 2019.”
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Required Vote
As described above in this Proxy Statement (under “Vote Required for Approval of the Proposals”), the reelection of Ms. Tzvia Broida requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a simple majority of the votes cast with respect to the resolution approving her reelection.
As also described above, under the Companies Law, the reelection of Ms. Broida as an external director requires that either of the following two voting conditions be met as part of the approval by an ordinary majority of shares present and voting thereon:
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the majority voted in favor includes a majority of the shares held by non-controlling shareholders who do not have a conflict of interest (referred to under the Companies Law as a personal interest) in the election of Ms. Broida that are voted at the Meeting, excluding abstentions; or
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the total number of shares held by non-controlling, non-conflicted shareholders (as described in the previous bullet-point) voted against the election of Ms. Broida does not exceed two percent (2%) of the aggregate voting rights in our Company.
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Please see the discussion under “Vote Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 1. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal. In particular, please remember that you must check the box for Item/Proposal 1A on the proxy card in order for your vote to be counted towards the special majority required under the Companies Law for the reelection of Ms. Broida under Proposal 1. If you do not check that box, even if you vote in favor of Proposal 1, your vote will not be counted towards the special majority required under the Companies Law for approval of this proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the reelection of Ms. Tzvia Broida as an external director who will serve as a Class II director of the Company.
PROPOSAL 2
APPROVAL OF INVESTMENT, AND ACQUISITION OF CONTROL BLOCK, IN OUR COMPANY BY
IGP DIGITAL INTERACTION LIMITED PARTNERSHIP
Background
Factual Background to Investment by IGP
We are always in search of new partners that possess the experience and the financial ability to contribute in a meaningful way to our Company’s success, whether in helping to strengthen our financial condition and/or in contributing to our operational success. As a matter of course, our management and Board members conduct discussions with potential investors and strategic partners with those goals in mind.
In early 2016, our co-Chief Executive Officer, Mr. Giddy Hollander, was approached by Israel Growth Partners, which we refer to as IGP Parent, a private equity investment firm founded by two of Israel’s most experienced global tech leaders with the backing of leading financial institutions, including banks, insurance companies and pension funds. The stated mission of IGP Parent is to provide growth capital, strategic guidance and hands-on involvement to Israeli-related technology companies. IGP Parent seeks to partner with companies and management teams who are eager to accelerate their growth and to reach category leadership and significant position in their respective markets. Our Company determined that an investment by IGP Parent or one of its affiliates would be beneficial to our Company because of the significant industry experience it would bring to the Company.
Mr. Hollander and his counterpart(s) from IGP Parent began a dialogue that gradually led to more serious discussions as to how our Company could benefit from IGP Parent or one of its affiliates acquiring a significant stake in the Company. In parallel with discussions as to the nature and details of such investment transaction, IGP Parent began a process of due diligence with respect to our Company. Later, IGP Parent began discussions with two of our significant shareholders, Robert B. Ashton and Lloyd I. Miller, III, regarding the potential purchase by IGP Parent’s affiliate of a significant percentage of our shares through a secondary purchase of shares from Messrs. Ashton and Miller.
In June 2016, our counsel, Meitar Liquornik Geva Leshem Tal, or Meitar, and IGP Parent’s counsel, Barnea & Co., or Barnea, began negotiating documentation for an investment by IGP, which we sometimes refer to as the Investor, in our Company. Pursuant to the negotiated documentation, IGP would be assumed to have purchased a portion of the ordinary shares held by Messrs. Miller and Ashton, and would purchase additional ordinary shares that would be newly issued to it by our Company via a private placement. Because, under the planned private placement, the Investor’s percentage ownership in the Company would rise above 25% (after giving effect to the secondary purchase from Messrs. Ashton and Miller), and since there is no other shareholder of the Company holding 25% or more of the outstanding ordinary shares, shareholder approval would be required from the Company’s shareholders for such investment under the Companies Law.
Among the key terms negotiated between us and IGP were:
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certain information rights for IGP related to our quarterly financial statements;
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agreements by our Company to exert our reasonable best efforts to ensure that IGP has the right to appoint, replace and remove one or two representatives to the Board subject to maintaining minimum percentage shareholdings;
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registration rights under which IGP may demand the registration, under the Securities Act of 1933, as amended, or the Securities Act, of the resale of the ordinary shares it holds and is acquiring;
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obtaining voting undertakings from certain shareholders of our Company to agree to vote in favor of certain matters;
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obtaining standstill undertakings from certain shareholders of our Company to agree not to increase their respective holdings or acquire any additional ordinary shares (including any securities exchangeable or convertible into ordinary shares) for a period of time; and
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a standstill undertaking by IGP for a period of time post-investment in which it would agree not to acquire additional ordinary shares that would bring its aggregate shareholdings above a certain percentage of our Company’s issued and outstanding share capital without the approval of the Board.
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Following extensive negotiations, we and the Investor, via our respective counsel, finalized all open negotiation points. On August 17, 2016, our Board approved our entry into a securities purchase agreement for the sale, via an exempt private placement, of 261,287 newly-issued ordinary shares, representing 5% of our issued and outstanding share capital on a fully diluted basis, to IGP, at a price of $5.25 per share, or approximately $1.37 million in the aggregate. On September 29, 2016, the parties executed the securities purchase agreement and all related documentation.
Agreements and Transactions Entered Into Related to the Investment by IGP
Off-Market Acquisition from Significant Shareholders
On September 26, 2016 and September 29, 2016 (in the case of the latter date, at or about the time at which it entered into the Securities Purchase Agreement for the purchase from our Company of newly-issued ordinary shares), IGP consummated off-market acquisitions of ordinary shares from two existing significant shareholders of our Company—Robert B. Ashton and Lloyd I. Miller, III, respectively (or from entities affiliated with them) —pursuant to which it purchased an aggregate of 1,040,000 ordinary shares.
Securities Purchase Agreement
On September 29, 2016, we entered into the Securities Purchase Agreement, or the Purchase Agreement, with IGP (to which we also refer as the Investor) for the issuance and sale of 261,287 ordinary shares of the Company, representing 5% of our issued and outstanding share capital on a fully diluted basis, to the Investor at a purchase price of $5.25 per share, or approximately $1.37 million in the aggregate. The issuance and sale of the ordinary shares contemplated under the Purchase Agreement are subject to certain closing conditions, including the approval by our shareholders of the Investor becoming the holder of 25% or more of the outstanding voting rights in our Company pursuant to this Proposal 2. The following description of certain of the material provisions of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, attached to this Proxy Statement as Appendix A.
Besides the above-described terms concerning price and number of ordinary shares to be issued and sold pursuant thereto, the Purchase Agreement also includes the following additional, material provisions:
Board Representation Rights
Under the Purchase Agreement, we have agreed to use our reasonable best efforts (including by obtaining the voting undertakings described further below from certain of our significant shareholders) to secure for the Investor the right to appoint, replace and remove up to two members of the Board, whom we refer to as the Investor Directors, out of a total of no more than nine members of the Board (including statutory external directors elected pursuant to the Companies Law requirements). This requirement remains in effect for so long as the Investor holds ordinary shares (including any securities exchangeable or convertible into ordinary shares) representing at least 17.5% of our issued and outstanding share capital. If the Investor’s percentage ownership drops below 17.5%, but remains above 10%, of our issued and outstanding share capital (or if the expansion of the authorized size of the Board to nine and the increase in the authorized number of unclassified Board members to four under Proposal 4 is not approved at the Meeting), we are required to secure for the Investor the right to appoint, remove or replace only one member of the Board and one non-voting observer of the Board. If the Investor’s percentage ownership drops below 10%, we would no longer be required to secure any Board representation for the Investor.
As part of the Investor’s foregoing Board representation rights, at least one of the Investor’s Board appointees will have the right to be appointed as a member of any committee of the Board, subject to any applicable legal or regulatory requirements that govern the constitution of certain committees of the Board. In addition, we are required to use our reasonable best efforts to secure that each Board representative of the Investor is entitled to remuneration and reimbursement of expenses, indemnification and exculpation, and inclusion in our director and officer liability insurance policy. Towards that end, we have included the proposed approval of those rights and benefits in Proposal 7 for the Meeting, along with the election of the Investor Directors pursuant to Proposals 3 and 5 for the Meeting.
In order to ensure that the Investor’s Board representation rights are implemented, we agreed in the Purchase Agreement to obtain, and we have actually obtained upon execution of the Purchase Agreement, signed voting undertakings (which we refer to collectively as the Voting Undertakings) from certain of our shareholders holding just under 25%, in the aggregate, of the voting power of outstanding shares in our Company, in which they have agreed to vote their ordinary shares in accordance with the Investor’s directions as related to those Board representation rights. The Voting Undertakings will remain in effect until the earlier of (i) such time as the Investor holds ordinary shares representing less than 10% of our issued and outstanding share capital, or (ii) delivery of a written termination notice by the Investor to the shareholder that is party to the Voting Undertaking. The Voting Undertakings will remain in effect even if the investment by the Investor under the Purchase Agreement is not completed, provided that (i) the Investor holds at least 10% of our issued and outstanding share capital and (ii) the failure to consummate the investment under the Purchase Agreement was not solely due to breach or default by the Investor of the terms thereof. To the extent that at any time the aggregate number of ordinary shares represented by all Voting Undertakings then in full force decreases to less than 24% of the then issued and outstanding ordinary shares of our Company, then at the Investor’s request we are required to use our reasonable best efforts to obtain additional, unconditional irrevocable undertakings, in the form of the Voting Undertakings, to bring the aggregate number of ordinary shares covered by all Voting Undertaking to 24% of the then issued and outstanding ordinary shares.
Please see “Voting Undertakings” below for further information as to the terms of the Voting Undertakings.
Standstill Restrictions on Certain Significant Shareholders
As described below (under the heading “Standstill Undertakings of Our Other Shareholders”), we agreed in the Purchase Agreement to obtain, and we have actually obtained upon execution of the Purchase Agreement, signed unconditional, irrevocable undertakings from certain of our shareholders (which we refer to collectively as the Other Shareholder Standstill Undertakings), in which they have agreed not to acquire additional ordinary shares (or shares convertible into, or exchangeable for, ordinary shares) for a certain period of time following the closing under the Purchase Agreement (or, if there is no closing, for a period of time following the signing of the Purchase Agreement). We have undertaken in the Purchase Agreement not to waive our rights under, or terminate, those Other Shareholder Standstill Undertakings.
Please see “Standstill Undertakings of Our Other Shareholders” below for further information as to the terms of the Other Shareholder Standstill Undertakings.
Standstill Restriction on Investor
As described below (under the heading “Standstill Undertakings of IGP”), the Investor has agreed in the Purchase Agreement for a five year period of time commencing on the closing of its investment (and subject to the closing thereof) during which it will not acquire additional ordinary shares that would bring its aggregate shareholdings above 40% of our Company’s issued and outstanding share capital without the prior approval of the Board (and in compliance with the relevant provisions of the Companies Law). We refer to this below as the Investor’s Standstill Undertaking.
Please see “Standstill Undertaking of IGP” below for further information as to the terms of the Investor’s Standstill Undertaking.
Information Rights
Under the Purchase Agreement, we have agreed that from and after the closing under the Purchase Agreement and for so long as the Investor shall hold ordinary shares (including for this purpose any securities exchangeable or convertible into ordinary shares) representing at least 10% of the Company’s issued and outstanding share capital, and subject to execution by the Investor of a non-disclosure agreement in a form reasonably satisfactory to the Company and having the Investor agree to comply with our “black out” policy (to the extent applicable), we will deliver to the Investor (i) unreviewed interim financial statements consisting of a consolidated balance sheet of the Company dated as of, and consolidated statements of operations and cash flows of the Company for each of the fiscal quarters ending, March 31, June 30 and September 30 of each year, each prepared by management in accordance with GAAP, which shall be delivered to the Investor within 45 days following the end of the quarter; (ii) as soon as practicable, but in any event within 30 days after the end of each quarter, a management report in a form agreed from time to time by the parties; and (iii) as soon as practicable but in any event not later than 30 days prior to the first day of each calendar year, our annual operating plan and budget for the following calendar year. In addition, we have agreed to permit an authorized representative of the Investor, to visit and inspect our properties, to examine our books of account and records and to discuss our affairs, finances and accounts with its officers, all at such reasonable times and upon reasonable notice as may be requested by the Investor.
Representations and Warranties
Each of the Company and IGP has provided representations and warranties to one another that are customary for an investment transaction of this type. Our representations and warranties concern the following matters:
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Organization, Good Standing and Qualification
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Authorization; Consents
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Due Execution; Enforceability
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Disclosure Documents; Agreements; Financial Statements; Other Information
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Due Authorization; Valid Issuance
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No Conflict with Other Instruments
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Financial Condition; Taxes; Litigation
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Solicitation; Other Issuances of Securities
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Bad Actor Representation
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Foreign Corrupt Practices
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Exchange Act Registration; Listing
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Investment Company Status
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Sarbanes-Oxley Act; Internal Controls and Procedures
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Transactions with Interested Persons
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Customers and Suppliers
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IGP’s representations and warranties concern the following matters:
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Authorization; Enforceability
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Accredited Investor Status
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Limitations on Disposition
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Restrictions Between Signing and Closing
The Purchase Agreement imposes certain restrictions on our taking any actions that are out of the ordinary course or inconsistent with our past practice between signing and closing, including any of the following:
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issuance, sale or transfer of any shares, options, stock, warrants or any other securities which are convertible or exchangeable into shares of the Company (other than upon the exercise of outstanding options);
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declaration or payment of any dividends, other distributions or payments with respect to share capital;
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transaction with any “Interested Party,” as defined in the Israel Securities Act, 1968;
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restructurings, recapitalizations, reorganizations, reclassifications, share splits, reverse share splits, combinations or like changes in capitalization;
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disposition or agreement to dispose of (or grant any option in respect of) any of our assets (including intellectual property), except for the sale of products or provision of services in the ordinary course of business consistent with past practice; or
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creation of any lien on any part of our assets.;
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Voting Undertakings
Pursuant to the requirements of the Purchase Agreement, at the signing thereof, each of Giddy Hollander, Yossie Hollander and Ms. Genia Hollander (whom we refer to collectively as the Relevant Shareholders), who beneficially own ordinary shares (including ordinary shares underlying options) constituting 10.1%, 12.9%, and 2.9% of our issued and outstanding ordinary shares, respectively, has entered into a Voting Undertaking, in which he or she has agreed to, among other things, (i) participate in shareholder meetings convened at the Investor’s request pursuant to its Board appointment rights; (ii) vote as instructed by the Investor on any resolutions proposed by the Investor pursuant to its Board appointment rights brought before such shareholder meetings; and (iii) vote his or her ordinary shares and use its rights as a shareholder to (a) effect the appointment, replacement and removal of the Board representatives of the Investor as instructed by the Investor, (b) approve the Investor’s Board representatives’ rights to remuneration, indemnification and exculpation, and inclusion in our director and officer liability insurance policy, and (c) not to sell, transfer, assign or pledge of any of the ordinary shares owned and/or held by the Relevant Shareholder, including any additional Ordinary Shares subsequently acquired and/or held by the Relevant Shareholders to any third party, subject to certain exceptions.
Each Voting Undertaking will remain in effect until the earlier of (i) such time as the Investor holds ordinary shares representing less than 10% of our issued and outstanding share capital, or (ii) delivery of a termination notice by the Investor to a Relevant Shareholder. A Voting Undertaking will remain in effect even if the investment by the Investor under the Purchase Agreement is not completed, provided that (i) the Investor holds at least 10% of our issued and outstanding share capital and (ii) the failure to consummate the investment under the Purchase Agreement was not solely due to breach or default by the Investor of the terms thereof.
Standstill Undertakings of Our Other Shareholders
Pursuant to the requirements of the Purchase Agreement, at the signing thereof, each of the Relevant Shareholders has entered into an Other Shareholder Standstill Undertaking, in which he or she has agreed not to increase his or her current holdings of ordinary shares or acquire (whether by purchase, inheritance, gift or otherwise), directly or indirectly, any additional ordinary shares (including any securities exchangeable or convertible into ordinary shares) or other securities in the Company, until the earlier of: (i) one year following the closing date under the Purchase Agreement (or if there is no such closing, for one (1) year and three months from the execution date of the Purchase Agreement); or (ii) such time as the Investor holds ordinary shares (including any ordinary shares purchased by the Investor at or prior to the closing under the Purchase Agreement) representing at least 40% or more of our issued and outstanding share capital. We undertook to the Investor not to waive our rights under, or terminate, such Other Shareholder Standstill Undertaking.
Standstill Undertaking of IGP
Among the negotiated terms of the investment by the Investor that are reflected in the Purchase Agreement, the Investor has undertaken, pursuant to the Investor’s Standstill Undertaking, that until the five-year anniversary of the Closing Date, other than in compliance with the relevant provisions of the Companies Law and the receipt of the prior approval of the Board of Directors, it will not acquire directly or indirectly such additional ordinary shares that would bring its aggregate shareholdings (directly or indirectly) in our Company to 40% or more of our Company’s issued and outstanding share capital.
Registration Rights Agreement
The Purchase Agreement requires that at the closing of the investment by the Investor, we enter into a registration rights agreement with the Investor (which we refer to as the Registration Rights Agreement), under which we will agree to register the resale of the Investor’s ordinary shares under the Securities Act under certain circumstances.
Under the Registration Rights Agreement, the Investor will have the right to demand that we register the resale of its ordinary shares under the Securities Act beginning 180 days after the date of the closing under the Purchase Agreement, subject to a minimum market value of the shares to be resold of $2 million (in the case of a registration on the SEC’s Form F-1) or $750,000 (in the case of a registration on the SEC’s Form F-3). The demand registration rights will be subject to customary exceptions and limitations (such as “cutbacks” for marketing reasons in the event of an underwritten offering). The Investor will also be entitled to “piggyback” registration rights under the Registration Rights Agreement, subject to certain limitations, including “cutbacks” for marketing reasons in the event of an underwritten offering. Registration of the resale of the Investor’s ordinary shares under the Securities Act would result in such shares becoming freely tradable by the Investor (subject to any applicable periodic limitations under our insider trading policy). Any sales of securities by the Investor pursuant to its registration rights could have a material adverse effect on the trading price of our ordinary shares.
The above description of the Registration Rights Agreement is qualified in its entirety by reference to the form of Registration Rights Agreement that is attached to this Proxy Statement as Appendix B.
Legal Background to Shareholder Approval Requirement for Prospective Investment
Under Section 328(b)(1) of the Companies Law, if an investor in a public company wants to rise above the threshold of ownership of 25% or more of the voting rights in the company— when there is no shareholder then holding 25% or more of the voting rights— the investor may do so by way of a private placement investment in the company that is approved by the company’s shareholders. Such a transaction, when it receives shareholder approval, enables the investor to cross that 25% threshold without being required to conduct a special tender offer in which he/she/it offers to purchase shares from all of the company’s shareholders.
In the case of our Company, IGP’s prospective investment of approximately $1.37 million in the Company, in which it would purchase 261,287 newly-issued ordinary shares, and which would follow upon its purchase of an aggregate of 1,040,000 of our ordinary shares from Messrs. Lloyd I. Miller, III and Robert Ashton, would raise its percentage ownership of our ordinary shares above 25%. That investment, which will take place by way of a private placement, would also raise IGP’s percentage voting rights in our company above 25%. Because we do not have a shareholder or group of shareholders that possess 50% or more (or even 25% or more) of the voting rights in our company, this prospective investment by IGP triggers the requirement for approval by our shareholders pursuant to Section 328(b)(1) of the Companies Law.
Proposed Resolution
We are proposing the adoption by our shareholders of the following resolution at the Meeting pursuant to this Proposal 2:
“RESOLVED, that the acquisition by IGP of 261,287 newly issued ordinary shares from the Company in a private placement intended to result in IGP acquiring aggregate holdings of over 25% of the total voting power of the Company (a “control block” within the meaning of, the Companies Law), as described in Proposal 2 of the Proxy Statement, dated October 11, 2016, with respect to the Meeting, be, and hereby is, approved in all respects, including pursuant to Section 328(b)(1) of the Companies Law.
Required Vote
As described above (under “Vote Required for Approval of the Proposals”), under the Companies Law, the approval of this Proposal 2 requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a majority of the votes cast with respect to this proposal. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends a vote FOR the foregoing resolution approving the acquisition, through a private placement, by IGP of 261,287 ordinary shares intended to bring the Investor to an aggregate holding of 25% or more of the voting interest in our Company.
PROPOSAL 3
ELECTION OF HAIM SHANI AS A CLASS II DIRECTOR, FOR A THREE-YEAR TERM
Background
Proposed Election of Investor Directors
As described in Proposal 2 above, in connection with the prospective investment by IGP, we have agreed to certain undertakings in order to induce the Investor, IGP, to consummate its investment. Among those undertakings, we have agreed that we will use our reasonable best efforts to secure for the Investor the right to appoint, replace and remove up to two Investor Directors, out of a total of no more than nine members of the Board (including external directors under the Companies Law). We have furthermore agreed to procure the Voting Undertakings from certain of our significant shareholders to vote in favor of the election of the Investor Directors to the Board.
The Investor’s right to appoint, replace and remove the two Investor Directors will continue in effect for as long as the Investor holds ordinary shares (including ordinary shares issuable upon exchange or conversion of other securities) representing at least 17.5% of our Company’s issued and outstanding share capital. If the Investor’s percentage holdings in our Company drop below 17.5%, but remain at least 10% (including ordinary shares issuable upon exchange or conversion of other securities), our Company’s commitment to the Investor is reduced to securing its right to appoint, remove or replace only one Investor Director, plus one non-voting observer on our Board.
Our agreement to secure for the Investor the right to elect the second Investor Director is furthermore conditioned on the approval of the expansion of the authorized size of the Board to nine directors and, through the increase in the number of authorized unclassified directors under the Articles, pursuant to Proposal 4. In the event that our shareholders do not approve that expansion of the size of the Board or the increase in the number of authorized unclassified directors, then we have agreed to continue to use our reasonable best efforts to receive such approvals (including by convening additional shareholder meetings) until such expansion and increase are finally approved. In the interim, we would be required to secure for the Investor the right to appoint, replace and remove at least one Investor Director (out of a total of six authorized members of the Board), along with one observer to participate in all meetings of the Board (subject to the observer’s executing a standard non-disclosure agreement).
Mr. Haim Shani serves as the Investor’s first nominee to serve on the Board. Consequently, Mr. Shani will serve on the Board as an Investor Director (as a Class II director under the articles of the Company) if he is elected pursuant to this Proposal 3, regardless of whether the expansion of the authorized size of the Board and increase in the number of authorized unclassified directors is approved pursuant to Proposal 4.
Because our Board believes that the investment by and relationship with the Investor will benefit our Company, our Board recommends the election of Mr. Haim Shani as a Class II director under the articles of the Company pursuant to this Proposal 3.
Mr. Shani has declared to the Company that he complies with the required qualifications under the Companies Law for appointment as a member of the Board of the Company, detailing his applicable qualifications, and that he is capable of dedicating the appropriate amount of time for the performance of his role as a member of the Board. A copy of his declaration to serve on the Board is available for inspection at the Company’s offices.
Voting on Proposal 3
At the Meeting, it is intended that proxies that are signed and submitted by our shareholders to our Company (other than those directing the proxy holders to vote against Mr. Haim Shani under this Proposal 3) will be voted for the election of Mr. Haim Shani as a Class II director under the articles of the Company, for a three-year term, until the annual general meeting of shareholders held in the third year following the Meeting (i.e., 2019). If elected, Mr. Shani will hold office for that period of time, unless his office is earlier vacated under any relevant provision of the Articles and/or the Companies Law.
Biographical Information for Nominee
Biographical information for the first Investor Director nominee, Mr. Haim Shani, is as follows:
Haim Shani is a Co-Founder and general partner of IGP. In 2012, Mr. Shani retired from the Israeli Ministry of Finance, where he served as Director General (2009-2011) and the Head of the Competitiveness Committee. Prior to that, he served as CEO of NICE Systems (NASDAQ:NICE) for a period of close to 9 years. Mr. Shani came to NICE from Applied Materials (Israel), where he served as VP of its Israeli business (Ex Opal/Orbot) for a period of three years. From 1992 to 1998, Mr. Shani held various management positions at Orbotech Ltd. as Corporate Vice President of Marketing and Business Development, President of Orbotech’s Asia Pacific subsidiary and President of Orbotech Europe. Prior to that, Mr. Shani held various management positions at Scitex Corporation and IBM Israel. Mr. Shani currently serves as Chairman of the UK Israel Tech Hub, a board member at Strauss Water, R2Net GreenRoad, and Stratassys and is a member of the Advisory Committee, Supervisor of Banks, Bank Of Israel. Mr. Shani holds a Bachelor’s degree in Industrial and Management Engineering from the Technion – Israel Institute of Technology, and an MBA from INSEAD, France.
Proposed Resolution for Proposal 3
It is proposed that at the Meeting the following resolution be adopted pursuant to Proposal 5:
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“RESOLVED, that Mr. Haim Shani be, and hereby is, elected, to serve as a Class II director under the Company’s Articles for a term of three years, until the annual general meeting of shareholders of the Company held in 2019, and until the due election and qualification of his successor.”
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Required Vote
As described above (under “Vote Required for Approval of the Proposals”), the election of Mr. Haim Shani as a Class II director requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a simple majority of the votes cast with respect to the resolution approving his election. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the election Mr. Haim Shani as a Class II director of the Company.
PROPOSAL 4
APPROVAL OF EXPANSION OF AUTHORIZED SIZE OF BOARD OF DIRECTORS AND INCREASE
IN NUMBER OF UNCLASSIFIED DIRECTORS
Background
Under Article 38 of our Articles, the authorized size of our Board consists of such number of directors (not less than five (5) nor more than fourteen (14)) as may be fixed, from time to time, by a Special Resolution of our shareholders. Under Article 39(c) of our Articles, among the authorized members of the Board is one unclassified director, who is elected annually for a one-year term that extends from one annual general meeting of shareholders until the next annual general meeting of shareholders. That unclassified director serves alongside the remaining members of the Board, who consist of directors who serve in one of three classes of directors, who are elected for three-year terms in a staggered manner.
The “Special Resolution” that is required to alter the authorized size of the Board or the number of authorized unclassified directors as appears in our Articles, is defined in our Articles as the approval of a resolution by seventy-five percent (75%) of the ordinary shares present (in person or by proxy) and voting (not including abstentions) on the resolution at a general meeting of shareholders.
As described in Proposal 2 above, we have agreed, as part of the proposed investment by IGP, to use our reasonable best efforts to secure for the Investor the right to appoint, replace and remove up to two members of the Board, out of a total of no more than nine members of the Board (including statutory external directors elected pursuant to the Companies Law requirements). As described in Proposal 2, our commitment to provide the new Investor representation on our Board is subject to the Investor’s maintaining certain levels of share ownership in our Company. In light of that condition, we believe that it is most appropriate to add the prospective Investor’s nominees to the Board. In order to add those directors, without detracting from the contributions of the existing members of our Board, however, we need to increase the number of directors who are authorized to serve both (i) on our Board as a whole, and (ii) as unclassified directors in particular.
Our Board has approved, and recommends that our shareholders likewise approve, at the Meeting, increasing, by three, the authorized number of directors serving (i) on our Board as a whole, so as to be set at nine directors, and (ii) as unclassified directors, so as to be set at three. If this Proposal 4, along with Proposals 1, 3, 5 and 6, are approved at the Meeting, Mr. Haim Shani will serve as a Class II director and Mr. Assaf Harel will join Mr. Ofer Timor, our current unclassified director, as the unclassified members of the Board, while the Board as a whole would constitute eight individuals. The third authorized unclassified director seat, which would also constitute the ninth authorized director seat on the Board as a whole, would remain vacant in the interim, and we could potentially fill it in the future.
If we do not increase the authorized size of the Board and the number of unclassified directors under the Articles pursuant to this Proposal 4, we will be unable to add to the Board both of the two new nominees proposed for election by the Investor. Instead, we will add one such nominee (Mr. Haim Shani) pursuant to Proposal 3 (assuming that he is elected), while the other such nominee (Mr. Assaf Harel, who has been proposed for election under Proposal 5) will serve as a non-voting observer on the Board (and will execute a standard non-disclosure agreement with us) until we succeed at securing our shareholders’ approval of an increase in the authorized size of the Board and the number of unclassified directors. We would then continue to seek, at future shareholders meetings, our shareholders’ approval of an amendment to Article 39(c) increasing the number of unclassified directors who are authorized to serve on the Board. We will also be unable to re-elect Mr. Ofer Timor for an additional one-year term as an unclassified director pursuant to Proposal 6 if our shareholders do not approve the expansion of the Board and the increase in number of unclassified directors under our Articles pursuant to this Proposal 4.
The authorized size of our Board was last fixed by our shareholders at six directors via a Special Resolution that was adopted at our annual general meeting of shareholders in August 2004. The authorized number of unclassified directors was originally set by our shareholders at one (in the form of an amendment to the then-existing Articles) at our annual general meeting of shareholders that took place in August 2004, and has remained unchanged since that time.
As part of our proposed amendment to increase the number of authorized unclassified directors under Article 39(c) of the Articles, we also propose conforming adjustments to the secondary provisions of that Article 39(c). In particular, existing Article 39(c) provides that we may convert both the authorized position of an unclassified director and, if such position is then filled, a then-active unclassified director into a Class II director at any time by a resolution of the Board (not including such unclassified director). In light of our proposed increase in the number of authorized unclassified members of the Board to three, we are also proposing (as part of the amendment to Article 39(c)) that the Board will have the authority to convert any unclassified director into a member of any of the three classes of directors at any time. Existing Article 39(c) also provides that upon the submission of any tender offer (as defined in the Companies Law) for the Company’s shares, the unclassified director and the position of the unclassified director (even if vacant) will automatically be classified as a Class II director. In light of our proposed increase in the number of unclassified directors, we propose that this provision be retained but modified such that upon any tender offer (as defined in the Companies Law), each of the existing unclassified Board memberships (and, if then filled, the directors serving as such) be automatically converted into one of the three classes within the classified Board structure (the class with the least then-current members of the Board serving as members thereof). As a result of that classification, the former unclassified directors and their positions will be divided as evenly as possible among the three classes of directors, as determined by the Board.
Proposed Resolution
We are proposing the adoption by our shareholders of the following resolutions at the Meeting pursuant to Proposal 4:
“RESOLVED, that the authorized size of the Board of Directors of the Company be, and hereby is, increased so as to be fixed at nine (9) members of the Board.”
“RESOLVED, that paragraph (c) of Article 39 of the Company’s Articles be, and hereby is, amended to read in its entirety as follows (the text to be added or deleted relative to existing paragraph (c) of Article 39 of our Articles is marked below):
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“(c) In addition to the directors appointed in accordance with Article 39(a), the Company may elect up to three (3) additional directors (the “Unclassified Directors”) to serve on the Company’s Board of Directors, each for a one (1) year term from the Annual General Meeting until the following Annual General Meeting, based on the vote of the holders of a majority of the voting power represented at the Annual General Meeting in person or by proxy and voting on the election of such Unclassified Director. Any Unclassified Director may be classified as a Class I, II or III Director at any time by a resolution of the Board of Directors (not including such Unclassified Director). In addition, the position of such Unclassified Director may be classified as a Class I, II or III Director at any time by a resolution of the Board of Directors (not including such Unclassified Director), whether or not such position is vacant at such time. Upon the submission of any tender offer (as defined in the Companies Law) for the Company’s shares, each such Unclassified Director and the position of each such Unclassified Director (even if vacant) shall automatically be classified as one of the three classes within the classified Board (the class with the least then-current members of the Board serving as members thereof as of that time), such that following such classification, the Unclassified Directors and their positions shall be divided as evenly as possible among the three classes of Director (unless determined otherwise by a resolution of the Board of Directors (not including such Unclassified Director) adopted within 30 days of the announcement of such Tender Offer). Upon any such classification, the former Unclassified Directors shall continue to serve on the Company’s Board of Directors as members of the classes to which they were assigned and shall be subject to re-election together with the other members of the class to which they were assigned. Any Unclassified Director may be removed from office in accordance with the provisions of Article 39(b), which shall apply, mutatis mutandis”
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Required Vote
As described above (under “Vote Required for Approval of the Proposals”), under our Articles, each of the proposed increases in the authorized number of directors serving (i) on the Board as a whole and (ii) as unclassified directors requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing seventy-five percent (75%) of the votes cast (excluding abstentions) with respect to Proposal 4. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether this supermajority has been achieved for the proposal.
Recommendation
The Board of Directors recommends a vote FOR the foregoing resolutions increasing the authorized size of the Board to nine (9) directors and the authorized number of unclassified directors to three (3).
PROPOSAL 5
ELECTION OF ASSAF HAREL AS UNCLASSIFIED DIRECTOR FOR ONE-YEAR TERM
Background
Proposed Election of Assaf Harel as Second Investor Director
As described in Proposals 2 and 3 above, in connection with the prospective investment by IGP, we have agreed to certain undertakings in order to induce IGP, to consummate its investment. Among those undertakings, we have agreed that we will use our reasonable best efforts to secure for the Investor the right to appoint, replace and remove up to two Investor Directors, out of a total of no more than nine members of the Board (including external directors under the Companies Law). Please see the “Background” to Proposal 3 above for a description of the shareholding requirements upon which the Investor’s right to appoint, replace and remove the two Investor Directors is conditioned.
Under the Purchase Agreement with IGP, because IGP currently holds ordinary shares representing at least 17.5% of our Company’s issued and outstanding share capital, it is entitled to appoint, replace and remove up to two Investor Directors. Mr. Assaf Harel serves as the second such Investor Director, and he is being nominated for election at the Meeting as an unclassified director, to serve a one-year term (until our next annual general meeting of shareholders), pursuant to this Proposal 5.
Our agreement to secure for the Investor the right to elect Mr. Harel as the second Investor Director is, however, conditioned on the approval of the expansion of the authorized number of directors serving (i) on the Board as whole, to nine, and (ii) as unclassified directors, to three, in each case pursuant to Proposal 4. If Mr. Harel is elected pursuant to this Proposal 5 and our shareholders approve Proposal 4, Mr. Harel will serve as the second Investor Director. If our shareholders do not approve Proposal 4, we will continue to use our reasonable best efforts to receive such approval (including by convening additional shareholder meetings), and, in the interim, Mr. Harel (or another designee of IGP) will serve as a non-voting observer who will participate in all meetings of the Board (subject to his execution of a standard non-disclosure agreement). Consequently, if this Proposal 5 is approved, but either of Proposal 3 or Proposal 4 is rejected, Mr. Haim Shani will be deemed elected to the Board to serve as Class II Director, while Mr. Assaf Harel will serve as an observer on the Board.
Because our Board believes that the investment by and relationship with the Investor will benefit our Company, our Board recommends the election of the two new Investor Directors to our Board (or the election of Mr. Haim Shani and the appointment of Mr. Assaf Harel as a non-voting observer, to the extent that this Proposal 5 is approved but either of Proposal 3 or Proposal 4 is rejected).
Mr. Assaf Harel has declared to the Company that he complies with the required qualifications under the Companies Law for appointment as a member of the Board of the Company, detailing his applicable qualifications, and that he is capable of dedicating the appropriate amount of time for the performance of his role as a member of the Board. A copy of that declaration is available for inspection at the Company’s offices.
Voting on Proposal 5
At the Meeting, it is intended that proxies that are signed and submitted by our shareholders to our Company (other than those directing the proxy holders to vote against the election of Mr. Assaf Harel under this Proposal 5) will be voted for the election of Mr. Harel as an unclassified director, for a one-year term, until the next annual general meeting of shareholders following the Meeting, and until the due election and qualification of his successor. If elected, Mr. Harel will hold office for that period of time, unless his office is earlier vacated under any relevant provision of the Articles and/or the Companies Law.
Biographical Information for Nominee
Biographical information for the second Investor Director nominee, Mr. Assaf Harel, is as follows:
Assaf Harel serves as a partner of IGP. Assaf Harel has over 12 years of experience in tech-focused Private Equity investments and leadership roles in high-tech companies. Prior to joining IGP, Assaf served as the CEO of Sentigo Technologies, and as a Principal with Viola Private Equity and SCP Private Equity Partners. His global investment experience includes Growth Equity, Venture Capital, Buyouts, M&A and Special situations. Earlier in his career, Assaf served as a Director of Business Development with HyperRoll (acquired by Oracle) and held R&D roles with EDSL Networks (acquired by Orckit) and RADVision. Assaf holds an MBA in Finance from the Wharton School at the University of Pennsylvania, and a B.A in Computer Science and Management from Tel Aviv University.
Proposed Resolution for Proposal 5
It is proposed that at the Meeting the following resolution be adopted pursuant to Proposal 5:
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“RESOLVED, that subject to the approval of Proposal 4 at the Meeting, Mr. Assaf Harel be, and hereby is, elected, to serve as an unclassified director under the Company’s Articles for a one-year term, until the next annual general meeting of shareholders following the present Meeting and until the due election and qualification of his successor.”
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Required Vote
As described above (under “Vote Required for Approval of the Proposals”), the election of Mr. Assaf Harel as an unclassified director requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a simple majority of the votes cast with respect to the resolution approving his election. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the election of Mr. Assaf Harel as an unclassified director of the Company.
PROPOSAL 6
RE-ELECTION OF MR. OFER TIMOR AS UNCLASSIFIED DIRECTOR FOR ONE-YEAR TERM
Background
Proposed Reelection of Mr. Ofer Timor
The Board has determined that in addition to re-electing Ms. Tzvia Broida as a Class II director and adding Mr. Haim Shani as a Class II director and Assaf Harel as unclassified director, our Company would benefit from the continued advice of another existing director with significant experience in our industry and familiarity with our Company. The Board believes that Mr. Ofer Timor, our current unclassified director and former President, has much to continue to contribute towards the management of our Company, and, accordingly, has nominated him for reelection as an unclassified director under our Articles, pursuant to which he will serve an additional one year term, until our next annual general meeting of shareholders and until his successor is duly elected and qualified. However, as is the case with the election of Mr. Assaf Harel (one of the proposed Investor Directors) pursuant to Proposal 5, if this Proposal 6 is approved, but the increase under Proposal 4 in the number of authorized number of directors serving (i) on the Board as a whole, to nine, and (ii) as unclassified directors, to three, is rejected, Mr. Timor will be unable to serve on the Board (due to the insufficient number of authorized Board seats and unclassified Board seats).
Mr. Timor has declared to the Company that he complies with the required qualifications under the Companies Law for appointment as a member of the Board, having detailed his qualifications, and that he is capable of dedicating the appropriate amount of time for the performance of his role as a member of the Board. A copy of that declaration is available for inspection at the Company’s offices.
Voting on Proposal 6
At the Meeting, it is intended that proxies that are signed and submitted by our shareholders to our Company (other than those directing the proxy holders to vote against Mr. Ofer Timor under this Proposal 6) will be voted for the reelection of Mr. Timor as an unclassified director, for a one-year term, until the next annual general meeting of shareholders following the Meeting, and until the due election and qualification of his successor. If reelected, Mr. Timor will hold office for that period of time, unless his office is earlier vacated under any relevant provision of the Articles and/or the Companies Law.
Biographical Information for Nominee
Biographical information for Mr. Timor is as follows:
Ofer Timor joined us as a director in January 2016. Mr. Timor is one of the founders of Inimiti Capital Partners, a venture capital fund that focuses upon investments in software platforms and services in the New Media space (Internet, Mobile and anything in between). Prior to co-founding lnimiti, Mr. Timor co-founded and managed Delta Ventures, a seed and early stage Israeli fund. He had an active role in building portfolio companies from the ground up and assisting in more advanced stages by serving as a member of their boards. Before Delta, Mr. Timor served as President of our Company during the mid-1990’s, helping to bring the Company from the startup stage to maturity. Mr. Timor was also a board member of Borderfree Inc. (NASDAQ: BRDR), which was sold to Pitney Bowes Inc. (NASDAQ: PBI) in 2015, and a board member of ClickFox, Inc. Mr. Timor was a fighter pilot in the Israeli Air Forces. He holds a BSA in Economics and a BA in Business Administration from Haifa University.
Proposed Resolution for Proposal 6
It is proposed that at the Meeting the following resolution be adopted pursuant to Proposal 6:
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“RESOLVED, that subject to the approval of Proposal 4 at the Meeting, Mr. Ofer Timor be, and hereby is, reelected, to serve as an unclassified director under the Company’s Articles for a one-year term, until the next annual general meeting of shareholders following the present Meeting and until the due election and qualification of his successor.”
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Required Vote
As described above (under “Vote Required for Approval of the Proposals”), the re-election of Mr. Ofer Timor as an unclassified director requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a simple majority of the votes cast with respect to the resolution approving his re-election. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the reelection of Mr. Ofer Timor as an unclassified director of the Company.
PROPOSAL 7
APPROVAL OF REMUNERATION, REIMBURSEMENT, INDEMNIFICATION AND INSURANCE FOR
NEW DIRECTOR(S)
Background
Terms of Service for Investor Directors
As described in Proposal 2 above and again noted in Proposals 3 and 5 above, we have agreed with the Investor to secure for it the right to elect two Investor Directors. In order to compensate each Investor Director for his time and to ensure that he is properly motivated to carry out his duties on the Board with the best interests of our shareholders in mind, we are proposing in this Proposal 7 that each of the Investor Directors (or Mr. Haim Shani only, if Mr. Assaf Harel’s election is not approved under Proposal 5, or the increase in the number of authorized number of directors serving (i) on the Board as a whole, to nine, and (ii) as unclassified directors, to three, is not approved pursuant to Proposal 4) receive remuneration and reimbursement of expenses on the same terms and conditions that the Company remunerates and reimburses its other non-executive members of the Board. Under our current remuneration terms, each Investor Director would therefore receive NIS 37,260 (approximately $10,000) annually in cash remuneration, plus NIS 2,490 (approximately $700) for each meeting of the Board and each meeting of a committee of the Board attended. The Investor Directors will not, however, be entitled to option grants (or other equity-based awards) to the extent that the same is awarded to other members of the Board out of the pool of options to purchase up to 263,750 ordinary shares that has been previously designated for Board members (consisting of 233,750 currently granted options and an additional 30,000 options available for future grants), provided that to the extent other directors are awarded options and other equity-based awards in excess of the 263,750 pool, then each of Messrs. Shani and Harel shall also be entitled to awards of like tenor.
As further agreed with the Investor, if approved as part of this Proposal 7, in order to provide each Investor Director with the additional customary personal protections that accompany service as a Board member of a public company, each of the Investor Directors will be entitled to indemnification and exculpation from the Company pursuant to an indemnification agreement with the Company having the same terms and conditions as the corresponding agreement to which the remaining members of the Board are party with the Company—which agreement is being updated, subject to the approval of Proposal 8 below. Each Investor Director will furthermore be covered by our directors’ and officers’ liability insurance policy, just as all other members of the Board are covered.
Proposed Resolutions for Proposal 7
Our Board is proposing that at the Meeting the following resolutions be adopted pursuant to Proposal 8:
“RESOLVED, that subject to the election of Messrs. Haim Shani and Assaf Harel pursuant to Proposals 3 and 5, respectively, the Company’s payment to each of them annual cash remuneration of NIS 37,260, or approximately $10,000, plus NIS 2,490 (approximately $700) for each meeting of the Board and each meeting of a committee of the Board attended, and providing reimbursement of expenses to them in respect of their director services to the Company, and, in addition, to the extent any other Board member will be awarded options or other equity-based awards in excess of the pool of options to purchase up to 263,750 ordinary shares that has been previously designated for Board members (consisting of 233,750 currently granted options and an additional 30,000 options available for future grants), then each of Messrs. Shani and Harel shall also be entitled to awards of like tenor, be, and hereby is, approved in all respects.”
“RESOLVED FURTHER, that subject to the election of Messrs. Haim Shani and Assaf Harel pursuant to Proposals 3 and 5, respectively, the Company’s providing to each of them indemnification and exculpation pursuant to an indemnification agreement with the Company having the same terms and conditions as that to which the Company is or will be party with the remaining members of the Company’s Board of Directors, as approved by the Company’s shareholders, be, and hereby is, approved in all respects.”
“RESOLVED FURTHER, that subject to the election of Messrs. Haim Shani and Assaf Harel pursuant to Proposals 3 and 5, respectively, the Company’s inclusion of each of them in the coverage under the Company’s insurance policy for its officers and directors, as previously approved by the Company’s shareholders, be, and hereby is, approved in all respects.”
Required Vote
As described above (under “Vote Required for Approval of the Proposals”), the approval of remuneration, reimbursement, indemnification and exculpation, and directors’ and officers’ liability insurance coverage, for Messrs. Haim Shani and Assaf Harel, requires the affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing a simple majority of the votes cast with respect to the resolutions approving these benefits. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the prospective Investor Director(s)’ receipt of remuneration, reimbursement of expenses, indemnification and exculpation, and directors’ and officers’ liability insurance coverage, in respect of their/his Board service.
PROPOSAL 8
AMENDMENT AND RESTATEMENT OF INDEMNIFICATION PROVISIONS OF ARTICLES AND
ENTRY INTO CORRESPONDING AMENDED INDEMNIFICATION AGREEMENT WITH DIRECTORS
AND OFFICERS
Background
Our shareholders had previously approved (at our annual shareholder meeting in August 2003) an amendment to our Articles that consisted of updated indemnification provisions that reflected the permissible situations under which directors and officers could be indemnified under the Companies Law, as updated as of that time. Since that time, the Companies Law indemnification provisions have been further updated via amendment (most recently in 2011). Neither our Articles, as most recently updated, nor the form of indemnification agreement to which we are party with our directors and officers, currently reflects the full scope of director and officer indemnification that is permitted under the Companies Law, as updated. There have also been certain provisions added to the Israeli Securities Law, 5728-1968, or the Israeli Securities Law, and the Israeli Antitrust Law, 5748-1988, or the Israeli Antitrust Law, that enable indemnification of an officer or director for certain liabilities under those laws, which provisions are also not reflected in our current Articles or in the form of indemnification agreement to which we are party with our officers and directors.
In particular, Section 260(a)(1a) of the Companies Law was amended in 2005 and subsequently amended in 2011. This sub-section of the law provides that an office holder (as defined in the Companies Law) may be indemnified for reasonable litigation expenses, including attorneys’ fees, expended in connection with an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial sanction. Entitlement to that indemnification is conditioned on (1) no indictment being filed against the office holder as a result of the investigation or proceeding; and (2) no financial liability in lieu of a criminal proceeding being imposed upon him or her as a result of that investigation or proceeding. In the alternative, even if such a financial liability is imposed, the office holder can still be entitled to indemnification if the liability was imposed with respect to an offense that does not require proof of criminal intent or in connection with a financial sanction.
Under the Israeli Securities Law and the Israeli Antitrust Law, the scope of permissible indemnification of an officer or director has been expanded as well. Those laws entitle us to indemnify an officer or director for monetary liability to a party harmed by a breach, and for related legal fees incurred, in connection with an administrative proceeding pursuant to Chapter H3 (Imposing a Monetary Sanction by the Israeli Securities Authority), H4 (Imposing Administrative Enforcement Measures by the Administrative Enforcement Committee) and I1 (Conditioned Arrangement for Avoidance of Taking Action or for Stopping Action) of the Israeli Securities Law, and Chapter G1 of the Israeli Antitrust Law. Indemnification in connection with those proceedings is conditioned on our Articles containing an explicit provision that allows that indemnification.
The foregoing provisions under the Companies Law, Israeli Securities Law and Israeli Antitrust Law do not appear in Article 67 of our existing Articles, which contains our Articles’ existing indemnification provisions. Those provisions similarly do not appear in the form of directors’ and officers’ indemnification agreement to which we are currently party with our directors and officers.
We believe that it is important to provide our directors and officers with the widest indemnification coverage, as is customary for directors and officers of most, if not all, Israeli public companies whose shares are traded in the United States. Such coverage will give our directors and officers the necessary comfort to make difficult decisions that are in the best interest of our Company and our shareholders without fear of accompanying liability. In order to achieve that goal, we are proposing that Article 67 of our Articles be amended and restated to cover all scenarios for which indemnification (and insurance) is now permitted under Israeli law. We propose that Article 67 be amended and restated as follows:
“67. INDEMNITY AND INSURANCE
In this Article 67, the following terms shall have the following, respective meanings:
“Administrative Proceeding” shall mean a proceeding pursuant to Chapter H3 (Imposing a Monetary Sanction by the Israeli Securities Authority), H4 (Imposing Administrative Enforcement Measures by the Administrative Enforcement Committee) or I1 (Conditioned Arrangement for Avoidance of Taking Action or for Stopping Action) of the Securities Law; or a proceeding pursuant to Chapter G1 of the Israeli Antitrust Law, 5748-1988, as amended from time to time; and any other or additional administrative enforcement proceeding in respect of which indemnification or insurance may lawfully be granted for expenses incurred in connection therewith or payments relating thereto.
“Securities Law” shall mean the Israeli Securities Law, 5728-1968, as amended from time to time.
“Party harmed by a breach” shall be a harmed party described in Section 52(54)(a)(1)(a) of the Securities Law, in the context of an Administrative Proceeding pursuant to the Securities Law or pursuant to any other legislation in respect of which an Administrative Proceeding may be held.
Subject to the provisions of the Companies Law with regard to such matters and to the maximum extent permitted under the Companies Law:
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(a)
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Insurance. The Company may enter into a contract for the insurance of all or part of the liability of an Office Holder (as defined in the Companies Law) with respect to an obligation imposed on such Office Holder due to an act performed by him in his capacity as an Office Holder of the Company arising from any of the following:
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(i)
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a breach of his duty of care to the Company or to another person.
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(ii)
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a breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable cause to assume that such act would not prejudice the interests of the Company.
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(iii)
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a financial liability imposed on such Office Holder in favor of another person.
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(iv)
(v)
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a monetary liability of an Office Holder to a party harmed by a breach in an Administrative Proceeding.
expenses incurred by an Office Holder in connection with an Administrative Proceeding conducted in his matter, including reasonable litigation expenses (including legal fees).
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(b)
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Advance Indemnification. The Company may indemnify, and may undertake in advance to indemnify, an Office Holder in respect of liability or expense set forth in subparagraph (c) below, provided that in the case of sub-paragraph (c)(i) only, that an advance undertaking to indemnify shall be limited to those categories of events, and to such amounts or criteria, as the Board of Directors may, at the time of the giving of such undertaking to indemnify, in its opinion deem to be reasonable under the circumstances, and shall specify such categories of events, and such amounts and/or criteria, in the undertaking to indemnify.
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(c)
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Indemnification. The Company may indemnify, and undertake to indemnify, an Office Holder for any liability and expense that may be imposed on such Office Holder due to an act performed by him in his capacity as an Office Holder as follows:
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(i)
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a financial liability imposed on an Office Holder in favor of another person by a court judgment, including a compromise judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court;
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(ii)
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reasonable litigation expenses, including attorneys’ fees, expended by the Office Holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial sanction, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability in lieu of a criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent or in connection with a financial sanction;.
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(iii)
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reasonable litigation costs, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge in respect of which the Office Holder was acquitted or in a criminal charge in respect of which the Office Holder was convicted for an offense that did not require proof of criminal intent; and
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(iv)
(v)
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a monetary liability of an Office Holder to a party harmed by a breach in an Administrative Proceeding.
expenses incurred by an Office Holder in connection with an Administrative Proceeding conducted in his matter, including reasonable litigation expenses (including legal fees).
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(d)
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Retroactive Indemnification. The Company may indemnify an Office Holder retroactively.
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(e)
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Exculpation. The Company may release, in advance, all or part of an Office Holder’s liability to the Company for damage which arises from the breach of his duty of care to the Company.
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(f)
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Prospective Applicability of Amendments. Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to this Article 67 and any amendments to this Article 67 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 applicable law.
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(g)
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Broad Applicability. The provisions of this Article 67 (x) shall apply to the maximum extent permitted by law (including, the Companies Law, the Securities Law and the Antitrust Law); and (y) are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance and/or in respect of indemnification (whether in advance or retroactively) (i) in connection with 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, and/or (ii) in connection with any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law; provided that the procurement of any such insurance and/or the provision of any such indemnification shall be approved by the Board of Directors or in such manner as may be required by the Companies Law.”
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In conjunction with this amendment to Article 67, we are proposing that our shareholders approve our entry into an updated form of director and officer indemnification agreement with all of our directors and officers, which form includes these updated provisions of the Companies Law that would be added to our Articles (as described above). The new form of indemnification agreement would replace the existing indemnification agreement for all of our existing directors and officers, and would also serve as the form of indemnification agreement that we would enter into with the new proposed Investor Director(s) under Proposal 7 above upon their election (subject to their election pursuant to Proposals 3 and 5). A copy of the form of proposed updated director and officer indemnification agreement is annexed to this Proxy Statement as Appendix C.
Proposed Resolutions for Proposal 8
Our Board is proposing that at the Meeting the following resolutions be adopted pursuant to Proposal 8:
“RESOLVED, that Article 67 of the Company’s Articles be, and hereby is, amended and restated in its entirety to state as follows:
“67. INDEMNITY AND INSURANCE
In this Article 67, the following terms shall have the following, respective meanings:
“Administrative Proceeding” shall mean a proceeding pursuant to Chapter H3 (Imposing a Monetary Sanction by the Israeli Securities Authority), H4 (Imposing Administrative Enforcement Measures by the Administrative Enforcement Committee) or I1 (Conditioned Arrangement for Avoidance of Taking Action or for Stopping Action) of the Securities Law; or a proceeding pursuant to Chapter G1 of the Israeli Antitrust Law, 5748-1988, as amended from time to time; and any other or additional administrative enforcement proceeding in respect of which indemnification or insurance may lawfully be granted for expenses incurred in connection therewith or payments relating thereto.
“Securities Law” shall mean the Israeli Securities Law, 5728-1968, as amended from time to time.
“Party harmed by a breach” shall be a harmed party described in Section 52(54)(a)(1)(a) of the Securities Law, in the context of an Administrative Proceeding pursuant to the Securities Law or pursuant to any other legislation in respect of which an Administrative Proceeding may be held.
Subject to the provisions of the Companies Law with regard to such matters and to the maximum extent permitted under the Companies Law:
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(a)
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Insurance. The Company may enter into a contract for the insurance of all or part of the liability of an Office Holder (as defined in the Companies Law) with respect to an obligation imposed on such Office Holder due to an act performed by him in his capacity as an Office Holder of the Company arising from any of the following:
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(i)
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a breach of his duty of care to the Company or to another person.
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(ii)
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a breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable cause to assume that such act would not prejudice the interests of the Company.
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(iii)
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a financial liability imposed on such Office Holder in favor of another person.
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(iv)
(v)
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a monetary liability of an Office Holder to a party harmed by a breach in an Administrative Proceeding.
expenses incurred by an Office Holder in connection with an Administrative Proceeding conducted in his matter, including reasonable litigation expenses (including legal fees).
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(b)
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Advance Indemnification. The Company may indemnify, and may undertake in advance to indemnify, an Office Holder in respect of liability or expense set forth in subparagraph (c) below, provided that in the case of sub-paragraph (c)(i) only, that an advance undertaking to indemnify shall be limited to those categories of events, and to such amounts or criteria, as the Board of Directors may, at the time of the giving of such undertaking to indemnify, in its opinion deem to be reasonable under the circumstances, and shall specify such categories of events, and such amounts and/or criteria, in the undertaking to indemnify.
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(c)
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Indemnification. The Company may indemnify, and undertake to indemnify, an Office Holder for any liability and expense that may be imposed on such Office Holder due to an act performed by him in his capacity as an Office Holder as follows:
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(i)
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a financial liability imposed on an Office Holder in favor of another person by a court judgment, including a compromise judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court;
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(ii)
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reasonable litigation expenses, including attorneys’ fees, expended by the Office Holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial sanction, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability in lieu of a criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent or in connection with a financial sanction;.
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(iii)
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reasonable litigation costs, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge in respect of which the Office Holder was acquitted or in a criminal charge in respect of which the Office Holder was convicted for an offense that did not require proof of criminal intent; and
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(iv)
(v)
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a monetary liability of an Office Holder to a party harmed by a breach in an Administrative Proceeding.
expenses incurred by an Office Holder in connection with an Administrative Proceeding conducted in his matter, including reasonable litigation expenses (including legal fees).
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(d)
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Retroactive Indemnification. The Company may indemnify an Office Holder retroactively.
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(e)
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Exculpation. The Company may release, in advance, all or part of an Office Holder’s liability to the Company for damage which arises from the breach of his duty of care to the Company.
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(f)
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Prospective Applicability of Amendments. Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to this Article 67 and any amendments to this Article 67 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 applicable law.
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(g)
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Broad Applicability. The provisions of this Article 67 (x) shall apply to the maximum extent permitted by law (including, the Companies Law, the Securities Law and the Antitrust Law); and (y) are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance and/or in respect of indemnification (whether in advance or retroactively) (i) in connection with 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, and/or (ii) in connection with any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law; provided that the procurement of any such insurance and/or the provision of any such indemnification shall be approved by the Board of Directors or in such manner as may be required by the Companies Law.”
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“RESOLVED FURTHER, that the Company’s entry into a revised form of indemnification agreement with its directors and officers, in the form attached as Appendix C to the Company’s Proxy Statement with respect to its 2016 Annual General Meeting of Shareholders, dated October 11, 2016, in replacement of the existing such agreements to which the Company is party with its directors and officers, be, and hereby is, approved in all respects.”
Required Vote
As described above (under “Vote Required for Approval of the Proposals”), under our Articles, the approval of the amendment and restatement of the director and officer indemnification provisions of Article 67 (and, consequently, the approval of the revised form of indemnification agreement containing corresponding provisions) requires the approval of affirmative vote of shareholders present in person or by proxy and holding ordinary shares representing seventy-five percent (75%) of the votes cast (excluding abstentions) with respect to Proposal 8. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether this supermajority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of the updated directors’ and officers’ indemnification provisions of our Articles and our updated form of director and officer indemnification agreement.
PROPOSAL 9
RE-APPOINTMENT OF INDEPENDENT AUDITORS AND APPROVAL OF THEIR ANNUAL
REMUNERATION
Background
In January 2016, Kost, Forer, Gabbay and Kasierer, a member of EY Global, or Kost Forer, was appointed by the Company’s shareholders as the Company’s independent auditors for the fiscal year ending December 31, 2015, and for such additional period until the Meeting. Pursuant to the Sarbanes-Oxley Act of 2002, as amended, the audit committee of the Board, or the Audit Committee, has already acted to approve the re-appointment of Kost Forer as the Company’s independent auditors and the fixing of its remuneration, as well as the terms of its engagement. In furtherance of such approval, the Board has nominated Kost Forer once again for re-appointment as the independent auditors of the Company for the fiscal year ending December 31, 2016 and for such additional period until the next annual general meeting of shareholders. At the Meeting, the Company’s shareholders will be requested to approve such re-appointment, as well as to authorize the Board to fix the remuneration of the auditors in accordance with the volume and nature of their services.
Fees Paid to Independent Auditors in Last Two Fiscal Years
The following captions and tables sets forth, for the years ended December 31, 2014 and 2015, the fees billed to us and our subsidiaries by Kost Forer, our independent auditors with respect to each of those years:
The aggregate fees billed for professional services rendered to us by our independent auditors for the audit of our financial statements in 2014 and 2015 appear in the table below:
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2014
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$
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80,000
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2015
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$
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95,000
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The aggregate fees billed for professional services rendered to us by our independent auditors for tax compliance, tax advice and tax planning in 2014 and 2015 appear in the table below. Such fees related to the preparation of tax returns.
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2014
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$
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74,000
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2015
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$
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85,500
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Proposed Resolutions
It is proposed that at the Meeting the following resolutions be adopted:
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“RESOLVED, that the Company’s independent auditors, Kost Forer Gabbay & Kasierer, a member of EY Global, be, and hereby are, re-appointed as the independent auditors of the Company for the fiscal year ending December 31, 2016 and for such additional period until the next annual general meeting of shareholders, such re-appointment having been previously approved by the Audit Committee and the Board.”
“RESOLVED FURTHER, that the Company’s Board be, and hereby is, authorized to fix the remuneration of the independent auditors in accordance with the volume and nature of their services, such remuneration and the volume and nature of such services having been previously approved by the Audit Committee.”
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Required Vote
The approval of Proposal 9 requires the affirmative vote of the holders of a majority of the ordinary shares present, in person or by proxy, and voting on the proposal. Ordinary shares present at the Meeting that are not voted with respect to this proposal or ordinary shares present by proxy where the shareholder properly withholds authority to vote with respect to this proposal (including broker non-votes) will not be counted towards determining whether a majority has been achieved for the proposal.
Recommendation
The Board recommends to the Company’s shareholders to vote in favor of (i) the re-appointment of Kost Forer Gabbay & Kasierer, a member of EY Global, as the independent auditors of the Company and (ii) the authorization of the Board to fix the remuneration of the auditors in accordance with the volume and nature of their services.
PRESENTATION OF AUDITED ANNUAL FINANCIAL STATEMENTS
At the Meeting, the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2015 will be presented. A copy of the 2015 Form 20-F (including the audited consolidated financial statements for the year ended December 31, 2015 contained therein), which we filed with the SEC on April 21, 2016, is being made available to shareholders through the SEC website, www.sec.gov. Alternatively, you may request a printed copy of the 2015 Form 20-F by calling Jacada’s Investors Relations department in the U.S at 770-352-1300 or in Israel at +972 (9) 952-5900.
OTHER MATTERS
The Board does not intend to bring any matter before the Meeting other than as specifically set forth in the Notice of Annual General Meeting of Shareholders that was published by the Company and in this Proxy Statement, and knows of no other matter to be brought before the Meeting by others. If any other matter properly comes before the Meeting, it is the intention of the persons named in the accompanying proxy to vote such proxy in accordance with the judgment of the Board.
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By Order of the Board of Directors
Yossie Hollander
Chairman of the Board of Directors
October 11, 2016
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32
Index of Appendices to Proxy Statement
Appendix A: Securities Purchase Agreement, dated as of September 29, 2016, by and between Jacada Ltd. and IGP Digital Interaction Limited Partnership
Appendix B: Registration Rights Agreement to be entered into by and between Jacada Ltd. and IGP Digital Interaction Limited Partnership
Appendix C: Proposed Amended Form of Indemnification Agreement with Directors and Officers of Jacada Ltd.
If the Selling Shareholder is a Broker or Dealer and has checked the “No” box directly above, the Company may identify the Selling Shareholder as an underwriter in the Registration Statement and related Prospectus in accordance with the Commission’s rules and interpretations.
By signing below, the Selling Shareholder understands that such information will be relied upon by the Company in connection with the preparation of the Registration Statement and the related prospectus.
Exchange Act, Rule 13d-3.
