RNS Number:6275Z
F.T.S-Formula Telecom Solutions Ltd
04 July 2007
F.T.S - FORMULA TELECOM SOLUTIONS LTD (the "Company" or "FTS")
Proposal to grant Options
London, UK |July 4, 2007: F.T.S. - Formula Telecom Solutions Ltd. (LSE: FTS), a
global provider of Business Control, and infrastructure software solutions for
communications service providers, has today posted to shareholders notice of a
General Meeting of shareholders to be held on August 16, 2007. The notice of a
General Meeting of shareholders provides details of, inter alia, a proposed
grant of options to certain directors of the Company.
In addition, pursuant to the resolution of the Company's board of directors
dated July 3rd, 2007 it was resolved to grant to employees of the Company and
its subsidiaries of a total of up to 975,000 options to purchase ordinary shares
nominal value of NIL New Israeli Shekels each of the Company, under the
Company's 2005 Share Option Plan. An outline of this proposed grant is provided
below.
For further information please contact:
Sonus PR for FTS
Patrick Smith, Tel. +44 20 7851 4890, patrick.smith@sonuspr.com
FTS
Moshe Peterfreund, Tel. +972-9-952-6536, press@fts-soft.com
Seymour Pierce Limited
Mark Percy, Tel. +44 (0)20 7107 8000
This outline is published pursuant to exemption number 54/06, which was issued
to the Company by the Israeli Securities Exchange Commission on August 23, 2006
under Section 15D of the Securities Law 5728-1968 (the "Securities Law").
1 Chapter 1 - Preface and Option Grants
1.1 Share Options to Israeli Grantees and Israeli Share Option Plan
In August 2005 and in December 1, 2005, following the completion of the public
offering of the Company's shares on the AIM market of London Stock Exchange plc
(the "AIM") - FTS adopted an option plan (the "Plan") for the grant of options
(not listed for trading) ("Options") to purchase ordinary shares nominal value
of NIL New Israeli Shekel each of the Company ("Shares") to employees,
directors, consultants and contractors of FTS and any of its subsidiaries and
affiliates (the "FTS Group"). On February 15, 2007, the board of directors of
FTS (the "Board") approved a maximum pool of up to 975,000 Shares reserved for
issuance upon exercise of Options that may be granted pursuant to the 2005 Share
Option Plan (the "Option Pool").
On July 3, 2007, the Board, approved a grant of a total of up to 855,000 Options
exercisable into 855,000 Shares (subject to adjustments as provided in Section
2.5 below) to 175 employees, directors and office holders of the Company and its
subsidiaries, out of which 717,900 Options to 130 Israeli employees and office
holders of the Company (the Israeli employees and office holders will be
referred to hereinafter as "Grantees" and each such employee and/or office
holder a "Grantee"), 40,600 Options to 40 employees in Bulgaria, 70,100 Options
to 4 directors of the Company, and 27,000 Options to 2 office holders of the
Company's subsidiaries. The aforesaid 717,900 Options granted to the Grantees,
represent approximately 2.20% of the issued and outstanding share capital of the
Company at the date of this outline, and 2.15% of the issued and outstanding
share capital of the Company at the date of this outline on a fully diluted
basis (i.e. under the assumption that all outstanding Options granted by the
Company under the Plan and other incentive plans are fully exercised into
Shares).
Prior to the date of this outline the Company has granted a total of 144,000
Options to purchase a total of 144,000 Shares under its 1999 Share Option Plan
to senior employees of the Company. The exercise price for such Options was set
as the nominal value of the Shares underlying the Options and such Options were
exercised into 144,000 Shares recently. In addition, the Company has granted a
total of 1,288,000 Options to purchase a total of 1,288,000 Shares under its
2003 Share Option Plan to employees and other eligible persons in the Company.
Such Options are still outstanding as of the date of this outline.
1.2 Administration of Plan; Grant of Options
The Plan is administered by an Options Committee appointed by the Board, or by
the Board (including, but not limited to, actions which the Options' Committee
is not permitted to take according to Section 112 of the Israeli Companies Law,
1999 (the "Companies Law")) (the Board or its Options Committee, as applicable -
the "Committee").
The Committee, at its discretion and subject to applicable law and regulations,
may grant Options to any employee, director, consultant or contractor of the FTS
Group. Anything in this Plan to the contrary notwithstanding, all grants of
Options to office holders (i.e., "Nosei Misra", as such term is defined in the
Companies Law) shall be authorized and implemented in accordance with the
provisions of the Companies Law and the regulations promulgated thereunder.
Under the Plan, the effective date of the grant of an Option (the "Date of Grant
") is the date the Committee resolves to grant such Option, unless specified
otherwise by the Committee in its determination relating to the award of such
Option. The Committee shall promptly give the Grantee written notice (the "
Notice of Grant") of the grant of an Option.
Under the Plan, Other than in circumstances considered by the Committee to be
exceptional, Options shall only be granted within the 42 days next following the
announcement of the Company's final or interim results in respect of any
financial period; PROVIDED ALWAYS THAT, so long as the Shares are listed on the
Official List of the London Stock Exchange or on the AIM section thereof, as
applicable, the Committee shall in granting Options be bound by the provisions
(as from time to time in force) or guidelines of any applicable code on dealings
in shares and securities in the United Kingdom.
2 Chapter 2 - Terms of Grant
2.1 Deposit of Options with Trustee
The Options granted under the Plan to Grantees who are Israeli residents, will
be deposited with a trustee (the "Trustee") pursuant to the provisions of
Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 (the "Tax
Ordinance"), in order to be eligible for preferred tax treatment - see
discussion in Section 2.9 below.
2.2 Exercise Price and Exercise of Options
Options granted under the Plan are exercisable pursuant to the terms under which
they were awarded, as detailed below, and subject to the terms and conditions of
the Plan.
The exercise price of the Options granted to the Grantees is GBP 0.86 per Share
(1), except for one of the employees of the FTS Group, whose Options were
granted at an exercise price of GBP 0.6. per Share. The exercise price of the
Options granted to the directors of the Company is GBP 0.97 per Share.
The exercise of Options into a Shares shall be made by a written notice of
exercise delivered by the Grantee (or, with respect to Options held in trust, by
the Trustee upon receipt of written instructions from the Grantee) to the
Company at its principal executive office, specifying the number of Shares to be
purchased and accompanied by the payment therefore, and containing such other
terms and conditions as the Committee shall prescribe from time to time.
Each payment for Shares shall be in respect of a whole number of Shares, and
shall be effected in cash or by a bank's check payable to the order of the
Company, or such other method of payment acceptable to the Company.
2.3 Vesting Schedule and Term of Options
The vesting schedule for each Grantee will be as follows:
* 50% of the Options shall vest on January 1, 2008; and
* 50% of the Options shall vest on January 1, 2009.
The term of the Options shall be ten (10) years from their grant. Accordingly,
without derogating from the provisions of Section 2.6 hereof, if any Option has
not been exercised and the Shares subject thereto not paid for within ten (10)
years after the Date of Grant, such Option and the right to acquire such Shares
shall terminate, all interests and rights of the Grantee in and to the same
shall ipso facto expire, and, in the event that in connection therewith any
Options are still held in the Trust as aforesaid, the Trust with respect thereto
shall ipso facto expire, and the Shares underlying such Options shall again be
available for grant through Options under the Plan, provided the Plan shall be
in force at such time.
Pursuant to the Plan, subject to applicable law and regulations, the Committee
shall have full authority to, at any time, determine any provisions regarding
the acceleration of the vesting schedule of any Option or the cancellation of
all or any portion of any outstanding restrictions with respect to any Option or
Share upon certain events or occurrences, and to include such provisions in the
Notice of Grant on such terms and conditions as the Committee shall deem
appropriate.
2.4 Rights as a Shareholder
Unless otherwise provided herein, the holder of an Option shall have no
shareholder rights with respect to the Shares underlying such Option until such
person shall have exercised the Option, paid the exercise price and become the
record holder of the purchased Shares. Subject to the provisions of the Plan and
the provisions of the Articles of Association of the Company, the Shares shall
entitle the Grantee thereof to full shareholder rights, including voting and
dividend rights, with respect to such Shares. As long as the Shares are
registered in the name of the Trustee, the voting rights at the Company's
general meeting attached to such Shares will remain with the Trustee. However,
the Trustee shall not be obligated to exercise such voting rights at general
meetings, and may, in its sole discretion, empower another person, including the
respective Grantee, to vote in name and in place of the Trustee according to
such Grantee's instructions, if provided.
2.5 Adjustments
2.5.1 Bonus Shares.
(a) If the Company distributes bonus shares, whose date of distribution is
earlier than the actual date of exercise of the Options (the "Exercise Date"),
Shares in the number and kind that the Grantee would have been entitled to as
bonus shares had he/she exercised the Options before the record date determining
the right to receive bonus shares, will be added to the Shares to which the
Grantee is entitled upon exercising the Options (the "Option Shares").
(b) The exercise price of each Option will not change as a result of the
addition of such bonus shares, while other terms referring to the Option Shares
will also apply to the bonus shares added to the Option Shares, mutatis mutandis
.
(c) If the Company distributes bonus shares for which the record date for
distribution and the date of distribution fall during the period in which Option
Shares are registered in the name of the Trustee for Grantees, the Company will
transfer to the Trustee an amount of bonus shares according to the number of
Option Shares registered in his name at the time of distribution, and the
Trustee will hold them in Trust for the Grantees. In the event Option Shares
have been transferred from the Trustee to a Grantee and/or sold by the Trustee
at the Grantee's request between the record date for distribution and the date
of distribution, the Company will transfer bonus shares in respect of these
Option Shares directly to such Grantee. Each such Grantee will be entitled to
bonus shares in the same number and kind to which he were entitled, had the
Option Shares been held by him prior to the record date for the right to receive
the bonus shares.
2.5.2 Cash Dividend Distributions. If the Company distributes cash dividends
with respect to all Company's Shares issued to its shareholders, and the record
date for determining the right to receive such dividends (the "Determining
Date") is earlier than the Exercise Date of the Options, granted hereunder, then
the exercise price for each Option not exercised prior to the Determining Date,
shall be reduced by an amount equal to the gross amount of the dividend per
Share distributed, calculated in the same currency as the exercise price
according to the representative rate of exchange as of the Determining Date, if
applicable.
2.5.3 Adjustments Without deviating from the aforesaid in
this Section 2.5, Subject to any required action by the shareholders of the
Company, the number of Option Shares and the number of Shares which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per share of Shares subject to each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, combination or reclassification of the Shares or any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration" Such adjustment shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
2.6 Liquidation and Corporate Transaction
2.6.1 For the purpose of this Section the term "Corporate Transaction" means the
occurrence, in a single transaction or in a series of related transactions, of
any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by
the Board in its discretion, of the consolidated assets of the Company and its
subsidiaries;
(ii) a sale or other disposition of at least eighty percent (80%) of the
outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company
is not the surviving corporation; or
(iv) a merger, consolidation or similar transaction following which the Company
is the surviving corporation but the Ordinary Shares of the Company outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.
2.6.2 Liquidation. Unless otherwise provided by the Board, in the event of the
proposed dissolution or liquidation of the Company, all outstanding Options will
terminate immediately prior to the consummation of such proposed action. In such
case, the Committee may declare that any Option shall terminate as of a date
fixed by the Committee and give each Grantee the right to exercise his Option,
including any Option that would not otherwise be exercisable.
2.6.3 Corporate Transaction
(a) In the event of a Corporate Transaction, immediately prior to the effective
date of such Corporate Transaction, each Option may, at the sole and absolute
discretion of the Committee, either:
(i) be substituted for an option to purchase securities of any successor entity
(the "Successor Entity Option") such that the Grantee may exercise the Successor
Entity Option for such number and class of securities of the successor entity
which would have been issuable to the Grantee in consummation of such Corporate
Transaction, had the Option been exercised immediately prior to the effective
date of such Corporate Transaction, given the exchange ratio or consideration
paid in the Corporate Transaction, the vesting of the Options and such other
terms and factors that the Committee determines to be relevant for purposes of
calculating the number of Successor Entity Options granted to each Grantee; and/
or
(ii) be assumed by any successor entity such that the Grantee may exercise the
Option for such number and class of securities of the successor entity which
would have been issuable to the Grantee in consummation of such Corporate
Transaction, had the Option been exercised immediately prior to the effective
date of such Corporate Transaction; given the exchange ratio or consideration
paid in the Corporate Transaction, the vesting of the Options and such other
terms and factors that the Committee determines to be relevant for purposes of
calculating the number of Options granted to each Grantee.
In the event of a clause (i) or clause (ii) action, appropriate adjustments
shall be made to the exercise price per Share to reflect such action.
(b) Immediately following the consummation of the Corporate Transaction, all
outstanding Options shall terminate and cease to be outstanding, except to the
extent assumed by a successor entity.
(c) Notwithstanding the foregoing, and without derogating from the power of the
Committee pursuant to the provisions of this Plan, the Committee shall have full
authority and sole discretion to determine that any of the provisions of
Sections (a)(i) and/or (a)(ii) above shall apply in the event of a Corporate
Transaction in which the consideration received by the shareholders of the
Company is not solely comprised of securities of a successor entity, or in which
such consideration is solely cash or assets other than securities of a successor
entity.
2.6.4 Subject to any provision in the Articles of Association of the Company and
to the Committee's sole and absolute discretion, in the event that all or
substantially all of the issued and outstanding share capital of the Company is
to be sold (the "Sale"), each Grantee shall be obligated to participate in the
Sale and sell his or her Shares and/or Options in the Company, provided,
however, that each such Share or Option shall be sold at a price equal to that
of any other Share sold under the Sale (minus the applicable exercise price),
while accounting for changes in such price due to the respective terms of any
such Option. With respect to Shares held in Trust the following procedure will
be applied:
The Trustee will transfer the Shares held in Trust and sign any document in
order to effectuate the transfer of Shares, including share transfer deeds,
provided, however, that the Trustee receives a notice from the Board, specifying
that: (i) all or substantially all of the issued outstanding share capital of
the Company is to be sold, and therefore the Trustee is obligated to transfer
the Shares held in Trust; (ii) the Company is obligated to withhold at the
source all taxes required to be paid upon release of the Shares from the Trust
and to provide the Trustee with evidence, satisfactory to the Trustee, that such
taxes indeed have been paid; (iii) the Company is obligated to transfer the
consideration for the Shares directly to the Grantees.
2.6.5 Except as expressly provided in this Section 2.6, no issuance by the
Company of shares of any class, or securities convertible into shares of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or exercise price of Option Shares subject to an Option.
2.6.6 The grant of Options under the Plan shall in no way affect the right of
the Company to change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
2.7 Termination of Employment
2.7.1 In the event that a Grantee who was an employee of the Company (in this
Section 2.7 the terms "Company" shall include any subsidiary or
affiliate of the Company) on the Date of Grant of any Options to him or her
ceases, for any reason, to be employed by the Company (the "Cessation of
Employment"), unless otherwise determined by the Committee, all Options
theretofore granted to such Grantee when such Grantee was an employee of the
Company shall terminate as follows:
(i) The date of the Grantee's Cessation of Employment shall be the date on which
the employee-employer relationship between the Grantee and the Company ceases
to exist (the "Date of the Cessation").
(ii) Subject to Section (iii) below, all such Options that are not vested at
the Date of Cessation shall terminate immediately.
(iii) If the Grantee's Cessation of Employment is by reason of
such Grantee's death or "Disability" (as hereinafter defined), such Options
shall be exercisable (to the extent vested) by the Grantee or the Grantee's
guardian, legal representative, estate or other person to whom the Grantee's
rights are transferred by will or by laws of descent or distribution, at any
time until 12 months from the Date of Cessation, and shall thereafter terminate.
Notwithstanding the provision of Section (ii) above, if the Grantee's Cessation
of Employment is by reason of such Grantee's death or "Disability", such
Grantee's Options that are unvested at the Date of Cessation shall continue to
vest for a period of 12 months following the Date of Cessation, in accordance
with the vesting schedule of such Options as prescribed in the Notice of Grant
of such Options.
For purposes of the Plan, "Disability" shall mean the inability to engage in any
substantial gainful occupation for which the Grantee is suited by education,
training or experience, by reason of any medically determinable physical or
mental impairment that is expected to result in such person's death or to
continue for a period of six (6) consecutive months or more.
(iv) If the Grantee's Cessation of Employment is due to any reason other than
those stated in Sections (iii), (v) and (vi) herein, such Options (to
the extent vested at the Date of Cessation) shall be exercisable at any time
until 90 days after the Date of Cessation, and shall thereafter terminate;
provided, however, that if the Grantee dies within such period, such Options (to
the extent vested at the Date of Cessation) shall be exercisable by the
Grantee's legal representative, estate or other person to whom the Grantee's
rights are transferred by will or by laws of descent or distribution at any time
until 12 months from the Date of Cessation, and shall thereafter terminate.
(v) Notwithstanding the aforesaid, if the Grantee's Cessation of
Employment is due to (i) breach of the Grantee's duty of loyalty towards the
Company, or (ii) breach of the Grantee's duty of care towards the Company, or
(iii) the commission of any flagrant criminal offense by the Grantee, or (iv)
the commission of any act of fraud, embezzlement or dishonesty towards the
Company by the Grantee, or (v) a material breach of the Grantee's employment
contract, or (vi) any unauthorized use or disclosure by the Grantee of
confidential information or trade secrets of the Company, or (vii) any act
constituting business competition with the Company or enabling, in the past,
present or future, another party to compete with the Company, or (viii) any
other intentional misconduct by the Grantee (by act or omission) adversely
affecting the business or affairs of the Company in a material manner, or (ix)
any act or omission by the Grantee which would allow for the termination of the
Grantee's employment without severance pay, according to the Israeli Severance
Pay Law, 1963, all the Options whether vested or not shall ipso facto expire
immediately and be of no legal effect.
(vi) If a Grantee retires, he shall, subject to the approval of the
Committee, continue to enjoy such rights, if any, under the Plan and on such
terms and conditions, with such limitations and subject to such requirements as
the Committee in its discretion may determine.
(vii) Whether the Cessation of Employment of a particular Grantee is
by reason of "Disability" for the purposes of paragraph (iii) hereof or by
virtue of "retirement" for purposes of paragraph (vi) hereof, or is a
termination of employment other than by reason of such Disability or retirement,
or is for reasons as set forth in paragraph (v) hereof, shall be finally and
conclusively determined by the Committee in its absolute discretion.
(viii) Notwithstanding the aforesaid, under no circumstances shall any
Option be exercisable after the specified expiration of the term of such Option.
2.7.2 Notwithstanding the foregoing provisions of this
Section 2.7, the Committee shall have the discretion, exercisable either at the
time an Option is granted or thereafter, to:
(a) extend the period of time for which the Option is to remain exercisable
following the Date of Cessation to such greater period of time as the Committee
shall deem appropriate, but in no event beyond the specified expiration of the
term of the Option;
(b) permit the Option to be exercised, during the applicable exercise period
following the Date of Cessation, not only with respect to the number of Shares
for which such Option is exercisable at the Date of Cessation but also with
respect to one or more additional installments in which the Grantee would have
vested under the Option had the Grantee continued in the employ or service of
the Company.
2.8 Limitations on transfer
No Option shall be assignable or transferable by the Grantee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of the Grantee only by such Grantee or by
such Grantee's guardian or legal representative. The terms of such Option shall
be binding upon the beneficiaries, executors, administrators, heirs and
successors of such Grantee.
If requested by any managing underwriter, each Grantee so requested shall enter
into a lock-up agreement pursuant to which they will not, for a certain period
following the effective date of a registration statement for any public offering
of Shares and for such reasonable period of time prior to the effective date of
such registration statement, as such underwriter may specify, offer, sell or
otherwise dispose of any Shares, except any Shares sold pursuant to such
registration statement, without the prior consent of such underwriter.
2.9 Tax Consequences
2.9.1 General
The Company's obligation to deliver Shares upon the exercise of any Options
granted under the Plan shall be subject to the satisfaction of all applicable
income tax and other compulsory payments and withholding requirements.
All tax consequences and obligations regarding any other compulsory payments
arising from the grant or exercise of any Option, from the payment for, or the
subsequent disposition of, Shares subject thereto or from any other event or act
(of the Company, of the Trustee or of the Grantee) under the Plan, shall be
borne solely by the Grantee, and the Grantee shall indemnify the Company and/or
the Trustee, as applicable, and hold them harmless against and from any and all
liability for any such tax or other compulsory payment, or interest or penalty
thereon, including without limitation, liabilities relating to the necessity to
withhold, or to have withheld, any such tax or other compulsory payments from
any payments made to the Grantee.
2.9.2 Israeli Taxation of Israeli Grantees
On January 15, 2006, the Company received approval from the Israeli income tax
authorities qualifying the Plan and the Trustee for purposes of the "Capital
Gains Route" of Section 102(B)(2) of the Tax Ordinance (as detailed below).
The grant of Options under the Plan to Grantees who are employees and/or office
holders, and who are residents of Israel (aside from Grantees who are
"Controlling Shareholders", as such term is defined in Section 102 of the Tax
Ordinance, who are subject to a different tax arrangement) is subject to Section
102 of the Tax Ordinance. The Company has chosen the "Capital Gains Route" under
Section 102(B)(2) of the Tax Ordinance (the "Capital Gains Route") for the
taxation of gains resulting from the Options granted under the Plan and Section
102 of the Tax Ordinance.
Pursuant to the Capital Gains Route, the following Israeli tax provisions shall
generally apply:
(i) Taxable Event
In general, taxable income that should be attributed to the Grantee as a result
of the grant of the Options is tax-free on the date of grant, but will be taxed
upon the sale of Shares issued upon exercise of the Options ("Exercised Shares")
or transfer of Options or Exercised Shares from the Trustee to the Grantee (a "
Transfer").
At the time of sale of the Exercised Shares or a Transfer, the Grantee shall be
subject to tax, which will be calculated, in general, according to difference
between (a) the market price (or the actual sale price) of the Exercised Shares
at such time, and (b) the exercise price(2). Such tax shall be withheld at the
source by the Company or the Trustee, in accordance with the provisions of the
Income Tax Rules (Tax Relief in Issuance of Shares to Employees), 2003 (the "102
Rules").
(ii) Tax Rates
(a) According to the Capital Gains Route, should the Options or
Exercised Shares be held by the Trustee for the applicable period of time,
currently two years from the Date of Grant and deposit of the Options with the
Trustee (the "Trust Period"), then the Grantee's benefit resulting from the sale
of the Exercised Shares (or the Transfer of such Exercised Shares and/or
Options) shall be classified as capital gains and taxed at a rate of only 25%,
except for a benefit derived at the time of grant of the Options, equal to the
difference between (a) the average closing price of the Company's Share on AIM
during the 30 trading days prior to the Date of Grant, and (b) the exercise
price of the Option. Such benefit will be classified as ordinary income and will
be subject to tax at the time of sale of the Exercised Shares, or a Transfer, at
marginal tax rates (currently up to 48%) plus Israeli social security and
national health insurance payments.
(b) A Grantee shall not be entitled to sell the Exercised Shares
or to execute a Transfer, prior to the lapse of the Trust Period. Furthermore,
any and all rights issued in respect of the Exercised Shares, including bonus
shares but excluding cash dividends ("Rights"(, shall be deposited with the
Trustee and held thereby until the lapse of the Trust Period, and such Rights
shall be subject to the Capital Gains Route.
Notwithstanding the aforesaid, a Grantee may sell Exercised Shares or Rights or
execute a Transfer prior to the lapse of the Trust Period, provided, however,
that tax is withheld at the source by the Company or the Trustee in accordance
with the 102 Rules. In such case, the calculation of the Grantee's gains in
accordance with the provisions of the 102 Rules may result in increased tax
payments, and all the gains of the Garntee shall be classified as ordinary
income and he/she shall be subject to tax on such income at marginal tax rates
(currently up to 48%) plus Israeli social security and national health insurance
payments.
The tax implications, as detailed in this Section, are based on existing law as
applicable on the date this outline is published. However, the applicable law
regarding tax payments and other compulsory payments, in relation with the
Options granted pursuant to the Plan, may be amended from time to time. The
information provided in this Section 2.9 shall not be construed as an
interpretation of applicable law in relation with Options granted under the Plan
and shall not replace any legal and other professional consultation. Each
Grantee should consider the various tax implications related to the exercise of
Options or sale of Shares and is encouraged to consult his/her professional
advisors in this matter, including tax and legal advisors.
2.10 The Consideration to the Company
The Options granted under the Plan were granted for no consideration. Assuming
all Options granted to Israeli Grantees under the Plan, as described herein, are
exercised into Shares, the Company shall receive a total amount of GBP 538,454
The consideration received by the Company is based on the exercise price, as
detailed in Section 2.2, multiplied by the number of Options granted at such
exercise price, as detailed above.
3 Chapter 3 - The Shares
The Exercised Shares issued as a result of exercise of the Options (in this
Section 3 defined as "Ordinary Shares") confer upon the holders thereof all
rights accruing to a shareholder of a Company, as provided in the Articles of
Association of the Company (the "Articles"), including, inter alia, the right to
receive notices of, and to attend meetings of shareholders; for each share held,
the right to one vote at all meetings of shareholders; and to share equally, on
a per share basis, in such dividends as may be declared by the Board in
accordance with the Articles and Companies Law, and upon liquidation or
dissolution of the Company, in the assets of the Company legally available for
distribution to shareholders after payment of all debts and other liabilities of
the Company, in accordance with the terms of the Articles and applicable law.
All Ordinary Shares rank pari passu in all respects with each other.
3.1 Voting Power and Voting Rights
(a) Subject to the provisions of this Section 3.1 and subject to any
provision of the Articles conferring special rights as to voting, or restricting
the right to vote, every holder of Ordinary Shares shall have one vote for each
share held by him of record, on every resolution, without regard to whether the
vote hereon is conducted by a show of hands, by written ballot or by any other
means.
(b) No holder of Ordinary Shares shall be entitled to vote at any General
Meeting (or be counted as a part of the quorum thereat), unless all calls and
other sums then payable by him in respect of his shares in the Company have been
paid, but this provision shall not apply to separate General Meetings of the
holders of a particular class of shares pursuant to the Articles.
(c) A company or other corporate body being a holder of Ordinary Shares of
the Company may, by resolution of its directors or any other managing body
thereof, authorize any person to be its representative at any meeting of the
Company. Any person so authorized shall be entitled to exercise on behalf of
such holder all the power which the latter could have exercised if it were an
individual shareholder. Upon the request of the Chairman of the meeting, written
evidence of such authorization (in form acceptable to the Chairman) shall be
delivered to him.
(d) Any holder of Ordinary Shares entitled to vote may vote either personally
or by proxy (who need not be a holder of the Company), or, if the holder is a
company or other corporate body, by a representative authorized pursuant to
Section (c) aforementioned.
(e) If two or more persons are registered as joint holders of any Ordinary
Share, the vote of the senior who tenders a vote, in person or by proxy, shall
be accepted to the exclusion of the vote(s) of the other joint holder(s); and
for this purpose seniority shall be determined by the order in which the names
stand in the Register of Shareholders.
(f) The Board may determine, in its discretion, the matters, if any, that
may be voted upon by written ballot to the Company (without attendance in person
or by proxy), as shall be permitted, at a General Meeting, in addition to the
matters listed in Section 87(a) of the Companies Law.
3.2 Winding up and Dividend Rights
(a) Winding Up. If the Company be wound up, then, subject to applicable law
and to the rights of the holders of shares with special rights upon winding up,
the assets of the Company available for distribution among the shareholders
shall be distributed to them in proportion to the nominal value of their
respective holdings of the shares in respect of which such distribution is being
made, provided, however, that if a class of shares has no nominal value, then
the assets of the Company available for distribution among the shareholders
shall be distributed to them in proportion to their respective holdings of the
shares in respect of which such distribution is made.
(b) Dividend Rights. Subject to the applicable law, the holders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, shall be the shareholders on the date upon which it was resolved to
distribute the dividend or at such later date as shall be determined by, or
pursuant to a resolution of, the Board.
3.3 Transfer of Ordinary Shares
(a) Subject to the provisions of the Articles, no transfer of shares shall be
registered unless a proper instrument of transfer (in form and substance
satisfactory to the Board) has been submitted to the Company or its agent,
together with any share certificate(s) and such other evidence of title as the
Board may reasonably require. Until the transferee has been registered in the
Register of Shareholders in respect of the shares so transferred, the Company
may continue to regard the transferor as the owner thereof. The Board may, from
time to time, prescribe a fee for the registration of a transfer.
(b) Subject to the provisions of the Articles, the Board shall be entitled to
refuse to recognize a transfer deed until the certificate of the transferred
share is attached to it together with any other evidence which the Board shall
require as proof of the transferor's right to transfer the share and payment of
any transfer fee determined by the Board. Registered transfer deeds shall remain
with the Company, but any transfer deed which the Board refuses to register
shall be returned to the transferor upon demand.
(c) The Directors have absolute discretion to refuse to register a transfer
of any share which is not fully paid up or upon which the Company has a lien
without giving a reason, but they must provide the transferee with a notice of
the refusal within two months after the date on which the transfer was lodged.
Such discretion may not be exercised to prevent dealings in such shares taking
place on an open and proper basis.
3.4 Pre-emption rights
(a) Notwithstanding any provision in the Companies Law or the Articles, save
for Section (b), the Board shall not, without the approval of a Shareholders
Resolution allot or issue any shares in the Company (other than shares allotted
pursuant to an employee share scheme or pursuant to the exercise of any warrants
or other securities convertible or exchangeable into shares issued by the
Company), or grant any right to subscribe for, or to convert securities into
shares in the Company, for cash only consideration unless:
(i) the same shall first have been offered on the same terms
and conditions to all existing shareholders or to all the holders of the shares,
or any right to subscribe for, or to convert securities into shares in the
Company, of the class or classes being issued, in proportion as nearly as may be
to their existing holdings, subject only to such exclusions or other
arrangements as the Board from time to time may consider expedient to deal with
fractional entitlements or legal or practical problems under the laws of any
territory or the regulations or requirements of any regulatory body or any stock
exchange in any territory; and
(ii) the period during which any such offer may be accepted has
expired or the Company has received notice of the acceptance or refusal of every
offer so made.
(b) Notwithstanding Section (a), the Directors may allot and issue shares, or
grant any right to subscribe for, or to convert securities into shares in the
Company, for cash only consideration without first being required to seek a
Shareholders Resolution pursuant to Section (a), provided that such number of
shares or rights to subscribe for, or convert securities into shares in the
Company, proposed to be allotted and issued for cash shall not exceed 10 per
cent. of the Company's issued share capital at the date on which such shares or
rights are proposed to be allotted.
3.5 General Meetings
3.5.1 Annual General Meeting. An Annual General Meeting shall
be held once in every calendar year at such time (within a period of not more
than fifteen (15) months after the last preceding Annual General Meeting) and at
such place either within or without the State of Israel as may be determined by
the Board.
3.5.2 Special Meetings. All General Meetings other than
Annual General Meetings shall be called "Special Meetings." The Board may,
whenever it deems fit, convene a Special General Meeting at such time and place,
within or without the State of Israel, as may be determined by the Board, and
shall be obliged to do so upon a requisition in writing in accordance with
Sections 63(b)(1) or (2) and 63(c) of the Companies Law.
3.5.3 Notice of General Meetings.
(a) The Company is required to give such prior notice of a
General Meeting as required by law or applicable stock exchange rules, but in
any event not less than fourteen (14) days. The accidental omission to give
notice of a meeting to any shareholder or the non-receipt of notice by any of
the shareholders shall not invalidate the proceedings at any meeting.
(b) The notice of the meeting shall set forth the agenda of the
meeting.
(c) A shareholder desiring to request that the Board include a
certain item on the agenda of the meeting pursuant to Section 66(b) of the
Companies Law, shall, as a condition to such proposal being considered by the
Board, make such request to the Company in writing at least eight (8) weeks
prior to the date of the meeting (or such shorter period as determined by the
Board).
3.5.4 Quorum
(a) Two or more holders of Ordinary Shares (not in default in payment of any sum
referred to in Section 3.1 above), present in person or by proxy and holding
shares conferring in the aggregate at least 25% of the voting power of the
Company (subject to rules and regulations, if any, applicable to the Company),
shall constitute a quorum at General Meetings. No business shall be transacted
at a General Meeting, or at any adjournment thereof, unless the requisite quorum
is present when the meeting proceeds to business.
(b) If within an hour from the time set for the meeting a quorum is not present,
in person or by proxy, the meeting shall stand adjourned to the same day in the
next week, at the same time and place, or, if not set forth in the notice of the
meeting, to such day and at such time and place as the Chairman may determine
with the consent of the holders of a majority of the voting power represented at
the meeting in person or by proxy and voting on the question of adjournment. No
business shall be transacted at any adjourned meeting except business which
might lawfully have been transacted at the meeting as originally called. At such
adjourned meeting, if a quorum is not present, in person or by proxy, within a
half hour from the time set, any two (2) holders of Ordinary Shares (not in
default as aforesaid) present in person or by proxy, shall constitute a quorum
(subject to rules and regulations, if any, applicable to the Company).
Notwithstanding anything in this section 3.5.4 to the contrary, if the meeting
was convened upon requisition pursuant to Section 63 or 64 of the Companies Law,
the quorum requirement at any adjournment thereof shall be governed by the
provisions of the Companies Law.
(c) The Board may determine, in its discretion, the matters that may be voted
upon at the meeting by proxy or written ballot in addition to the matters listed
in Section 87(a) to the Companies Law.
3.5.5 Election of Directors and Powers
(a) The Board shall consist of such number of Directors (not less than four (4)
nor more than eleven (11)) as may be determined by Shareholder Resolution of the
Company.
(b) The members of the Board shall be called Directors, and they shall be
elected and removed in accordance with the provisions of this section, provided,
however, that to the extent that any provisions in the Articles relating to
Directors conflict with the provisions of the Companies Law relating to External
Directors, the provisions of the Israeli Companies Law shall apply to External
Directors.
(c) Directors shall be elected at the Annual General Meeting, and Directors may
be elected at any other General Meeting, by the vote of the holders of a
majority of the voting power represented at such meeting in person or by proxy
and voting on the election of directors. Directors may also be appointed by the
Board. Each Director shall serve, subject to the provisions of the Articles,
until the Annual General Meeting next following the date of his election or
appointment. The shareholders shall be entitled to remove any Director(s) from
office by a Shareholder Resolution, all subject to applicable law. In addition,
any Director appointed by the Board may be subsequently removed by the Board.
(d) The Board may from time to time, in its discretion, cause the Company to
borrow or secure the payment of any sum or sums of money for the purposes of the
Company, and may secure or provide for the repayment of such sum or sums in such
manner, at such times and upon such terms and conditions in all respects as it
deems fit, and, in particular, by the issuance of bonds, perpetual or redeemable
debentures, debenture stock, or any mortgages, charges, or other securities on
the undertaking provided that the Board shall not, without the previous sanction
of a shareholders' resolution, borrow an amount equal to the greater of three
times the aggregate of the Company's share capital and consolidated reserves and
US$100,000,000.
(e) The Board may, from time to time, set aside any amount(s) out of the profits
of the Company as a reserve or reserves for any purpose(s) which the Board, in
its absolute discretion, shall deem fit, and may invest any sum so set aside in
any manner and from time to time deal with and vary such investments, and
dispose of all or any part thereof, and employ any such reserve or any part
thereof in the business of the Company without being bound to keep the same
separate from other assets of the Company, and may subdivide or redesignate any
reserve or cancel the same or apply the funds therein for another purpose, all
as the Board may from time to time deem fit.
4 Chapter 4 - Share Prices
Below are details regarding the high and low closing prices of a Company Share
on AIM in 2005 and 2006, and during the period between January 1, 2007 and July
3, 2007.
AIM January 1, 2007 to 2006 2005
Price
July 3, 2007
Date Price (GBP) Date Price (GBP) Date Price (GBP)
High 29/1/07 65.00 27/3/06 120.00 7/9/05 120.95
Low 5/1/07 39.50 11/10/06 33.00 23/12/05 83.63
The closing price of a Company Share on July 3, 2007 (the last trading day
before the date this outline was published) was GBP 0.585.
5 Chapter 5 - Financial Statements
The Grantees' attention is directed to the Company's financial statements for
the period ending December 31, 2006, which were published on March 5, 2007.
Date: July 4, 2007
--------------------------
(1) Such exercise price is applicable to non-Israeli grantees as well, excluding
directors.
(2) The above tax description is a general summary only and does not refer to
expenses involved with the exercise of Options and sale of Exercised Shares or
changes in the Israeli Consumer Price Index or foreign exchange rates, which may
impact the final tax calculation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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