☒
☐
October
to advance the clinical development of PRX-102, our product candidate for the treatment of Fabry disease.
Senior
Sr. Vice President and Chief Financial Officer
Corporate Secretary
Tel: 972-4-988-9488 | Fax: 972-4-988-9489 | Web: www.protalix.com
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JUNE 7, 2020
| TIME: | | | 1:00 p.m., Israel time | |
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| DATE: | | June 7, 2020 | | |
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PLACE: | | | Horn & Co., Law Offices, Amot Investments Tower, 2 Weizmann Street, 24th Floor, Tel Aviv 6423902, Israel | |
PURPOSE:
PURPOSES: 1. To elect seven members to the Board of Directors to serve for the ensuing year or until their respective successors have been duly elected. 2. To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed in the proxy statement that accompanies this notice. 3. To approve, on a non-binding advisory basis, on the frequency (every one, two or three years) that stockholders of the Company will have a non-binding, advisory vote on the compensation of the Company’s named executive officers. 4. In order to continue to recruit and retain talented employees, to adopt amendments to the Amended and Restated Protalix BioTherapeutics, Inc. 2006 Stock Incentive Plan to increase the number of shares of common stock available under the plan from 2,384,165 shares to 5,725,171 shares and to amend certain other terms of said plan as described in the proxy statement that accompanies this notice. 5. To ratify the appointment of Kesselman & Kesselman, Certified Public Accountant (lsr.), a member of PricewaterhouseCoopers International Limited, as our independent registered public accounting firm for the fiscal year ending December 31, 2020. 6. To transact such other business that is properly presented at the meeting or any adjournment. All of these proposals are |
This proposal is more fully described in the proxy statement that follows. You may vote at the meeting and any adjournments if you were the record owner of ourthe Company’s common stock at the close of business on October 11, 2019.April 10, 2020. A list of stockholders of record will be available at the meeting and, during the 10 days prior to the meeting, at the office of ourthe Company’s Corporate Secretary at the above address.
| | | | BY ORDER OF THE BOARD OF DIRECTORS | |
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| | | | Eyal Rubin | |
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Carmiel, Israel April 14, 2020 | | Sr. Vice President and Chief Financial Officer | |||
and Corporate Secretary | |
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SPECIAL
JUNE 7, 2020
Although not part of this proxy statement, we are also sending along with this proxy statement our Annual Report on Form 10-K which includes financial statements for the fiscal year ended December 31, 2019. You can also find a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 on the Internet through the electronic data system called EDGAR provided by the Securities and Exchange Commission, or the SEC, at http://www.sec.gov or through the Investor Relations section of our website at http://www.protalix.com. In addition, since we are also listed on the Tel Aviv Stock Exchange, we submit copies of all our filings with the SEC to the Israeli Securities Authority and the Tel Aviv Stock Exchange. Such copies can be retrieved electronically through the Tel Aviv Stock Exchange’s Internet messaging system (www.maya.tase.co.il) and through the MAGNA distribution site of the Israeli Securities Authority (www.magna.isc.gov.il). Our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and information on the website other than the proxy statement are not part of our proxy soliciting materials. Additional copies of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are available upon request.
• The election of seven members to our |
Our Board of Directors reservesto serve for the rightensuing year or until their respective successors have been duly elected (Zeev Bronfeld, Dror Bashan, Amos Bar Shalev, Pol F. Boudes, M.D., David Granot, Gwen A. Melincoff and Aharon Schwartz, Ph.D.).
appointment of Kesselman and Kesselman, Certified Public Accountant (Isr.), a member of PricewaterhouseCoopers International Limited, as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
Amendment to Certificatevotes cast by the shares of Incorporation, as amended, to (i) effect a reversecommon stock split at a ratio not less than 1-for-10 and not greater than 1-for-20, with the exact ratio to be set within that rangevoting in person or represented by proxy at the discretionannual meeting. This means that the nominees who receive the most votes will be elected to the Board of ourDirectors. In voting to elect nominees to the Board of Directors, beforestockholders may vote in favor of all the day priornominees or any individual nominee or withhold their votes as to all the specialnominees or any individual nominee. Shares not present at the annual meeting have no effect on the election of stockholders and (ii) reduce the total numberdirectors.
non-binding advisory resolution on executive compensation
our independent auditor
Consequently, proxies submitted by brokers for shares beneficially owned by other persons may not, in the absence of specific instructions from such beneficial owners, vote the shares in favor of or withhold votes from such proposals at the brokers’ discretion. Proposal 5 is a routine matter. Please complete your proxy and return it as instructed so your vote can be counted.
the plan; and for the ratification of the appointment of Kesselman & Kesselman.
Annual Meeting?
$40,000.
April 1, 2020.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Class (%) | ||||||
Board of Directors and Executive Officers | ||||||||
Zeev Bronfeld (1) | 2,162,481 | 1.5 | ||||||
Dror Bashan (2) | 100,000 | * | ||||||
Amos Bar Shalev | 1,680 | * | ||||||
David Granot | -- | -- | ||||||
Aharon Schwartz, Ph.D. | -- | -- | ||||||
Einat Brill Almon, Ph.D. (3) | 740,000 | * | ||||||
Yaron Naos (4) | 514,563 | * | ||||||
Eyal Rubin (5) | -- | * | ||||||
Yoseph Shaaltiel, Ph.D. (6) | 1,390,916 | * | ||||||
All executive officers and directors as a group (9 persons) (7) | 4,909,640 | 3.3 | ||||||
5% Holders | ||||||||
Citigroup Global Markets Inc. (8) | 9,214,117 | 5.8 | ||||||
Highbridge Capital Management LLC (9) | 16,468,605 | 9.99 | ||||||
UBS O’Connor LLC (10) | 9,411,764 | 6.0 |
Name and Address of Beneficial Owner | | | Amount and Nature of Beneficial Ownership | | | Percentage of Class (%) | | ||||||
Board of Directors and Executive Officers | | | | | | | | | | | | | |
Zeev Bronfeld(1) | | | | | 231,247 | | | | | | * | | |
Dror Bashan(2) | | | | | 30,000 | | | | | | * | | |
Amos Bar Shalev(3) | | | | | 2,668 | | | | | | * | | |
Pol F. Boudes, M.D.(4) | | | | | 2,540 | | | | | | * | | |
David Granot(5) | | | | | 2,500 | | | | | | * | | |
Gwen A. Melincoff(6) | | | | | 2,500 | | | | | | * | | |
Aharon Schwartz, Ph.D.(7) | | | | | 2,500 | | | | | | * | | |
Einat Brill Almon, Ph.D.(8) | | | | | 69,750 | | | | | | * | | |
Yaron Naos(9) | | | | | 47,455 | | | | | | * | | |
Eyal Rubin(10) | | | | | 10,000 | | | | | | * | | |
Yoseph Shaaltiel, Ph.D.(11) | | | | | 133,341 | | | | | | * | | |
All executive officers and directors as a group (11 persons)(12) | | | | | 534,501 | | | | | | 1.64 | | |
5% Holders | | | | | | | | | | | | | |
Alfred Akirov(13) | | | | | 2,503,615 | | | | | | 7.72 | | |
Angels Investments in Hi-Tech Ltd.(14) | | | | | 2,816,901 | | | | | | 8.68 | | |
Dexcel Pharma Technologies Ltd.(15) | | | | | 2,816,901 | | | | | | 8.68 | | |
Highbridge Capital Management LLC(16) | | | | | 3,332,754 | | | | | | 9.99 | | |
HIR Investments Ltd.(17) | | | | | 2,196,651 | | | | | | 6.77 | | |
Psagot Provident Funds and Pension Ltd.(18) | | | | | 3,223,156 | | | | | | 9.93 | | |
UBS O’Connor LLC(19) | | | | | 1,746,005 | | | | | | 5.23 | | |
* less
Name | Age | | | Position | |
Zeev Bronfeld |
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Dror Bashan | | | 53 | | | President and | |
Amos Bar Shalev | | | 67 | | | Director | |
Pol F. Boudes, M.D. | | | 62 | | | Director | |
David Granot | | | 73 | | | Director | |
Gwen A. Melincoff | | | 68 | | | Director | |
Aharon Schwartz, Ph.D. | | | 77 | | | Director | |
Zeev Bronfeld. Mr. Bronfeld has served as the Chairman of |
PROPOSAL: AMENDMENT TO EFFECT A REVERSE STOCK SPLIT AND REDUCTION IN AUTHORIZED SHARES
On September 22, 2019, our Board of Directors authorizedsince August 2019. He has served as a director of Protalix Ltd. since 1996 and approvedas our director since December 2006. Mr. Bronfeld brings to us vast experience in management and value building of biotechnology companies. He is an amendmentexperienced businessman who is involved in a number of biotechnology companies. He was a co-founder of Bio-cell Ltd., a former Israeli publicly-traded holding company that specialized in biotechnology companies and served as its Chief Executive Officer from 1986 through 2015. Mr. Bronfeld currently serves as a director of Entera Bio Ltd. (NASDAQ: ENTX), as well as The Trendlines Group (SGX:42T), D.N.A. Biomedical Solutions Ltd. (TASE:DNA) and Electreon Wireless Ltd. (TASE:ELWS) (formerly, Biomedix Incubator Ltd.), all of which are public companies. Mr. Bronfeld is also a director of a number of privately-held companies, most of which are involved in the life sciences industry, such as Contipi Medical Ltd and TransBiodiesel Ltd. From 2008 through January 2017, Mr. Bronfeld served as a director of Macrocure Ltd., a Nasdaq-listed company that merged into Leap Therapeutics, Inc. (NASDAQ:LPTX). Mr. Bronfeld received a B.A. in Economics from the Hebrew University in 1975. We believe Mr. Bronfeld’s qualifications to serve on our Board of Directors include his years of experience in the management of private and public Israeli companies, including life science companies.
Committee | | | Chairman | | | Membership | |
Audit and Finance Committee | | | David Granot | | | David Granot, Amos Bar Shalev and Aharon Schwartz, Ph.D. | |
Compensation Committee | | | Amos Bar Shalev | | | Amos Bar Shalev, David Granot and Aharon Schwartz, Ph.D. | |
Nominating Committee | | | Amos Bar Shalev | | | Amos Bar Shalev, David Granot and Aharon Schwartz, Ph.D. | |
Name(1) | | | Fees Earned or Paid in Cash ($) | | | Total ($) | | ||||||
Shlomo Yanai(2) | | | | | 123,656 | | | | | | 123,656 | | |
Zeev Bronfeld | | | | | 80,000 | | | | | | 80,000 | | |
Amos Bar Shalev | | | | | 80,000 | | | | | | 80,000 | | |
David Granot | | | | | 80,000 | | | | | | 80,000 | | |
Aharon Schwartz, Ph.D. | | | | | 80,000 | | | | | | 80,000 | | |
Name | | | Age | | | Position | |
Yoseph Shaaltiel, Ph.D. | | | 67 | | | Executive VP, Research and Development | |
Einat Brill Almon, Ph.D. | | | 61 | | | Senior Vice President, Product Development | |
Eyal Rubin | | | 44 | | | Sr. Vice President, Chief Financial Officer, Treasurer and Secretary | |
Yaron Naos | | | 56 | | | Senior Vice President, Operations | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Award(s) ($) | | | Option Award (s) ($) | | | All Other Compensation ($)(1) | | | Total ($) | | |||||||||||||||||||||
Dror Bashan(2) President and Chief Executive Officer | | | | | 2019 | | | | | | 174,725 | | | | | | | | | | | | | | | | | | 161,792 | | | | | | 55,082 | | | | | | 391,599 | | |
Moshe Manor(3) President and Chief Executive Officer | | | | | 2019 | | | | | | 362,073 | | | | | | | | | | | | | | | | | | 39,337 | | | | | | 214,221 | | | | | | 615,631 | | |
| | | 2018 | | | | | | 356,551 | | | | | | 150,000 | | | | | | | | | | | | 106,820 | | | | | | 104,283 | | | | | | 717,654 | | | ||
| | | 2017 | | | | | | 355,290 | | | | | | 374,000 | | | | | | | | | | | | 103,354 | | | | | | 105,056 | | | | | | 937,700 | | | ||
Yoseph Shaaltiel, Ph.D. Executive Vice President, Research and Development | | | | | 2019 | | | | | | 290,926 | | | | | | | | | | | | | | | | | | 94,012 | | | | | | 83,383 | | | | | | 468,321 | | |
| | | 2018 | | | | | | 288,719 | | | | | | | | | | | | | | | | | | 60,575 | | | | | | 84,148 | | | | | | 433,442 | | | ||
| | | 2017 | | | | | | 288,326 | | | | | | 62,176 | | | | | | | | | | | | 41,454 | | | | | | 80,786 | | | | | | 472,742 | | | ||
Einat Brill Almon, Ph.D. Senior Vice President, Product Development | | | | | 2019 | | | | | | 251,509 | | | | | | | | | | | | | | | | | | 93,916 | | | | | | 76,756 | | | | | | 422,181 | | |
| | | 2018 | | | | | | 249,583 | | | | | | 120,000 | | | | | | | | | | | | 59,089 | | | | | | 75,369 | | | | | | 504,041 | | | ||
| | | 2017 | | | | | | 249,243 | | | | | | 157,508 | | | | | | | | | | | | 37,686 | | | | | | 74,798 | | | | | | 519,235 | | | ||
Eyal Rubin(4) Senior Vice President, Chief Financial Officer | | | | | 2019 | | | | | | 81,521 | | | | | | | | | | | | 25,000 | | | | | | 20,468 | | | | | | 27,217 | | | | | | 154,206 | | |
Yossi Maimon, CPA(5) Vice President, Chief Financial Officer | | | | | 2019 | | | | | | 209,602 | | | | | | | | | | | | | | | | | | 9,060 | | | | | | 87,586 | | | | | | 306,248 | | |
| | | 2018 | | | | | | 282,649 | | | | | | 140,000 | | | | | | | | | | | | 59,089 | | | | | | 75,813 | | | | | | 557,551 | | | ||
| | | 2017 | | | | | | 282,197 | | | | | | 363,647 | | | | | | | | | | | | 37,686 | | | | | | 75,448 | | | | | | 758,978 | | | ||
Yaron Naos(6) Senior Vice President, Operations | | | | | 2019 | | | | | | 223,318 | | | | | | | | | | | | | | | | | | 79,868 | | | | | | 82,553 | | | | | | 385,739 | | |
| | | 2018 | | | | | | 218,058 | | | | | | | | | | | | | | | | | | 40,878 | | | | | | 80,338 | | | | | | 339,274 | | |
Name | | | Grant date | | | All other option awards: Number of securities underlying options (#) | | | Exercise or base price of option awards ($/Sh) | | | Grant date fair value of stock and option awards ($) | | |||||||||
(a) | | | (b) | | | (j) | | | (k) | | | (l) | | |||||||||
Dror Bashan | | | May 20, 2019 | | | | | 160,000 | | | | | | 4.69 | | | | | | 449,309 | | |
Eyal Rubin | | | September 22, 2019 | | | | | 80,000 | | | | | | 2.00 | | | | | | 96,869 | | |
| | | Option Awards | | |||||||||||||||||||||
Name | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | ||||||||||||
Dror Bashan | | | | | 20,000 | | | | | | 140,000 | | | | | | 4.69 | | | | | | 6/30/2029 | | |
Moshe Manor | | | | | 90,000 | | | | | | — | | | | | | 23.70 | | | | | | 10/31/2021 | | |
| | | | | 40,625 | | | | | | | | | | | | 5.60 | | | | | | 10/31/2021 | | |
Yoseph Shaaltiel | | | | | 14,500 | | | | | | — | | | | | | 69.00 | | | | | | 2/25/2020 | | |
| | | | | 27,500 | | | | | | — | | | | | | 17.20 | | | | | | 3/23/2025 | | |
| | | | | 21,875 | | | | | | 48,125 | | | | | | 5.60 | | | | | | 9/13/2028 | | |
Einat Brill Almon | | | | | 13,000 | | | | | | — | | | | | | 69.00 | | | | | | 2/25/2020 | | |
| | | | | 25,000 | | | | | | — | | | | | | 17.20 | | | | | | 3/23/2025 | | |
| | | | | 21,875 | | | | | | 48,125 | | | | | | 5.60 | | | | | | 9/13/2028 | | |
Eyal Rubin | | | | | 5,000 | | | | | | 75,000 | | | | | | 2.00 | | | | | | 9/22/2029 | | |
Yossi Maimon | | | | | 13,000 | | | | | | — | | | | | | 69.00 | | | | | | 2/25/2020 | | |
| | | | | 25,000 | | | | | | — | | | | | | 17.20 | | | | | | 9/22/2020 | | |
| | | | | 21,875 | | | | | | 48,125 | | | | | | 5.60 | | | | | | 9/22/2020 | | |
Yaron Naos | | | | | 11,500 | | | | | | | | | | | | 69.00 | | | | | | 2/25/2020 | | |
| | | | | 5,000 | | | | | | | | | | | | 17.20 | | | | | | 3/23/2025 | | |
| | | | | 18,750 | | | | | | 41,250 | | | | | | 5.60 | | | | | | 9/13/2028 | | |
The form of the proposed amendment to our Certificate to effect the Proposal is attached to this proxy statement as Appendix A. The amendment will (i) effect a reverse stock split of our common stock using a split ratio between, and including, 1-for-10 and 1-for-20, with the actual ratio within this range to be selected by the Board of Directors following stockholder approval and (ii) reduce the total number of shares of our common stock that we are authorized to issue from 350 million shares to 120 million shares. The Board of Directors believes that stockholder approval of a range of potential split ratios (rather than a single split ratio) provides the Board of Directors with the flexibility to achieve the desired results of the Proposal. If the stockholders approve this Proposal, the reverse stock split will be effected only upon a determination by the Board of Directors that the Proposal is in the best interests of the stockholders at that time. In connection with any determination to effect the Proposal, the Board of Directors will set the timing for the reverse stock split and select the specific ratio from within the range of ratios set forth herein. The Board of Directors reserves its right to elect not to proceed with and to abandon the Proposal if it determines, in its sole discretion, that this Proposal is no longer in the best interests of the stockholders. No further action by the stockholders will be required for the Board of Directors to either implement or abandon the Proposal.
In determining which reverse stock split ratio to implement, if any, following the receipt of stockholder approval, the Board of Directors may consider, among other things, factors such as:
No fractional shares will be issued in connection with the Proposal. To avoid the existence of fractional shares of the Company’s common stock, the Company will pay its stockholders the fair value of any fractional shares as a result of the implementation of the Proposal. The fair value of a fractional share will be equal to the product obtained by multiplying (i)$4.69 per share, the closing sales price of the common stock on the NYSE American on the effective date of grant. The options vest over four years on a quarterly basis in 16 equal increments, subject to certain conditions. Vesting of the reverse stock split by (ii) the number of shares of common stock held by such stockholder before the reverse stock split that would otherwise have been exchanged for a fractional share. Where shares are held in certificated form, the surrender of all old certificate(s) and receipt by American Stock Transfer & Trust Company, LLC (the “Exchange Agent”) of a properly completed and duly executed transmittal letteroptions will be required.
Asaccelerated in full upon a Corporate Transaction or a Change in Control, as those terms are defined in our Plan. Mr. Bashan’s employment agreement is terminable by our company on 180 days’ written notice for any reason. Mr. Bashan may terminate the agreement on 90 days’ written notice for any reason during its term. We may terminate the Agreement for cause without notice. Mr. Bashan is entitled to be insured by the company under a Manager’s Policy in lieu of October 11, 2019, 148,382,299 sharesseverance, company contributions towards vocational studies, annual recreational allowances, a company car, a company laptop and a company phone. Mr. Bashan is entitled to 24 working days of vacation.
Reasons for the Proposal
In our Quarterly Report on Form 10-Q for the period ended June 30, 2019, we announced that based on our then current cash resources and commitments, we believe we may not be able to maintain our current planned development activities and the corresponding level of expenditures for at least 12 months in the absence of a refinancing or restructuring of our existing obligations. These factors raise substantial doubt as to our ability to continue as a going concern. In addition, on August 30, 2019, we announced that we received a deficiency letter from NYSE American LLC (the “NYSE American”) stating that we are not in compliance with its continued listing standards as set forth in Section 1003(a)(i) – (iii) of the NYSE American Company Guide, or the Company Guide, as we have reported a stockholders’ equity deficiency as of June 30, 2019 and net losses in the five most recent fiscal years ended December 31, 2018. In response to these developments, we have been reviewing our capital structure and are evaluating and pursuing strategic alternatives to maximize stockholder value through financing and partnerships.
We need to take certain steps to regain compliance with the continued listing guidelines of the Company Guide and to resolve our going concern issue.law. The Board of Directors authorizedalso granted to Mr. Rubin options to purchase 80,000 shares of our common stock at an exercise price equal to $2.00 per share, the Proposal with the primary intent of facilitating potential transactions that may allow us to regain compliance with the continued listing guidelinesclosing sales price of the Company Guide.common stock on the NYSE American on the date of grant. The options vest over four years on a quarterly basis in 16 equal increments, subject to certain conditions. Vesting of the options will be accelerated in full upon a Corporate Transaction or a Change in Control, as those terms are defined in our Plan. In addition, contingent upon certain conditions, Mr. Rubin is entitled to a grant of restricted stock units with an aggregate value of $100,000, on an annual basis. Mr. Rubin’s employment agreement is terminable by our company on 180 days’ written notice for any reason. Mr. Rubin may terminate the agreement on 90 days’ written notice for any reason during its term. We may terminate the Agreement for cause without notice. Mr. Rubin is entitled to be insured by the company under a Manager’s Policy in lieu of severance, company contributions towards vocational studies, annual recreational allowances, a company car, a company laptop and a company phone. Mr. Rubin is entitled to 24 working days of vacation.
| Median Employee total annual compensation | | | | $ | 53,127 | | |
| PEO total annual compensation | | | | $ | 699,414 | | |
| Ratio of PEO to Median Employee Compensation | | | | | 13.16 | | |
We believe that the Proposal will make the Company’sa stock split or any future stock dividend or other similar change in our common stock more attractiveor our capital structure. As of December 31, 2019, options to a broader range of institutional and other investors and therefore facilitate our ability to take the actions necessary to regain compliance with the continued listing guidelines of the Company Guide and to resolve our going concern issue. It is our understanding that the current market price of the Company’s common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public.
The lack of shares available for future issuance significantly impedes our ability to take the actions necessary to regain compliance with the continued listing guidelines of the Company Guide and to resolve our going concern issue. Our Certificate of Incorporation currently authorizes the issuance of 350,000,000acquire 690,182 shares of common stock without giving effectremain available for grant under the amended Plan.
In addition to the foregoing, our common stock has been trading at a very low price. If the NYSE American were to consider our common stock to be a low-priced stock, our common stock could be subject to delisting due to the low stock price, which will have a material adverse effect on our liquidity and on the trading of our common stock and will make it harder for us to raise capital and sell securities.
We anticipate that we may issue shares of common stock in the future in connection with one or more of the following:
If additional authorized shares of common stock are available, transactions dependent upon the issuance of additional shares would be less likely to be impeded or undermined by delays and uncertainties occasionedotherwise excluded by, the need to obtain prior stockholder authorization. Tax Ordinance. In accordance with the terms and conditions imposed by the Tax Ordinance, grantees who receive awards under the amended Plan may be afforded certain tax benefits in Israel as described below.
If approved, our Board of Directors will have the discretion to issue the shares of common stock without further stockholder action, except as may be required for a particular transaction by applicable law or regulation, or the Company Guide. As ofCompensation Committee, referred to as the date of this Proxy Statement, we have no specific plans, agreements or commitments to issue any shares of common stock for which approval of“plan administrator,” will administer our amended Plan, including selecting the proposed Amendment is required.
We believe that the reverse stock split would not only establish a mechanism for the price of the Company’s common stock to continue to meet the NYSE American’s minimum price requirement, it will also make the Company’s common stock more attractive to a broader range of institutional and other investors. It is our understanding that many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. However, some investors may view Proposal negatively because it reducesgrantees, determining the number of shares of common stock available into be subject to each award, determining the public market.
Other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the marketexercise or purchase price of each award, and determining the Company’s common stock. As a result, there can be no assurance that the Proposal, if completed, will result in the intended benefits described above, that the marketvesting and exercise periods of each award.
In the event that the Proposal is not approved, we intend to continue to actively monitor the trading pricefair market value of our common stock on the NYSE American and will consider available optionsdate of grant; however, in certain circumstances, grants may be made at a lower price to resolve our non-compliance with the NYSE American listing rules. We believe that our ability to remain listed on the NYSE American would be significantly and negatively affected if the Proposal is not approved. In addition, if our stock is delisted, it will significantly and negatively affect our ability to obtain alternative debt or equity financing in order to support Company operations.
Possible EffectsIsraeli grantees who are residents of the Proposal
State of Israel. If, the Proposal is approved and implemented, the principal effect will behowever, incentive stock options are granted to proportionately decrease the number of outstanding shares of the Company’s commonan employee who owns stock based on the reverse stock split ratio selected by the Board of Directors. The Company’s common stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject to the periodic reporting and other requirements of the Exchange Act. The Proposal will not affect the registration of the Company’s common stock under the Exchange Act, or, except as described above, the listing of the Company’s common stock on the NYSE American. Following the implementation of the Proposal, we expect that the Company’s common stock will continue to be listed on the NYSE American under the symbol “PLX.”
Proportionate voting rights and other rights of the holders of the Company’s common stock will not be materially affected by the reverse stock split. For example, a holder of 2%possessing more than 10% of the voting power of all classes of our stock or the outstanding sharesstock of any parent or subsidiary of our company, the exercise price of any incentive stock option granted must equal at least 110% of the Company’s commonfair market value on the grant date and the maximum term of these incentive stock immediately prioroptions must not exceed five years. The maximum term of all other awards must not exceed 10 years (or five years in the case of an incentive stock option granted to the effectiveness of the reverseany participant who owns stock split will generally continue to hold 2%representing more than 10% of the voting power of the outstanding sharesall classes of the Company’s common stock after the reverse stock split. The number of stockholders of record will not be affected by the reverse stock split. If approved and implemented, the reverse stock split may result in some stockholders owning “odd lots” of less than 100 shares of the Company’s common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
The issuance of additional shares of common stock in connection with a future transaction may, among other things, have a dilutive effect on earnings per share and on stockholders’ equity and voting rights. Furthermore, future sales of substantial amounts of our common stock or the perception that these sales might occur, could adversely affect the prevailing market pricestock of any parent or subsidiary of our commoncompany). The plan administrator will determine the exercise or purchase price (if any) of all other awards granted under the amended Plan.
The Board of Directors believes, however, that these potential effects are outweighedparticipant only by the benefitsparticipant. Other awards shall be transferable by will or by the laws of descent or distribution and to the
Effect onparticipant’s immediate family. The amended Plan permits the Company’s Stockdesignation of beneficiaries by holders of awards, including incentive stock options.
The Company’s 2006 Stock Incentive is terminated for any reason other than cause, the participant may exercise awards that were vested as of the termination date for a period ending upon the earlier of 12 months from the date of termination (or such shorter or longer period set forth in the award agreement) or the expiration date of the awards unless otherwise determined by the plan administrator. If the service of a participant in the amended Plan is terminated for cause, the participant may exercise awards that were vested as amended, providesof the termination date for proportionate adjustments toa period ending upon the numberearlier of shares subject to14 days from the applicabledate of termination (or such shorter or longer period set forth in the award agreement) or the expiration date of the awards unless otherwise determined by the plan administrator.
Effect on Authorized but Unissued Shares of Capital Stock
As described above, the Proposal, if approved and implemented, will affect the authorized number of shares of our common stock as it will increase the ratio between our authorized capital stock and our issued capital stock. Accordingly, subject to the limits imposed by Part 7 of the NYSE American Rules, our Board of Directors could issue a relatively larger amount of capital stock without additional action by our stockholders. The issuance of additional shares of our capital stock would dilute the voting and economic rights of our existing stockholders. Additionally, the ability to issue a relatively larger amount of capital stock could allow our Board of Directors to take certain actions which would discourage hostile takeover attempts. The ability to resist takeover attempts could also allow our Board of Directors greater power to resist or delay changes in control or the removal of our management team.
Effect on Par Value
The amendment to the Certificate attached as Appendix A does not contemplate any change to the par value of our common stock, par value $0.001 per share.
Reduction in Stated Capital
Upon the effectiveness of the Reverse Stock Split, the stated capital on our balance sheet attributable to the Company’s common stock, which consists of the par value per share of the Company’s common stock multiplied by the aggregate number of shares of the Company’s common stock issued and outstanding, will be reduced in proportion to the size of the Reverse Stock Split. Correspondingly, our paid-in capital account, which consists of the difference between our stated capital and the aggregate amount paid to us upon issuance of all currently outstanding shares of the Company’s common stock, will be increased by the same amount by which the stated capital is reduced. The stockholders’ equity, in the aggregate, will remain unchanged.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the Proposal, this transaction is not the first step in a “going private transaction,” within the meaning of Rule 13e-3 of the Exchange Act, and will not produce, either directly or indirectly, any of the effects described in paragraph (a)(3)(ii) of Rule 13e-3.
Certain Material U.S. Federal Income Tax Consequences
The following paragraphs are intended as a summary of certain U.S. federal income tax consequences to U.S. taxpayers and the company with respect to Proposal, if effected. This summary does not attempt to describe all possible U.S. federal or other tax consequences of such actions or based on particular circumstances. In addition, it does not describe any state, local or non-U.S. tax consequences.
The following discussion is a general summary of certain U.S. federal income tax consequences of the Proposal that may be relevant to holders of the Company’s Common Stock that are U.S. Holders (as defined below) who hold such stock as a capital asset for U.S. federal income tax purposes. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions as of the date hereof, all of which may change, possibly with retroactive effect, resulting in U.S. federal income tax consequences that may differ from those discussed below. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to such holders in light of their particular circumstances or to holders that may be subject to special tax rules, including, without limitation: (i) holders subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations; (iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and their partners or members); (vii) traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; (viii) U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; (ix) persons holding the Company’s Common Stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; (x) persons who acquire shares of the Company’s Common Stock in connection with employment or other performance of services including pursuant to the exercise of compensatory stock options or the vesting of restricted shares of Common Stock; (xi) persons who hold Company Common Stock as qualified small business stock within the meaning of Section 1202 of the Code; (xii) U.S. expatriates; (xiii) holders which own or which are deemed to own 10% or more of the total vote or value of the Company’s stock; or (xiv) holders that are required to accelerate the recognition of any item of gross income with respect to the Company’s Common Stock as a resultportion of each award that is assumed or replaced, then such income being recognized on an applicable financial statement. In addition, this summary does not address the tax consequences arising under the laws of any foreign, state or local jurisdictionportion will automatically become fully vested and U.S. federal tax consequences other than U.S. federal income taxation. If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of the Company’s Common Stock, the tax treatmentexercisable immediately upon termination of a holderparticipant’s service if the participant is terminated by the successor company or us without cause within 12 months after the corporate transaction. With respect to the portion of each award that is a partner in the partnership generallynot assumed or replaced, such portion will depend upon the status of the partnerautomatically become fully vested and the activities of the partnership.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) regarding the U.S. federal income tax consequences of the Proposal, and there can be no assurance the IRS will not challenge the statements and conclusions set forth in this discussion or that a court would not sustain any such challenge.
EACH HOLDER OF COMMON STOCK SHOULD CONSULT SUCH HOLDER’S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE PROPOSAL TO SUCH HOLDER.
For purposes of the discussion below, a “U.S. Holder” is a beneficial owner of shares of the Company’s Common Stock that for U.S. federal income tax purposes is: (i) an individual citizen or resident of the United States; (ii) a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state or political subdivision thereof; (iii) an estate the income of which is subjectexercisable immediately prior to U.S. federal income taxation regardless of its source; or (iv) a trust, the administration of which is subject to the primary supervision of a U.S. court and as to which one or more U.S. persons have the authority to control all substantial decisions of the trust, or that has a valid election in effect to be treated as a U.S. person.
The Proposal is intended to constitute a “recapitalization” for U.S. federal income tax purposes. Assuming such treatment is correct, a U.S. Holder generally should not recognize gain or loss upon the receipt of the Company’s Common Stock in the Proposal except with respect to any cash paid in lieu of the issuance of fractional shares of the Company’s Common Stock that would otherwise be issued, as discussed below. A U.S. Holder’s aggregate tax basis in the shares of the Company’s Common Stock received pursuant to the Proposal should equal the aggregate tax basis of the shares of the Company’s Common Stock surrendered (excluding any portion of such U.S. Holder’s basis allocated to a fractional share), and such U.S. Holder’s holding period in the shares of the Company’s Common Stock received should include the holding period in the shares of the Company’s Common Stock surrendered. Treasury regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of the shares of the Company’s Common Stock surrendered to the shares of the Company’s Common Stock received pursuant to the Proposal. U.S. Holders of shares of the Company’s Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder who receives cash in lieu of a fractional share of Common Stock should generally recognize capital gain or loss equal to the difference between the amount of cash received and the holder’s tax basis allocable to the fractional share. Any capital gain or loss should be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year as of the effective date of the Proposal. U.S. Holders are urgedcorporate transaction so long as the participant’s service has not been terminated prior to consult their own tax advisors as tosuch date.
Effectivenessform of securities, cash or otherwise, or in which securities possessing more than forty percent (40%) of the Proposal
The Proposal, if approvedtotal combined voting power of our outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or
Exchange Procedures
Book-Entry Shares
If the Proposal is effected, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted by the exchange agent, through the Depository Trust Company’s Direct Registration System (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Proposal.
Exchange of Stock Certificates
If the Proposal is effected, stockholders holding certificated shares (i.e., shares represented by one or more physical stock certificates) will be required to exchange their old stock certificate(s) (“Old Certificate(s)”) for shares held in book-entry form through the Depository Trust Company’s Direct Registration System representing the appropriate number of shares of the Company’s common stock resulting from the Proposal. Stockholders of record upon the Effective Time will be furnished the necessary materials and instructions for the surrender and exchange of their Old Certificate(s) at the appropriate time by the Exchange Agent. Stockholders will not have to pay any transfer fee or other fee in connection with such exchange. As soon as practicable after the effectiveness of the Proposal, the Exchange Agent will send a transmittal letter to each stockholder advising such holder of the procedure for surrendering Old Certificate(s) in exchange for new shares to be held in book-entry form.
No Appraisal Rights
trust by a trustee. This alternative, while facilitating immediate exercise of vested options and sale of the underlying shares, will subject the optionee to the marginal income tax rate of up to 50% as well as payments to the National Insurance Institute and health tax on the date of the sale of the shares or options. Under the Delaware General Corporation Law,Plan, we may also grant to non-employees options pursuant to Section 3(I) of the Company’s stockholders are not entitled to dissenter’s rights or appraisal rights with respectTax Ordinance. Under that section, the income tax on the benefit arising to the Proposal described in this proposal,optionee upon the exercise of options and we will not independently provide the stockholders with any such rights.
Vote Required
The affirmative vote of a majority of the outstanding sharesissuance of common stock entitled to vote is required to approvegenerally due at the amendmenttime of exercise of the Certificateoptions.
Exchange Act.
| | | A | | | B | | | C | | |||||||||
Plan Category | | | Number of Securities to be Issued Upon Exercise of Outstanding Options | | | Weighted Average Exercise Price of Outstanding Options | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | |||||||||
Equity Compensation Plans Approved by Stockholders | | | | | 1,055,197 | | | | | $ | 13.34 | | | | | | 690,182 | | |
Equity Compensation Plans Not Approved by Stockholders | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 1,055,197 | | | | | $ | 13.34 | | | | | | 690,182 | | |
| New Plan Benefits Protalix BioTherapeutics, Inc. Amended and Restated 2006 Stock Incentive Plan | | ||||||
| Name and Position | | | Dollar Value ($) | | | Number of Units | |
| Eyal Rubin, Sr. VP & CFO | | | Annual Grant of RSUs with a value of $100,000 | | | |
the amount of the income recognized by the participant, subject to possible limitations imposed by Section 162(m) of the Code and so long as we withhold the appropriate taxes with respect to such income (if required) and the participant’s total compensation is deemed reasonable in amount. Any gain or loss on the participant’s subsequent disposition of the shares will receive long or short-term capital gain or loss treatment, depending on whether the shares are held for more than one year following exercise. We do not receive a tax deduction for any such gain.
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Audit Fees | | | | $ | 207,000 | | | | | $ | 207,343 | | |
Audit Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | $ | 36,000 | | | | | $ | 37,463 | | |
All Other Fees | | | | | — | | | | | | — | | |
AMENDED AND RESTATED 2006 STOCK INCENTIVE PLAN, AMENDED
(Pursuant to Section 242 of the , 2020)
Protalix BioTherapeutics, Inc.,this Plan are to attract and retain the best available personnel, to provide additional incentives to Employees, Directors and Consultants and to promote the success of the Company’s business.
1. The namesuccessor entity or its Parent subject to the Award and the exercise or purchase price thereof which at least preserves the compensation element of the corporation is Protalix BioTherapeutics, Inc. (the “Corporation”). The Certificate of IncorporationAward existing at the time of the Corporation was filedCorporate Transaction as determined in accordance with the Secretaryinstruments evidencing the agreement to assume the Award.
2. This Certificate of Amendment to Certificate of Incorporation of the Corporation was duly adopted byGrantee, including any amendments thereto.
3. Article IIIcomprised of individuals who are Continuing Directors.
“The Corporation is authorized to issue the following shares of capital stock: (a) 120,000,000 shares of common stock, par value $.001 per share (the “Common Stock”); and (b) 100,000,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). The voting rights, the rights of redemption and other relative rights and preferences of the Preferred Stock shall be establishedBoard appointed by the Board to administer the Plan.
Thethe Company.
Effective on [●], 2019 (the “Effective Date”), each [●]Company is the surviving entity but (A) the shares of Common Stock issued or outstanding (including treasury shares) immediately prior to the Effective Date shall be reclassified and combined into one validly issued, fully paid and nonassessable share of Common Stock automatically and without any action by the holder thereof upon the Effective Date and shall represent one share of Common Stock from and after the Effective Date (such reclassification and combination of shares, the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain at $0.001 par value per share. No fractional shares of Common Stock shall be issued as a result of the Reverse Stock Split and, in lieu thereof, upon surrender after the Effective Date of a certificate which formerly represented shares of Common Stock that were issued and outstanding immediately prior to such merger are converted or exchanged by virtue of the Effective Date,merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than forty percent (40%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger; or
Each stock certificate that, immediately prior to the Effective Date, represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Date shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of Common Stock after the Effective Date into which the shares formerly represented by such certificate have been reclassified (as well as the right to receive cash in lieu of fractional shares of Common Stock after the Effective Date); provided, however, that each person of record holding a certificate that represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Date shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of Common Stock after the Effective Date into which the shares of Common Stock formerly represented by such certificate shall have been reclassified.”
4. The aforesaid amendment was duly adoptedITA, in accordance with the provisions of Section 242102(a) of the General CorporationTax Ordinance and the regulations promulgated thereunder.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of AmendmentIsrael applicable to Certificate of Incorporation to be signed by its duly authorized President and Chief Executive Officer this day of , 2019.
PROTALIX BIOTHERAPEUTICS, INC. 2 Snunit Street Science Park POB 455 Carmiel, Israel 20100 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Dror Bashan and Eyal Rubin as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the shares of Common Stock of Protalix BioTherapeutics, Inc. held of record by the undersigned on October 11, 2019, at the Special Meeting of Stockholders to be held on December 9, 2019, or any adjournment or postponement thereof. UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH. (Continuedcontracts made and to be marked, dated and signed on the other side) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held on December 9, 2019. The Notice of Meeting, Proxy Statement and Proxy Card are available at: http://www.viewproxy.com/Protalix/2019SM
Please mark your votes in blue or black ink as shown here This proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder. If no specification is made, this proxy will be voted FOR the proposal. The undersigned acknowledges receipt from the Company before the execution of this proxy of the Notice of Special Meeting of Stockholders and the Proxy Statement for the Special Meeting of Stockholders. I plan to attend the meeting Date: FOR AGAINST ABSTAIN To approve an amendment to our Certificate of Incorporation, as amended, to (i)performed therein, without giving effect a reverse stock split at a ratio not less than 1-for-10 and not greater than 1-for-20, with the exact ratio to be set within that range at the discretion of our Board of Directors before the day prior to the special meetingprinciples of stockholders without further approval or authorizationconflict of our stockholders and (ii) reduce the total numberlaws. The competent courts of shares of our common stock that we are authorizedTel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to issue from 350 million shares to 120 million shares. Signature Signature (if held jointly) NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. CONTROL NUMBER Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.VIEW MATERIALS & VOTE PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone MAIL Vote Your Shares by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. TELEPHONE Vote Your Shares by Phone: Call 1 (866) 804-9616 Use any touch-tone telephone to vote your Shares. Have your proxy card available when you call. Follow the voting instructions to vote your shares. INTERNET Vote Your Shares on the Internet: Go to www.AALVote.com/PLXSM Have your proxy card available when you access the above website. Follow the prompts to vote your shares. CONTROL NUMBER SCAN TO THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.