FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the month of August, 2003
Commission File Number: 0-29452
RADCOM LTD.
(Translation of Registrant's Name into English)
24 Raoul Wallenberg Street, Tel Aviv 69719, Israel
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F:
Form 20-F X Form:40-F_______
-
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): N/A
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): N/A
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes _______ No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- N/A
THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO RADCOM LTD.'S
("RADCOM") REGISTRATION STATEMENTS ON FORM S-8 (REGISTRATION STATEMENT NOS.
333-13244, 333-13246, 333-13248, 333-13250, 333-13254, 333-13252, 333-13236),
AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FILED, TO THE
EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OF FURNISHED.
CONTENTS
This report on Form 6-K of Radcom consists of the following documents, which is
attached hereto and incorporated by reference herein:
1. Notice of 2003 Annual Meeting of Shareholders and Proxy Statement, dated July
31, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Radcom Ltd.
(Registrant)
Dated: August 11, 2003 By: /s/David Zigdon
-------------------
David Zigdon
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
10.1 Notice of 2003 Annual Meeting of Shareholders and
Proxy Statement, dated July 31, 2003.
EXHIBIT 10.1
RADCOM LTD.
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NOTICE OF 2003 ANNUAL GENERAL MEETING OF SHAREHOLDERS
---------------------------
Notice is hereby given that the 2003 Annual General Meeting of
Shareholders (the "Meeting") of Radcom Ltd. (the "Company") will be held on
Wednesday, September 10, 2003 at 16:00 P.M. (Israel time), at the offices of the
Company, 24 Raoul Wallenberg Street, Tel Aviv, Israel, for the following
purposes:
(1) To elect three (3) directors to serve as members of our Board of
Directors;
(2) To reappoint our auditors, and to authorize our Board of Directors
to fix the remuneration of the auditors in accordance with the amount
and nature of their services;
(3) To approve the adoption of the Radcom Ltd. 2003 Share Option Plan;
(4) To approve the grant of options to purchase 30,000 Ordinary Shares
to each of Rony Ross, Dan Barnea, Zohar Gilon and Arnon Toussia-Cohen,
directors of the Company;
(5) To approve the grant of options to purchase 60,000 Ordinary Shares to
Zohar Zisapel, the Chairman of the Board of Directors of the Company;
(6) To approve a directors and officers' liability insurance policy for the
benefit of directors;
(7) To approve a maximum aggregate Company liability under all
indemnification agreements entered into with directors and officers;
(8) To discuss the auditors' report and the consolidated financial
statements of the Company for the year ended December 31, 2002; and
(9) To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors recommends a vote FOR approval of all matters to
be voted upon at the Meeting.
Shareholders of record at the close of business on July 31, 2003 are
entitled to notice of, and to vote at, the Meeting. All shareholders are
cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, you are urged to
promptly complete, date and sign the enclosed proxy and to mail it in the
enclosed envelope, which requires no postage if mailed in the United States.
Return of your proxy does not deprive you of your right to attend the Meeting,
to revoke the proxy and to vote your shares in person.
Joint holders of shares should take note that, pursuant to Article
32(d) of the Articles of Association of the Company, the vote of the senior
holder of the joint shares who tenders a vote, in person or by proxy, will be
accepted to the exclusion of the vote(s) of the other joint holder(s). For this
purpose seniority will be determined by the order in which the names stand in
the Company's Register of Members.
By Order of the Board of Directors,
Arnon Toussia-Cohen
Chief Executive Officer
Dated: July 31, 2003
The audited financial statements of the Company for the fiscal year
ended December 31, 2002, is enclosed, but is not a part of the proxy
solicitation material.
1
RADCOM LTD.
24 RAOUL WALLENBERG STREET
TEL AVIV 69719, ISRAEL
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PROXY STATEMENT
---------------------------
2003 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the holders of ordinary shares,
NIS 0.05 nominal value (the "Ordinary Shares"), of Radcom Ltd. (the "Company")
in connection with the solicitation by the Board of Directors of proxies for use
at the 2003 Annual Meeting of Shareholders (the "Meeting"), or at any
adjournment thereof, pursuant to the accompanying Notice of 2003 Annual General
Meeting of Shareholders. The Meeting will be held on Wednesday, September 10,
2003 at 16:00 P.M. (Israel time), at the offices of the Company, 24 Raoul
Wallenberg Street, Tel Aviv, Israel.
It is proposed that at the Meeting, resolutions be adopted as follows:
1. To elect three (3) directors to serve as members of our Board of
Directors;
2. To reappoint our auditors, and to authorize our Board of Directors
to fix the remuneration of the auditors in accordance with the
amount and nature of their services;
3. To approve the adoption of the Radcom Ltd. 2003 Share Option Plan;
4. To approve the grant of options to purchase 30,000 Ordinary Shares
to each of Rony Ross, Dan Barnea, Zohar Gilon and Arnon Toussia-Cohen,
directors of the Company;
5. To approve the grant of options to purchase 60,000 Ordinary Shares to
Zohar Zisapel, the Chairman of the Board of Directors of the Company;
6. To approve a directors and officers' liability insurance policy for
the benefit of directors; and
7. To approve a maximum aggregate Company liability under all
indemnification agreements entered into with directors and officers.
Additionally, the auditors' report and the consolidated financial
statements of the Company for the year ended December 31, 2002 will be
discussed.
The Company currently is not aware of any other matters which will come
before the Meeting. If any other matters properly come before the Meeting, the
persons designated as proxies intend to vote in accordance with their judgment
on such matters.
A form of proxy for use at the Meeting and a return envelope for the
proxy are enclosed. Shareholders may revoke the authority granted by their
execution of proxies at any time before the exercise thereof by filing with the
Company a written notice of revocation or duly executed proxy bearing a later
date, or by voting in person at the Meeting. Unless otherwise indicated on the
form of proxy, shares represented by any proxy in the enclosed form, if the
proxy is properly executed and received by the Company not less than 72 hours
prior to the time fixed for the Meeting, will be voted in favor of all the
matters to be presented to the Meeting, as described above. On all matters
considered at the Meeting, abstentions and broker non-votes will be treated as
neither a vote "for" nor "against" the matter, although they will be counted in
determining whether a quorum is present.
Proxies for use at the Meeting are being solicited by the Board of
Directors of the Company. Only shareholders of record at the close of business
on July 31, 2003 will be entitled to vote at the Meeting. Proxies are being
mailed to shareholders on or about August 5, 2003 and will be solicited chiefly
by mail. However, certain officers, directors, employees and agents of the
Company, none of whom will receive additional compensation therefor, may solicit
proxies by telephone, telegram or other personal contact. The Company will bear
the cost for the solicitation of the proxies, including postage, printing and
handling, and will reimburse the reasonable expenses of brokerage firms and
others for forwarding material to beneficial owners of shares.
RECORD DATE; OUTSTANDING VOTING SECURITIES; VOTING RIGHTS
Only shareholders of record at the close of business on July 31, 2003
will be entitled to vote at the Meeting and any adjournments or postponements
thereof. The Company had outstanding on June 30, 2003, 10,492,050 Ordinary
Shares, each of which is entitled to one vote upon each of the matters to be
presented at the Meeting. Two or more shareholders of the Company holding shares
conferring in the aggregate at least one-third (1/3) of the voting power of the
Company, present in person or by proxy and entitled to vote, will constitute a
quorum at the Meeting.
BENEFICIAL OWNERSHIP OF SECURITIES BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 2003, the number of
shares owned beneficially by (i) all shareholders known to the Company to own
beneficially five percent (5%) or more of the Company's shares, and (ii) all
directors and officers as a group.
The information contained herein has been obtained from the Company's
records, from information furnished by the individual or entity to the Company
or from public filings.
Percentage of
Number of Ordinary Outstanding Ordinary
Name Shares Beneficially Owned(1) Shares(2)
Zohar Zisapel (3) (4)......................... 2,557,129 24.2%
Yehuda Zisapel (3) (5)........................ 1,396,034 13.3%
RAD Data Communications Ltd................... 127,946 1.2%
J. Carrlo Cannell, D/B/A
Cannell Capital Management (6)................ 1,402,340 13.4%
All directors and executive officers as a group (12
persons) (1) (2).............................. 3,522,579 30.7 %
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(1) Except as otherwise noted and pursuant to applicable community property
laws, each person named in the table has sole voting and investment
power with respect to all Ordinary Shares listed as owned by such
person. Shares beneficially owned include shares that may be acquired
pursuant to options that are exercisable within 60 days of June 30,
2003.
(2) Ordinary Shares deemed beneficially owned by virtue of the right of any
person or group to acquire such shares within 60 days of June 30, 2003
are treated as outstanding only for the purposes of determining the
percent owned by such person or group. The outstanding Ordinary Shares
do not include 123,372 Ordinary Shares that were repurchased by us in
2001.
(3) Messrs. Zohar Zisapel and Yehuda Zisapel may be deemed to have
beneficial ownership of the Ordinary Shares held by RAD Data
Communications Ltd., an Israeli company.
(4) Includes 127,946 Ordinary Shares owned of record by RAD Data
Communications, 54,500 Ordinary Shares owned of record by Klil and
Michael Ltd., an Israeli company, and 61,666 Ordinary Shares issuable
upon exercise of options exercisable within 60 days of June 30, 2003.
Zohar Zisapel is a principal shareholder and director of each of RAD
Data Communications Ltd. and Klil and Michael Ltd. and, as such, Mr.
Zisapel may be deemed to have voting and dispositive power over the
Ordinary Shares held by RAD Data Communications and Klil and Michael
Ltd. Mr. Zisapel disclaims beneficial ownership of these Ordinary
Shares except to the extent of his pecuniary interest therein.
(5) Includes 127,946 Ordinary Shares owned of record by RAD Data
Communications and 910,360 Ordinary Shares owned of record by Retem
Local Networks Ltd., an Israeli company. Yehuda Zisapel is a principal
shareholder and director of each of RAD Data Communications and Retem
Local Networks and, as such, Mr. Zisapel may be deemed to have voting
and dispositive power over the Ordinary Shares held by RAD Data
Communications and Retem Local Networks. Mr. Zisapel disclaims
beneficial ownership of these Ordinary Shares except to the extent of
his pecuniary interest therein.
(6) J. Carrlo Cannell, D/B/A Cannell Capital Management, acquired
beneficial ownership of the Ordinary Shares during the past years,
based on his Form 13-G filling as of March 31, 2003.
ITEM 1 - ELECTION OF DIRECTORS
Under the Company's Articles of Association, the Board of Directors is
to consist of not less than three (3) and not more than nine (9) directors, the
exact number to be fixed from time to time by resolution of the shareholders.
The number of directors which can be elected as members of the Board of
Directors of the Company is six (6). Directors of the Company, other than
outside directors, are elected at each annual general meeting of shareholders.
All of the Company's directors, other than it's outside directors, are up for
re-election. At the Meeting, shareholders will be asked to re-elect Zohar
Zisapel, Arnon Toussia-Cohen and Zohar Gilon to serve as members of our Board of
Directors. Mr. Mordechai (Moty) Ben-Arie has informed the Company that he does
not wish to stand for re-election and therefor there will be a vacancy in the
Company's Board of Directors. There is currently no candidate for such vacancy
and the Board of Directors does not currently have a plan to fill such vacancy.
Pursuant to the Articles of Association of the Company, the Board of Directors
is entitled to temporarily fill such vacancy until the next annual general
meeting of the shareholders, and such vacancy may be filled by action of the
shareholders of the Company at an extraordinary or annual general meeting. Rony
Ross and Dan Barnea, the Company's outside directors, are not up for
re-election.
Proxies may not be voted for a greater number of persons than the
number of nominees named. Under the Articles of Association of the Company, the
Board of Directors will be entitled to fill, until the next election of
directors, any vacancies existing on the Board of Directors following the annual
general meeting at its sole discretion.
It is intended that proxies (other than those directing the proxy
holders to vote against the listed nominees or for certain of them or to
abstain) will be voted for the election of the three nominees named below as
directors of the Company, each to hold office until the next annual general
meeting and until his successor shall have duly taken office, unless his office
is vacated earlier under any relevant provision of the Articles of Association
of the Company.
The affirmative vote of a majority of the Ordinary Shares represented
at the Meeting in person or by proxy is required to elect the four nominees
named below as directors of the Company. In the event any one or more of such
nominees should be unable to serve, the proxies will be voted for the election
of such other person or persons as shall be determined by the persons named in
the proxy in accordance with their best judgment. The Company is not aware of
any reason why any of the nominees, if elected, should be unable to serve as a
director. The Company does not have any understanding or agreement with respect
to the future election of any nominees named herein. The following information
is supplied with respect to each person nominated and recommended to be elected
by the Board of Directors of the Company, and is based upon the records of the
Company and information furnished to it by the nominees. Reference is made to
the above chart entitled "Beneficial Ownership of Securities by Certain
Beneficial Owners and Management" for information pertaining to stock ownership
by certain nominees.
A brief biography of each nominee is set forth below:
Mr. Zohar Zisapel (54), one of the co-founders of the Company, has
served as the Chairman of the Board of Directors of the Company since its
inception. Mr. Zisapel also serves as a director of RADCOM Equipment, Inc. Mr.
Zisapel is also a founder and a director of RAD Data Communications Ltd., a
worldwide data communications company headquartered in Israel, for which he
currently serves as Chairman of the Board and served as President from 1982 to
1997. Mr. Zisapel is a director of other public companies including: Verisity
Ltd., RADVision Ltd., Ceragon Ltd. and RIT Technologies Ltd. Mr. Zisapel
previously served as Head of the Electronics Research Department in the Israeli
Ministry of Defense. Mr. Zisapel has a B.Sc. and a M.Sc. degree in electrical
engineering from the Technion and an M.B.A. degree from Tel Aviv University.
Mr. Arnon Toussia-Cohen (49), the President and Chief Executive Officer
of the Company, joined the Company in September 1998, and has served as a
director since September 1999. Mr. Toussia-Cohen also serves as a director of
RADCOM Equipment, Inc. and RADCOM (UK) Ltd. Prior to joining the Company, Mr.
Toussia-Cohen worked for Telrad Telecommunications Industries, a leading Israeli
telecommunications equipment manufacturer, in a number of capacities, including
R&D Division Manager, Vice President of Business Systems and finally as
President of Telrad Telecommunications Inc., the Company's subsidiary in North
America. Mr. Toussia-Cohen has a B.Sc. degree in electrical engineering from the
Technion and a diploma in Advanced Business Studies for Managers from the Open
University in Israel.
Mr. Zohar Gilon (55), has served as a director since June 1995. Mr.
Gilon serves as a General Partner and Managing Director of Tamar Technologies
Ventures, a venture capital fund that invests in Israel and the United States.
From 1993 until August 1995, Mr. Gilon served as President of W.S.P. Capital
Holdings Ltd., which provides investment banking and underwriting services in
Israel and invests in real estate and high-technology investments in Israel and
abroad. Mr. Gilon is a private investor in numerous high-technology companies,
including affiliates of the Company in Israel, and is a director of Silicom Ltd,
RIT Technologies Ltd, Advance Vision Technology Ltd, Edge Medical Devices Ltd,
Exlibris Ltd, Orsense Ltd and Ceragon Ltd. Mr. Gilon holds a B.Sc. degree in
electrical engineering from the Technion and an M.B.A. degree from Tel Aviv
University.
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for the approval of this matter.
It is proposed that at the Meeting the following resolutions be
adopted:
"RESOLVED, that Zohar Zisapel be elected to serve as a member of the
Board of Directors of the Company, effective immediately."
"RESOLVED, that Arnon Toussia-Cohen be elected to serve
as a member of the Board of Directors of the Company, effective immediately."
"RESOLVED, that Zohar Gilon be elected to serve as a member of the
Board of Directors of the Company, effective immediately."
The Board of Directors recommends a vote FOR approval of the proposed
resolutions.
ITEM 2- REAPPOINTMENT OF INDEPENDENT AUDITORS
At the Meeting, the shareholders will be asked to approve the
reappointment of Somekh Chaikin, Certified Public Accountants (Israel), a member
firm of KPMG International, as our independent auditors for the fiscal year
ending December 31, 2003. Somekh Chaikin has no relationship with the Company or
with any affiliate of the Company except as auditors and, to a limited extent,
as tax consultants. The Board of Directors believes that such limited non-audit
function does not affect the independence of Somekh Chaikin. The shareholders
will also be asked to authorize the Board of Directors to fix the compensation
of the auditors in accordance with the amount and nature of their services, or
to delegate such power to the Company's Audit Committee.
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for the approval of this matter.
It is proposed that at the Meeting the following resolutions be
adopted:
"RESOLVED, that Somekh Chaikin, Certified Public Accountants (Israel),
a member firm of KPMG International, be, and hereby are, appointed as
the independent auditors of the Company for the fiscal year ending
December 31, 2003, and that the Board of Directors of the Company be,
and it hereby is, authorized to fix the compensation of the independent
auditors in accordance with the amount and nature of their services, or
to delegate such power to the Audit Committee of the Company."
The Board of Directors recommends a vote FOR approval of the
proposed resolutions.
ITEM 3 - APPROVAL OF THE RADCOM LTD. 2003 SHARE OPTION PLAN
At the Meeting, the shareholders will be asked to approve the Radcom
Ltd. 2003 Share Option Plan (as amended) (the "Plan"), under which the Board of
Directors may grant options to employees, officers, consultants and/or
contractors of the Company, provided that such options are granted in compliance
with applicable law.
On July 24, 2002 an extensive tax reform was adopted by the Israeli
parliament, which became effective as of January 1, 2003 (the "Tax Reform"), and
included certain changes with respect to the taxation of options granted to
employees and directors. In the framework of the Tax Reform, the Income Tax
Ordinance [New Version] - 1961 (the "Tax Ordinance") was amended and, among
other things, various new tax advantages are afforded under the amended Section
102 of the Tax Ordinance ("Section 102") with respect to grant of options to
employees and directors.
According to Section 102 and the rules which were promulgated
thereunder (the "102 Rules"), in order to enable employees and directors of the
Company to benefit from such tax advantages with respect to future grants of
options and shares, among other conditions, such grants have to be performed
under a share option plan that is adjusted to Section 102 as well as the 102
Rules. Accordingly, on December 22, 2002 the Board of Directors of the Company
adopted the Radcom Ltd. 2003 Share Option Plan, which provisions are adjusted to
Section 102, and on March 20, 2003, following the subsequent official
publication of the 102 Rules, the Board of Directors of the Company adopted an
amendment to the Plan, and on July 10, 2003, the Board of Directors of the
Company approved a further amendment to the Plan. The provisions of the Plan are
summarized below.
Administration
The Plan is administered by a Share Incentive Committee of the Board of
Directors (the "Committee"), or where not permitted according to Section 112 of
the Companies Law, 1999, by the Board of Directors of the Company. Subject to
the terms of the Plan and applicable law, the Committee will have full authority
to determine, among other things, the grantees to whom options to purchase
shares shall be granted ("Options"), the number of shares subject to each
Option, the time at which each Option shall be issued, the schedule and
conditions of exercise of such Options and which law the Options shall be
granted under. The Committee may also adopt rules and regulations for carrying
out the Plan and may interpret and construct the provisions of the Plan.
Securities Subject to the Radcom Ltd. 2003 Share Option Plan
At the Annual General Meeting of the Shareholders of the Company on
December 11, 2000, the shareholders of the Company approved the reservation of
4% of the outstanding Ordinary Shares of the Company, every year for three years
beginning January 2001 and ending December 2003, to be used for options for
issuance pursuant to the Radcom Ltd. 2001 Share Option Plan (the "2001 Share
Option Plan"). On December 22, 2002, the Board of Directors of the Company
resolved that such reserved shares in respect of which options have not been
granted to date under the 2001 Share Option Plan shall be transferred for
issuance under the Plan, and on July 10, 2003, the Board of Directors of the
Company further resolved that such reserved shares in respect of which options
have not been granted to date under the Directors Share Incentive Plan (1997)
shall be transferred for issuance under the Plan. Accordingly and in accordance
with the Plan, the Company has reserved 946,748 authorized but unissued Ordinary
Shares to be issued under the Plan and any other option or incentive plan that
the Company may adopt.
All shares under the Plan for which a grantee's right to purchase the
same shall, for any reason, terminate, expire or otherwise cease to exist, shall
again be available for grant through Options under the Plan.
Eligibility and Participation
The Plan is designed to allow employees, officers, consultants and
contractors of the Company to purchase Ordinary Shares of the Company (the
"Shares").
All grants of Options to employees, directors and office holders of the
Company, other than to a Controlling Shareholder of the Company (as such term is
defined in the Tax Ordinance), shall be 102 Options (as defined in the Plan),
and grants of Options to consultants, contractors or Controlling Shareholders of
the Company shall be 3(9) Options (as defined in the Plan).
Grant of Options and Issuance of Shares
The effective date of the grant of an Option (the "Date of Grant")
shall be the date specified by the Committee in its determination relating to
the award of such Option.
The Committee shall have the full authority to determine:
(a) with respect to the grant of 102 Options - whether for the grant of
such 102 Options the Company shall elect the Ordinary Income Route or the
Capital Gains Route (both such terms as defined in the Plan, and each a
"Taxation Route"), and the identity of the trustee who shall be granted such 102
Options. In the event the Committee determines that the Company shall elect one
of the Taxation Routes for the grant of 102 Options, the Company shall be
entitled to change such election only following the lapse of one year from the
end of the tax year in which 102 Options are first granted under the then
prevailing Taxation Route. Notwithstanding the aforesaid, the Committee may,
from time to time and at any time, grant 102 Options that will not be subject to
a Taxation Route, which shall be 102(c) Options (as defined in the Plan); and
(b) with respect to the grant of 3(9) Options - whether or not 3(9)
Options shall be granted to a trustee, and, if applicable, the identity of the
trustee who shall be granted such 3(9) Options.
In the event Options are granted under the Plan to a trustee designated
by the Committee, which with respect to 102 Options will be approved by the
Israeli Commissioner of Income Tax (the "Trustee"), the Trustee shall hold each
such Option and the Shares issued upon exercise thereof in trust (the "Trust")
for the benefit of the grantee in respect of whom such Option was granted. All
certificates representing Shares issued to the Trustee under the Plan shall be
deposited with the Trustee, and shall be held by the Trustee until such time
that such Shares are released from the Trust as provided in the Plan.
Term of Options and Vesting
Unless otherwise specified by the Committee, the Options shall be for a
term of ten (10) years. Unless otherwise determined by the Committee, the
Options shall be fully vested on the fourth anniversary following the Date of
Grant, as follows: 50% of the Options shall vest on the second anniversary of
the Date of Grant, and an additional 25% shall vest on the third and fourth
anniversaries of the Date of Grant.
Notwithstanding anything contrary in the Plan, the Committee shall have
full authority to determine any provisions regarding the acceleration of the
vesting period of any Option or the cancellation of all or any portion of any
outstanding restrictions with respect to any Option or Share upon certain events
or occurrences.
Exercise Price and Terms of Exercise
The exercise price per Share subject to each Option shall be determined
by the Committee in its sole and absolute discretion, however the exercise price
per Share shall not be less than the par value of the Shares into which such
Option is exercisable.
Subject to applicable law, the Committee shall have full authority to,
at any time and from time to time, without the approval of the shareholders of
the Company, (i) grant in its discretion to the holder of an outstanding Option,
in exchange for the surrender and cancellation of such Option, a new Option
having an exercise price lower than provided in the Option so surrendered and
cancelled and containing such other terms and conditions as the Committee may
prescribe in accordance with the provisions of the Plan, or (ii) effectuate a
decrease in the exercise price of outstanding Options.
Options shall be exercisable pursuant to the terms under which they
were awarded and subject to the terms and conditions of the Plan. If any Option
has not been exercised and the Shares subject thereto not paid for within ten
(10) years after the Date of Grant (or any shorter period set forth in the
Notice of Grant), such Option and the right to acquire such Shares shall
terminate, and all interests and rights of the grantee in and to the same shall
ipso facto expire, and, in the event that in connection therewith any Options
are still held in Trust, the Trust with respect thereto shall ipso facto expire,
and the Shares subject to such Options shall again be available for grant
through Options under the Plan.
The exercise price shall be payable in cash or check made payable to
the Company or such other method of payment acceptable to the Company.
Limitations on Transfer
No Option shall be assignable or transferable by the grantee to whom
granted otherwise than by will or the laws of descent and distribution, and an
Option may be exercised during the lifetime of the grantee only by such grantee
or by such grantee's guardian or legal representative. The terms of such Option
shall be binding upon the beneficiaries, executors, administrators, heirs and
successors of such grantee.
Termination of Employment or Service
In the event that a grantee who was an employee of the Company on the
Date of Grant of any Options ceases, for any reason, to be employed by the
Company, all Options theretofore granted to such grantee when such grantee was
an employee of the Company shall terminate as follows:
(a) All Options not vested at the time of the cessation of employment shall
terminate immediately.
(b) If the grantee's cessation of employment is by reason of such grantee's
death or Disability (as defined in the Plan), such Options (to the
extent vested at the Date of Cessation) shall be exercisable by the
grantee or the grantee's guardian, legal representative, estate or
other person to whom the grantee's rights are transferred by will or by
laws of descent or distribution, at any time until 180 days from the
date of cessation of employment, and shall thereafter terminate.
(c) If the grantee's cessation of employment is due to (i) breach of
the grantee's duty of loyalty towards the Company, or (ii) breach
of the grantee's duty of care towards the Company, or (iii) the
commission of any flagrant criminal offense by the grantee, or (iv)
the commission of any act of fraud, embezzlement or dishonesty
towards the Company by the grantee, or (v) any unauthorized use or
disclosure by the grantee of confidential information or trade secrets
of the Company, or (vi) any other intentional misconduct by the
grantee (by act or omission) adversely affecting the business or
affairs of the Company in a material manner, or (vii) any act or
omission by the grantee which would allow for the termination of
the grantee's employment without severance pay, according to the
Israeli Severance Pay Law, 1963, all the Options whether vested
or not shall ipso facto expire immediately and be of no legal effect.
(d) If a grantee retires, he shall, subject to the approval of the
Committee, continue to enjoy such rights, if any, under the Plan and on
such terms and conditions, with such limitations and subject to such
requirements as the Committee in its discretion may determine.
(e) If the grantee's cessation of employment is due to any reason other
than those stated in Sections (b), (c) and (d) above, such Options (to
the extent vested at the date of cessation of employment) shall be
exercisable at any time until 180 days after the date of cessation of
employment, and shall thereafter terminate; provided, however, that if
the grantee dies within such period, such Options (to the extent vested
at the date of cessation of employment) shall be exercisable by the
grantee's legal representative, estate or other person to whom the
grantee's rights are transferred by will or by laws of descent or
distribution at any time until 180 days from the date of cessation of
employment, and shall thereafter terminate.
In the event that a grantee, who is a director, consultant or
contractor of the Company, ceases, for any reason, to serve as such, the
provisions of Sections (a), (b), (c) and (e), above shall apply, with
appropriate adjustments. For these purposes, the "date of cessation of
employment" shall mean: (a) with respect to directors - the date on which a
director submits notice of resignation from the Board or the date on which the
shareholders of the Company remove such director from the Board; and (b) with
respect to consultants and contractors - the date on which the consulting or
contractor agreement between such consultant or contractor, as applicable, and
the Company expires or the date on which either of the parties to such agreement
sends the other notice of its intention to terminate said agreement.
Notwithstanding the foregoing provisions of the preceding paragraphs,
the Committee may provide, either at the time an Option is granted or
thereafter, (a) that such Option may be exercised after the periods provided for
above, but in no event beyond the term of the Option; and (b) that such Option
may be exercised during the applicable exercise period following the date of
cessation of employment or service, not only with respect to the number of
Shares for which such Option is exercisable at such date but also with respect
to one or more additional installments in which the grantee would have vested
under the Option had the grantee continued in the employ or service of the
Company.
Treatment of Options upon Merger or Sale of All of the Company's Assets
If, upon a Merger or Sale of All of the Company's Assets (both such
terms as defined in the Plan, collectively a "Corporate Transaction"),
securities of the Company shall be exchanged for the securities of another
corporation or a parent or subsidiary of such other corporation, then,
immediately prior to the effective date of such Corporate Transaction, each
Option shall, at the sole and absolute discretion of the Committee, either (i)
be substituted for options to purchase shares of the successor entity which
would have been issuable to the grantee in consummation of such Corporate
Transaction, and appropriate adjustments shall be made in the exercise price per
share to reflect such exchange; or (ii) be assumed by the successor entity such
that the grantee may exercise the Option for such number and class of shares of
the successor entity which would have been issuable to the grantee in
consummation of such Corporate Transaction, and appropriate adjustments shall be
made in the purchase price per share to reflect such exchange.
Notwithstanding the foregoing, the Committee shall have full authority
and sole discretion to determine that any of the provisions of Sections (i) or
(ii) above shall apply in the event of a Corporate Transaction in which the
consideration received by the shareholders of the Company is not solely
comprised of securities of the successor entity, or in which such consideration
is solely cash or assets other than securities of the successor entity
In the event that all or substantially all of the issued and
outstanding share capital of the Company is to be sold, each grantee shall be
obligated to participate in such sale and sell his or her Shares and/or Options
in the Company, provided, however, that each such Share or Option shall be sold
at a price equal to that of any other Share sold under such sale (minus the
applicable exercise price), while accounting for changes in such price due to
the respective terms of any such Option, and subject to the absolute discretion
of the Board of Directors.
Amendment and Termination
The Plan shall expire upon the earliest of December 22, 2012, or the
termination of all outstanding Options in connection with a Corporate
Transaction. If the Plan shall terminate on December 22, 2012, all outstanding
Options shall thereafter continue to have full force and effect in accordance
with the provisions of the Plan and the documents evidencing such grants.
The Board of Directors of the Company shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects. However,
no such amendment or modification shall adversely affect the rights and
obligations with respect to Options at the time outstanding under the Plan,
unless the grantee consents to such amendment or modification. Without
derogating from the foregoing, the Board of Directors of the Company in its
discretion may, at any time and from time to time, without the approval of the
shareholders of the Company, (i) increase the number of Shares to be issued
under the Plan; or (ii) expand of the class of participants eligible to
participate in the Plan; or (iii) expand the types of options or awards provided
under the Plan.
Tax Consequence: Applicable to Israeli Residents Only
Option grants to Israeli employees, directors and office holders, other
than Controlling Shareholders (as such term is defined in the Tax Ordinance)
under the Plan may be granted only under Section 102, while Options granted to
Israeli contractors, consultants or Controlling Shareholders under the Plan may
be granted only under Section 3(9) of the Tax Ordinance.
Options granted under Section 3(9) of the Tax Ordinance are deemed
ordinary income of the grantee on the date of exercise of the Option. The
benefit to the grantee is calculated as the fair market value of the share on
the exercise date less the exercise price. Such income is subject to up to 50%
income tax, and may be subject to social security and national health insurance
payments.
Options granted under Section 102 of the Tax Ordinance are taxed on the
date of sale of the exercised Share and/or the date of the release of the
Options or such exercised Shares from the Trust (as such term is defined above)
(rather than on the exercise date of the Options). The income of the grantee on
such date is calculated as the fair market value of the share (or the actual
sale price) less the exercise price of the Option.
In the event that the Committee elects the Capital Gains Route for the
taxation of Options granted under Section 102 then, provided such Options (or
the exercised Shares) are held by the Trustee (as defined above) for a period of
at least two years from the end of the tax year in which such Options are
granted, the gains derived from such Options shall be classified as capital
gains and taxed at a rate of only 25% and the Company shall not benefit from any
recognized deductions resulting from the grant of such awards. However if the
exercised Shares are sold (or if the exercised Shares or Options are released
from Trust) prior to the lapse of such period, gains derived from such sale
shall be deemed ordinary income and subject to tax at a marginal rate of up to
50%, plus social security and national health insurance payments, and the
Company shall not benefit from any recognized deduction resulting from the grant
of such awards.
In the event that the Committee elects the Ordinary Income Route for
the taxation of Options granted under Section 102 then, provided such Options
(or the exercised Shares) are held by the Trustee for a period of at least one
year from the end of the tax year in which such Options are granted, the gains
derived from such Options shall be classified as ordinary income and taxed at a
marginal rate of up to 50%, plus social security and national health insurance
payments, and the Company shall benefit from the recognized deduction resulting
from the grant of such awards. However if the Options (or the exercised Shares)
are released from Trust prior to the lapse of such period, gains derived from
such sale shall be classified as ordinary income and taxed at a marginal rate of
up to 50%, based on the higher of the following calculations: (a) the tax due at
the time of the grant plus interest and linkage to the Israeli Consumer Price
Index accumulated from the date of the grant until the date of the payment of
the tax, and (b) the tax due on the date of the release of the Option (or the
exercised Shares) from Trust, plus social security and national health insurance
payments, and the Company shall benefit from the recognized deduction resulting
from the grant of such awards.
On December 22, 2002, the Board of Directors of the Company elected the
Capital Gains Route for the taxation of Options that will be granted under the
Plan pursuant to Section 102.
Vote Required
The approval of the Radcom Ltd. 2003 Share Option Plan (as amended)
requires the affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter.
Should such shareholder approval not be obtained, then the Radcom Ltd. 2003
Share Option Plan will not be implemented.
It is proposed that at the Meeting the following resolution be adopted:
"RESOLVED, that the adoption of the Radcom Ltd. 2003 Share Option Plan
(as amended) be approved."
The Board of Directors recommends a vote FOR approval
of the proposed resolution.
ITEM 4 - APPROVAL OF GRANT OF OPTIONS TO PURCHASE
30,000 ORDINARY SHARES TO DIRECTORS
By actions of the Company's Audit Committee and Board of Directors on
January 26, 2003, Rony Ross, Dan Barnea, Zohar Gilon and Arnon Toussia-Cohen,
directors of the Company, were each granted options to purchase 30,000 Ordinary
Shares, which shall vest in three (3) equal annual installments (commencing
January 1, 2004 through January 1, 2006), as long as each such director
continues to serve as a member of the Company's Board of Directors, exercisable
at an exercise price equal to the closing price for Ordinary Shares as traded on
the Nasdaq National Market at the close of trading on January 31, 2003. The
aforesaid options were granted by the Company under the Radcom Ltd. 2003 Share
Option Plan, subject to shareholder approval, and under Section 102(b)(2) of the
Income Tax Ordinance [New Version] - 1961, and the Company elected the capital
gains route for the grant of these options.
It is proposed that at the Meeting the following resolutions be
adopted:
"RESOLVED, to approve the grant of options to Rony Ross, Dan Barnea,
Zohar Gilon and Arnon Toussia-Cohen, directors of the Company, to
purchase 30,000 Ordinary Shares, which shall vest in three (3) equal
annual installments (commencing January 1, 2004 through January 1,
2006), as long as each such director continues to serve as a member of
the Company's Board of Directors, exercisable at an exercise price
equal to the closing price for Ordinary Shares as traded on the Nasdaq
National Market at the close of trading on January 31, 2003."
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for the approval of this matter.
The Board of Directors recommends a vote FOR the approval of the
proposed resolutions.
ITEM 5 - APPROVAL OF GRANT OF OPTIONS TO PURCHASE
60,000 ORDINARY SHARES TO THE CHAIRMAN OF THE BOARD OF DIRECTORS
By actions of the Company's Audit Committee and Board of Directors on
January 26, 2003, Zohar Zisapel, the Chairman of the Board of Directors of the
Company, was granted options to purchase 60,000 Ordinary Shares, which shall
vest in three (3) equal annual installments (commencing January 1, 2004 through
January 1, 2006), provided that he continues to serve as a member of the
Company's Board of Directors, exercisable at an exercise price equal to the
closing price for Ordinary Shares as traded on the Nasdaq National Market at the
close of trading on January 31, 2003. These options were granted by the Company
under the Radcom Ltd. 2003 Share Option Plan, subject to shareholder approval,
and under Section 3(9) of the Income Tax Ordinance [New Version] - 1961.
It is proposed that at the Meeting the following resolution be adopted:
"RESOLVED, to approve the grant of options to Zohar Zisapel, the
Chairman of the Board of Directors of the Company, to purchase 60,000
Ordinary Shares, which shall vest in three (3) equal annual
installments (commencing January 1, 2004 through January 1, 2006),
provided that he continues to serve as a member of the Company's Board
of Directors, exercisable at an exercise price equal to the closing
price for Ordinary Shares as traded on the Nasdaq National Market at
the close of trading on January 31, 2003."
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for approval of this matter.
The Board of Directors recommends a vote FOR approval of this proposed
matter.
ITEM 6 - APPROVAL OF DIRECTORS AND OFFICERS' LIABILITY INSURANCE POLICY
Our articles of association provide that, subject to the provisions of
the Israeli Companies Law, we may enter into a contract for the insurance of the
liability of any of our office holders with respect to an act performed by such
individual in his or her capacity as an office holder.
The Companies Law provides that a company may not enter into a contract
for the insurance of its office holders for: (a) a breach by the office holder
of his or her duty of loyalty, unless the office holder acted in good faith and
had a reasonable basis to believe that such act would not prejudice the company;
(b) a breach by the office holder of his or her duty of care if the breach was
committed intentionally or recklessly; (c) any act or omission committed with
the intent to unlawfully yield a personal profit; or (d) any fine imposed on the
office holder.
Under the Israeli Companies Law, the procurement of insurance coverage
for directors requires the approval of our Audit Committee, Board of Directors
and shareholders.
The Company's current directors and officers' liability insurance
policy is due to expire on August 31, 2003, and the Company intends to enter
into a new directors and officers' liability insurance policy to replace it. The
new directors and officers' liability insurance policy shall cover a maximum
liability of US$15,000,000. The Company is currently negotiating with certain
insurance companies in order to obtain the most cost effective policy.
It is proposed that at the Meeting the following resolution be adopted:
"RESOLVED, that the purchase of a directors and officers' liability
insurance policy, with maximum coverage of US$15,000,000, for the
benefit of all directors of the Company, from time to time, is hereby
approved."
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for the approval of this matter.
The Board of Directors recommends a vote FOR
approval of this proposed matter.
ITEM 7 - APPROVAL OF MAXIMUM AGGREGATE COMPANY LIABILITY UNDER ALL
INDEMNIFICATION AGREEMENTS ENTERED INTO WITH DIRECTORS AND OFFICERS
On December 11, 2000, the Company's shareholders approved a form of an
Indemnification Agreement regarding indemnification of the Company's directors
and officers, which is attached to the Proxy Statement as Exhibit A. Under the
Israeli Companies Law, a company may undertake to indemnify a director or
officer in advance, provided, among other things, that the undertaking is
limited to an amount the board of directors has determined is reasonable in the
circumstances. The Company's Board of Directors has resolved to limit the
Company's liability under all indemnification agreements entered into with the
Company's directors and officers, jointly and in the aggregate, to a maximum
amount of US$15,000,000, which was determined to be a reasonable amount under
the circumstances set forth in the approved form of Indemnification Agreement.
Under the Israeli Companies Law, indemnification of a director or
officer of a company requires the approval of our Audit Committee and Board of
Directors, and if the beneficiary is a director, also the approval of the
shareholders.
It is proposed that at the Meeting the following resolution be adopted:
"RESOLVED, that the maximum Company liability under all indemnification
agreements entered into with the Company's directors and officers, from
time to time, in the form previously approved by the shareholders,
jointly and in the aggregate, in the amount of US$15,000,000, is hereby
approved."
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting, in person or by proxy, and voting on this matter, is
required for the approval of this matter. If the directors of the Company, who
together own approximately 27.6% of the Ordinary Shares, may collectively be
deemed to be controlling shareholders, and if so, a special majority vote would
be required for approval of this matter. In such event, the affirmative vote of
the Ordinary Shares must include at least one-third (1/3) of the Ordinary Shares
voted by shareholders who do not have a personal interest in the matter (unless
the total shares of non-interested shareholders voted against the matter does
not represent more than one percent (1%) of the outstanding Ordinary Shares).
For this purpose, all shareholders are asked to indicate on the enclosed proxy
card whether or not they have a personal interest in this matter. Under the
Companies Law, a "personal interest" of a shareholder (i) includes an interest
of any member of the shareholder's immediate family (or spouses thereof), or an
interest of a company with respect to which the shareholder (or such family
member thereof) owns at least five percent (5%) of the shares, has the right to
appoint a director or the Chief Executive Officer, or serves as a director or
the Chief Executive Officer; and (ii) excludes an interest arising solely from
the ownership of shares in the Company.
The Board of Directors recommends a vote FOR approval of this proposed
matter.
ITEM 8 - REVIEW OF THE AUDITORS' REPORT
AND THE CONSOLIDATED FINANCIAL STATEMENTS
The Company's annual report, consisting of a letter to the shareholders
and the audited consolidated financial statements of the Company for the fiscal
year ended December 31, 2002 is attached hereto. The Company will hold a
discussion with respect to the financial statements at the Meeting. This item
will not involve a vote of the shareholders.
ITEM 9 - OTHER BUSINESS
Management knows of no other business to be transacted at the Meeting;
but, if any other matters are properly presented to the Meeting, the persons
named in the enclosed form of proxy will vote upon such matters in accordance
with their best judgment.
By Order of the Board of Directors,
Arnon Toussia-Cohen
Chief Executive Officer
Dated: July 31, 2003