¨
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of Each Class
Ordinary shares, par value NIS 0.01 per share
|
Name of Each Exchange on which Registered
NASDAQ Global Market
|
U.S. GAAP
T
|
International Financial Reporting Standards as issued by
the International Accounting Standards Board
o
|
Other
o
|
Year ended December 31,
|
||||||||||||||||||||
Statement of Operations Data: |
2008
|
2009
|
2010
|
2011
|
2012
|
|||||||||||||||
U.S. dollars in thousands (except share and per share data)
|
||||||||||||||||||||
Revenues | ||||||||||||||||||||
Search | $ |
11,747
|
$ |
20,011
|
$ |
22,792
|
$ |
25,466
|
$ |
38,061
|
||||||||||
Products |
9,158
|
6,717
|
5,404
|
7,191
|
17,574
|
|||||||||||||||
Other |
1,001
|
467
|
1,301
|
2,816
|
4,588
|
|||||||||||||||
$ |
21,906
|
$ |
27,195
|
$ |
29,497
|
$ |
35,473
|
$ |
60,223
|
|||||||||||
Cost of revenues |
1,795
|
1,505
|
1,606
|
2,840
|
5,230
|
|||||||||||||||
Gross profit
|
20,111 | 25,690 | 27,891 | 32,633 | 54,993 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development costs, net
|
7,589 | 6,254 | 6,607 | 7,453 | 10,735 | |||||||||||||||
Selling and marketing expenses
|
7,343 | 4,616 | 5,244 | 12,984 | 29,517 | |||||||||||||||
General and administrative expenses
|
3,806 | 3,334 | 4,741 | 7,649 | 8,560 | |||||||||||||||
Goodwill impairment and other charges
|
1,153 | - | - | - | - | |||||||||||||||
Total operating expenses
|
19,891 | 14,204 | 16,592 | 28,086 | 48,812 | |||||||||||||||
Operating income
|
220 | 11,486 | 11,299 | 4,547 | 6,181 | |||||||||||||||
Financial income, net
|
4,494 | 72 | 322 | 1,293 | ( 174 | ) | ||||||||||||||
Income, before taxes on income
|
4,714 | 11,558 | 11,621 | 5,840 | 6,007 | |||||||||||||||
Taxes on income
|
289 | 3,545 | 3,232 | 172 | 2,473 | |||||||||||||||
Net income
|
$ | 4,425 | $ | 8,013 | $ | 8,389 | $ | 5,668 | $ | 3,534 | ||||||||||
Net earnings per share:
|
||||||||||||||||||||
Basic
|
$ | 0.47 | $ | 0.86 | $ | 0.87 | $ | 0.58 | $ | 0.35 | ||||||||||
Diluted
|
$ | 0.46 | $ | 0.84 | $ | 0.85 | $ | 0.57 | $ | 0.34 | ||||||||||
Weighted average number of shares used
in net earnings (loss) per share:
|
||||||||||||||||||||
Basic
|
9,427,424 | 9,347,915 | 9,622,181 | 9,796,380 | 10,159,049 | |||||||||||||||
Diluted
|
9,516,477 | 9,562,721 | 9,831,628 | 10,002,171 | 10,366,808 |
As of December 31,
|
||||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 7,835 | $ | 24,368 | $ | 16,055 | $ | 11,260 | $ | 21,762 | ||||||||||
Working capital
|
25,143 | 26,846 | 28,067 | (27 | ) | (4,296 | ) | |||||||||||||
Total assets
|
37,651 | 39,894 | 41,348 | 54,904 | 123,159 | |||||||||||||||
Total liabilities
|
12,107 | 12,892 | 13,196 | 23,083 | 68,449 | |||||||||||||||
Shareholders’ equity
|
25,544 | 27,002 | 28,152 | 31,815 | 54,710 |
|
·
|
accurate prediction of market requirements, market preferences and trends and evolving standards;
|
|
·
|
development of advanced technologies and capabilities;
|
|
·
|
timely completion and introduction of new product designs and features that incorporate market requirements and preferences;
|
|
·
|
recruiting and retaining highly qualified personnel;
|
|
·
|
marketing new products; and
|
|
·
|
market acceptance of the enhanced and new products.
|
|
·
|
implementing appropriate operational and financial systems and controls;
|
|
·
|
expanding our sales and marketing infrastructure and capabilities;
|
|
·
|
expanding our infrastructures and technological capabilities; and
|
|
·
|
maintaining the commitment of our employees.
|
|
·
|
potential loss of proprietary information due to piracy, misappropriation or laws that may be less protective of our intellectual property rights than those of the United States;
|
|
·
|
costs and delays associated with translating and supporting our products in multiple languages;
|
|
·
|
foreign exchange rate fluctuations and economic instability, such as higher interest rates and inflation, which could make our products more expensive in those countries;
|
|
·
|
costs of compliance with a variety of laws and regulations;
|
|
·
|
restrictive governmental actions such as trade restrictions;
|
|
·
|
limitations on the transfer and repatriation of funds and foreign currency exchange restrictions;
|
|
·
|
compliance with different consumer and data protection laws and restrictions on pricing or discounts;
|
|
·
|
lower levels of adoption or use of the Internet and other technologies vital to our business and the lack of appropriate infrastructure to support widespread Internet usage;
|
|
·
|
lower levels of consumer spending on a per capita basis and fewer opportunities for growth in certain foreign market segments compared to the United States;
|
|
·
|
lower levels of credit card usage and increased payment risk;
|
|
·
|
changes in domestic and international tax regulations; and
|
|
·
|
geopolitical events, including war and terrorism.
|
|
·
|
subject to limited exceptions, the judgment is final and non-appealable;
|
|
·
|
the judgment was given by a court competent under the laws of the state of the court and is otherwise enforceable in such state;
|
|
·
|
the judgment was rendered by a court competent under the rules of private international law applicable in Israel;
|
|
·
|
the laws of the state in which the judgment was given provide for the enforcement of judgments of Israeli courts;
|
|
·
|
adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence;
|
|
·
|
the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;
|
|
·
|
the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and
|
|
·
|
an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court.
|
·
|
some programs may be discontinued;
|
·
|
we may be unable to meet the requirements for continuing to qualify for some programs;
|
·
|
these programs and tax benefits may be unavailable at their current levels;
|
·
|
upon expiration of a particular benefit, we may not be eligible to participate in a new program or qualify for a new tax benefit that would offset the loss of the expiring tax benefit; or
|
·
|
we may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.
|
|
·
|
invest in consumer insight enabling us to identify the specific needs of our targeted demographic segment;
|
|
·
|
continue and further increase our customer acquisition costs;
|
|
·
|
broaden the platform for our applications, embracing mobile platforms; and
|
|
·
|
develop a more robust product line.
|
|
·
|
Growing our user base.
Our effective viral marketing has resulted in millions of registered users who spread the word about our products and services at relatively low marketing costs to us. On top of that, since 2012, in order to accelerate our growth we have invested heavily in acquiring new customers, who may also contribute to viral growth to a certain extent.
|
|
·
|
Increasing the use of our products by our users.
By focusing on our consumers and their needs, we believe we can increase the use of our products and subsequently the searching capabilities offered to them, thereby increasing our search generated revenues.
|
|
·
|
Enhancing product offerings and increasing user sales.
Since the acquisition of Smilebox in 2011, our product sales have increased, more than offsetting a decrease in premium revenues from our
IncrediMail
communication client. We believe the offering of our products on mobile platforms will serve to increase product revenues in the future. In addition, we believe that another result of our consumer research will be to identify the premium products and services sought by our users. Although we believe that a majority of our revenues will continue to be generated by advertising in general, and search generated revenues in particular, we believe that there remains a real opportunity to grow our premium product sales significantly.
|
|
·
|
Enhancing the consumer experience.
We have always attempted to provide a positive experience to our users. As we further emphasize this aspect, we will continue to design our products and services and market them to address users’ aversion to offensive Internet marketing tools, which we believe encourages more use of our products and increases user loyalty.
|
|
·
|
Continuing to focus on the online consumer market.
Email remains a prominent communication medium and sharing digital photo creations has become a popular way of expression. We have enhanced our email client so that it incorporates the users’ Facebook feeds, and will look in the future to embrace other methods of communication. In addition, we have begun incorporating new platforms for sharing photos, such as iPhones, and introduced our IncrediMail product for the iPad in the first quarter of 2013. We intend to broaden this offering by enabling other platforms, such as Android and Windows Mobile, as well. The Internet and the application stores available enable us to reach potential users throughout the world quickly and easily as well as reduce the costs associated with sales and distribution of our products and services.
|
|
·
|
IncrediMail
is our communication client, available over the Internet it its basic version free of charge, used for managing email messages and Facebook feeds, with many graphic and personalizing capabilities. However, most important is that it is safe, simple and easy to use. The premium version of this software offers, for an annual subscription fee, VIP support and enhanced graphic capabilities, as well as advanced anti-spam software for a separate annual subscription.
|
|
·
|
SweetIM
is free downloadable and easy to use software that enables users to enhance their messaging experience and express themselves in creative ways across online platforms, such as messenger, email, etc.
|
|
·
|
Smilebox
is an Internet photo sharing service available for the desktop and smart-phone.
|
|
o
|
On the desktop, Smilebox can be used both on the PC and the Mac, making it easy to create digital creations from personal photos using a range of digital designs including invitations, greetings, collages, scrapbooks, photo albums and slideshows. These creations can then be shared free of charge via email, Facebook, Twitter, Print, DVD or photo frames. Revenues are generated from subscriptions for premium content and features, advertising from creations that are shared for free, printing revenues from creations that are printed to store or printed and shipped to home and search revenues for consumers that elect to have Smilebox provide their default search results.
|
|
o
|
Smilebox is also available free of charge for the iPhone, making it easy to personalize and share photos in real time, directly from the device. Personalization options include captions, stickers and frames, and sharing options include email, Facebook and SMS.
|
Search Generated
Revenues
|
Product Revenues | |
Tier 1
|
47% |
84%
|
Tier 2
|
35% |
8%
|
Tier 3
|
18% |
8%
|
|
·
|
the simplicity of use
|
|
·
|
product quality;
|
|
·
|
product pricing;
|
|
·
|
the creativity, variety and volume of content accessible through our software;
|
|
·
|
success and timing of new product development and introductions;
|
|
·
|
maintaining our reputation for safe and reliable products; and
|
|
·
|
development of successful marketing channels.
|
Year Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Search
|
$ | 22,792 | $ | 25,466 | $ | 38,061 | ||||||
Products
|
5,404 | 7,191 | 17,574 | |||||||||
Other
|
1,301 | 2,816 | 4,588 | |||||||||
Total revenues
|
$ | 29,497 | $ | 35,473 | $ | 60,223 |
Year Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Revenues:
|
||||||||||||
Search
|
77 | % | 72 | % | 63 | % | ||||||
Products
|
19 | 20 | 29 | |||||||||
Other
|
4 | 8 | 8 | |||||||||
Total revenues
|
100 | % | 100 | % | 100 | % | ||||||
Cost of revenues
|
5 | 8 | 9 | |||||||||
Gross profit
|
95 | 92 | 91 | |||||||||
Operating expenses
|
||||||||||||
Research and development, net
|
23 | 21 | 18 | |||||||||
Selling and marketing
|
18 | 37 | 49 | |||||||||
General and administrative
|
16 | 22 | 14 | |||||||||
Total operating expenses
|
57 | 80 | 81 | |||||||||
Operating income
|
38 | 12 | 10 | |||||||||
Financial income, net
|
1 | 4 | 0 | |||||||||
Income before taxes on income
|
39 | 16 | 10 | |||||||||
Income tax expense
|
11 | - | 4 | |||||||||
Net income
|
28 | % | 16 | % | 6 | % |
|
1.
|
In recent months there have been certain changes introduced by Google, changing the way Google’s partners, such as ourselves, acquire and retain customers. These changes aim to improve the user experience, a principle that is important to us as well. However, the changes could reduce the return on investment in the short term, and will cause long term changes to the search market as well. We believe that our recent acquisition of SweetIM, our existing team and the experienced team that joined us as part of the acquisition, make us well positioned to address and accommodate these changes. As a result, we expect that a as result of the combination of the two companies, as well as the further increases in our customer acquisition efforts, search generated revenues will be our primary organic growth catalyst in 2013. We are working to ensure compliance with our contractual obligations and an improved user experience. However, although we believe the measures being taken are good for the consumer and in the long-term for us as well, it is possible that in the short term, as the market adapts to these new requirements and environment, the return on our marketing investment could decrease.
|
|
2.
|
In recent years, we have witnessed an increase in the use on the desktop of web-based email solutions, such as Microsoft Outlook, Yahoo! Mail and Google’s Gmail. Facebook Mail is a relatively new addition to this market, having a lot of potential based on its social network popularity. While our IncrediMail product is based on the use of these email products, and there is still a vast market for PC-based email clients, there is no doubt that the popularity of web-based email is growing at the expense of the PC-based software. This has caused us to increase our efforts in adapting our IncrediMail product to the specific consumer needs not satisfied by the web-based solution. Further investment is also required in other forms of online communication as audiences (especially younger ones) are using email less. The continual growth in social communication products and services, including smartphones, makes it essential for our products to be compatible with Facebook, Twitter, SMS and other forms of social communication and mobile platforms. While the use of an email client on mobile devices is common practice, there is increasing competition from dedicated email applications, such as Mailbox, Inky, Mailbird, Sparrow and others. We will continue to make investments, both organic and through acquisitions, to further solidify our position with new products and services focusing on mobile applications as well as social communication products and look to increase our investment on the usage of social media and mobile devices to attract more users to our brands.
|
|
3.
|
The sharing and storing of digital photos on personal computers, and on photo hosting sites such as Instagram, Facebook or Shutterfly, has increased substantially in recent years. The convenience of such online storage of photos has created a growing commercial industry with products like personalized photo books, cards, calendars, stationery, scrapbooks (printed and digital) as well as photo backup services and storage services. Smilebox is aimed at helping people create and share their pictures enabling users to enjoy all the photos that they have stored on their computer or online using new capabilities, with minimal effort from the user. As camera phones continue to improve and more and more users use their camera phones to capture their special moments, there is significant growth opportunity for us to help users create special memories both “in the moment” and “after the moment.”
|
|
5.
|
There has been a growing usage of portable platforms, including smartphones and tablets, enabling users to enjoy a more graphic and creative experience without a PC. This trend is most prominently represented by the popularity of the iPhone and its Android mobile platforms, as well as with the popular iPad tablet. In addition, and partially as a result of these successes, the Apple-Mac platform popularity has increased as well. Although this trend is attracting an increasing portion of the market, we believe that particularly with regard to our demographic segment, the PC environment will remain the predominant platform for managing emails in the near future. To address this trend, we have been developing mobile versions of our desktop applications. We have already introduced Smilebox for the iPhone and this application has recorded over 1.2 million downloads to date. In addition, in the first quarter of 2013, we introduced IncrediMail for the iPad. In 2013, we intend to increase our investments in this direction offering better and more products on various mobile platforms.
|
|
6.
|
As roughly 63% of our revenues are search generated, and this percentage is expected to increase in 2013, we are affected by the general trends and metrics of the search revenue market. One of the most significant metrics is the revenue per thousand impressions, or RPM, rate. In an economic downturn, the amount advertisers are willing to pay naturally declines, reducing their cost per click, or CPC, rate and subsequently our revenues. The RPM rate has fluctuated dramatically over the past months and it is difficult to predict a specific trend in this important metric going forward. This fluctuation is a function of economic conditions in each country and more importantly by the different economic conditions in each country and which countries are the focus for growth in this market. Moreover, this market is becoming more susceptible to alternative methods of advertising and commerce trends. Advertising through generic search sites is facing growing competition from alternative commerce sites as the latter become more popular and more visible, and also have the ability to leverage the increasing user data available through these sites. We have begun to invest in systems and products that could possibly leverage this trend in 2014 and beyond.
|
|
7.
|
The downloadable software market and the way it interacts with search providers have been changing. With its market leading position, Google has been the forerunner of these changes, which have also impacted our agreement with Google. It is difficult to know how this process will end, although we are convinced that the process is ongoing and has not reached equilibrium. We will continue to work with Google as well with the other search companies to improve the consumer experience and address the market needs. As more and more products become cloud based services, this may also impact the way in which companies like ours generate search revenue. The clear trend is to provide users with a solution that is at least partly cloud-driven, enabling portability for consumers and easier maintenance for companies. More and more companies, however, are finding new ways to generate revenues, including advertising and premium sales as well as search from the web based service. Another trend in the market as it relates to downloadable software with search monetization is the intensity of the competition. In 2012, the amount of competitors and the intensity of the competition have made it more difficult to maximize the lifetime value of a consumer. We continue to focus on providing real value to the consumer from our products and services with a belief that in the long run companies with a real relationship with consumers based on a product that gives them real value is sustainable. This will be especially true in the future as the next generation of browsers may block the installation of toolbars in their current format. As mentioned earlier, our solution is one of value. Our focus is on creating products and services that serve the needs of our users and provide them with real value so that they continue to use our products and brand instead of those of the competition.
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Commitments
|
Total
|
Less than
1 year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
|||||||||||||||
(in thousands)
|
||||||||||||||||||||
Long-term debt, including current
portion(*)
|
$ | 8,850 | $ | 2,300 | $ | 6,150 | $ | 400 | - | |||||||||||
Accrued severance pay(**)
|
$ | 933 | ||||||||||||||||||
Uncertain income tax positions(*
**)
|
$ | 3,952 | - | - | ||||||||||||||||
Deferred and contingent
Consideration(****)
|
$ | 15,000 | $ | 7,500 | $ | 7,500 | ||||||||||||||
Operating leases
|
$ | 2,904 | $ | 1,173 | $ | 1,731 | - | - | ||||||||||||
Total
|
$ | 31,639 | $ | 10,973 | $ | 15,381 | $ | 400 |
(*)
Long-term debt obligations represent repayment of principal and do not include interest payments due thereunder.
(**) Severance pay obligations to our Israeli employees, as required under Israeli labor law and as set forth in employment agreements, are payable only upon termination, retirement or death of the respective employee and are for the most part covered by on going payments to funds to cover its obligation. Of this amount only, $449 is unfunded.
(***) Uncertain income tax positions are due upon settlement and we are unable to reasonbaly estimate the ultimate amount or timing of settlment. See Note 10i to our consolidated financial statements for further informaiton.
(****) Deferred and contingent consideration represents the maximum cash payments we will be obligated to make under contingent consideration arrangements with former owners of certain entities we acquired if specified operating objectives and financial results are achieved.
|
Name
|
Age
|
Position
|
||
Tamar Gottlieb*
(3) (4)
|
56
|
Director and Chairperson of the Board
|
||
Iris Beck*
(2)
|
47
|
Director
|
||
Alan Gelman*
(1)
|
57
|
Director
|
||
David Jutkowitz*
(1)(2)(3) (4)
|
62
|
External Director
|
||
Avichay Nissenbaum*
(1)(2)(4)
|
46
|
External Director
|
||
Adi Soffer Teeni*
|
42
|
Director
|
||
Josef Mandelbaum
(4)
|
46
|
Chief Executive Officer and Director
|
||
Yacov Kaufman
|
55
|
Chief Financial Officer
|
||
Li Carmel
|
40
|
Vice President, Human Resources
|
||
Limor Gershoni Levy
|
42
|
Vice President, General Counsel
|
||
Mark Ziering
|
46
|
Vice President, Corporate Development
|
||
Yuval Hamudot
|
39
|
General Manger, Smilebox
|
||
Ron Harari
|
41
|
General Manager, Incredimail
|
||
Tomer Pascal
|
34
|
General Manager, Utilities
|
* "Independent" for NASDAQ Stock Market purposes;
|
(1)
|
Member of the audit committee.
|
(2)
|
Member of the compensation committee.
|
(3)
|
Member of the nominating and governance committee.
|
(4)
|
Member of the investment committee.
|
|
·
|
establishing our policies and overseeing the performance and activities of our chief executive officer;
|
|
·
|
convening shareholders’ meetings;
|
|
·
|
approving our financial statements;
|
|
·
|
determining our plans of action, principles for funding them and the priorities among them, our organizational structure and examining our financial status; and
|
|
·
|
issuing securities and distributing dividends.
|
|
·
|
the company;
|
|
·
|
a controlling shareholder of the company or a relative thereof; or
|
|
·
|
any entity controlled by the company or by its controlling shareholder on the date of the appointment or during the two years preceding such date.
|
|
·
|
an employment relationship;
|
|
·
|
a business or professional relationship that is not negligible;
|
|
·
|
control; and
|
|
·
|
service as an office holder.
|
|
·
|
the majority of shares voted on the matter, including at least a majority of the shares of non-controlling shareholders voted on the matter, vote in favor of election; or
|
|
·
|
the total number of shares of non-controlling shareholders voted against the election of the external director does not exceed two percent of the aggregate voting rights in the company.
The initial term of an external director is three years and such director may be reappointed for up to two additional three-year terms. Thereafter, he or she may be reelected by our shareholders for additional periods of up to three years each only if the audit committee and the board of directors confirm that, in light of the external director’s expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional period is beneficial to us. Reelection of an external director may be effected through one of the following mechanisms: (1) the board of directors proposed the reelection of the nominee and the election was approved by the shareholders by the majority required to appoint external directors for their initial term; or (2) a shareholder holding 1% or more of the voting rights proposed the reelection of the nominee, and the reelection is approved by a majority of the votes cast by the shareholders of the company, excluding the votes of controlling shareholders and those who have a personal interest in the matter as a result of their relations with the controlling shareholders, provided that the aggregate votes cast in favor of the reelection by such non-excluded shareholders constitute more than 2% of the voting rights in the company. An external director may be removed only in a general meeting, by the same percentage of shareholders as is required for electing an external director, or by a court, and in both cases only if the external director ceases to meet the statutory qualifications for appointment or if he or she has violated the duty of loyalty to us.
|
December 31, | |||||||||||||
2010
|
2011
|
2012
|
|||||||||||
Management and administration
|
21 | 24 | 30 | ||||||||||
Support
|
14 | 14 | 11 | ||||||||||
Research and development
|
54 | 69 | 117 | ||||||||||
Selling and marketing
|
18 | 32 | 50 | ||||||||||
Total
|
107 | 139 | 208 |
(1)
|
Represents options to purchase 300,000 ordinary shares at an exercise price of $4.38 per share, which expire on July 5, 2015, 20,000 ordinary shares at an exercise price of $7.50, which expire on January 19, 2016 and 10,833 ordinary shares at an exercise price of $4.04, which expire on January 1, 2017.
|
(2)
|
Includes options to purchase, 30,000 ordinary shares at an exercise price of $3.51 per share, which expire on May 28, 2013, 20,000 ordinary shares at an exercise price of $6.75 per share, which expire on August 5, 2014, 50,000 ordinary shares at an exercise price of $5.94, which expire on November 1, 2015, 16,666 at an exercise price of $7.50 per share, which expire on January 19, 2016 and 7,500 ordinary shares at an exercise price of $4.04, which expire on January 1, 2017.
|
(3)
|
Includes options to purchase 709,167 ordinary shares, exercisable within 60 days of this Annual Report. |
Name
|
Number of Ordinary Shares Beneficially Owned
|
Percentage of Ordinary Shares Outstanding (1)
|
||||||
Holine Finance Ltd.(2)
|
1,109,732 | 9.2 | % |
|
(1)
|
Based upon 12,093,699 ordinary shares outstanding as of April 24, 2013.
|
|
(2)
|
Based solely upon, and qualified in its entirety with reference to, a Schedule 13G/A filed with the SEC on December 10, 2012, by Holine Finance Ltd.
|
NASDAQ Global Market
|
Tel Aviv Stock Exchange
|
|||||||||||||||
High
($)
|
Low
($)
|
High
($)
|
Low
($)
|
|||||||||||||
Five most recent full financial years
|
||||||||||||||||
2012
|
10.50 | 3.68 | 10.45 | 3.85 | ||||||||||||
2011
|
8.25 | 3.45 | 8.20 | 3.41 | ||||||||||||
2010
|
10.75 | 3.85 | 10.96 | 4.04 | ||||||||||||
2009
|
10.89 | 2.30 | 10.46 | 2.48 | ||||||||||||
2008
|
5.58 | 1.86 | 5.28 | 2.00 | ||||||||||||
Financial quarters during the past two recent full financial years and any subsequent period
|
||||||||||||||||
First Quarter 2013
|
13.10 | 8.19 | 12.79 | 8.21 | ||||||||||||
Fourth Quarter 2012
|
10.50 | 6.66 | 10.45 | 6.65 | ||||||||||||
Third Quarter 2012
|
7.68 | 4.04 | 7.38 | 4.16 | ||||||||||||
Second Quarter 2012
|
5.20 | 3.68 | 5.13 | 3.81 | ||||||||||||
First Quarter 2012
|
5.59 | 3.90 | 5.59 | 3.85 | ||||||||||||
Fourth Quarter 2011
|
5.87 | 3.45 | 5.65 | 3.41 | ||||||||||||
Third Quarter 2011
|
7.96 | 4.50 | 7.77 | 4.67 | ||||||||||||
Second Quarter 2011
|
8.25 | 6.57 | 7.92 | 6.44 | ||||||||||||
First Quarter 2011
|
8.10 | 6.85 | 8.20 | 6.59 | ||||||||||||
Most recent six months
|
||||||||||||||||
April 2013 (through April 24)
|
11.98 | 9.53 | 12.08 | 9.57 | ||||||||||||
March 2013
|
10.39 | 8.19 | 10.06 | 8.21 | ||||||||||||
February 2013
|
10.84 | 8.56 | 10.48 | 8.74 | ||||||||||||
January 2013
|
13.10 | 9.01 | 12.79 | 8.87 | ||||||||||||
December 2012
|
10.50 | 8.38 | 10.45 | 8.61 | ||||||||||||
November 2012
|
10.15 | 7.45 | 10.31 | 7.56 | ||||||||||||
October 2012
|
7.48 | 6.66 | 7.85 | 6.65 |
|
·
|
amend our articles of association (except as set forth below);
|
|
·
|
make changes in our capital structure such as a reduction of capital, increase of capital or share split, merger or consolidation;
|
|
·
|
authorize a new class of shares;
|
|
·
|
elect directors, other than external directors;
|
|
·
|
appoint auditors; or
|
|
·
|
approve most transactions with office holders,
will be deemed adopted if approved by the holders of a majority of the voting power represented at a shareholders’ meeting, in person or by proxy, and voting on that resolution. Except as set forth in the following sentence none of these actions require the approval of a special majority. Amendments to our articles of association relating to the election and vacation of office of directors, the composition and size of the board of directors and the insurance, indemnification and release in advance of the company’s office holders with respect to certain liabilities incurred by them require the approval at a general meeting of shareholders holding more than two-thirds of the voting power of the issued and outstanding share capital of the company.
|
|
(1)
|
appointment and removal of directors;
|
|
(2)
|
approval of certain matters relating to the fiduciary duties of office holders and of certain transactions with interested parties;
|
|
(3)
|
approval of certain mergers; and
|
|
(4)
|
any other matter in respect of which the articles of association provide that resolutions of the general meeting may be approved by means of a voting document.
|
|
·
|
the majority of shares voted for the election includes at least a majority of the shares held by non-controlling shareholders voted at the meeting and excluding shares held by a person with a personal interest in the approval of the election, excluding a personal interest which is not as a result of his connection with the controlling shareholder (excluding abstaining votes); or
|
|
·
|
the total number of shares of non-controlling shareholders voted against the election of the external director does not exceed two percent of the aggregate voting rights in the company.
|
|
·
|
the majority must include at least a majority of the shares of the voting shareholders who have no personal interest in the transaction voted at the meeting (excluding abstaining votes); or
|
|
·
|
the total shareholdings of those who have no personal interest in the transaction and who vote against the transaction must not represent more than 2% of the aggregate voting rights in the company.
|
|
·
|
any amendment to the articles of association;
|
|
·
|
an increase in the company’s authorized share capital;
|
|
·
|
a merger; or
|
|
·
|
approval of related party transactions that require shareholder approval.
|
|
·
|
any monetary liability whether imposed on him or her in favor of another person pursuant to a judgment, a settlement or an arbitrator’s award approved by a court;
|
|
·
|
reasonable litigation expenses, including attorneys’ fees, incurred by him or her as a result of an investigation or proceedings instituted against him or her by an authority empowered to conduct an investigation or proceedings, which are concluded either (i) without the filing of an indictment against the office holder and without the levying of a monetary obligation in lieu of criminal proceedings upon the office holder, or (ii) without the filing of an indictment against the office holder but with levying a monetary obligation in substitute of such criminal proceedings upon the office holder for a crime that does not require proof of criminal intent; and
|
|
·
|
reasonable litigation expenses, including attorneys’ fees, in proceedings instituted against him or her by the company, on the company’s behalf or by a third-party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for a crime that does not require proof of criminal intent.
|
|
·
|
that the Beneficiary Enterprise’s revenues during the applicable tax year from any single market (i.e. country or a separate customs territory) do not exceed 75% of the Beneficiary enterprise’s aggregate revenues during such year; or
|
|
·
|
that 25% or more of the Beneficiary Enterprise’s revenues during the applicable tax year are generated from sales into a single market (i.e. country or a separate customs territory) with a population of at least 12 million residents.
|
|
·
|
amortization of the cost of purchased know-how and patents, which are used for the development or advancement of the company, over an eight-year period;
|
|
·
|
accelerated depreciation rates on equipment and buildings;
|
|
·
|
under specified conditions, an election to file consolidated tax returns with additional related Israeli Industrial Companies; and
|
|
·
|
expenses related to a public offering are deductible in equal amounts over three years.
|
|
·
|
an individual citizen or resident of the United States;
|
|
·
|
a corporation created or organized in or under the laws of the United States or of any state of the United States or the District of Columbia;
|
|
·
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
·
|
a trust if the trust has elected validly to be treated as a U.S. person for U.S. federal income tax purposes or if a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions.
|
|
·
|
insurance companies;
|
|
·
|
dealers in stocks, securities or currencies;
|
|
·
|
financial institutions and financial services entities;
|
|
·
|
real estate investment trusts;
|
|
·
|
regulated investment companies;
|
|
·
|
persons that receive ordinary shares as compensation for the performance of services;
|
|
·
|
tax-exempt organizations;
|
|
·
|
persons that hold ordinary shares as a position in a straddle or as part of a hedging, conversion or other integrated instrument;
|
|
·
|
individual retirement and other tax-deferred accounts;
|
|
·
|
expatriates of the United States;
|
|
·
|
persons (other than Non-U.S. Holders) having a functional currency other than the U.S. dollar; and
|
|
·
|
direct, indirect or constructive owners of 10% or more, by voting power or value, of us.
|
|
(a)
|
the stock of that corporation with respect to which the dividends are paid is readily tradable on an established securities market in the U.S., or
|
|
(b)
|
that corporation is eligible for the benefits of a comprehensive income tax treaty with the U.S. which includes an information exchange program and is determined to be satisfactory by the U.S. Secretary of the Treasury. The Internal Revenue Service has determined that the U.S.-Israel Tax Treaty is satisfactory for this purpose.
|
|
·
|
that gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States, or
|
|
·
|
in the case of any gain realized by an individual Non-U.S. Holder, that holder is present in the United States for 183 days or more in the taxable year of the sale or exchange, and other conditions are met.
|
U.S. dollars
|
NIS
|
Other
Currencies
|
Total
|
|||||||||||||
In thousands of U.S. dollars
|
||||||||||||||||
Current assets
|
38,241 | 7,823 | 1,628 | 47,692 | ||||||||||||
Long-term assets
|
72,382 | 3,085 | -- | 75,467 | ||||||||||||
Current liabilities
|
(41,482 | ) | (8,951 | ) | (1,555 | ) | (51,988 | ) | ||||||||
Long-term liabilities
|
(15,528 | ) | (933 | ) | -- | (16,461 | ) | |||||||||
Total
|
53,615 | 1,024 | 73 | 54,170 |
Notional
Amount
|
Fair Value
|
|||||||
In thousands of U.S. dollars
|
||||||||
Zero-cost collar contracts to hedge payroll expenses
|
6,891
|
238
|
Year Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Average rate for period
|
3.733 | 3.578 | 3.855 | |||||||||
Rate at year-end
|
3.549 | 3.821 | 3.733 |
|
None.
|
ITEM 14.
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
|
●
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
|
●
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
|
●
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
ITEM 16A.
|
AUDIT COMMITTEE FINANCIAL E
XP
ERT
|
ITEM 16B.
|
CODE OF ETHICS
|
ITEM 16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
2011
|
2012
|
|||||||
Audit Fees
|
$ | 173 | $ | 181 | ||||
Tax Fees
|
150 | 105 | ||||||
Audit Related fees
|
39 | 15 | ||||||
Total
|
$ | 362 | $ | 301 |
ITEM 16D.
|
EXEMPTIONS FROM
THE LISTING
STANDARDS FOR AUDIT COMMITTEES
|
|
None.
|
ITEM 16E.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
·
|
the securities issued amount to 20% or more of our outstanding voting rights before the issuance;
|
|
·
|
some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
|
|
·
|
the transaction will increase the relative holdings of a shareholder that holds 5% or more of our outstanding share capital or voting rights or will cause any person to become, as a result of the issuance, a holder of more than 5% of our outstanding share capital or voting rights.
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Balance Sheets as of December 31, 2011 and 2012
|
F-3 - F-4
|
Statements of Income for the Years Ended December 31, 2010, 2011 and 2012
|
F-5
|
Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 2010, 2011 and 2012
|
F-7
|
Statements of Cash Flows for the Years Ended December 31, 2010, 2011 and 2012
|
F-8
|
Notes to Financial Statements
|
F-10
|
No.
|
Description
|
1.1
|
Memorandum of Association of Registrant. (1)
|
1.2
|
Amended and Restated Articles of Association of Registrant, dated February 3, 2006.
|
4.1
|
The Registrant’s 2003 Israeli Share Option Plan and the U.S. Addendum to such plan.
|
4.2
|
Google Search and Advertising Services Agreement, dated December 27, 2010, between the Company and Google Ireland Limited, (2) and the Amendment to said agreement, dated January 31 2013.
|
4.3
|
Stock Purchase Agreement among Ofer Adler, the Company and the purchasers listed therein, dated January 24, 2011. (3)
|
4.4
|
Registration Rights Agreement among the Company and the investors listed therein, dated January 24, 2011. (3)
|
4.5
|
Commitment Letter and Financial Covenants Letter among the Company and Bank Leumi Le-Israel, B.M., dated September 6, 2011, (4) and an amendment thereto.
|
4.6
|
Commitment Letter and Financial Covenants Letter among the Company and the First International Bank of Israel, B.M., dated September 6, 2011 (translated from Hebrew), (4) and an amendment thereto (translated from Hebrew).
|
4.7
|
Agreement and Plan of Merger, dated July 31, 2011, by and among the Company, Incredimail Inc., Seder Merger Inc., Smilebox, Inc. and Andrew Wright and Shareholder Representative Services LLC, as the Shareholder Representative dated as of July 31, 2011. (4) (5)
|
4.8
|
Google Search and Advertising Services Agreement, dated April 23, 2013, between the Company and Google Ireland Limited.*
|
4.9
|
Share Purchase Agreement by and among Perion Network Ltd., SweetIM Ltd., SweetIM Technologies Ltd., the Shareholders of SweetIM Ltd. and Nadav Goshen as Shareholders’ Agent, dated as of November 7, 2012, and Amendment No. 1, dated as of November 30, 2012.
|
4.10
|
Registration Rights Agreement among the Company and the investors listed therein, dated as of November 7, 2012.
|
8
|
List of all subsidiaries.
|
12.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a) executed by the Chief Executive Officer of the Company.
|
12.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a) executed by the Chief Financial Officer of the Company.
|
13.1
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of T
itle 18 of the United States Code.
|
13.2
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of T
itle 18 of the United States Code.
|
15.1
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, Independent Auditors.
|
101
|
The following financial information from Perion Network Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2011 and 2012; (ii) Consolidated Statements of Income for the years ended December 31, 2010, 2011 and 2012; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2011 and 2012; (iv) Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2010, 2011 and 2012; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012; and (vi) Notes to Consolidated Financial Statements. (6)
|
(1)
|
Previously filed with the SEC on October 25, 2005 as an exhibit to our registration statement on Form F-1 (File No. 333-129246), and incorporated herein by reference.
|
(2)
|
Previously filed with the SEC on
March 8, 2011 as an exhibit to our annual report on Form 20-F, and incorporated herein by reference. Confidential treatment was requested and approved with respect to certain portions of this exhibit pursuant to 17.C.F.R. §§ 230.406 and 200.83. Omitted portions were filed separately with the SEC.
|
(3)
|
Previously filed with the SEC on March 9, 2011 as an exhibit to our annual report on Form 20-F, and incorporated herein by reference.
|
(4)
|
Previously filed with the SEC on March 22, 2012 as an exhibit to our annual report on Form 20-F, and incorporated herein by reference.
|
(5)
|
Confidential treatment was requested and approved with respect to certain portions of this exhibit pursuant to 17.C.F.R. §§ 230.406 and 200.83. Omitted portions were filed separately with the SEC.
|
(6)
|
In accordance with Rule 406T of Regulation S-T, the information in Exhibit 101 is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
*
|
Confidential treatment was requested with respect to certain portions of this exhibit pursuant to 17.C.F.R. §§ 230.406 and 200.83. Omitted portions were filed separately with the SEC.
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
XXX, 2013
|
A Member of Ernst & Young Global
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 11,260 | $ | 21,762 | ||||
Restricted cash
|
- | 10,260 | ||||||
Trade receivables (net of allowance for doubtful accounts and sales reserves in a total amount of $ 57 and $ 108 in 2011 and 2012, respectively)
|
3,265 | 10,246 | ||||||
Other receivables and prepaid expenses
|
6,459 | 5,424 | ||||||
Total
current assets
|
20,984 | 47,692 | ||||||
LONG-TERM ASSETS:
|
||||||||
Property and equipment, net
|
1,300 | 1,522 | ||||||
Other intangible assets, net
|
6,606 | 35,295 | ||||||
Goodwill
|
24,753 | 37,435 | ||||||
Other assets
|
1,261 | 1,215 | ||||||
Total
long-term assets
|
33,920 | 75,467 | ||||||
Total
assets
|
$ | 54,904 | $ | 123,159 |
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Revenues:
|
||||||||||||
Search
|
$ | 22,792 | $ | 25,466 | $ | 38,061 | ||||||
Products
|
5,404 | 7,191 | 17,574 | |||||||||
Other
|
1,301 | 2,816 | 4,588 | |||||||||
29,497 | 35,473 | 60,223 | ||||||||||
Cost of revenues
|
1,606 | 2,840 | 5,230 | |||||||||
Gross profit
|
27,891 | 32,633 | 54,993 | |||||||||
Operating expenses:
|
||||||||||||
Research and development, net
|
6,607 | 7,453 | 10,735 | |||||||||
Selling and marketing
|
5,244 | 12,984 | 29,517 | |||||||||
General and administrative
|
4,741 | 7,649 | 8,560 | |||||||||
Total
operating expenses
|
16,592 | 28,086 | 48,812 | |||||||||
Operating income
|
11,299 | 4,547 | 6,181 | |||||||||
Financial income (expense), net
|
322 | 1,293 | (174 | ) | ||||||||
Income before taxes on income
|
11,621 | 5,840 | 6,007 | |||||||||
Taxes on income
|
3,232 | 172 | 2,473 | |||||||||
Net income
|
$ | 8,389 | $ | 5,668 | $ | 3,534 | ||||||
Net earnings per Ordinary share:
|
||||||||||||
Basic
|
$ | 0.87 | $ | 0.58 | $ | 0.35 | ||||||
Diluted
|
$ | 0.85 | $ | 0.57 | $ | 0.34 |
Year ended
December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net income
|
$ | 8,389 | $ | 5,668 | $ | 3,534 | ||||||
Other comprehensive income:
|
||||||||||||
Reclassification adjustments to income on marketable securities, net of tax
|
(107 | ) | (100 | ) | - | |||||||
Other comprehensive income, net of tax
|
(107 | ) | (100 | ) | - | |||||||
Comprehensive income
|
$ | 8,282 | $ | 5,568 | $ | 3,534 |
Share
capital
|
Additional
paid-in
capital
|
Accumulated other comprehensive income
|
Retained earnings
|
Treasury stock
|
Total shareholders' equity
|
|||||||||||||||||||
Balance as of January 1, 2010
|
$ | 21 | $ | 22,390 | $ | 207 | $ | 5,386 | $ | (1,002 | ) | $ | 27,002 | |||||||||||
Stock based compensation expense
|
- | 761 | - | - | - | 761 | ||||||||||||||||||
Excess tax benefit from share-based payment arrangements
|
209 | 209 | ||||||||||||||||||||||
Exercise of share options
|
1 | 374 | - | - | - | 375 | ||||||||||||||||||
Dividends
|
- | - | - | (8,477 | ) | - | (8,477 | ) | ||||||||||||||||
Other Comprehensive income
|
- | - | (107 | ) | - | - | (107 | ) | ||||||||||||||||
Net income
|
- | - | - | 8,389 | - | 8,389 | ||||||||||||||||||
Balance as of December 31, 2010
|
22 | 23,734 | 100 | 5,298 | (1,002 | ) | 28,152 | |||||||||||||||||
Stock based compensation expense
|
- | 1,200 | - | - | - | 1,200 | ||||||||||||||||||
Exercise of share options
|
* | ) | 30 | - | - | - | 30 | |||||||||||||||||
Dividends
|
- | - | - | (3,885 | ) | - | (3,885 | ) | ||||||||||||||||
Issuance of shares related to acquisition
|
* | ) | 750 | - | - | - | 750 | |||||||||||||||||
Other Comprehensive income
|
- | - | (100 | ) | - | - | (100 | ) | ||||||||||||||||
Net income
|
- | - | - | 5,668 | - | 5,668 | ||||||||||||||||||
Balance as of December 31, 2011
|
22 | 25,714 | - | 7,081 | (1,002 | ) | 31,815 | |||||||||||||||||
Stock based compensation expense
|
- | 1,085 | - | - | - | 1,085 | ||||||||||||||||||
Exercise of share options
|
1 | 75 | - | - | 76 | |||||||||||||||||||
Issuance of shares related to acquisitions
|
5 | 18,195 | - | - | - | 18,200 | ||||||||||||||||||
Net income
|
- | - | - | 3,534 | - | 3,534 | ||||||||||||||||||
Balance as of December 31, 2012
|
$ | 28 |
$
|
45,069 | - |
$
|
10,615 |
$
|
(1,002 | ) |
$
|
54,710 |
*)
|
Represent amount of less than $1
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 8,389 | $ | 5,668 | $ | 3,534 | ||||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
739 | 1,388 | 3,572 | |||||||||
Stock based compensation expense, net
|
761 | 1,183 | 1,056 | |||||||||
Accretion of payment obligation related to acquisitions
|
- | 100 |
177
|
|||||||||
Excess tax benefit from share-based payment arrangements
|
(209 | ) | - | - | ||||||||
Amortization of premium and accrued interest on marketable securities
|
42 | (16 | ) | - | ||||||||
Loss (gain) from marketable securities, net
|
(107 | ) | 100 | - | ||||||||
Deferred taxes, net
|
(385 | ) | (1,140 | ) | (172 | ) | ||||||
Accrued severance pay, net
|
216 | (40 | ) | (3 | ) | |||||||
Net changes in operating assets and liabilities:
|
||||||||||||
Trade receivables
|
(475 | ) | (383 | ) | 491 | |||||||
Other receivables and prepaid expenses
|
544 | (1,100 | ) | 1,658 | ||||||||
Other long-term assets
|
17 | 60 | 82 | |||||||||
Trade payables
|
374 | 108 | 4,035 | |||||||||
Deferred revenues
|
(106 | ) | 998 | (268 | ) | |||||||
Accrued expenses and other liabilities
|
(25 | ) | 112 |
2,101
|
||||||||
Other
|
8 | - | - | |||||||||
Net cash provided by operating activities
|
9,783 | 7,038 | 16,263 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of property and equipment
|
(246 | ) | (316 | ) | (662 | ) | ||||||
Proceeds from sale of property and equipment
|
12 | - | - | |||||||||
Restricted cash
|
- | 90 | - | |||||||||
Capitalization of software development and content costs
|
(180 | ) | (829 | ) | (819 | ) | ||||||
Cash paid by employees on previously exercised options of acquired company
|
- | - | 727 | |||||||||
Cash paid in connection with acquisitions, net of cash acquired
|
- | (21,712 | ) | (7,307 | ) | |||||||
Proceeds from sales of marketable securities
|
10,745 | 26,704 | - | |||||||||
Investment in marketable securities
|
(20,534 | ) | (11,915 | ) | - | |||||||
Net cash used in investing activities
|
(10,203 | ) | (7,978 | ) | (8,061 | ) |
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Exercise of share options
|
375 | 30 | 76 | |||||||||
Excess tax benefit from share-based payment arrangements
|
209 | - | - | |||||||||
Deferred payment made in connection with acquisitions
|
- | - | (6,626 | ) | ||||||||
Proceeds from long-term loans
|
- | - | 10,000 | |||||||||
Repayment of long-term loans
|
- | - | (1,150 | ) | ||||||||
Dividend paid
|
(8,477 | ) | (3,885 | ) | - | |||||||
Net cash provided by (used in) financing activities
|
(7,893 | ) | (3,855 | ) | 2,300 | |||||||
Increase (decrease) in cash and cash equivalents
|
(8,313 | ) | (4,795 | ) | 10,502 | |||||||
Cash and cash equivalents at beginning of year
|
24,368 | 16,055 | 11,260 | |||||||||
Cash and cash equivalents at end of year
|
$ | 16,055 | $ | 11,260 | $ | 21,762 | ||||||
Supplemental disclosure of cash flow activities:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Income taxes
|
$ | 2,719 | $ | 3,200 | $ | 2,828 | ||||||
Interest paid
|
$ | - | $ | - | $ | 291 | ||||||
Supplemental disclosure of non-cash investing activities:
|
||||||||||||
Purchase of property and equipment on credit
|
$ | 418 | $ | - | $ | - | ||||||
Issuance of shares in connection with the acquisitions
|
$ | - | $ | 750 | $ | 18,200 | ||||||
stock-based compensation that was capitalized as part of capitalization of software development costs
|
$ | - | $ | 17 | $ | 29 |
NOTE 1:-
|
GENERAL
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
a.
|
Use of estimates:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
b.
|
Financial statements in U.S. dollars:
|
|
c.
|
Principles of consolidation:
|
|
d.
|
Cash equivalents:
|
|
e.
|
Restricted cash:
|
|
f.
|
Property and equipment:
|
%
|
|
Computers and peripheral equipment
|
33
|
Office furniture and equipment
|
7 - 15
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
g.
|
Impairment of long-lived assets and intangible assets subject to amortization:
|
|
h.
|
Goodwill and other intangible assets:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
i.
|
Revenue recognition:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
j.
|
Cost of revenues:
|
|
k.
|
Research and development costs:
|
|
l.
|
Income taxes:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
m.
|
Advertising costs:
|
|
n.
|
Concentrations of credit risk:
|
|
o.
|
Severance pay:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
p.
|
Net earnings per Ordinary share:
|
|
q.
|
Accounting for stock-based compensation:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Risk-free interest rate
|
1.62% | 2.23% | 0.75% | |||||||||
Dividend yield
|
0%-7.83% | 0% | 0% | |||||||||
Weighted average dividend yield
|
5.65% | 0% | 0% | |||||||||
Expected volatility
|
62.77%-64.56% | 47.31%-65.27% | 45.60%-61.90% | |||||||||
Weighted average volatility
|
63.67% | 56.29% | 53.76% | |||||||||
Expected term (years)
|
4.6 | 3.75 | 4.09 |
|
r.
|
Derivative instruments:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
s.
|
Fair value of financial instruments:
|
·
|
Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.
|
·
|
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
·
|
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
|
t.
|
Treasury shares:
|
|
u.
|
Comprehensive income:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
v.
|
Business combinations:
|
w.
|
Reclassifications:
|
NOTE 3:-
|
ACQUISITIONS
|
a.
|
Acquisition of Sweet IM Ltd.
|
·
|
$ 13,054 in cash, including $ 3,014 for working capital acquired from Sweet IM;
|
·
|
1,990,000 ordinary shares of the Company issued at closing for total value of $17,863, which considered the market restrictions on these shares;
|
·
|
$ 7,500 in cash (subject to certain adjustments), payable within 12 months following the Closing Date (December 2013). In connection with this consideration, the Company recorded a $ 7,324 liability; and
|
·
|
A milestones-based contingent cash payment of up to $7,500 payable in June 2014.
In connection with this contingent payment consideration, the Company recorded at the Closing Date, an estimated liability of $5,992.
|
NOTE 3:-
|
ACQUISITIONS (Cont.)
|
Cash
|
$ | 2,733 | ||
Restricted cash
|
10,260 | |||
Trade receivables
|
7,473 | |||
Other receivables and prepaid expenses
|
1,253 | |||
Property and equipment
|
216 | |||
Long-term prepaid expenses and other
|
70 | |||
Trade payables
|
(2,318 | ) | ||
Accrued expenses and other liabilities
|
(5,148 | ) | ||
Payment obligation related to acquisition
|
(9,958 | ) | ||
Intangible assets
|
30,756 | |||
Deferred tax liability
|
(3,786 | ) | ||
Goodwill
|
12,682 | |||
Total purchase price
|
$ | 44,233 |
Fair value
|
Useful life
|
|||||||
Technology
|
$ | 20,066 |
5 years
|
|||||
Logo
|
5,242 |
4 years
|
||||||
IP R&D
|
5,448 | (*) | ||||||
Total intangible assets
|
$ | 30,756 |
NOTE 3:-
|
ACQUISITIONS (Cont.)
|
Year ended December 31,
|
||||||||
2011
|
2012
|
|||||||
Unaudited
|
Unaudited
|
|||||||
Revenues
|
$ | $ 51,190 | $ | $79,254 | ||||
Net income
|
$ | 1,154 | $ | $ 4,887 | ||||
Basic earnings per share
|
$ | 0.12 | $ | 0.48 | ||||
Diluted earnings per share
|
$ | 0.12 | $ | 0.47 |
b.
|
Acquisition of Sweet IM Ltd.
|
·
|
$ 24,269 in cash;
|
·
|
128,538 Ordinary shares of the Company issuable at closing at fair value of $ 750;
|
·
|
$ 7,000 in cash and in Ordinary shares of the Company (subject to certain adjustments), payable within 7 months following the closing (March 2012). In connection with this consideration, the Company recorded a $ 6,474 liability at closing. This amount was paid in full in 2012, including $ 6,266 paid in cash and 65,720 shares issued at value of $ 337 and;
|
·
|
A milestone-based contingent cash and Ordinary shares of the Company payment ("Contingent Payment") of up to $ 8,000 payable in September 2012. The Company recognized a liability of zero with respect to this Contingent Payment, which represents its fair value. No payment was made in September 2012 as the milestones were not met.
|
NOTE 3:-
|
ACQUISITIONS (Cont.)
|
Cash
|
$ | 2,100 | ||
Trade receivables
|
87 | |||
Other receivables and prepaid expenses
|
616 | |||
Property and equipment
|
191 | |||
Long-term prepaid expenses and other
|
449 | |||
Trade payables
|
(1,268 | ) | ||
Accrued expenses and other liabilities
|
(1,171 | ) | ||
Deferred revenues
|
(622 | ) | ||
Intangible assets
|
6,358 | |||
Goodwill
|
24,753 | |||
Total purchase price
|
$ | 31,493 |
Fair value
|
Useful life
|
||||
Customer relationships
|
$ | 1,488 |
4.3-6.3 years
|
||
Technology
|
3,000 |
3 years
|
|||
Trade name
|
1,870 |
10.25 years
|
|||
Total intangible assets
|
$ | 6,358 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Government authorities
|
$ | 5,555 | 3,661 | |||||
Prepaid expenses
|
471 | 1,079 | ||||||
Deferred tax asset, net
|
258 | 360 | ||||||
Other
|
175 | 324 | ||||||
$ | 6,459 | 5,424 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Cost:
|
||||||||
Computers and peripheral equipment
|
$ | 3,861 | $ | 3,745 | ||||
Office furniture and equipment
|
533 | 670 | ||||||
Leasehold improvements
|
606 | 618 | ||||||
5,000 | 5,033 | |||||||
Accumulated depreciation
|
3,700 | 3,511 | ||||||
Property and equipment, net
|
$ | 1,300 | $ | 1,522 |
NOTE 6:-
|
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
|
|
a.
|
Goodwill:
|
2011
|
2012
|
|||||||
Balance as of January 1
|
$ | - | 24,753 | |||||
Changes during year
|
24,753 | 12,682 | ||||||
Balance as of December 31
|
$ | 24,753 | 37,435 |
NOTE 6:-
|
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Cont.)
|
|
b.
|
Other intangible assets, net
|
Useful
|
December 31,
|
|||||||||||
life
|
2011
|
2012
|
||||||||||
Original amount:
|
||||||||||||
Capitalized software development costs
|
3-5
|
$ | 739 | $ |
1,587
|
|||||||
Capitalized content costs and domain
|
3-5
|
555 |
556
|
|||||||||
Technology
|
3-5 | 3,000 | 23,066 | |||||||||
Trade name
|
10.25 | 1,870 | 1,870 | |||||||||
Customer relationship
|
4.3-6.3 | 1,488 | 1,488 | |||||||||
Logo
|
5 | - | 5,242 | |||||||||
IP R&D
|
- | 5,448 | ||||||||||
7,652 | 39,257 | |||||||||||
Accumulated amortization:
|
||||||||||||
Capitalized software development costs
|
22 | 398 | ||||||||||
Capitalized content costs and domain
|
368 | 485 | ||||||||||
Technology
|
333 | 1,822 | ||||||||||
Trade name
|
61 | 243 | ||||||||||
Customer relationship
|
262 | 913 | ||||||||||
Logo
|
- | 101 | ||||||||||
1,046 | 3,962 | |||||||||||
$ | 6,606 | $ | 35,295 |
|
c.
|
Amortization expense amounted to $ 112, $ 800 and $ 2,915 for the years ended December 31, 2010, 2011 and 2012, respectively.
|
|
d.
|
The estimated future amortization expense of other intangible assets as of December 31, 2012 is as follows:
|
2013
|
9,686 | |||
2014
|
9,853 | |||
2015
|
7,539 | |||
2016
|
5,393 | |||
2017 and thereafter
|
2,824 | |||
$ | 35,295 |
NOTE 7:-
|
ACCRUED EXPENSES AND OTHER LIABILITIES
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Employees and payroll accruals
|
$ | 1,556 | 3,865 | |||||
Government authorities
|
1,429 | 3,812 | ||||||
Uncertain tax position liability
|
2,151 | 3,952 | ||||||
Deferred tax liabilities, net
|
- | 971 | ||||||
Accrued expenses and other
|
1,814 | 2,079 | ||||||
$ | 6,950 | 14,679 |
NOTE 8:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
2013
|
$ | 1,173 | ||
2014
|
1,145 | |||
2015
|
586 | |||
$ | 2,904 |
NOTE 9:-
|
LONG-TERM LOAN
|
|
a.
|
On May 17, 2012, the Company entered into Loan Agreements (the "Agreements"), with two Israeli Banks (the "Banks"), based on which the Company borrowed $10,000
The Agreements contain various provisions including a pledge of all the Company’s assets under a floating charge, compliance with certain financial covenants, restrictive covenants, including negative pledges, and other commitments, typically contained in facility agreements of this type. As of December 31, 2012, the Company was in compliance with all covenants.
The loans shall be repaid in 16 and 20 equal quarterly installments, respectively starting July 17, 2012. Interest rates applicable are 4.35% and 4.64%, payable monthly starting May 17, 2012.
|
NOTE 9:-
|
LONG-TERM LOAN
(Cont.)
|
|
b.
|
As of December 31, 2012, the aggregate principal annual maturities according to the loan agreement are as follows:
|
Repayment amount
|
||||
2013 (current maturities)
|
$ | 2,300 | ||
2014
|
2,300 | |||
2015
|
2,300 | |||
2016
|
1,550 | |||
2017
|
400 | |||
Total
|
$ | 8,850 |
NOTE 10:-
|
INCOME TAXES
|
|
a.
|
Tax benefits under the Israel Law for the Encouragement of Capital Investments, 1959 (the "Law"):
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
b.
|
Corporate tax rates in Israel:
|
|
c.
|
Income taxes of non-Israeli subsidiaries:
|
|
d.
|
Tax reports filed by the Company and its subsidiaries in Israel through the year ended December 31, 2008 are considered final. The U.S tax returns of the U.S subsidiaries remain subject to examination by the U.S tax authorities for the tax years beginning on December 31, 2008.
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
e.
|
Tax loss carry-forwards:
|
|
f.
|
Deferred tax assets, net:
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carry forwards
|
$ | 6,821 | $ |
7,800
|
||||
Other
|
331
|
500
|
||||||
Deferred tax assets, before valuation allowance
|
7,152 |
8,300
|
||||||
Valuation allowance
|
(4,113 | ) |
(6,254
|
) | ||||
Total deferred tax assets, net of valuation allowance
|
3,039 | 2,046 | ||||||
Deferred tax liabilities:
|
||||||||
Intangible assets
|
(2,281 | ) | (5,248 | ) | ||||
Deferred revenues
|
(427 | ) | - | |||||
Capitalized software development costs
|
(85 | ) | (148 | ) | ||||
Total deferred tax liabilities
|
(2,793 | ) | (5,396 | ) | ||||
Deferred tax asset (liability), net
|
$ | 246 | $ | (3,350 | ) |
NOTE 10:-
|
INCOME TAXES (Cont.)
|
Domestic:
|
||||||||
December 31,
|
||||||||
2011
|
2012
|
|||||||
Current deferred tax asset, net
|
$ | 258 | $ | 360 | ||||
Current deferred tax liability
|
- | (971 | ) | |||||
Non-current deferred tax asset, net
|
- | 140 | ||||||
Long-term deferred tax liability
|
(12 | ) | (2,879 | ) | ||||
$ | 246 | $ | (3,350 | ) |
|
g.
|
Reconciliation of the Company's effective tax rate to the statutory tax rate in Israel
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Income before taxes on income
|
$ | 11,621 | $ | 5,840 | $ | 6,007 | ||||||
Statutory tax rate in Israel
|
25 | % | 24 | % | 25 | % | ||||||
Theoretical income tax expense
|
$ | 2,905 | $ | 1,402 | $ | 1,502 | ||||||
Increase (decrease) in tax expenses resulting from:
|
||||||||||||
"Preferred Enterprise" benefits (*)
|
- | (1,751 | ) | (1,369 | ) | |||||||
Non-deductible expenses
|
230 | 78 | 757 | |||||||||
Previous years taxes
|
- | (156 | ) | - | ||||||||
Tax on previously distributed dividend from tax-exampt income | - | - | 812 | |||||||||
Loss and timing differences for which no deferred taxes were recorded
|
- | 994 | 1,009 | |||||||||
Tax adjustment in respect of different tax rate of foreign subsidiary
|
- | (400 | ) | (151 | ) | |||||||
Other
|
97 | 5 | (87 | ) | ||||||||
Taxes on income
|
$ | 3,232 | $ | 172 | $ | 2,473 | ||||||
(*) Benefit per Ordinary share, resulting from " Preferred Enterprise " status:
|
||||||||||||
Basic
|
$ | - | $ | 0.18 | $ |
0.13
|
||||||
Diluted
|
$ | - | $ | 0.18 | $ |
0.13
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
h.
|
Income taxes are comprised as follows:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Deferred tax benefit
|
$ | (385 | ) | $ | (1,140 | ) | $ | (172 | ) | |||
Current taxes
|
3,617 |
1,312
|
2,645
|
|||||||||
$ | 3,232 | $ | 172 | $ | 2,473 |
|
i.
|
Uncertain tax position:
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Balance at January 1
|
$ | 1,388 | $ | 2,151 | ||||
Additions for prior year tax positions
|
505 | 622 | ||||||
Additions in tax positions for current year
|
258 | 1,179 | ||||||
Balance at December 31
|
$ | 2,151 | $ | 3,952 |
|
j.
|
Income before taxes on income is comprised as follows:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Domestic
|
$ | 11,553 | $ | 8,325 | $ | 8,530 | ||||||
Foreign - U.S.A
|
68 | (2,485 | ) | (2,523 | ) | |||||||
$ | 11,621 | $ | 5,840 | $ | 6,007 |
NOTE 11:-
|
SHAREHOLDERS' EQUITY
|
|
a.
|
Ordinary share:
|
|
b.
|
Share option plans:
|
Weighted average
|
||||||||||||||||
Number of options
|
Exercise price
|
Remaining contractual
term
(in Years)
|
Aggregate intrinsic
value
|
|||||||||||||
Outstanding at January 1, 2012
|
1,776,072 | $ | 5.87 | 3.39 | $ | 113 | ||||||||||
Granted
|
1,060,501 | $ | 6.19 | |||||||||||||
Exercised *)
|
(209,067 | ) | $ | 4.41 | ||||||||||||
Cancelled
|
(221,206 | ) | $ | 6.12 | ||||||||||||
Forfeited
|
(82,666 | ) | $ | 7.09 | ||||||||||||
Outstanding at December 31, 2012 **)
|
2,323,634 | $ | 6.09 | 3.38 | $ | 6,971 | ||||||||||
Exercisable at December 31, 2012 ***)
|
694,005 | $ | 5.72 | 2.31 | $ | 2,278 |
|
*)
|
During 2012, 25,000 share options were exercised in consideration for cash received in an amount of $ 76 and 184,067 share options were exercised under net-share settlement.
|
|
**)
|
Represents intrinsic value of 1,930,300 outstanding options that are in-the-money as of December 31, 2012. The remaining 393,334 outstanding options are out of the money as of December 31, 2012, and their intrinsic value was considered as zero.
|
NOTE 11:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
|
***)
|
Represents intrinsic value of 650,672 exercisable options that are in-the-money as of December 31, 2012. The remaining 43,333 outstanding options are out of the money as of December 31, 2012, and their intrinsic value was considered as zero.
|
Outstanding
|
Exercisable
|
|||||||||||||||||||||
Weighted
|
||||||||||||||||||||||
average
|
Weighted
|
Weighted
|
||||||||||||||||||||
Ranges of
|
remaining
|
average
|
average
|
|||||||||||||||||||
exercise
|
Number of
|
contractual
|
exercise
|
Number of
|
exercise
|
|||||||||||||||||
price
|
options
|
life (years)
|
price
|
options
|
price
|
|||||||||||||||||
2.30-3.51 | 50,000 | 0.52 | 3.27 | 50,000 | 3.27 | |||||||||||||||||
4.04-4.38 | 997,168 | 3.39 | 4.23 | 300,000 | 4.38 | |||||||||||||||||
5.12-5.99 | 299,336 | 3.12 | 5.80 | 33,334 | 5.61 | |||||||||||||||||
6.04-6.93 | 229,004 | 2.68 | 6.65 | 145,670 | 6.62 | |||||||||||||||||
7.11-7.85 | 354,792 | 3.12 | 7.47 | 121,667 | 7.49 | |||||||||||||||||
9.14-9.98 | 393,334 | 4.59 | 9.80 | 43,334 | 9.98 | |||||||||||||||||
2,323,634 | 694,005 |
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Cost of sales
|
$ | 7 | $ | 10 | $ | 16 | ||||||
Research and development
|
145 | 108 | 221 | |||||||||
Selling and marketing
|
151 | 78 | 168 | |||||||||
General and administrative
|
458 | 987 | 651 | |||||||||
Total Expenses
|
$ | 761 | $ | 1,183 | $ | 1,056 |
NOTE 12:-
|
SUPPLEMENTARY DATA ON SELECTED CONSOLIDATED STATEMENTS OF INCOME ITEMS
|
|
a.
|
Financial income, net:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Financial income:
|
||||||||||||
Interest from bank deposits and marketable securities
|
$ | 449 | $ | 304 | 29 | |||||||
Gains from marketable securities, net
|
- | 71 | - | |||||||||
Exchange rate differences , net
|
- | 102 | 170 | |||||||||
Interest from government authorities, net
|
- | 988 | 225 | |||||||||
449 | 1,465 | 424 | ||||||||||
Financial expenses:
|
||||||||||||
Losses from marketable securities, net
|
38 | - | - | |||||||||
Exchange rate differences , net
|
45 | - | - | |||||||||
Accretion of payment obligation related to acquisitions
|
- | 100 | 177 | |||||||||
Interest with respect to long-term loans
|
- | - | 373 | |||||||||
Other
|
44 | 72 | 48 | |||||||||
127 | 172 | 598 | ||||||||||
$ | 322 | $ | 1,293 | (174 | ) |
|
b.
|
Research and development costs, net:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Total costs
|
$ | 6,607 | $ | 8,192 | $ | 11,583 | ||||||
Capitalized software development costs
|
- | (739 | ) | (848 | ) | |||||||
$ | 6,607 | $ | 7,453 | $ | 10,735 |
NOTE 12:-
|
SUPPLEMENTARY DATA ON SELECTED CONSOLIDATED STATEMENTS OF INCOME ITEMS (Cont.)
|
|
c.
|
Net earnings per Ordinary share:
|
|
1.
|
Numerator
:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net income available to Ordinary shareholders
|
$ | 8,389 | $ | 5,668 | $ | 3,534 |
|
2.
|
Denominator:
|
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Weighted average number of Ordinary shares, net of treasury stock
|
9,622,181 | 9,796,380 | 10,159,049 | |||||||||
Effect of dilutive securities:
|
||||||||||||
Add - stock options
|
209,447 | 205,791 | 207,759 | |||||||||
Adjusted weighted average shares
|
9,831,628 | 10,002,171 | 10,366,808 |
Perion Network Ltd.
|
|||
|
By:
|
/s/ Josef Mandelbaum | |
Josef Mandelbaum
|
|||
Chief Executive Officer
|
|||
No.
|
Description
|
1.2
|
Amended and Restated Articles of Association of Registrant, dated February 3, 2006.
|
4.1
|
The Registrant’s 2003 Israeli Share Option Plan and the U.S. Addendum to such plan.
|
4.2
|
Amendment to Google Search and Advertising Services Agreement, dated January 31 2013.
|
4.5
|
Amendment to the Commitment Letter and Financial Covenants Letter among the Company and Bank Leumi Le-Israel, B.M., dated May 10, 2012.
|
4.6
|
Amendment to Commitment Letter and Financial Covenants Letter among the Company and the First International Bank of Israel, B.M., dated April 15, 2012 (translated from Hebrew).
|
4.8
|
Google Search and Advertising Services Agreement, dated April 23, 2013, between the Company and Google Ireland Limited.*
|
4.9
|
Share Purchase Agreement by and among Perion Network Ltd., SweetIM Ltd., SweetIM Technologies Ltd., the Shareholders of SweetIM Ltd. and Nadav Goshen as Shareholders’ Agent, dated as of November 7, 2012, and Amendment No. 1, dated as of November 30, 2012.
|
4.10
|
Registration Rights Agreement among the Company and the investors listed therein, dated as of November 7, 2012.
|
8
|
List of all subsidiaries.
|
12.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a) executed by the Chief Executive Officer of the Company.
|
12.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a) executed by the Chief Financial Officer of the Company.
|
13.1
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of
Title 18 of the United States Code.
|
13.2
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of
Title 18 of the United States Code.
|
15.1
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, Independent Auditors.
|
101
|
The following financial information from Perion Network Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2011 and 2012; (ii) Consolidated Statements of Income for the years ended December 31, 2010, 2011 and 2012; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2011 and 2012; (iv) Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2010, 2011 and 2012; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012; and (vi) Notes to Consolidated Financial Statements. (1)
|
(1)
|
In accordance with Rule 406T of Regulation S-T, the information in Exhibit 101 is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
*
|
Confidential treatment was requested with respect to certain portions of this exhibit pursuant to 17.C.F.R. §§ 230.406 and 200.83. Omitted portions were filed separately with the SEC.
|
1.
|
In these Articles, unless the context otherwise requires:
|
2.
|
The Company is a public company as such term is defined in Section 1 of the Law. The liability of the Company’s Shareholders is limited and, accordingly, each Shareholder’s responsibility for the Company’s obligations shall be limited to the payment of the nominal value of the shares held by such Shareholder, subject to the provisions of these Articles and the Law.
|
3.
|
The Company's objectives are:
|
|
3.1.
|
The development, manufacture and marketing of software;
|
|
3.2.
|
Any other objective as determined by the Board.
|
4.
|
Share Capital
|
5.
|
Allotment of Shares
|
6.
|
Bearer Shares
|
7.
|
Special Rights
|
8.
|
Consolidation and Subdivision; Fractional Shares
|
|
8.1.
|
From time to time, by resolution of the Shareholders, subject to the Articles and the Law:
|
8.1.1.
|
Consolidate all or any of its issued or unissued share capital into shares bearing a per share nominal value that is larger than the per share nominal value of its existing shares;
|
8.1.2.
|
Cancel any shares that at the date of the adoption of such resolution have not been acquired or agreed to be acquired by any person, and reduce the amount of its share capital by the amount of the shares so cancelled;
|
8.1.3.
|
Subdivide its shares (issued or unissued) or any of them, into shares of smaller per share nominal value than is fixed by these Articles. The resolution pursuant to which any share is subdivided may determine that, as among the holders of the shares resulting from such subdivision, one or more of such shares may, as compared with the others, have special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares;
|
8.1.4.
|
Reduce its share capital in any manner, including with and subject to any incidental authorities and/or consents required by law.
|
|
8.2.
|
Upon any consolidation or subdivision of shares that may result in fractional shares, the Board may settle any difficulty that may arise with regard thereto as it deems fit, including, without limitation, by:
|
8.2.1.
|
Allotting, in contemplation of, or subsequent to, such consolidation or other action, such shares or fractional shares sufficient to preclude or remove fractional shareholdings;
|
8.2.2.
|
Notwithstanding Section 295 of the Law, making such arrangements for the sale or transfer of the fractional shares to such other shareholders of the Company at such times and at such price as the Board deems fit so as to most expeditiously preclude or remove any fractional shareholdings and cause the transferees of such fractional shares to pay the full fair market value thereof to the transferors, and the Board is hereby authorized to act as agent for the transferors and transferees with power of substitution and off-setting for purposes of implementing the provisions of this sub-Article
8.2.2.
|
8.2.3.
|
To the extent as may be permitted under the Law, redeeming or purchasing such fractional shares sufficient to preclude and remove such fractional shareholding; and
|
8.2.4.
|
Determining, as to the holders of shares so consolidated, which issued shares shall be consolidated into each share of a larger nominal value.
|
9.
|
Increase of Capital
|
|
9.1.
|
The Company, by resolution of the Shareholders, may from time to time, whether or not all the shares then authorized have been issued, and whether or not all the shares theretofore issued have been fully called up for payment, increase its authorized share capital. Any such new share capital shall be of such amount and divided into shares of such nominal values and (subject to any special rights then attached to any existing class of shares) bear such rights or preferences or be subject to such conditions or restrictions (if any) as the resolution approving such share capital increase shall provide.
|
|
9.2.
|
Except so far as otherwise provided in such resolution or pursuant to the Articles, such new shares shall be subject to all the provisions of the Articles applicable to the shares of such class included in the existing share capital.
|
10.
|
Modification of Class Rights
|
|
10.1.
|
If at any time the share capital of the Company is divided into different classes of shares, the right attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be modified only upon consent of a separate general meeting of the holders of the shares of that class. The provisions of these Articles relating to general meetings of Shareholders shall apply
mutatis mutandis
to every such separate general class meeting.
|
|
10.2.
|
Unless otherwise provided by these Articles, the increase in an authorized class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for the purposes of Article
10.1 to vary, modify or abrogate the rights attached to previously issued shares of such class or of any other class of shares.
|
11.
|
Redeemable Shares
|
12.
|
Issuance of Share Certificates; Replacement of Lost Certificates
|
|
12.1.
|
Share certificates, when issued, shall be issued, upon the written request of a Shareholder, under the Seal and shall bear the signature of any person or persons so authorized by the Board.
|
|
12.2.
|
Each Shareholder shall be entitled to one or more numbered certificate(s) for all the shares of any class registered in his name, each of which shall state the number of shares represented by the certificate, their serial numbers and the amount paid on account of their nominal value.
|
|
12.3.
|
A share certificate registered in the Shareholders Register in the names of two or more persons shall be delivered to the person first named in the Shareholders Register in respect of such co-ownership and the Company shall not be obligated to issue more than one certificate to all of the joint holders.
|
|
12.4.
|
A share certificate that has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board, in its discretion, deems fit.
|
13.
|
Registered Holder
|
14.
|
Payment in Installment
|
15.
|
Calls on Shares
|
|
15.1.
|
The Board may, from time to time, as in its discretion it deems fit, make calls for payment upon Shareholders in respect of any sum which has not been paid up in respect of shares held by such Shareholders and that is not, pursuant to the terms of allotment or issue of such shares or otherwise, payable at a fixed time. Each Shareholder shall pay the amount of every call so made upon him (and of each installment thereof if the same is payable in installments), to the person(s) and at the time(s) and place(s) designated by the Board. Unless otherwise stipulated in the resolution of the Board (and in the notice referred to below), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.
|
|
15.2.
|
Notice of any call for payment by a Shareholder shall be given in writing to such Shareholder not less than 14 days prior to the time of payment fixed in such notice, and shall specify the time and place of payment, and the person to whom such payment is to be made. Prior to the time for any such payment fixed in a notice of a call given to a Shareholder, the Board may in its discretion, by notice in writing to such Shareholder, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment or person to whom payment is to be made. In the event of a call payable in installments, only one notice thereof need be given.
|
|
15.3.
|
If, pursuant to the terms of allotment or issue of a share or otherwise, an amount is made payable at a fixed time (whether on account of such share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board and for which notice was given in accordance with this Article
15, and the provisions of these Articles with regard to calls (and the non-payment thereof) shall be applicable to such amount (and the non-payment thereof).
|
|
15.4.
|
Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable thereon.
|
|
15.5.
|
Any amount called for payment that is not paid when due shall bear interest from the date fixed for payment until actual payment thereof, at such rate and payable at such time(s) as the Board may prescribe.
|
|
15.6.
|
The Board may provide for differences among the allottees of such shares as to the amounts and times for payment of calls for payment in respect of such shares.
|
16.
|
Prepayment
|
17.
|
Forfeiture and Surrender
|
|
17.1.
|
If any Shareholder fails to pay an amount payable by virtue of a call, or interest thereon as provided for in accordance herewith, on or before the day fixed for payment of the same, the Board may, at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, forfeit all or any of the shares in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorneys’ fees and costs of legal proceedings, shall be added to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of, the amount payable to the Company in respect of such call.
|
|
17.2.
|
Upon the adoption of a resolution as to the forfeiture of a Shareholder’s share, the Board shall cause notice thereof to be given to such Shareholder, which notice shall state the place that payment is to be made and that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than seven days after the date such notice is given and which may be extended by the Board), such shares shall be
ipso facto
forfeited;
provided, however
, that, prior to such date, the Board may nullify such resolution of forfeiture, but no such nullification shall prevent the Board from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.
|
|
17.3.
|
Without derogating from Articles
17.1 and
17.2 hereof, whenever shares are forfeited as herein provided, any and all dividends declared in respect of such shares and not actually paid shall be deemed to have been forfeited at the same time as the forfeiture of such shares.
|
|
17.4.
|
The Company, by resolution of the Board, may accept the voluntary surrender of any share. A surrendered share shall be treated as if it had been forfeited.
|
|
17.5.
|
Any share forfeited or surrendered as provided herein shall become the property of the Company, and the same, subject to the provisions of these Articles, may be sold, re-allotted or otherwise disposed of, as the Board deems fit.
|
|
17.6.
|
Any Shareholder whose shares have been forfeited or surrendered shall cease to be a Shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article
15.5 above, and the Board, in its discretion, may, but shall not be obligated to, enforce the payment of such monies, or any part thereof. In the event of such forfeiture or surrender, the Company, by resolution of the Board, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the Shareholder in question (but not yet due) in respect of all shares owned by such Shareholder, solely or jointly with another.
|
|
17.7.
|
The Board may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems fit, but no such nullification shall prevent the Board from re-exercising its powers of forfeiture pursuant to this Article
17.
|
|
17.8.
|
A declaration in writing by a director or secretary of the Company that a share in the Company has been duly forfeited on the date stated in the declaration shall be conclusive evidence of the facts therein stated against all persons claiming to be entitled to the share.
|
|
17.9.
|
The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
|
18.
|
Lien
|
|
18.1.
|
Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each Shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts or other liabilities to the Company arising from any amount payable by such Shareholder in respect of any unpaid or partly paid share, whether or not such debt or other liability has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such transfer.
|
|
18.2.
|
The Board may cause the Company to sell a share subject to such a lien when the debt or other liability giving rise to such lien has matured, in such manner and for such sums as the Board deems fit, but no such sale shall be made unless such debt or other liability has not been satisfied within seven days after written notice of the intention to sell shall have been served on such Shareholder, his executors or administrators.
|
|
18.3.
|
The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts or other liabilities of such Shareholder in respect of such share (whether or not the same have matured), and the remainder (if any) shall be paid to the Shareholder, his executors, administrators or assigns.
|
19.
|
Sale After Forfeiture or Surrender or in Enforcement of Lien
|
20.
|
Purchase of the Company’s Shares
|
21.
|
Registration of Transfer
|
|
21.1.
|
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the Board) has been submitted to the Company (or its transfer agent), together with the share certificate(s) or such other evidence of title as the Board may reasonably require.
|
|
21.2.
|
The Board may, in its discretion to the extent it deems necessary and subject to any restrictions in the Law or the rules of any stock exchange upon which the Ordinary Shares are listed or included for quotation, close the Shareholders Register for registrations of transfers of shares during any year for periods to be determined by the Board, and no registrations in the Shareholders Register of transfers of shares shall be made by the Company during any such period during which the Shareholders Register is so closed.
|
22.
|
Decedents’ Shares
|
|
22.1.
|
In case of a share registered in the name of two or more shareholders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article
22.2 have been effectively invoked.
|
|
22.2.
|
Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board may reasonably deem sufficient), shall be registered as a Shareholder in respect of such share, or may, subject to the regulations as to transfer herein contained, transfer such share. However, nothing herein shall release the estate of a deceased Shareholder (whether sole or joint) of a share from any obligation to the Company with respect to any share held by the deceased.
|
23.
|
Receivers and Liquidators
|
|
23.1.
|
The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a Shareholder that is an entity, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceeding with respect to, a Shareholder or its properties, as being entitled to the shares registered in the name of such Shareholder.
|
|
23.2.
|
Any such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a Shareholder that is an entity and any such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings with respect to, a Shareholder or its properties, upon producing such evidence as the Board may deem sufficient as to his authority to act in such capacity or under this Article, shall with the consent of the Board (which the Board may grant or refuse in its discretion), be registered as a Shareholder in respect of such shares, or may, subject to the provisions as to transfer herein contained, transfer such shares.
|
24.
|
Branch Registers
|
25.
|
Record Date for Notices of General Meetings
|
|
25.1.
|
Notwithstanding any provision of these Articles to the contrary and subject to applicable law, the Board may fix a date, not exceeding 40 days, and not less than four days, prior to the date of any general meeting of the Shareholders, as the date of which Shareholders entitled to participate and to vote at such meeting shall be determined, and all persons who were holders of record of voting shares on such date and no others shall be entitled to notice of, participate in and to vote at such meeting. A determination of Shareholders of record entitled to participate and to vote at any meeting shall apply to any adjournment of such meeting;
provided, however
, that the Board may fix a new record date for the adjourned meeting.
|
|
25.2.
|
Any Shareholder or Shareholders of the Company holding at least one percent of the voting rights in the issued share capital of the Company may, subject to the Law, request that the Board include a subject in the agenda of a general meeting to be held in the future. Any such request (i) must be in writing, (ii) must include all information related to the subject matter and the reason that such subject is proposed to be brought before the general meeting and (iii) must be signed by the Shareholder or Shareholders making such request. In addition, subject to the Law, the Board may include such subject in the agenda of a general meeting only if the request has been delivered to the secretary of the Company at least 75 days and not more than 120 days prior to the date set for the relevant Annual General Meeting or Extraordinary General Meeting, as applicable. Each such request shall also set forth: (a) the name and address of the Shareholder making the request; (b) a representation that the Shareholder is a holder of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting; (c) a description of all arrangements or understandings between the Shareholder and any other person or persons (naming such person or persons) in connection with the subject which is requested to be included in the agenda; and (d) a declaration that all the information that is required under the Law and any other applicable law to be provided to the Company in connection with such subject, if any, has been provided. In addition, if such subject includes a nomination to the Board in accordance with the Articles, the request shall also set forth the consent of each nominee to serve as a director of the Company if so elected and a declaration signed by each of the nominees declaring that there is no limitation under applicable law for the appointment of such a nominee. Furthermore, the Board may, in its discretion, to the extent it deems necessary, require that the Shareholders making the request provide additional information so as to include a subject in the agenda of a general meeting.
|
26.
|
Annual Meetings
|
27.
|
Extraordinary General Meetings
|
28.
|
Powers of the General Meeting
|
29.
|
Notice of General Meetings; Omission to Give Notice
|
30.
|
Manner of Meeting
|
31.
|
Quorum
|
|
31.1.
|
No business shall be transacted at any general meeting unless a quorum is present when the meeting commences. For all purposes, the quorum shall be at least two Shareholders present in person, or by proxy, holding in the aggregate at least 33 1/3% (thirty three percent and one-third of a percent) of the voting rights in the issued share capital of the Company.
|
|
31.2.
|
If within 30 minutes from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the request of the Shareholders, shall be dissolved; if the meeting is not convened upon the request of a Shareholder it shall stand adjourned to the same day in the next week at the same place and time, or to such day and at such time and place as the chairperson may determine with the consent of the holders of a majority of the voting power represented at the meeting in person or by proxy and voting on the question of adjournment. No business shall be transacted at any adjourned meeting except business that might lawfully have been transacted at the meeting as originally called. If at the adjourned meeting a legal quorum is not present after 30 minutes from the time specified for the commencement of the adjourned meeting, than the meeting shall take place regardless of the number of members present and in such event the required quorum shall consist of any number of shareholders present in person or by proxy.
|
32.
|
Chairperson
|
33.
|
Adoption of Resolutions at General Meetings
|
|
33.1.
|
Subject to Article
34 below, resolutions of the Shareholders with respect to all matters shall be deemed adopted if approved by the holders of a simple majority of the voting power of the Company represented at the meeting in person or by proxy and voting thereon, other than as specified in the Articles or otherwise required by the Law.
|
|
33.2.
|
Every question submitted to a general meeting shall be decided by a show of hands, but if a written ballot is demanded by any Shareholder present in person or by proxy and entitled to vote at the meeting, the same shall be decided by such ballot. A written ballot may be demanded before the voting on a proposed resolution or immediately after the declaration by the chairperson of the meeting of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot. The demand for a written ballot may be withdrawn at any time before the same is conducted, in which event another Shareholder may then demand such written ballot. The demand for a written ballot shall not prevent the continuance of the meeting for the transaction of business other than the question on which the written ballot was demanded.
|
|
33.3.
|
A declaration by the chairperson of the meeting that a resolution was carried unanimously, or carried by a particular majority, or did not receive the required majority in order to be carried, and an entry to that effect in the minute book of the Company, shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.
|
34.
|
Special Resolution
|
35.
|
Voting Power
|
36.
|
Voting Rights
|
|
36.1.
|
In the case of joint holders, the vote of the senior holder to tender a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For the purpose of this Article, seniority shall be determined by the order in which the names appear in the Shareholders Register (or in the Company’s transfer agent records). The appointment of a proxy to vote on behalf of a jointly held share shall be executed by the senior holder.
|
|
36.2.
|
No Shareholder shall be entitled to vote at any general meeting (or be counted as a part of the quorum thereat), unless all calls and other sums then payable by him in respect of his shares in the Company have been paid.
|
|
36.3.
|
Any Shareholder entitled to vote may vote either personally or by proxy (who need not be a shareholder of the Company), or, if the Shareholder is a company or other entity, by a representative authorized pursuant to Article
36.4.
|
|
36.4.
|
A company or other corporate body that is a Shareholder of the Company may, by resolution of its directors or any other managing body thereof, authorize any person to be or to appoint its representative at any meeting of the Company. Any person so authorized shall be entitled to exercise on behalf of such Shareholder all the power that the latter could have exercised if it were an individual shareholder. Upon the request of the chairperson of the meeting, written evidence of such authorization (in form reasonably acceptable to the chairperson) shall be delivered to him.
|
37.
|
Instrument of Appointment
|
|
37.1.
|
The instrument appointing a proxy shall be in writing in such form as may be approved by the Board from time to time in compliance with applicable law.
|
|
37.2.
|
The instrument appointing a proxy (and the power of attorney or other authority, if any, under which such instrument has been signed) shall either be delivered to the Company (at its Registered Office, at its principal place of business, at such place as the Board may specify, or by any other means, including electronic form, all in compliance with applicable law) not less than the close of business on the business day preceding the time fixed for the meeting at which the person named in the instrument proposes to vote, or presented to the chairperson at such meeting.
|
|
37.3.
|
The Board may cause the Company to send, by mail or otherwise, instruments of proxy to Shareholders for use at any general meeting.
|
38.
|
Effect of Death of Appointer or Revocation of Appointment
|
39.
|
Multiple Proxies
|
40.
|
Number of Directors
|
41.
|
Qualification of Directors
|
42.
|
Continuing Directors in the Event of Vacancies
|
43.
|
Vacation of Office
; Removal of Directors
|
|
43.1.
|
The office of a director shall be vacated,
ipso facto
, upon his death or if he be found legally incompetent; if he becomes bankrupt, if he is prevented by applicable law or listing requirements from serving as a director of the Company, if the Board terminates his office according to Section 231 of the Law, if a court order is given in accordance with Section 233 of the Law, or if under the Law his term otherwise automatically terminates.
|
|
43.2.
|
The office of a director shall be vacated by his written resignation. Such resignation shall become effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later.
|
|
43.3.
|
A director shall be removed from office only pursuant to the provisions of Article 43.1 or by a resolution of the general meeting of the Company approved by Shareholders holding more than two-thirds of the voting power of the issued and outstanding share capital of the Company.
|
44.
|
Remuneration of Directors
|
45.
|
Conflict of Interests; Approval of Related Party Transactions
|
|
45.1.
|
Subject to the provisions of the Law and the Articles, the Company may enter into any contract or otherwise transact any business with any director in which contract or business such director has a personal interest, directly or indirectly; and may enter into any contract of otherwise transact any business with any third party in which contract or business a director has a personal interest, directly or indirectly.
|
|
45.2.
|
A director or other Office Holder, shall not participate in deliberations concerning, nor vote upon a resolution approving, a transaction with the Company in which he has a personal interest, except as otherwise provided for in the Law.
|
46.
|
Powers of the Board of Directors
|
|
46.1.
|
General
|
|
46.2.
|
Borrowing Power
|
|
46.3.
|
Reserves
|
47.
|
Exercise of Powers of Directors
|
|
47.1.
|
A meeting of the Board at which a quorum is present shall be competent to exercise all the authorities, powers and discretions vested in or exercisable by the Board.
|
|
47.2.
|
Except as otherwise specifically set forth in these Articles or as required by the Law, a resolution proposed at any meeting of the Board shall be deemed adopted if approved by a majority of the directors present when such resolution is put to a vote and voting thereon.
|
|
47.3.
|
A resolution in writing signed by all directors then in office and lawfully entitled to vote thereon, or to which all such directors have given their written consent (by letter, telegram, email, facsimile, telecopier, email, or otherwise), shall be deemed to have been unanimously adopted by a meeting of the Board duly convened and held.
|
48.
|
Delegation of Powers
|
|
48.1.
|
The Board may, subject to the provisions of the Law and any other applicable law, delegate any or all of its powers to committees, and it may from time to time revoke such delegation or alter the composition of any such committee. Any Committee so formed (in these Articles referred to as a “Committee of the Board”), shall, in the exercise of the powers so delegated, conform to any regulations imposed on it by the Board. The meetings and proceedings of any Committee of the Board shall be governed, with the relevant changes, by the provisions herein contained for regulating the meetings of the Board, so far as not superseded by any regulations adopted by the Board under this Article. Unless otherwise expressly provided by the Board in delegating powers to a Committee of the Board, such Committee shall not be empowered to further delegate such powers. In accordance with and subject to Section 271 of the Law, the Compensation Committee of the Board (if any) shall have the full power and authority to approve the terms of compensation of the Office Holders of the Company, other than Office Holders who are also directors.
|
|
48.2.
|
Without derogating from the provisions of Article
48.1, the Board may, subject to the provisions of the Law, from time to time appoint a secretary to the Company, as well as officers, agents, employees and independent contractors, as the Board may deem fit, and may terminate the service of any such person. The Board may, subject to the provisions of the Law, determine the powers and duties, as well as the salaries and emoluments, of all such persons, and may require security in such cases and in such amounts as it thinks fit.
|
|
48.3.
|
The Board may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or attorneys of the Company at law or in fact for such purpose(s) and with such powers, authorities and discretions, and for such period and subject to such conditions, as it thinks fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him.
|
49.
|
Other than External Directors, the directors will be elected in three staggered classes by the vote of a majority of the ordinary shares present and entitled to vote. The directors of only one class will be elected at each annual meeting for a three year term, so that the regular term of only one class of directors expires annually. The directors serving as of the date these Articles become effective will be classified as shall be determined by a resolution of the Board. At the Company's Annual General Meeting to be held in 2006, the term of the first class, consisting of two directors will expire, and the directors elected at that meeting will be elected for a three-year term. At the Company's Annual General Meeting to be held in 2007, the term of the second class, consisting of two directors, will expire and the directors elected at that meeting will be elected for a three-year term. At the Company's Annual General Meeting to be held in 2008, the term of the third class, consisting of one director, will expire and the director elected at that meeting will be elected for a three-year term. The External Directors will not be assigned a class.
|
50.
|
Subject to Article
49, directors shall be elected at the Annual General Meeting or an Extraordinary General Meeting of the Company by the vote of the holders of a majority of the voting power represented at such meeting in person or by proxy and voting on the election of directors.
|
51.
|
Notwithstanding the provisions of Article
49, External Directors shall be elected and hold office in accordance with the provisions of the Law.
|
52.
|
Nominations to the Board
|
|
52.1.
|
Nominations for the election of directors may be made by the Board or a Committee of the Board or, subject to the Law, by any Shareholder. Any Shareholder or Shareholders holding at least five percent of the voting rights in the issued share capital of the Company may nominate one or more persons for election as directors at a general meeting only if a written notice of such Shareholder’s intent to make such nomination or nominations has been given to the secretary of the Company and each such notice sets forth all the details and information set forth in Article
25.2. The chairperson of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
|
|
52.2.
|
Notwithstanding the provisions of Articles
52.1 and
51, no person shall be nominated or appointed to the office of a director if such person is disqualified under the Law from being appointed as a director.
|
|
52.3.
|
A director’s term (including External Directors) shall begin either on the date of his appointment to the Board or at such later date designated in the resolution appointing such director.
|
53.
|
Subject to the provisions of Article
49, the Board may at any time appoint any other person as a director, whether to fill a vacancy or as an addition to the then current number of directors, provided that the total number of directors shall not at any time exceed seven directors. Any director so appointed shall hold office until the Annual General Meeting at which the term for the other directors of his class expires, unless otherwise stated in the appointing resolution.
|
54.
|
Subject to the provisions of the Law, a director may appoint an alternate director to attend a meeting in his or her place, but an alternate director so appointed must be approved by the board prior to the relevant meeting.
|
55.
|
Meetings of the Board
|
|
55.1.
|
The Board may meet and adjourn its meetings at such places either within or out the State of Israel and otherwise regulate such meetings and proceedings as the directors think fit, provided that meetings shall be convened at least once every three months. Subject to all of the other provisions of the Articles concerning meetings of the Board, the Board may meet by telephone conference call or other communication equipment so long as each director participating in such call can hear, and be heard by, each other director participating in such call. The directors participating in this manner shall be deemed to be present in person at such meeting and shall be entitled to vote or be counted in a quorum accordingly.
|
|
55.2.
|
Board meetings may be convened at any time by the chairperson of the Board. The chairperson of the Board shall convene a Board meeting upon the written request of any two directors (or one director if the Board is comprised of fewer than seven directors) as soon as practicable after receiving such request and shall otherwise convene a Board meeting as provided by the Law.
|
56.
|
Notice
|
|
56.1.
|
Notice of a Board meeting shall contain the information required by the Law and shall be delivered to the directors not less than three days before such meeting.
|
|
56.2.
|
Notice of a meeting of the Board shall be given in writing, and may be sent by hand, post, facsimile or electronic mail to a director at the address, facsimile number or electronic mail address given by such director to the Company for such purpose. Any such notice shall be deemed duly received, if sent by post, three days following the day when any such notice was duly posted and if delivered by hand or transmitted by facsimile transmission or electronic mail, such notice shall be deemed duly received by the director on the date of delivery or, as the case may be, transmission of the same.
|
|
56.3.
|
Notwithstanding anything contained to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required hereby may be waived (in advance or retroactively) by such director and a meeting shall be deemed to have been duly convened notwithstanding such defective notice if such failure or defect is waived (in advance or retroactively), by all directors entitled to participate at such meeting and to whom notice was not duly given. The presence of a director at any such meeting shall be deemed due receipt of prior notice or a waiver of any such notice requirement by such director.
|
57.
|
Quorum
|
|
57.1.
|
A quorum at a meeting of the Board shall be constituted by the presence in person, or by telephone or similar communication equipment of a majority of the directors then in office who are lawfully entitled to participate and vote at the meeting. If within 30 minutes (or within such longer time as the chairperson of the meeting may decide) from the time appointed for the holding of the Board meeting a quorum is not present, the Board meeting shall stand adjourned to the date, time, and place determined by the chairperson. No business shall be transacted at a meeting of the Board unless the requisite quorum is present.
|
|
57.2.
|
If at any adjourned Board meeting a quorum is not present within 30 minutes (or within such longer time as the chairperson of the meeting may decide) from the time appointed for holding the meeting, then the quorum at such meeting shall be constituted by the presence in person, or by telephone or similar communication equipment of two of the directors then in office who are lawfully entitled to participate and vote at the meeting. If at such meeting such quorum is not present within the above mentioned time frame, the Board meeting shall be adjourned in accordance with the provisions of this Article
57. No business shall be transacted at a meeting of the Board unless the requisite quorum is present.
|
58.
|
Chairperson
|
59.
|
Validity of Acts
|
60.
|
Subject to the Articles and the Law, the Board may from time to time appoint one or more persons, whether or not directors, as the General Manager, Chief Executive Officer, and/or President of the Company (the “Chief Executive Officer”). Subject to the Law, the powers, authorities and responsibilities any such Chief Executive Officer shall have shall be those that the Board may, at its discretion, lawfully confer on the same. The Board may, from time to time, as the Board may deem fit, modify or revoke, such title(s), duties and authorities the Board conferred as aforesaid. Subject to the Articles and the Law, any such appointment(s) and any such powers, authorities and responsibilities may be either for a fixed term or without any limitation of time, and may be made upon such conditions and subject to such limitations and restrictions as the Board may, from time to time, determine. In addition, the Board may from time to time (subject to the provisions of any applicable law or the rules of any stock exchange upon which securities of the Company are listed or included for quotation and of any contract between any such person(s) and the Company) determine the salary of any such person(s) and remove or dismiss any such person(s) from office and appoint another or others in his or their place.
|
61.
|
The management and the operation of the Company’s affairs and business in accordance with the policies determined by the Board shall be vested in the Chief Executive Officer, in addition to all powers and authorities of the Chief Executive Officer, as specified in the Law. Without derogating from the above, all powers of management and executive authority that are not vested by the Law or by the Articles in another organ of the Company shall be vested in the Chief Executive Officer.
|
62.
|
The Company shall cause minutes to be recorded of all general meetings of the Company and also of all appointments of directors and Office Holders and of the proceedings of all meetings of the Board and any Committees thereof. Such minutes shall set forth the names of persons present and all business transacted at such meetings. Any such minutes of any meeting, if purporting to be signed by the chairperson of such meeting or of the next succeeding meeting, or by the chairperson of the Board or the secretary of the Company, shall be
prima facie
evidence of the facts therein stated. Minutes of a meeting shall be kept at the Office for the period, and in the manner, prescribed in the Law.
|
63.
|
Declaration of Dividends
|
64.
|
Funds Available for Payment of Dividends
|
65.
|
Amount Payable by Way of Dividends
|
66.
|
Interest
|
67.
|
Payment in Kind
|
|
67.1.
|
A dividend may be paid, wholly or partly, by the distribution of specific assets, and, in particular, by distribution of paid-up shares, debentures of the Company or debentures of any other company, or in any one or more such ways.
|
|
67.2.
|
The Board may resolve that: (a) any monies, investments, or other assets forming part of the undivided profits of the Company standing to the credit of the reserve fund, or to the credit of any reserve fund for the redemption of capital, or to the credit of a reserve fund for the revaluation of real estate or other assets of the Company or any other reserve fund or investment funds or assets in the hands of the Company and available for dividends, or representing premiums received on the issue of shares and standing to the credit of the share premium account, be capitalized and distributed among such of the Shareholders as would be entitled to receive the same if distributed by the way of dividend and in the same proportion on the basis that they become entitled thereto as capital; (b) all or any part of such capitalized fund be applied on behalf of such Shareholders in paying up in full, either at nominal or at such premiums as the resolution may provide, any unissued shares or debentures of the Company that shall be distributed accordingly or in or towards the payment, in full or in part, of the uncalled liability on any issued shares or debentures of the Company; and (c) such distribution or payment shall be accepted by such Shareholders in full satisfaction of their share and interest in the said capitalized sum.
|
68.
|
Implementation of Powers under Article
67
|
69.
|
Dividends on Unpaid Shares
|
|
69.1.
|
Without derogating from Article
65 hereof, the Board may give an instruction that shall prevent the distribution of a dividend to the holders of shares for which the full amount payable has not been paid.
|
|
69.2.
|
The Board may deduct from any dividend payable to any Shareholder all sums of money, if any, presently payable by such Shareholder to the Company on account of calls or otherwise in relation to the shares of the Company. The Board may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien, and may apply the same in or toward the satisfaction of the debts, liabilities or engagement in respect of which the lien exists.
|
70.
|
Retention of Dividends
|
|
70.1.
|
The Board may retain any dividend or other monies payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or toward satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.
|
|
70.2.
|
The Board may retain any dividend or other monies payable or property distributable in respect of a share in respect of which any person is, under Article
21 entitled to become a Shareholder, or which any person is, under such Article, entitled to transfer, until such person shall become a shareholder in respect of such share or shall transfer the same.
|
71.
|
Unclaimed Dividends
|
72.
|
Payment
|
73.
|
Receipt from a Joint Holder
|
74.
|
Books of Account
|
75.
|
Audit
|
76.
|
Auditors
|
77.
|
Rights of Signature
|
78.
|
Notices
|
|
78.1.
|
Any written notice or other document may be served by the Company upon any Shareholder either personally, electronically, or by sending it by prepaid mail (airmail if sent internationally) addressed to such Shareholder at his address as described in the Shareholders Register or such other address as he may have designated in writing for the receipt of notices and other documents. Any written notice or other document may be served by any Shareholder upon the Company by tendering the same in person to the secretary or the Chief Executive Officer of the Company at the Office or by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at its Office. Any such notice or other document shall be deemed to have been served 48 hours after it has been posted (seven business days if sent internationally), or when actually received by the addressee if sooner than 48 hours or seven business days, as the case may be, after it has been posted, or when actually tendered in person, to such shareholder (or to the secretary or the Chief Executive Officer). Notice sent by telegram, facsimile or electronic mail shall be deemed to have been served when actually received by the addressee, including in the event that it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article
78.1.
|
|
78.2.
|
All notices to be given to the Shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the Shareholders Register or in the records of the Company’s transfer agent, and any notice so given shall be sufficient notice to the holders of such share.
|
|
78.3.
|
Any Shareholder whose address is not described in the Shareholders Register, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.
|
|
78.4.
|
Notwithstanding anything to the contrary contained herein and subject to the provisions of the Law, notice to a Shareholder may be served, as general notice to all Shareholders, in accordance with applicable rules and regulations of any stock exchange upon which the Company’s shares are listed or included for quotation.
|
|
78.5.
|
Subject to applicable law, any Shareholder, director or any other person entitled to receive notice in accordance with these Articles or Law, may waive notice, in advance or retroactively, in a particular case or type of cases or generally, and if so, notice will be deemed as having been duly served, and all proceedings or actions for which the notice was required will be deemed valid.
|
|
78.6.
|
The accidental omission to give notice of a meeting to any Shareholder or the non-receipt of notice by any Shareholder entitled to receive notice shall not invalidate the proceedings at any meeting or any resolution(s) adopted by such a meeting.
|
79.
|
Subject to the provisions of the Law, the Company may:
|
|
79.1.
|
enter into a contract for the insurance of the liability, in whole or in part, of any of its Office Holders with respect to an obligation imposed on such Office Holder due to an act performed by the Office Holder in the Office Holder’s capacity as an Office Holder of the Company arising from any of the following:
|
79.1.1.
|
a breach of duty of care to the Company or to any other person;
|
79.1.2.
|
a breach of the duty of loyalty to the Company provided that the Office Holder acted in good faith and had reasonable grounds to assume that the act would not harm the interests of the Company;
|
79.1.3.
|
a financial liability imposed on such Office Holder in favor of any other person;
|
|
79.2.
|
undertake, in advance to indemnify, or may indemnify retroactively, an Office Holder of the Company with respect to any of the following liabilities or expenses that arise from an act performed by the Office Holder by virtue of being an Office Holder of the Company:
|
79.2.1.
|
a financial liability imposed on an Office Holder in favor of another person by any judgment, including a judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court,
|
79.2.2.
|
reasonable litigation expenses including attorney's fees, incurred by him as a result of an investigation or proceedings instituted against him by an authority empowered to conduct an investigation or proceedings, which are concluded without the filing of an indictment against the Office Holder and without the levying of a monetary obligation in lieu of criminal proceedings upon the Office Holder, or which are concluded without the filing of an indictment against the Office Holder but with levying a monetary obligation in substitute of such criminal proceedings upon the Office Holder for a crime that does not require proof of criminal intent; and
|
79.2.3.
|
reasonable litigation expenses, including attorney's fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge on which the Office Holder was acquitted or in a criminal charge on which the Office Holder was convicted for an offense which did not require proof of criminal intent;
|
80.
|
Subject to the provisions of the Law, the Company hereby releases, in advance, its Office Holders from liability to the Company for damage that arises from the breach of the Office Holder’s duty of care to the Company.
|
81.
|
The provisions of Articles
79 and
80 are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance or in respect of indemnification (i) in connection with any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder, or (ii) in connection with any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law;
provided
that the procurement of any such insurance or the provision of any such indemnification shall be approved by the Board . Any modification of Articles
79 through
81 shall be prospective in effect and shall not affect the Company’s obligation or ability to indemnify an Office Holder for any act or omission occurring prior to such modification.
|
1.
|
PURPOSE OF THE ISOP
|
2
|
2.
|
DEFINITIONS
|
3
|
3.
|
ADMINISTRATION
OF THE ISOP
|
6
|
4.
|
DESIGNATION OF PARTICIPANTS
|
7
|
5.
|
DESIGNATION OF OPTIONS PURSUANT TO SECTION 102
|
7
|
6.
|
TRUSTEE
|
9
|
7.
|
SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON
|
9
|
8.
|
PURCHASE PRICE
|
10
|
9.
|
ADJUSTMENTS
|
10
|
10.
|
TERM AND EXERCISE OF OPTIONS
|
12
|
11.
|
VESTING OF OPTIONS
|
14
|
12.
|
SHARES SUBJECT TO RIGHT OF FIRST REFUSAL
|
14
|
13.
|
DIVIDENDS
|
15
|
14.
|
RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS
|
15
|
15.
|
EFFECTIVE DATE AND DURATION OF THE ISOP
|
15
|
16.
|
AMENDMENTS OR TERMINATION
|
16
|
17.
|
GOVERNMENT REGULATIONS
|
16
|
18.
|
CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
|
16
|
19.
|
GOVERNING LAW & JURISDICTION
|
16
|
20.
|
TAX CONSEQUENCES
|
17
|
21.
|
NON-EXCLUSIVITY OF THE ISOP
|
17
|
22.
|
MULTIPLE AGREEMENTS
|
17
|
2.
|
DEFINITIONS
|
2.1
|
“
Affiliate
” means any “employing company” within the meaning of Section 102(a) of the Ordinance.
|
2.2
|
“
Approved 102 Option
” means an Option granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee.
|
2.3
|
“Board”
means the Board of Directors of the Company.
|
2.4
|
“
Capital Gain Option (CGO)
” as defined in Section 5.4 below.
|
2.5
|
“
Cause”
means, (i) conviction of any felony involving moral turpitude or affecting the Company; (ii) any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Optionee’s direct supervisor, which involves the business of the Company or its Affiliates and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or its Affiliates; (iv) any breach of the Optionee’s fiduciary duties or duties of care of the Company; including without limitation disclosure of confidential information of the Company; and (v) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company.
|
2.6
|
“Chairman”
means the chairman of the Committee.
|
2.7
|
“Committee”
means a share option compensation committee appointed by the Board, which shall consist of no fewer than two members of the Board.
|
2.8
|
“Company”
means Perion Network Ltd., an Israeli company.
|
2.9
|
“Companies Law”
means the Israeli Companies Law 5759-1999.
|
2.10
|
“
Controlling Shareholder
” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.
|
2.11
|
“Date of Grant”
means, the date of grant of an Option, as determined by the Board and set forth in the Optionee’s Option Agreement.
|
2.12
|
“Employee”
means a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding Controlling Shareholder.
|
2.13
|
“Expiration date”
means the date upon which an Option shall expire, as set forth in Section 10.2 of the ISOP.
|
2.14
|
“Fair Market Value”
means as of any date, the value of a Share determined as follows:
|
2.15
|
“IPO”
means the initial public offering of the Company’s shares.
|
2.16
|
“ISOP”
means this 2003 Israeli Share Option Plan.
|
2.17
|
“
ITA”
means the Israeli Tax Authorities.
|
2.18
|
“Non-Employee”
means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.
|
2.19
|
“
Ordinary Income Option (OIO)
” as defined in Section 5.5 below.
|
2.20
|
“Option”
means an option to purchase one or more Shares of the Company pursuant to the ISOP.
|
2.21
|
“102 Option”
means any Option granted to Employees pursuant to Section 102 of the Ordinance.
|
2.22
|
“3(i) Option”
means an Option granted pursuant to Section 3(i) of the Ordinance to any person who is Non- Employee.
|
2.23
|
“Optionee”
means a person who receives or holds an Option under the ISOP.
|
2.24
|
“Option Agreement”
means the share option agreement between the Company and an Optionee that sets out the terms and conditions of an Option.
|
2.25
|
“
Ordinance”
means the 1961 Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.
|
2.26
|
“Purchase Price”
means the price for each Share subject to an Option.
|
2.27
|
“Section 102”
means section 102 of the Ordinance as now in effect or as hereafter amended.
|
2.29
|
“Successor Company”
means any entity the Company is merged to or is acquired by, in which the Company is not the surviving entity.
|
2.30
|
“Transaction”
means (i) merger, acquisition or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of all or substantially all of the assets of the Company.
|
2.31
|
“Trustee”
means any individual appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.
|
2.32
|
“
Unapproved 102 Option
” means an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.
|
2.33
|
“Vested Option”
means any Option, which has already been vested according to the Vesting Dates.
|
2.34
|
“Vesting Dates”
means, as determined by the Board or by the Committee, the date as of which the Optionee shall be entitled to exercise the Options or part of the Options, as set forth in section 11 of the ISOP.
|
3.1
|
The Board shall have the power to administer the ISOP either directly or upon the recommendation of the Committee, all as provided by applicable law and in the Company’s Articles of Association. Notwithstanding the above, the Board shall automatically have residual authority if no Committee shall be constituted or if such Committee shall cease to operate for any reason.
|
3.2
|
The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as the Chairman shall determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.
|
3.3
|
The Committee shall have the power to recommend to the Board and the Board shall have the full power and authority to: (i) designate participants; (ii) determine the terms and provisions of the respective Option Agreements, including, but not limited to, the number of Options to be granted to each Optionee, the number of Shares to be covered by each Option, provisions concerning the time and the extent to which the Options may be exercised and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend awards, as necessary; (iii) determine the Fair Market Value of the Shares covered by each Option; (iv) make an election as to the type of 102 Approved Option; and (v) designate the type of Options.
|
3.4
|
Notwithstanding the above, the Committee shall not be entitled to grant Options to the Optionees, however, it will be authorized to issue Shares underlying Options which have been granted by the Board and duly exercised pursuant to the provisions herein in accordance with section 112(a)(5) of the Companies Law.
|
3.5
|
The Board shall have the authority to grant, at its discretion, to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having a purchase price equal to, lower than or higher than the Purchase Price of the original Option so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the ISOP.
|
3.6
|
Subject to the Company’s Articles of Association, all decisions and selections made by the Board or the Committee pursuant to the provisions of the ISOP shall be made by a majority of its members except that no member of the Board or the Committee shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Board or the Committee relating to any Option to be granted to that member. Any decision reduced to writing shall be executed in accordance with the provisions of the Company’s Articles of Association, as the same may be in effect from time to time.
|
3.7
|
The interpretation and construction by the Committee of any provision of the ISOP or of any Option Agreement thereunder shall be final and conclusive unless otherwise determined by the Board.
|
3.8
|
Subject to the Company’s Articles of Association and the Company’s decision, and to all approvals legally required, including, but not limited to the provisions of the Companies Law, each member of the Board or the Committee shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the ISOP unless arising out of such member's own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under the Company's Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.
|
4.1
|
The persons eligible for participation in the ISOP as Optionees shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees who are Israeli residents for tax purposes may only be granted 102 Options; (ii) Non-Employees who are Israeli residents for tax purposes may only be granted 3(i) Options; (iii) Controlling Shareholders who are Israeli residents for tax purposes may only be granted 3(i) Options; and (iv) U.S. Persons may only be granted Options in accordance with the Addendum.
|
4.2
|
The grant of an Option hereunder shall neither entitle the Optionee to participate nor disqualify the Optionee from participating in, any other grant of Options pursuant to the ISOP or any other option or share plan of the Company or any of its Affiliates.
|
4.3
|
Anything in the ISOP to the contrary notwithstanding, all grants of Options to directors and office holders shall be authorized and implemented in accordance with the provisions of the Companies Law or any successor act or regulation, as in effect from time to time.
|
5.1
|
The Company may designate Options granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.
|
5.2
|
The grant of Approved 102 Options shall be made under this ISOP adopted by the Board as described in Section 15 below, and shall be conditioned upon the approval of this ISOP by the ITA.
|
5.3
|
Approved 102 Option may either be classified as Capital Gain Option (“
CGO
”) or Ordinary Income Option (“
OIO
”).
|
5.4
|
Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as
CGO
.
|
5.5
|
Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as
OIO
.
|
5.6
|
The Company’s election of the type of Approved 102 Options as CGI or OIO granted to Employees (the “
Election
”), shall be appropriately filed with the ITA in the framework of the request for the approval of this ISOP, which shall be submitted to ITA at least 30 days prior to the Date of Grant of an Approved 102 Option. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Option under this ISOP and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grant
only
the type of Approved 102 Option it has elected, and shall apply to all Optionees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options simultaneously.
|
5.7
|
All Approved 102 Options must be held in trust by a Trustee, as described in Section 6 below
.
|
5.8
|
For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder.
|
5.9
|
The provisions of the ISOP and/or the Option Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the ISOP and of the Option Agreement. Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the ISOP or the Option Agreement, shall be considered binding upon the Company and the Optionees.
|
6.1
|
Approved 102 Options which shall be granted under the ISOP and/or any Shares allocated or issued upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights and/or any rights granted to the Optionee by virtue of the Approved 102 Options (including bonus shares), shall be allocated or issued to the Trustee and held for the benefit of the Optionees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder, and in accordance with the Election made by the Company according to section 5.5 above.
|
6.2
|
Notwithstanding anything to the contrary, the Trustee shall not release any Shares allocated or issued upon exercise of Approved 102 Options prior to the full payment of the Optionee’s tax liabilities arising from Approved 102 Options which were granted to him and/or any Shares allocated or issued upon exercise of such Options.
|
6.3
|
Upon receipt of Approved 102 Option, the Optionee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the ISOP, or any Approved 102 Option or Share granted to him thereunder.
|
7.1
|
The Company has reserved 4,368,000 (four million three hundred and sixty eight thousand) authorized but unissued Shares, for the purposes of the ISOP, subject to adjustment as set forth in Section 9 below. Any Shares which remain unissued and which are not subject to the outstanding Options at the termination of the ISOP shall cease to be reserved for the purpose of the ISOP. Should any Option for any reason expire or be canceled prior to its exercise or relinquishment in full, the Shares subject to such Option may again be subjected to an Option under the ISOP or under the Company’s other share option plans.
|
7.2
|
Each Option granted pursuant to the ISOP, shall be evidenced by a written Option Agreement between the Company and the Optionee, in such form as the Board or the Committee shall from time to time approve. Each Option Agreement shall state, among other matters, the number of Shares to which the Option relates, the type of Option granted thereunder (whether a CGI, OIO, Unapproved 102 Option or a 3(i) Option), the Vesting Dates, the Purchase Price per share, the Expiration Date and such other terms and conditions as the Committee or the Board in its discretion may prescribe, provided that they are consistent with this ISOP.
|
7.3
|
Until the consummation of an IPO, such Shares shall be voted by an irrevocable proxy (the ”
Proxy
”) pursuant to the directions of the Board, such Proxy to be assigned to the person or persons designated by the Board. Such person or persons designated by the Board shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him/her, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the voting of such Proxy unless arising out of such member's own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the person(s) may have as a director or otherwise under the Company's Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.
|
8.1
|
The Purchase Price of each Share subject to an Option shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time. Each Option Agreement will contain the Purchase Price determined for each Optionee.
|
8.2
|
The Purchase Price shall be payable upon the exercise of the Option in a form satisfactory to the Committee, including without limitation, by cash or check. Notwithstanding the forms of exercise of Options specified herein, the Company may (at its full and exclusive discretion), effectuate the exercise of the Options in a cash-less exercise or net-exercise, if and when, the Optionee instructs to exercise his Options for an immediate sale. The Committee shall have the authority to postpone the date of payment on such terms as it may determine.
|
8.3
|
The Purchase Price shall be denominated in the currency of the primary economic environment of, either the Company or the Optionee (that is the functional currency of the Company or the currency in which the Optionee is paid) as determined by the Company.
|
9.1
|
In the event of Transaction, the unexercised Options then outstanding under the ISOP shall be assumed or substituted for an appropriate number of shares of each class of shares or other securities of the Successor Company (or a parent or subsidiary of the Successor Company) as were distributed to the shareholders of the Company in connection and with respect to the Transaction. In the case of such assumption and/or substitution of Options, appropriate adjustments shall be made to the Purchase Price so as to reflect such action and all other terms and conditions of the Option Agreements shall remain unchanged, including but not limited to the vesting schedule, all subject to the determination of the Committee or the Board, which determination shall be in their sole discretion and final. The Company shall notify the Optionee of the Transaction in such form and method as it deems applicable at least ten (10) days prior to the effective date of such Transaction.
|
9.2
|
Notwithstanding the above and subject to any applicable law, the Board or the Committee shall have full power and authority to determine that in certain Option Agreements there shall be a clause instructing that, if in any such Transaction as described in section 9.1 above, the Successor Company (or parent or subsidiary of the Successor Company) does not agree to assume or substitute for the Options,
the Vesting Dates shall be accelerated so that any unvested Option or any portion thereof shall be immediately vested as of the date which is ten (10) days prior to the effective date of the Transaction.
|
9.3
|
For the purposes of section 9.1 above, an Option shall be considered assumed or substituted if, following the Transaction, the Option confers the right to purchase or receive, for each Share underlying an Option immediately prior to the Transaction, the consideration (whether shares, options, cash, or other securities or property) received in the Transaction by holders of shares held on the effective date of the Transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Transaction is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option to be solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in Fair Market Value to the per Share consideration received by holders of a majority of the outstanding shares in the Transaction; and provided further that the Committee may determine, in its discretion, that in lieu of such assumption or substitution of Options for options of the Successor Company or its parent or subsidiary, such Options will be substituted for any other type of asset or property including cash which is fair under the circumstances.
|
9.4
|
If the Company is voluntarily liquidated or dissolved while unexercised Options remain outstanding under the ISOP, the Company shall immediately notify all unexercised Option holders of such liquidation, and the Option holders shall then have ten (10) days to exercise any unexercised Vested Option held by them at that time, in accordance with the exercise procedure set forth herein. Upon the expiration of such ten-days period, all remaining outstanding Options will terminate immediately.
|
9.5
|
If the outstanding shares of the Company shall at any time be changed or exchanged by declaration of a share dividend (bonus shares), share split, combination or exchange of shares, recapitalization, or any other like event by or of the Company, and as often as the same shall occur, then the number, class and kind of the Shares subject to the ISOP or subject to any Options therefore granted, and the Purchase Prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Purchase Price, provided, however, that no adjustment shall be made by reason of the distribution of subscription rights (rights offering) on outstanding shares. Upon happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the ISOP (as set forth in Section 7 hereof), in respect of which Options have not yet been exercised, shall be appropriately adjusted, all as will be determined by the Board whose determination shall be final
.
|
9.6
|
Anything herein to the contrary notwithstanding, if prior to the completion of the IPO all or substantially all of the shares of the Company are to be sold, or in case of a Transaction, all or substantially all of the shares of the Company are to be exchanged for securities of another Company, then each Optionee shall be obliged to sell or exchange, as the case may be, any Shares such Optionee purchased under the ISOP, in accordance with the instructions issued by the Board in connection with the Transaction, whose determination shall be final.
|
9.7
|
The Optionee acknowledges that in the event that the Company’s shares shall be registered for trading in any public market, Optionee’s rights to sell the Shares may be subject to certain limitations (including a lock-up period), as will be requested by the Company or its underwriters, and the Optionee unconditionally agrees and accepts any such limitations.
|
9.8
|
Without derogating from the provisions of section 20 below, it is hereby clarified that any tax consequences arising from the exercise of the provisions of this section 9, shall be borne solely by the Optionee
|
10.1
|
Options shall be exercised by the Optionee by giving written notice to the Company and/or to any third party designated by the Company (the “
Representative
”), in such form and method as may be determined by the Company and when applicable, by the Trustee in accordance with the requirements of Section 102, which exercise shall be effective upon receipt of such notice by the Company and/or the Representative and the payment of the Purchase Price at the Company’s or the Representative’s principal office. The notice shall specify the number of Shares with respect to which the Option is being exercised.
|
|
10.2
|
Options, to the extent not previously exercised, shall terminate forthwith upon the earlier of: (i) the date set forth in the Option Agreement; and (ii) the expiration of any extended period in any of the events set forth in section 10.5 below.
|
|
10.3
|
(a) The Options may be exercised by the Optionee in whole at any time or in part from time to time, to the extent that the Options become vested and exercisable, prior to the Expiration Date, and provided that, subject to the provisions of section 10.5 below, the Optionee is employed by or providing services to the Company or any of its Affiliates, at all times during the period beginning with the granting of the Option and ending upon the date of exercise.
|
(b) Notwithstanding anything to the contrary hereinabove, Options shall not be exercised on the determining date with respect to the distribution of bonus shares, offer by way of rights issue, distribution of dividends, consolidation of share capital, consolidation of shares, reduction or split in share capital or company split (each hereinafter referred to as a "
Corporate Event
"). In addition, if the Ex Date with respect to a Corporate Event occurs before the determining date relating to such Corporate Event, then the exercise of Options shall not occur on such Ex Date.
|
10.4
|
In the event of termination of employment or service, the unvested portion of the Optionee’s Option shall not vest and shall not become exercisable. The termination of employer-employee relations or cessation of service shall constitute termination of employment or service. In the event of termination of employment or service Vested Options granted to such Optionee shall expire unless extended pursuant to the provisions of section 10.5 below.
|
10.5
|
Notwithstanding anything to the contrary hereinabove and unless otherwise determined in the Optionee’s Option Agreement, an Option may be exercised after the date of termination of Optionee's employment or service with the Company or any Affiliates during an additional period of time beyond the date of such termination, but only with respect to the number of Vested Options at the time of such termination according to the Vesting Dates, if
:
(i) termination is without Cause, in which event any Vested Option still in force and unexpired may be exercised within a period of ninety (90) days after the date of such termination; or-
(ii) termination is the result of death or disability of the Optionee, in which event any Vested Option still in force and unexpired may be exercised within a period of twelve (12) months after the date of such termination; or -
(iii) at any time, the Committee shall authorize an extension of the terms of all or part of the Vested Options beyond the date of such termination for a period not to exceed the period during which the Options by their terms would otherwise have been exercisable.
|
10.6
|
Notwithstanding the foregoing provisions of Section 10.3 to 10.5, unless determined otherwise by the Committee, and for the avoidance of doubt, the transfer of an Optionee from the employ or service of the Company to the employ or service of an Affiliate, or from the employ or service of an Affiliate to the employ or service of the Company or another Affiliate, shall not be deemed a termination of employment or service for purposes hereof.
|
10.7
|
In the event of termination of employment or service of an Optionee of Unapproved 102 Option, than such Optionee shall be required, as a condition to his right to exercise the option granted to him, to secure the due, timely and complete payment of any tax duty imposed upon him (including in accordance with section 20 below), by the submission to the Company of any security or guaranty approved, in advance, by the Board or the Committee.
|
10.8
|
The Optionees shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any Option, nor shall they be deemed to be a class of shareholders or creditors of the Company for purpose of the operation of sections 350 and 351 of the Companies Law or any successor to such section, until registration of the Optionee as holder of such Shares in the Company’s register of shareholders upon exercise of the Option in accordance with the provisions of the ISOP, but in case of Options and Shares held by the Trustee, subject to the provisions of Section 6 of the ISOP.
|
10.9
|
Any form of Option Agreement authorized by the ISOP may contain such other provisions as the Committee may, from time to time, deem advisable.
|
11.1
|
Subject to the provisions of the ISOP, each Option shall vest following the Vesting Dates and for the number of Shares as shall be provided in the Option Agreement. However, no Option shall be exercisable after the Expiration Date.
|
11.2
|
An Option may be subject to such other terms and conditions on the time or times when it may be exercised, as the Committee may deem appropriate. The vesting provisions of individual Options may vary.
|
12.1
|
Notwithstanding anything to the contrary in the Articles of Association of the Company, none of the Optionees shall have a right of first refusal in relation with any sale of shares in the Company.
|
|
12.2
|
Unless otherwise determined by the Committee, until such time as the Company shall complete an IPO, an Optionee shall not have the right to sell Shares issued upon the exercise of an Option within six (6) months and one day from the date of exercise of such Option. Unless otherwise determined by the Committee, until such time as the Company shall complete an IPO, the sale of Shares issuable upon the exercise of an Option shall be subject to a right of first refusal on the part of the Repurchaser(s).
|
|
|
Repurchaser(s) means (i) the Company, if permitted by applicable law, (ii) if the Company is not permitted by applicable law, then any affiliate of the Company designated by the Committee; or (iii) if no decision is reached by the Committee, then the Company’s existing shareholders (save, for avoidance of doubt, for other Optionees who already exercised their Options), pro rata in accordance with their shareholding. The Optionee shall give a notice of sale (hereinafter the “
Notice
”) to the Company in order to offer the Shares to the Repurchaser(s).
|
12.3
|
The Notice shall specify the name of each proposed purchaser or other transferee (hereinafter the “
Proposed Transferee
”), the number of Shares offered for sale (hereinafter the
"Offered Shares"
), the price per Share and the payment terms. The Repurchaser(s) will be entitled for thirty (30) days from the day of receipt of the Notice (hereinafter the “
Notice Period
”), to purchase all or part of the Offered Shares on a pro rata basis based upon their respective holdings in the Company.
|
12.4
|
If by the end of the Notice Period not all of the Offered Shares have been purchased by the Repurchaser(s), then any remaining Offered Shares shall be re-allocated among the accepting Repurchaser(s) (other than those to be disregarded as aforesaid), in the same manner specified in sections 12.2 and 12.3 above.
|
13.1
|
With respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Options) allocated or issued upon the exercise of Options purchased by the Optionee and held by the Optionee or by the Trustee, as the case may be, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends.
|
13.2
|
During the period in which Shares are held by the Trustee on behalf of the Optionee, the cash dividends paid with respect thereto shall be paid directly to the Optionee, after deduction of any tax imposed on such cash dividends.
|
14.1
|
No Option or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to it given to any third party whatsoever, except as specifically allowed under the ISOP, and during the lifetime of the Optionee each and all of such Optionee's rights to purchase Shares hereunder shall be exercisable only by the Optionee.
|
|
Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.
|
14.2
|
As long as Options and/or Shares are held by the Trustee on behalf of the Optionee, all rights of the Optionee over the Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.
|
20.1
|
Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby or from any other event or act (of the Company and/or its Affiliates, the Trustee or the Optionee), hereunder, shall be borne solely by the Optionee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Optionee shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Optionee.
|
20.2
|
The Company and/or, when applicable, the Trustee shall not be required to release any Share certificate to an Optionee until all required payments have been fully made.
|
20.3
|
To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any tax withholding obligation relating to the exercise or acquisition of Shares under an Option by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Optionee by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) subject to the Committee’s approval on the payment date, authorizing the Company to withhold Shares from the Shares otherwise issuable to the Optionee as a result of the exercise or acquisition of Shares under the Option in an amount not to exceed the minimum amount of tax required to be withheld by law; or (iii) subject to Committee approval on the payment date, delivering to the Company owned and unencumbered Shares; provided that Shares acquired on exercise of Options have been held for at least 6 months from the date of exercise.
|
1.
|
Purpose of the Addendum
|
2.
|
Provisions of the Addendum
|
3.
|
Eligibility
|
7.
|
Tax Withholding and Reporting
|
(A)
|
Google and Company are parties to a Google Search and Advertising Services Agreement and a Google Search
("GSA")
and Agvertising Services Agreement Order Form
("Order Form")
with an effective date of 01 January 2011 (together, the
"Agreement").
|
(B)
|
The parties now wish to amend the Agreement in the manner set out in this Amendment.
|
1.
|
Definitions
|
3.
|
The parties agree that the "Special Terms and Conditions" section of the Order Form is amended as follows:
|
|
a)
|
Google may assign to Company, and modify the number of Client IDs and Channel IDs for each Service from time to time. Company will use Client IDs and Channel IDs as instructed by Google, and will provide such information to Google as may reasonably request with respect to the use and application of any Client IDs and Channel IDs.
|
|
b)
|
For the purposes of this Agreement, "Channel ID" means a unique alphanumeric code used by Company as specified by Google for purposes of associating each Request with a reporting channel.
|
4.
|
Clause 14.4 of the GSA shall be replaced in its entirety by the following clause
14.4:
|
|
a) has a clearly labeled and easily accessible privacy policy in place relating to the applicable Site(s); and
|
|
b) provides End Users with clear an comprehensive information about cookies and other information stored or accessed on an End User's device, including information about End Users' options for cookie management
|
GOOGLE
|
COMPANY
|
By:
|
/s/ Ailis Daly
|
By:
|
/s/ Josef Mandelbaum /s/ Yacov Kaufman
|
Name:
|
Ailis Daly
|
Name:
|
Josef Mandelbaum Yacov Kaufman
|
Title:
|
___________________________
|
Title:
|
CEO CFO
|
Date:
|
January 31, 2013
|
Date:
|
January 31, 2013
|
1.
|
The preamble hereto forms an integral part hereof;
|
2.
|
The Commitment Letter shall be amended as follows:
|
a.
|
Section 5 of Schedule B of the of the Commitment Letter shall be deleted in its entirety and replaced with the following:
|
b.
|
Section 6 of Schedule B of the of the Commitment Letter shall be deleted in its entirety and replaced with the following:
|
3.
|
The Financial Covenants shall be amended as follows:
|
a.
|
Section 1.3 of the Financial Covenants shall be deleted in its entirety, and replaced with the following:
|
"1.3
|
The Company's EBITDA on an annual basis, shall not, at any time, be less than USD5,000,000."
|
b.
|
Section 3 of the Financial Covenants shall be deleted in its entirety, and replaced with the following:
|
"3.
|
Undertakings regarding current holdings and future acquisitions
|
3.1
|
We hereby agree and undertake that our wholly owned subsidiary, IncrediMail Inc. shall not pledge or charge and shall not undertake to pledge or charge, in any manner whatsoever and for any reason whatsoever, the shares of SMILEBOX Inc. held by it in favour of any third party whomsoever, without receiving the Bank's prior written consent. For the avoidance of doubt it is hereby provided that in the event that IncrediMail Inc. pledges or charges or undertakes to pledge or charge, in any manner whatsoever and for any reason whatsoever, the shares of SMILEBOX Inc. held by it in favour of any third party whomsoever, without receiving the Bank's prior written consent
the Bank shall, without prejudicing of any other of the Bank's rights, be entitled but not obliged to declare our indebtedness and undertakings, in whole or in part, to be immediately due and payable in accordance with section 7 below.
|
3.2
|
In the event that the Company shall at any time acquire any corporation, we hereby undertake and agree:
|
3.2.1
|
In the case of an Israeli corporation, to grant to the Bank a first ranking fixed pledge of the shares of such corporation, unlimited in amount, which pledge shall rank pari passu to the rights of the First International Bank of Israel in such collateral, and to sign a deed of pledge in the Bank's customary form as well as such other documents as may be required by the Bank to create and/or perfect the aforementioned pledge; and
|
3.2.2
|
In the case of a foreign corporation, not to pledge or charge and not to undertake to pledge or charge, in any manner whatsoever and for any reason whatsoever, the shares of such corporation, in favour of any third party whomsoever, without receiving the Bank's prior written consent.
|
|
1.
|
In Section 1.1 on the fifth paragraph which starts with the words “Intangible Assets on Account of Acquisitions”, in the fourth line, in lieu of the reference to Section 7.4, it shall refer to Section 9.4.
|
|
2.
|
In Section 1.2 of the Undertaking, in the first paragraph on the second line, in lieu of the amount specified therein “$6,000,000 USD”, it shall read “$3,000,000 USD”.
|
|
3.
|
In Section 1.2 of the Undertaking, on the second paragraph in the second line, in lieu of the amount specified therein “$8,000,000 USD”, it shall read “$4,000,000 USD”.
|
|
4.
|
Section 1.2 of the Undertaking, in the third paragraph on the second line, in lieu of the amount specified therein “$10,000,000 USD”, it shall read “$5,000,000 USD”.
|
5.
|
Section 1.3 of the Undertaking, in the first paragraph, in lieu of the words “shall not exceed 3.5”, it shall read “shall not exceed 3.5 in the financial statements of the first and the second quarter of 2012, and will not exceed 3 in the financial statements of the third and the fourth quarter of 2012 and the first and the second quarter of 2013, and 2 in the financial statements of the third quarter of 2013 onwards.”
|
|
6.
|
Section 1.4 of the Undertaking, in the first paragraph, in lieu of the amount specified therein “$8,000,000 USD”, it shall read “$4,000,000 USD”.
|
|
7.
|
The remaining sections of the Undertaking shall not be amended and shall remain in full force and effect. Without derogating from the foregoing said, the Company acknowledges that this consent does not derogate from other undertakings of the Company towards the Bank, including any other covenant specified in the Undertaking.
|
(A)
|
Google and Company have agreed that Google will provide certain of its search and advertising related services to Company, as listed in one or more Order Forms.
|
(B)
|
Each Order Form will form a separate (and separately terminable) agreement between Company and Google on the terms contained in the Order Form and in this GSA.
|
1.
|
Definitions
|
1.1
|
In this GSA and any Order Form(s):
|
1.2
|
The words "
include
" and "
including
" will not limit the generality of any words preceding them.
|
2.
|
Implementation Requirements
|
2.1
|
Launch of the AdSense Services and Search Services
|
(a)
|
The parties will each use their reasonable endeavours to launch the AdSense Services and Search Services into live use within
[
***
]
from the effective date of the applicable Order Form.
|
(b)
|
Company will not put its implementation of the AdSense Services and Search Services for a Site into live use (or any amended implementation pursuant to clause 6.2a or b) until Google has notified Company that the implementation for that Site is approved (this approval not to be unreasonably withheld or delayed).
|
2.2
|
Implementation
|
(a)
|
Implementation of Services on a Site, Approved Client Application or through a Feed is conditional on Company or, in the case of ADX Services, on Company or Company Partner:
|
|
(i)
|
being the technical and editorial decision maker in relation to each page, including Results Pages, on which the Services are implemented; and
|
|
(ii)
|
having control over the way in which the Services are implemented on each of those pages.
|
(b)
|
Company will ensure that the AdSense Services and Search Services are implemented and maintained in accordance with:
|
|
(i)
|
the applicable Google Technical Protocols;
|
|
(ii)
|
the applicable Google Branding Guidelines;
|
|
(iii)
|
the applicable Google Program Guidelines; and
|
|
(iv)
|
the mock ups and specifications for such AdSense Services and Search Services set out in the exhibits to the applicable Order Form, unless otherwise approved by Google or permitted in accordance with clause 6.2(a), (b) or (c).
|
(c)
|
Company will ensure that the ADX Services are implemented and maintained in accordance with:
|
|
(i)
|
the applicable Google Technical Protocols; and
|
|
(ii)
|
the ADX Guidelines.
|
(d)
|
Company shall ensure that the Company Mobile Application adheres to the Google Software Principles (available at http://www.google.com/about/company/software-principles.html or such other URL as may be provided from time to time).
|
2.3
|
Requests
|
(a)
|
Google will:
|
|
(i)
|
for each Valid Request received by it, where available provide a Search Results Set or an Ad Set (as applicable); and
|
|
(ii)
|
within
[
***
]
of the end of each month during the Term, make available to Company Search Services and/or Advertising Services revenue and usage reports (as applicable) in such form and manner as Google generally makes such reports available at that time.
|
(b)
|
Company will:
|
|
(i)
|
ensure that every
Search
Query generates a Request containing that Search Query;
|
|
(ii)
|
ensure that all Requests are sent to Google without editing, modifying or filtering the Requests or any Search Queries contained in the Requests individually or in the aggregate;
|
|
(iii)
|
display the Search Results Sets and/or Ad Sets (as applicable) on the applicable Site or as part of the applicable Feed; and
|
|
(iv)
|
ensure that the Services are not implemented on any property other than a Site.
|
(c)
|
In clauses 2.3 (d) and (e):
|
|
“
Gambling Ad Enabled Countries”
means the set of countries for which Google’s AdWords program will accept Gambling Ads. As at insert date of amendment this set consists of
[
***
]
but this may be modified by Google at any time without notification in accordance with Google’s advertising policies; and
|
|
“
Gambling Ads
” means Ads which contain (and/or link to websites which contain) material which promotes or otherwise relates to gambling and gambling products and services, as defined by Google in its advertising policies.
|
(d)
|
Notwithstanding anything in any Agreement, if the end user IP address or other geographic location or geographic region codes sent by Company to Google in relation to any Request for AFS Ads indicates that the request comes from any of the Gambling Ad Enabled Countries, in response to that request Google may provide to Company (as part of AFS) Gambling Ads. Company: (i) warrants that its AFS Sites are not targeted at individuals under 18 years old; (ii) agrees to comply with all applicable laws in its display of Gambling Ads on its Sites; and (iii) acknowledges that Google is under no obligation to provide Gambling Ads and may cease providing them at any time.
|
(e)
|
Company shall indemnify Google against any loss, liability, cost or expense suffered or incurred by Google and arising out of:
|
|
(i)
|
any claim by any third party (including any regulator or law enforcement agency): (i) that the AFS Site specified in the Agreement (or any page of or content on such Site) is targeted at individuals under 18 years old; (ii) that Gambling Ads were displayed on the Sites in violation of applicable laws; or (iii) arising from Company’s failure to display any Gambling Ads on the correct Site or page; and
|
|
(ii)
|
any error or inaccuracy in, modification to or encryption of the End User IP address or other geographic location or geographic region codes sent by Company to Google in relation to any request for an AFS Ad Set which results in a Gambling Ad(s) being displayed to End Users in a territory outside of the Gambling Ad Enabled Countries,
|
2.4
|
ADX Services
|
(a)
|
Any services and technologies made available to Company through the Admeld user interface are provided at Google’s sole discretion and are subject to cancellation with notice.
|
(b)
|
In each case solely for the purpose of providing ADX, Company authorises Google to access, manage, retrieve data from, and analyse data from:
|
(i)
|
Client-Managed Accounts (including by automated means); and
|
(ii)
|
Company’s ADX account,
|
3.
|
Support Services
|
4.
|
Policy and Compliance Obligations
|
4.1
|
Company will not, and will not knowingly or negligently allow any third party to:
|
|
(a)
|
modify, obscure or prevent the display of all, or any part of, any Results;
|
|
(b)
|
edit, filter, truncate, append terms to or otherwise modify any Search Query;
|
|
(c)
|
implement any click tracking or other monitoring of Results;
|
|
(d)
|
display any Results in pop-ups, pop-unders, exit windows, expanding buttons, animation or other similar methods;
|
|
(e)
|
interfere with the display of or frame any Results Page or any page accessed by clicking on any Results;
|
|
(f)
|
display any content between any Results and any page accessed by clicking on those Results or place any content immediately before any Results Page containing any Search Results;
|
|
(g)
|
enter into any type of co-branding, white labeling or sub-syndication arrangement with any third party in connection with any Results or Ad revenue (including any arrangement under which a third party pays to or receives from Company any fees, revenue share or other amounts in return for the display of Results), except that Company may enter into an arrangement with a Company Partner in accordance with the relevant Agreement where the ADX Services are implemented on the ADX Site(s) of that Company Partner;
|
|
(h)
|
directly or indirectly: (i) offer incentives to End Users to generate impressions, Requests or clicks on Results; (ii) fraudulently generate impressions, Requests or clicks on Results; or (iii) modify impressions, Requests or clicks on Results;
|
|
(i)
|
“
crawl”, “spider”, index or in any non-transitory manner store or cache information obtained from the Services (including any Results);
|
|
(j)
|
display on any Site, Approved Client Application or Feed, any content that violates or encourages conduct that would violate any applicable laws, any third party rights, the Google Program Guidelines or Google Technical Protocols applicable to the AdSense Services or Search Services, or the ADX Guidelines applicable to the ADX Services, as notified to Company by Google from time to time;
|
|
(k)
|
send Requests to Google which are not Valid Requests; or
|
|
(l)
|
provide End Users with access (directly or indirectly) to any Results or Services using any application, plug-in, helper, component or other executable code that runs on a user’s computer, other than an Approved Client Application.
|
4.2
|
Google may generate a reasonable number of Requests or make a reasonable number of uncompensated clicks on any Results at any time to check that that the Services continue to be implemented in accordance with the applicable Agreement and are functioning well.
|
5.
|
Compliance
|
5.1
|
Company will not knowingly or negligently allow any use of or access to the Services through any Site, Approved Client Application or Feed which is not in compliance with the terms of the applicable Agreement or not otherwise approved by Google. Company will use its reasonable endeavours to monitor for any such access or use and will, if any such access or use is detected, take all reasonable steps requested by Google to disable this access or use. Notwithstanding clause 15.2, if Company is not in compliance with this GSA or any Agreement at any time, Google may, with written notice to Company, suspend provision of all (or any part of) the applicable Services until Company implements adequate corrective modifications as reasonably required and determined by Google.
Google shall use reasonable endeavours to hold a meeting with Company (including by way of telephone and/or video conference) to explain the reason for any suspension of the Services (or any part of them) before such suspension is put into effect.
|
5.2
|
Company will procure that Company Partner uses, or accesses the ADX Services, including Results, in accordance with this GSA and any Agreement, as if Company’s obligations in this GSA and any Agreement were obligations on Company Partner. Company will not provide Company Partner with access to the ADX user interface. Company accepts full liability for the actions and/or inactions of the Company Partner as if such actions and/or inactions were Company’s own.
|
6.
|
Changes and Modifications
|
6.1
|
By Google
|
6.2
|
By Company
|
(a)
|
Unless approved in writing in advance by Google, Company will not make any changes in relation to:
|
|
(i)
|
the display or implementation of the Search Box, including changes to the format, size or placement of the Search Box;
|
|
(ii)
|
the display of Search Results Sets, Search Results, AFC Ad Sets or AFC Ads on a Results Page, including changes to their number, colour, font, size or placement or the extent to which they are clickable; or
|
|
(iii)
|
the use of any Google Brand Features or other attribution or similar wording.
|
(b)
|
If Company wishes to make changes in relation to the display of:
|
|
(i)
|
AFS Ad Sets or AFS Ads on a Results Page, including changes to their number, colour, font, size or placement or the extent to which they are clickable, Company will not make any changes unless approved in writing in advance by Google. Google may only withhold its approval on grounds that the proposed change would be in breach of the applicable Agreement or the Google Branding Guidelines and Google may not withhold its approval on purely commercial grounds. Google shall at all times permit Company to display Equivalent Ads on a Results Page; or
|
|
(ii)
|
Equivalent Ads on a Results Page, including changes to their number, colour, font, size or placement or the extent to which they are clickable, Company will not make any changes unless approved in writing in advance by Google. Google may not withhold its approval unless such proposed change would be in breach of the applicable Agreement or the Google Branding Guidelines and Google may not withhold its approval on purely commercial grounds. If Google does not respond to any request for approval set out in this clause 6.2(b)(ii)
[
***
]
of receipt from Company, such approval shall be deemed given by Google.
|
(c)
|
Subject to clauses 6.2(a) and (b), Company may update the design and content of any Site, Approved Client Application or Feed in a manner consistent with its obligations under this Agreement.
|
(d)
|
Company will provide Google with at least
[
***
]
advance notice of any change in code or serving technology that could reasonably be expected to affect use of the Services.
|
(e)
|
If a fault in Company’s implementation of the Services (or any of them) could cause or is causing an interruption or degradation of the Services (or any of them), Company will make the required fixes or changes as soon as reasonably possible.
|
6.3
|
Site List Changes
|
(a)
|
Company may notify Google from time to time that it wishes to add additional URLs and mobile applications to those comprising the AdSense Site(s) or Search Site(s), such notification to be sent to Google at least
[
***
]
(or such shorter period as Google may agree) before Company wishes the addition to take effect. Google may approve or disapprove the request at its reasonable discretion, this approval or disapproval to be in writing.
|
(b)
|
Company may notify Google from time to time that it wishes to add or remove property(ies) to those comprising the ADX Site(s) by either sending notice to Google or adding or removing the property(ies) through the ADX user interface.
|
(c)
|
If there is any change in control of any Site or Feed (such that the conditions set out in clause 2.2 (a) are not met):
|
|
(i)
|
Company will notify Google at least
[
***
]
in advance of the change;
|
|
(ii)
|
unless the entire applicable Agreement is assigned to a third party in accordance with clause 16.3, from the date of such change that Site or Feed will be treated as removed from the applicable Order Form and Company will ensure that from that date the Services are no longer implemented on that Site or through the applicable Feed(s).
|
7.
|
Similar Services
|
WebSearch Services, AdSense for Content and Mobile AFC
|
7.1
|
[
***
]
|
(a)
|
[
***
]
|
(b)
|
[
***
]
|
AdSense for Search
|
7.2
|
The parties agree that:
|
(a)
|
[
***
]
and
|
(b)
|
[
***
]
|
General
|
7.3
|
[
***
]
|
8.
|
Intellectual Property Rights
|
9.
|
Trade mark licence
|
9.1
|
Google grants to Company a non-exclusive and non-sublicensable licence during the Term to use the Google Brand Features solely to fulfil Company’s obligations under the applicable Agreement in accordance with its terms and subject to compliance with the Google Branding Guidelines in respect of the AdSense Services and/or Search Services.
|
9.2
|
All goodwill arising from the use by Company of the Google Brand Features will belong to Google.
|
9.3
|
Google may revoke the licence granted under clause 9.1 above at any time on reasonable written notice.
|
10.
|
Payment
|
10.1
|
Company Payments
|
(a)
|
[
***
]
|
(b)
|
[
***
]
|
(c)
|
[
***
]
|
10.2
|
Google Payments
|
(a)
|
[
***
]
|
(b)
|
[
***
]
|
(c)
|
[
***
]
|
10.3
|
All Payments
|
(a)
|
[
***
]
|
(b)
|
In respect of the Search Services and the AdSense Services, all payments due to Google or to Company will be in the currency specified in the applicable Order Form and made by electronic transfer to the account notified to the paying party by the other party for that purpose. In respect of the ADX Services, all payments to Company will be in the form of payment and currency selected by Company from the options provided by Google. In all cases, the party receiving payment will be responsible for any bank charges assessed by the recipient's bank.
|
(c)
|
Google will, unless it has notified Company otherwise, set off the fees payable by Company for Search Services and ADX Services under an Agreement against Google’s payment obligations to Company under that Agreement.
|
(d)
|
If Google recognises any ad revenues in error or otherwise overpays Company for any reason, Google will, unless it has notified Company otherwise, set off the overpaid amounts against Google’s payment obligations to Company under the Agreement to which the overpaid amounts related or require Company to pay to Google within [***] of an invoice, any such overpaid amounts.
|
(e)
|
Google or Company (as applicable) may charge interest at the rate of 2% per annum above the base rate of Barclays Bank PLC from time to time, from the due date until the date of actual payment, whether before or after judgment: (i) in the case of Google, on any fee for Search Services which is overdue; and (ii) in the case of Company, on any payments to be made by Google to Company in relation to Advertising Services which are overdue, unless such payments have been set off.
|
11.
|
Warranties
|
11.1
|
Each party warrants to the other that it will use reasonable care and skill in complying with its obligations under this GSA and any Agreement(s).
|
11.2
|
No conditions, warranties or other terms apply to any Services or to any other goods or services supplied by Google under this GSA or any Agreement unless expressly set out in this GSA or the applicable Agreement. Subject to clause 13.1(b), no implied conditions, warranties or other terms apply (including any implied terms as to satisfactory quality, fitness for purpose or conformance with description).
|
12.
|
Indemnities
|
12.1
|
If either:
|
|
(a)
|
Company receives a claim from a third party that either Google’s or any Google Affiliate’s technology used to provide the Services or, where Company has ordered the Search Services and/or AdSense Services, any Google Brand Feature infringe(s) any Intellectual Property Rights of that third party; or
|
|
(b)
|
Google receives a claim: (i) from a third party that the Company Content, Site and/or Approved Client Application (if any) infringe(s) any Intellectual Property Rights of that third party; (ii) from a third party relating to any use of, or access to, the ADX Services by any Company Partner; or (iii) from any Company Partner relating to the implementation or display of Ads on the Company Partner’s Site(s),
|
(i)
|
promptly notify the other party;
|
|
(ii)
|
provide the other party with reasonable information, assistance and cooperation in responding to and, where applicable, defending such IP Claim; and
|
|
(iii)
|
give the other party full control and sole authority over the defence and settlement of such IP Claim. The Recipient may appoint its own supervising counsel of its choice at its own expense.
|
12.2
|
Provided the Recipient complies with clause 12.1(i) to (iii) and subject (if applicable) to clause 12.3, the party notified in accordance with clause 12.1(i) (the “
Indemnifying Party
”) will accept full control and sole authority over the defence and settlement of such IP Claim and will indemnify the Recipient against all damages and costs awarded for such IP Claim, settlement costs approved in writing by the Indemnifying Party in relation to such IP Claim, reasonable legal fees necessarily incurred by the Recipient in relation to such IP Claim and reasonable costs necessarily incurred by the Recipient in complying with clause 12.1(i) to (iii).
|
12.3
|
Google will not have any obligations or liability under this clause 12 in relation to any IP Claim arising from any:
|
|
(a)
|
use of the Services or Google Brand Features in a modified form
or in combination with materials not furnished by Google;
|
|
(b)
|
[
***
]
|
|
(c)
|
[
***
]
|
|
(d)
|
acts or omissions by Company Partner.
|
12.4
|
Company will not have any obligations or liability under this clause 12 in relation to any IP Claim arising from content, information or data provided to Company by Google save where Company’s use of such content, information or data is in breach of the terms and conditions of this GSA or any Agreement.
|
12.5
|
Google may (at its sole discretion) suspend Company’s use of any Services or Google Brand Features which are alleged, or believed by Google, to infringe any third party’s Intellectual Property Rights, or to modify such Services or Google Brand Features to make them non-infringing. If any suspension of Services under this clause continues for more than 30 days, Company may, at any time until use of the applicable Services is reinstated, terminate the applicable Agreement immediately upon written notice.
|
12.6
|
This clause 12 states the parties’ entire liability and exclusive remedy with respect to infringement of a third party’s Intellectual Property Rights.
|
13.
|
Limitation of Liability
|
13.1
|
[
***
]
|
|
(a)
|
[
***
]
|
(b)
|
[
***
]
|
(c)
|
[
***
]
|
13.2
|
[
***
]
|
13.3
|
[
***
]
|
13.4
|
[
***
]
|
|
(a)
|
[
***
]
|
|
(i)
|
[
***
]
|
|
(ii)
|
[
***
]
|
|
(iii)
|
[
***
]
|
|
(b)
|
[
***
]
|
14.
|
Confidentiality
|
14.1
|
The recipient will not disclose the Confidential Information, except to Affiliates, employees, agents or professional advisors who need to know it and who have agreed in writing (or in the case of professional advisors are otherwise bound) to keep it confidential. The recipient will ensure that those people and entities use the received Confidential Information only to exercise rights and fulfil obligations under this GSA or any Agreement, while using reasonable care to keep it confidential. The recipient may also disclose Confidential Information when required by law after giving reasonable notice to the discloser, such notice to be sufficient to give the discloser the opportunity to seek confidential treatment, a protective order or similar remedies or relief prior to disclosure.
|
14.2
|
Notwithstanding clause 14.1 above, and except, in respect of ADX Services, as specified by Company’s anonymity preferences selected in the ADX user interface, Google may: (i) share Site-specific statistics, the Site URL(s), and related information collected by Google through its provision of the Advertising Services to Company with advertisers or potential advertisers; (ii) share know how gained by Google through its provision of the Services to Company (including sharing information illustrating this know how presented in an anonymised or aggregated form) with third parties. In either case, this sharing of information will not include any sharing of personally identifiable information.
|
14.3
|
Notwithstanding clause 14.1 above, Company may disclose to Company Partner, or to any other third party, the ADX reports provided by Google to Company. Company shall not disclose to any Company Partners, or any other third party, the Percentage of ADX Revenues payable to Company, or any information that could allow such Company Partners or third party to calculate the Percentage of ADX Revenues payable to Company.
|
14.4
|
Company will ensure that at all times during the applicable Term, Company and, in the case of ADX Services, Company and Company Partner:
|
|
(a)
|
has a clearly labelled and easily accessible privacy policy in place relating to the applicable Site(s); and
|
|
(b)
|
provides End Users with clear and comprehensive information about cookies and other information stored or accessed on an End User’s device, including information about End Users’ options for cookie management.
|
14.5
|
Company will take reasonable steps to ensure that an End User gives consent to the storing and accessing of cookies and other information on the End User's device where such activity occurs in connection with the Services and obtaining such consent is required by law.
|
14.6
|
Google hereby acknowledges that Company is a publicly traded company, and as such is obliged to comply with certain disclosure rules, including the obligation to disclose the existence of this Agreement and its material terms and conditions to the U.S Securities and Exchange Commission (the “
Authority
”). Company shall work with Google to agree which terms of this Agreement should be treated as confidential (“
Confidential Terms
”) and Company shall use best endeavors to ensure that such Confidential Terms are granted confidential treatment by the Authority. Providing that Company has used best endeavours to ensure that the Confidential Terms are granted confidential treatment by the Authority, Company shall not be held liable under this Agreement in the event that Confidential Terms are eventually required by the Authority to be publicly disclosed.
|
14.7
|
Where Company has ordered Mobile AFC, Google shall have the right to use, publish and display Company’s logo, name and Mobile AFC Site(s) content/screenshots in Google’s sales and marketing materials and on any of Google’s websites (including www.admob.com). Otherwise, subject to clause 14.6, neither party will issue any press release regarding this GSA or any Agreement without the other’s prior written approval.
|
14.8
|
If Company wishes to collect or disclose location-based information through the Company Mobile Application, Company will obtain all legally required and valid consents from End Users and provide all legally required disclosures in Company’s privacy policy in accordance with applicable law.
|
15.
|
Term and Termination
|
15.1
|
This GSA will commence on the GSA Effective Date and remain in force until it terminates or expires in accordance with its terms. Each Agreement shall (unless earlier terminated in accordance with its terms) remain in force for the Term, at the end of which it shall expire automatically.
|
15.2
|
Without prejudice to clause 5.1, a party may suspend performance under any Agreement (in whole or in respect of a page of a Site, a Site or Sites) and/or terminate any Agreement (in whole) or remove a page of a Site, a Site or Sites from any Agreement with immediate effect, if the other party:
|
|
(a)
|
is in material breach of the Agreement where the breach is incapable of remedy;
|
|
(b)
|
is in material breach of the Agreement where the breach is capable of remedy and fails to remedy that breach within 30 days after receiving written notice of such breach; or
|
|
(c)
|
is in material breach of the Agreement more than twice even if the previous breaches were remedied,
|
15.3
|
A party may suspend performance and/or terminate this GSA (and all Agreements) with immediate effect, if:
|
|
(a)
|
the other party enters into an arrangement or composition with or for the benefit of its creditors, goes into administration, receivership or administrative receivership, is declared bankrupt or insolvent or is dissolved or otherwise ceases to carry on business; or
|
|
(b)
|
any analogous event happens to the other party in any jurisdiction in which it is incorporated or resident or in which it carries on business or has assets.
|
15.4
|
[
***
]
|
15.5
|
Google has the right (in its sole discretion) with
[
***
]
notice to Company to remove or require Company to remove the AFC Services from any Site (or part of a Site) on which the AFC RPM falls below
[
***
]
for the previous calendar month. For the purposes of this clause 15.5, “
AFC RPM
” means AFC AdSense Revenues per one thousand AFC Requests.
|
15.6
|
Google may terminate any Agreement on at least
[
***
]
written notice to Company if at any time the average total amount of Ad Revenues (in respect of all Advertising Services provided under the relevant Order Form) calculated across any three consecutive months is less than or equal to
[
***
]
per calendar month.
|
15.7
|
Google may terminate any Agreement immediately by providing written notice to Company if pornographic content that is illegal under United States laws is displayed on any Site.
|
15.8
|
The parties acknowledge that following any removal of the AFC Services from any Site or termination of an Agreement pursuant to clause 15.5 or 15.6, Company may continue to receive the applicable Google advertising services in relation to the relevant Site (or part of a Site) by entering into an online agreement with Google in respect of such services and Site.
|
15.9
|
Upon the expiration or termination of this GSA for any reason:
|
|
(a)
|
all rights and licences granted by each party will cease immediately; and
|
|
(b)
|
if requested, each party will use its reasonable endeavours to promptly return to the other party, or destroy and certify the destruction of, all Confidential Information disclosed to it by the other party.
|
15.10
|
The termination or expiration of an individual Agreement will not have the effect of terminating any other Agreement or this GSA unless expressly agreed to by the parties in writing. If an Agreement (but not this GSA) terminates or expires, all rights and licences granted by Google to Company under that Agreement will cease immediately. Termination or expiration of all Agreements will result in the expiration of this GSA on the same date on which the last Agreement terminates or expires.
|
16.
|
General
|
16.1
|
All notices of termination or breach must be in writing and addressed to the other party’s Legal Department. The email address for notices being sent to Google’s Legal Department is
legal-notices@google.com
. Notice will be treated as given on receipt, as verified by written or automated receipt or by electronic log (as applicable). All other notices must be in English, in writing and addressed to the other party’s primary contact and sent to their then current postal address or email address.
|
16.2
|
Neither party may assign any of its rights or obligations under this GSA or any Agreement without the prior written consent of the other. Where a party gives the other party such written consent: (a) the assignor shall ensure that the assignee has agreed in writing to be bound by the terms of this GSA and the applicable Agreement(s); and (b) the assignment takes effect from 23:59 on the last day of the relevant calendar month.
|
16.3
|
[
***
]
|
16.4
|
Neither this GSA nor any Agreement confers any benefits on any third party unless it expressly states that it does.
|
16.5
|
Neither this GSA nor any Agreement will create an agency, partnership or joint venture between the parties.
|
16.6
|
Neither party will be liable for failure to perform or delay in performance to the extent caused by circumstances beyond its reasonable control.
|
16.7
|
[
***
]
|
16.8
|
Neither party will be treated as having waived any rights by not exercising (or delaying the exercise of) any rights under this GSA or any Agreement.
|
16.9
|
If any term (or part of a term) of this GSA or any Agreement is invalid, illegal or unenforceable, the rest of this GSA or that Agreement (as applicable) will continue in force unaffected.
|
16.10
|
Subject to clause 13.1(b), this GSA and the Order Forms entered into under it set out all terms agreed between the parties and supersedes all previous or contemporaneous agreements between the parties relating to its subject matter. In entering into this GSA and the related Order Forms neither party has relied on, and neither party will have any right or remedy based on, any statement, representation or warranty (whether made negligently or innocently), except those expressly set out in this Agreement.
|
16.11
|
This GSA and any Agreements and any dispute (contractual or non-contractual) concerning this GSA and any Agreement(s) or their subject matter or formation (a “
Dispute
”) are governed by English law.
|
16.12
|
Any Dispute shall be referred to and finally resolved by arbitration under the rules of the LCIA, which rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be three. The seat, or legal place, of arbitration shall be London, England. The language to be used in the arbitration shall be English.
|
16.13
|
Clause 16.12 shall be without prejudice to the right of either party to apply to any court of competent jurisdiction for emergency, interim or injunctive relief (together "
Interim Relief
"). Except where Company has its registered office or principal place of business in Russia or Ukraine, such Interim Relief shall be subject to review and subsequent adjudication by the arbitral tribunal such that any dispute in respect of Interim Relief shall be determined by the arbitral tribunal.
|
Google
|
Company
|
By:
/s/ Ailis Daly for Graham Law (Board Director)
|
By:
/s/ Josef Mandelbaum, Yacov Kaufman
|
Print Name:
/s/ Ailis Daly for Graham Law (Board Director)
|
Print Name:
Josef Mandelbaum, Yacov Kaufman
|
Title:
Director
|
Title:
CEO, CFO
|
Date:
April 23, 2013
|
Date:
April 23, 2013
|
Google Ireland Limited
Gordon House
Barrow Street
Dublin 4
Ireland
|
Google Search and Advertising Services Agreement
ORDER FORM
|
SEARCH SERVICES
|
|
WEB SEARCH SERVICES (“WS”)
|
search fees
(for all Search Queries transmitted to Google for
the purpose of obtaining Search Results)
|
[
***
]
|
[***]
[***]
[***]
[***]
[***]
|
ADSENSE SERVICES
|
||
ADSENSE FOR SEARCH (“AFS”)
|
Percentage (%) of Net AdSense
Revenues for AFS payable to Company
|
AFS Deduction Percentage
|
[***]
|
[***]
|
[***]
|
Payment Information Details
|
currency
:
x
US dollars
|
1.
|
Definitions
|
2.
|
Blocklist
|
3.
|
Additional termination rights
|
a.
|
[***]
|
b.
|
[***]
|
i.
|
; or
[***]
|
ii.
|
[***]
|
4.
|
Google Brand Features
|
5.
|
Client Applications
|
a.
|
Subject to the Company’s compliance with clauses 5(b) to 5(d) below, each client application set forth in the cover page(s) of this Order Form is an Approved Client Application for the purposes of (i) sending Requests to Google in connection with the Search Services which resolve to Results Pages on the Web Search Site(s); and (ii) sending Requests to Google for the purposes of generating Ad Sets to be displayed on the Site(s).
|
b.
|
[***]
|
c.
|
[***]
|
6.
|
Company Suggested Searches using Company Provided Keywords
[***]
|
a.
|
The definition of “
Search Query
” in the GSA shall be amended as follows:
|
b.
|
Company Provided Keywords
|
i.
|
Subject to the remainder of this clause 6(b), Company may implement on the Site certain text links consisting of suggested keywords which are provided by Company or a third party (subject to Company obtaining Google’s prior written approval of such third party, such approval not to be unreasonably withheld or delayed) and which generate Requests when clicked on by End Users (“
Company Provided Keywords
”). If Company wishes to use Company Provided Keywords that are provided by a third party it shall send a written request to Google (each a “
Third Party Notice
”) and Google shall provide Company with a written reply, either approving or rejecting the Third Party Notice, within fifteen days of Google’s receipt of such Third Party Notice. In the event that Google does not send a reply to a Third Party Notice within fifteen days of Google’s receipt of such Third Party Notice then Google shall be deemed to have given its approval to the Third Party Notice but Customer shall still be required to comply with all other provisions of this clause 6(b) (including, but not limited to, clause 6(b)(ix)).
|
ii.
|
Company shall ensure that all clicks by End Users on Company Provided Keywords generate Valid Requests: (i) which contain all of the relevant Company Provided Keyword(s) as presented to and clicked by the End User; and (ii) which are transmitted to Google in the manner specified by Google from time to time, without editing, filtering, truncating, appending terms to or otherwise modifying such Requests, either individually or in the aggregate.
|
iii.
|
Company may select the Company Provided Keywords using an automated or algorithmic mechanism which shall be subject to Google's approval (such approval not to be unreasonably withheld or delayed). If Company wishes to select Company Provided Keywords using an automated or algorithmic mechanism it shall send a written request to Google (each an “
Automated Notice
”) and Google shall provide Company with a written reply, either approving or rejecting the Automated Notice, within fifteen days of Google’s receipt of such Automated Notice. In the event that Google does not send a reply to an Automated Notice within fifteen days of Google’s receipt of such Automated Notice then Google shall be deemed to have given its approval to the Automated Notice but Company shall still be required to comply with all other provisions of this clause 6 (including, but not limited to, clause 6(b)(ix)).
|
iv.
|
Company shall ensure that that Company Provided Keywords:
|
1.
|
are determined by objective measures (rather than commercial criteria) such as search query frequencies and relevancies, and are not selected manually or in such a way as to be commercially biased to favour Search Queries that result in Ads with high cost per click or otherwise;
|
2.
|
do not include any Google Brand Features;
|
3.
|
do not contain or refer to any pornographic, hate-related or violent content or contain or refer to any other material, products or services that violate or encourage conduct that would violate any criminal laws, any other applicable laws, or any third party rights;
|
4.
|
if Company Provided Keywords are related keywords, such keywords are relevant to the Request which generated the Results Page containing Search Results on which such Company Provided Keywords are displayed;
|
5.
|
if Company Provided Keywords are popular keywords, then such keywords are derived from previous End User searches and arranged by popularity;
|
6.
|
if Company Provided Keywords are suggested keywords, then such keywords are relevant to the current text entered into the Search Box by the End User.
|
v.
|
Google may from time to time require that particular words or terms are not used as Company Provided Keywords.
|
vi.
|
Google may prohibit the sending of Requests by Company using Company Provided Keywords or may refuse to serve Ads in response to Requests generated via Company Provided Keywords, if Google in its sole discretion determines that such feature or implementation is detrimental to Google and/or Google’s advertiser(s).
|
vii.
|
Company will use and assign Client IDs and/or Channel IDs in relation to Company Provided Keywords as instructed by Google at all times, and will provide such information to Google as Google may reasonably request with respect to the use and application of any such Client IDs and/or Channel IDs.
|
viii.
|
Company shall ensure that the implementation of such functionality is in accordance with the mock ups in Exhibit C and that Company Provided Keywords are clearly labelled with the designation approved, or notified, by Google to Company from time to time.
|
ix.
|
Company may only put its implementation of Company Provided Keywords into live use once Google’s technical and account management personnel are satisfied that Company has properly implemented Company Provided Keywords on the Site in accordance with Google’s technical and branding requirements and otherwise in accordance with the Agreement and Google has approved the Company’s implementation (such approval not to be unreasonably withheld or delayed).
|
x.
|
Google will not have any obligations or liability under clause 12 (Indemnities) of the GSA arising from or in connection with any Company Provided Keywords. Company shall indemnify Google against all liabilities, costs, expenses, losses and damages suffered or incurred by Google or any Google Affiliate as a result of any third party claim in connection with, arising from or related to the use of Company Provided Keywords and/or the implementation of that feature on any Site. In order for the indemnity given in this clause to apply in relation to a particular claim, Google will: (i) notify Company of such claim; and (ii) provide Company with reasonable information, assistance and co-operation in defending the claim; and (iii) give Company full control and sole authority over the defence and settlement of such claim, subject to Google’s approval of any such settlement, which approval will not be unreasonably withheld or delayed. Nothing in the GSA or any Order Form will exclude or limit Company’s liability under this clause 6(b)(x).
|
c.
|
[***]
|
i.
|
[***]
|
ii.
|
[***]
|
iii.
|
[***]
|
1.
|
[***]
|
2.
|
[***]
|
3.
|
[***]
|
iv.
|
[***]
|
v.
|
[***]
|
vi.
|
[***]
|
1.
|
[***]
|
2.
|
[***]
|
3.
|
[***]
|
vii.
|
[***]
|
viii.
|
[***]
|
ix.
|
[***]
|
7.
|
Search History
|
a.
|
Company shall be permitted to implement on the Site text links provided by Company that consist of an End User’s previous Search Queries and which generate Requests when clicked on by End Users (“
Search History
”) with Google’s prior written approval (including by email), such approval not to be unreasonably withheld or delayed. Google may require Company to provide mock-ups of the Site incorporating Search History before giving such approval.
|
b.
|
Subject to clause 7(a), Company shall not make Search History available to an End User unless it:
|
i.
|
has provided the End User with sufficient information to allow End User to make an informed choice as to whether or not to enable Search History;
|
ii.
|
has obtained the End User’s prior opt-in consent to enable this feature; and
|
iii.
|
provides the End-User with the option, at all times, to disable Search History and delete his or her Search History.
|
c.
|
Subject to clauses 7(a) and 7(b), Company shall only provide an End User’s Search History to the End User that performed the searches and shall not provide such Search History to any other third party.
|
d.
|
Subject to clauses 7(a), 7(b) and 7(c), if Company implements Search History on the Site it shall ensure that no Requests contain any End User personal data. For the purposes of this clause 4.4 “personal data” means any information relating to an identified or identifiable natural person; an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity.
|
e.
|
Company may only put its implementation of Search History into live use once Google’s technical and account management personnel are satisfied that Company has properly implemented Search History on the Site in accordance with Google’s technical and branding requirements and otherwise in accordance with the Agreement and Google has approved the Company’s implementation (such approval not to be unreasonably withheld or delayed).
|
f.
|
Company will use and assign Client IDs and/or Channel IDs in relation to Search History as instructed by Google at all times, and will provide such information to Google as Google may reasonably request with respect to the use and application of any such Client IDs and/or Channel IDs.
|
g.
|
Google will not have any obligations or liability under clause 12 (Indemnities) of the GSA arising from or in connection with any Search History. Company shall indemnify Google against all liabilities, costs, expenses, losses and damages suffered or incurred by Google or any Google Affiliate as a result of any third party claim in connection with, arising from or related to the use of Search History and/or the implementation of that feature on any Site. In order for the indemnity given in this clause to apply in relation to a particular claim, Google will: (i) notify the Company in writing of such claim, as soon as reasonably practicable following Google’s internal investigation of such claim; (ii) provide Company with reasonable information, assistance and co-operation in defending the claim; and (iii) give Company full control and sole authority over the defence and settlement of such claim, subject to Google’s approval of any such settlement, which approval will not be unreasonably withheld or delayed. Nothing in the GSA or any Order Form will exclude or limit Company’s liability under this clause 7(g). Company shall be liable for any act or omission by any such third party provider which, if had been committed by Company directly, would constitute a breach of this Agreement by Company.
|
h.
|
Company shall ensure that the implementation of such functionality is in accordance with the mock ups in Exhibit E and that Company “Search History” is clearly labeled with the designation approved, or notified, by Google to Company from time to time.
|
i.
|
Google may prohibit the sending of Requests by Company using the Search History functionality or may refuse to serve Ads in response to such Requests, if Google in its sole discretion determines that doing so is detrimental to Google and/or Google’s advertiser(s).
|
8.
|
Channel IDs
|
9.
|
Company’s implementation of the Services
|
Google
|
Company
|
By:
/s/ Ailis Daly for Graham Law (Board Director)
|
By:
/s/ Josef Mandelbaum, Yacov Kaufman
|
Print name:
Ailis Daly for Graham Law (Board Director)
|
Print name:
Josef Mandelbaum, Yacov Kaufman
|
Title:
Director
|
Title:
CEO, CFO
|
Date:
April 23, 2013
|
Date:
April 23, 2013
|
A.
|
The Company Shareholders collectively are the holders and the record and beneficial owners of all of the Company Share Capital.
|
B.
|
Each Company Shareholder is the record and beneficial owner of the number of Company Shares (as defined below) set forth opposite such Company Shareholder’s name on
Schedule 2.2
of the Company Disclosure Letter.
|
C.
|
Purchaser desires, subject to the terms and conditions set forth in this Agreement, to, purchase from the Company Shareholders and each Company Shareholder desires to sell to Purchaser all Company Share Capital owned by such Company Shareholder subject to the terms and conditions set forth in this Agreement (the “
Share Purchase
”).
|
D.
|
The Company, the Company Shareholders and Purchaser desire to make certain representations, warranties, covenants and other agreements in connection with the Share Purchase as set forth herein.
|
E.
|
The board of directors of the Company (the "
Company Board of Directors
") has carefully considered the terms of this Agreement and has determined that the terms and conditions of the transactions contemplated hereby, are fair to and in the best interests of, and are advisable to, the Company, the Company Securityholders and the Company's employees and creditors, has approved this Agreement and the transactions contemplated hereby and has recommended that the Company Shareholders approve this Agreement and the transactions contemplated hereby and execute this Agreement.
|
F.
|
Concurrently with the execution of this Agreement, and as a condition and inducement to Purchaser’s willingness to enter into this Agreement, the Company shall have obtained and delivered to Purchaser a true, correct and complete copy of a unanimous written consent of the Company Shareholders evidencing the adoption and approval of this Agreement (the “
Company Shareholder Approval
”), signed by all of the Company Shareholders in accordance with the Company’s Charter Documents and the Belize International Business Companies Act (the “
IBCA
”) (the “
Requisite Shareholder Approval
”).
|
G.
|
Concurrently with the execution of this Agreement, and as a condition and inducement to Purchaser’s willingness to enter into this Agreement, each key employee and consultant of the Israeli Subsidiary listed in
Exhibit C
hereto has executed a termination and waiver agreement with the Company and an employment agreement (including a retention plan) with Purchaser (the "
Key Employee Agreements
"), to be effective upon the Closing;
|
H.
|
The board of directors of Purchaser has carefully considered the terms of this Agreement and has determined that the terms and conditions of the transactions contemplated hereby are in the best interests of, and are advisable to, Purchaser and has approved this Agreement and the transactions contemplated hereby.
|
Perion Network Ltd.
By:
/s/ Josef Mandelbaum /s/ Yacov Kaufman
Name:
Josef Mandelbaum Yacov Kaufman
Title:
CEO CFO
SweetIM Ltd.
By:
/s/ Nadav Goshen
Name:
Nadav Goshen
SweetIM Technologies Ltd.
By:
/s/ Nadav Goshen
Name:
Nadav Goshen
Title:
CEO
Shareholders’ Agent
By:
/s/ Nadav Goshen
Name:
Nadav Goshen
|
|
¨
|
Regulation D Investor
|
|
¨
|
Regulation S Investor
|
|
¨
|
Is
not
a Qualified Israeli Investor
|
|
¨
|
Is
a Qualified Israeli Investor, as specified in one of the following categories (
please check the applicable box(es)
):
|
q
|
a venture capital fund. For the purpose hereof, a “venture capital fund” is an entity primarily involved in investments in entities which, at the time of investment, are engaged primarily in research and development or manufacture of innovative, high-technology products or processes, which investments involve above-average risk;
|
q
|
an entity wholly owned by "exempt investors" under Israeli law (including those on this list);
|
q
|
an entity, other than an entity organized for the purpose of purchasing securities in a certain offering, with equity capital greater than NIS 50 million; or
|
q
|
an individual who meets the qualifications set forth in Section 9 of the Addendum to the Israeli Arrangement of Investment Advising and Investment Portfolio Management Law, 5755-1995, purchasing for himself, i.e., an individual who meets any
two
of the following conditions: (1) the aggregate value of the cash, deposits, financial assets and securities owned by the individual exceeds NIS 12 million; (2) the individual has expertise and skills in the capital market field or was employed for at least one year in a professional position that requires capital market expertise; and (3) the individual has executed at least 30 transactions, on average, in each quarter during the four quarters preceding the date hereof, not including transactions executed by a portfolio manager for such individual pursuant to a portfolio management agreement.
If you check this category on the basis of condition no. 2, please specify the source of your applicable expertise and/or the professional position
. __________ __________________________________________________________________________
|
Amir Amit
|
|
Ben Garrun
|
|
Dan Gotlieb
|
|
Esti Selickter
|
|
Gigi Levy
|
|
Holine Finance Ltd.
|
|
Ilan Weintrob
|
|
Learnicom LLC
|
|
Moshe Cohen
|
|
Purple Martin Ltd.
|
|
Roee Mor
|
|
Rami Gorali
|
|
Robert Sherman
|
|
Tamir Kremener
|
|
Zach Sigal
|
|
Yoram Shiv (as trustee for Ari Jedeikin, Eran Brener, Itay Rokni, Itzik Shrik, Keren Arieli, Roee Mor, Udi Vacks)
|
WHEREAS
|
the Purchaser and the Shareholders' Agent are parties to that certain Share Purchase Agreement, dated as of November 7, 2012 (the "
Purchase Agreement
"), by and among the Purchaser, SweetIM Ltd., SweetIM Technologies Ltd., the Company Shareholders listed on Exhibit A to the Purchase Agreement, and Nadav Goshen as “
Shareholders’ Agent
”
; and
|
WHEREAS
|
the Parties agree to amend the Purchase Agreement pursuant to the below.
|
1.
|
The preamble and the schedules attached hereto constitute an integral part hereof.
|
2.
|
Capitalized terms in this Amendment shall have the same meaning as in the Purchase Agreement, unless otherwise expressly stated herein.
|
3.
|
Section 1.5(h) of the Purchase Agreement is hereby replaced in its entirety with the following:
|
|
3.1.
|
Without derogating from the right of the Purchaser to receive the Negative Adjustment Amount pursuant to Section (g), Purchaser shall pay the lower of (i) the amount by which the Company Net Working Capital is higher than the Cash as of the Closing Date, and (ii) the Google Payments actually received by the Company following the Closing (the "
Google Adjustment
Amount
"). The Purchaser shall transfer such payment to the Paying Agent within 3 Business Days of final determination of the Company Net Working Capital under this Section 1.5 and shall instruct the Paying Agent to distribute such amounts to the Company Securityholders in accordance with the provisions of the Paying Agent Agreement and this Agreement, in accordance with each Company Securityholder's Pro Rata Share of such amount, less applicable withholdings. Notwithstanding the foregoing, any Cash Consideration and Option Amount payable pursuant this Section 1.5(h) to Company Shareholders and Company Optionholders, as applicable, holding Company Shares and Company Options pursuant to Section 102(b) shall be paid to the 102 Trustee. Notwithstanding anything in this Agreement, the Google Adjustment shall be reduced by $422,600 (the "
Purchaser Adjustment
Amount
"). In the event that the Google Adjustment Amount shall be
less
than the Purchaser Adjustment Amount, Purchaser shall be entitled to reduce the Deferred Payment by the amount that is equal to the Purchaser Adjustment Amount
less
the Google Adjustment Amount.
|
4.
|
Section 10.12 of the Purchase Agreement is hereby replaced in its entirety with the following:
|
5.
|
The following is hereby added as Section 6.19 of the Purchase Agreement:
|
6.
|
This Amendment is made in accordance with Section 8.3 of the Purchase Agreement, and constitutes an integral part thereof.
|
7.
|
Except as expressly stated in this Amendment, the Purchase Agreement shall remain unchanged.
|
8.
|
This Amendment may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A signed Amendment received by a Party via facsimile or electronic mail will be deemed an original, and binding upon the party who signed it.
|
COMPANY:
Perion Network Ltd.
|
|||||
/s/
|
Josef Mandelbaum |
/s/
Yacov Kaufman
|
|||
Name: Josef Mandelbaum
|
Yacov Kaufman
|
||||
Title: CEO
|
CFO
|
INVESTORS:
/s/ Moshe Cohen
Moshe Cohen
/s/ Ben Garrun
Ben Garrun
HOLINE FINANCE LTD.
By:
/s/ Kees-Jan A
vis
Name:
Kees-Jan Avis
Title:
Director
/s/ Robert Sherman
Robert Sherman
|
|
Exhibit 8
|
|
1.
|
IncrediMail Inc., a Delaware corporation
|
|
2.
|
Perion Interactive Ltd., an Israeli corporation (under voluntary liquidation)
|
|
3.
|
Smilebox Inc., a Washington corporation
|
|
4.
|
SweetIM Ltd., a Belize company
|
|
5.
|
SweetIM Technologies Ltd., an Israeli company
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
5.
|
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
Date: April 29, 2013
|
|
/s/ Josef Mandelbaum
|
|
Josef Mandelbaum,
|
|
Chief Executive Officer
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
5.
|
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
Date: April 29, 2013
|
|
/s/ Yacov Kaufman
|
|
Yacov Kaufman,
|
|
Chief Financial Officer
|
1.
|
The Report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
|
/s/ Josef Mandelbaum
Josef Mandelbaum
Chief Executive Officer
|
1.
|
The Report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
|
/s/ Yacov Kaufman
Yacov Kaufman
Chief Financial Officer
|
/
s/ KOST FORER GABBAY & KASIERER
|
||
Tel Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
|
April 29, 2013
|
A member of Ernst & Young Global
|
|