UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy
Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material
under Rule 14a-12
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INTEC PHARMA LTD.
(Name of Registrant as Specified in its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate
box):
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No fee required
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class
of securities to which transaction applies:
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Aggregate number
of securities to which transaction applies
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Per unit price or
other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4)
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Proposed maximum
aggregate value of transaction:
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Fee paid previously
with preliminary materials
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Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule or
Registration Statement No.:
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INTEC PHARMA LTD.
12 Hartom Street, Har Hotzvim,
Jerusalem 9777512, Israel
NOTICE OF ANNUAL GENERAL MEETING OF
SHAREHOLDERS
Notice is hereby given
that the annual general meeting of shareholders of Intec Pharma Ltd., or the Company, will be held at the offices of Meitar Liquornik
Geva Leshem Tal, 16 Abba Hillel Silver Rd. Ramat Gan 52506, Israel on December 2, 2019, at 5:00 p.m. Israel time (10:00 a.m. Eastern
time), or the Annual Meeting.
The agenda for the
Annual Meeting is as follows:
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1.
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To re-elect Dr.
John W. Kozarich, Jeffrey A. Meckler, Anthony J. Maddaluna, Hila Karah, Dr. Roger J. Pomerantz and William B. Hayes to serve
as a director of the Company to hold office until the close of the next annual general meeting;
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2.
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To approve the terms
of Dr. Kozarich as Chairman of the Company;
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3.
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To approve an
amendment to the Company’s 2015 Equity Incentive Plan, or the 2015 Plan, to increase the aggregate number of
ordinary shares authorized for issuance under the 2015 Plan by 1,000,000 ordinary shares;
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4.
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To approve and ratify
the re-appointment of Kesselman & Kesselman, Certified Public Accountant (Isr.), independent registered public accounting
firm, a member of PricewaterhouseCoopers International Limited as the independent auditors of the Company for the period ending
at the close of the next annual general meeting; and
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5.
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To transact such
other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
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In addition, at the
Annual Meeting, the shareholders of the Company will be requested to consider the Company’s audited financial statements
for the year ended December 31, 2018.
These proposals are
described more fully in the attached proxy statement, which we urge you to read in its entirety.
The record date for
the Annual Meeting is October 25, 2019. Only shareholders of record at the close of business on that date may vote at the
Annual Meeting or any adjournment thereof. This notice and the accompanying proxy statement and proxy card are being first mailed
to shareholders on or about October 30, 2019.
All shareholders are
cordially invited to attend the Annual Meeting in person. Please sign, date and return the enclosed proxy card in the postage-paid
envelope provided, or, use the telephone or Internet voting instructions on the enclosed proxy card, even if you plan to attend
the Annual Meeting.
Even if you have given
your proxy, you may still attend and vote in person at the Annual Meeting after revoking your proxy in accordance with the instructions
below.
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By Order of the Board of
Directors,
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INTEC PHARMA LTD.
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/s/
John W. Kozarich
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Dr. John W. Kozarich
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Chairman
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October 25, 2019
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IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 2, 2019
The proxy statement
and proxy card are available at https://ir.intecpharma.com/financial-information/sec-filings.
EXPLANATORY NOTE
We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and a “smaller reporting
company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. As an emerging
growth company and a smaller reporting company, we provide in this proxy statement the scaled disclosure permitted under the JOBS
Act and otherwise as applicable to smaller reporting companies. In addition, as an emerging growth company, we are not required
to conduct votes seeking shareholder approval on an advisory basis of (1) the compensation of our “named executive officers”
or the frequency with which such votes must be conducted or (2) compensation arrangements and understandings in connection with
merger transactions, known as “golden parachute” arrangements.
Under the JOBS Act,
we will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which
we have total annual gross revenues of $1.07 billion or more (as adjusted every five years for inflation); (ii) the last day of
the fiscal year following the fifth anniversary of the completion of our initial public offering on August 7, 2015; (iii) the
date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and (iv)
the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We will qualify as a large
accelerated filer as of the first day of the first fiscal year after we have at least $700 million in outstanding voting and non-voting
common equity held by our non-affiliates, as measured as of the last business day of the second quarter of the fiscal year.
We are also a smaller
reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting
and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of our second
fiscal quarter, or our annual revenues are more than $100 million during the most recently completed fiscal year and our voting
and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second
fiscal quarter. Similar to emerging growth companies, smaller reporting companies are, among other things, able to provide simplified
executive compensation disclosure and have certain other reduced disclosure obligations.
TABLE OF CONTENTS
INTEC PHARMA LTD.
12 Hartom Street, Har Hotzvim,
Jerusalem 9777512, Israel 42504
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
We are furnishing
this proxy statement to the holders of ordinary shares, no par value, of Intec Pharma Ltd., a company organized under the laws
of the State of Israel (referred to as “we,” “us,” “our” or the “Company”), in
connection with the solicitation by our board of directors of proxies for use at an annual general meeting of shareholders and
any adjournment thereof, or the Annual Meeting. The Annual Meeting will be held on December 2, 2019, at 5:00 p.m. Israel
time (10:00 a.m. Eastern time), at the offices of Meitar Liquornik Geva Leshem Tal, 16 Abba Hillel Silver Rd. Ramat Gan 52506.
At the Annual Meeting,
you will be requested to approve the following matters:
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1.
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To re-elect Dr.
John W. Kozarich, Jeffrey A. Meckler, Anthony J. Maddaluna, Hila Karah, Dr. Roger J. Pomerantz and William B. Hayes to serve
as a director of the Company to hold office until the close of the next annual general meeting;
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2.
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To approve the terms
of Dr. Kozarich as Chairman of the Company;
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3.
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To approve an
amendment to the Company’s 2015 Equity Incentive Plan, or the 2015 Plan, to increase the aggregate number of
ordinary shares authorized for issuance under the Plan by 1,000,000 ordinary shares;
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4.
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To approve and ratify
the re-appointment of Kesselman & Kesselman, Certified Public Accountant (Isr.), independent registered public accounting
firm, a member of PricewaterhouseCoopers International Limited as the independent auditors of the Company for the period ending
at the close of the next annual general meeting; and
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To transact such
other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
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The record date for
the Annual Meeting is October 25, 2019. Only shareholders of record at the close of business on that date are entitled to vote
at the Annual Meeting.
By signing and returning
the proxy card, you authorize Jeffrey Meckler, our Chief Executive Officer, or Nir Sassi, our Chief Financial Officer, to represent
you and vote your shares at the Annual Meeting in accordance with your instructions. Each of the foregoing may also vote your
shares to adjourn the Annual Meeting and will be authorized to vote your shares at any postponements or adjournments of the Annual
Meeting.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, and as modified by the
Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to, and have taken advantage of, certain
exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies,”
such as not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
We will remain an emerging growth company until the earliest of: (i) the last day of our fiscal year during which we have total
annual gross revenues of at least $1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the closing
of our initial public offering; (iii) the date on which we have, during the previous three-year period, issued more than $1.0
billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the
Exchange Act.
We are first making
available this proxy statement and accompanying materials to shareholders on or about October 30, 2019.
YOUR VOTE IS VERY IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING, PLEASE VOTE AS SOON AS POSSIBLE.
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING OF SHAREHOLDERS
What is the purpose of the Annual
Meeting of Shareholders?
At the Annual Meeting
of Shareholders, the shareholders will be asked to:
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1.
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To re-elect Dr.
John W. Kozarich, Jeffrey A. Meckler, Anthony J. Maddaluna, Hila Karah, Dr. Roger J. Pomerantz and William B. Hayes to serve
as a director of the Company to hold office until the close of the next annual general meeting;
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2.
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To approve the terms
of Dr. Kozarich as Chairman of the Company;
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3.
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To approve an amendment
to the Company’s 2015 Plan to increase the aggregate number of ordinary shares authorized
for issuance under the Plan by 1,000,000 ordinary shares;
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4.
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To approve and ratify
the re-appointment of Kesselman & Kesselman, Certified Public Accountant (Isr.), independent registered public accounting
firm, a member of PricewaterhouseCoopers International Limited as the independent auditors of the Company for the period ending
at the close of the next annual general meeting; and
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To transact such
other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
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Who is entitled to vote?
The record date for
the Annual Meeting is October 25, 2019. Only shareholders of record at the close of business on that date are entitled to vote
at the Annual Meeting. The total number of outstanding ordinary shares, no par value, as of September
30, 2019, was 35,019,479.
How do I vote?
You can vote either
in person at the Annual Meeting or by authorizing another person as your proxy, whether or not you attend the Annual Meeting.
You may vote in any of the manners below:
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By mail—If
you are a shareholder of record, you can submit a proxy by completing, dating, signing and returning your proxy card or voting
instruction card in the postage-paid envelope provided. You should sign your name exactly as it appears on the enclosed proxy
card or voting instruction card. If you are signing in a representative capacity (for example, as a guardian, executor, trustee,
custodian, attorney or officer of a corporation), please indicate your name and title or capacity. If you are a beneficial
owner, you have the right to direct your brokerage firm, bank or other similar organization on how to vote your shares, and
the brokerage firm, bank or other similar organization is required to vote your shares in accordance with your instructions.
To provide instructions to your brokerage firm, bank or other similar organization by mail, please complete, date, sign and
return your proxy card or voting instruction card in the postage-paid envelope provided by your brokerage firm, bank or other
similar organization;
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By telephone—If
you are a shareholder of record, you can submit a proxy by telephone by calling the toll-free number listed on the enclosed
proxy card or voting instruction card, entering your control number located on the enclosed proxy card or voting instruction
card and following the prompts. If you are a beneficial owner and if the brokerage firm, bank or other similar organization
that holds your shares offers telephone voting, you will receive instructions from the brokerage firm, bank or other similar
organization that you must follow in order to submit a proxy by telephone; or
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By Internet—If
you are a shareholder of record, you can submit a proxy over the Internet by logging on to the website listed on the enclosed
proxy card or voting instruction card, entering your control number located on the enclosed proxy card or voting instruction
card and submitting a proxy by following the on-screen prompts. If you are a beneficial owner, and if the brokerage firm,
bank or other similar nominee that holds your shares offers Internet voting, you will receive instructions from the brokerage
firm, bank or other similar organization that you must follow in order to submit your proxy over the Internet.
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What is the difference between being
a “record holder” and holding shares in “street name”?
A record holder holds
shares in his or her name. Shares held in “street name” means shares that are held in the name of a bank, broker
or other nominee on a person’s behalf.
Am I entitled to vote if my shares
are held in “street name”?
If your shares
are held by a bank, a brokerage firm or other nominee, you are considered the “beneficial owner” of shares held
in “street name.” If your shares are held in street name, the proxy materials are being forwarded to you by your
bank, brokerage firm or other nominee, or the record holder, along with a voting instruction card. As the beneficial owner,
you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your
shares in accordance with your instructions. If you do not give instructions to the record holder, and the broker, bank or
other nominee is not entitled to exercise its voting discretion on the matter, the shares will be treated as “broker
non-votes.” See “How are Broker Non-Votes Treated” below. You are also invited to attend the Annual
Meeting. However, since you are not the shareholder of record, you may not vote your shares in person at the Annual Meeting
unless you request and obtain a valid proxy from the record holder.
What is the quorum requirement?
A quorum is necessary
to hold a valid meeting. According to our articles of association, the quorum required for a special meeting of shareholders consists
of two or more shareholders present, in person or by proxy, who hold shares, in the aggregate, conferring at least 33⅓%
of the voting rights in the Company. If such quorum is not present within half an hour from the time scheduled for the Annual
Meeting, the Annual Meeting will be adjourned for one week to the same day, time and place.
Your shares will be
counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other
nominee) or if you vote in person at the Annual Meeting.
Proxies with only
broker non-votes are not counted towards the quorum. However, if a proxy is returned with a vote on at least one proposal, even
if broker non-votes are returned with respect to the other proposals, the proxy shall count toward the quorum. See “How
are Broker Non-Votes Treated” below. Abstentions will also be counted towards the quorum requirement.
Who can attend the Annual Meeting
of Shareholders?
All Company shareholders
of record as of the close of business on October 25, 2019 may attend the Annual Meeting.
How many votes do I have?
On each matter to
be voted upon, you have one vote for each ordinary share you own as of the record date.
Can I change my vote after I submit
my proxy?
If you are a record
holder of shares, you may revoke your proxy and change your vote at any time before your proxy is actually voted:
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by signing and delivering
another proxy with a later date;
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by providing us
a written notice of such revocation prior to or at the Annual Meeting; or
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by voting in person
at the Annual Meeting so long as you provide us a written notice of the revocation before your proxy is voted or before you
vote in person at the Annual Meeting.
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If you are a beneficial
owner of shares, you may submit new voting instructions by contacting the record holder, or, if you have obtained a legal proxy
from the record holder giving you the right to vote your shares, by attending the Annual Meeting and voting in person.
How are votes counted?
Votes will be counted
by the inspector of election appointed for the Annual Meeting, who will separately count “For” and “Against”
votes, abstentions, and broker non-votes.
How does the Board of Directors
recommend I vote on the proposals?
Our board of directors
recommends that you vote FOR each of the proposals that are further described in the enclosed proxy statement.
What if I do not specify how my
shares are to be voted?
If you submit a proxy
but do not indicate any voting instructions, the proxy holders will vote in accordance with the recommendations of our board of
directors. If you are a beneficial owner of shares held in street name and do not provide the broker, bank or other nominee that
holds your shares with specific voting instructions, the broker, bank or other nominee may generally vote in its discretion on
“discretionary” matters. However, if the broker, bank or other nominee that holds your shares does not receive instructions
from you on how to vote your shares on a “non-discretionary” matter, it will be unable to vote your shares on that
matter. When this occurs, it is generally referred to as a “broker non-vote.”
Will any other business be conducted
at the Annual Meeting?
As of the date of
this proxy statement, we know of no other business that will be presented at the Annual Meeting. If any other matter arises and
is presented properly to the shareholders for a vote at the Annual Meeting, the proxy holders will vote your shares in accordance
with their best judgment, subject to the rules applicable to broker discretionary voting.
In accordance with
the Israeli Companies Law 5759-1999, and regulations promulgated thereunder, or the Companies Law, any shareholder of the Company
holding at least one percent of the outstanding voting rights of the Company for the meeting may submit to the Company a proposed
additional agenda item for the meeting, to our offices, c/o Nir Sassi, at 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel,
no later than November 1, 2019. To the extent that there are any additional agenda items that our board of directors determines
to add as a result of any such submission, we will publish an updated agenda and proxy card with respect to the meeting, no later
than November 8, 2019, which will be furnished to the Securities and Exchange Commission, or the SEC, on Form DEFA 14A, and will
be made available to the public on the Commission’s website at www.sec.gov.
How many votes are required for
approval of each of the proposals?
According to our articles
of association, approval of each proposal requires the majority of the voting power present and voting at the Annual Meeting or
at any adjournment thereof.
This means that the
numbers of shares voted “for” the proposal must exceed the numbers of shares voted “against” the proposal.
Abstentions and broker non-votes are not considered votes cast for this purpose, and will have no effect on the vote.
What is an abstention and how will
abstentions be treated?
An “abstention”
represents a shareholder’s affirmative choice to decline to vote on a proposal. Abstained shares are treated as shares present
for quorum purposes and entitled to vote. Since the voting standard for all of the proposals at this Annual Meeting is “the
majority of the voting power present and voting at the Annual Meeting,” and not a majority of shares present and
entitled to vote, so long as a quorum has been established at the Annual Meeting, abstentions will have no effect on
the proposal.
How will broker non-votes be treated?
If beneficial
owners do not instruct their broker, bank, or other nominee how to vote, the broker may exercise its voting discretion with
regard to the shares only on “routine” proposals and not on “non-routine” proposals. Only Proposal 4
is considered a “routine” proposal.
Banks, brokers, or
other nominees are not permitted to exercise discretionary voting on “non-routine” matters and therefore submit no
vote – or a “broker non-vote” – on non-routine proxy items for which beneficial owners do not provide
their voting instructions. A broker non-vote occurs when banks, brokers or other nominees who hold shares in street name for a
client return a proxy but provide no instructions as to how shares should be voted on a particular matter.
A broker non-vote
on a non-routine proposal on the ballot does not count as a vote for or against such proposal and shall therefore have no effect
on the outcome of the vote on that proposal.
Where can I find the voting results
of the Annual Meeting of Shareholders?
We plan to announce
preliminary voting results at the Annual Meeting and to publish final results in a current report on Form 8-K to be filed with
the SEC, within four days of the Annual Meeting.
Who can help answer my questions?
The information provided
above in this “Questions and Answers” format is for your convenience only and is merely a summary of the information
contained in this proxy statement. We urge you to carefully read this entire proxy statement, including the documents we refer
to in this proxy statement.
PROPOSAL 1
RE-ELECTION OF DIRECTORS
Background
Board of Directors
Under the Companies
Law and our articles of association, the management of our business is vested in our board of directors. Our board of directors
may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive
officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors.
Our Chief Executive Officer is appointed by, and serves at the discretion of, our board of directors, subject to his personal
contract with the Company. All other executive officers are also appointed by our board of directors, and are subject to the terms
of their personal employment agreements (as such may be updated from time to time).
Our board of directors
determined that all of our directors other than Mr. Meckler are independent under Nasdaq Capital Market rules.
Under our articles
of association, our board of directors must consist of at least four and not more than nine directors, including at least two
external directors, to the extent applicable and subject to the Relief Regulations described below under “—External
Directors”. Our directors are elected at the annual and/or special general meeting of our shareholders by a simple majority.
Because our ordinary shares do not have cumulative voting rights in the election of directors, the holders of a majority of the
voting power represented at a shareholders meeting have the power to elect all of our directors. We have held elections for each
of our non-external directors at each annual meeting of our shareholders since our initial public offering in Israel.
In addition, our articles
of association allow our board of directors to appoint directors to fill vacancies on our board of directors, for a term of office
ending on the earlier of the next annual general meeting of our shareholders, or the conclusion of the term of office in accordance
with our articles or any applicable law, subject to the maximum number of directors allowed under our articles of association.
In addition, in accordance
with the Companies Law and our articles of association, our board of directors is required to appoint one of its members to serve
as chairman of the board of directors. Our board of directors has appointed John Kozarich to serve as chairman of the board of
directors.
External directors
Under the Companies
Law, Israeli public companies are generally required to appoint at least two external directors, who need to meet certain criteria
and be appointed according to a specific procedure. However, according to the Israeli Companies Regulations (Relief for Companies
whose Securities are Listed for Trading on a Stock Exchange Outside Israel), 2000, or the Relief Regulations, a company whose
shares are traded on certain stock exchanges outside Israel (including the Nasdaq Capital Market, such as our company) that does
not have a controlling shareholder and that complies with the requirements of the laws of the foreign jurisdiction where the company’s
shares are listed, as they apply to domestic issuers, with respect to the appointment of independent directors and the composition
of the audit committee and compensation committee, may elect to exempt itself from the requirements of Israeli law with respect
to among other things (i) the requirement to appoint external directors and that one external director serve on each committee
of the board of directors; and (ii) certain limitations on the employment or service of an external director or his or her spouse,
children or other relatives, following the cessation of his or her service as an external director, by or for the company, its
controlling shareholder or an entity controlled by the controlling shareholder. In May 14, 2018, our board decided to opt out
of these requirements.
Under the Relief Regulations,
these concessions will continue to be available to us so long as (i) our shares are traded on a U.S. stock exchange, including
the Nasdaq Capital Market; (ii) we do not have a “controlling shareholder” (as such term is defined under the Companies
Law), and (iii) we comply with the majority board independence requirements and audit committee and compensation committee requirements
under U.S. laws applicable to U.S. domestic issuers.
Director Nominees
There are currently
eight directors serving on our board of directors, whose term of office will end upon the close of the Annual Meeting.
At the Annual Meeting,
shareholders will be asked to re-elect Dr. John W. Kozarich, Jeffrey A. Meckler, Anthony J. Maddaluna, Hila Karah, Dr. Roger J.
Pomerantz and William B. Hayes to serve as a director of the Company to hold office until the close of the next annual general
meeting. Isaac Silberman and Gil Bianco have not been nominated for re-election at the Annual Meeting and their term of office
will end upon the close of the Annual Meeting.
Each of the director
nominees has certified to us that he or she complies with all requirements under the Companies Law for serving as a director and,
in the case of Hila Karah, also for serving as an independent director. Such certifications will be available for inspection at
the Annual Meeting.
Unless otherwise instructed,
the proxy holders will vote the proxies received by them for the six nominees listed below. It is not expected that any nominee
will be unable or will decline to serve as a director.
The following sets
forth certain information with respect to each director nominee for re-election to the board. The biographies of each of the director
nominees contain information regarding the individual’s service as a director, business experience, and the qualifications,
attributes or skills that led to the conclusion that the individual should serve as our director.
Jeffrey A. Meckler,
age 53, has served as our Vice Chairman of the board of directors since April 2017 and as our Chief Executive Officer since
July 2017. Mr. Meckler has served on numerous public and private corporate boards and since October 2014 has served as a director
of Retrophin, Inc. (Nasdaq: RTRX). Mr. Meckler recently served as Chief Executive Officer and a director of CoCrystal Pharma,
Inc., a pharmaceutical company, from April 2015 to July 2016. He has also served as a director of QLT, Inc. (Nasdaq: QLTI), a
biotechnology company, from June 2012 to November 2016, as well as the Managing Director of The Andra Group, a life sciences consulting
firm since 2009. Mr. Meckler also served as Chief Executive Officer of Trieber Therapeutics from January 2017 to July 2017. Earlier
in his career, Mr. Meckler held a series of positions at Pfizer Inc. in manufacturing systems, market research, business development,
strategic planning and corporate finance, which included playing a significant role in acquisitions and divestitures. Mr. Meckler
is the past President and continues to serve on the board of directors of Children of Bellevue, a non-profit organization focused
on advocating and developing pediatric programs at Bellevue Hospital Center. Mr. Meckler holds a B.S. in Industrial Management
and M.S. in Industrial Administration from Carnegie Mellon University. In addition, Mr. Meckler received his J.D. from Fordham
University School of Law. We believe that Mr. Meckler is qualified to serve on our board of directors because of his extensive
executive leadership experience in the biopharmaceutical industry, including his service at Pfizer, and his experience serving
on public company boards.
John
W. Kozarich age, 70, has served as our Chairman of the board of directors since July 2016. Dr. Kozarich has nearly
40 years of experience in the biopharmaceutical industry and academia. Dr. Kozarich currently serves as Chairman of Ligand Pharmaceuticals
(Nasdaq: LGND) and has served as a member of Ligand’s board since 2003. Dr. Kozarich currently serves as a consultant of
ActivX Biosciences, Inc., a wholly owned subsidiary
of Kyorin Pharmaceutical Co., LTD, and previously served as Distinguished Scientist and Executive Advisor of ActivX from March
2017 until April 2019, and ActivX’s Chairman and President from 2004 through March 2017 having joined ActivX in 2002. Prior
to his role at ActivX, Dr. Kozarich was Vice President at Merck Research Laboratories where he was responsible for a variety of
drug discovery and development programs and external biotech collaborations. Dr. Kozarich previously held full professorships at
the University of Maryland and Yale School of Medicine. He was named Director of the Year for 2014 by the Corporate Directors Forum,
has been an American Cancer Society Faculty Research Awardee, and received the Distinguished Scientist Award of the San Diego Section
of the American Chemical Society. Since February 2019, Dr. Kozarich has served as director of Curza and since April 2015, Dr. Kozarich
has served as a director at Retrophin, Inc., a publicly traded biopharmaceutical company (Nasdaq: RTRX). From 2007 until April
2015, Dr. Kozarich served as a director of Corium International, Inc. (NASDAQ: CORI) and, from June 2012 to November 2016, as a
director of QLT, Inc. Dr. Kozarich holds a B.S. in chemistry from Boston College and a Ph.D. in biological chemistry from the Massachusetts
Institute of Technology and was an NIH Postdoctoral Fellow at Harvard University. We believe that Dr. Kozarich is qualified
to serve on our board of directors because of his extensive experience in the biopharmaceutical industry, including his service
at Merck Research Laboratories, his academic experience and his experience serving on public company boards.
Hila Karah age,
51, has served as a member of our board of directors since December 2009. Ms. Karah is an experienced board director and since
2013 serves as an independent business consultant to private and public companies on strategy, operations, financing, regulatory
and corporate governance. From November 2017 to September 2018, Ms. Karah was the executive chairperson of FloraFotonica Ltd.,
an Israeli Agro Tech startup. From 2006 until 2013, Ms. Karah was the chief investment officer of Eurotrust Ltd., a family office,
where she focused primarily on investments in life science, internet and high-tech companies. Prior to joining Eurotrust, Ms.
Karah served as a senior analyst at Perceptive Life Sciences Ltd., a New York-based hedge fund. Prior to her position at Perceptive,
Ms. Karah was a research analyst at Oracle Partners Ltd., a healthcare-focused hedge fund based in Connecticut. Ms. Karah has
served on the board of Cyren Ltd. a cyber security company (Nasdaq, TASE: CYRN) since 2008 and the board of Dario Health Corp.,
(Nasdaq: DRIO) since 2014. She also serves on the board of several private companies. Ms. Karah has a BA in molecular and cell
biology from the University of California, Berkeley, and has studied at the UCSB – UCSF Joint Medical Program. We believe
Ms. Karah is qualified to serve on our board of directors because of her longstanding service with us, her investment career in
life science companies, her scientific background and experience serving on public company boards.
Anthony J. Maddaluna age,
67, has served on our board of directors since December 2017. Mr. Maddaluna has more than 40 years of experience in the pharmaceutical
manufacturing industry, including leadership positions in plants, regions and globally. From January 2011 to December 2016, Mr.
Maddaluna held a series of positions at Pfizer Inc., most recently serving as the Executive Vice President and President of Pfizer
Global Supply. Prior to that Mr. Maddaluna served as Senior Vice President of Pfizer Global Manufacturing Strategy and Supply
Network Transformation from 2008 until 2011, and as Vice President of Pfizer Global Manufacturing Europe Area from 1998 until
2008. Mr. Maddaluna served as a director of Albany Molecular Research Inc. from February 2016 until its acquisition by The Carlyle
Group and GTCR in August 2017 and currently serves on the board of managers for the private company. Mr. Maddaluna holds a B.S.
in Chemical Engineering from Northeastern University and an M.B.A. from Southern Illinois University. We believe that Mr. Maddaluna
is qualified to serve on our board of directors because of his extensive experience in the pharmaceutical manufacturing industry,
including his service at Pfizer, and his experience serving on company boards.
William B. Hayes age,
54, has served on our board of directors since June 2018. Most recently, Mr. Hayes was Executive Vice President, Chief Financial
Officer and Treasurer of Laboratory Corporation of America Holdings (LabCorp) (NYSE: LH), a diagnostics laboratory company. Mr.
Hayes joined LabCorp in 1996, where he was responsible for day-to-day operations of the revenue cycle function. He rose through
a series of promotions and in 2005 was named Executive Vice President, Chief Financial Officer and Treasurer of LabCorp, a role
he held until his retirement in 2014. Prior to LabCorp, Mr. Hayes was at KPMG for nine years in their audit department. Mr. Hayes
served as a director from March 2016 for Patheon N.V. (NYSE: PTHN), a pharmaceutical manufacturing company, until its acquisition
by Thermo Fisher in late 2017. Mr. Hayes holds a Bachelor of Science in accounting from the University of North Carolina at Greensboro
and is a Certified Public Accountant. We believe Mr. Hayes is qualified to serve on our board of directors because of his accounting
background and experience serving on public company boards.
Roger J. Pomerantz age,
62, has served on our board of directors since March 2018. Since November 2013, Dr. Pomerantz served as Chairman of Seres Therapeutics
(Nasdaq: MCRB) and from June 2014 until January 2019, Dr. Pomerantz served as the President and Chief Executive Officer of Seres.
Since July 2014, Dr. Pomerantz has been a Senior Partner at Flagship Pioneering, formerly known as Flagship Ventures, an
early-stage venture capital firm. Prior to joining Seres, Dr. Pomerantz was Worldwide Head of Licensing & Acquisitions, Senior
Vice President at Merck & Co., Inc., where he oversaw all licensing and acquisitions at Merck Research Laboratories, including
external research, out-licensing regional deals, and academic alliances. Previously, he served as Senior Vice President and Global
Franchise Head of Infectious Diseases at Merck. Prior to joining Merck, Dr. Pomerantz was Global Head of Infectious Diseases for
J&J. He has served on the board of directors of ContraFect Corporation (Nasdaq: CFRX) and Rubius Therapeutics (Nasdaq: RUBY)
since 2014. Dr. Pomerantz earned his B.A. in biochemistry at the Johns Hopkins University and his M.D. at the Johns Hopkins School
of Medicine. He completed his internal medicine internship and residency training, and his subspecialty clinical and research
training in infectious diseases and virology at the Massachusetts General Hospital of Harvard Medical School. His post-doctoral
research training in molecular retrovirology was obtained at both Harvard Medical School and the Whitehead Institute of the Massachusetts
Institute of Technology (MIT). Dr. Pomerantz also served as the Chief Resident at the Massachusetts General Hospital. Following
his medical-scientist training, he was an Endowed, Tenured Professor of Medicine and Molecular Pharmacology and Chairman of the
Infectious Diseases Department of Thomas Jefferson University in Philadelphia. Dr. Pomerantz is an internationally recognized
expert in HIV molecular pathogenesis and latency. He has developed ten approved infectious disease drugs in important diseases
including HIV, HCV, tuberculosis, and Clostridium difficile infection. We believe that Dr. Pomerantz is qualified to serve on
our board of directors because of his significant scientific, executive and board leadership experience in drug development and
in the pharmaceutical industry.
Proposed Resolutions
“RESOLVED,
to re-elect Dr. John W. Kozarich, Jeffrey A. Meckler, Anthony J. Maddaluna, Hila Karah, Dr. Roger J. Pomerantz and William
B. Hayes to serve as a director of the Company to hold office until the close of the next annual general meeting.”
Vote Required for Approval of Proposal
The affirmative vote
of the holders of a majority of the shares represented at the Annual Meeting in person or by proxy and voting on each proposal
is required. Each director nominee shall be voted separately.
CORPORATE GOVERNANCE
Arrangements between Officers and Directors
To our knowledge,
there is no arrangement or understanding between any of our officers and any other person, including directors, pursuant to which
the officer was selected to serve as an officer.
Involvement in Certain Legal Proceedings
We are not aware of
any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy,
insolvency, criminal proceedings (other than traffic and other minor offenses), or being subject to any of the items set forth
under Item 401(f) of Regulation S-K.
Board Meetings
The board met on eight
occasions during the fiscal year ended December 31, 2018. Each of the members of the board attended at least 75% of the meetings
held by the board during the time such directors served as a member of the board. None of our directors attended our 2018 annual
meeting of stockholders, either in person or telephonically.
Although we do not have
a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage our
directors to attend.
Board Committees
Our board of directors
has established an audit committee, a compensation committee and a nominating and governance committee. Our board of directors
may establish other committees to facilitate the management of our business. We are required to comply with both the Nasdaq listing
rules and the Companies Law regarding the composition of our board committees.
The composition and
functions of our established committees are described below. Members serve on these committees until their resignation or until
otherwise determined by our board of directors.
Audit Committee
Our
audit committee currently consists of William B. Hayes, Gil Bianco and Issac Silberman. Mr. Hayes serves as the Chairman of the
audit committee. Each member of our audit committee is independent under the Nasdaq listing rules.
Under
the Nasdaq Capital Market corporate governance rules, we are required to maintain an audit committee consisting of at least three
independent directors, each of whom is financially literate and one of whom has accounting or related financial management expertise.
All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of
the SEC and the Nasdaq Capital Market corporate governance rules. Our board of directors has affirmatively determined that Gil
Bianco is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined
by the Nasdaq Capital Market corporate governance rules.
The
audit committee met on five occasions during the fiscal year ended December 31, 2018. Each of the members of the audit committee
attended at least 75% of the meetings held by the audit committee during the time such directors served as a member of the committee.
Audit Committee
Role
Our
board of directors has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent
with the rules of the SEC and the Listing Rules of the Nasdaq Capital Market, as well as the requirements for such committee under
the Companies Law, including the following:
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oversight
of our independent registered public accounting firm and recommending the engagement,
compensation or termination of engagement of our independent registered public accounting
firm to the board of directors in accordance with Israeli law;
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recommending
the engagement or termination of the person filling the office of our internal auditor;
and
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recommending
the terms of audit and non-audit services provided by the independent registered public
accounting firm for pre-approval by our board of directors.
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Our
audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving
our accounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed
by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control
over financial reporting. Our audit committee also oversees the audit efforts of our independent accountants and takes those actions
that it deems necessary to satisfy itself that the accountants are independent of management.
Under
the Companies Law, our audit committee is responsible for:
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(i)
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determining whether
there are deficiencies in the business management practices of our Company, including in consultation with our internal auditor
or the independent auditor, and making recommendations to our board of directors to improve such practices;
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(ii)
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determining the
approval process for transactions that are ‘non-negligible’ (i.e., transactions with a controlling shareholder
that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions),
as well as determining which types of transactions would require the approval of the audit committee, optionally based on
criteria which may be determined annually in advance by the audit committee;
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(iii)
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determining whether
to approve certain related party transactions (including transactions in which an office holder has a personal interest and
whether such transaction is extraordinary or material under Companies Law) (see “— Approval of Related Party Transactions
under Israeli Law”);
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(iv)
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where the board
of directors approves the working plan of the internal auditor, to examine such working plan before its submission to our
board of directors and proposing amendments thereto;
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(v)
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examining our internal
controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools
to dispose of its responsibilities;
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(vi)
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examining the scope
of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors
or shareholders, depending on which of them is considering the appointment of our auditor; and
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(vii)
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establishing procedures
for the handling of employees’ complaints as to the management of our business and the protection to be provided to
such employees.
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Internal Auditor
Under the Companies
Law, the board of directors of an Israeli public company must appoint an internal auditor in accordance with the recommendation
of the audit committee. Each of the following may not be appointed as internal auditor:
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a
person (or a relative of a person) who holds more than 5% of the company’s outstanding
shares or voting rights;
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a
person (or a relative of a person) who has the power to appoint a director or the general
manager of the company;
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an
office holder (including a director) of the company (or a relative thereof); or
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a
member of the company’s independent accounting firm, or anyone on his or her behalf.
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The role of the internal
auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. The audit committee
is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internal
auditor’s work plan. Haim Halfon has been appointed as our internal auditor. Mr. Halfon is a certified internal auditor
and a partner of Amit, Halfon (a member firm of the PKF International Limited).
The board of directors
shall determine the direct supervisor of the internal auditor. The internal auditor is required to submit his findings to the
audit committee, unless specified otherwise by the board of directors.
Compensation
Committee
Our
compensation committee currently consists of Roger J. Pomerantz, M.D., Hila Karah, Anthony J. Maddaluna and Issac Silberman.
Dr. Pomerantz serves as the Chairman of the compensation committee. Each member of our compensation committee is independent under
the Nasdaq listing rules.
Under
the Companies Law, the board of directors of a public company must appoint a compensation committee and adopt a compensation policy.
Under
the Companies Law, the compensation committee is responsible, among other things, for (i) recommending to the board of directors
regarding its approval of a compensation policy in accordance with the requirements of the Companies Law; (ii) overseeing the
development and implementation of such compensation policy and recommending to the board of directors regarding any amendments
or modifications that the compensation committee deems appropriate; (iii) determining whether to approve transactions concerning
the terms of engagement and employment of our officers and directors that require compensation committee approval under the Companies
Law; and (iv) resolving whether or not to exempt a transaction with a candidate for chief executive officer from shareholder’s
approval. In addition, any amendment of existing terms of office and employment of office holders (other than directors or controlling
shareholders and their relatives, who serve as office holders) requires the sole approval of the compensation committee, if the
committee determines that the amendment is not material in relation to its existing terms and if such amendment is in accordance
with the approved compensation policy of the company then in effect.
The
compensation committee met on four occasions during the fiscal year ended December 31, 2018. Each of the members of the audit
committee attended at least 75% of the meetings held by the audit committee during the time such directors served as a member
of the committee.
Typically,
the compensation committee meets at least quarterly and with greater frequency if necessary. The agenda for each meeting is usually
developed by the Chair of the compensation committee, in consultation with the chief executive officer. The compensation committee
meets regularly in executive session. However, from time to time, various members of management and other employees as well as
outside advisors or consultants may be invited by the compensation committee to make presentations, to provide financial or other
background information or advice or to otherwise participate in compensation committee meetings. The chief executive officer may
not participate in, or be present during, any deliberations or determinations of the compensation committee regarding his compensation.
Under the Companies Law, the decisions of the compensation committee with respect to executive officers are subject in addition
to the approval of the board. Under the charter, the compensation committee has direct responsibility to appoint, compensate and
oversee the work of compensation consultants engaged for the purpose of advising the compensation committee. Compensation consultants
so retained shall report directly to the compensation committee. Under the charter, the compensation committee may select a compensation
consultant only after taking into consideration the independence of such person in accordance with the requirements of Nasdaq.
During
the past fiscal year, after taking into consideration the six factors prescribed by the SEC and Nasdaq, our compensation committee
engaged Radford, a national compensation consulting firm, to provide executive compensation advisory services based, in part,
on its reputation and extensive experience in the industry. The compensation committee determined that Radford was independent
from management and had no conflicts of interest in connection with the advisory services to be provided. Specifically, the compensation
committee requested that Radford develop a comparative group of companies and perform analyses of competitive performance and
compensation levels for that group. Radford also conducted discussions with members of the compensation committee and senior management
to learn more about our business operations and strategy, key performance metrics and strategic goals, as well as the labor markets
in which we compete. Radford ultimately developed recommendations that were presented to the compensation committee for its consideration.
Generally,
the compensation committee’s process comprises two related elements: the determination of compensation levels and the establishment
of performance objectives for the current year. For executives other than the Chief Executive Officer, the compensation committee
solicits and considers recommendations submitted to the compensation committee by the Chief Executive Officer. The evaluation
of the performance of the Chief Executive Officer is conducted by the compensation committee, which determines any adjustments
to his compensation as well as awards to be granted. For all executives and directors, the compensation committee may review and
consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information,
executive and director share ownership information, company share performance data, analyses of historical executive compensation
levels and current company-wide compensation levels and recommendations of the compensation committee’s compensation consultant,
including analyses of executive and director compensation paid at other companies identified by the consultant.
The
compensation committee generally makes adjustments to annual compensation, determines bonuses and equity awards and establishes
new performance objectives at one or more meetings held during the first quarter of the year. However, the compensation committee
also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level
strategic issues, such as the efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans
or approaches to compensation, at various meetings throughout the year.
Nominating and Governance Committee
Since we ceased to
report as a foreign private issuer as of December 31, 2018, and in accordance with Nasdaq listing rules, we were required to either
appoint a nominating and corporate governance committee for the nomination of our directors or have director nominees recommended
for appointment by a majority of the board’s independent directors in a vote in which only independent directors participate.
Our board has opted for the first alternative and during 2018 established a nominating and governance committee of the board and
adopted a charter.
Our nominating and
governance committee consists of Hila Karah, who also serves as chairperson of the committee, along with Dr. John W. Kozarich
and Anthony J. Maddaluna. Each member of our nominating and corporate governance committee is independent under
the Nasdaq listing rules.
Our nominating and
governance committee is responsible for identifying and making recommendations to the board of directors regarding candidates
for directorships. In addition, the committee is responsible for developing our corporate governance policies, as appropriate,
overseeing our corporate governance guidelines and reporting and making recommendations to the board concerning governance matters.
The committee shall exercise such other powers and authority as are set forth in its charter, which is available on our website
at www.intecpharma.com, as well as such other powers and authority as shall from time to time be assigned thereto
by resolution of the board, to the extent permitted by law.
To
date, our nominating and governance committee has not adopted a formal policy with respect to a fixed set of specific minimum
qualifications for its candidates for membership on the board of directors. Instead, when considering candidates for director,
the nominating and corporate governance committee will generally consider all of the relevant qualifications of board of directors
candidates, including such factors as the candidate’s relevant expertise upon which to be able to offer advice and guidance
to management, having sufficient time to devote to the affairs of the company, demonstrated excellence in his or her field, having
relevant financial or accounting expertise, having the ability to exercise sound business judgment, having the commitment to rigorously
represent the long-term interests of our shareholders and whether the board candidates will be independent for purposes of the
Nasdaq listing standards, as well as the current needs of the board of directors and the company.
In addition, while
it does not have a formal policy on the board of directors’ diversity, our nominating and governance committee will take
into account a broad range of diversity considerations when assessing director candidates, including individual backgrounds and
skill sets, professional experiences and other factors that contribute to the board of directors having an appropriate range of
expertise, talents, experiences and viewpoints. Our nominating and governance committee will consider diversity criteria in view
of the needs of the board of directors as a whole when making decisions on director nominations. In the case of incumbent directors
whose terms of office are set to expire, our nominating and governance committee will also review, prior to nominating such directors
for another term, such directors’ overall service to the company during their term. Our nominating and corporate governance
committee will conduct any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates
after considering the function and needs of the board of directors. We have, from time to time, engaged an executive search firm
to assist our nominating and corporate governance committee in identifying and recruiting potential candidates for membership
on the board of directors.
Our nominating and
governance committee will consider candidates for nomination as director who are recommended by a shareholder and will not evaluate
any candidate for nomination for director differently because the candidate was recommended by a shareholder. When submitting
candidates for nomination to be elected at our annual meeting of shareholders, shareholders must also follow the notice procedures
and provide the information required by our articles of association. To consider a candidate recommended by a shareholder for
nomination at the 2020 annual meeting, the recommendation must be delivered or mailed to and received by our secretary within
the time periods discussed elsewhere in this proxy statement under the heading “Shareholder Proposals for Future Meetings.”
The
nominating and governance committee met on one occasion during the fiscal year ended December 31, 2018. All of the members of
the nominating and governance committee attended the meeting held by the nominating and governance committee during the time such
directors served as a member of the committee.
Material Changes to Director Nomination Procedures
Except with respect
to the establishment of a nominating and governance committee and adoption of a nominating and governance committee charter during
2018, there have been no material changes to the procedures by which shareholders may recommend nominees to our board of directors
since such procedures were last disclosed.
Shareholder Communications with the Board of Directors
Historically, we have
not provided a formal process related to shareholder communications with the board. Nevertheless, every effort has been made to
ensure that the views of shareholders are heard by the board or individual directors, as applicable, and that appropriate responses
are provided to shareholders in a timely manner. Shareholders or other interested parties may communicate with any director by
writing to them at Intec Pharma Ltd., Attention: Nir Sassi, Chief Financial Officer, 12 Hartom St., Har Hotzvim Jerusalem 9777512,
Israel.
Board Leadership Structure
Our
board of directors believes it is in the best interest of the Company to make the determination regarding the separation of the
roles of chief executive officer and chairman of the board based on varied considerations, including the position and direction
of the Company and the membership of the board at any given time. Our board of directors has determined that having Jeffrey Meckler
serve as chief executive officer and John Kozarich serve as chairman of the board is in the best interest of the Company’s
shareholders at this time. This structure permits Mr. Meckler to manage our day-to-day operations and Dr. Kozarich to oversee
the board’s activities.
Risk Oversight
The
board of directors oversees our risk exposures and risk management of various parts of the business, including appropriate guidelines
and policies to minimize business risks and major financial risks and the steps management has undertaken to control them. In
its risk oversight role, the board of directors reviews periodically our strategic plan, which includes an assessment of potential
risks we are facing. While the board of directors has the ultimate oversight responsibility for the risk management process, various
committees of the board also have responsibility for risk management. In particular, the audit committee focuses on financial
risk, including internal controls. In addition, in setting compensation, the compensation committee strives to create incentives
that do not encourage risk-taking behavior that is inconsistent with our business strategy. Each committee regularly reports to
the full board of directors.
Anti-hedging Policy
Our insider trading
policy prohibits directors, officers and other employees or contractors from engaging in short sales and transactions in put or
call options. Hedging or monetization transactions, such as zero-cost collars and forward sale contracts, and other similar transactions
require pre-clearance under our insider trading policy.
Approval of Related Party Transactions under Israeli Law
Fiduciary Duties of Directors and Executive Officers
The Companies
Law codifies the fiduciary duties that office holders owe to a company. Each director and each person listed in the
table under “Executive Officer” is an office holder under the Companies Law.
An office holder’s
fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level
of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of
loyalty requires that an office holder act in good faith and in the best interests of the company.
The duty of care includes
a duty to use reasonable means to obtain:
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information
on the advisability of a given action brought for his or her approval or performed by
virtue of his or her position; and
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all
other important information pertaining to any such action.
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The duty
of loyalty includes a duty to:
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refrain
from any conflict of interest between the performance of his or her duties to the company
and his or her other duties or personal affairs;
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refrain
from any activity that is competitive with the company;
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refrain
from exploiting any business opportunity of the company to receive a personal gain for
himself or herself or others; and
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disclose
to the company any information or documents relating to the company’s affairs which
the office holder received as a result of his or her position as an office holder.
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Disclosure of Personal Interests of an Office Holder
and Approval of Certain Transactions
The Companies Law
requires that an office holder promptly disclose to the board of directors any personal interest that he or she may be aware of
and all related material information or documents concerning any existing or proposed transaction with the company. An interested
office holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors
at which the transaction is considered. A personal interest includes an interest of any person in an act or transaction of a company,
including a personal interest of such person’s relative or of a corporate body in which such person or a relative of such
person is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one
director or the general manager, but excluding a personal interest stemming from one’s ownership of shares in the company.
A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or
the personal interest of the office holder with respect to his or her vote on behalf of a person for whom he or she holds a proxy
even if such shareholder has no personal interest in the matter. An office holder is not however obligated to disclose a personal
interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary
transaction. Under the Companies Law, an extraordinary transaction is defined as any of the following:
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a
transaction other than in the ordinary course of business;
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a
transaction that is not on market terms; or
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a
transaction that may have a material impact on a company’s profitability, assets
or liabilities.
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If it is determined
that an office holder has a personal interest in a transaction, approval by the board of directors is required for the transaction,
unless the company’s articles of association provide for a different method of approval. Our articles of association do
not provide otherwise. Further, so long as an office holder has disclosed his or her personal interest in a transaction, the board
of directors may approve an action by the office holder that would otherwise be deemed a breach of the duty of loyalty. However,
a company may not approve a transaction or action that is adverse to the company’s interest or that is not performed by
the office holder in good faith. An extraordinary transaction in which an office holder has a personal interest requires approval
of the company’s audit committee followed by the approval of the board of directors. The compensation of, or an undertaking
to indemnify or insure, an office holder who is not a director requires approval by the company’s compensation committee,
followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to
indemnify or insure is inconsistent with the company’s stated compensation policy, or if the said office holder is the chief
executive officer of the company (apart from a number of specific exceptions), then such arrangement is subject to the approval
of a majority vote of the shares present and voting at a shareholders meeting, provided that either: (a) such majority includes
at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest
in the approval of such compensation arrangement (excluding abstaining shareholders); or (b) the total number of shares of non-controlling
shareholders and shareholders who do not have a personal interest in the approval of the compensation arrangement and who vote
against the arrangement does not exceed 2% of the company’s aggregate voting rights. We refer to this as the Special Approval
for Compensation. Arrangements regarding the compensation, indemnification or insurance of a director require the approvals of
the compensation committee, board of directors and shareholders by simple majority, and under certain circumstances, a Special
Approval for Compensation.
Generally, a person
who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may
not be present at such a meeting or vote on that matter unless the chairman of the relevant committee or board of directors, as
applicable, determines that he or she should be present in order to present the transaction that is subject to approval. Generally,
if a majority of the members of the audit committee or the board of directors, as applicable, have a personal interest in the
approval of a transaction, then all directors may participate in discussions of the audit committee or the board of directors,
as applicable. In the event a majority of the members of the board of directors have a personal interest in the approval of a
transaction, then the approval thereof shall also require the approval of the shareholders.
Shareholder Duties
Pursuant to the Companies
Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and its other shareholders and
to refrain from abusing his or her power in the company, including, among other things, in voting at a general meeting and at
shareholder class meetings with respect to the following matters:
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an amendment to
the company’s articles of association;
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an increase of the
company’s authorized share capital;
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the approval of related party transactions and
acts of office holders that require shareholder approval.
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In addition, a shareholder
also has a general duty to refrain from discriminating against other shareholders.
In addition, certain
shareholders also have a duty of fairness toward the company. These shareholders include any controlling shareholder, any shareholder
who knows that he or she has the power to determine the outcome of a shareholder vote at a general meeting or a shareholder class
meeting, and any shareholder who has the power to appoint or to prevent the appointment of an office holder of the company or
other power towards the company. The Companies Law does not define the substance of the duty of fairness, except to state that
the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the
1934 Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our shares,
to file with the SEC initial reports of ownership and reports of changes in ownership of our ordinary shares and other equity
securities.
SEC regulations require
us to identify officers and directors, and persons who beneficially owned more than 10% of our shares who failed to file a required
report or filed a late report during the most recent fiscal year. We reported as a “foreign private issuer” until
December 31, 2018. As a result, our officers and directors, and persons who beneficially owned more than 10% of our shares, were
exempt from filing reports of ownership and changes in ownership with the SEC under Section 16(a) of the Exchange Act during the
year ended December 31, 2018, in accordance with Rule 3a12-3 under the Exchange Act.
As of January 1, 2019,
our officers, directors and persons who beneficially owned more than 10% of our shares are required by SEC regulations to file
forms pursuant to Section 16(a).
Involvement in Certain Legal Proceedings.
As of the date of
this proxy statement, there are no material proceedings to which any of our directors or executive officers, or any associate
thereof, is a party which is adverse to or has a material interest adverse to us or any of our subsidiaries.
Family Relationships
There are no family
relationships among any of our executive officers, directors or persons nominated to become one of our directors.
Code of Ethics
We have adopted a
Code of Business Conduct and Ethics applicable to all of our directors and employees, including our Chief Executive Officer, Chief
Financial Officer, controller or principal accounting officer or other persons performing similar functions, which is a “code
of ethics” compliant with Item 406 of SEC Regulation S-K promulgated by the SEC and the Nasdaq Capital Market Listing Rules,
which refers to Section 406(c) of the Sarbanes-Oxley Act.
The full text of the
Code of Business Conduct and Ethics is posted on our website at www.intecpharma.com. Information contained on, or
that can be accessed through, our website does not constitute a part of this proxy statement and is not incorporated by reference
herein. We will provide a copy of such code of ethics without charge upon request by mail or by telephone. If we make any amendment
to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of
Business Conduct and Ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by
the rules and regulations of the SEC.
Recommendation of the Board
THE BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.
PROPOSAL
2
APPROVAL
OF TERMS OF DR. KOZARICH AS CHAIRMAN OF THE COMPANY
Background
The Companies Law
requires that the terms of service of a company’s chairman, as any other director, be approved by the company’s compensation
committee, board of directors, and the shareholders of the company.
Dr. Kozarich was elected
to serve as our chairman of the board of directors in May 2016, and started his tenure on July 1, 2016. Under Dr. Kozarich’s
service agreement, which expired on June 30, 2019, he was entitled to an annual fee of $80,000, paid in four quarterly payments,
as well as to reimbursement for out-of-pocket expenses incurred in connection with his services as chairman of the board of directors.
In view of Dr.
Kozarich’s credentials and capabilities, proven track record and our expectation of his continued contribution, our
compensation committee and board of directors have resolved to approve (i) the payment of an annual fee of $80,000 to Dr.
Kozarich for his services as chairman of the board of directors, (ii) an award of 20,000 ordinary shares of the Company on
approval of this proposal at the Annual Meeing and on each anniversary thereafter (each is referred to below as the
“date of grant”), provided Dr. Kozarich is still in office at the time of the grant and vesting of the option.
The options will have the following terms: (i) the options vest over a period of three (3) years, 1/3 of which vest on the
first anniversary date of the grant, and the additional 2/3 vest in eight (8) quarterly installments, (ii) the term of the
options is seven (7) years after the grant date, unless they have been exercised or cancelled in accordance with the 2015
Plan, and (iii) the exercise price of each option is equal to the average price of our ordinary shares on Nasdaq in the last
30 days prior to the date of grant, but, not less than the fair market value under Section 409A of the U.S. Internal Revenue
Code of 1986, or the Code. The proposed compensation terms are consistent with our compensation policy.
Proposed Resolution
It is proposed that
the following resolution be adopted at the Annual Meeting:
“RESOLVED, to
approve the compensation terms of the Chairman of the Company, John W. Kozarich, subject to his election as a director at the
Annual Meeting.”
Vote Required for Approval
The affirmative vote
of the holders of a majority of the shares represented at the Annual Meeting in person or by proxy and voting on Proposal 2 is
necessary for the approval of Proposal 2.
Recommendation of the Board
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE “FOR” PROPOSAL 2.
PROPOSAL
3
INCREASE IN
THE NUMBER OF ORDINARY SHARES UNDER OUR 2015 EQUITY INCENTIVE PLAN
Background
Our
board is asking the shareholders to approve an amendment of our 2015 Plan to increase by 1,000,000
the number of ordinary shares reserved for issuance under the 2015 Plan.
As
of September 30, 2019, we had 4,500,000 shares authorized for issuance under the 2015 Plan and, after taking into account shares
previously issued or covered by outstanding awards, there were 175,598 shares available for future grants under the 2015 Plan.
Under the proposed 2015 Plan amendment, the aggregate number of shares authorized for issuance would be increased by 1,000,000
shares to a total of 5,500,000 shares.
Our
board believes that the effective use of share-based compensation is vital to our ability to achieve strong performance in the
future by providing a direct link between employee compensation and long-term shareholder value creation. We believe
the ability to grant competitive equity awards is a necessary and powerful recruiting and retention tool for us to obtain the
quality personnel we need to move our business forward. If we are unable to offer competitive equity packages to retain and hire
employees, this could adversely affect our ability to operate our business. In addition, if we are unable to grant competitive
equity awards, we may be required to offer additional cash-based incentives to replace equity as a means of competing for talent.
The
significant decline in the trading price of our ordinary shares over the past few months has caused a substantial reduction in
the value of our options and caused heightened concerns regarding our ability to retain and motivate employees. On August 22,
2019, we reduced the exercise price of outstanding options to purchase an aggregate of 1,263,655 ordinary shares granted to our
employees (excluding any executive officers and directors) to $0.44 per share, which was the closing price of our ordinary shares
on August 21, 2019. Nevertheless, we believe the 175,598 shares remaining for future grants under the 2015 Plan as of September
30, 2019 is insufficient for us to maintain our current equity compensation strategy.
Accordingly,
upon the recommendation of our compensation committee, our board is seeking shareholder approval of an amendment to the 2015 Plan
that increases the number of shares reserved for issuance thereunder by 1,000,000 shares.
Summary Description of 2015 Plan
The principal features
of the 2015 Plan are summarized below. The following summary of the 2015 Plan does not purport to be a complete description. A
copy of the 2015 Plan is attached to this proxy statement as Appendix A and is incorporated herein by
reference. Please see Appendix A for more detailed information.
Purpose.
The purpose of the 2015 Plan is to secure for the Company and its shareholders the benefits arising from the provision of share
based Awards (as defined below) to employees, officers, directors and consultants of the Company and its Affiliates, who are expected
to contribute to the Company’s future growth and success. The 2015 Plan is intended to enable the Company to issue Awards
under various tax regimes.
For purposes of the
2015 Plan, “Awards” mean any option to purchase one share of the Company, or the Option, granted to a participant
under the 2015 Plan, and “Affiliate” means a present or future company that either (i) controls the Company or is
controlled by the Company, or (ii) is controlled by the same person or entity that controls the Company.
Administration.
The 2015 Plan is administered by the Board, or a committee or any other person or persons, to which the Board has delegated power
to act on its behalf with respect to the 2015 Plan, or the Administrator.
Eligibility. Awards
may be granted under the 2015 Plan to any employee, officer, director or consultant of the Company and its Affiliates. As
of September 30, 2019, approximately 59 employees (including five executive officers) and seven non-employee directors were eligible
to participate in the 2015 Plan.
Number of Shares.
The number of shares authorized for issuance under the 2015 Plan is 4,500,000 shares, subject to adjustment as described below
for share splits and similar events. Unless otherwise determined by the Board, in the event that Awards allocated under
the 2015 Plan expire or otherwise terminate in accordance with the provisions of the 2015 Plan, such expired or terminated Awards
shall become available for future grants and allocation under the 2015 Plan. Subject to the approval of this Proposal 3, an additional
1,000,000 shares will be available under the 2015 Plan.
Adjustments. If
a change in our shares occurs by reason of a share dividend, share split, spin-off, recapitalization, merger, consolidation, combination
or exchange of shares, distribution to shareholders other than a normal cash dividend or other change in our corporate or capital
structure, dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization,
share split, reverse share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of shares or other securities of the Company, or other change in the corporate structure of the Company affecting the shares occurs,
the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available
under the 2015 Plan, may (in its sole discretion) adjust the number and class of shares that may be delivered under the 2015 Plan
and/or the number, class, and price of shares covered by each outstanding Award.
Types of Awards.
The 2015 Plan permits
certain types of Awards to Israeli employees and non-employees:
In general, Israeli employees, officers
and directors of the Company may be granted Awards under Section 102 of the Israeli Income Tax Ordinance, or Section 102 and ITO,
respectively.
Section 102 of the
ITO provides three distinct tax tracks, which are available to companies granting Awards to employees. These tracks are: (i) a
‘capital gains’ tax track with a trustee; (ii) an ‘income’ tax track with a trustee; and (iii) a track
without a trustee, or the “Track Without a Trustee. The Company’s election regarding the type of Section 102 Awards
it chooses to make shall be filed with the Israeli Tax Authority. Such election will remain in effect at least until the end of
the year following the year during which the Company first made Awards under the 2015 Plan or previous plans pursuant to Section
102(b) of the ITO. Such election does not prevent the Company from making awards under the Track Without a Trustee.
The 2015 Plan permits
the grant of the following two types of awards to U.S. employees and non-employees:
Incentive Stock
Options. These are options that are intended to qualify as incentive options under Section 422 of the Code. To qualify as
an Incentive Stock Option, an option must meet the following requirements imposed by the Code, which requirements are reflected
in the 2015 Plan:
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The grant may be made only to an employee of the Company
or an employee of a parent or subsidiary;
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The option must have a maximum term of ten years;
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The option must have a minimum option exercise price
equal to the fair market value of the shares on the date of grant; and
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There is a $100,000 limit on the value of shares underlying
the options granted to a single participant that may become exercisable for the first time in any one year.
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In addition, in the case of certain large shareholders,
the minimum exercise price of incentive options must equal 110% of fair market value on the date of grant and the maximum term
is limited to five years.
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Notwithstanding the
foregoing, Incentive Stock Options may be granted with an exercise price other than as required above, pursuant to a Merger Transaction
(as defined below).
Non-Qualified Stock
Options. These are options that do not qualify under Section 422 of the Code. The exercise price of a Nonqualified Stock Option
will not be less than 100% of the Fair Market Value (as defined in the 2015 Plan) of the shares on the date of grant, unless the
Administrator specifically indicates that the Option will have a lower exercise price and the Option complies with Section 409A
of the Code, provided, however, that the exercise price will not be reduced below the par value of the underlying share, if any,
or any other minimum exercise price required under applicable law or stock exchange rules.
Transferability.
Awards generally may not be transferred, except by will or the laws of descent, and during the participant’s lifetime, each
and all of a participant’s rights to purchase shares shall be exercisable or taken only by the participant.
Change in Control. Under
the 2015 Plan, in the event of a Merger Transaction (as defined below), subject to applicable law and the obtaining of any applicable
approvals of the Israeli Tax Authority, the board, in its sole discretion, shall decide (i) if and how the unvested Awards shall
be canceled, replaced or accelerated; and (ii) if and how vested Awards shall be exercised, replaced and/or sold by the trustee
or the Company (as the case may be) on behalf of Israeli participants.
The Administrator,
in its sole discretion, may decide to add a provision in certain grant letters providing that, in the case of a Merger Transaction,
all or some of the unvested Awards shall automatically accelerate. For purposes of the 2015 Plan, “Merger Transaction”
means (i) a sale of all or substantially all of the assets of the Company; or (ii) a sale (including an exchange) of all or substantially
all of the shares of the capital stock of the Company; or (iii) a merger, consolidation or like transaction of the Company into
another corporation in which the holders of the Company’s outstanding share capital immediately before such consolidation
or merger do not, immediately after such consolidation or merger, retain either (x) stock representing a majority of the voting
power of the surviving entity, or (y) stock representing a majority of the voting power of an entity that wholly owns, directly
or indirectly, the surviving entity.
Amendment and
Termination. The Board may at any time suspend, terminate, modify or amend the 2015 Plan in any respect; provided, however,
that no amendment, modification, suspension or termination of the 2015 Plan will impair the rights of any participant, unless
the Company obtains the written consent of participants holding a majority in interest of the affected Awards. Termination of
the 2015 Plan will not affect the Administrator’s ability to exercise its powers under the 2015 Plan with respect to Awards
granted prior to the termination. Unless sooner terminated by the Board, the 2015 Plan will terminate ten years on January 6,
2026.
U.S. Federal Income Tax Information
The following discussion
briefly describes the U.S. federal income tax consequences of awards under the 2015 Plan generally applicable to the Company and
to participants who are subject to U.S. federal taxation. The discussion is general in nature and does not address
issues relating to the tax circumstances of any individual participant or any participant who is not subject to U.S. federal taxation. The
discussion is based on the Code, applicable treasury regulations and administrative and judicial interpretations thereof, each
as in effect on the date of this proxy statement and is, therefore, subject to future changes in the law, possibly with retroactive
effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the
discussion does not address the consequences of any estate, gift, state, local or foreign tax laws.
Share Options
Nonqualified
Stock Options. A participant generally will not recognize taxable income upon the grant of a Nonqualified Stock
Option with an exercise price at least equal to the fair market value of the common stock on the date of grant. Upon
the exercise of a Nonqualified Stock Option, a participant generally will recognize compensation taxable as ordinary income in
an amount equal to the difference between the fair market value of the shares underlying the option on the date of exercise and
the option exercise price. When a participant sells the shares acquired upon exercise, the participant generally will
have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant
received from the sale and the tax basis of the shares sold (the tax basis in the acquired shares generally being the exercise
price plus any amount recognized as ordinary income in connection with the exercise of the option).
Incentive Stock
Options. A participant who is granted an Incentive Stock Option generally does not recognize taxable income at the time the
option is granted or upon its exercise, although the exercise is an adjustment item for alternative minimum tax purposes and may
subject the employee to the alternative minimum tax. Upon a disposition of the shares more than two years after grant of the option
and more than one year after exercise of the option, the employee will recognize long-term capital gains or losses equal to the
difference between the sale price and the exercise price. If the holding periods are not satisfied, then (1) if the sale price
exceeds the exercise price, the employee will recognize a capital gain equal to the excess, if any, of his or her sale price over
the fair market value of the shares on the date of exercise and will recognize ordinary income equal to the difference, if any,
between the lesser of the sale price or the fair market value of the shares on the exercise date and the exercise price or (2)
if the sale price is less than the exercise price, the employee will recognize a capital loss equal to the difference between
the exercise price and the sale price. The Company ordinarily is entitled to a deduction in the same amount and at the same time
as the employee recognizes ordinary income which can occur only when the holding periods are not satisfied.
Tax Consequences
to the Company. In the foregoing cases, the Company generally will be entitled to a deduction at the same time
and in the same amount as a participant recognizes in ordinary income, subject to certain limitations imposed under the Code,
including under Section 162(m) of the Code, described below.
Limitations
on Deductions under Section 162(m) of the Code. Under Section 162(m) of the Code, the Company is
generally prohibited from deducting compensation paid to “covered employees” (generally our Chief Executive Officer,
Chief Financial Officer, and our three other most highly compensated executive officers) in excess of $1 million per person in
any year. However, this limitation does not apply to certain performance-based compensation that is payable pursuant
to a written binding contract that was in effect on November 2, 2017, and is not materially modified after that date.
Section 409A. This
summary of tax consequences assumes that awards will be exempt from, or compliant with, Section 409A of the Code. The Company
intends that awards granted under the 2015 Plan comply with, or otherwise be exempt from, Section 409A of the Code, but makes
no representation or warranty to that effect. Failure to comply with Section 409A of the Code could lead to less favorable
tax treatment.
Medicare Surtax.
A participant’s annual “net investment income”, as defined in Section 1411 of the Code, may be subject to a
3.8% federal surtax. Net investment income may include capital gain and/or loss arising from the disposition of shares issued
pursuant to awards granted under the 2015 Plan. Whether a participant’s net investment income will be subject to this surtax
will depend on the participant’s level of annual income and other factors.
Tax Withholding.
The Company is authorized to deduct or withhold from any award granted or payment made under the 2015 Plan, or require a participant
to remit to the Company, the amount of any withholding taxes due in respect of an award or payment thereunder.
Israeli Income Tax Consequences
The following discussion
is only a summary of certain Israeli income tax consequences of Awards under the 2015 Plan. Because it is a summary, it may not
contain all the information that may be important to each participant or that are based upon a participant’s individual
circumstances. Statements made herein are based upon current provisions of the ITO, and the rules and regulations thereunder,
to which Participants should refer. No assurance can be given that legislative, regulatory or judicial changes will not occur
(possibly with retroactive effect) which would modify the information below. This summary does not purport to address all aspects
of Israeli income taxation and does not describe or address any other foreign tax consequences (other than as expressly provided
herein).
The following discussion
was written on the understanding that it would be used to explain to each Participant the general Israeli income tax consequences
of the Awards under the Plan. The discussion was not written and is not intended to be used by any person, and cannot be used
by any person, for purposes of avoiding penalties under the ITO.
In general, participants
who were granted options under the Capital Gains Track are generally subject to tax at the rate of 25% (in 2019) (no national
insurance and health tax are generally imposed) subject to the fulfillment of all the conditions required under Section 102.
Under the Capital
Gains Track, the options and the underlying Shares must be deposited with a trustee nominated for these purposes for a holding
period of at least 24 months. Under the Capital Gains Track a tax event will be triggered on the earlier of the sale of the options/underlying
Shares or their withdrawal from the trustee. If the tax event is triggered prior to lapse of such holding period, the Participants
will be subject to tax at his marginal tax rate (up to 47% in 2019) (plus national insurance and health tax) while if it is triggered
afterwards the Participants will be subject to tax at the beneficial tax rate of 25% (in 2019) (no national insurance and health
tax are imposed) subject to the fulfillment of all the conditions required under Section 102.
Notwithstanding the
above, if the options are issued by a public company, or the Company’s Shares are registered for trading during the 90 days
following the issuance of the options, the participant will be taxed at a mixed tax rate by dividing the profit from the sale
of the Shares (or the value of the Shares with respect to Section 102 Awards transferred to the participant’s account without
a sale) into two components: (i) the average price of the Shares underlying the Section 102 Awards, during the 30 trading days
prior to the grant date of the Section 102 Awards, or at the end of the 30 trading days after the said listing for trading, as
the case may be, less the exercise price (if any) and other tax deductible expenses concerning the sale, or the Benefit at the
Grant Date, is taxable as ordinary income according to the participant’s marginal tax rate (up to 47% in 2019) and subject
to social security and health taxes, provided that such component does not exceed the value of the benefit on the date of the
sale of the Shares or on the date in which the 102 Awards are transferred to the participant’s account; and (ii) the positive
difference, if any, between the proceeds the participant receives from the sale of the Shares (or the value of the Shares with
respect to Section 102 Awards transferred to the Participant’s account without a sale) and the Benefit at the Grant Date,
or the Benefit Surplus, is subject to , capital gain tax of 25% (in 2019), subject to the fulfillment of all the conditions required
under Section 102. Social security and health taxes are not required to be paid on the Benefit Surplus.
If after the grant
of a Section 102 Awards under the Capital Gains Track, the Participant shall fail to satisfy the requirement described above,
the Participant will be subject to ordinary income tax at the Participant’s marginal income tax rate (up to 47% in 2019)
and social security and health taxes on the taxable income.
Furthermore, beginning
on January 1, 2013, an additional tax liability at the rate of 2% was added to the applicable tax rate on the annual taxable income
of the individuals (whether any such individual is an Israeli resident or non-Israeli resident) exceeding a certain threshold
(and as of 2018, the additional tax will be at a rate of 3% on annual income exceeding NIS 641,880 (NIS 649,560 in 2019) which
amount is linked to the annual change in the Israeli consumer price index), including, but not limited to, dividends, interest
and capital gain.
New Plan Benefits
The granting of awards
under the 2015 Plan is discretionary. Accordingly, the benefits and amounts that will be received or allocated under the 2015
Plan, as amended, or that would have been received or allocated had the 2015 Plan, as amended, been in effect during the last
fiscal year, are not determinable at this time. However, please refer to the information about grants made to our named executive
officers in the last fiscal year described under “Executive Compensation.” Grants made to our non-employee directors
in the last fiscal year are described in “Director Compensation.”
Proposed Resolution
It is proposed that
the following resolution be adopted at the Annual Meeting:
“RESOLVED,
to approve an amendment to the 2015 Plan to increase the aggregate number of shares authorized for issuance under the 2015
Plan by 1,000,000 ordinary shares.”
Vote Required
The affirmative vote
of the holders of a majority of the shares represented at the Annual Meeting in person or by proxy and voting on Proposal 3 is
necessary for the approval of Proposal 3.
Board Recommendation
THE BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE “FOR” THE PROPOSAL 3.
PROPOSAL 4
APPROVE AND RATIFY THE APPOINTMENT OF
OUR INDEPENDENT PUBLIC ACCOUNTANTS
Under the
Companies Law and our articles of association, the shareholders of our Company are authorized to appoint the Company’s independent
auditors. Under our articles of association, our board of directors (or a committee, if it is so authorized by the board) is authorized
to determine the independent auditor’s remuneration. In addition, the approval by our audit committee of the independent
auditor’s re-appointment and remuneration is required under the corporate governance rules of the Nasdaq.
Following the recommendation
by our audit committee and board, it is proposed that Kesselman & Kesselman, Certified Public Accountant (Isr.), independent
registered public accounting firm, a member of PricewaterhouseCoopers International Limited, be reappointed as the independent
auditors of the Company for the period ending at the close of the next annual general meeting. Such auditors served as the Company’s
auditors for fiscal year 2018 and 2017.
We expect that representatives
of Kesselman & Kesselman will be either physically present or available via phone at the Annual Meeting, will be able to make
a statement if they so desire, and will be available to respond to appropriate questions.
The following table presents
the aggregate fees for professional services rendered by such accountants to us during their respective term as our principal
accountants in 2018 and 2017.
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2018
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2017
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(US$ in thousands)
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(US$ in thousands)
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Audit
Fees(1)
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186
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189
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Audit-Related fees(2)
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23
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-
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Tax Fees(3)
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20
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17
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All Other Fees
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-
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-
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Total
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229
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206
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(1)
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Audit fees consists
of services that would normally be provided in connection with statutory and regulatory filings or engagements, including
services that generally only the independent accountant can reasonably provide and includes audit services in connection with
our public offerings in the United States in 2017 and 2018.
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(2)
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Audit-related fees
consist of assurance and related services by the principal accountant that are reasonably related to the performance of the
audit or review of our consolidated financial statements and are not reported under item (1).
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(3)
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Tax fees relate
to tax compliance, planning and advice.
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Pre-Approval Policies and Procedures
Our audit committee provides
assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing,
financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent
accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting.
Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary
to satisfy itself that the accountants are independent of management. Our audit committee has authorized all auditing and non-auditing
services provided by Kesselman and Kesselman during 2018 and 2017 and the fees paid for such services.
Proposed Resolution
It is proposed that the
following resolution be adopted at the Annual Meeting:
“RESOLVED,
to approve and ratify the re-appointment of Kesselman & Kesselman, Certified Public Accountant (Isr.), independent registered
public accounting firm, a member of PricewaterhouseCoopers International Limited as the independent auditors of the Company for
the period ending at the close of the next annual general meeting.”
Vote Required
The affirmative vote of
the holders of a majority of the shares represented at the Annual Meeting in person or by proxy and voting on Proposal 4 is necessary
for the approval of Proposal 4.
THE BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE “FOR” PROPOSAL 4.
REPORT ON FINANCIAL STATEMENTS
At
the Annual Meeting, as required under the Companies Law, we will discuss our consolidated financial statements for the year
ended December 31, 2018. The Company’s annual consolidated financial statements for the year ended December 31, 2018,
which are included in our annual report on Form 10-K for the year ended December 31, 2018, are available on our website at
www.intecpharma.com,.
Audit Committee Report
The audit committee has
reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with management of the
Company. The audit committee has discussed with the independent registered public accounting firm the matters required to be discussed
by the applicable requirements of the Public Company Accounting Oversight Board, or the PCAOB, and the SEC. The audit committee
has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable
requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence
and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on these
reviews and discussions, the audit committee has recommended to the board that the audited financial statements be included in
our Form 10-K for the year ended December 31, 2018.
|
|
William B. Hayes (Chair)
|
|
|
Gil Bianco
|
|
|
Issac Silberman
|
Notwithstanding anything to the contrary set forth in any of
our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings,
including this proxy statement, in whole or in part, the above Report shall not be incorporated by reference into this proxy statement.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets
forth information with respect to the beneficial ownership of our shares as of September 30, 2019 by:
|
|
●
|
each person or entity
known by us to beneficially own 5% or more of our outstanding ordinary shares;
|
|
|
●
|
each of our executive
officers;
|
|
|
●
|
each of our directors;
and
|
|
|
●
|
all of our executive
officers and directors as a group.
|
Applicable percentage
ownership is based on 35,019,479 ordinary shares outstanding as of September 30, 2019. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment
power. Ordinary shares issuable under options or warrants that are exercisable within 60 days after September 30, 2019 are deemed
beneficially owned and such shares are used in computing the percentage ownership of the person holding the options or warrants,
but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The information contained
in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares
in the table does not constitute an admission of beneficial ownership of those shares.
Unless otherwise indicated
below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares, except
to the extent that authority is shared by spouses under community property laws. Unless otherwise indicated, the address of each
beneficial owner is c/o Intec Pharma Ltd., 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel.
We are not owned or controlled,
directly or indirectly, by another corporation or by any foreign government. We are not aware of any arrangement that may, at
a subsequent date, result in a change of control of our Company.
|
|
|
Shares Beneficially Owned
|
|
|
Name of Beneficial Owner
|
|
Ordinary
Shares
|
|
|
Percentage
|
|
|
Persons or entities holding 5% or more our outstanding ordinary shares
|
|
|
|
|
|
|
|
Meitav Dash Investments Ltd.(1)
|
|
|
2,416,322
|
|
|
|
6.9
|
%
|
|
venBio Select Advisor LLC.(2)
|
|
|
2,500,000
|
|
|
|
7.1
|
%
|
|
Dexcel Pharma Technologies Ltd.(3)
|
|
|
5,150,848
|
|
|
|
14.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Executive officers and directors
|
|
|
|
|
|
|
|
|
|
Jeffrey A. Meckler
|
|
|
605,094
|
(4)
|
|
|
1.7
|
%
|
|
John W. Kozarich
|
|
|
376,239
|
(5)
|
|
|
1.1
|
%
|
|
Nadav Navon
|
|
|
198,227
|
(6)
|
|
|
*
|
|
|
Walt A. Linscott
|
|
|
121,667
|
(7)
|
|
|
*
|
|
|
R. Michael Gendreau
|
|
|
145,833
|
(8)
|
|
|
*
|
|
|
Nir Sassi
|
|
|
107,476
|
(9)
|
|
|
*
|
|
|
Anthony J. Maddaluna
|
|
|
65,237
|
(10)
|
|
|
*
|
|
|
Gil Bianco
|
|
|
51,584
|
(11)
|
|
|
*
|
|
|
Issac Silberman
|
|
|
46,584
|
(12)
|
|
|
*
|
|
|
Hila Karah
|
|
|
41,584
|
(13)
|
|
|
*
|
|
|
Roger J. Pomerantz
|
|
|
10,000
|
(14)
|
|
|
*
|
|
|
William B. Hayes
|
|
|
8,333
|
(15)
|
|
|
*
|
|
|
All executive officers and directors as a group (12 persons)
|
|
|
1,777,858
|
(16)
|
|
|
4.9
|
%
|
|
(1)
|
Based in part on
information contained in a Schedule 13G/A filed with the SEC on February 7, 2019 jointly by Meitav Dash Investments Ltd. (“Meitav
Investments”) and Meitav Dash Provident Funds and Pension Ltd. (“Meitav Funds”) The ordinary shares are
beneficially owned by various direct or indirect, majority or wholly-owned subsidiaries of Meitav Investments (the “Subsidiaries”).
Meitav Investments, Meitav Funds and the Subsidiaries disclaim any beneficial ownership of the ordinary shares referred to
herein in excess of their actual pecuniary interest therein and each of Meitav Investments, Meitav Funds and the Subsidiaries
disclaim beneficial ownership of any such ordinary shares. The address of Meitav Investments and Meitav Funds is 30 Derekh
Sheshet Ha-Yamim, Bene-Beraq, Israel.
|
|
(2)
|
Based on information
contained in a Schedule 13G/A filed with the SEC on February 14, 2019 jointly by (i) venBio Select Advisor LLC, (“venBio”),
which provides investment advisory and management services and has acquired our ordinary shares for investment purposes on
behalf of venBio Select Fund LLC, and certain managed accounts and (ii) Dr. Behzad Aghazadeh who serves as the portfolio manager
and controlling person of venBio. The address of venBio and Dr. Aghazadeh is 110 Greene Street, Suite 800, New York, NY 10012.
|
|
(3)
|
Based on information
contained in a Schedule 13G/A filed with the SEC on February 14, 2019 jointly by Dexcel Pharma Technologies Ltd. (“DPT”)
and Dan Oren. Dan Oren is the President and Chief Executive Officer and ultimately the sole shareholder of DPT. The address
of DPT and Mr. Oren is 1 Dexcel Street, Or Akiva, 30600000, Israel.
|
|
(4)
|
Consists of (i)
196,761 ordinary shares, and (ii) 408,333 ordinary shares issuable upon exercise of outstanding options.
|
|
(5)
|
Consists of (i)
151,761 ordinary shares, and (ii) 224,478 ordinary shares issuable upon exercise of outstanding options.
|
|
(6)
|
Consists of (i)
19,456 ordinary shares, and (ii) 178,771 ordinary shares issuable upon exercise of outstanding options, of which 15,625, will
vest within 60 days of September 30, 2019.
|
|
(7)
|
Consists of 121,667
ordinary shares issuable upon exercise of outstanding options, of which 5,000 will vest within 60 days of September 30, 2019.
|
|
(8)
|
Consists of 145,833
ordinary shares issuable upon exercise of outstanding options, of which 20,833 will vest within 60 days of September 30, 2019.
|
|
(9)
|
Consists of 107,476
ordinary shares issuable upon exercise of outstanding options, of which 10,833 will vest within 60 days of September 30, 2019.
|
|
(10)
|
Consists of (i)
53,570 ordinary shares, and (ii) 11,667 ordinary shares issuable upon exercise of outstanding options.
|
|
(11)
|
Consists of (i)
10,000 ordinary shares, and (ii) 41,584 ordinary shares issuable upon exercise of outstanding options.
|
|
(12)
|
Consists of (i)
5,000 ordinary shares, and (ii) 41,584 ordinary shares issuable upon exercise of outstanding options.
|
|
(13)
|
Consists of 41,584
ordinary shares issuable upon exercise of outstanding options.
|
|
(14)
|
Consists of 10,000
ordinary shares issuable upon exercise of outstanding options.
|
|
(15)
|
Consists of 8,333
ordinary shares issuable upon exercise of outstanding options.
|
|
|
|
|
(16)
|
Consists of (i)
436,548 ordinary shares, and (ii) 1,341,310 ordinary shares issuable upon exercise of outstanding options, of which 52,291
will vest within 60 days of days of September 30, 2019.
|
executive
officers
The following table sets
forth information relating to our executive officers as of September 30, 2019.
|
Name
|
|
Age
|
|
Position
|
|
Jeffrey A. Meckler
|
|
53
|
|
Chief Executive
Officer, Vice Chairman of the Board of Directors
|
|
Dr. Nadav Navon
|
|
51
|
|
Chief Operating
Officer
|
|
Walt A. Linscott,
Esq.
|
|
59
|
|
Chief Business Officer
|
|
Nir Sassi
|
|
44
|
|
Chief Financial
Officer
|
|
Dr. R. Michael Gendreau
|
|
64
|
|
Chief Medical Officer
|
Mr. Jeffrey A. Meckler Mr.
Meckler’s biography is included above under the section titled “Proposal 1—Director Nominees.”
Dr. Nadav Navon joined
us in March 2006 and has served as our Chief Operating Officer since July 2017. Between March 2015 and July 2017, Dr. Navon served
as our Executive Vice President of Research & Development and Operations. Before that, he served as our Vice President of
Research & Development and Operations from May 2013 until March 2015. Prior to his service with us, Dr. Navon headed the analytical
and quality assurance operations at Sharon Laboratories Ltd., a chemical company that develops and manufactures raw materials
for the pharmaceutical, cosmetic and food industries, from 2001 to 2006. Prior to that, Dr. Navon led a number of research and
development projects in the Negev’s Nuclear Research Center. Dr. Navon has a Ph.D. in inorganic and analytical chemistry,
and an MBA and a BSc in chemistry, each from Ben-Gurion University in Be’er Sheva, Israel.
Walt A. Linscott,
Esq. joined us in October 2017 and has served as our Chief Business Officer since July 2018. Previously, from October
2017 to July 2018, Mr. Linscott served as our Chief Administrative Officer. Prior to his service with us, Mr. Linscott co-founded
a global consulting enterprise in October 2014 providing strategic advice to developing companies and most recently served as
the President and Chief Operating Officer of Treiber Therapeutics, Inc. from March 2017 to October 2017. Mr. Linscott also has
held senior level executive positions at public and private medical device and pharmaceutical companies including Cocrystal Pharma,
Inc., from July 2015 to March 2017, Carestream Health, Inc., from January 2011 to January, 2015 and Solvay Pharmaceuticals, Inc.,
from 2001 to 2005. In addition to this experience, he was an associate and partner at Thompson Hine LLP from 1990 to 2001, and
again as a partner from 2005 to 2010 where he founded the firm’s Atlanta, Georgia office, served as Partner in Charge and
Chair of the firm’s Life Science Practice Group. Mr. Linscott holds a Postgraduate Diploma in Global Business from the University
of Oxford and a Postgraduate Diploma in Entrepreneurship from Cambridge University. He earned a bachelor’s degree from Syracuse
University and a Juris Doctor from the University of Dayton School of Law. Mr. Linscott served on active duty as an Officer in
the United States Marine Corps prior to attending law school.
Nir Sassi has
served as our Chief Financial Officer since August 2016. Prior to serving as our Chief Financial Officer, Mr. Sassi served as
our VP Finance commencing in January 2015 and as our Chief Financial Officer between March 2010 and January 2015. Prior to his
service with us, Mr. Sassi served as a Senior Manager at PricewaterhouseCoopers Israel, an accounting firm, from 2002 until 2010,
including two years relocation to the PricewaterhouseCoopers New York office. Mr. Sassi is a certified public accountant in Israel
and has a bachelor’s degree in economics and accounting from Ben Gurion University in Be’er Sheva, Israel.
Dr. R. Michael Gendreau has
served as our Chief Medical Officer since February 2018. In 2011, prior to joining Intec, Dr. Gendreau founded Gendreau Consulting,
LLC, a consulting firm providing strategic advice and operational leadership on the design and management of clinical programs,
strategic planning, and technology assessments for emerging pharmaceutical, diagnostic, and medical device companies. He has served
on various scientific advisory boards, executive strategic planning boards, and Data Safety Monitoring Boards. Prior to his consulting
career, Dr. Gendreau served from 1996 until 2011 as Chief Medical Officer at Cypress Bioscience, Inc., a clinical-stage biotech
company developing therapies for central nervous system disorders. Prior to Cypress Bioscience, Dr. Gendreau was Chief Medical
Officer of Microprobe Corporation from 1991 to 1994. Additionally, he has served as Chief Medical Officer/Therapeutic Area Head
at other institutions, including Battelle Memorial Institute. Dr. Gendreau received his B.S. in Chemistry from Ohio University,
and earned his M.D./Ph.D. from The Ohio State University.
EXECUTIVE
COMPENSATION
Our named executive officers
for 2018, which consist of our principal executive officer and the next two most-highly compensated executive officers are:
|
|
●
|
Walt. A. Linscott, Esq., Chief Business Officer;
and
|
|
|
●
|
Dr. Michael Gendreau, Chief Medical Officer.
|
Summary Compensation Table
The following table sets
forth all of the compensation awarded to, earned by or paid to our named executive officers during 2017 and 2018.
|
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Awards
($)
|
|
|
Option Awards(1)
($)
|
|
|
Non-equity Incentive Plan
Compensation
|
|
|
All Other Compensation
($)
|
|
|
Total
($)
|
|
|
Jeffrey Meckler,
|
|
2018
|
|
|
500,000
|
|
|
|
213,750
|
|
|
|
-
|
|
|
|
658,229
|
|
|
|
-
|
|
|
|
48,000
|
(4)
|
|
|
1,419,979
|
|
|
CEO(2)
|
|
2017
|
|
|
143,286
|
(2)
|
|
|
385,000
|
|
|
|
-
|
|
|
|
419,143
|
|
|
|
-
|
|
|
|
4,000
|
(4)
|
|
|
951,429
|
|
|
Walt A. Linscott, Esq.,
|
|
2018
|
|
|
300,000
|
|
|
|
130,613
|
|
|
|
-
|
|
|
|
254,884
|
|
|
|
-
|
|
|
|
48,000
|
(5)
|
|
|
733,497
|
|
|
Chief Business Officer
|
|
2017
|
|
|
57,954
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
33,140
|
|
|
|
-
|
|
|
|
12,000
|
(5)
|
|
|
178,094
|
|
|
Dr. Michael Gendreau,
|
|
2018
|
|
|
350,483
|
(3)
|
|
|
111,008
|
|
|
|
-
|
|
|
|
408,265
|
|
|
|
-
|
|
|
|
12,081
|
(6)
|
|
|
881,837
|
|
|
Chief Medical Officer(3)
|
|
2017
|
|
|
182,325
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
182,325
|
|
|
(1)
|
Represents the share-based
compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2018 and 2017, based
on the option’s fair value, calculated in accordance with accounting guidance for equity-based compensation. For a discussion
of the assumptions used in reaching this valuation, see note 7 to our consolidated audited financial statements included in
Item 8. Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018.
|
|
(2)
|
Mr. Meckler was
appointed to act as our Vice Chairman in April 2017 and as our chief executive officer in July 2017. The salary for Mr. Jeffrey
Meckler in 2017 includes $112,532 of director fees.
|
|
(3)
|
Dr. Gendreau acted
as our consultant since July 2017 until January 2018 and was appointed to act as our Chief Medical Officer in February 2018.
The salary for Dr. Michael Gendreau in 2018 includes $57,150 of consulting fees and in 2017 is comprised entirely from consulting
fees.
|
|
(4)
|
For 2018, referenced
amount is for employer contribution to 401K plan and for life insurance and other medical premiums. For 2017, referenced amount
is for life insurance, and other medical premiums.
|
|
(5)
|
For 2018 and 2017,
referenced amount is for life insurance and other medical premiums.
|
|
(6)
|
Referenced amount
is for life insurance and other medical premiums.
|
For additional information
on the compensation granted to our five most highly compensated office holders (as defined in the Companies Law) during or with
respect to the year ended December 31, 2018 and 2017, please see Item 11 of our annual report on Form 10-K for the year ended
December 31, 2018.
Outstanding
Equity Awards at Fiscal Year-End
The following table sets
forth information concerning outstanding option awards as of December 31, 2018, for each named executive officer:
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
Number of Securities Underlying
Unexercised Options Exercisable
(#)
|
|
|
Number of Securities Underlying
Unexercised Options Unexercisable
(#)
|
|
|
Option Exercise Price
($)
|
|
|
Option Expiration Date
|
|
Jeffrey Meckler, CEO
|
|
04/10/17(1)
|
|
|
40,000
|
|
|
|
80,000
|
|
|
|
5.32
|
|
|
04/10/2027
|
|
|
|
05/01/17(2)
|
|
|
65,000
|
|
|
|
-
|
|
|
|
5.32
|
|
|
05/01/2027
|
|
|
|
12/11/17(3)
|
|
|
126,667
|
|
|
|
253,333
|
|
|
|
6.70
|
|
|
12/11/2027
|
|
|
|
06/28/18(4)
|
|
|
-
|
|
|
|
100,000
|
|
|
|
4.44
|
|
|
06/28/2025
|
|
Walt A. Linscott, Esq., Chief Business Officer
|
|
10/23/17(5)
|
|
|
20,000
|
|
|
|
40,000
|
|
|
|
8.56
|
|
|
10/23/2027
|
|
|
|
12/11/17(6)
|
|
|
46,667
|
|
|
|
93,333
|
|
|
|
8.56
|
|
|
12/11/2027
|
|
Dr. Michael Gendreau, Chief Medical Officer
|
|
02/01/18(7)
|
|
|
-
|
|
|
|
250,000
|
|
|
|
6.10
|
|
|
02/01/2025
|
|
(1)
|
The options vest
over a period of three years from April 10, 2017, 33.3% on each anniversary of such date, ending April 10, 2020.
|
|
(2)
|
The options vest
over a period of nine months from May 1, 2017, 11.1% every month after such date, ending January 31, 2018.
|
|
(3)
|
The options vest
over a period of three years from December 11, 2017, 33.3% on the first anniversary of such date and 8.33% every three months
thereafter, ending December 11, 2020.
|
|
(4)
|
The options vest
over a period of three years from June 28, 2018, 33.3% on the first anniversary of such date and 8.33% every three months
thereafter, ending June 28, 2021.
|
|
(5)
|
The options vest
over a period of three years from October 23, 2017, 33.3% on the first anniversary of such date and 8.33% every three months
thereafter, ending October 23, 2020.
|
|
(6)
|
The options vest
over a period of three years from December 11, 2017, 33.3% on the first anniversary of such date and 8.33% every three months
thereafter, ending December 11, 2020.
|
|
(7)
|
The options vest
over a period of three years from February 1, 2018, 33.3% on the first anniversary of such date and 8.33% every three months
thereafter, ending February 1, 2021.
|
Employment Agreements of Chairman and
Named Executive Officers
Our employees are employed
under the terms prescribed in their respective personal contracts, in accordance with the decisions of our management. Under these
employment contracts, the employees are entitled to the social benefits prescribed by law and as otherwise provided in their personal
contracts. These employment contracts each contain provisions standard for a company in our industry regarding non-competition,
confidentiality of information and assignment of inventions. Under current applicable employment laws, we may not be able to enforce
covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of
our former employees.
Services Agreement with Chairman of
the Board of Directors, Dr. John W. Kozarich
Dr. Kozarich was elected
to serve as our chairman of the board of directors in May 2016, and started his tenure on July 1, 2016. Under Dr. Kozarich’s
service agreement, which expired on June 30, 2019, he was entitled to an annual fee of $80,000, paid in four quarterly payments,
as well as to reimbursement for out-of-pocket expenses incurred in connection with his services as chairman of the board of directors.
Dr. Kozarich’s service agreement was for a term of three years and could be terminated by either us or Dr. Kozarich upon
90 days’ prior written notice, or immediately if Dr. Kozarich no longer acts as our chairman of the board of directors.
Dr. Kozarich’s agreement also included customary non-disclosure, non-compete and ownership assignment of intellectual property
undertakings.
Employment Agreement with Vice Chairman
of the Board of Directors and Chief Executive Officer, Mr. Jeffrey A. Meckler
Mr. Meckler has served
as our Vice Chairman of the Board since April 2017 and has served as Chief Executive Officer since July 2017. On December 11,
2017, Mr. Meckler entered into an employment with our wholly owned subsidiary, Intec Pharma, Inc., or Intec US, which superseded
a services agreement that was previously entered into on August 29, 2017.
Under Mr. Meckler’s
employment agreement, he is currently entitled to receive a base salary at the annual rate of $540,000. In addition, Mr. Meckler
is entitled to (i) paid holidays as generally provided by the Company to its personnel and (ii) five weeks of paid vacation each
calendar year.
Mr. Meckler is also entitled
to an annual bonus. For each calendar year beginning on or after January 1, 2018, during which Mr. Meckler’s term of employment
continues through December 31 of each such year, Mr. Meckler will be entitled to receive an annual bonus of up to 50% of his base
salary. The annual bonus will be paid, subject to the achievement by Mr. Meckler of certain goals to be set by our board of directors
after consultation with Mr. Meckler and further subject to the terms of our Compensation Policy then in effect, as approved by
our shareholders.
The agreement with Mr.
Meckler will terminate upon the earliest to occur of (i) a termination by the Company without cause, subject to 30 days’
prior notice, (ii) immediate termination by the Company for cause (subject to a reasonable cure period, if curable), (iii) a termination
by Mr. Meckler for good reason, subject to 30 days’ prior notice (which will also serve as a cure period) to be provided
to the Company within 60 days of the occurrence of the event that constitutes good reason, (iv) a termination by Mr. Meckler without
good reason, subject to 90 days’ prior notice, (v) Mr. Meckler’s death, or (vi) a termination by the Company or Mr.
Meckler by reason of Mr. Meckler’s disability.
Upon termination by the
Company without cause, Mr. Meckler will be entitled to a severance amount payable in six equal monthly installments, which will
be equal to (i) 50% of Mr. Meckler’s annual base salary as in effect prior to the termination date, (ii) 1/12th of Mr. Meckler’s
annual bonus for each completed month of such fiscal year provided the termination date is following June 30 of such fiscal year,
and (iii) an amount equal to Mr. Meckler’s cost of continued health insurance coverage for six months. In addition, any
options that have not previously vested will become vested and exercisable immediately prior to such termination.
If Mr. Meckler’s
employment is terminated by the Company without cause or by Mr. Meckler for good reason during the one year period immediately
following a change in control, then Mr. Meckler will be entitled to receive a lump-sum payment equal of up to two times the severance
amount. In addition, subject to Mr. Meckler’s continued employment by us, in the event of (i) a change in control or (ii)
the entry into a “Material Agreement” (as will be defined by our compensation committee and the board of directors)
an aggregate of 605,000 options granted to Mr. Meckler that have not previously vested will become vested and exercisable immediately
prior to such event.
Mr. Meckler’s employment
agreement includes additional customary provisions, such as non-solicitation, non-competition, confidentiality, intellectual property
assignment, participation in our medical and similar insurance plans and reimbursement of expenses.
Under the services agreement
which was effective from May 1, 2017 through December 11, 2017, Mr. Meckler was paid $112,532 in fees and a cash bonus of $250,000.
On January 22, 2019, our
board of directors, upon recommendation of the compensation committee, approved the payment of a 2018 cash performance bonus of
$213,750 to Mr. Meckler.
On April 4, 2019 our shareholders
approved revised terms of employment of Mr. Meckler, as our Chief Executive Officer, such that his annual base salary shall be
$540,000, effective January 1, 2019, and further approved the grant to Mr. Meckler of 125,000 options. The foregoing options have
an exercise price of $7.64 per share, a seven-year term and, subject to Mr. Meckler’s continued employment with us on the
applicable vesting date, vest with respect to one-third of the ordinary shares on the first anniversary of the date of grant and
with respect to the balance of the ordinary shares shall vest over two years in eight equal quarterly installments following the
first anniversary of the date of grant.
Employment Agreement with Chief Business
Officer, Walt Addison Linscott, Esq.
Mr. Linscott has served
as our Chief Administration Officer from October 2017 until July 2018 and as Chief Business Officer since July 9, 2018. On October
23, 2017, Mr. Linscott and Intec US entered into an employment agreement. Mr. Linscott is currently entitled to receive a base
salary at the annual rate of $340,000. In addition, Mr. Linscott is entitled to (i) paid holidays as generally provided by the
Company to its personnel and (ii) four weeks of paid vacation each calendar year.
Mr. Linscott is also entitled
to an annual bonus. He received a bonus of $75,000 upon entering into the employment agreement. Going forward, for each calendar
year beginning on or after January 1, 2018, during which Mr. Linscott’s term of employment continues through December 31
of each such year, Mr. Linscott will be entitled to receive an annual bonus of up to 50% of his base salary. The annual bonus
will be paid, subject to the achievement by Mr. Linscott of certain goals to be set by our board of directors after consultation
with Mr. Linscott and further subject to the terms of our Compensation Policy then in effect, as approved by our shareholders.
The agreement with Mr.
Linscott will terminate upon the earliest to occur of (i) a termination by the Company without cause, subject to 30 days’
prior notice, (ii) immediate termination by the Company for cause (subject to a reasonable cure period, if curable), (iii) a termination
by Mr. Linscott for good reason, subject to 30 days’ prior notice (which will also serve as a cure period) to be provided
to the Company within 60 days of the occurrence of the event that constitutes good reason, (iv) a termination by Mr. Linscott
without good reason, subject to 90 days’ prior notice, (v) Mr. Linscott’s death, or (vi) a termination by the Company
or Mr. Linscott by reason of Mr. Linscott’s disability.
Upon termination by the
Company without cause or by Mr. Linscott for good reason, Mr. Linscott will be entitled to a severance of 25% of Mr. Linscott’s
annual base salary and an amount equal to Mr. Linscott’s cost of continued health insurance coverage for three months.
If Mr. Linscott’s
employment is terminated by the Company without cause or by Mr. Linscott for good reason during the one year period immediately
following a change in control, then Mr. Linscott will be entitled to receive a lump-sum payment equal to the severance amount.
In addition, subject to Mr. Linscott’s continued employment by us, in the event of (i) a change in control or (ii) the entry
into a “Material Agreement” (as will be defined by our compensation committee and the board of directors) 400,000 options
granted to Mr. Linscott that have not previously vested will become vested and exercisable immediately prior to such event.
Mr. Linscott’s employment
agreement includes additional customary provisions, such as non-solicitation, non-competition, confidentiality, intellectual property
assignment, participation in our medical and similar insurance plans and reimbursement of expenses.
On January 22, 2019, our
board of directors, upon recommendation of the compensation committee, approved the payment of a 2018 cash performance bonus of
$130,613, the grant of 90,000 options to purchase ordinary shares pursuant to the 2015 Plan, an annual 2019 base salary of $340,000,
and an annual discretionary bonus target for 2019 of 50% of annual base salary to Mr. Linscott. The foregoing options have an
exercise price of $7.268 per share, a seven-year term and, subject to Mr. Linscott’s continued employment with us on the
applicable vesting date, vest with respect to one-third of the ordinary shares on the first anniversary of the date of grant and
with respect to the balance of the ordinary shares shall vest over two years in eight equal quarterly installments following the
first anniversary of the date of grant.
On September 13, 2019,
our board of directors, upon recommendation of the compensation committe, approved an executive retention award to Mr. Linscott
of 200,000 options to purchase ordinary shares of the Company pursuant to the 2015 Plan and a guaranteed bonus of 100% of his
target annual bonus (i.e. $170,000). The foregoing options have an exercise price of $0.90 per share, have a seven-year term and,
subject to Mr. Linscott’s continued employment with us on the applicable vesting date, vest with respect to one-third of
the ordinary shares on the first anniversary of the date of grant and with respect to the balance of the ordinary shares shall
vest over two years in eight equal quarterly installments following the first anniversary of the date of grant.
Employment Agreement with Chief Medical
Officer, Michael Gendreau, MD.
Dr. Michael Gendreau has
served as our Chief Medical Officer since February 1, 2018. Under an employment agreement dated February 1, 2018, entered into
between Dr. Gendreau and Intec US, Dr. Gendreau is employed on a part-time basis (80% position) and devotes four days per week.
Dr. Gendreau is currently entitled to receive a base salary at the annual rate of $336,000. In addition, Dr. Gendreau is entitled
to (i) paid holidays as generally provided by the Company to its personnel and (ii) four weeks of paid vacation each calendar
year.
Dr. Gendreau is also entitled
to an annual bonus. For each calendar year beginning on or after January 1, 2018, during which Dr. Gendreau’s term of employment
continues through December 31 of each such year, Dr. Gendreau will be entitled to receive an annual bonus of up to 40% of his
base salary. The annual bonus will be paid, subject to the achievement by Dr. Gendreau of certain goals to be set by our board
of directors and subject to the terms of our Compensation Policy then in effect, as approved by our shareholders.
The agreement with Dr.
Gendreau will terminate upon the earliest to occur of (i) a termination by the Company without cause, subject to 30 days’
prior notice, (ii) immediate termination by the Company for cause (subject to a reasonable cure period, if curable), (iii) a termination
by Dr. Gendreau for good reason, subject to 30 days’ prior notice (which will also serve as a cure period) to be provided
to the Company within 60 days of the occurrence of the event that constitutes good reason, (iv) a termination by Dr. Gendreau
without good reason, subject to 90 days’ prior notice, (v) Dr. Gendreau’s death, or (vi) a termination by the Company
or Dr. Gendreau by reason of Dr. Gendreau’s disability.
Upon termination by the
Company without cause or by Dr. Gendreau for good reason, Dr. Gendreau will be entitled to a severance of 25% of Dr. Gendreau’s
annual base salary and an amount equal to Dr. Gendreau’s cost of continued health insurance coverage for twelve months.
If Dr. Gendreau’s
employment is terminated by the Company without cause or by Dr. Gendreau for good reason during the one year period immediately
following a change in control, then Dr. Gendreau will be entitled to receive a lump-sum payment equal to the severance amount.
In addition, subject to Dr. Gendreau’s continued employment by us, in the event of (i) a change in control or (ii) the entry
into a “Material Agreement” (as will be defined by our compensation committee and the board of directors) 250,000
options granted to Dr. Gendreau under his employment agreement that have not previously vested will become vested and exercisable
immediately prior to such event.
Dr. Gendreau’s employment
agreement includes additional customary provisions, such as non-solicitation, confidentiality, intellectual property assignment,
participation in our medical and similar insurance plans and reimbursement of expenses.
On January 22, 2019, our
board of directors, upon recommendation of the compensation committee, approved the payment of a 2018 cash performance bonus of
$111,008, the grant 110,000 options to purchase ordinary shares pursuant to the 2015 Plan, an annual 2019 base salary of $336,000,
and an annual discretionary bonus target for 2019 of 40% of annual base salary to Dr. Gendreau. The foregoing options have an
exercise price of $7.268 per share, a seven-year term and, subject to Dr. Gendreau’s continued employment with us on the
applicable vesting date, vest with respect to one-third of the ordinary shares on the first anniversary of the date of grant and
with respect to the balance of the ordinary shares shall vest over two years in eight equal quarterly installments following the
first anniversary of the date of grant.
Current Compensation Policy
As approved by our shareholders,
and as required by the Companies Law, we have adopted a compensation policy regarding the terms of office and employment of its
“office holders” (as defined under the Companies Law, which includes directors, the CEO, other executive officers
and any other managers directly subordinate to the CEO), including cash compensation, equity-based awards, releases from liability,
indemnification and insurance, severance and other benefits. Each of the named executive officers is an “office holder”
within the meaning of the Companies Law. The compensation policy is reviewed from time to time by our compensation committee and
our board of directors to ensure its appropriateness, and is required to be brought at least once every three years to our shareholders
for reassessment and approval.
Our most recent compensation
policy was last approved at our annual general meeting of shareholders that was held in May 2017 and certain amendments to the
compensation policy were approved by our shareholders in December 2017 and June 2018.
The compensation policy
must be based on certain considerations, must include certain provisions and needs to reference certain matters as set forth in
the Companies Law. The compensation policy must be approved by the board of directors after considering the recommendations of
the compensation committee. In addition, the compensation policy needs to be approved by our shareholders by a simple majority,
provided that (i) such majority includes a majority of the votes cast by the shareholders who are not controlling shareholders
and who do not have a personal interest in the matter, present and voting (abstentions are disregarded) or (ii) the votes cast
by shareholders who are not controlling shareholders and who do not have a personal interest in the matter who were present and
voted against the compensation policy, constitute 2% or less of the voting power of the company. Such majority determined in accordance
with clause (i) or (ii) is hereinafter referred to as the “Compensation Majority.”
To the extent a compensation
policy is not approved by shareholders at a duly convened shareholders meeting or by the Compensation Majority, the board of directors
of a company may override the resolution of the shareholders following a re-discussion of the matter by the board of directors
and the compensation committee and for specified reasons, and after determining that despite the rejection by the shareholders,
the adoption of the compensation policy is in the best interest of the company. A compensation policy that is for a period of
more than three years must be approved in accordance with the above procedure once in every three years.
Notwithstanding the above,
the amendment of existing terms of office and employment of office holders (other than directors or controlling shareholders and
their relatives, who serve as office holders) requires the sole approval of the compensation committee, if such committee determines
that the amendment is not material in relation to its existing terms.
The compensation policy
must serve as the basis for decisions concerning the consolidated financial terms of employment or engagement of office holders,
including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or
engagement. The compensation policy must relate to certain factors, including advancement of the company’s objectives, the
company’s business plan and its long-term strategy, and creation of appropriate incentives for office holders. It must also
consider, among other things, the company’s risk management, size and the nature of its operations. The compensation policy
must furthermore consider the following additional factors:
|
|
●
|
the knowledge, skills,
expertise and accomplishments of the relevant office holder;
|
|
|
●
|
the office holder’s
roles and responsibilities and prior compensation agreements with him or her;
|
|
|
●
|
the ratio between
the cost of the terms of employment of an office holder and the cost of the compensation of the other employees of the company,
including those employed through manpower companies, in particular the ratio between such cost and the average and median
compensation of the other employees of the company, as well as the impact such disparities may have on the work relationships
in the company;
|
|
|
●
|
the possibility
of reducing variable compensation, if any, at the discretion of the board of directors; and the possibility of setting a limit
on the exercise value of non-cash variable equity-based compensation; and
|
|
|
●
|
as to severance
compensation, if any, the period of service of the office holder, the terms of his or her compensation during such service
period, the company’s performance during that period of service, the person’s contribution towards the company’s
achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the
company.
|
The compensation policy
must also include the following principles:
|
|
●
|
the link between
variable compensation and long-term performance and measurable criteria;
|
|
|
●
|
the relationship
between variable and fixed compensation, and the ceiling for the value of variable compensation;
|
|
|
●
|
the conditions under
which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon
which such compensation was based was inaccurate and was required to be restated in the company’s consolidated financial
statements;
|
|
|
●
|
the minimum holding
or vesting period for variable, equity-based compensation; and
|
|
|
●
|
maximum limits for
severance compensation.
|
Potential Payments Upon Termination
or Change in Control
See “Executive Compensation—Employment
Agreements of Chairman and Named Executive Officers”.
Our compensation policy
provides that we may provide certain benefits to our office holders (which includes directors, the CEO, other executive officers
and any other managers directly subordinate to the CEO) upon termination or change in control. Under the compensation policy,
office holders may be awarded, subject to the approvals required in each case under the Companies Law (i) severance pay in full
(other than in the case of termination for cause), (ii) advance notice of termination of up to six months during which the office
holder would be eligible to receive bonuses with respect to this period and would also continue to accrue vesting of options awarded,
(iii) a bonus upon termination in return for a commitment not to compete with us in an amount equal to two months’ salary
for each three months’ non-compete, up to a maximum of twelve months’ salaries, and (iv) a retirement bonus of up
to six months’ salary for office holders that served for over five years or the CEO and two months’ salary for an
office holder that served for less than five years but more than three years. In addition, to the foregoing, in the case of a
change in control, an office holder may be entitled to the following (i) accelerated vesting of outstanding options, (ii) an extension
in the exercise period of options for up to six months from termination, (iii) up to 12 months’ base salary and benefits
from date of termination, and (iv) a cash bonus of up to three monthly salaries.
DIRECTOR COMPENSATION
The following table provides
certain information concerning the compensation for services rendered in all capacities by each non-employee director serving
on our board during the year ended December 31, 2018, other than Mr. Meckler, our Chief Executive Officer, who did not receive
additional compensation for his services as director and whose compensation is set forth in the Summary Compensation Table found
elsewhere in this proxy statement.
|
Name
|
|
Fees earned
($)
|
|
|
Stock awards
($)
|
|
|
Option awards
($) (1)
|
|
|
Non-equity incentive plan
compensation
($)
|
|
|
Nonqualified deferred compensation
earnings
($)
|
|
|
All other compensation
($)
|
|
|
Total
($)
|
|
|
Dr. John W. Kozarich
|
|
|
80,000
|
|
|
|
-
|
|
|
|
79,257
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159,257
|
|
|
Gil Bianco
|
|
|
49,516
|
|
|
|
-
|
|
|
|
18,857
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
68,373
|
|
|
Hila Karah
|
|
|
52,736
|
|
|
|
-
|
|
|
|
19,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,886
|
|
|
Issac Silberman
|
|
|
53,530
|
|
|
|
-
|
|
|
|
18,857
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72,387
|
|
|
Anthony J. Maddaluna
|
|
|
44,922
|
|
|
|
-
|
|
|
|
24,329
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,251
|
|
|
Roger J. Pomerantz(2)
|
|
|
32,076
|
|
|
|
-
|
|
|
|
18,139
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,215
|
|
|
William B. Hayes(3)
|
|
|
27,500
|
|
|
|
-
|
|
|
|
12,054
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,554
|
|
|
(1)
|
Represents the share-based
compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2018 and 2017, based
on the option’s fair value, calculated in accordance with accounting guidance for equity-based compensation. For a discussion
of the assumptions used in reaching this valuation, see note 7 to our consolidated audited financial statements included in
Item 8. Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018.
|
|
(2)
|
Roger Pomerantz
was appointed to our board of directors effective March 22, 2018.
|
|
(3)
|
William Hayes was
appointed to our board of directors effective June 28, 2018.
|
Our independent, non-employee
directors (other than our chairman) receive a yearly retainer of US$45,000 with an additional payment of US$7,500 (or $15,000
for the chairperson) per membership at the audit committee, $6,000 (or $10,000 for the chairperson) per membership at the compensation
committee and $5,000 (or $7,500 for the chairperson) per membership at the nominating and governance committee. Upon first becoming
a member of the board (whether appointed by the board or elected by the shareholders) and on each anniversary thereafter (each
is referred to below as the “date of grant”), a director is awarded a grant of options to purchase 20,000 ordinary
shares of the Company, provided the director is still in office at the time of the grant and vesting of the option. The options
have the following terms: (i) the options vest over a period of three (3) years, 1/3 of which vest on the first anniversary date
of the grant, and the additional 2/3 vest in eight (8) quarterly installments, (ii) the term of the options is seven (7) years
after the grant date, unless they have been exercised or cancelled in accordance with the Plan, and (iii) the exercise price of
each option is equal to the average price of our ordinary shares on Nasdaq in the last 30 days prior to the date of grant, but,
with respect to U.S. taxpayers, not less than the fair market value under Section 409A of the Code.
EQUITY COMPENSATION
PLANS
We maintain the 2005 Share
Option Plan, or the 2005 Plan, which was adopted by our board of directors on September 19, 2005, that provides for granting options
to our directors, officers, employees, consultants, advisers and service providers. As of December 31, 2018, the 2005 Plan has
expired, however 295,452 options that were previously granted under the 2005 Plan are still outstanding and remain subject to
its terms and conditions. Such options will remain outstanding until the earlier of their exercise or expiration in accordance
with the terms of the 2005 Plan and the applicable grant agreement. In addition, as of December 31, 2018, we had outstanding options
to purchase 8,035 ordinary shares that were issued to consultants outside of the 2005 Plan; all of these options are vested and
outstanding. Of such outstanding options, options to purchase 126,093 ordinary shares were vested as of December 31, 2018, with
a weighted average exercise price of NIS 42.1 per share and will expire between 2019 and 2020.
The 2005 Plan permitted
options to be awarded to Participants (as such term is defined in the 2005 Plan) pursuant to Section 102 of the Israeli Income
Tax Ordinance (New Version) 1961, or the Ordinance, and Section 3(i) of the Ordinance, based on entitlement and compliance with
the terms for receiving options under these sections of the Ordinance. Section 102 of the Ordinance provides to employees, directors
and officers who are not controlling shareholders (i.e., such persons are not deemed to hold 10% of the company’s share
capital, or to be entitled to 10% of the company’s profits or to appoint a director to the company’s board of directors)
and are Israeli residents, favorable tax treatment for compensation in the form of shares or options issued or granted, as applicable,
to a trustee under the “capital gains track” for the benefit of the applicable employee, director or officer and are
(or were) to be held by the trustee for at least two years after the date of grant or issuance. Options granted under Section
102 of the Ordinance will be deposited with a trustee appointed by the company in accordance with Section 102 of the Ordinance
and the relevant income tax regulations and guidelines, and will be granted in the employee income track or the capital gains
track. The 2005 Plan is managed by our board of directors or any other committee or person that our board of directors authorizes
for this purpose. According to our board of directors’ resolution of September 19, 2005, the options granted under Section
102 of the Ordinance were granted under the capital gains track. The 2005 Plan also permitted us to grant options to U.S. residents,
which may qualify as “incentive stock options” within the meaning of Section 422 of the Code and to residents of other
jurisdictions.
Options granted under
the 2005 Plan are subject to applicable vesting schedules and generally for all awards granted after May 27, 2010, expire six
years from the grant date (however, generally, awards granted prior to such date, expire ten years from the grant date).
Upon the termination of
a Participant’s engagement with us for any reason other than death, retirement, disability or due cause, all unvested options
allocated will automatically expire 90 days after the termination, unless expired earlier due to their term. If the Participant’s
engagement was terminated for cause (as defined in the 2005 Plan), the Participant’s right to exercise any unexercised options,
awarded and allocated in favor of such Participant, whether vested or not, will immediately cease and expire as of the date of
such termination. If the Participant dies, retires or is disabled, any vested but unexercised options will automatically expire
12 months from the termination of the engagement, unless expired earlier due to their term.
In the event of (i) the
sale of all or substantially all of our assets; (ii) a sale (including an exchange) of all or substantially all of our share capital;
or (iii) a merger, consolidation or like transaction of ours with or into another corporation, then, subject to obtaining the
applicable approvals of the Israeli tax authorities, the board of directors in its sole discretion shall resolve: (a) if and how
any unvested options shall be canceled, replaced or accelerated; (b) if and how any vested options (including options with respect
to which the vesting period has been accelerated according to the foregoing) shall be exercised, replaced and/or sold by a trustee
or us (as the case may be) on the behalf of the respective Israeli Participants; and (c) how any underlying shares issued upon
exercise of the options and held by a trustee on behalf any Israeli Participants shall be replaced and/or sold by such trustee
on behalf of the Israeli Participants.
On January 6, 2016, our
board of directors adopted the 2015 Plan. Originally, the maximum number of ordinary shares reserved for issuance under the 2015
Plan was 700,000, subject to future adjustments. On July 25, 2016, the board of directors increased the aggregate number of shares
issuable under the 2015 Plan by 700,000 shares, another increase by 2,100,000 was approved by the general meeting of our shareholders
on December 11, 2017 and another increase by 1,000,000 was approved by the general meeting of our shareholders on June 28, 2018.
In connection with the aforementioned increase of 2016, we did not obtain shareholder approval as required under Nasdaq Listing
Rules and instead followed home practice rules that do not require such approval. Similar to the 2005 Plan, the 2015 Plan permits
options to be awarded to Participants (as such term is defined in the 2015 Plan) pursuant to Section 102 of the Ordinance and
Section 3(i) of the Ordinance, based on entitlement and compliance with the terms for receiving options under these sections of
the Ordinance. The 2015 Plan also permits us to grant options to U.S. residents, which may qualify as “incentive stock options”
within the meaning of Section 422 of the Code, and to residents of other jurisdictions.
Options under the 2015
Plan are subject to applicable vesting schedules and will generally expire up to ten years from the grant date.
Upon the termination of
a Participant’s engagement with us for any reason other than death, retirement, disability or due cause, any vested but
unexercised options will automatically expire 90 days after termination, unless earlier expired due to their term, and all unvested
options will expire upon the date of termination. If the Participant’s engagement was terminated for cause (as defined in
the 2015 Plan), the Participant’s right to exercise any unexercised options, awarded and allocated in favor of such Participant,
whether vested or not, will immediately cease and expire as of the date of such termination. If the Participant dies, retires
or is disabled, any vested but unexercised options will automatically expire 12 months from the termination of the engagement,
unless expired earlier due to their term and all unvested options will expire upon the date of termination.
As of December 31, 2018,
outstanding awards under the 2015 Plan totaled 3,138,183 ordinary shares and an additional 1,343,593 awards were available for
grant. Of the 3,138,183 outstanding options, options to purchase 879,529 ordinary shares were vested as of December 31, 2018,
with a weighted average exercise price of $5.48 per share and will expire between 2024 and 2027.
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides
certain aggregate information with respect to our ordinary shares that may be issued under our equity compensation plans in effect
as of December 31, 2018.
|
Plan Category
|
|
Number of securities to be
issued upon exercise of outstanding options, warrants and rights(1)
|
|
|
Weighted-average exercise
price of outstanding options, warrants and rights
|
|
|
Number of securities remaining
available for future issuance under equity compensation plans (excluding securities reflected in first column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Equity compensation plans not approved by security holders-2015 Plan
|
|
|
3,138,183
|
|
|
$
|
5.85
|
|
|
|
1,343,593
|
|
|
Equity compensation plans not approved by security holders-2005 Plan
|
|
|
303,487
|
|
|
NIS
|
26.8
|
|
|
|
-
|
|
|
Total
|
|
|
3,441,670
|
|
|
|
|
|
|
|
1,343,593
|
|
|
(1)
|
The weighted average
remaining term for the expiration of stock options under the 2005 Plan is 0.97 years. The weighted average remaining term
for the expiration of stock options under the 2015 Plan is 6.51 years.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
During years ended December
31, 2018 and 2017, except as set forth below, we did not participate in any transaction, and we are not currently participating
in any proposed transaction, or series of transactions, in which the amount involved exceeded the lesser of $120,000 or one percent
of the average of our total assets at year-end for the last two completed fiscal years, and in which, to our knowledge, any of
our directors, officers, five percent beneficial security holders, or any member of the immediate family of the foregoing persons
had, or will have, a direct or indirect material interest.
Agreements with Officers, Directors
and Others
Compensation arrangements
for our executive officers and directors are described in the section entitled “Executive Compensation.”
Giora Carni served as
our Director of Technology from October 2014 as well as member of our board of directors from March 2016 to December 2017. In
May 2017, following the resignation of Zeev Weiss, Mr. Carni became our interim Chief Executive Officer until July 2017 when Mr.
Meckler, our current Chief Executive Officer, was appointed. As of our general meeting of shareholders held on December 11, 2017,
Mr. Carni’s services as a director of the Company ended, and he currently serves as a consultant (on a 50% basis). Prior
to his resignation Mr. Carni was entitled to a monthly gross salary of NIS 35,000 (70% scope of employment), and to social benefits,
such as annual paid vacation days, severance pay, recuperation pay, manager’s insurance, sick leave and studies fund. In
addition, we provided Mr. Carni with a leased company car and a mobile phone. In December 2017, following the lapse of this tenure
as a member our board of directors, we entered into a new employment agreement with Mr. Carni. Mr. Carni’s agreement (50%
scope of employment) was for a term starting on December 12, 2017 and ending June 11, 2019 for a monthly fee of NIS 35,000.
Additionally, we have
entered into employment agreements with our former directors, Messrs. Zeev Weiss, and Zvi Joseph for their continued service to
the Company (on a reduced scope of work and for a limited term). Mr. Weiss’ agreement (40% scope of employment) is for a
term starting on October 1, 2017 and ending June 30, 2019 for a monthly fee of NIS 25,000, and Mr. Joseph’s agreement (50%
scope of employment) is for a term starting on December 12, 2017 and ending June 11, 2019 for a monthly fee of NIS 25,000.
As of December 31, 2018,
Mr. Carni held options to purchase 70,909 ordinary shares with a weighted exercise price of NIS 16.25, of which all will vest
in the event that a material agreement, as defined in our previous compensation policy, is signed between us and a third party.
In addition, as of December 31, 2018, Mr. Carni also held options to purchase 148,000 ordinary shares that will vest over time
with a weighted exercise price of $6.00, of which 80,000 will vest over time or immediately upon the earlier of: (i) the closing
of a merger agreement, as defined in our 2015 Plan, or (ii) if Mr. Carni is terminated without cause prior to June 11, 2019. As
of December 31, 2018, 83,438 options are vested.
As of December 31, 2018,
Mr. Joseph held options to purchase 75,463 ordinary shares with a weighted exercise price of NIS 30.1, of which 26,000 are vested
and 49,463 will vest in the event that a material agreement, as defined in our previous compensation policy, is signed between
us and a third party. In addition, as of December 31, 2018, Mr. Joseph also held options to purchase 95,250 ordinary shares that
will vest over time or immediately upon the earlier of: (i) the closing of a merger agreement, as defined in our 2015 Plan, or
(ii) if Mr. Joseph is terminated without cause prior to June 11, 2019 with an exercise price of $6.15 per share. As of December
31, 2018, 54,219 options are vested.
As of December 31, 2018,
Mr. Weiss held options to purchase 57,023 ordinary shares with a weighted exercise price of NIS 15.19, of which all will vest
in the event that a material agreement, as defined in our previous compensation policy, is signed between us and a third party.
In addition, as of December 31, 2018, Mr. Weiss also held options to purchase 35,000 ordinary shares that will vest over time
(or immediately upon the earlier of: (i) the closing of a merger agreement, as defined in our 2015 Plan, or (ii) if Mr. Weiss
is terminated without cause prior to June 30, 2019 with an exercise price of $7.44 per share. As of December 31, 2018, 21,385
options are vested.
Indemnification Agreements and Directors’ and Officers’
Liability Insurance
Our articles of association
permit us to exculpate, indemnify and insure our directors and officeholders to the fullest extent permitted by the Companies
Law. We have obtained directors’ and officers’ insurance for each of our officers and directors and have entered into
indemnification agreements with all of our current officers and directors.
We have entered into indemnification
and exculpation agreements with each of our current office holders and directors exculpating them to the fullest extent permitted
by the law and our articles of association and undertaking to indemnify them to the fullest extent permitted by the law and our
articles of association, including with respect to liabilities resulting from this Annual Report, to the extent such liabilities
are not covered by insurance.
We also maintain an insurance
policy that insures our directors and officers against certain liabilities, including liabilities arising under applicable securities
laws.
2017 Private Placement
In March 2017, we completed
a private placement of 2,289,638 of our ordinary shares with various investors at a price of $4.40 per share, for gross proceeds
of approximately $10 million. The chairman of our board of directors, Dr. John Kozarich, and two other (former) directors, Messrs.
Zvi Joseph and Giora Carni, participated in the private placement. On April 7, 2017, we filed a registration statement under the
Securities Act to register for resale most of the ordinary shares issued in the private placement for those purchasers which elected
to register their ordinary shares.
Policies and Procedures for Related Party Transactions
See “Corporate Governance
— Approval of Related Party Transactions Under Israeli Law” for a discussion of our policies and procedures related
to related party transactions and conflicts of interest.
ANNUAL REPORT
Our Annual Report on Form
10-K for the year ended December 31, 2018 is being delivered with this proxy statement. Any person who was a beneficial owner
of our ordinary shares on the record date may request a copy of our Annual Report, and it will be furnished without charge upon
receipt of a written request identifying the person so requesting an Annual Report as a stockholder of Intec Pharma Ltd. at such
date. Requests should be directed in writing to Intec Pharma Ltd., 12 Hartom St., Har Hotzvim Jerusalem 9777512, Israel, Attention:
Chief Financial Officer. Our Annual Report, as well as other company reports, are also available on the SEC’s website (www.sec.gov).
OTHER INFORMATION
Other Matters
Our board of directors
knows of no other matters to be presented for shareholder action at the upcoming Annual Meeting. However, other matters may properly
come before the Annual Meeting or any adjournment or postponement thereof. If any other matter or matters are properly brought
before the Annual Meeting, the persons named as proxy holders will use their discretion to vote on the matters in accordance with
their best judgment as they deem advisable.
No Dissenters’ Rights
The corporate action described
in this proxy statement will not afford shareholders the opportunity to dissent from the actions described herein or to receive
an agreed or judicially appraised value for their shares.
Where to Find More Information
Our reports on Forms 10-K,
10-Q, 8-K and formerly on Forms 20-F and 6-K and all amendments to those reports are available without charge through our website,
www.intecpharma.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.
Our Code of Business Conduct and Code of Ethics, and our Committee Charters are also available at our website address mentioned
above. The content of our website, however, is not part of this proxy statement. You may request a copy of our SEC filings,
as well as the foregoing corporate documents, at no cost to you, by writing to the Company address appearing in this proxy statement
or by calling us at +972-2-586-4657.
Our SEC filings and submissions
are also available to the public from commercial document retrieval services and at the Internet at http://www.sec.gov.
Proxy Solicitation
We will bear the entire
cost of this proxy solicitation. In addition to soliciting proxies, we expect that our directors, officers and regularly engaged
employees may solicit proxies personally or by mail, facsimile, telephone, or other electronic means, for which solicitation they
will not receive any additional compensation. We will reimburse brokerage firms, custodians, fiduciaries and other nominees for
their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request.
Shareholder Proposals for Future Meetings
From time to time shareholders
may present proposals, including to nominate a candidate to serve on our board that may be proper subjects to add to the agenda
for consideration at a general meeting of shareholders. Under Section 66(b) of the Companies Law and the regulations thereto,
shareholders who meet the conditions set out in that section, specifically – holding, in the aggregate, at least 1% of the
voting power in the Company – may submit a request to include an item to the agenda within 7 days following our notice of
convening a shareholders’ general meeting at which directors are to be elected and certain other proposals are to be considered
(or within 3 days of our notice in other instances), provided the requested item is appropriate for presentation at a general
meeting and for consideration by the shareholders.
In addition, shareholder
proposals may be submitted for inclusion in a proxy statement under Rule 14a-8 under the Exchange Act. Under Rule 14a-8 of the
Exchange Act, the deadline for submission of shareholder proposals for inclusion in our proxy materials for the 2020 annual general
meeting of shareholders is July 2, 2020; however, if the date of the 2020 annual meeting is changed by more than 30 days from the
date of the last annual general meeting, the proposal must be received no later than a reasonable time before we begin to print
and send our annual proxy materials. In addition, Rule 14a-8 proposals must otherwise comply with the requirements of the rule.
Proposals should be addressed
to: Intec Pharma Ltd., Attention: Nir Sassi, Chief Financial Officer, 12 Hartom St., Har Hotzvim Jerusalem 9777512, Israel.
Householding of Proxies
Under rules adopted by
the SEC, we are permitted to deliver a single set of proxy materials to any household at which two or more shareholders reside
if we reasonably believe the shareholders are members of the same family. This process, called householding, allows us to reduce
the number of copies of these materials we must print and mail. Even if householding is used, each shareholder will continue to
be entitled to submit a separate proxy or voting instruction.
We are not householding
this year for those shareholders who own their shares directly in their own name. If you share the same last name and address
with another Company shareholder who also holds his or her shares directly, and you would each like to start householding for
our annual reports and proxy statements, please contact us at 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel, or by
calling us at +972-2-586-4657.
This year, some brokers
and nominees who hold our shares on behalf of shareholders may be participating in the practice of householding proxy statements
and annual reports for those shareholders. If your household receives a single set of proxy materials for this year, but you would
like to receive your own copy, please contact us as stated above, and we will promptly send you a copy. If a broker or nominee
holds Company shares on your behalf and you share the same last name and address with another shareholder for whom a broker or
nominee holds Company shares, and together both of you would like to receive only a single set of our disclosure documents, please
contact your broker or nominee as described in the voter instruction card or other information you received from your broker or
nominee.
If you consent to householding,
your election will remain in effect until you revoke it. Should you later revoke your consent, you will be sent separate copies
of those documents that are mailed at least 30 days or more after receipt of your revocation.
Appendix A
INTEC PHARMA LTD.
2015 EQUITY INCENTIVE PLAN
The purpose of this 2015 Equity
Incentive Plan is to secure for Intec Pharma Ltd. and its shareholders the benefits arising from the provision of share based
Awards to employees, officers, directors and Consultants of the Company and its Affiliates (as defined below), who are expected
to contribute to the Company’s future growth and success. The Plan is intended to enable the Company to issue Awards under
various tax regimes.
Initially capitalized terms,
as used in this Plan, shall have the meaning ascribed thereto as set forth below:
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“Administrator”
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means the Board of Directors, or a committee or
any other person or persons, to which the Board of Directors shall have delegated power to act on its behalf with respect
to the Plan, provided, however, that the composition of such committee shall at all times be in compliance with any mandatory
requirements under any applicable Law
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“Affiliate(s)”
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means a present or future company that either (i) Controls Intec
Pharma Ltd. or is Controlled by Intec Pharma Ltd., or (ii) is Controlled by the same person or entity that Controls Intec
Pharma Ltd.
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“Allocate” or “Allocated”
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with respect to Awards, means the allocation of Awards by the
Company to a Participant.
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“Award(s)”
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means any Option granted to a Participant under the Plan.
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“Board of Directors”
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means the Board of Directors of the Company.
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“Cause”
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means, when used in connection with the termination of a Participant’s
employment with, or service to the Company or an Affiliate, as a result of a basis for termination, including, but not limited
to: dishonesty toward the Company or Affiliate, insubordination, substantial malfeasance or nonfeasance of duty, unauthorized
disclosure of confidential information, and conduct substantially prejudicial to the business of the Company or Affiliate;
or, any substantial breach by the Participant of (i) his or her employment or service agreement or (ii) any other
obligations toward Company or Affiliate.
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“Code”
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means the United States Internal Revenue
Code of 1986, as amended, and any applicable regulations promulgated thereunder.
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“Commencement
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Date” means the date of commencement of the vesting schedule
with respect to a Grant of Awards which, unless otherwise determined by the Administrator, shall be the date on which such
Grant of Awards shall be Allocated.
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“Company”
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means Intec Pharma Ltd., a company incorporated under the laws
of the State of Israel.
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“Consultant”
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means any person, including an advisor, engaged by the Company
or its Affiliates to render services to such entity.
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“Control” or “Controlled”
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shall have the meaning ascribed thereto in Section
102.
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“Disability”
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means physical or mental impairment or sickness of a Participant,
making it impossible for the Participant to continue such Participant’s employment with or service to the Company or
Affiliate.
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“Effective Date”
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means the date in which the Plan shall take effect upon its
adoption by the Board of Directors.
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“Exercise Price”
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means, the price determined by the Administrator in accordance
with Section 6.4 below which is to be paid to the Company in order to exercise a Granted Option and convert such Option into an
Underlying Share.
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“Grant Letter”
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means a letter from the Company or Affiliate to a Participant
in which the Participant is notified of the decision to Grant to the Participant Awards according to the terms of the Plan.
The Grant Letter shall specify (i) the Tax Track under which the Award is Granted, including the Section 102 Tax Track that
the Company chose (if applicable); (ii) the Exercise Price in the case of Options; (iii) the number of Awards Granted to the
Participant; and (iv) the vesting schedule.
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“Grant of Awards”
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with respect to Awards, means the grant of Awards by the Company
to a Participant pursuant to a Letter of Grant
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“Holding Period”
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means with regard to Section 102 Awards Granted
under Section 102, the period in which the Allocated Awards granted to a Participant or, upon exercise of Options, the Underlying
Shares, are to be held by the Trustee on behalf of the Participant, in accordance with Section 102, and pursuant to the Section
102 Tax Track which the Company selects.
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“Incentive Stock Options” or “ISO”
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means Options Granted to Non-Israeli Participants, in accordance
with the provisions of section 422 of the Code.
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“Israeli Participant”
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means an Israeli resident who is an employee, officer or director
of the Company or any Affiliate (provided that such person does not Control the Company as such term is defined in the Tax
Ordinance), on behalf of whom an Award is Granted pursuant to Section 102.
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“ITA”
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Israeli Tax Authority.
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“Law”
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means the laws of the State of Israel as are in effect from
time to time and any US law applicable to Options Granted to Non-Israeli Participants.
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“Merger Transaction”
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(i) a sale of all or substantially all of the assets of the
Company; or (ii) a sale (including an exchange) of all or substantially all of the shares of the capital stock of the Company;
or (iii) a merger, consolidation or like transaction of the Company into another corporation in which the holders of the Company’s
outstanding share capital immediately before such consolidation or merger do not, immediately after such consolidation or
merger, retain either (x) stock representing a majority of the voting power of the surviving entity, or (y) stock representing
a majority of the voting power of an entity that wholly owns, directly or indirectly, the surviving entity.
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“Notice of Exercise”
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shall have the meaning set forth in Section 6.7 below.
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“Option”
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means an option to purchase one Share of the Company.
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“Non-Israeli Participant”
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means a non-Israeli resident, on behalf of whom an Award is
Granted.
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“Non-Qualified Israeli Participant”
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means an Israeli resident is not qualified to receive
Options under the provisions of Section 102, on behalf of whom an Option is Granted pursuant to Section 3(i).
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“Non-Qualified Stock Option”
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means any Option granted to a person who is deemed to be a resident
of the U.S. for purposes of taxation, which Option is not designated as, or does not meet the conditions for, an Incentive
Stock Option.
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“Parent”
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means any company (other than the Company), which
now exists or is hereafter organized, (i) in an unbroken chain of companies ending with the Company if, at the time of granting
an Award, each of the companies (other than the Company) owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other companies in such chain, or (ii) if applicable, as defined in Section
424(e) of the Code.
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“Participant”
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means an Israeli Participant, or a Non-Qualified Israeli Participant,
or a Non-Israeli Participant.
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“Plan”
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means this 2015 Equity Incentive Plan, as may be amended from
time to time.
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“Retirement”
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means the termination of a Participant’s employment as
a result of his or her reaching the earlier of (i) the age of retirement as defined by Law; or (ii) the age of retirement
specified in the Participant’s employment agreement.
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“Section 102”
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means Section 102 of the Tax Ordinance as amended from time
to time.
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“Section 102 Award”
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means an Award granted under the provisions of Section 102 to
an Israeli Participant.
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“Section 102
Tax Track(s)”
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means one of the three Tax Tracks included under Section 102:
(1) the “Capital Gains Track Through a Trustee”; (2) “Income Tax Track Through a Trustee”; or (3)
the “Income Tax Track Without a Trustee”.
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“Section 102 Rules” or “Rules”
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means the Income Tax Rules (Tax Relief for Issuance of Shares
to Employees), 2003 as amended from time to time.
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“Section 3(i)”
or “Section 3(i) Rules”
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means section 3(i) of the Israeli Tax Ordinance and the applicable
rules thereto or under applicable regulations.
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“Section 3(i) Options Award”
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means an Option granted under the provisions of Section 3(i)
to Non-Qualified Israeli Participant.
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“Share(s)”
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means an ordinary share of the Company, having no par value
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“Subsidiary”
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means a subsidiary of the Company as defined in the Code.
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“Tax Ordinance”
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means the Israeli Income Tax Ordinance [New Version], 1961,
as amended, and any regulations, rules, orders or procedures promulgated thereunder.
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“Tax Track”
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means one of the five tax tracks described in sections
7.1-7.5 to this Plan, including one of the three Section 102 Tax Tracks.
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“Tax Provision”
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means, with respect to the Grant of Awards, the provisions
of one of the Tax Tracks.
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“Ten-Percent-
Shareholder”
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mean a Participant who, at the time an Incentive
Stock Option is granted, owns (directly, or by reason of the attribution rules of Section 424(d) of the Code) shares possessing
more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary.
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“Term of the Awards”
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means, with respect to Granted but unexercised Awards, the time
period set forth in Section 11 below.
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“Trustee”
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means a Trustee appointed by the Company to hold in trust, Allocated
Awards and the Underlying Shares issued upon exercise of such Awards, on behalf of Participants.
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“Underlying Shares”
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means ordinary shares of the Company, having no par value issued
or to be issued under Granted Awards all in accordance with the Plan.
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Without derogating from the
meanings ascribed to the capitalized terms above, all singular references in this Plan shall include the plural and vice versa,
and reference to one gender shall include the other, unless otherwise required by the context.
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3.
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Shares Available for Awards
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The total number of Underlying Shares
reserved for issuance under the Plan and any modification thereof, shall be determined from time to time by the Board of Directors
of the Company and initially shall be 700,000 Shares. Such number of Shares shall be subject to adjustment as required for the
implementation of the provisions of the Plan, in accordance with Section 4 below.
In the event that Awards allocated
under the Plan expire or otherwise terminate in accordance with the provisions of the Plan, such expired or terminated Awards
shall become available for future Grants and Allocations under the Plan, unless the Board of Directors decides otherwise.
In the event that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, share split,
reverse share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares
or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the
Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or
the number, class, and price of Shares covered by each outstanding Award. Upon the occurrence of any such adjustment, references
in this Plan to Shares and Underlying Shares shall be construed to mean the Shares of the Company subject to the Plan as so determined
by the Administrator, following such adjustment.
If the Change in Capitalization
is the distribution of a cash dividend, the Company shall transfer to the Trustee the amount of dividend resulting from the Underlying
Shares held by the Trustee for the benefit of Participants in accordance with the provisions of this Plan. The Trustee shall deduct
all applicable taxes from the dividend amount and transfer the remaining dividend amount to such Participants.
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5.
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Administration of the Plan
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Subject to the Law, the Articles
of Association of the Company, and any resolution to the contrary by the Board of Directors, the Administrator is authorized,
in its sole and absolute discretion, to exercise all powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan; including, without limitation,
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(i)
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the Participants in the Plan, and the number of Awards to be
Granted for each Participant’s benefit (subject to further approvals if such approvals are required by Law);
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(ii)
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the time or times at which Awards shall be Granted;
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(iii)
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the Exercise Price;
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(iv)
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whether, to what extent, and under what circumstances an Award
may be settled, canceled, forfeited, exchanged, or surrendered;
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(v)
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any terms and conditions in addition to those specified in the
Plan under which an Award may be Granted;
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(vi)
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any measures, and to take actions, as deemed necessary or advisable
for the administration and implementation of the Plan;
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(vii)
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the Fair Market Value of the Shares;
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(viii)
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the Tax Track; and
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(ix)
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the vesting schedule, the acceleration thereof and conditions
on which Awards may be exercised.
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(B)
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to interpret the provisions of the Plan and to take all actions
resulting therefrom including without limitation:
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(i)
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subject to Section 6 below, to accelerate the date on which
any Allocated Award under the Plan becomes exercisable;
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(ii)
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to waive or amend Plan provisions relating to exercise of Options,
including exercise of Options, after termination of employment, for any reason;
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(iii)
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to modify Awards to eligible individuals who are foreign nationals
or are individuals who are employed outside Israel to recognize differences in local law, tax policy or custom, in order to
effectuate the purposes of the Plan but without amending the Plan.
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(iv)
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to grant to the holder of an outstanding Award, in exchange
for the surrender and cancellation of such Award, a new Award having an Exercise Price lower than that provided in the Award
so surrendered and canceled and containing such other terms and conditions as the Administrator may prescribe in accordance
with the provisions of the Plan; and
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(v)
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subject to Section 22, amend any of the terms of the Plan, or
any prior determinations of the Administrator.
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Notwithstanding the provisions of Section
5.1 above, no interpretations, determinations or actions of the Administrator shall contradict the provisions of applicable Law.
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6.
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Terms
And Conditions Of Options
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6.1
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Conditions
for grant of Options
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Options
may be Granted at any time after:
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(A)
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the grant has been approved by the necessary corporate bodies
of the Company; and
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(B)
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all other approvals, consents or requirements necessary by Law
have been received or met.
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6.2
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Conditions for Allocation of Options
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Options
may be Allocated at any time after:
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(A)
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the Plan has been approved by the necessary corporate bodies
of the Company; and
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(B)
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30 days after a request for approval of the Plan has been submitted
for approval to the Israeli Income Tax Authorities pursuant to the requirements of the Tax Ordinance; and
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(C)
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all other approvals, consents or requirements necessary by Law
have been received or met.
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6.3
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Date of grant or Allocation
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(A)
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The date on which Options shall be deemed Granted under the
Plan shall be the date on which the Company shall notify the Participant in a Grant Letter that such Options have been Granted
to the Participant (“Date of Grant”).
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(B)
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The date on which Options shall be deemed Allocated under the
Plan shall be the date on which the Company shall notify the Trustee that such Options have been Allocated in the name of
the Trustee on behalf of a Participant (“Date of Allocation”).
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(C)
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Each Grant Letter shall specifically state the type of Option
granted thereunder and the applicable Tax Track.
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The Exercise Price per Underlying
Share deliverable upon the exercise of an Option shall be determined by the Administrator. The Exercise Price shall be set forth
in the Grant Letter.
The Exercise Price of an Incentive
Stock Options Granted to a Non-Israeli Participant shall not be less than 100% of the Fair Market Value of the Share as defined
below or such other price as may be required pursuant to applicable Law or applicable stock exchange rules. If an
Incentive Stock Option is Granted to a Non-Israeli Participant who is a Ten-Percent Shareholder, then the Exercise Price shall
be no less than 110% of the Fair Market Value of the Share at the Date of Grant. Notwithstanding the foregoing, Incentive Stock
Options may be Granted with an Exercise Price other than as required above, pursuant to a Merger Transaction.
The Exercise Price of a Nonqualified
Stock Option shall not be less than 100% of the Fair Market Value of the Shares on the Date of Grant unless the Administrator
specifically indicates that the Option will have a lower Exercise Price and the Option complies with Section 409A of the Code,
provided, however, that the Exercise Price shall not be reduced below the par value of the Underlying Share, if any, or any other
minimum exercise price required under applicable Law or stock exchange rules.
In the case of any other Option,
the Exercise Price per Underlying Share shall be equal to the Fair Market Value of the Shares on the Date of Grant, or such other
price as shall be determined by the Administrator, provided, however, that in no event shall the Exercise Price of an Option be
less than the par value of the shares for which such Option is exercisable, if any, or any other minimum exercise price required
under applicable Law or stock exchange rules.
This Section 6.4 shall not
apply to an Option granted pursuant to assumption of, or substitution for, another option in a manner that complies with Code
Section 424(a), whether or not the Option is an Incentive Stock Option.
“Fair Market Value”
means, as of any date, the value of the Shares determined as follows:
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(A)
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if the Shares are listed on any established stock exchange or
a national market system, including without limitation the Tel-Aviv Stock Exchange Ltd., and the NASDAQ Stock Market, the
Fair Market Value shall be the average closing sales price for such shares (or the closing bid, if no sales were reported),
as quoted on such exchange or system over the thirty (30) day calendar period preceding the subject date (utilizing all trading
days during such 30 calendar day period), as reported in the Wall Street Journal, or according to any other source the Administrator
deems reliable;
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(B)
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if the Shares are then quoted in an over-the-counter market,
the Fair Market Value shall be the average of closing bid and asked prices for the Shares in that over-the-counter market
during the thirty (30) day calendar period preceding the subject date; or
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(C)
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in the absence of an established market for the Shares, the
Fair Market Value thereof shall be determined in good faith by the Administrator; provided, however, that with respect to
Nonqualified Stock Options, the Fair Market Value of the Shares shall be determined in a manner that satisfies the applicable
requirements of Section 409A of the Code, and with respect to Incentive Stock Options, the Fair Market Value shall be determined
in a manner that satisfies the applicable requirements of Section 422 of the Code, subject to Code Section 422(c)(7). The
Administrator shall maintain a written record of its method of determining such value.
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If the Shares are listed or
quoted on more than one established stock exchange or over-the-counter market, the Administrator shall determine the principal
exchange or market and utilize the price of the Shares on that exchange or market (determined as per the method described in clauses
(A) or (B) above, as applicable) for the purpose of determining Fair Market Value. Without derogating from the above, solely for
the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant of Section
102 Awards the Shares are listed on any established stock exchange or a national market system or if the Shares will be registered
for trading within ninety (90) days following the date of grant, the Fair Market Value at the date of grant for purposes of 102
Awards, shall be determined in accordance with the average value of the Shares on the thirty (30) trading days preceding the date
of grant or on the thirty (30) trading days following the date of registration for trading, as the case may be.
Notwithstanding the above,
the Exercise Price of any Option shall be reduced in the amount of any cash dividend per share distributed by the Company, provided,
however, that the Exercise Price shall not be reduced below the par value of the Underlying Share, if any, or any other minimum
exercise price required under applicable Law or stock exchange rules.
Unless otherwise determined
by the Administrator, all Options Granted on a certain date shall, subject to continued employment with or service to the Company
or Affiliate by the Participant, become vested and exercisable in accordance with the vesting schedule specified in the Grant
Letter.
An Option may not be exercised
for fractional Shares.
The exercise of a portion of
the Options Granted shall not cause the expiration, termination or cancellation of the remaining unexercised Options held by the
Trustee on behalf of the Participant.
An Option
may be exercised by and upon the fulfillment of the following:
The signing by the Participant,
and delivery to both the Company (at its principal office) and the Trustee (if the Options are held by a Trustee), of an exercise
notice form as prescribed by the Administrator, including but not limited to: (i) the identity of the Participant, (ii) the number
of Options to be exercised, and (iii) the Exercise Price to be paid (the “Notice of Exercise”).
The payment by the Participant
to the Company, in such manner as shall be determined by the Administrator (which may include procedures for cashless exercise),
of the Exercise Price with respect to all the Options exercised, as set forth in the Notice of Exercise.
Upon the delivery of a duly
signed Notice of Exercise and the payment to the Company of the Exercise Price with respect to all the Options specified therein,
the Company shall issue the Underlying Shares to the Trustee (according to the applicable Holding Period) or to the Participant,
as the case may be.
All costs and expenses including
broker fees and bank commissions, derived from the exercise of Options or Underlying Shares, shall be borne solely on the Participant.
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6.8
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Waiver of Option Rights
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At any time prior to the expiration
of any Granted (but unexercised) Option, a Participant may waive his rights to such Option by a written notice to the Company’s
principal office. Such notice shall specify the number of Options Granted, which the Participant waives, and shall be signed by
the Participant.
Upon receipt by the Company
of a notice of waiver of such rights, such Options shall expire and shall become available for future Grants and Allocations under
the Plan.
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6.9
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Termination of Employment
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6.9.1 Termination
of Employment
If a Participant ceases to
be an employee, director, officer or Consultant of the Company or Affiliate for any reason (“Termination of Employment”)
other than death, Retirement, Disability or Cause, then any vested but unexercised Options on the date of Termination of Employment
(as shall be determined by the Company or Affiliate, in its sole discretion), Allocated on the Participant’s behalf (“Exercisable
Options”) may be exercised, if not previously expired, not later than the earlier of (i) 90 days after the date of Termination
of Employment; or (ii) the Term of the Options.
All other Granted Options for
the benefit of Participant shall expire upon the date of Termination of Employment.
6.9.2
Termination for Cause
In the event of Termination
of Employment of a Participant for Cause, the Participant’s right to exercise any unexercised Options, Granted to such Participant,
whether vested or not on the date of Termination of Employment, shall cease as of such date of Termination of Employment, and
the Options shall thereupon expire.
If subsequent to the Participant’s
Termination of Employment, but prior to the exercise of Options Granted to such Participant, the Administrator determines that
either prior or subsequent to the Participant’s Termination of Employment, the Participant engaged in conduct which would
constitute Cause, then the Participant’s right to exercise the Options Granted to such Participant shall immediately cease
upon such determination and the Options shall thereupon expire.
The determination by the Administrator
as to the occurrence of Cause shall be final and conclusive for all purposes of this Plan.
6.9.3
Termination by Reason of Death, Retirement, or Disability
In the event of Termination
of Employment of a Participant by reason of death, Retirement, or Disability, any vested but unexercised Options shall be exercisable
in the case of death, by his or her estate, personal representative or beneficiary, or in the case of Retirement or Disability,
by the Participant or his or her personal representative (as the case may be), until the earlier of (i) 12 months after the date
of Termination of Employment; or (ii) the Term of the Options.
All other Granted Options for
the benefit of Participant shall expire upon the date of Termination of Employment.
6.9.4 Exceptions
In special circumstances, pertaining
to the Termination of Employment of a certain Participant, the Administrator may in its discretion decide to extend any of the
periods stated above in Sections 6.10.1-6.10.3
6.9.5 Transfer
of Employment or Service
Subject to the receipt of appropriate
approvals from the Israeli Tax Authorities, if applicable, a Participant’s right to Options or the exercise thereof that
were Granted to him or her under this Plan, shall not be terminated or expire solely as a result of the fact that the Participant’s
employment or service as an employee, officer, director or Consultant changes from the Company to an Affiliate or vice versa.
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7.
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Awards and Tax Provisions
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All Awards under this Plan
shall be Granted in accordance with one of the Tax Provisions specified in sections 7.1-7.5.
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7.1
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Section 102 Trustee Tax Tracks
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If the Company elects to Grant
Awards to Israeli Participants through (i) the Capital Gains Track Through a Trustee, or (ii) the Income Tax Track Through a Trustee,
then, in accordance with the requirements of Section 102, the Company shall appoint a Trustee who will hold in trust on behalf
of each Israeli Participant the Allocated Awards and the Underlying Shares issued upon exercise of Options in trust on behalf
of each Israeli Participant.
The Holding Period for the
Awards will be as follows:
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(A)
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The Capital Gains Tax Track Through a Trustee –
if the Company elects to Allocate the Awards according to the provisions of this track, then the Holding Period will be: 24
months from the date of Allocation; or such period as may be legislated by any amendment of Section 102.
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(B)
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Income Tax Track Through a Trustee – if the
Company elects to Allocate Awards according to the provisions of this track, then the Holding Period will be 12 months from
the date of Allocation; or such period as may be legislated by any amendment of Section 102.
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Subject to Section 102 and
the Rules, Israeli Participants shall not be able to receive from the Trustee, nor shall they be able to sell or dispose of Underlying
Shares before the end of the applicable Holding Period. If a Participant sells or removes the Underlying Shares form the Trustee
before the end of the applicable Holding Period (“Breach”), the Participant shall pay all applicable taxes imposed
on such Breach by Section 7 of the Rules.
In the event of a distribution
of rights, including an issuance of bonus shares, in connection with Awards originally Allocated (the “Additional Rights”),
all such Additional Rights shall be Allocated and/or issued to the Trustee for the benefit of Israeli Participants, and shall
be held by the Trustee for the remainder of the Holding Period applicable to the Awards originally Allocated. Such Additional
Rights shall be treated in accordance with the provisions of the applicable Tax Track.
The terms and conditions applicable
to the trust relating to the Tax Track selected by the Company, as appropriate, shall be set forth in an agreement signed by the
Company and the Trustee (the “Trust Agreement”).
The Holding Period of Section
102, if any, is in addition to the vesting period as specified in this Plan. The Holding Period and vesting period may run concurrently,
but neither is a substitute for the other, and each are independent terms and conditions for Awards Granted.
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7.2
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Tax Track Without a Trustee
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If the Company elects to Allocate
Awards to Israeli Participants according to the provisions of this track, then the Awards will not be subject to a Holding Period.
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7.3
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Section 3(i) Options Award
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Options granted pursuant to
this Section 7.3 are intended to constitute Section 3(i) Options Award and shall be granted to Non-Qualified Israeli Participants
subject to the general terms and conditions specified in the Plan, except for any provisions of the Plan applying to Awards under
different tax laws or regulations.
To the extent required by the
Tax Ordinance or the ITA or otherwise deemed by the Administrator prudent or advisable, the Section 3(i) Options Award granted
pursuant to the Plan shall be issued to a Trustee nominated by the Administrator in accordance with the provisions of the Tax
Ordinance. In such event, the Trustee shall hold such Options in trust, until exercised by the Participant, pursuant to the Company’s
instructions from time to time as set forth in the Trust Agreement, which will be entered into between the Company and the Trustee.
If determined by the Board or the Administrator, and subject to such trust agreement the Trustee shall be responsible for withholding
any taxes to which a Participant may become liable upon the exercise of such Options.
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7.4
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Incentive Stock Options
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Awards granted pursuant to
this Section 7.4 are intended to constitute Incentive Stock Options and shall be granted subject to the following special terms
and conditions, the general terms and conditions specified in Section 6 hereof and other provisions of the Plan, except for any
provisions of the Plan applying to Awards under different tax laws or regulations.
Incentive Stock Options may
be granted only to Employees of the Company, or to Employees of a Parent or Subsidiary corporation thereof (as such terms are
defined in Sections 424(e) and 424(f) of the Code).
The maximum number of Shares
that may be issued pursuant to Incentive Stock Options is 700,000 Shares, and such reserve of Shares for grants of Incentive Stock
Options shall not be increased without the approval of the shareholders of the Company as required pursuant to Section 421 et
seq. of the Code.
The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which all Incentive Stock Options
granted under the Plan and all other option plans of any Parent or Subsidiary corporation become exercisable for the first time
by each Participant during any calendar year shall not exceed one hundred thousand United States dollars (US$100,000) with respect
to such Participant. To the extent that the aggregate Fair Market Value of Shares with respect to which the Incentive Stock Options
are exercisable for the first time by any Participant during any calendar years exceeds one hundred thousand United States dollars
(US$100,000), such Options shall be treated as Nonqualified Stock Options. The foregoing shall be applied by taking Options into
account in the order in which they were granted, with the Fair Market Value of any Share to be determined at the time of the grant
of the Option. In the event the foregoing results in the portion of an Incentive Stock Option exceeding the one hundred thousand
United States dollars (US$100,000) limitation, only such excess shall be treated as a Nonqualified Stock Option.
In the case of an Incentive
Stock Option granted to a Ten Percent Shareholder, (i) the Exercise Price shall not be less than one hundred and ten percent (110%)
of the Fair Market Value of the Shares on the Date of Grant of such Incentive Stock Option, and (ii) the Exercise Period shall
not exceed five (5) years from the Date of Grant of such Incentive Stock Option.
No disposition of Shares received
pursuant to the exercise of Incentive Stock Options (“ISO Shares”), shall be made by the Participant within 2 years
from the date of grant, nor within 1 year after the transfer of such ISO Shares to her or him. To the extent that the Participant
violates the aforementioned limitations, the Incentive Stock Options shall be deemed to be Nonqualified Stock Options
The status of any ISO Shares
shall be subject to approval of the Plan by the Company’s shareholders, such approval to be provided 12 months before or
after the date of adoption of the Plan by the Board of Directors.
Notwithstanding anything else
in the Plan to the contrary, Incentive Stock Options that are not exercised within three (3) months following termination of Participant’s
employment in the Company or its Parent or Subsidiary corporations, or within one year in case of termination of Participant’s
employment in the Company or its Parent or Subsidiary corporations due to a Disability (within the meaning of section 22(e)(3)
of the Code), shall be deemed to be Nonqualified Stock Options.
Any Grant Letter providing
for the grant of Incentive Stock Options shall indicate that adjustments made pursuant to the Plan with respect to Incentive Stock
Options could constitute a “modification” of such Incentive Stock Options (as that term is defined in Section 424(h)
of the Code) or could cause adverse tax consequences for the holder of such Incentive Stock Options and that the holder should
consult with his or her tax advisor regarding the consequences of such “modification” on his or her income tax treatment
with respect to the Incentive Stock Option.
Each Participant who receives
an Incentive Stock Option must agree to notify the Company in writing immediately after the Participant makes a Disqualifying
Disposition of any ISO Shares. A “Disqualifying Disposition” is any disposition (including any sale) of such ISO Shares
before the later of (i) two years after the date the Participant was granted the Incentive Stock Option, or (ii) one year after
the date the Participant acquired Shares by exercising the Incentive Stock Option. If the Participant dies before such ISO Shares
are sold, these holding period requirements do not apply and no disposition of the ISO Shares will be deemed a Disqualifying Disposition.
A Disqualifying Disposition by a Participant shall not affect the status of any other Option granted under the Plan as an Incentive
Stock Option within the meaning of Section 422 of the Code.
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7.5
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NonQualified
Stock Options
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Awards granted pursuant to
this Section 7.5 are intended to constitute Nonqualified Stock Options and shall be subject to the general terms and conditions
specified in Section 6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under
different tax laws or regulations. Nonqualified Stock Options may not be granted to Service Providers who are providing services
only to a “parent” of the Company, as such term is defined in Rule 405 of Regulation C under the Securities Act of
1933, as amended, unless the Shares underlying such Awards are treated as “service recipient stock” under Section
409A of the Code because the Options are granted pursuant to a corporate transaction (such as a spin off transaction) or unless
such Awards comply with the distribution requirements of Section 409A of the Code.
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8.
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Rights as a Shareholder
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Unless otherwise specified
in the Plan, a Participant shall not have any rights as a shareholder with respect to Shares issued under this Plan, until such
time as the Shares shall be registered in the name of the Participant in the Company’s register of shareholders.
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9.
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No Special Employment Rights
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Nothing contained in this Plan
shall confer upon any Participant any right with respect to the continuation of employment by or service to the Company or Affiliate
or to interfere in any way with the right of the Company or Affiliate, to terminate such employment or service or to increase
or decrease the compensation of the Israeli Participant.
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10.
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Restrictions on Sale of Awards
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10.1
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Awards may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent.
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In the event of a Merger Transaction,
then, subject to obtaining the applicable approvals of the ITA, the Board of Directors in its sole discretion and without the
need of obtaining any approval from any of the Participants, shall decide:
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(A)
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if and how unvested
Awards shall be canceled, replaced or accelerated; and
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(B)
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if and how vested Awards
(including Awards with respect to which the vesting period has been accelerated according to Section 10.3 shall be exercised,
replaced and/or sold by the Trustee or the Company (as the case may be) on the behalf of Israeli Participants.
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10.3
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Acceleration
Provision
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The Administrator, in its sole
discretion, may decide to add a provision in certain Grant Letters, according to which in case of a Merger, all or some of the
unvested Awards, shall automatically accelerate.
Notwithstanding the Holding
Period at the request of the underwriter, the Administrator may determine that the Underlying Shares issued pursuant to the exercise
of Options may be subject to a lock-up period of up to 180 days, or such longer period of time as may be recommended by the Company’s
Board of Directors, during which time Participants shall not be allowed to sell Shares.
Awards may be granted pursuant
to the Plan from time to time within a period of ten (10) years from the Effective Date. From and after the tenth (10th)
anniversary of the Effective Date no grants of Awards may be made and the Plan shall continue to be in full force and effect solely
with respect to such Awards that remain outstanding. If any Award, or any part thereof, has not been exercised, in the case of
Options, and the Shares covered thereby not paid for within the term of the Award as determined by the Administrator, which in
any event shall not exceed ten (10) years after the date on which the Award was granted, as set forth in the Grant Letter, such
Award, or such part thereof, and the right to acquire such Shares shall terminate, and all interests and rights of the Participant
in and to the same shall expire. In the case of Shares held by a Trustee, the Participant shall elect whether to release such
Shares from trust or sell the Shares and upon such release or sale such trust shall expire.
This Plan shall be governed
by, and shall conform with and be interpreted so as to comply with, the requirements of the Tax Ordinance and the Code, as applicable
and any written approval from any relevant Tax Authorities. All tax consequences under any applicable law (other than stamp duty)
which may arise from the Grant or Allocation of Awards, from the exercise thereof or from the holding or sale of Underlying Shares
(or other securities issued under the Plan) by or on behalf of the Participant, shall be borne solely by the Participant. The
Participant shall indemnify the Company and/or Affiliate, as the case may be, and hold them harmless, against and from any liability
for any such tax or any penalty, interest or indexing.
If the Company elects to Allocate
Awards according to the provisions of the Income Tax Track Without a Trustee (Section 7.2 of this Plan), and if prior to the exercise
of any and/or all of Options, such Israeli Participant ceases to be an employee, director, or officer of the Company or Affiliate,
the Israeli Participant shall deposit with the Company a guarantee or other security as required by law, in order to ensure the
payment of applicable taxes upon the Exercise of such Options.
Whenever an amount with respect
to withholding tax relating to Awards Granted to a Participant and/or Underlying Shares issued upon the exercise of Options is
due from the Participant and/or the Company and/or an Affiliate, the Company and/or an Affiliate shall have the right to demand
from a Participant such amount sufficient to satisfy any applicable withholding tax requirements related thereto, and whenever
Shares or any other non-cash assets are to be delivered pursuant to the exercise of an Option, or transferred thereafter, the
Company and/or an Affiliate shall have the right to require the Participant to remit to the Company and/or to the Affiliate, or
to the Trustee an amount in cash sufficient to satisfy any applicable withholding tax requirements related thereto. If such amount
is not timely remitted, the Company and/or the Affiliate shall have the right to withhold or set-off (subject to Law) such Shares
or any other non-cash assets pending payment by the Participant of such amounts.
With regard to Awards Granted
to Israeli Participants - until all taxes have been paid in accordance with Rule 7 of the Section 102 Rules, Awards and/or Underlying
Shares may not be sold, transferred, assigned, pledged, encumbered, or otherwise willfully hypothecated or disposed of, and no
power of attorney or deed of transfer, whether for immediate or future use may be validly given. Notwithstanding the foregoing,
the Awards and/or Underlying Shares may be validly transferred in accordance with Section 15 below, provided that the transferee
thereof shall be subject to the provisions of Section 102 and the Section 102 Rules as would have been applicable to the deceased
Israeli Participant were he or she to have survived.
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14.
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No Transfer of Awards
|
The Trustee shall not transfer
Awards to any third party, including a Participant, except in accordance with instructions received from the Administrator.
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15.
|
Transfer of Rights Upon Death
|
No transfer of any right to
an Award or Underlying Share issued upon the exercise of Option thereof by will or by the laws of descent shall be effective to
bind the Company unless the Company shall have been furnished with the following signed and notarized documents:
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(A)
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A written request for such transfer and a copy of the legal
documents creating and confirming the right of the person acting with respect to the Participant’s estate and of the
transferee;
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|
(B)
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A written consent by the transferee to pay any amounts in connection
with the Awards and Underlying Shares any payment due according to the provisions of the Plan and otherwise abide by all the
terms of the Plan; and
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(C)
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any such other evidence as the Administrator may deem necessary
to establish the right to the transfer of the Option or Underlying Share issued upon the exercise thereof and the validity
of the transfer.
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16.
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No Right of Others to Awards
|
Subject to the provisions of
the Plan, no person other than the Participant shall have any right with respect to Awards Granted to the Participant’s
under the Plan.
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17.
|
Expenses and Receipts
|
The expenses incurred in connection
with the administration and implementation of the Plan (including any applicable stamp duty) shall be borne by the Company. Any
proceeds received by the Company in connection with the exercise of any Option may be used for general corporate purposes.
The Plan is subject to the
receipt of all approvals required under the Ordinance, the Code and the Law.
This Plan and all documents
delivered or executed by the Company or Affiliate in connection herewith shall be governed by, and construed and administered
in accordance with the Law.
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20.
|
Treatment of Participants
|
There is no obligation for
uniformity of treatment of Participants.
In the event of any conflict
between the terms of the Plan and the Grant Letter, the Plan shall prevail, unless the Grant Letter stated specifically that the
conflicting provision in the Grant Letter shall prevail.
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22.
|
Amendments and
Modification of the Plan
|
The Board of Directors at any
time and from time to time may suspend, terminate, modify or amend the Plan, whether retroactively or prospectively; provided,
however, that, unless otherwise determined by the Board, an amendment which requires shareholder approval in order for the Plan
to continue to comply with any applicable Law shall not be effective unless approved by the requisite vote of shareholders, and
provided further that except as provided herein, no suspension, termination, modification or amendment of the Plan may adversely
affect any Award previously granted, without the written consent of Participants holding a majority in interest of the Awards
so affected, and in the event that such consent is obtained, all Awards so affected and the holders thereof shall be bound by
and be deemed amended as set forth in, such consent.
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23.
|
Participant Undertakings
|
By entering into this Plan,
the Participant shall (1) agree and acknowledge that he or she have received and read the Plan and the Grant Letter; (2) undertake
all the provisions set forth in: the Code, Section 3i, or Section 102 (including provisions regarding the applicable Tax Track
that the Company has selected) as applicable, the Plan, the Grant Letter and the Trust Agreement (if applicable); and (3) if the
Awards are Granted under Section 102, the Israeli Participant shall undertake that subject to the provisions of Section 102 and
the Rules, he or she shall not to sell or release the Underlying Shares from trust before the end of the Holding Period (if any).
Notwithstanding any provision
of this Plan to the contrary, the Company shall not issue the Shares, per the exercise of an Option, on the record date of any
of the following events (each, a “Company’s Event”): distribution of bonus shares, rights offering, dividends,
share split, reverse share split, or capital reduction and such issuance shall be postponed to the immediately following NASDAQ
trading date, provided, however, that in the event the Ex-day (as such term is defined under the regulations of the Tel Aviv
Stock Exchange Ltd.) occurs prior to the record date of such Company’s Event, the Company shall not issue the Shares, per
the exercise of an Option, on such date and such issuance shall be postponed to the immediately following NASDAQ trading date.
*****
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