Title
of Each Class |
Trading
Symbol(s) |
Name
of Each Exchange on which Registered |
Ordinary
shares, par value NIS 0.03 per share |
PERI
|
Nasdaq
Global Select Market |
Large
accelerated filer ☒ |
Accelerated
filer ☐ |
Non-accelerated
filer ☐ |
Emerging
growth company ☐ |
U.S. GAAP ☒ |
International
Financial Reporting Standards as issued by
the
International Accounting Standards Board ☐ |
Other
☐ |
• |
Our search advertising solution depends heavily upon revenue generated from our agreement with Microsoft Bing, and any adverse change
in that agreement could adversely affect our business, financial condition and results of operations. |
• |
The generation of search advertising revenue through publishers is subject to competition. If we cannot compete effectively in this
market, our revenue is likely to decline. |
• |
Should the methods used for the distribution of our search solution, be blocked, constrained, limited, materially changed, based
on a change of policies, technology or otherwise (as has happened in the past), or made redundant by any of our search engine providers,
our ability to generate revenue from our users’ search activity could be significantly reduced. |
• |
Should the providers of platforms, particularly browsers, further block, constrain or limit our ability to offer or change search
properties, or materially change their policies, technology or the way they operate, our ability to generate revenue from our users’
search activity could be significantly reduced. |
• |
Our advertising customers, comprised of brands, advertising agencies, demand side platforms (“DSPs”) and supply side
platforms (“SSPs”), may reduce or terminate their business relationship with us at any time which could have a material adverse
effect on our business, financial condition and results of operation. |
• |
Large and established internet and technology companies, such as Google, Meta and Amazon, play a substantial role in the digital
advertising market and may significantly harm our ability to operate in this industry. |
• |
We depend on supply sources to provide us with advertising inventory in order for us to deliver advertising campaigns in a cost-effective
manner. |
• |
Non-compliance with industry self-regulation could negatively impact our Display Advertising business, brand and reputation.
|
• |
The advertising industry is highly competitive. If we cannot compete effectively and overcome the technological gaps in this market,
our revenue is likely to decline. |
• |
If our campaigns are not able to reach certain performance goals or we are unable to measure certain metrics proving achievement
of those goals, this could have a material adverse effect on our business. |
• |
Increased availability of advertisement-blocking technologies could limit or block the delivery or display of advertisements by our
solutions, which could undermine the viability of our business financial condition and results of operations. |
• |
Our Advertising business depends on our ability to collect and use data, and any limitation on the collection to use of this data
could significantly diminish the value of our solutions and cause us to lose customers, revenue and profit. |
• |
If we do not continue to innovate and provide high-quality advertising solutions and services, we may not remain competitive, and
our business and results of operations could be materially adversely affected. |
• |
Our growth depends in part on the success of our relationships with advertising agencies, DSPs and SSPs. |
• |
Our products are dependent on the platform terms of use and policies that are subject to changes out of our control. |
• |
Global economic and market conditions and actions taken by our customers, suppliers and other business partners in markets in which
we operate might materially adversely impact us. |
• |
A loss of the services of our senior management and other key personnel could adversely affect execution of our business strategy.
|
• |
We have acquired and may continue to acquire other businesses. These acquisitions divert a substantial part of our resources and
management attention and could in the future, adversely affect our financial results. |
• |
Our share price has fluctuated significantly and could continue to fluctuate significantly. |
• |
Our business and financial performance may be materially adversely affected by information technology issues, data breaches, cyber-attacks
and other similar incidents, and other business disruptions. |
• |
If we fail to detect or prevent suspicious traffic or other invalid traffic or engagement with our ads, or otherwise prevent against
malware intrusions, we could lose the confidence of our advertisers, damage our reputation and be responsible to make-good or refund demands,
which would cause our business to suffer. |
• |
We depend on third party internet, telecommunication and hosting providers to operate our platforms, websites and services.
|
• |
Regulations, legislation or self-regulation relating to privacy, data collection and protection, e-commerce
and internet advertising and uncertainties regarding the application or interpretation of existing or newly adopted laws and regulations
could harm our business and subject us to significant legal liability for non-compliance. |
• |
Our proprietary information and intellectual property may not be adequately protected and thus our technology may be unlawfully copied
by or disclosed to other third parties. |
• |
Our business is significantly reliant on the North American market. Any material adverse change in that market could have a material
adverse effect on our results of operations and share price. |
• |
Our business may be materially affected by changes to fiscal and tax policies. Potentially negative or unexpected tax consequences
of these policies, or the uncertainty surrounding their potential effects, could adversely affect our results of operations. |
• |
Political, economic and military instability in the Middle East and specifically in Israel may impede our ability to operate and
harm our financial results. |
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A. Selected Financial Data | 10 |
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40 | |
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91 | |
|
91 |
91 | |
91 | |
91 | |
Item 19. Exhibits |
92 |
Signatures |
93 |
Index |
F - 2 |
A. |
SELECTED FINANCIAL DATA |
B. |
CAPITALIZATION AND INDEBTEDNESS |
C. |
REASONS FOR OFFER AND USE OF PROCEEDS |
D. |
RISK FACTORS |
• |
Supply sources may impose significant restrictions on the advertising inventory they sell or may impose other unfavorable terms and
conditions on the advertisers using their sites or platforms. For example, these restrictions may include frequency caps, prohibitions
on advertisements from specific advertisers or specific industries, or restrictions on the use of specific creative content or advertising
formats as well as content adjacent restrictions, which would restrain our supply of available inventory. |
• |
Supply sources that offer online content and mobile applications may shift from an advertising-based monetization method to a pay
for content/services model, thereby reducing available inventory. |
• |
Social media platforms may be successful in keeping
users within their sites via products such as Facebook’s, which may be competitive to our offerings and solutions. If, as a result,
users are not on the open web, advertising inventory outside of such platforms (including our publishers’ and our owned and operated
sites) may be reduced or may become less attractive to our advertising customers. |
• |
Supply sources may be reluctant or unable to adopt certain of our proprietary and unique high-impact, CTV, iCTV and video ad formats
for a variety of reasons (such as changes in user preference making such ad formats less desirable, or technological limitations, such
as connection with header bidding or the ability to transact programmatically), resulting in limited advertising inventory supply for
such formats and inhibiting our ability to scale such formats. |
• |
Historically, in most cases our advertising business experienced the lowest revenue levels in the first quarter and the highest revenue
levels in the fourth quarter, with the second and third quarters being slightly stronger than the first quarter (except for 2020 as a
result of the initial effect of COVID-19); |
• |
Product and service revenue are influenced by political advertising in the US, which generally occurs every two years; |
• |
In any single period, product and service revenue and delivery costs are subject to significant variation based on changes in the
volume and mix of deliveries performed during such period; |
• |
Revenue is subject to the changes of brand marketing trends, including when and where brands choose to spend their money in a given
year; |
• |
Advertising customers generally retain the right to supplement, extend, or cancel existing advertising orders at any time prior to
their delivery, and we have no control over the timing or magnitude of these revenue changes; and |
• |
Relative complexity of individual advertising formats, and the length of the creative design process. |
• |
negative fluctuations in our quarterly revenue and earnings or those of our competitors; |
• |
pending sales into the market due to the sale of large blocks of shares, due to, among other reasons, the expiration of any tax-related
or contractual lock–ups with respect to significant amounts of our ordinary shares; |
• |
shortfalls in our operating results compared to levels forecast by us or securities analysts; |
• |
changes in our senior management; |
• |
changes in regulations or in policies of search engine companies or other industry conditions; |
• |
mergers and acquisitions by us or our competitors; |
• |
technological innovations; |
• |
the introduction of new products; |
• |
the conditions of the securities markets, particularly in the internet and Israeli sectors; and |
• |
political, economic and other developments in Israel and worldwide. |
• |
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 and potential trade wars; |
• |
limitations on the transfer and repatriation of funds and foreign currency exchange restrictions; |
• |
compliance with different consumer, privacy and data collection and protection laws and regulations, 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. |
• |
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; or |
• |
we may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.
|
1. |
The ability to monetize search
traffic through our partnership with Microsoft Advertising (Bing), the effectiveness of which is reflected in the consistent growth of
our publisher network. This is particularly important given the growing shift to Direct Response units marketing, as search represents
the highest intent customers; |
2. |
The ability to meet advertiser demand for higher sustained user engagement with our high-impact Ad suite; |
3. |
The ability to monetize the fast-growing retail media segment; |
4. |
The ability to innovate in sectors that matter most to brands; this is manifest in SORT® which is
an effective and successful response to advertiser recognition of privacy matters and the upcoming deprecation of cookies by Google;
|
5. |
The ability to acquire and execute with strategic and operational discipline; and |
6. |
SORT®, Perion’s alternative to third party cookies, is first and foremost the result of our ability to analyze the complex
data signals that are derived from our assets that flow through our iHUB. |
1. |
Operational Savings – Shared Resources |
2. |
Traffic Acquisition Costs (TAC) Optimization |
3. |
Increased Customer Value |
4. |
Market Agility and Creative Firepower |
1. |
Intelligent High-Impact Solutions that Win the War for Attention |
2. |
Search monetization solution - Transforming Search into Revenue |
3. |
Video Monetization & Revenue Management |
4. |
Content optimization Solution – Creating Opportunities for Publishers Seeking Growth |
5. |
Paragone’s The Cross-Channel
Digital Advertising SaaS platform: Maximize Reach, Optimize Revenue and Improve Efficiency |
• |
Compensation Framework: we have implemented
a comprehensive framework which guides our pay decisions. We use an objective job and compensation evaluation methodology to reduce subjectivity
and bias in pay decisions, leading to greater equity and alignment with the market in employee compensation. |
• |
Community Outreach: We believe that improving
life quality of our employees as well as the communities in which they live, is of great value. We encourage our employees to participate
in volunteering programs. We allow our employees to volunteer for 40 hours per year during working hours. We make donations to nonprofit
organization such as Black Girls Code, “Cracking the glass ceiling”, holocaust survivors, youth organizations and many more
around our communities. |
Name of Subsidiary |
Place of Incorporation |
Codefuel Ltd. |
Israel |
IncrediMail, Inc. |
Delaware |
Intercept Interactive, Inc. |
Delaware |
Vidazoo Ltd. |
Israel |
Content IQ LLC |
New York |
Pub Ocean Media UK Limited |
England and Wales |
Pub Ocean Inc. |
Delaware |
BT Media LLC |
Nevada |
Make Me Reach SAS, dba Paragone |
France |
Smilebox Inc. |
Washington |
2021 |
2022 |
|||||||||||||||
Search Advertising Revenue
|
Display Advertising
Revenue |
Search Advertising Revenue
|
Display Advertising
Revenue |
|||||||||||||
North America (Mainly U.S.) |
80 |
% |
95 |
% |
86 |
% |
89 |
% | ||||||||
Europe |
18 |
% |
4 |
% |
13 |
% |
10 |
% | ||||||||
Other |
2 |
% |
1 |
% |
1 |
% |
1 |
% | ||||||||
Total |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
Year ended December 31, |
||||||||||||||||
2021 |
2022 |
|||||||||||||||
Amount |
% of Revenue |
Amount |
% of Revenue |
|||||||||||||
Revenue: |
||||||||||||||||
Display advertising |
$ |
265,323 |
55 |
% |
$ |
360,690 |
56 |
% | ||||||||
Search advertising |
213,175 |
45 |
279,566 |
44 |
||||||||||||
Total Revenue |
478,498 |
100 |
640,256 |
100 |
||||||||||||
|
||||||||||||||||
Costs and Expenses: |
||||||||||||||||
Cost of revenue |
25,197 |
5 |
30,404 |
5 |
||||||||||||
Traffic acquisition costs and media buy |
288,018 |
60 |
372,601 |
58 |
||||||||||||
Research and development |
35,348 |
8 |
34,424 |
5 |
||||||||||||
Selling and marketing |
53,209 |
11 |
56,014 |
9 |
||||||||||||
General and administrative |
20,933 |
4 |
23,813 |
4 |
||||||||||||
Depreciation and amortization |
9,897 |
2 |
13,838 |
2 |
||||||||||||
Total Costs and Expenses |
432,602 |
90 |
531,094 |
83 |
||||||||||||
|
||||||||||||||||
Income from Operations |
45,896 |
10 |
109,162 |
17 |
||||||||||||
Financial expense (income), net |
581 |
* |
) |
(4,502 |
) |
(1 |
) | |||||||||
|
||||||||||||||||
Income before Taxes on income |
45,315 |
10 |
113,664 |
18 |
||||||||||||
Taxes on income |
6,609 |
2 |
14,439 |
2 |
||||||||||||
|
||||||||||||||||
Net Income |
$ |
38,706 |
8 |
% |
$ |
99,225 |
16 |
% |
Year ended December 31, |
||||||||
2021 |
2022 |
|||||||
Net cash provided by operating activities |
$ |
71,106 |
$ |
122,119 |
||||
Net cash used in investing activities |
(243,470 |
) |
(46,816 |
) | ||||
Net cash provided by (used in) financing activities |
229,054 |
(3,258 |
) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(33 |
) |
(59 |
) | ||||
Net increase in cash and cash equivalents and restricted cash |
$ |
56,657 |
$ |
71,986 |
Name
|
Age
|
Position
|
Eyal Kaplan*(1)(2)
|
63 |
Chairman of the Board of Directors |
Doron Gerstel |
62 |
Chief Executive Officer; Director |
Tal Jacobson |
48 |
General Manager, CodeFuel |
Maoz Sigron |
45 |
Chief Financial Officer |
Michal Drayman*(1)(4)
|
50 |
Director |
Amir Guy*(1)(3)
|
53 |
Director |
Rami Schwartz*(4)
|
64 |
Director |
Michael Vorhaus*(2)(3)(4)
|
65 |
Director |
Joy Marcus*(2)(3)
|
61 |
Director |
Daniel E. Aks |
62 |
President, Undertone |
Daniel Slivkin |
39 |
Chief Executive Officer, Vidazoo |
Gal Dagan |
38 |
VP R&D, Vidazoo |
• |
chairperson of our audit committee: $110,000; |
• |
chairperson of our compensation committee: $107,500; |
• |
chairperson of our nominating and governance committee: $105,000; and |
• |
other non-executive directors: $97,500. |
Name and Principal Position (1)
|
Salary Cost (2)
|
Bonus (3)
|
Equity-Based
Compensation (4) |
Total |
||||||||||||
Doron Gerstel, Chief Executive Officer |
755 |
1,312 |
1,711 |
3,778 |
||||||||||||
Tal Jacobson, General Manager, CodeFuel Business Unit
|
455 |
826 |
549 |
1,830 |
||||||||||||
Maoz Sigron, Chief Financial Officer |
368 |
560 |
837 |
1,765 |
||||||||||||
Daniel E. Aks, President, Undertone Business Unit |
540 |
625 |
459 |
1,624 |
||||||||||||
Gal Dagan, Co-Founder and VP R&D, Vidazoo Business Unit
|
486 |
273 |
675 |
1,435 |
• |
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. |
December 31, |
||||||||||||
2020 |
2021 |
2022 |
||||||||||
Cost of sales |
73 |
83 |
91 |
|||||||||
Research and development |
135 |
115 |
121 |
|||||||||
Selling and marketing |
146 |
154 |
150 |
|||||||||
General and administration |
63 |
68 |
78 |
|||||||||
Total |
417 |
420 |
440 |
Name |
Number of Ordinary Shares Beneficially Owned |
Percentage of Ordinary Shares Outstanding |
||||||
All directors and officers as a group (12 persons) (1)
|
457,685 |
0.98 |
% |
(1) |
Includes 279,754 RSUs and options to purchase ordinary shares that are vested or will vest within 60 days of March 6, 2023.
|
Name of Beneficial Owner |
Shares Beneficially Owned |
|||||||
Number |
Percentage |
|||||||
Harel Insurance Investments & Financial Services Ltd.
(1) |
2,352,922 |
5.06 |
% | |||||
● |
A company's average R&D expenses in the three years prior to the current tax year must be greater than or equal to 7% of its
total revenue or exceed NIS 75 million (approximately $22 million) per year; and |
● |
A company must also satisfy one of the following conditions: (1) at least 20% of the workforce (or at least 200 employees) are employed
in R&D; (2) a venture capital investment of an amount approximately equivalent to at least NIS 8 million was previously made in the
company, and the company did not change its type of business after such investment; (3) growth in sales or workforce by an average of
25% over the three years preceding the tax year provided that the company's turnover in the tax year and in each of the previous three
years was at least NIS 10 million; or (4) the number of the company’s employees increased by 25% (on average) or more in the course
of three years, provided that the company employed at least 50 employees in the tax year and in each of the previous three years.
|
● |
Companies that do not meet one of the above two conditions may request preliminary approval from the National Authority for Technological
Innovation regarding being companies that own an innovation-promoting enterprise. |
● |
A company must qualify as a “Competitive Enterprise” as described under the Investment Law. |
• |
Amortization of the cost of purchased know-how, patents, and right to use patent or know how, which are used for the development
or promotion of the Industrial Enterprise, over an eight-year period; |
• |
Under specified conditions, an election to file consolidated tax returns with additional related Israeli Industrial Companies; and
|
• |
Deduction of expenses related to a public offering in equal amounts over three years. |
• |
certain financial institutions; |
• |
dealers or traders in securities that use a mark-to-market method of tax accounting; |
• |
persons holding ordinary shares as part of a straddle, integrated or similar transaction; |
• |
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
• |
entities classified as partnerships for U.S. federal income tax purposes and their partners; |
• |
tax-exempt entities, “individual retirement accounts” or “Roth IRAs”; |
• |
persons who acquired our ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation;
|
• |
persons that own or are deemed to own 10% or more of our stock by voting power or value; or |
• |
persons holding ordinary shares
in connection with a trade or business outside the United States .If a partnership (or other entity that is classified as a partnership
for U.S. federal income tax purposes) owns ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on
the status of the partner and the activities of the partnership. Partnerships owning ordinary shares and their partners should consult
their tax advisers as to their particular U.S. federal income tax consequences of owning and disposing of ordinary shares.
|
• |
a citizen or individual resident of the United States; |
• |
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state
therein or the District of Columbia; or |
• |
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
U.S. dollars |
NIS |
Other Currencies |
Total |
|||||||||||||
In thousands of U.S. dollars |
||||||||||||||||
Current assets |
589,485 |
9,013 |
4,960 |
603,458 |
||||||||||||
Long-term assets |
1,213 |
3,714 |
901 |
5,828 |
||||||||||||
Current liabilities |
(210,074 |
) |
(20,895 |
) |
(1,262 |
) |
(232,231 |
) | ||||||||
Long-term liabilities |
(48,239 |
) |
(3,757 |
) |
(480 |
) |
(52,476 |
) | ||||||||
Total |
332,385 |
(11,925 |
) |
4,119 |
324,579 |
Year Ended December 31, |
||||||||||||
2020 |
2021 |
2022 |
||||||||||
Average rate for period |
3.437 |
3.231 |
3.359 |
|||||||||
Rate at year-end |
3.215 |
3.110 |
3.519 |
(a) |
Disclosure controls and procedures |
(b) |
Management annual report on internal control over financial reporting |
(c) |
Attestation Report of the Registered Public Accounting Firm |
(d) |
Changes in internal control over financial reporting |
2021 |
2022 |
|||||||
Audit Fees |
$ |
568 |
$ |
643 |
||||
Tax Fees |
181 |
109 |
||||||
Audit Related fees |
394 |
288 |
||||||
Total |
$ |
1,143 |
$ |
1,040 |
• |
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
| |
F-2
| |
F-6
| |
F-7
| |
F-8
| |
F-9
| |
F-10
| |
F-12
|
|
Kost
Forer Gabbay & Kasierer
144
Menachem Begin Road, Building A,
Tel-Aviv
6492102, Israel |
Tel:
+972-3-6232525
Fax:
+972-3-5622555
ey.com
|
Revenue
Recognition Gross versus Net presentation | ||
Description
of the Matter |
As described in Note
2 to the consolidated financial statements, the Company’s revenue are comprised primarily of Search Advertising Revenue and Display
Advertising Revenue. To determine whether Search Advertising and Display Advertising revenue should be presented on a gross or net basis,
the Company considers whether it controls the promised good or service before transferring that good or service to the customer.
Auditing
the Company's gross or net basis evaluation was complex and required a high degree of auditor judgment due to the significant judgment
and subjectivity used by the Company in determining whether revenue should be presented on a gross or net basis. The significant judgment
was primarily due to the evaluation, for each contract, of whether the Company is the primary obligor in the arrangement.
| |
How
We Addressed the Matter in Our Audit |
We
obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s revenue
recognition process, including controls over the review of contracts and assessment of principal versus agent, and controls over the completeness
and accuracy of data.
Our
substantive audit procedures included, among others, reviewing, on a sample basis, the terms of contracts with publishers, evaluating
management’s assessment on the principal versus agent analysis, discussing the terms of contracts with legal and finance personnel
responsible for managing the contractual arrangements and evaluating the related disclosures in the consolidated financial statements.
|
Ordinary
shares of ILS 0.03
par value - Authorized: 60,000,000
shares at December 31, 2022 and 2021; Issued: 46,287,732
and 43,812,062
shares at December 31, 2022 and 2021, respectively; Outstanding: 46,172,393
and 43,696,723
shares at December 31, 2022 and 2021, respectively |
398
|
375
|
||||||
Additional
paid-in capital |
513,534
|
496,154
|
||||||
Treasury
shares at cost (115,339
shares at December 31, 2022 and 2021) |
(1,002
|
)
|
(1,002
|
)
| ||||
Accumulated
other comprehensive loss |
(582
|
)
|
(128
|
)
| ||||
Retained
earnings (Accumulated deficit) |
70,786
|
(28,439
|
)
| |||||
Total
Shareholders' Equity |
583,134
|
466,960
|
||||||
Total
Liabilities and Shareholders' Equity |
$
|
870,218
|
$
|
713,232 |
|
|
Year
ended December 31, |
| |||||||||
|
|
2022
|
|
|
2021
|
|
|
2020
|
| |||
Revenue:
|
|
|
|
|
|
|
|
|
| |||
Display
Advertising |
|
$
|
360,690
|
|
|
$
|
265,323
|
|
|
$
|
148,698
|
|
Search
Advertising |
|
|
279,566
|
|
|
|
213,175
|
|
|
|
179,365
|
|
Total
Revenue |
|
|
640,256
|
|
|
|
478,498
|
|
|
|
328,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenue |
|
|
30,404
|
|
|
|
25,197
|
|
|
|
22,477
|
|
Traffic
acquisition costs and media buy |
|
|
372,601
|
|
|
|
288,018
|
|
|
|
197,626
|
|
Research
and development |
|
|
34,424
|
|
|
|
35,348
|
|
|
|
30,880
|
|
Selling
and marketing |
|
|
56,014
|
|
|
|
53,209
|
|
|
|
39,085
|
|
General
and administrative |
|
|
23,813
|
|
|
|
20,933
|
|
|
|
15,819
|
|
Depreciation
and amortization |
|
|
13,838
|
|
|
|
9,897
|
|
|
|
9,923
|
|
Total
Costs and Expenses |
|
|
531,094
|
|
|
|
432,602
|
|
|
|
315,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from Operations |
|
|
109,162
|
|
|
|
45,896
|
|
|
|
12,253
|
|
Financial
expenses (income), net |
|
|
(4,502
|
)
|
|
|
581
|
|
|
|
2,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before Taxes on Income |
|
|
113,664
|
|
|
|
45,315
|
|
|
|
9,615
|
|
Taxes
on income (benefit) |
|
|
14,439
|
|
|
|
6,609
|
|
|
|
(610
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
$
|
99,225
|
|
|
$
|
38,706
|
|
|
$
|
10,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings per Share - Basic: |
|
$
|
2.21
|
|
|
$
|
1.13
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings per Share - Diluted: |
|
$
|
2.06
|
|
|
$
|
1.02
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares – Basic: |
|
|
44,871,149
|
|
|
|
34,397,134
|
|
|
|
26,687,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares – Diluted: |
|
|
48,071,638
|
|
|
|
37,829,725
|
|
|
|
28,797,747
|
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Net
income |
$
|
99,225
|
$
|
38,706
|
$
|
10,225
|
||||||
Other
comprehensive income (loss): |
||||||||||||
Change
in foreign currency translation adjustment |
(147
|
)
|
(315
|
)
|
49
|
|||||||
Cash
Flow Hedge: |
||||||||||||
Unrealized
gain (loss) from cash flow hedges |
(1,255
|
)
|
242
|
697
|
||||||||
Less:
reclassification adjustment for net gain (loss) included in net income |
948
|
(167
|
)
|
(764
|
)
| |||||||
Net
change |
(307
|
)
|
75
|
(67
|
)
| |||||||
Other
comprehensive loss |
(454
|
)
|
(240
|
)
|
(18
|
)
| ||||||
Comprehensive
income |
$
|
98,771
|
$
|
38,466
|
$
|
10,207
|
Common
shares |
Additional
paid-in
capital
|
Accumulated
Other
Comprehensive
income
(loss) |
Retained
earnings
(Accumulated
deficit)
|
Treasury
shares
|
Total
shareholders’
equity
|
|||||||||||||||||||||||
Number
of
Shares
|
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||||||||||
Balance
as of December 31, 2019 |
26,242,459
|
213
|
243,211
|
130
|
(77,370
|
)
|
(1,002
|
)
|
165,182
|
|||||||||||||||||||
Stock-based
compensation |
-
|
-
|
4,447
|
-
|
-
|
-
|
4,447
|
|||||||||||||||||||||
Exercise
of stock-based compensation |
1,109,515
|
11
|
4,275
|
-
|
-
|
-
|
4,286
|
|||||||||||||||||||||
Other
comprehensive loss |
-
|
-
|
-
|
(18
|
)
|
-
|
-
|
(18
|
)
| |||||||||||||||||||
Net
income |
-
|
-
|
-
|
-
|
10,225
|
-
|
10,225
|
|||||||||||||||||||||
Balance
as of December 31, 2020 |
27,351,974
|
224
|
251,933
|
112
|
(67,145
|
)
|
(1,002
|
)
|
184,122
|
|||||||||||||||||||
Issuance
of shares - Offering |
14,110,592
|
133
|
230,356
|
-
|
-
|
-
|
230,489
|
|||||||||||||||||||||
Stock-based
compensation |
-
|
-
|
6,985
|
-
|
-
|
-
|
6,985
|
|||||||||||||||||||||
Exercise
of stock-based compensation |
2,234,157
|
18
|
6,880
|
-
|
-
|
-
|
6,898
|
|||||||||||||||||||||
Other
comprehensive loss |
-
|
-
|
-
|
(240
|
)
|
-
|
-
|
(240
|
)
| |||||||||||||||||||
Net
income |
-
|
-
|
-
|
-
|
38,706
|
-
|
38,706
|
|||||||||||||||||||||
Balance
as of December 31, 2021 |
43,696,723
|
375
|
496,154
|
(128
|
)
|
(28,439
|
)
|
(1,002
|
)
|
466,960
|
||||||||||||||||||
Stock-based
compensation |
-
|
-
|
11,570
|
-
|
-
|
-
|
11,570
|
|||||||||||||||||||||
Exercise
of stock-based compensation |
2,475,670
|
23
|
5,810
|
-
|
-
|
-
|
5,833
|
|||||||||||||||||||||
Other
comprehensive loss |
-
|
-
|
-
|
(454
|
)
|
-
|
-
|
(454
|
)
| |||||||||||||||||||
Net
income |
-
|
-
|
-
|
-
|
99,225
|
-
|
99,225
|
|||||||||||||||||||||
Balance
as of December 31, 2022 |
46,172,393
|
398
|
513,534
|
(582
|
)
|
70,786
|
(1,002
|
)
|
583,134
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Operating
activities: |
||||||||||||
Net
income |
$
|
99,225
|
$
|
38,706
|
$
|
10,225
|
||||||
Adjustments
required to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation
and amortization |
13,838
|
9,897
|
9,923
|
|||||||||
Stock-based
compensation expense |
11,570
|
6,985
|
4,447
|
|||||||||
Foreign
currency translation |
20
|
(223
|
)
|
19
|
||||||||
Accrued
interest, net |
(3,646
|
)
|
(300
|
)
|
(125
|
)
| ||||||
Deferred
taxes, net |
(1,428
|
)
|
(2,755
|
)
|
(3,093
|
)
| ||||||
Accrued
severance pay, net |
(106
|
)
|
663
|
(23
|
)
| |||||||
Change
in payment obligation related to acquisitions |
(6,904
|
)
|
350
|
4,646
|
||||||||
Loss
(gain) from sale of property and equipment |
(12
|
)
|
121
|
10
|
||||||||
Net
changes in operating assets and liabilities: |
||||||||||||
Accounts
receivable, net |
(45,236
|
)
|
(34,239
|
)
|
(32,049
|
)
| ||||||
Prepaid
expenses and other current assets |
(434
|
)
|
(2,781
|
)
|
(1,185
|
)
| ||||||
Operating
lease right-of-use assets |
1,104
|
8,510
|
2,595
|
|||||||||
Operating
lease liabilities |
(1,909
|
)
|
(8,643
|
)
|
(2,255
|
)
| ||||||
Accounts
payable |
48,191
|
35,222
|
24,742
|
|||||||||
Accrued
expenses and other liabilities |
9,320
|
21,446
|
2,776
|
|||||||||
Deferred
revenue |
(1,474
|
)
|
(1,853
|
)
|
1,506
|
|||||||
Net
cash provided by operating activities |
$
|
122,119
|
$
|
71,106
|
$
|
22,159
|
||||||
Investing
activities: |
||||||||||||
Purchases
of property and equipment |
$
|
(1,058
|
)
|
$
|
(627
|
)
|
$
|
(459
|
)
| |||
Proceeds
from sale of property and equipment |
12
|
95
|
5
|
|||||||||
Short-term
deposits, inflows |
217,200
|
12,700
|
23,234
|
|||||||||
Short-term
deposits, outflows |
(253,400
|
)
|
(217,200
|
)
|
(12,700
|
)
| ||||||
Cash
paid in connection with acquisitions, net of cash acquired |
(9,570
|
)
|
(38,438
|
)
|
(19,000
|
)
| ||||||
Net
cash used in investing activities |
$
|
(46,816
|
)
|
$
|
(243,470
|
)
|
$
|
(8,920
|
)
| |||
Financing
activities: |
||||||||||||
Issuance
of shares in private placement, net |
$
|
-
|
$
|
230,489
|
$
|
-
|
||||||
Proceeds
from exercise of stock-based compensation |
5,833
|
6,898
|
4,286
|
|||||||||
Payments
of contingent consideration |
(9,091
|
)
|
-
|
-
|
||||||||
Repayment
of long-term loans |
-
|
(8,333
|
)
|
(8,333
|
)
| |||||||
Net
cash provided by (used in) financing activities |
$
|
(3,258
|
)
|
$
|
229,054
|
$
|
(4,047
|
)
| ||||
Effect
of exchange rate changes on cash and cash equivalents |
(59
|
)
|
(33
|
)
|
81
|
|||||||
Net
increase in cash and cash equivalents and restricted cash |
$
|
71,986
|
$
|
56,657
|
$
|
9,273
|
||||||
Cash
and cash equivalents and restricted cash at beginning of year |
105,535
|
48,878
|
39,605
|
|||||||||
Cash
and cash equivalents and restricted cash at end of year |
$
|
177,521
|
$
|
105,535
|
$
|
48,878
|
|
|
Year
ended December 31 |
| |||||||||
|
|
2022
|
|
|
2021
|
|
|
2020
|
| |||
Reconciliation
of cash, cash equivalents, and restricted cash to the consolidated
balance sheet |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Cash
and cash equivalents |
|
$
|
176,226
|
|
|
$
|
104,446
|
|
|
$
|
47,656
|
|
Restricted
cash |
|
|
1,295
|
|
|
|
1,089
|
|
|
|
1,222
|
|
Total
cash, cash equivalents, and restricted cash |
|
$
|
177,521
|
|
|
$
|
105,535
|
|
|
$
|
48,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the year for: |
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes |
|
$
|
7,689
|
|
|
$
|
4,365
|
|
|
$
|
3,180
|
|
Interest
|
|
$
|
5
|
|
|
$
|
203
|
|
|
$
|
1,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Creation
of new lease right-of-use assets arising from lease liability |
|
$
|
2,085
|
|
|
$
|
-
|
|
|
$
|
1,671
|
|
Purchase
of property and equipment on credit |
|
$
|
(47
|
) |
|
$
|
45
|
|
|
$
|
3
|
|
NOTE 1: |
GENERAL |
NOTE 2: |
SIGNIFICANT ACCOUNTING POLICIES |
F - 12
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2022 and 2021, the Company has recorded an allowance for credit losses in the amounts of $2,134 and $891, respectively.
%
|
||||
Computers
and peripheral equipment |
33
|
|||
Office
furniture and equipment |
6
- 15
|
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
F - 13
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company elected the practical expedient allowing not to separate the lease and non-lease components for its leases.
Following an impairment review of our long-lived assets for 2022, 2021 and 2020, it was concluded that no such impairment charges should be recorded.
F - 14
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Business combinations
The
Company accounted for business combination in accordance with ASC 805, "Business Combinations". ASC 805 requires recognition of assets
acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date.
Any excess of the fair value of net assets acquired over purchase price is allocated to goodwill. During the measurement period, not to
exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed,
with a corresponding offset to goodwill only for adjustments resulting from facts and circumstances that existed as of the acquisition
date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of income.
Acquisition related costs are expensed to the statement of income in the period incurred.
Revenue recognition
The Company applies the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606").
The Company applies the practical expedient for incremental costs of obtaining contracts when the associated revenue is recognized over less than one year.
F - 15
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Generally, in cases in which the Company controls the specified good or service before it is transferred to a customer, revenue is recorded on a gross basis.
The Company capitalized certain internal and external software development costs, consisting primarily of direct labor associated with creating the internally developed software. During 2021, 2020, depreciation expense for the related capitalized internally developed software in the consolidated statements of income amounted to $1,392, and $3,056, respectively. No expense related to internally developed software incurred in 2022.
Research and development costs are charged to the statement of income as incurred.
F - 16
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F - 17
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based on the Company’s methodology. The Company’s methodology is based on historical collection experience, customer creditworthiness, current and future economic condition, and market condition. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Trade receivables are written off after all reasonable means to collect the full amount have been exhausted.
F - 18
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year
ended December 31 |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Risk-free interest rate
|
1.92%
- 4.29%
|
|
0.94%
- 1.52%
|
|
0.29%
- 1.60%
|
| ||||||
Expected volatility
|
)
- |
|
59%
- 60%
|
|
53%
- 59%
|
| ||||||
Early exercise factor
|
130%
- 200%
|
|
130%
- 200%
|
|
110%
- 200%
|
| ||||||
Forfeiture rate post
vesting |
1%
- 28%
|
|
1%
- 27%
|
|
0%
- 34%
|
| ||||||
Dividend yield
|
0%
|
|
0%
|
|
0%
|
|
*) Only RSUs were granted
F - 19
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company follows the requirements of ASC No. 815, Derivatives and Hedging (“ASC 815”), which requires companies to recognize all of their derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging transaction and further, on the type of hedging transaction. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.
The notional value of the Company’s derivative instruments designed as hedging instruments as of December 31, 2022 and 2021, amounted to $14,364 and $5,071, respectively.
The notional value of the Company’s derivative instruments not designed as hedging instruments as of December 31, 2022 and 2021, amounted to $3,576 and $2,876, respectively. Notional values in USD are translated and calculated based on the spot rates for options and swap. Gross notional amounts do not quantify risk or represent assets or liabilities of the Company; however, they are used in the calculation of settlements under the contracts.
F - 20
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
• |
Level 1 - Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets. | |
• |
Level 2 - Other inputs that are directly or indirectly observable in the market place. | |
• |
Level 3 - Unobservable inputs which are supported by little or no market activity, and unobservable inputs based on the Company's own assumptions used to measure liabilities at fair value. The inputs require significant management judgment or estimation. |
Recently Accounting Pronouncements - not yet adopted
In October 2021 the FASB ASU 2021-08, Topic 805 “Business Combinations” – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. The adoption of the new guidance will have an immaterial impact on its consolidated financial statements.
F - 21
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: |
FAIR VALUE OF FINANCIAL
INSTRUMENTS |
Fair
value measurements using input type |
||||||||||||||||
Level
1 |
Level
2 |
Level
3 |
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Derivative assets
|
$
|
-
|
$
|
7
|
$
|
-
|
$
|
7
|
||||||||
Total
financial assets |
$
|
-
|
$
|
7
|
$
|
-
|
$
|
7
|
||||||||
Liabilities:
|
||||||||||||||||
Derivative liabilities
|
$
|
-
|
$
|
239
|
$
|
-
|
$
|
239
|
||||||||
Contingent consideration
in connection to the acquisitions *) |
-
|
-
|
63,695
|
63,695
|
||||||||||||
Total
financial liabilities |
$
|
-
|
$
|
239
|
$
|
63,695
|
$
|
63,934
|
Fair
value measurements using input type |
||||||||||||||||
Level
1 |
Level
2 |
Level
3 |
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Derivative assets
|
$
|
-
|
$
|
75
|
$
|
-
|
$
|
75
|
||||||||
Total
financial assets |
$
|
-
|
$
|
75
|
$
|
-
|
$
|
75
|
||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration
in connection to the acquisitions |
$
|
-
|
$
|
-
|
$
|
63,550
|
$
|
63,550
|
||||||||
Total
financial liabilities |
$
|
-
|
$
|
-
|
$
|
63,550
|
$
|
63,550
|
NOTE 4: |
ACQUISITIONS
|
a. |
Content IQ LLC |
b. |
Pub Ocean |
c. |
Vidazoo |
F - 23
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Initially
Reported
as
of
December 31,
2021
|
Measurement
Period
Adjustment
|
December 31,
2022
|
||||||||||
Net Assets
|
$
|
6,291
|
$
|
-
|
$
|
6,291
|
||||||
Technology
|
31,005
|
5,358
|
36,363
|
|||||||||
Customer
Relationship |
8,194
|
1,490
|
9,684
|
|||||||||
Deferred
Taxes |
(4,704
|
)
|
(820
|
)
|
(5,524
|
)
| ||||||
Goodwill
|
36,962
|
6,262
|
43,224
|
|||||||||
Net
assets acquired |
$
|
77,748
|
$
|
12,290
|
$
|
90,038
|
NOTE 5: |
PROPERTY AND EQUIPMENT, NET |
December
31, |
||||||||
2022
|
2021
|
|||||||
Cost:
|
||||||||
Computers and peripheral
equipment |
$
|
5,941
|
$
|
7,219
|
||||
Office furniture and
equipment |
2,777
|
2,686
|
||||||
Leasehold improvements
|
8,400
|
8,392
|
||||||
Capitalized software
|
12,473
|
12,473
|
||||||
Total cost
|
29,591
|
30,770
|
||||||
Less: accumulated depreciation
and amortization |
(25,980
|
)
|
(26,559
|
)
| ||||
Property and equipment,
net |
$
|
3,611
|
$
|
4,211
|
F - 24
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: |
GOODWILL AND OTHER INTANGIBLE
ASSETS, NET |
a. |
Goodwill |
Balance
as of January 1, 2021 |
$
|
152,303
|
||
Acquisition of Vidazoo
|
$
|
36,962
|
||
Balance
as of December 31, 2021 |
$
|
189,265
|
||
Vidazoo measurement period
adjustments |
$
|
6,262
|
||
Balance
as of December 31, 2022 |
$
|
195,527
|
F - 25
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b. |
Intangible assets, net |
December 31,
2021
|
Vidazoo
measurement
period
adjustments
|
Amortization
|
December 31,
2022
|
|||||||||||||
Acquired
technology |
$
|
84,417
|
$
|
5,358
|
$
|
-
|
$
|
89,775
|
||||||||
Accumulated amortization
|
(31,137
|
)
|
-
|
(9,886
|
)
|
(41,023
|
)
| |||||||||
Impairment
|
(8,749
|
)
|
-
|
-
|
(8,749
|
)
| ||||||||||
Acquired
technology, net |
44,531
|
5,358
|
(9,886
|
)
|
40,003
|
|||||||||||
Customer
relationships |
45,054
|
1,490
|
-
|
46,544
|
||||||||||||
Accumulated amortization
|
(23,218
|
)
|
-
|
(1,758
|
)
|
(24,976
|
)
| |||||||||
Impairment
|
(10,426
|
)
|
-
|
-
|
(10,426
|
)
| ||||||||||
Customer
relationships, net |
11,410
|
1,490
|
(1,758
|
)
|
11,142
|
|||||||||||
Tradename
and other |
18,503
|
-
|
-
|
18,503
|
||||||||||||
Accumulated amortization
|
(12,634
|
)
|
-
|
(240
|
)
|
(12,874
|
)
| |||||||||
Impairment
|
(5,110
|
)
|
-
|
-
|
(5,110
|
)
| ||||||||||
Tradename
and other, net |
759
|
-
|
(240
|
)
|
519
|
|||||||||||
Intangible
assets, net |
$
|
56,700
|
$
|
6,848
|
$
|
(11,884
|
)
|
$
|
51,664
|
December 31,
2020
|
Additions
|
Amortization
|
December 31,
2021
|
|||||||||||||
Acquired
technology |
$
|
53,412
|
$
|
31,005
|
$
|
-
|
$
|
84,417
|
||||||||
Accumulated amortization
|
(25,548
|
)
|
-
|
(5,589
|
)
|
(31,137
|
)
| |||||||||
Impairment
|
(8,749
|
)
|
-
|
-
|
(8,749
|
)
| ||||||||||
Acquired
technology, net |
19,115
|
31,005
|
(5,589
|
)
|
44,531
|
|||||||||||
Customer
relationships |
36,860
|
8,194
|
-
|
45,054
|
||||||||||||
Accumulated amortization
|
(22,161
|
)
|
-
|
(1,057
|
)
|
(23,218
|
)
| |||||||||
Impairment
|
(10,426
|
)
|
-
|
-
|
(10,426
|
)
| ||||||||||
Customer
relationships, net |
4,273
|
8,194
|
(1,057
|
)
|
11,410
|
|||||||||||
Tradename
and other |
18,503
|
-
|
-
|
18,503
|
||||||||||||
Accumulated amortization
|
(12,405
|
)
|
-
|
(229
|
)
|
(12,634
|
)
| |||||||||
Impairment
|
(5,110
|
)
|
-
|
-
|
(5,110
|
)
| ||||||||||
Tradename
and other, net |
988
|
-
|
(229
|
)
|
759
|
|||||||||||
Intangible
assets, net |
$
|
24,376
|
$
|
39,199
|
$
|
(6,875
|
)
|
$
|
56,700
|
F - 26
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Estimated
useful
life |
||||
Acquired technology
|
4-7
years |
|||
Customer relationships
|
5-8
years |
|||
Tradename and other
|
4-11
years |
2023
|
$
|
12,255
|
||
2024
|
11,718
|
|||
2025
|
8,283
|
|||
2026
|
6,834
|
|||
2027
|
6,590
|
|||
Thereafter
|
5,984
|
|||
$
|
51,664
|
NOTE 7: |
ACCRUED EXPENSES AND
OTHER LIABILITIES |
|
December
31, |
||||||||
2022
|
2021
|
|||||||
Employees and payroll
accruals |
$
|
20,788
|
$
|
19,597
|
||||
Obligation related to
acquisitions |
331
|
8,725
|
||||||
Government authorities
|
10,758
|
6,706
|
||||||
Accrued expenses
|
5,185
|
4,560
|
||||||
Other short-term liabilities
|
807
|
743
|
||||||
$
|
37,869
|
$
|
40,331
|
F - 27
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: |
DERIVATIVES AND HEDGING ACTIVITIES |
December
31, |
||||||||||
Balance
sheet |
2022
|
2021
|
||||||||
Derivatives
designate as hedging instruments: |
||||||||||
Foreign exchange forward
contracts and other derivatives |
''Prepaid expenses and
other current assets'' |
$
|
7
|
$
|
75
|
|||||
''Accrued expenses and
other liabilities'' |
239
|
-
|
||||||||
''Accumulated other comprehensive
income'' |
(232
|
)
|
75
|
|||||||
Derivatives
not designated as hedging instruments: |
||||||||||
Foreign exchange forward
contracts and other derivatives |
''Prepaid expenses and
other current assets'' |
18
|
21
|
|||||||
''Accrued expenses and
other liabilities'' |
$
|
31
|
$
|
3
|
Gain
recognized
in
Statements of
Comprehensive
Income
|
Gain
(loss) recognized
in
consolidated statements of
Income
|
||||||||||||||||
Year
ended December 31, |
|||||||||||||||||
Statement
of
Income
|
Year
ended December 31, |
||||||||||||||||
2022
|
2022
|
2021
|
2020
|
||||||||||||||
Derivatives
designated as hedging instruments: |
|||||||||||||||||
Foreign
exchange options and forward contracts |
$
|
307
|
"Operating
expenses" |
$
|
(948
|
)
|
$
|
167
|
$
|
764
|
|||||||
Derivatives
not designated as hedging instruments: |
|||||||||||||||||
Foreign
exchange options and forward contracts |
-
|
"Financial
expenses" |
(75
|
)
|
24
|
(166
|
)
| ||||||||||
Total
|
$
|
307
|
$
|
(1,023
|
)
|
$
|
191
|
$
|
598
|
F - 28
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: |
SHORT TERM AND LONG-TERM
DEBT |
NOTE 10: |
LEASES
|
Year
ended
December 31,
2022
|
||
Weighted average remaining
lease term |
2.94
Years |
|
Weighted average discount
rate |
5.23
% |
The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.
F - 29
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Maturities of operating lease liabilities were as follows:
Year
ending December 31, |
||||
2023
|
$
|
4,578
|
||
2024
|
4,588
|
|||
2025
|
2,798
|
|||
2026
|
777
|
|||
Total
lease payments *) |
$
|
12,741
|
||
Less
– imputed interest |
(1,261
|
)
| ||
Present
value of lease liabilities |
$
|
11,480
|
NOTE 11: |
SHAREHOLDERS' EQUITY
|
a. |
Ordinary shares |
b. |
Share Options, Restricted Share Units and Warrants
|
F - 30
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Weighted average |
||||||||||||||||
|
|
Number of options and RSUs |
|
|
Exercise price |
|
|
Remaining contractual term (in years) |
|
|
Aggregate intrinsic value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Outstanding at January 1, 2022 |
|
|
3,574,401 |
|
|
$ |
2.46 |
|
|
|
45.90 |
|
|
$ |
77,173 |
|
Granted |
|
|
1,532,548 |
|
|
|
0.01 |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
(1,824,876 |
) |
|
|
2.19 |
|
|
|
- |
|
|
|
35,811 |
|
Cancelled |
|
|
(217,399 |
) |
|
|
2.53 |
|
|
|
- |
|
|
|
- |
|
Outstanding at December 31, 2022 |
|
|
3,064,674 |
|
|
$ |
1.39 |
|
|
|
59.70 |
|
|
$ |
73,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2022 |
|
|
618,230 |
|
|
$ |
5.10 |
|
|
|
3.30 |
|
|
$ |
12,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31, 2022 |
|
|
3,264,763 |
|
|
$ |
1.46 |
|
|
|
0.88 |
|
|
$ |
138,673 |
|
Number of |
Weighted average |
|||||||||||||||
Performance
based options and RSUs |
Exercise
price
|
Remaining
contractual
term
(in years) |
Aggregate
intrinsic
value |
|||||||||||||
Outstanding at January
1, 2022 |
903,900
|
$
|
2.37
|
46.16
|
$
|
19,599
|
||||||||||
Granted
|
417,628
|
0.01
|
-
|
-
|
||||||||||||
Exercised
|
(650,794
|
)
|
2.83
|
-
|
12,493
|
|||||||||||
Cancelled
|
(78,223
|
)
|
0.01
|
-
|
-
|
|||||||||||
Outstanding
at December 31, 2022 |
592,511
|
$
|
0.51
|
70.64
|
$
|
14,690
|
||||||||||
Exercisable
at December 31, 2022 |
56,250
|
$
|
5.35
|
4.58
|
$
|
1,122
|
||||||||||
Vested
and expected to vest at December 31, 2022 |
658,487
|
$
|
0.46
|
0.39
|
$
|
29,926
|
F - 31
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Outstanding
|
Exercisable
|
|||||||||||||||||||||||||
Range
of exercise price |
Number
of options and RSUs |
Weighted
average remaining contractual life (years) |
Weighted
average exercise price |
Number
of options and RSUs |
Weighted
average remaining contractual life (years) |
Weighted
average exercise price |
||||||||||||||||||||
$
|
0.01
|
2,323,813
|
77.65
|
$
|
0.01
|
-
|
- |
$
|
-
|
|||||||||||||||||
2.52
– 3.38
|
237,699
|
2.39
|
3.19
|
237,699
|
2.39
|
3.19
|
||||||||||||||||||||
4.23
– 5.90
|
258,475
|
3.97
|
5.21
|
244,412
|
3.93
|
5.18
|
||||||||||||||||||||
6.23
– 8.34
|
180,932
|
3.18
|
6.73
|
105,834
|
3.32
|
6.80
|
||||||||||||||||||||
$
|
12.02
– 21.35
|
63,755
|
5.19
|
14.60
|
30,285
|
5.15
|
13.50
|
|||||||||||||||||||
3,064,674
|
59.70
|
$
|
1.39
|
618,230
|
3.30
|
$
|
5.10
|
The following table summarizes additional information regarding outstanding and exercisable performance-based options and RSUs under the Company's share Option Plan as of December 31, 2022:
Outstanding
|
Exercisable
|
|||||||||||||||||||||||||
Range
of exercise price |
Number
of options and RSUs |
Weighted
average remaining contractual life (years) |
Weighted
average exercise price |
Number
of options and RSUs |
Weighted
average remaining contractual life (years) |
Weighted
average exercise price |
||||||||||||||||||||
$
|
0.01
|
536,261
|
77.57
|
$
|
0.01
|
-
|
-
|
$
|
-
|
|||||||||||||||||
$
|
5.35
|
56,250
|
4.58
|
5.35
|
56,250
|
4.58
|
5.35
|
|||||||||||||||||||
592,511
|
70.64
|
$
|
0.51
|
56,250
|
4.58
|
$
|
5.35
|
F - 32
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized share-based compensation expenses related to its share-based awards in the consolidated statements of operations as follows:
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cost of revenue
|
$
|
446
|
$
|
171
|
$
|
102
|
||||||
Research and development
|
2,129
|
946
|
887
|
|||||||||
Selling and marketing
|
4,528
|
3,248
|
1,898
|
|||||||||
General and administrative
|
4,467
|
2,620
|
1,560
|
|||||||||
Total
|
$
|
11,570
|
$
|
6,985
|
$
|
4,447
|
c. |
As part of the acquisition of Undertone, the Company
granted warrants to purchase 66,666
ordinary shares, at a weighted average exercise price of $9.09
per share, to a third-party vendor that provides development services to Undertone. The warrants were exercisable until December 27, 2020
and wasn’t exercised by this date. No expense incurred in 2020. | |
F - 33
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: |
FINANCIAL INCOME (EXPENSE),
NET |
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Financial
income: |
||||||||||||
Interest income
|
$
|
4,993
|
$
|
539
|
$
|
287
|
||||||
Other
|
-
|
-
|
45
|
|||||||||
$
|
4,993
|
$
|
539
|
$
|
332
|
|||||||
Financial
expense: |
||||||||||||
Foreign currency translation
losses |
$
|
(264
|
)
|
$
|
(528
|
)
|
$
|
(1,537
|
)
| |||
Interest expense on debts
|
-
|
(119
|
)
|
(1,045
|
)
| |||||||
Bank charges and other
|
(227
|
)
|
(473
|
)
|
(388
|
)
| ||||||
$
|
(491
|
)
|
$
|
(1,120
|
)
|
$
|
(2,970
|
)
| ||||
Financial
income (expense), net |
$
|
4,502
|
$
|
(581
|
)
|
$
|
(2,638
|
)
|
NOTE 13: |
INCOME TAXES
|
a. |
Income before taxes on income
|
b. |
Taxes on income |
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Current taxes
|
$
|
16,758
|
$
|
7,891
|
$
|
2,498
|
||||||
Taxes in respect of previous
years |
(794
|
)
|
1,476
|
6
|
||||||||
Deferred tax benefit
|
(1,525
|
)
|
(2,758
|
)
|
(3,114
|
)
| ||||||
Total
|
$
|
14,439
|
$
|
6,609
|
$
|
(610
|
)
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Domestic
|
$
|
14,378
|
$
|
8,060
|
$
|
1,031
|
||||||
Foreign
|
61
|
(1,451
|
)
|
(1,641
|
)
| |||||||
Total
|
$
|
14,439
|
$
|
6,609
|
$
|
(610
|
)
| |||||
Domestic:
|
||||||||||||
Current taxes
|
$
|
15,938
|
$
|
7,447
|
$
|
1,466
|
||||||
Deferred tax benefit
|
(860
|
)
|
(980
|
)
|
(984
|
)
| ||||||
Taxes in respect of previous
years |
(700
|
)
|
1,593
|
549
|
||||||||
Total
- Domestic |
$
|
14,378
|
$
|
8,060
|
$
|
1,031
|
||||||
Foreign:
|
||||||||||||
Current taxes
|
$
|
820
|
$
|
444
|
$
|
1,032
|
||||||
Deferred tax benefit
|
(665
|
)
|
(1,778
|
)
|
(2,130
|
)
| ||||||
Taxes in respect of previous
years |
(94
|
)
|
(117
|
)
|
(543
|
)
| ||||||
Total
- Foreign |
$
|
61
|
$
|
(1,451
|
)
|
$
|
(1,641
|
)
| ||||
Total
income tax expense (benefit) (benefit) |
$
|
14,439
|
$
|
6,609
|
$
|
(610
|
)
|
c. |
Deferred Taxes |
December
31, |
||||||||
2022
|
2021
|
|||||||
Deferred
tax assets: |
||||||||
Net operating loss and
other losses carry forwards |
$
|
5,912
|
$
|
4,955
|
||||
Research and development
|
3,278
|
3,629
|
||||||
Intangible assets
|
(3,895
|
)
|
(3,251
|
)
| ||||
Other temporary differences
mainly relating to reserve and allowances |
2,943
|
2,539
|
||||||
Deferred
tax assets, before valuation allowance |
$
|
8,238
|
$
|
7,872
|
||||
Valuation allowance
|
2,459
|
2,644
|
||||||
Total
deferred tax assets, net |
$
|
5,779
|
$
|
5,228
|
||||
Domestic:
|
||||||||
Long term deferred tax
liability, net |
$
|
(791
|
)
|
$
|
(732
|
)
| ||
$
|
(791
|
)
|
$
|
(732
|
)
| |||
Foreign:
|
||||||||
Long term deferred tax
asset, net |
$
|
6,570
|
$
|
5,960
|
||||
$
|
6,570
|
$
|
5,960
|
|||||
Total
deferred tax asset, net |
$
|
5,779
|
$
|
5,228
|
F - 36
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. |
Reconciliation of the Company’s effective
tax rate to the statutory tax rate in Israel |
e. |
Income tax rates |
F - 37
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
f. |
Law for the Encouragement of Capital Investments,
1959 |
g. |
Technological Enterprise Incentives Regime (Amendment
73 to the Investment Law) |
F - 38
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
h. |
Uncertain tax positions |
December
31, |
||||||||
2022
|
2021
|
|||||||
Balance
at the beginning of the year |
$
|
6,928
|
$
|
4,525
|
||||
Increase (decrease) related
to prior year tax positions, net |
(590
|
)
|
1,285
|
|||||
Increase related to current
year tax positions, net |
3,062
|
1,118
|
||||||
Balance
at the end of the year |
$
|
9,400
|
$
|
6,928
|
i. |
Tax loss carry-forwards |
F - 39
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
j. |
US Tax: |
NOTE 14: |
EARNINGS PER SHARE
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Numerator:
|
||||||||||||
Net
income attributable to ordinary shares – basic and diluted |
$
|
99,225
|
$
|
38,706
|
$
|
10,225
|
||||||
Denominator:
|
||||||||||||
Number
of ordinary shares outstanding during the year |
44,871,149
|
34,397,134
|
26,687,145
|
|||||||||
Weighted
average effect of dilutive securities: |
||||||||||||
Employee options and
restricted share units |
3,200,489
|
3,432,591
|
2,110,602
|
|||||||||
Diluted
number of ordinary shares outstanding |
48,071,638
|
37,829,725
|
28,797,747
|
|||||||||
Basic
net earnings per ordinary share |
$
|
2.21
|
$
|
1.13
|
$
|
0.38
|
||||||
Diluted
net earnings per ordinary share |
$
|
2.06
|
$
|
1.02
|
$
|
0.36
|
||||||
Potential
ordinary shares equivalents excluded because their effect would have been anti-dilutive |
456,696
|
1,035,307
|
3,178,024
|
F - 40
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: |
MAJOR CUSTOMERS
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Customer A
|
35
|
%
|
37
|
%
|
51
|
%
|
NOTE 16: |
GEOGRAPHIC INFORMATION
|
Year
ended December 31, |
||||||||||||
2022
|
2021
|
2020
|
||||||||||
North America (mainly
U.S.) |
$
|
561,959
|
$
|
423,571
|
$
|
272,220
|
||||||
Europe
|
69,019
|
48,109
|
49,222
|
|||||||||
Other
|
9,278
|
6,818
|
6,621
|
|||||||||
$
|
640,256
|
$
|
478,498
|
$
|
328,063
|
F - 41
|
|
Incorporation
by Reference | ||||
Exhibit
No. |
Description |
Form |
File
No. |
Exhibit
No. |
Filing
Date |
Filed
/ Furnished |
20-F |
000-51694 |
1.1 |
March 16, 2022 |
|||
20-F |
000-51694 |
1.2 |
March 16, 2022 |
|||
* | ||||||
20-F |
000-51694 |
4.1 |
April
29, 2013 |
|||
* | ||||||
|
|
|
|
* | ||
20-F |
000-51694 |
4.16 |
March 19, 2019 |
| ||
20-F |
000-51694 |
4.17 |
March 27, 2018 |
| ||
20-F |
000-51694 |
4.6 |
March 25, 2021 |
| ||
20-F |
000-51694 |
4.7 |
March 25, 2021 |
| ||
20-F |
000-51694 |
4.8 |
March 16, 2020 |
| ||
|
|
|
|
* | ||
|
|
|
|
* | ||
|
|
|
|
* | ||
|
|
|
|
** | ||
|
|
|
|
** | ||
|
|
|
|
* | ||
101.INS |
Inline
XBRL Instance Document | |||||
101.SCH |
Inline
XBRL Taxonomy Extension Schema Document | |||||
101.CAL |
Inline
XBRL Taxonomy Extension Calculation Linkbase Document | |||||
101.DEF |
Inline
XBRL Taxonomy Definition Linkbase Document | |||||
101.LAB |
Inline
XBRL Taxonomy Extension Label Linkbase Document | |||||
101.PRE |
Inline
XBRL Taxonomy Extension Presentation Linkbase Document | |||||
104** |
Inline
XBRL for the cover page of this Annual Report on Form 20-F (embedded within the Inline XBRL document) |
* |
Filed
herewith. |
** |
Furnished
herewith. |
*** |
Certain
confidential information contained in this document, marked by brackets, was omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the Company if publicly disclosed. “[***]” indicates where the information has been omitted
from this exhibit. |
† |
Indicates
management contract or compensatory plan or arrangement. |
|
PERION
NETWORK LTD. |
| |
|
|
|
|
|
By: |
/s/
Doron Gerstel |
|
|
|
Name:
Doron Gerstel |
|
|
|
Title:
Chief Executive Officer |
|
|
|
|
|
|
By: |
/s/
Maoz Sigron |
|
|
|
Name:
Maoz Sigron |
|
|
|
Title:
Chief Financial Officer |
|
|
•
|
amend our articles of association (except as set forth below) or our memorandum of association;
|
|
•
|
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; or
|
|
•
|
appoint auditors.
|
|
•
|
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; 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;
|
|
•
|
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, or in connection with an administrative enforcement proceeding or financial sanction
instituted against him; and
|
|
•
|
reasonable litigation expenses, including attorneys’ fees, incurred by him or her as a result of an administrative enforcement proceeding instituted against him or her.
|
.7 | 10 |
.8 | PURCHASE PRICE | 10 |
.9 | ADJUSTMENTS | 12 |
.16 | 18 |
.17 | 18 |
.18 | 18 |
.19 | 19 |
.20 | 19 |
.21 | 19 |
.22 | 19 |
.23 | 19 |
.24 | 20 |
1. |
PURPOSE OF THE PLAN
|
2. |
DEFINITIONS
|
2.1 |
“Affiliate” means any “employing company” within the meaning of Section 102(a) of the Ordinance.
|
2.2 |
“Approved 102 Stock Award” means a Stock Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Stock Award
Holder.
|
2.3 |
“Board” means the Board of Directors of the Company.
|
2.4 |
“Capital Gain Stock Award” as defined in Section 5.3 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 Stock Award Holder’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 Stock Award Holder’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 |
“Change of Control” means an event following which the persons and/or entities that control the Company, directly or indirectly, at the time of adoption of this Plan,
shall cease to have the right to appoint, directly or indirectly, independently, or together with another person or entity (as a result of an agreement with such person or entity, or otherwise), 50% or more of the members of the Board.
|
2.7 |
“Chairman” means the chairman of the Committee.
|
2.8 |
“Committee” means the compensation committee appointed by the Board, which shall consist of no fewer than two members of the Board.
|
2.9 |
“Company” means Perion Network Ltd., an Israeli company.
|
2.10 |
“Companies Law” means the Israeli Companies Law 5759-1999.
|
2.11 |
“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.
|
2.12 |
“Date of Grant” means, the date of grant of a Stock Award, as determined by the Board and set forth in the Stock Award Agreement.
|
2.13 |
“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.
|
2.14 |
“Expiration date” means the date upon which the Stock Award shall expire, as set forth in Section 10.2 of the Plan.
|
2.15 |
“Fair Market Value” means as of any date, the value of a Share determined as follows:
|
2.16 |
“IPO” means the initial public offering of the Company’s shares.
|
2.17 |
“Plan” means this Equity Incentive Plan.
|
2.18 |
“ITA” means the Israeli Tax Authorities.
|
2.19 |
“Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.
|
2.20 |
“Ordinary Income Stock Award” ” as defined in Section 5.3 below.
|
2.21 |
“Option” means an option to purchase one or more Shares of the Company pursuant to the Plan.
|
2.22 |
“102 Stock Award” means any Stock Award granted to Employees pursuant to Section 102 of the Ordinance.
|
2.23 |
“3(i) Stock Award” means a Stock Award granted pursuant to Section 3(i) of the Ordinance to any person who is Non- Employee.
|
2.24 |
“Ordinance” means the 1961 Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.
|
2.25 |
“Purchase Price” means the price for each Share subject to a Stock Award.
|
2.26 |
“RSU” means Restricted Stock Unit, as defined in Section 13 below.
|
2.27 |
“Restricted Stock” means a Share issued under the Plan to a Stock Award Holder for such consideration, if any, and subject to such restrictions as established by the
Company, as detailed in Section 14 below.
|
2.28 |
“Sale” means the sale of all or substantially all of the issued and outstanding share capital of the Company. For purposes of a Sale, whether “all or substantially all
of the issued and outstanding share capital of the Company is to be sold”, shall be finally and conclusively determined by the Board in its absolute discretion.
|
2.29 |
“Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended.
|
2.30 |
“Share” means the ordinary shares, NIS 0.01 par value each, of the Company.
|
2.31 |
“Stock Award(s)” means all kinds of stock based awards, including, but not limited to, Options, Restricted Stock and Restricted Stock Unit.
|
2.32 |
“Stock Award Agreement” means the Stock Award agreement between the Company and a Stock Award Holder that sets out the terms and conditions of a Stock Award.
|
2.33 |
“Stock Award Holder” means a person who receives or holds a Stock Award under the Plan.
|
2.34 |
“Successor Company” means any entity the Company is merged to or is acquired by, in which the Company is not the surviving entity.
|
2.35 |
“Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
|
(iii) |
a merger, consolidation or similar transaction resulting in a Change of Control;
|
2.36 |
“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.
|
2.37 |
“Unapproved 102 Stock Award” means a Stock Award granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.
|
2.38 |
“Vested Stock Award” means any Stock Award, which has already been vested according to the Vesting Dates.
|
2.39 |
“Vesting Dates” means, as determined by the Board or by the Committee, the date as of which the Stock Award Holder shall be entitled to exercise or sell the Stock
Award, or receive Shares represented by a Stock Award, as applicable or part thereof, , as set forth in section 11 of the Plan.
|
3. |
ADMINISTRATION OF THE PLAN
|
3.1 |
The Board shall have the power to administer the Plan 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
Stock Awards Agreements, including, but not limited to, the number of Stock Awards to be granted to each Stock Award Holder, the number of Shares to be covered by each Stock Award, provisions concerning the time and the extent to which the
Stock Awards 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 Stock Award; (iv) make an election as to the type of 102 Approved Stock Award
|
3.4 |
The Board shall have the authority to grant, at its discretion, to the holder of an outstanding Stock Award, in exchange for the surrender and cancellation of such Stock Award, a new Stock Award having a
purchase price equal to, lower than or higher than the Purchase Price of the original Stock Award so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of
the Plan.
|
3.5 |
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 Plan 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 Stock Award 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 Plan or of any Stock Award 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 Plan 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. |
DESIGNATION OF PARTICIPANTS
|
4.1 |
The persons eligible for participation in the Plan as Stock Holders 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 Stock Awards; (ii) Non-Employees who are Israeli residents for tax purposes may only be granted 3(i) Stock Awards; (iii) Controlling Shareholders who are Israeli residents for tax purposes
may only be granted 3(i) Stock Awards; and (iv) U.S. Persons may only be granted Stock Awards s in accordance with the Addendum.
|
4.2 |
The grant of a Stock Award hereunder shall neither entitle the Stock Award Holder to participate nor disqualify the Stock Award Holder from participating in, any other grant of Stock Award pursuant to the
Plan or any other option, stock award or share plan of the Company or any of its Affiliates.
|
4.3 |
Anything in the Plan to the contrary notwithstanding, all grants of Stock Awards 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. |
DESIGNATION OF STOCK AWARDS PURSUANT TO SECTION 102
|
5.1 |
The Company may designate Stock Awards granted to Employees pursuant to Section 102 as Unapproved 102 Stock Awards or Approved 102 Stock Award.
|
5.2 |
The grant of Approved 102 Stock Award shall be made under this Plan adopted by the Board as described in Section 17 below, and shall be conditioned upon the approval of this Plan by the ITA.
|
5.3 |
Approved 102 Stock Award may either be classified as Capital Gain Stock Award (“CGSW”) or Ordinary Income Stock Award (“OISA”).
|
5.4 |
Approved 102 Stock Award 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 CGSW.
|
5.5 |
Approved 102 Stock Award 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 OISW.
|
5.6 |
The Company’s election of the type of Approved 102 Stock Awards as CGSW or OISA granted to Employees (the “Election”), shall be appropriately filed with the ITA in the
framework of the request for the approval of this Plan, which shall be submitted to ITA at least 30 days prior to the Date of Grant of an Approved 102 Stock Award. Such Election shall become effective beginning the first Date of Grant of an
Approved 102 Stock Awards under this Plan and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Stock Awards. The Election shall obligate the Company to grant only the type of Approved 102 Stock Awards it has elected, and shall apply to all Stock Awards Holders who were granted Approved 102 Stock Awards 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 Stock Awards simultaneously.
|
5.7 |
All Approved 102 Stock Awards 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 Stock Awards and Approved 102 Stock Awards 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 Plan and/or the Stock Awards 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 Plan and of the Stock Awards 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 Plan or the Stock Awards Agreement, shall be considered binding upon the Company and the Stock Awards Holder
|
6. |
TRUSTEE
|
6.1 |
Approved 102 Stock Awards which shall be granted under the Plan and/or any Shares allocated or issued upon exercise of such Approved 102 Stock Awards and/or other shares received subsequently following any
realization of rights and/or any rights granted to the Stock Awards Holder by virtue of the Approved 102 Stock Awards (including bonus shares), shall be allocated or issued to the Trustee and held for the benefit of the Stock Awards Holder
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 Stock Awards prior to the full payment of the Stock Awards Holder’s tax
liabilities arising from Approved 102 Stock Awards which were granted to him and/or any Shares allocated or issued upon exercise of Stock Awards.
|
6.3 |
Upon receipt of an Approved 102 Stock Awards, the Stock Awards Holder 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 Plan, or any Approved 102 Stock Awards or Share granted to him thereunder.
|
7. |
SHARES RESERVED FOR THE PLAN; RESTRICTION THEREON
|
7.1 |
The Company shall reserve sufficient number of authorized but unissued Shares for the purposes of the Plan, subject to adjustment as set forth in Section 9 below. Any Shares which remain unissued and which
are not subject to the outstanding Stock Awards at the termination of the Plan shall cease to be reserved for the purpose of the Plan. Should any Stock Award for any reason expire or be canceled prior to its exercise or relinquishment in
full, the Shares subject to the Stock Award may again be subjected to a Stock Award under the Plan or under the Company’s other stock awards plans.
|
7.2 |
Each Stock Award grant pursuant to the Plan shall be evidenced by a written Stock Award Agreement between the Company and the Stock Award Holder, in such form as the Board or the Committee shall from time to
time approve. Each Stock Award Agreement shall state, among other matters, the number of Shares to which the Stock Awards relates, the type of Stock Award granted thereunder (whether a CGSW, OISW, Unapproved 102 Stock Award or a 3(i) Stock
Award), 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 Plan.
|
8. |
PURCHASE PRICE
|
8.1 |
The Purchase Price of each Share subject to a Stock Award shall be determined by the Board or by the Committee in accordance with applicable law, subject to guidelines determined by the Board from time to
time. Each Stock Award Agreement will contain the Purchase Price determined for each Stock Award Holder.
|
8.2 |
The Purchase Price shall be payable upon the exercise of the Stock Award in a form satisfactory to the Committee, including without limitation, by cash or check. Notwithstanding the forms of exercise of Stock
Award 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 Stock Award Holder instructs to exercise his Options for an
immediate sale. The Board or the Committee, as applicable, 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 Stock Award Holder (that is the functional currency of the Company or the currency
in which the Stock Award Holder is paid) as determined by the Company.
|
8.4 |
Pursuant to Section 8.2 above, the Committee may decide in its own discretion that a Stock Award Holder may exercise his/her Stock Awards in such a manner that the number of exercised Shares, due to the
exercise of such Stock Awards, will reflect the premium component generated to such Stock Award Holder due to the exercise ("Cashless Exercise"). The premium component shall be calculated according
to the difference between the share price on the date of exercise to the Purchase Price of the Stock Award (the "premium component").
|
|
9. |
ADJUSTMENTS
|
9.1 |
In the event of a Transaction, immediately prior to the effective date of such Transaction, each Stock Award may, among other things, at the sole and absolute discretion of the Board, either:
|
9.2 |
Immediately following the consummation of the Transaction, all outstanding Stock Awards shall terminate and cease to be outstanding, except to the extent assumed by a Successor Company.
|
9.3 |
Notwithstanding the foregoing, and without derogating from the power of the Board pursuant to the provisions of the Plan, the Board shall have full authority and sole discretion to determine that any of the
provisions of Sections 9.1 (i) or 9.1 (ii) above shall apply in the event of a Transaction in which the consideration received by the shareholders of the Company is not solely comprised of securities of a Successor Company, or in which such
consideration is solely cash or assets other than securities of a Successor Company.
|
9.4 |
If the Company is voluntarily liquidated or dissolved while unexercised Stock Award remain outstanding under the Plan, the Company shall immediately notify all unexercised Stock Award holders of such
liquidation, and the Stock Award holders shall then have ten (10) days to exercise any unexercised Vested Stock Award 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 Stock Awards 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 Plan or subject to any Stock Award 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 Plan (as set forth in Section 7 hereof), in respect of which Stock Award 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, 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 Stock Award
Holder shall be obliged to sell or exchange, as the case may be, any Shares such Stock Award Holder purchased under the Plan, in accordance with the instructions issued by the Board in connection with the Transaction, whose determination
shall be final.
|
9.7 |
The Stock Award Holder acknowledges that in the event that the Company’s shares shall be registered for trading in any public market, Stock Award Holder’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 Stock Award Holder unconditionally agrees and accepts any such limitations.
|
9.8 |
Without derogating from the provisions of section 22 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 Stock
Award Holder.
|
9.9 |
Sale. Subject to any provision in the Articles of Association of the Company and to the Board’s sole and absolute discretion, in the event of a Sale, each Stock Award Holder shall be obligated to
participate in the Sale and sell his or her Shares and/or Stock Awards in the Company, provided, however, that each such Share or Stock Award shall be sold at a price equal to that of any other Share sold under the Sale (and, unless
determined otherwise by the Board, less the applicable Purchase Price), while accounting for changes in such price due to the respective terms of any such Stock Award, and subject to the absolute discretion of the Board.
|
10. |
TERM AND EXERCISE OF STOCK AWARD
|
10.1 |
Options shall be exercised by the Stock Award Holder 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 Stock Award is being exercised.
|
10.2 |
Stock Awards, to the extent not previously exercised, shall terminate forthwith upon the earlier of: (i) the date set forth in the Stock Award 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 Stock Award Holder 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 Stock Award Holder 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.
|
10.4 |
In the event of termination of employment or service, the unvested portion of the Stock Award Holder’s shall not vest and shall not become exercisable. The effective date of termination of employer-employee
relations or cessation of service shall constitute the termination date. In the event of termination of employment or service Vested Options granted to such Stock Award Holder 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 Stock Award Agreement, an Option may be exercised after the date of termination of Stock Award Holder’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 Stock Award Holder, 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 a Stock Award Holder 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 a Stock Award Holder of Unapproved 102 Stock Award, then such Stock Award Holder shall be required, as a condition to his right to exercise the Stock
Award granted to him, to secure the due, timely and complete payment of any tax duty imposed upon him (including in accordance with section 22 below), by the submission to the Company of any security or guaranty approved, in advance, by
the Board or the Committee.
|
10.8 |
The Stock Award Holders 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 Stock Award, 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 Stock Award Holder as holder of such Shares in
the Company’s register of shareholders upon exercise of the Stock Award in accordance with the provisions of the Plan, but in case of Stock Awards and Shares held by the Trustee, subject to the provisions of Section 6 of the Plan.
|
10.9 |
Any form of Stock Award Agreement authorized by the Plan may contain such other provisions as the Committee may, from time to time, deem advisable.
|
11. |
VESTING OF STOCK AWARDS
|
11.1 |
Subject to the provisions of the Plan, each Stock Award shall vest following the Vesting Dates and for the number of Shares as shall be provided in the Stock Award Holder Agreement. However, no Stock Award
shall be exercisable after the Expiration Date.
|
11.2 |
A Stock Award 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 Stock Awards may
vary.
|
12. |
SHARES SUBJECT TO RIGHT OF FIRST REFUSAL
|
12.1 |
Notwithstanding anything to the contrary in the Articles of Association of the Company, none of the Stock Award Holders shall have a right of first refusal in relation with any sale of shares in the
Company.
|
12.2 |
Any sale of Shares issued under the Plan by the Stock Award Holder that is not made in accordance with the Plan or the Stock Award Agreement shall be null and void.
|
13. |
RESTRICTED STOCK UNITS
|
13.1 |
Subject to the sole and absolute discretion and determination of the Board, the Board may decide to grant under the Plan, Restricted Stock Unit(s) (“RSU(s)”). A RSU
is a right to receive a Share of the Company, under certain terms and conditions, for a consideration of no more than the underlying Share’s nominal value. Upon the lapse of the Vesting Dates of a RSU, such RSU shall automatically vest
into an exercised Share of the Company (subject to adjustments under Section 9 herein) and the Stock Award Holder shall pay to the Company its nominal value. The Board, in its sole discretion, shall determine procedures from time to time
for payment of such nominal value by the Stock Award Holder or for collection of such amount from the Stock Award Holder by the Company. However, the Company shall have the full authority in its discretion to determine at any time that
said nominal value shall not be paid and that the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable laws regarding issuance of Shares for consideration that is lower
than the nominal value of such Shares.
|
13.2 |
Unless determined otherwise by the Board, in the event of a termination of employment or service, all RSUs granted to such Stock Award Holder that are not vested on the date of termination of employment or
service, shall terminate immediately and have no legal effect.
|
13.3 |
All other terms and conditions of the Plan applicable to Options, shall apply to RSUs, mutatis mutandis. It is clarified, that without deviating from the foregoing in Sub-Section 13.2, the provisions of
Sections 10.4 and 10.6 herein, shall, mutatis mutandis, apply to RSUs.
|
14. |
RESTRICTED STOCK
|
14.1 |
Restricted Stock may be granted upon such terms and conditions, as the Board shall determine.
|
14.2 |
Purchase Price. No monetary payment (other than payments made for applicable Taxes) shall be required as a condition of receiving Shares pursuant to a grant of Restricted Stock. Notwithstanding the
foregoing, the Stock Award Holder shall furnish consideration in the form of cash having a value not less than the nominal value of the Shares subject to an award of Restricted Stock. The Board, in its sole discretion, shall determine
procedures from time to time for payment of such nominal value by the Stock Award Holder or for collection of such amount from the Stock Award Holder by the Company. However, the Company shall have the full authority in its discretion to
determine at any time that said nominal value shall not be paid and that the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable laws regarding issuance of Shares for
consideration that is lower than the nominal value of such Shares.
|
14.3 |
Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock may (but need not) be made subject to Vesting Dates as described herein, as shall be established by the Board and set
forth in the applicable Stock Award Agreement evidencing such Stock Award. During any restriction period in which Shares acquired pursuant to an award of Restricted Stock remain subject to Vesting Dates, such Shares may not be sold,
exchanged, transferred, pledged, assigned or otherwise disposed of unless otherwise provided in the Plan. Upon request by the Company, each Stock Award Holder shall execute any agreement evidencing such transfer restrictions prior to the
receipt of Shares hereunder and the Company may place appropriate legends evidencing any such transfer restrictions on the relevant share certificates.
|
14.4 |
Voting Rights; Dividends and Distributions. Except as provided in this section and in any Stock Award Agreement, during any restriction period applicable to Shares subject to an award of Restricted Stocks
the Stock Award Holder shall have all of the rights of a shareholder of the Company holding Shares, including the right to receive all dividends and other distributions paid with respect to such Shares. However, in the event of a dividend
or distribution paid in Shares or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other
than normal cash dividends) to which the Stock Award Holder is entitled by reason of the Stock Award Holder’s award of Restricted Stocks shall be immediately subject to the same Vesting Dates as the Shares subject to the award of
Restricted Stocks with respect to which such dividends or distributions were paid or adjustments were made.
|
14.5 |
Termination of Employment or Service. Unless otherwise provided by the Board, in the event of termination of employment or service of a Stock Award Holder, for any reason, whether voluntary or involuntary
(including the Stock Award Holder’s death or disability), then the Stock Award Holder shall forfeit to the Company any Shares acquired by the Stock Award Holder pursuant to an award of Restricted Stocks which remain subject to Vesting
Dates as of the date of termination of employment or service.
|
14.6 |
All other terms and conditions of the Plan applicable to Options, shall apply to Restricted Stocks, mutatis mutandis. It is clarified, that without deviating from the foregoing in Sub- Section 14.5, the provisions of Section 10.4 and
10.6 herein, shall, mutatis mutandis, apply to Restricted Stocks.
|
15. |
DIVIDENDS
|
15.1 |
With respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Stock Award) allocated or issued upon the exercise of Stock Awards purchased by the Stock Award Holder and held by the
Stock Award Holder or by the Trustee, as the case may be, the Stock Award Holder 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.
|
15.2 |
During the period in which Shares are held by the Trustee on behalf of the Stock Award Holder, the cash dividends paid with respect thereto shall be paid directly to the Stock Award Holder, after deduction of any tax imposed on such
cash dividends.
|
16. |
RESTRICTIONS ON ASSIGNABILITY AND SALE OF STOCK AWARDS
|
16.1 |
No Stock Award 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 Plan, and during the lifetime of the Stock Award each and all of such Stock Award Holder’s rights to purchase Shares hereunder shall be exercisable only by the Stock Award Holder.
|
16.2 |
As long as the Stock Awards and/or Shares are held by the Trustee on behalf of the Stock Award Holder, all rights of the Stock Award Holder 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.
|
17. |
EFFECTIVE DATE AND DURATION OF THE PLAN
|
18. |
AMENDMENTS OR TERMINATION
|
19. |
GOVERNMENT REGULATIONS
|
20. |
CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
|
21. |
GOVERNING LAW & JURISDICTION
|
22. |
TAX CONSEQUENCES
|
22.1 |
Any tax consequences arising from the grant or exercise of any Stock Award, 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 Stock Award Holder), hereunder, shall be borne solely by the Stock Award Holder. 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 Stock Award Holder 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 Stock Award Holder.
|
22.2 |
The Company and/or, when applicable, the Trustee shall not be required to release any Share certificate to a Stock Award Holder until all required payments have been fully made.
|
22.3 |
To the extent provided by the terms of a Stock Award Agreement, the Stock Award Holder may satisfy any tax withholding obligation relating to the exercise or acquisition of Shares under a Stock Award by any
of the following means (in addition to the Company’s right to withhold from any compensation paid to the Stock Award Holder 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 Stock Award Holder as a result of the exercise or acquisition of Shares under the Stock Award 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 Stock Awards have
been held for at least 6 months from the date of exercise.
|
23. |
NON-EXCLUSIVITY OF THE PLAN
|
24. |
MULTIPLE AGREEMENTS
|
1. |
Purpose of the Addendum
|
2. |
Provisions of the Addendum
|
3. |
Eligibility
|
4. |
Aggregate Maximum Number of Shares Eligible for Stock Awards
|
5. |
Terms and Conditions of Options
|
6. |
Requirements of Law
|
7. |
Tax Withholding and Reporting
|
1.
|
Introduction
|
2.
|
Objectives
|
2.1.
|
To closely align the interests of the Executive Officers with those of Perion’s shareholders in order to enhance shareholder value;
|
|
2.2.
|
To align a significant portion of the Executive Officers’ compensation with Perion’s short and long-term goals and performance;
|
|
2.3.
|
To provide the Executive Officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity incentive programs and benefits, and to be
able to present to each Executive Officer an opportunity to advance in a growing organization;
|
|
2.4.
|
To strengthen the retention and the motivation of Executive Officers in the long term;
|
2.5.
|
To provide appropriate awards in order to incentivize superior individual excellency and corporate performance; and
|
|
2.6.
|
To maintain consistency in the way Executive Officers are compensated.
|
3.
|
Compensation Instruments
|
3.1.
|
Base salary;
|
|
3.2.
|
Benefits;
|
|
3.3.
|
Cash bonuses;
|
|
3.4.
|
Equity based compensation;
|
|
3.5.
|
Change of control terms; and
|
|
3.6.
|
Retirement and termination terms.
|
4.
|
Overall Compensation - Ratio Between Fixed and Variable Compensation
|
4.1.
|
This Policy aims to balance the mix of “Fixed Compensation” (comprised of base salary and benefits) and “Variable Compensation” (comprised of cash bonuses and equity-based compensation) in
order to, among other things, appropriately incentivize Executive Officers to meet Perion’s short and long-term goals while taking into consideration the Company’s need to manage a variety of business risks.
|
|
4.2.
|
The total annual target bonus and equity-based compensation per vesting annum (based on the fair market value at the time of grant calculated on a liner basis) of each Executive Officer
shall not exceed 90% of the total compensation package of such Executive Officer on an annual basis.
|
5.
|
Inter-Company Compensation Ratio
|
5.1.
|
In the process of drafting and updating this Policy, Perion’s Board and Compensation Committee have examined the ratio between employer cost associated with the engagement of the Executive
Officers, including directors, and the average and median employer cost associated with the engagement of Perion’s other employees (including contractor employees as defined in the Companies Law) (the “Ratio”).
|
|
5.2.
|
The possible ramifications of the Ratio on the daily working environment in Perion were examined and will continue to be examined by Perion from time to time in order to ensure that levels
of executive compensation, as compared to the overall workforce will not have a negative impact on work relations in Perion.
|
6.
|
Base Salary
|
6.1.
|
A base salary provides stable compensation to Executive Officers and allows Perion to attract and retain competent executive talent and maintain a stable management team. The base salary
varies among Executive Officers, and is individually determined according to the educational background, prior vocational experience, qualifications, company’s role, business responsibilities and the past performance of each Executive
Officer.
|
6.2.
|
Since a competitive base salary is essential to Perion’s ability to attract and retain highly skilled professionals, Perion will seek to establish a base salary that is competitive with
base salaries paid to Executive Officers in a peer group of other companies operating in technology sectors which are similar in their characteristics to Perion’s, as much as possible, while considering, among others, such companies’ size
and characteristics including their revenues, market capitalization, number of employees and operating arena (in Israel or globally), the list of which shall be reviewed and approved by the Compensation Committee. To that end, Perion shall
utilize as a reference, comparative market data and practices, which will include a compensation survey that compares and analyses the level of the overall compensation package offered to an Executive Officer of the Company with
compensation packages in similar positions to that of the relevant officer) in such companies. Such compensation survey may be conducted internally or through an external independent consultant. Information on such compensation survey shall
be included in the proxy statement published in connection with the annual general meeting of Perion’s shareholders.
|
6.3.
|
The Compensation Committee and the Board may periodically consider and approve base salary adjustments for Executive Officers. The main considerations for salary adjustment are similar to
those used in initially determining the base salary, but may also include change of role or responsibilities, recognition for professional achievements, regulatory or contractual requirements, budgetary constraints or market trends. The
Compensation Committee and the Board will also consider the previous and existing compensation arrangements of the Executive Officer whose base salary is being considered for adjustment. Any limitation herein based on the annual base salary
shall be calculated based on the monthly base salary applicable at the time of consideration of the respective grant or benefit.
|
7.
|
Benefits
|
7.1.
|
The following benefits may be granted to the Executive Officers in order, among other things, to comply with legal requirements:
|
7.1.1.
|
Vacation days in accordance with market practice;
|
7.1.2.
|
Sick days in accordance with market practice;
|
7.1.3.
|
Convalescence pay according to applicable law;
|
7.1.4.
|
Monthly remuneration for a study fund, as allowed by applicable law and with reference to Perion’s practice and the practice in peer group companies;
|
7.1.5.
|
Perion shall contribute on behalf of the Executive Officer to an insurance policy or a pension fund, as allowed by applicable law and with reference to Perion’s policies and procedures and
the practice in peer group companies (including contributions on bonus payments); and
|
7.1.6.
|
Perion shall contribute on behalf of the Executive Officer towards work disability insurance, as allowed by applicable law and with reference to Perion’s policies and procedures and to the
practice in peer group companies.
|
7.2.
|
Non-Israeli Executive Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed. Such customary benefits
shall be determined based on the methods described in Section 6.2 of this Policy (with the necessary changes and adjustments).
|
7.3.
|
In events of relocation or repatriation of an Executive Officer to another geography, such Executive Officer may receive other similar, comparable or customary benefits as applicable in the
relevant jurisdiction in which he or she is employed or additional payments to reflect adjustments in cost of living. Such benefits shall include reimbursement for out of pocket one-time payments and other ongoing expenses, such as housing
allowance, car allowance, and home leave visit, etc.
|
7.4.
|
Perion may offer additional benefits to its Executive Officers, which will be comparable to customary market practices, such as, but not limited to: cellular and land line phone benefits,
company car and travel benefits, reimbursement of business travel including a daily stipend when traveling and other business related expenses, insurances, other benefits (such as newspaper subscriptions, academic and professional studies),
etc., provided, however, that such additional benefits shall be determined in accordance with Perion’s policies and procedures.
|
8.
|
Annual Cash Bonuses - The Objective
|
8.1.
|
Compensation in the form of an annual cash bonus is an important element in aligning the Executive Officers’ compensation with Perion’s objectives and business goals. Therefore, a
pay-for-performance element, as payout eligibility and levels are determined based on actual financial and operational results, as well as individual performance.
|
8.2.
|
An annual cash bonus may be awarded to Executive Officers upon the attainment of pre-set periodical objectives and individual targets determined by the Compensation Committee (and, if
required by law, by the Board) at the beginning of each calendar year, or upon engagement, in case of newly hired Executive Officers, taking into account Perion’s short and long-term goals, as well as its compliance and risk management
policies. The Compensation Committee and the Board shall also determine applicable minimum thresholds that must be met for entitlement to the annual cash bonus (all or any portion thereof) and the formula for calculating any annual cash
bonus payout, with respect to each calendar year, for each Executive Officer. In special circumstances, as determined by the Compensation Committee and the Board (e.g., regulatory changes, significant changes in Perion’s business
environment, a significant organizational change, a significant merger and acquisition events etc.), the Compensation Committee and the Board may modify the objectives and/or their relative weights during the calendar year.
|
8.3.
|
In the event the employment of an Executive Officer is terminated prior to the end of a fiscal year, the Company may (but shall not be obligated to) pay such Executive Officer a full annual
cash bonus or a prorated one.
|
8.4.
|
The actual annual cash bonus to be awarded to Executive Officers shall be approved by the Compensation Committee and the Board.
|
9.
|
Annual Cash Bonuses - The Formula
|
9.1.
|
The annual cash bonus of Perion’s Executive Officers, other than the chief executive officer (the “CEO”), will be based on performance objectives and
a discretionary evaluation of the Executive Officer’s overall performance and subject to minimum thresholds based on overall company performance. The performance objectives will be approved by the Compensation Committee (and, if required by
law, by the Board) at the commencement of each calendar year (or upon engagement, in case of newly hired Executive Officers or in special circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company,
division or individual objectives. The performance measurable objectives, which include the objectives and the weight to be assigned to each achievement in the overall evaluation, may be based on actual financial and operational results
against annual plan, such as revenues, operating income and cash flow and may further include, divisional or personal objectives which may include operational objectives, such as market share, initiation of new markets and operational
efficiency, customer focused objectives, project milestones objectives and investment in human capital objectives, such as employee satisfaction, employee retention and employee training and leadership programs.
|
9.2.
|
The target annual cash bonus that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not exceed 100% of such Executive Officer’s annual
base salary.
|
9.3.
|
The maximum annual cash bonus including for overachievement performance that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not
exceed 150% of such Executive Officer’s annual base salary.
|
9.4.
|
The annual cash bonus of Perion’s CEO will be mainly based on performance measurable objectives and subject to minimum thresholds as provided in Section 8.2 above. Such performance
measurable objectives will be determined annually by Perion’s Compensation Committee (and, if required by law, by Perion’s Board) at the commencement of each calendar year (or upon engagement, in case of newly hired CEO or in special
circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company and personal objectives. These performance measurable objectives will include the objectives and the weight to be assigned to each achievement in
the overall evaluation.
|
9.5.
|
The less significant part of the annual cash bonus granted to Perion’s CEO, and in any event not more than 30% of the annual cash bonus, may be based on a discretionary evaluation of the
CEO’s overall performance by the Compensation Committee and the Board based on quantitative and qualitative criteria.
|
9.6.
|
The target annual cash bonus that the CEO will be entitled to receive for any given calendar year, will not exceed 100% of his or her annual base salary.
|
9.7.
|
The maximum annual cash bonus including for overachievement performance that the CEO will be entitled to receive for any given calendar year, will not exceed 150% of his or her annual base
salary.
|
10.
|
Other Bonuses
|
10.1.
|
Special Bonus. Perion may grant its Executive Officers a special bonus as an award for special achievements (such as in connection with mergers and acquisitions, offerings, achieving
target budget or business plan under exceptional circumstances or special recognition in case of retirement), as a retention award at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion) or as a non-compete grant, subject
to any additional approval as may be required by the Companies Law (the “Special Bonus”). The Special Bonus will not exceed 100% of the Executive Officer’s annual base salary.
|
10.2.
|
Signing Bonus. Perion may grant a newly recruited Executive Officer a signing bonus at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion), subject to any
additional approval as may be required by the Companies Law (the “Signing Bonus”). The Signing Bonus will not exceed 100% of the Executive Officer’s annual base salary.
|
10.3.
|
Relocation/ Repatriation Bonus. Perion may grant its Executive Officers a special bonus in the event of relocation or repatriation of an Executive Officer to another geography (the “Relocation Bonus”). The Relocation bonus will include customary benefits associated with such relocation and its monetary value will not exceed 100% of the Executive Officer’s annual base salary.
|
11.
|
Compensation Recovery (“Clawback”)
|
11.1.
|
In the event of an accounting restatement, Perion shall be entitled to recover from its Executive Officers the bonus compensation or performance-based equity compensation in the amount in
which such compensation exceeded what would have been paid under the financial statements, as restated, provided that a claim is made by Perion prior to the second anniversary of fiscal year end of the restated financial statements.
|
11.2.
|
Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:
|
11.2.1.
|
The financial restatement is required due to changes in the applicable financial reporting standards; or
|
11.2.2.
|
The Compensation Committee has determined that clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient.
|
11.3.
|
Nothing in this Section 11 derogates from any other “clawback” or similar provisions regarding disgorging of profits imposed on Executive Officers by virtue of applicable securities laws.
|
12.
|
The Objective
|
12.1.
|
The equity-based compensation for Perion’s Executive Officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus,
with its main objectives being to enhance the alignment between the Executive Officers’ interests with the long-term interests of Perion and its shareholders, and to strengthen the retention and the motivation of Executive Officers in the
long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.
|
12.2.
|
The equity-based compensation offered by Perion is intended to be in a form of share options and/or other equity-based awards, such as RSUs, in accordance with the Company’s equity
incentive plan in place as may be updated from time to time.
|
12.3.
|
All equity-based incentives granted to Executive Officers shall be subject to vesting periods in order to promote long-term retention of the awarded Executive Officers. Unless determined
otherwise in a specific award agreement approved by the Compensation Committee and the Board, grants to Executive Officers other than non-employee directors shall vest gradually over a period of between three (3) to five (5) years or based
on performance. The exercise price of options shall be determined in accordance with Perion’s policies, the main terms of which shall be disclosed in the annual report of Perion. Equity-based awards may include dividend adjustment
provisions.
|
12.4.
|
All other terms of the equity awards shall be in accordance with Perion’s incentive plans and other related practices and policies. Accordingly, the Board may, following approval by the
Compensation Committee, extend the period of time for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer’s awards, including, without limitation, in
connection with a corporate transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
13.
|
General Guidelines for the Grant of Awards
|
13.1.
|
The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience,
qualifications, role and the personal responsibilities of the Executive Officer.
|
13.2.
|
In determining the equity-based compensation granted to each Executive Officer, the Compensation Committee and Board shall consider the factors specified in Section 13.1 above, and in any
event the total fair market value of an equity-based compensation at the time of grant shall not exceed per vesting annum: (i) with respect to the CEO - 500% of his or her annual base salary; and (ii) with respect to each of the other
Executive Officers 300% of his or her annual base salary.
|
13.3.
|
The fair market value of the equity-based compensation for the Executive Officers will be determined according to acceptable valuation practices at the time of grant.
|
14.
|
Advanced Notice Period
|
15.
|
Additional Retirement and Termination Benefits
|
16.
|
Exculpation
|
17.
|
Insurance and Indemnification
|
17.1.
|
Perion may indemnify its directors and Executive Officers to the fullest extent permitted by applicable law, for any liability and expense that may be imposed on the director or the
Executive Officer, as provided in the indemnity agreement between such individuals and Perion, all subject to applicable law and the Company’s articles of association.
|
17.2.
|
Perion will provide directors’ and officers’ liability insurance (the “Insurance Policy”) for its directors and Executive Officers as follows:
|
17.2.1.
|
Reserved;
|
17.2.2.
|
The limit of liability of the insurer shall not exceed the greater of $100 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company
at the time of approval by the Compensation Committee; and
|
17.2.3.
|
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required by law, by the Board)
which shall determine that the sums are reasonable considering Perion’s exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market conditions, and it shall not materially affect the
Company’s profitability, assets or liabilities.
|
17.3.
|
Upon circumstances to be approved by the Compensation Committee (and, if required by law, by the Board), Perion shall be entitled to enter into a “run off” Insurance Policy of up to seven
(7) years, with the same insurer or any other insurance, as follows:
|
17.3.1.
|
The limit of liability of the insurer shall not exceed the greater of $100 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company
at the time of approval by the Compensation Committee;
|
17.3.2.
|
Reserved; and
|
17.3.3.
|
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required by law, by the Board)
which shall determine that the sums are reasonable considering the Company’s exposures covered under such policy, the scope of cover and the market conditions, and that the Insurance Policy reflects the current market conditions and that it
shall not materially affect the Company’s profitability, assets or liabilities.
|
17.4.
|
Perion may extend the Insurance Policy in place to include cover for liability pursuant to a future public offering of securities as follows:
|
17.4.1.
|
Reserved; and
|
17.4.2.
|
The Insurance Policy, as well as the additional premium shall be approved by the Compensation Committee (and if required by law, by the Board) which shall determine that the sums are
reasonable considering the exposures pursuant to such public offering of securities, the scope of cover and the market conditions and that the Insurance Policy reflects the current market conditions, and it does not materially affect the
Company’s profitability, assets or liabilities.
|
18.
|
The following benefits may be granted to Perion's Board members:
|
18.1.
|
All Perion’s non-employee Board members may be entitled to an annual cash fee of $62,500 per year (and in the case of the chairperson of the Board, $125,000 per year).
|
18.2.
|
The compensation of the Company’s external directors, if elected, shall be in accordance with the Companies Regulations (Rules Regarding the Compensation and Expenses of an External
Director), 5760-2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel), 5760-2000, as such regulations may be amended from time to time.
|
18.3.
|
Notwithstanding the provisions of Sections 18.1 above, in special circumstances, such as in the case of a professional director, an expert director or a director who makes a unique
contribution to the Company, such director’s compensation may be different than the compensation of all other directors and may be greater than the maximal amount allowed under Section 18.1.
|
18.4.
|
Each non-employee member of Perion’s Board may be granted with an annual equity-based compensation with a fair market value not to exceed $200,000 per vesting annum (calculated at the time
of grant on a liner basis). The equity-based compensation may be accelerated in the event of a change of control and include dividend adjustment provisions.
|
18.5.
|
All other terms of the equity awards shall be in accordance with Perion’s incentive plans and other related practices and policies. Accordingly, the Board may, following approval by the
Compensation Committee, extend the period of time for which an award is to remain exercisable or make provisions with respect to the acceleration of the vesting period of any awards, including, without limitation, in connection with a
corporate transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
18.6.
|
In addition, members of Perion’s Board may be entitled to reimbursement of expenses in connection with the performance of their duties.
|
19.
|
Nothing in this Policy shall be deemed to grant any of Perion’s Executive Officers or employees or any third party any right or privilege in connection with their employment by the Company.
Such rights and privileges shall be governed by the respective personal employment agreements. The Board may determine that none or only part of the payments, benefits and perquisites detailed in this Policy shall be granted, and is
authorized to cancel or suspend a compensation package or part of it.
|
20.
|
An Immaterial Change in the Terms of Employment of an Executive Officer other than the CEO may be approved by the CEO, provided that the amended terms of employment are in accordance with
this Policy. An “Immaterial Change in the Terms of Employment” means a change in the terms of employment of an Executive Officer with an annual total cost to the Company not exceeding an amount equal to two (2) monthly base salaries of such
employee.
|
21.
|
In the event that new regulations or law amendment in connection with Executive Officers’ and directors’ compensation will be enacted following the adoption of this Policy, Perion may
follow such new regulations or law amendments, even if such new regulations are in contradiction to the compensation terms set forth herein.
|
Legal Name of Subsidiary
|
|
Jurisdiction of Organization
|
Codefuel Ltd.
|
Israel
|
|
IncrediMail, Inc.
|
Delaware
|
|
Intercept Interactive, Inc.
|
Delaware
|
|
Vidazoo Ltd.
|
Israel
|
|
Content IQ LLC
|
New York
|
|
Pub Ocean Media UK Limited
|
England and Wales
|
|
Pub Ocean Inc.
|
Delaware
|
|
BT Media LLC
|
Nevada
|
|
Make Me Reach SAS, dba Paragone
|
France
|
|
Smilebox Inc.
|
Washington
|
1.
|
I have reviewed this annual report on Form 20-F of Perion Network Ltd.;
|
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.
|
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.
|
|
/s/ Doron Gerstel
Doron Gerstel
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 20-F of Perion Network Ltd.;
|
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.
|
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.
|
|
/s/ Maoz Sigron
Maoz Sigron
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.
|
|
By: /s/ Doron Gerstel
Doron Gerstel
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.
|
|
By: /s/ Maoz Sigron
Maoz Sigron
Chief Financial Officer
|
1)
|
Registration Statements on Form F-3 No. 333-254706 and Form F-3ASR No. 333-261541 of Perion Network Ltd., and
|
2)
|
Registration Statements on Form S-8 Nos. 333-133968, 333-152010, 333-171781, 333-188714, 333-192376, 333-193145,
333-203641, 333-208278, 333-216494, 333-237196, 333-249846, 333-262260 and 333-266928 of Perion Network Ltd.,
|
/s/ KOST FORER GABBAY & KASIERER
|
|
|
KOST FORER GABBAY & KASIERER
|
|
Tel Aviv, Israel
|
A member of Ernst & Young Global
|
|
March 15, 2023
|