<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ACCORD NETWORKS LTD.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
ACCORD NETWORKS LTD.
94 Derech Em Hamoshavot
Petach-Tikva, 49130 Israel
December 15, 2000
Dear Shareholders,
You are cordially invited to attend an extraordinary meeting of
shareholders of Accord Networks Ltd., to be held on January 12, 2001 at 10:00
a.m. at Accord's offices at 94 Derech Em Hamoshavot, Petach-Tikva, 49130 Israel.
At the meeting, you will be asked to:
1. Elect two external directors in accordance with Section 239 of the Israel
Companies Law, 1999, and in order to comply with the listing requirements
of the Nasdaq National Market;
2. Ratify and approve the remuneration, including the grant of options, to be
provided to Accord's external directors;
3. Authorize Jules L. DeVigne to fill the positions of chief executive officer
and chairman of the board of directors for a period of up to three years
from the date of the extraordinary meeting, in accordance with Section
121(c) of the Israel Companies Law, 1999;
4. Authorize and approve an automatic annual increase as of January 1/st/ of
each year, beginning as of January 1/st/, 2001, of the aggregate number of
ordinary shares reserved under our 2000 Share Ownership and Option Plan and
our 2000 Share Option Plan by the number of shares equal to four percent of
the total number of issued and outstanding ordinary shares and outstanding
options granted by Accord as of the close of business on December 31/st/ of
the previous year; and
5. Ratify and approve an increase from US$5 million to up to US$25 million in
our directors' and officers' liability insurance coverage and corresponding
premium payments made by Accord.
As you may know, on December 5, 2000, Accord entered into an Agreement and
Plan of Merger and Reorganization with Polycom, Inc. and Aruba Merger Sub Ltd.,
pursuant to which Accord will become a wholly-owned subsidiary of Polycom and
each outstanding ordinary share (and option or warrant to acquire an ordinary
share) of Accord will be exchanged for (or, in the case of options or warrants,
will become exercisable for) 0.3065 shares of Polycom common stock. We will
call and convene a separate extraordinary meeting of shareholders for the
purpose of approving, authorizing and ratifying the Agreement and Plan of
Reorganization and the merger. We presently anticipate holding the meeting on
or about February 22, 2001 at the principal executive offices of Accord in the
United States, although the time and place are subject to change. Notice of the
meeting and detailed information relating to the proposed merger will be mailed
to you before that meeting.
We look forward to greeting personally those shareholders who are able to
attend the meeting. If you do plan to attend, we ask that you bring with you
some form of personal identification and confirmation of your status as a
shareholder. However, whether or not you plan to attend the meeting, it is
important that your shares be represented. Accordingly, you are requested to
sign, date and mail the enclosed proxy in the envelope provided at your earliest
convenience.
Very truly yours,
/s/ Jules L. DeVigne
Jules L. DeVigne
Chief Executive Officer
<PAGE>
ACCORD NETWORKS LTD
94 Derech Em Hamoshavot
Petach-Tikva, 49130 Israel
To the Shareholders of Accord Networks Ltd.:
Notice is hereby given that an extraordinary meeting of Shareholders of
Accord Networks Ltd., an Israeli corporation, will be held on January 12, 2001
at 10:00 a.m., Israel time, at our offices at 94 Derech Em Hamoshavot, Petach-
Tikva, 49130 Israel, for the following purposes:
1. To elect two external directors in accordance with Section 239 of the
Israel Companies Law, 1999, and in order to comply with the listing
requirements of the Nasdaq National Market;
2. To ratify and approve the remuneration, including the grant of options, to
be provided to Accord's external directors;
3. To authorize Jules L. DeVigne to fill the positions of chief executive
officer and chairman of the board of directors for a period of up to three
years from the date of the extraordinary meeting, in accordance with
Section 121(c) of the Israel Companies Law, 1999;
4. To authorize and approve an automatic annual increase as of January 1/st/
of each year, beginning as of January 1/st/, 2001, of the aggregate number
of ordinary shares reserved under our 2000 Share Ownership and Option Plan
and our 2000 Share Option Plan by the number of shares equal to four
percent of the total number of issued and outstanding ordinary shares and
outstanding options granted by Accord as of the close of business on
December 31/st/ of the previous year; and
5. To ratify and approve an increase from US$5 million to up to US$25 million
in our directors' and officers' liability insurance coverage and
corresponding premium payments made by Accord.
Information relating to these matters is set forth in the attached proxy
statement. Shareholders of record at the close of business on December 6, 2000,
are entitled to notice of, and to vote at, the meeting. All shareholders are
cordially invited to attend the extraordinary meeting in person.
Shareholders who are unable to attend the meeting in person are requested
to complete, date and sign the enclosed form of proxy and return it promptly in
the pre-addressed envelope provided. No postage is required if mailed in the
United States. Shareholders who attend the meeting may revoke their proxies and
vote their shares in person. Joint holders of shares should note that, pursuant
to Article 63 of Accord's Articles of Association, the vote of the senior holder
of any share jointly owned, whether in person or by proxy, will be accepted to
the exclusion of the vote(s) of the other joint holder(s) of the share, and for
this purpose seniority will be determined by the order of the shareholders'
names in Accord's share register.
By order of the Board of Directors
/s/ Adam Vexler
Adam Vexler, Esq.
Secretary and Corporate Counsel
Atlanta, Georgia
December 15, 2000
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU
MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
ACCORD NETWORKS LTD.
EXTRAORDINARY MEETING OF SHAREHOLDERS
JANUARY 12, 2001
PROXY STATEMENT
The board of directors of Accord Networks Ltd. is furnishing this proxy
statement to solicit your proxy for the voting of your shares at an
extraordinary meeting of shareholders and at any adjournments. We will hold the
meeting on January 12, 2001 at 10:00 a.m. at our offices, which are located at
94 Derech Em Hamoshavot, Petach-Tikva, 49130 Israel. We are mailing this proxy
statement and the accompanying proxy card to shareholders on or about December
15, 2000.
VOTING
General
The securities that can be voted at the extraordinary meeting consist of
ordinary shares. Holders of ordinary shares are entitled to cast one vote for
each share held on the record date on each matter submitted to the shareholders
at the meeting.
The record date for determining the shareholders who are entitled to
receive notice of and to vote at the extraordinary meeting has been fixed as the
close of business on December 6, 2000. On the record date, 20,556,224 ordinary
shares were outstanding and eligible to be voted at the extraordinary
meeting.
Quorum and Vote Required
The presence at the extraordinary meeting, in person or by proxy, of the
holders of at least 50% of the ordinary shares entitled to vote will constitute
a quorum for the transaction of business at the extraordinary meeting. In
determining whether a quorum is present, we will apply the following principles:
. Proxies reflecting votes, abstentions and votes withheld will be
considered to be "ordinary shares entitled to vote" and will be
counted as present for purposes of determining the presence or absence
of a quorum.
. Broker non-votes will not be considered to be "ordinary shares
entitled to vote" and will not be counted as present for quorum
purposes. Broker non-votes are votes that brokers holding shares of
record for their customers are not permitted to cast under stock
exchange rules because the brokers have not received specific
instructions from their customers as to certain proposals and as to
which the brokers have advised us that they lack voting authority.
Proxies that are returned properly executed and not revoked will be voted
in accordance with the shareholder's directions. Where no direction is
specified, proxies will be voted as follows:
. FOR the election of the nominees for external director named in this
proxy statement;
. FOR ratification and approval of the remuneration, including the grant
of options, to be provided to Accord's external directors;
. FOR authorization for Jules L. DeVigne to fill the positions of chief
executive officer and chairman of the board of directors for a period
of up to three years;
<PAGE>
. FOR approval of an automatic annual increase as of January 1 of each
year, beginning as of January 1, 2001, in the aggregate number of
ordinary shares reserved under Accord's 2000 Share Ownership and
Option Plan and Accord's 2000 Share Option Plan by the number of
shares equal to four percent of the total number of issued and
outstanding ordinary shares and outstanding options granted by Accord
as of the close of business on December 31 of the previous year; and
. FOR ratification and approval of an increase from US $5 million to up
to US $25 million in our directors' and officers' liability insurance
coverage and corresponding premium payments made by Accord.
Approval of each proposal requires the favorable vote of the holders of a
majority of the outstanding shares represented in person or by proxy at a
meeting at which a quorum is present and voting. However, with respect to the
election of external directors, the majority vote must include at least one-
third of the total votes of the non-controlling shareholders who are present or
represented at the meeting and voting, or alternatively, the non-controlling
shareholders voting against either nominee must hold one percent or less of the
outstanding ordinary shares. With respect to authorization for Jules L. DeVigne
to fill the positions of chief executive officer and chairman of the board of
directors, the majority vote must include at least two-thirds of the non-
controlling shareholders present or represented at the meeting and voting. As
to all of the proposals, broker non-votes, abstentions and votes withheld will
have the practical effect of reducing the number of affirmative votes needed for
majority approval of a proposal by reducing the number of shares from which the
majority is calculated.
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives notice of his election to vote in
person. In addition, any proxy given pursuant to this solicitation may be
revoked prior to the annual meeting by executing and delivering to us a proxy
card bearing a later date or by giving written notice to Accord Networks Ltd.,
c/o Accord Networks, Inc., 9040 Roswell Road, Suite 450, Atlanta, Georgia,
30350-1877, Attention: Adam Vexler, Secretary and Corporate Counsel.
Polycom Merger
As you may know, on December 5, 2000, Accord entered into an Agreement and
Plan of Merger and Reorganization with Polycom, Inc. and Aruba Merger Sub Ltd.,
pursuant to which Accord will become a wholly-owned subsidiary of Polycom and
each outstanding ordinary share (and option or warrant to acquire an ordinary
share) of Accord will be exchanged for (or, in the case of options or warrants,
will become exercisable for) 0.3065 shares of Polycom common stock. We will call
and convene a separate extraordinary meeting of shareholders for the purpose of
approving, authorizing and ratifying the Agreement and Plan of Reorganization
and the merger. We presently anticipate holding the meeting on or about February
22, 2001 at the principal executive officers of Accord in the United States,
although the time and place are subject to change. Notice of the meeting and
detailed information relating to the proposed merger will be mailed to you
before that meeting.
Cost of Proxy Solicitation
We are soliciting your proxy on behalf of the board of directors, and we
will bear all of the related costs. Brokers, banks and others holding shares in
their names or in the names of their nominees will forward copies of the proxy
solicitation materials to beneficial owners and will seek authority for
execution of proxies. We will reimburse them for their reasonable expenses in so
doing. Our employees also may communicate with you to solicit your proxy, but we
will not pay them any additional compensation for doing so.
-2-
<PAGE>
PROPOSAL 1
ELECTION OF TWO EXTERNAL DIRECTORS
The Nasdaq National Market rules require that at least three independent
directors serve on our board of directors. Similarly, Section 239 of the Israel
Companies Law, 1999, or the Companies Law, requires that Israeli companies whose
shares are publicly traded have at least two external directors on their board
of directors. Matty Karp is a present member of our board of directors and
qualifies as an independent director. In order to comply with the Nasdaq
National Market rules and the Companies Law, our board of directors recommends
to our shareholders that two additional independent, external directors be
elected to our board of directors, which will then be comprised of six
directors.
The board of directors has nominated the following persons for election as
independent, external directors:
Eren Privman, age 47, has served as vice president of Amdocs (Israel) Ltd.
since 1997. Amdocs is a public company that provides customer care and billing
solutions for telecommunication companies. Prior to accepting his present
position, Mr. Privman served as managing director of Directory Technology, an
affiliate of Amdocs in Australia that provides systems for directory publishing.
Gila Silber Fiengold, age 46, has performed economic consulting services
since 1993 through TOMDAN Ltd., a company she founded. Ms. Fiengold has served
on the boards of directors of several companies, including Orit-The Center for
Research and Development Ltd., the Israel Corporation at Rami Ceramics Ltd. and
Perio Ltd. Ms. Fiengold has a masters degree in economics from Technion - the
Israel Institute of Technology and holds a bachelors degree in economics from
Haifa University.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR EACH OF THE NOMINEES LISTED ABOVE.
Requirements of External Directors. Under the Companies Law, no person may
be appointed as an external director if the person or the person's relative,
partner, employer or any entity under the person's control, had within the
preceding two years any affiliation with the company or with any entity
controlling or controlled by or under the common control with the company. The
term affiliation includes: (1) an employment relationship; (2) a business or
professional relationship maintained on a regular basis; (3) control; and (4)
service as an office holder, including as a director. Furthermore, no person may
serve as an external director if the person's position or other business
activities create, or may create, a conflict of interest with the person's
responsibilities as an external director or interfere with the person's ability
to serve as an external director, or if the person is a member or employee of
the Israel Securities Authority or of an Israeli stock exchange. If at the time
of election of an external director all other directors are of the same gender,
the external director nominated to be elected must be of the other gender.
External directors are elected for a term of three years and may be re-
elected for one additional three year term. Each committee of a company's board
that has the authority to exercise powers of the board of directors is required
to include at least one external director and its audit committee must include
all external directors.
Under the Companies Law an external director cannot be dismissed from
office unless one of the events described below occurs:
. The board of directors determines that the external director no longer
meets the statutory requirements for holding the office or that he or she
is in breach of his or her fiduciary duties. The shareholders must then
vote to remove the external director after he or she has been given the
opportunity to present his or her position. The majority required to remove
an external director is the same majority required to appoint an external
director.
-3-
<PAGE>
. A court determines, upon a request of a director or a shareholder, that the
external director no longer meets the statutory requirements of an external
director or that he or she is in breach of his or her fiduciary duties to
the company.
. A court determines, upon a request of the company or a director,
shareholder or creditor of the company, that the external director is
unable to fulfill his or her duties or has been convicted of specified
crimes.
Incumbent Directors and Officers:
Our incumbent directors and our executive officers are:
Jules L. DeVigne, age 60, has served as chief executive officer and as a
director of Accord Networks Ltd. since May 1997 and as chairman since June 1999.
Before joining Accord, Mr. DeVigne served as vice president, worldwide sales for
VideoServer, Inc. from October 1992 until May 1997. Mr. DeVigne also served as
president of Innovative Technology, a manufacturer of voicemail and interactive
voice response systems, from March 1990 until June 1992, and as senior vice
president of sales and marketing of Netrix Corporation, a manufacturer of wide
area networks, from February 1989 until March 1990. Mr. DeVigne has also held
various sales and executive management positions with Paradyne Corporation and
International Business Machines Corporation.
Sigi Gavish, age 49, co-founded Accord Networks Ltd. in 1992 and serves as
our chief technology officer and a director. Before founding Accord Networks
Ltd., Mr. Gavish spent sixteen years working for Tadrian Telecommunications,
Israel's largest telecommunications company, where he managed numerous research
and development projects and served as chief engineer of Tadrian's first
generation of ISDN-compatible PBXs that integrate voice, data and video
communications. Since 1992, Mr. Gavish has represented the Israeli electronics
industries on two technical committees of the European Telecommunications
Standards Institute. Mr. Gavish holds a B.S.C. degree in electrical engineering
from the Technion Israel Institute of Technology.
Philip B. Keenan, age 37, has served as senior vice president, worldwide
sales and marketing of Accord Networks Ltd. since April 1998. Before joining
Accord, Mr. Keenan served as the vice president of international sales for
VideoServer, Inc. from May 1994 until February 1998.
Amnon Shachar, age 48, has served as the senior vice president and general
manager, Israel operations of Accord Networks Ltd. since April 1998. Before
joining Accord, Mr. Shachar served as vice president of research and
development, engineering and support at Karat Digital Press, a joint venture
between Scitex and KBA from 1997 to 1999. Mr. Shachar also held a variety of
technology managerial positions, his last position as a colonel, within a
technological unit of the Israeli Defense Forces from 1973 to 1997. Mr. Shachar
holds a B.S.C. degree in electrical engineering from the Technion Israel
Institute of Technology and an executive M.B.A. from the University of Tel Aviv.
David P. Gallagher, age 50, has served as vice president, business
development since September 1998. Before joining Accord Networks Ltd., Mr.
Gallagher was president of Galmark, a consulting firm focused on the strategic
growth of high-tech companies from January 1997 until August 1998. Mr. Gallagher
previously served as the vice president of business development and marketing at
TechForce Corporation and as vice president of marketing and North American
sales at FiberCom Corporation.
Jeffrey B. Bradley, age 57, has served as chief financial officer of Accord
Networks Ltd., since July 1999. Mr. Bradley has also served as a partner of
Tatum CFO Partners, a firm of professional chief financial officers, since 1997.
Mr. Bradley served as executive vice president, chief financial officer and
acting chief operating officer of Metals Recycling Technologies Corp., a company
that developed chemical processing technology for waste products generated from
steel companies, from 1995 until 1997 and as executive vice president and chief
financial officer of The Landmarks Group, a real estate development company,
from 1982 until 1994. Mr. Bradley holds a B.S. in accounting and an M.B.A. in
finance and marketing from Bowling Green State University. Mr. Bradley is a
certified public accountant and a member of the AICPA and the Financial
Executives Institute.
-4-
<PAGE>
Matty Karp, age 50, has served as one of our directors since 1994. Mr. Karp
has been chief executive officer of Concord Technology Ltd. since 1997. Since
1994, Mr. Karp has served as chief executive officer of Nitzanim Fund (1993)
Ltd., chief executive officer of Kardan Technologies, Ltd. and active chairman
of Concord Ventures. Between 1979 and 1994, Mr. Karp held various executive
positions at Elbit Ltd., an Israeli electronics manufacturer, most recently the
position of senior executive. Mr. Karp also serves on the boards of director of
Galileo Technology and El-Al Israel Airlines.
Jos C. Henkens, age 48, has served as one of our directors since 1997 and
has participated as an observer in board meetings since 1996. Mr. Henkens has
been a general partner of Advanced Technology Ventures since 1983. Mr. Henkens
also serves as a director of Actel Corporation, Credence Systems Corporation,
Docent, Inc. and Seagull Business Software, BV, as well as a number of private
corporations.
Meetings of the Board of Directors and Committee
The board of directors conducts its business through meetings of the full
board and through committees of the board. During the fiscal year ended December
31, 1999, the board of directors held six meetings and acted by unanimous
written consent on five occasions. Each director attended at least 75% of the
meetings held by our board of directors and by committees of the board on which
such director served during the past fiscal year.
Our board of directors has the following committees:
Audit Committee
Our audit committee presently consists of Messrs. Karp and Henkens,
although Mr. Henkens intends to resign as a member of the audit committee after
the election of Mr. Privman and Ms. Silber Fiengold. After the planned
appointment of Mr. Privman and Ms. Silber Fiengold to the audit committee, the
audit committee will meet the requirement of the Companies Law that at least
three directors, including all of the external directors, must serve on a public
company's audit committee. Their appointments also will bring Accord into
compliance with the requirements of the Nasdaq National Market regarding
independent directors and their service on audit committees, for which we had
previously received an extension. Each of the members of the audit committee is
financially literate and has the financial management expertise required by the
Nasdaq rules.
Pursuant to the audit committee charter, a copy of which is attached as
Appendix A hereto, the duties of the audit committee include reviewing our
audited year-end financial statements and discussing the statements with our
management and independent auditors. The committee also is charged with
discussing with our independent auditors our internal financial controls and
standards as well as the nature of the independent relationship between Accord
and the auditors. The responsibilities of the audit committee also include
identifying flaws in the management of Accord's business, recommending
corrections to the board of directors and considering actions and transactions
that by law require approval of the audit committee.
Compensation Committee
Our compensation committee consists of Messrs. Karp and Henkens. The
compensation committee reviews and evaluates the salaries, supplemental
compensation and benefits of our officers, reviews general policy matters
relating to compensation and benefits of our employees and makes recommendations
concerning these matters to the board of directors. The compensation committee
is also authorized to administer our employee option plans. Under the Companies
Law, the compensation committee may only make recommendations to the board of
directors about the grant of options and may need to seek the approval of the
audit committee, the board of directors and the shareholders for specified
compensation decisions.
The board of directors nominates persons for election to the board.
Pursuant to our articles of association, shareholders also may nominate persons
for election to the board. For a description of requirements regarding
shareholder proposals, see "Shareholder Proposals for the 2001 Annual Meeting of
Shareholders."
-5-
<PAGE>
Directors' Compensation
We pay each of our non-employee directors who is not an external director
an annual retainer of $10,000, as well as fees of $1,000 for each board meeting
and $500 for each committee meeting in which the director participates, plus
value added tax if applicable. We also reimburse directors for any travel and
related expenses incurred in connection with their attendance in person at each
board or committee meeting.
Our 2000 Non-Employee Director Stock Option Plan provides that we grant
each of our non-employee directors an option to purchase 25,000 ordinary shares
on the later of the date the plan was adopted by our shareholders or the date
the person first becomes a non-employee director. The plan also provides that
each of our non-employee directors will receive an option to purchase 2,500
ordinary shares each year the director serves on our board. The exercise price
of the shares granted under the plan is the fair market value on the date of
grant. Options granted under the plan vest 25% per year over four years but vest
immediately upon a change of control as defined in the plan. Our board of
directors also are proposing to grant options to our external directors under
this plan, as discussed in proposal 2 below.
PROPOSAL 2
RATIFICATION AND APPROVAL OF REMUNERATION
TO BE PROVIDED TO EXTERNAL DIRECTORS
The Companies Law requires shareholder approval of the payment of
compensation to directors, including external directors. The audit committee of
the board of directors and the board of directors have approved resolutions
providing that the compensation of each of our external directors will be the
same as the compensation of our current non-employee directors. Specifically,
the audit committee and the board of directors have approved the following
compensation for external directors:
(a) an annual fee of $10,000, plus any applicable value added tax;
(b) a fee of $1,000 for each board meeting and $500 for each board
committee meeting, including audit committee meetings, in which they
participate, plus any applicable value added tax;
(c) reimbursement of expenses incurred for each board or committee meeting
attended, plus any applicable value added tax; and
(d) options to purchase our ordinary shares pursuant to our 2000 Non-
Employee Director Stock Option Plan, plus any applicable value added
tax.
Pursuant to the terms of our 2000 Non-Employee Director Stock Option Plan,
each external director will receive an option to purchase 25,000 ordinary shares
on the date the person first becomes an external director. The exercise price of
these initial options will be equal to the closing price of our ordinary shares
as reported by the Nasdaq National Market on the last day immediately preceding
the external director's election. Each external director will receive an
additional option to purchase 2,500 ordinary shares each year he or she serves
on our board. The exercise price of the additional shares granted under the plan
will be the fair market value on the date of grant. Options granted under the
plan vest 25% per year over four years.
The audit committee and the board of directors resolutions also provide
that if an external director is precluded from receiving or exercising options
to purchase our ordinary shares because of their positions as external
directors, they will be entitled to request by written notice that they receive,
in lieu of the options, a cash payment equal to the difference between the
exercise price per share of the options that they would otherwise have been
entitled and the closing price of our ordinary shares as reported by the Nasdaq
National Market on the date specified in the notice multiplied by the number of
shares specified in the notice. However, in order for Accord to be able to make
the cash payment, the following requirements must be met:
-6-
<PAGE>
. The date specified in the notice may not be earlier than the date on which
the notice is delivered to Accord;
. The option must have vested and been exercisable with respect to the
ordinary shares specified in the notice; and
. There would have been no impediment to the purchase and sale of the
ordinary shares by the external director on the date the notice is
delivered to Accord and on the date specified in the notice.
Payments to external directors in lieu of their exercise of options will
include any applicable value added tax and will be made immediately after
delivery of the notice to Accord, or the date specified in the notice if a later
date is specified.
External directors also will be covered by our directors and officers
liability insurance policy and will be indemnified by Accord and issued letters
of indemnification. The letters of indemnification will be for the matters and
in the form previously approved by our board of directors in October 1999 and
April 2000, and by our shareholders in December 1999 and May 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO PROVIDE REMUNERATION TO EXTERNAL DIRECTORS AS DESCRIBED ABOVE.
PROPOSAL 3
AUTHORIZATION OF JULES L. DEVIGNE
TO FILL THE POSITIONS OF CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
The Companies Law provides that, beginning three months after a company's
shares are listed for trading on a stock exchange, the general manager, or chief
executive officer, of a company may not serve as the chairman of its board of
directors. However, a company's shareholders may authorize the chairman to fill
the position of chief executive officer in addition to the position of chairman
by a vote of the holders of a majority of the shares present and voting,
including at least two-thirds of the shareholders who are not controlling
shareholders who are present and voting. The shareholders may approve the
chairman filling both positions for a period of up to three years from the date
of the shareholders' approval.
Jules L. DeVigne presently serves as our chief executive officer. The board
of directors believes that it is in Accord's best interest for Mr. DeVigne to
serve as the chairman of our board of directors as well as our chief executive
officer and is seeking shareholder approval for Mr. DeVigne to be permitted to
hold both positions for a period of up to three years after the date of the
extraordinary meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AUTHORIZE
JULES L. DEVIGNE TO FILL THE POSITIONS OF CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD OF DIRECTORS.
-7-
<PAGE>
PROPOSAL 4
APPROVAL OF AUTOMATIC ANNUAL INCREASES IN THE NUMBER OF SHARES
RESERVED UNDER THE 2000 SHARE OWNERSHIP AND OPTION PLAN
AND THE 2000 SHARE OPTION PLAN
Our shareholders and board of directors previously adopted the Accord 2000
Share Ownership and Option Plan, which provides for grants of options to our
employees, directors, consultants and others, and the Accord 2000 Share Option
Plan, which provides for grants of options primarily to our non-Israeli
employees and consultants. The maximum number of ordinary shares available for
grant under each plan is 750,000. Each plan presently provides for annual
increases in the total number of shares available under the plan by an amount
equal to four percent of the total number of shares reserved under the plan. As
of November 15, 2000, Accord had granted options to purchase 750,000 ordinary
shares under the 2000 Share Ownership and Option Plan and options to purchase
750,000 ordinary shares under the 2000 Share Option Plan.
The board of directors believes it to be in Accord's best interest to amend
the 2000 Share Ownership and Option Plan and the 2000 Share Option Plan to
change the calculation of annual increases. The board of directors recommends
that the shareholders approve an amendment to each plan to provide that as of
January 1 of each year, beginning as of January 1, 2001, the aggregate number of
shares available under the 2000 Share Ownership and Option Plan and the 2000
Share Option Plan, when taken together, automatically will be increased by the
number of shares equal to four percent of the total number of Accord's issued
and outstanding ordinary shares and outstanding options granted by Accord as of
the close of business on December 31st of the previous year. The board of
directors will have the authority to determine the allocation of the additional
shares between the 2000 Share Ownership and Option Plan and the 2000 Share
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE
AUTOMATIC ANNUAL INCREASES IN THE NUMBER OF SHARE RESERVED UNDER THE 2000 SHARE
OWNERSHIP AND OPTION PLAN AND THE 2000 SHARE OPTION PLAN.
Provided below are descriptions of the 2000 Share Ownership and Option Plan
and the 2000 Share Option Plan as they are proposed to be amended.
2000 Share Ownership and Option Plan
General. On January 26, 2000, our board of directors adopted the 2000
Accord Networks Ltd. Share Ownership and Option Plan, which provides for the
grant of options to our employees, directors, consultants and other service
providers and to those of our subsidiaries. The plan was approved by our
shareholders on March 23, 2000. The maximum number of ordinary shares subject to
the plan is 750,000. As of January 1 of each year, beginning as of January 1,
2001, the number of shares available under the 2000 Share Ownership and Option
Plan, together with the number of shares available under Accord's 2000 Share
Option Plan, automatically will be increased by the number of shares equal to
four percent of the total number of Accord's issued and outstanding ordinary
shares and outstanding options granted by Accord as of the close of business on
December 31st of the previous year. The board of directors will have the
authority to determine the allocation of the additional shares between the 2000
Share Ownership and Option Plan and the 2000 Share Option Plan. The exercise
price of options granted under the plan is determined in the discretion of our
board of directors. Grants to Israeli employees generally are made under Section
102 of the Israel Income Tax Ordinance.
Exercise of options. Persons who hold unexercised options granted under
this plan who stop working for us for any reason other than termination in
specified circumstances may exercise their options for 30 days after they stop
working. If the person stops working for us for the specified reasons, his
options will expire upon his termination of employment. Persons holding
unexercised options who die, are disabled or retire with board approval after
age 60 are entitled to exercise their options for a year after they stop
working. Unexercised options will terminate if not exercised in the times
specified for each situation.
-8-
<PAGE>
2000 Share Option Plan
General. On January 26, 2000, our board of directors adopted the Accord
Networks Inc. 2000 Share Option Plan, which provides for the grant of options to
our employees and consultants, and to those of our subsidiaries. The plan was
approved by our shareholders on March 23, 2000. The maximum number of ordinary
shares subject to the plan is 750,000. As of January 1 of each year, beginning
as of January 1, 2001, the number of shares available under the 2000 Share
Option Plan, together with the number of shares available under Accord's 2000
Share Ownership and Option Plan, automatically will be increased by the number
of shares equal to four percent of the total number of Accord's issued and
outstanding ordinary shares and outstanding options granted by Accord as of the
close of business on December 31st of the previous year. The board of directors
will have the authority to determine the allocation of the additional shares
between the 2000 Share Ownership and Option Plan and the 2000 Share Option Plan.
The 2000 Share Option Plan is intended primarily for our non-Israeli employees.
Grants to employees under the plan may be either incentive stock options within
the meaning of the U.S. Internal Revenue Code of 1986, as amended, or
nonstatutory stock options. The exercise price of the options granted under the
plan is determined in the discretion of our board of directors. That discretion
is, however, limited by some of the provisions concerning incentive stock
options.
Exercise of options. Persons who hold unexercised options under this plan
who stop working for us for any reason other than termination in specified
circumstances may exercise their options that were vested on the date of
termination during the time specified in their option agreement. If the person
stops working for us for the specified reasons, all options will expire upon the
termination of employment. If an option holder dies, the options vested on the
date of death may be exercised by the option holder's estate or whoever inherits
the option during the time specified in their option agreement. Any options that
are not vested on the date of termination or death will immediately revert to
the plan.
Administration of the plans
The 2000 Share Ownership and Option Plan and the 2000 Share Option Plan are
managed by the compensation committee of our board of directors, which makes
recommendations to the board of directors about the grant of options. The
vesting schedule of options granted under both plans is spread over four years,
so that 25% of the options may be exercised after one year and additional shares
may be exercised on the last day of each of the 12 successive three-month
periods.
PROPOSAL 5
RATIFICATION AND APPROVAL OF AN INCREASE FROM US$5 MILLION TO
UP TO US$25 MILLION IN OUR DIRECTORS' AND OFFICERS' LIABILITY INSURANCE COVERAGE
AND CORRESPONDING PREMIUM PAYMENTS MADE BY ACCORD
In 1999, our shareholders approved the purchase and periodic renewal of
liability insurance coverage for our officers, which under the Companies Law
includes our directors, to the maximum extent permitted by law. We obtained a
policy with limits of U.S. $5 million. In June 2000, the audit committee of our
board of directors and our board of directors approved an increase in the amount
of insurance coverage to an amount not to exceed US$25 million. We now have a
directors' and officers' liability insurance policy with coverage of up to US$15
million. At the extraordinary meeting, our shareholders will be asked to ratify
and approve the increase of our directors' and officers' liability insurance
coverage from US$5 million to up to US$25 million. Shareholders also will be
asked to ratify and approve the corresponding premium payments that we have made
as well as those that we will make in the future.
The Companies Law states that a company may include in its articles of
association provisions permitting the company to obtain liability insurance
coverage for its officers to cover the following acts or omissions committed by
an officer in his or her capacity as an officer:
-9-
<PAGE>
. the breach of his or her duty of care to the company or any other
person;
. the breach of his or her fiduciary duty to the company to the extent
he or she acted in good faith and had a reasonable basis to believe
that the act would not prejudice the interests of the company; and
. monetary liabilities or obligations that may be imposed on the
officers in favor of a third party.
The Companies Law further states that a company may not obtain insurance
coverage for the liability of an officer for the following acts or omissions:
. a breach of his or her fiduciary duty, except to the extent described
above;
. a breach of his or her duty of care, if the breach was done
intentionally, recklessly or with disregard for the circumstances of
the breach or its consequences;
. an act of omission done with the intent to unlawfully realize personal
gain; or
. a fine or monetary settlement imposed upon the officer.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY
AND APPROVE AN INCREASE IN OUR DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
COVERAGE AND CORRESPONDING PREMIUM PAYMENTS MADE BY ACCORD.
Section 16(a) Beneficial Ownership Reporting Compliance
The United States securities laws require our directors, executive officers
and any persons who beneficially own more than 10% of our common stock to file
with the Securities and Exchange Commission and the Nasdaq Stock Market initial
reports of ownership and subsequent reports of changes in ownership. To our
knowledge, based solely on a review of the copies of the reports furnished to us
and written representations that no other reports were required, all directors,
executive officers and beneficial owners of more than 10% of our common stock
made all required filings as of November 15, 2000.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of November 15, 2000, unless
otherwise indicated, regarding the beneficial ownership of our equity securities
by each person known by us to own more than 5% of any class of our voting
securities, each director and nominee for director, each executive officer named
in the Summary Compensation Table and all directors and executive officers as a
group.
Pursuant to SEC rules, the number of shares of common stock beneficially
owned by a specific person or group includes shares issuable pursuant to
convertible securities, warrants and options held by such person or group that
may be converted or exercised within 60 days after November 15, 2000. These
shares are deemed to be outstanding for the purpose of computing the percentage
of the class beneficially owned by such person or group but are not deemed to be
outstanding for the purpose of computing the percentage of the class
beneficially owned by any other person or group.
-10-
<PAGE>
The persons named in the table gave us the stock ownership information
about themselves. Except as explained in the footnotes below, the named persons
have sole voting and investment power with regard to the shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Number of Shares
---------------- Percentage of Total
Beneficial Owner Beneficially Owned Shares Outstanding
--------------- ------------------ ------------------
<S> <C> <C>
Entities affiliated with Nitzanim Fund (1993) Ltd. and Concord
K.T. Investment Partners Ltd. 3,190,275/(1/) 15.5
Entities managed by SVM STAR Venture Capital Management Ltd.
and SVM STAR Ventures Management No. 3 2,010,217/(2)/ 9.8
Advanced Technology Ventures IV, L.P. 1,631,158/(3)/ 7.9
Gilde IT Fund B.V. 1,620,768/(4)/ 7.9
Norwest Equity Capital L.L.C. 1,370,614/(5)/ 6.7
VTEL Corporation 1,301,092/(6)/ 6.3
Jules L. DeVigne 685,861/(7)/ 3.3
Sigi Gavish 908,310/(8)/ 4.4
Matty Karp 67,000/(9)/ *
Jos C. Henkens 6,250/(10)/ *
Eren Privman -- --
Gila Silber Fiengold -- --
Philip B. Keenan 162,688/(11)/ *
David P. Gallagher 56,250/(12)/ *
All executive officers and directors as a group 1,978,609/(13)/ 9.3
(10 persons)
</TABLE>
__________
*Represents beneficial ownership of less than 1%.
(1) Includes:
. 1,531,024 ordinary shares held by Nitzanim Fund (1993) Ltd.;
. 1,371,665 ordinary shares held by K.T. Concord Venture Fund (Cayman)
L.P.;
. 274,201 ordinary shares held by K.T. Concord Venture Fund (Israel)
L.P.;
. 11,192 ordinary shares held by K.T. Concord Venture Advisors (Cayman)
L.P.; and
. 2,193 ordinary shares held by K.T. Concord Venture Advisors (Israel)
L.P..
The general partner and investment manager of the Concord entities is
Concord K.T. Investment Partners Ltd. Matty Karp, one of our directors, is
a principal of this entity and vice chairman of Nitzanim Fund (1993) Ltd.
and may beneficially own these shares under the securities laws but
disclaims beneficial ownership of them. The address for each of these
entities is 85 Medinat Hayehudim Street, 7/th/ Floor, P.O. Box 4011,
Herzelia Pituach 46140, Israel.
(2) Includes:
. 937,160 ordinary shares held by STAR Management of Investments (1993)
Limited Partnership;
. 565,869 ordinary shares held by SVE STAR Ventures Enterprises No. III,
a German Civil Law Partnership (with limitation of liability);
. 249,069 ordinary shares held by SVM STAR Ventures Management GmbH Nr.
3 & Co. Beteiligungs KG;
. 210,776 ordinary shares held by SVE STAR Ventures Enterprises No. II,
a German Civil Law Partnership (with limitation of liability);
. 47,343 ordinary shares held by SVE STAR Ventures Enterprises No. IIIA
GbR, a German Civil Law Partnership (with limitation of liability).
SVM STAR Venture Capital Management Ltd. manages STAR Management of
Investments (1993) Limited Partnership, and SVM STAR Ventures Management
GmbH No. 3 manages the investments of the other STAR entities. Dr. Meir
Barel is the sole director and primary owner of each of SVM STAR Venture
Capital Management Ltd. and SVM STAR Ventures Management GmbH No. 3 and may
be deemed to beneficially
-11-
<PAGE>
own these shares under securities laws but disclaims beneficial ownership.
The address for STAR Management of Investments (1993) Limited Partnership
is 11 Galgaley Haplada, Building 3, Herzelia 46733, Israel, and for the
other STAR entities is Possartstrasse No. 9, D-81679 Munich, Germany.
(3) Jos C. Henkens, one of our directors, is a general partner of Advanced
Technology Ventures IV, L.P., and may beneficially own these shares under
the securities laws, but disclaims beneficial ownership. The address of
Advanced Technology Ventures IV, L.P. is 485 Romona Street, Suite 200, Palo
Alto, California 94301.
(4) The address of Gilde is Newtonlaan 91, P.O. Box 85067, 3508 AB Utrecht,
Netherlands.
(5) Itasca NEC, L.L.C., or Itasca, is the managing member of Norwest Equity
Capital, L.L.C., or Norwest, and has sole voting and investment power of
the shares. Under the securities laws, the managing members of Itasca
beneficially own the shares held by Norwest and therefore have voting and
investment power of the shares. The members of Itasca disclaim beneficial
ownership of the shares held by Norwest, except to the extent of their
direct pecuniary interest in the shares. The address of Norwest Equity
Capital, L.L.C. is 245 Lytton Avenue, Suite 250, Palo Alto, California
94301.
(6) The address of VTEL Corporation is 108 Wild Basin Road, Austin, Texas
78746.
(7) Includes 350,398 ordinary shares subject to options exercisable within 60
days of November 15, 2000.
(8) Includes 200,000 ordinary shares subject to options exercisable within 60
days of November 15, 2000.
(9) Includes 6,250 ordinary shares subject to options exercisable within 60
days of November 15, 2000.
(10) Represents ordinary shares subject to options exercisable within 60 days of
November 15, 2000.
(11) Represents 154,688 ordinary shares subject to options exercisable within 60
days of November 15, 2000 and 8,000 ordinary shares held by Mr. Keenan's
spouse, of which Mr. Keenan disclaims beneficial ownership.
(12) Represents ordinary shares subject to options exercisable within 60 days of
November 15, 2000.
(13) Includes 755,086 ordinary shares subject to options exercisable within 60
days of November 15, 2000 Does not include shares beneficially owned by
entities affiliated with Nitzanim Fund (1993) Ltd. or Concord K.T.
Investment Partners Ltd., of which one of our directors, Matty Karp, is
affiliated, or shares beneficially owned by Advanced Technology Ventures
IV, L.P., of which one of our directors Jos Henkens, is affiliated. Mr.
Karp and Mr. Henkens disclaim beneficial ownership of the shares held by
these entities.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by us for services rendered in all capacities
during the fiscal year ended December 31, 1997, December 31, 1998 and December
31, 1999 for our Chief Executive Officer and our next three most highly
compensated executive officers for the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
---------
Annual Compensation Compensation Awards
-------------------------- -------------------
Fiscal Securities Underlying
------
Name and Principal Position Year Salary Bonus Options (#)
--------------------------- ---- ------ ----- ---------------------
<S> <C> <C> <C> <C>
Jules L DeVigne, 1999 $200,004 $125,000 150,000
Chief Executive Officer
Sigi Gavish, 1999 $120,000 $ 30,000 --
Chief Technology Officer
Philip B. Keenan, 1999 $132,497 $178,963/(1)/ --
Senior Vice President, Worldwide
Sales and Marketing
David P. Gallagher, 1999 $122,700 $ 30,941 --
Vice President Business Development
</TABLE>
______________________________
/(1)/ The amount listed as Mr. Kennan's bonus in 1999 and 1998 represents
commissions paid to him.
-12-
<PAGE>
Employment Agreements
We are a party to a letter employment agreement with Jules L. DeVigne, our
chief executive officer. This agreement sets forth Mr. DeVigne's initial base
salary and benefits and states that he will be eligible for a performance based
bonus as determined by Accord. The agreement also states the Mr. DeVigne will
be eligible to receive options to purchase our ordinary shares. In the event
Mr. DeVigne is terminated without cause, Accord will make severance payments
equal to his monthly base salary to him for a period of six months to nine
months. As a condition to his employment, Mr. DeVigne also entered into a
Confidentiality and Intellectual Property Agreement with Accord pursuant to
which he agreed to keep confidential specific types of information and
relinquished any claims he may later have to technology products that we may
develop. The term of the Confidentiality Agreement is to be the maximum
permitted by applicable state law.
We have entered into an employment agreement with Sigi Gavish, our chief
technology officer. This agreement sets forth Mr. Gavish's base salary as of
the date of the agreement and provides for annual increases of an amount at
least equal to any increase in the Israeli consumer price index. The agreement
also sets forth specific benefits to be provided to Mr. Gavish, including
benefits customarily given to executive officers in Israel such as payment by
Accord into an insurance policy to partially fund severance pay, retirement
pension and disability payments for Mr. Gavish. If Mr. Gavish is terminated
without cause, he will be entitled to receive a severance payment equal to 200%
of his average monthly salary for the six months preceding his termination,
multiplied by the number of years of his employment with Accord, and less the
amounts accumulated for severance pay under the insurance policy. In connection
with the execution of his employment agreement, Mr. Gavish also entered into a
confidentiality and non-competition agreement with Accord. Pursuant to this
agreement, Mr. Gavish agreed to keep confidential specific types of information
and not to compete with Accord or solicit our employees for a period of two
years after termination of his employment.
We also are a party to letter employment agreements with Jeffrey B.
Bradley, our chief financial officer, and David P. Gallagher, our vice president
of business development. Each agreement sets forth the officer's initial base
salary and benefits and states that he will be eligible for a performance based
bonus as determined by Accord as well as options to purchase our ordinary
shares. Each agreement also contains a confidentiality provision and a non-
noncompetition provision. The non-competition provision restricts the officer
from owning, controlling, assisting or otherwise participating in a business
that competes with Accord and from soliciting our employees and customers for a
specified period of time. Mr. Bradley's non-competition covenant runs from 18
months after his date of termination and Mr. Gallagher's non-competition
covenant runs for six months after his date of termination. Under the terms of
Mr. Bradley's agreement, Accord will be obligated to make severance payments to
him if he is terminated without cause. If the termination occurs after Mr.
Bradley has been employed for 12 months, the severance payments will equal two
months base salary. If he has been employed with us for 24 months prior to his
termination, the severance payment will equal three months base salary or the
amount specified in any severance plan for senior managers.
In addition, we have entered into a letter employment agreement with
Phillip Keenan, our senior vice president of worldwide sales and marketing. Mr.
Keenan's agreement sets forth his initial base salary and benefits and
establishes a commission incentive base to permit him to earn commissions if
quotas are met. The agreement also states the Mr. Keenan will be eligible to
receive options to purchase our ordinary shares. In exchange for Mr. Keenan's
services to Accord, we have agreed to make severance payments to him for a
period of six months if he is terminated without cause. As a condition to his
employment, Mr. Keenan also entered into a Confidentiality and Intellectual
Property Agreement with Accord pursuant to which he agreed to keep confidential
specific types of information and relinquished any claims he may later have to
technology products that we may develop. The term of the Confidentiality
Agreement is to be the maximum permitted by applicable state law.
-13-
<PAGE>
Option Grants
The following table provides information with regard to stock option grants
to the named executive officers pursuant to our 1995 Employee Stock Ownership
and Option Plan during the fiscal year ended December 31, 1999. All options
expire May 6, 2005 and become exercisable at the rate of one-fourth on each
anniversary of the grant date.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise or Price Appreciation for
Options Employees in Base Price Expiration Option Term
-----------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ----------- ----------- ----------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Jules L DeVigne, 150,000 12.54 $1.25 5/6/05 1,466,171 1,931,511
Chief Executive Officer
Sigi Gavish, -- -- -- -- -- --
Chief Technology
Officer
Philip B. Keenan, -- -- -- -- -- --
Senior Vice President,
Worldwide Sales and
Marketing
David P. Gallagher, -- -- -- -- -- --
Vice President
Business Development
</TABLE>
Amounts represented in the last two columns represent hypothetical amount
that may be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation of the ordinary shares over the term of the options. These amounts
are calculated based on the assumption that the fair market price of Accord's
ordinary shares on December 31, 1999 was $8.50 per ordinary share, which was the
exercise price of options issued by Accord's board of directors on December 15,
1999 and January 26, 2000. The numbers shown in these two columns are
calculated based on SEC rules and do not reflect our estimate of future stock
price growth. Actual gains, if any, on stock option exercises and ordinary
share holdings depend on the timing of such exercise and the future performance
of our ordinary shares. We do not guarantee that the rates of appreciation
assumed in these two columns can be achieved or that the amounts reflected will
be received by the executive officers. The two columns do not take into account
any appreciation of the price of ordinary shares from the date of grant to the
present date.
-14-
<PAGE>
The following table sets forth information regarding the number of ordinary
shares received upon exercise of options by our named executive officers during
the fiscal year ended December 31, 1999 and the number of unexercised options
held at November 15, 2000.
Option Exercises in Last Fiscal Year
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options At Fiscal Options At
Shares Value Year-End (#) Fiscal Year End ($)
Acquired On Realized Exercisable / Exercisable /
Name Exercise (#) ($)/(1)/ Unexercisable Unexercisable/(2)/
-------------------------- -------------- ----------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Jules L. DeVigne, 325,463 738,801 81,364/ 672,880/
Chief Executive Officer 544,092 3,106,141
Sigi Gavish, -- -- 66,700/ 552,276/
Chief Technology Officer 133,300 275,724
Philip B. Keenan, -- -- 98,439/ 814,091/
Senior Vice President, 176,561 1,046,659
Worldwide Sales and
Marketing
David P. Gallagher, -- -- 31,250/ 234,375/
Vice President Business 88,750 515,625
Development
</TABLE>
(1) Value realized is calculated based on the assumption that the fair market
price of Accord's ordinary shares on June 24, 1999, the date the options
were exercised, was $2.50 per ordinary share. On June 16, 1999, Accord's
board of directors issued options with an exercise price of $2.50.
(2) Value of unexercised in-the-money options are calculated based on the
assumption that the fair market price of Accord's ordinary shares on
December 31, 1999 was $8.50 per ordinary share, which was the exercise
price of options issued by Accord's board of directors on December 15, 1999
and January 26, 2000.
-15-
<PAGE>
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the following report of the executive
compensation committee on executive compensation and the shareholder return
performance graph shall not be incorporated by reference into any such filings.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation committee is responsible for developing our executive
compensation policies and advising the board of directors with respect to these
policies. This report by the compensation committee reviews our policies
generally with respect to the compensation of all executive officers as a group
for the fiscal year ended December 31, 1999 and specifically reviews the
compensation established for our chief executive officer for the fiscal year
ended December 31, 1999.
Our policy with regard to executive compensation has consistently been
designed to:
. Adequately and fairly compensate executive officers in relation to
their responsibilities, capabilities and contributions and to do so
in a manner that is commensurate with compensation paid by
companies of comparable size within our industry;
. Reward executive officers for the achievement of short-term
operating goals and for the enhancement of our long-term
shareholder value; and
. Align the interests of executive officers with those of our
shareholders with respect to short-term operating results and long-
term shareholder value.
The primary components of our compensation to our executive officers, and
the relationship of these components to our performance, are discussed below.
Base Salary
Each year compensation committee members review and approve the base
salaries to be paid during the following year to members of our senior
management. Annual adjustments to base salaries are determined based on the
individual's performance and contributions to our success. The executive
compensation committee did not change Mr. DeVigne's $200,004 base salary for the
fiscal year ended December 31, 1999. The compensation committee believes that
Mr. DeVigne's salary is in-line with the average for comparable industry
positions.
Stock Options
We have traditionally used stock option grants as an incentive for
executive performance. We believe that stock option grants provide executives
with the opportunity to buy and maintain an equity interest in us and to share
in the rewards of stock appreciation. Stock option grants have value only if
the stock appreciates in value from the date the options are granted. Officers
are encouraged to hold shares upon the exercise of the options, linking their
interests to those of other shareholders.
Bonuses
The compensation committee uses bonuses to provide officers with the
support to continue their efforts towards our overall success. Committee
members believe that bonuses contribute to our ability to attract and retain
talented executives who seek to be rewarded for performance. Mr. DeVigne's
bonus was $125,000 for the fiscal year ended December 31, 1999, which the
compensation committee believes reflects Mr. DeVigne's contributions to Accord.
-16-
<PAGE>
Summary
We remain committed to the implementation of compensation practices that
are increasingly linked to our performance. We believe that our current
compensation policies and practices are appropriate and intend to continue to
use performance-based compensation as incentive for our executive officers.
COMMITTEE MEMBERS:
Matty Karp
Jos Henkens
-17-
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph and accompanying table compare the monthly
percentage change in the cumulative total shareholder return on our ordinary
shares against the cumulative total return of the Nasdaq Stock Market Index and
a composite index for corporations in our industry (i.e., classified under the
same Standard Industrial Classification Code ("SIC"), 3577) for the months
ending June 30, 2000, July 31, 2000, August 31, 2000, September 29, 2000 and
October 31, 2000. The graph assumes that the value of the investment in our
ordinary shares and each index was $100 on June 29, 2000, the date on which our
ordinary shares began trading on The Nasdaq National Market. The change in
cumulative total return is measured by dividing (i) the sum of (a) the
cumulative amount of dividends for the period, assuming dividend reinvestment,
and (b) the change in share price between the beginning and end of the period,
by (ii) the share price at the beginning of the period. We have not paid any
dividends during the period covered by the graph.
[GRAPH APPEARS HERE]
Total Returns for Months Ending
-------------------------------
<TABLE>
June 30, July 31, August 31, September 30, October 31,
2000 2000 2000 2000 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accord Networks Ltd. 103.50 92.31 113.29 109.10 96.50
---------------------------------------------------------------------------------------------------------------------
Nasdaq Market Index 102.28 96.78 108.18 94.48 86.88
---------------------------------------------------------------------------------------------------------------------
Industry Index 103.66 104.35 118.93 105.75 96.24
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The ordinary share performance shown in the graph and the table set forth
above is not necessarily indicative of future performance of our ordinary
shares. We obtained the information used in the tables from the Center for
Research in Security Prices, which we believe to be a reliable source, but we
are not responsible for any errors or omissions in the information.
-18-
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING OF SHAREHOLDERS
To be considered for inclusion in our proxy statement for the 2001 annual
meeting, proposals of shareholders must have been submitted in writing to us on
or before September 30, 2000. For any proposal that was not submitted for
inclusion in next year's proxy statement but is instead sought to be presented
directly to the shareholders at the 2001 annual meeting, management will be able
to vote proxies in its discretion.
All proposals of shareholders with regard to the 2001 annual meeting should
be submitted by certified mail, return receipt requested, to Accord Networks
Ltd., c/o Accord Networks, Inc., 9040 Roswell Road, Suite 450, Atlanta, Georgia
30350-1877, Attention: Adam Vexler, Secretary and Corporate Counsel.
-19-
<PAGE>
Appendix A
Accord Networks Ltd.
Audit Committee Charter
The Audit Committee (the "Committee"), of the Board of Directors (the "Board")
of Accord Networks Ltd. (the "Company"), will have the oversight responsibility,
authority and specific duties as described below.
General Responsibility
The Audit Committee serves as the representative of the Board for the general
oversight of Company affairs in the area of financial accounting and reporting
and the underlying internal controls of the Company. Through its activities, the
Committee will facilitate open communications among directors, the Company's
independent accountants, its internal audit function, and its corporate
management.
The Audit Committee will assist the Board in discharging its fiduciary
responsibilities to shareholders, providing assurance as to the independence of
the Company's outside accountants and the adequacy of disclosure to shareholders
and to the public. In discharging its oversight role, the Committee is empowered
to investigate any matter brought to its attention with full access to all
books, records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders; accordingly, the
outside auditor is ultimately accountable to the Board and to the Committee.
Membership
The Committee will be comprised of three or more directors as determined by the
Board. The members of the Committee will meet the independence and experience
requirements of the National Association of Securities Dealers, Inc. ("NASD"),
Israel's Companies Law 5759-1999, and any regulations set forth by the
Securities and Exchange Commission of the US.
The members will be free from any financial, family or other material personal
relationship that, in the opinion of the Board would interfere with the exercise
of his or her independence from management and the corporation. All members of
the Committee will have a working familiarity with basic finance and accounting
practices and at least one member must have accounting or related financial
management expertise.
The members of the Committee will be elected annually at the organizational
meeting of the full Board and will be listed in the annual report to
shareholders and the annual proxy statement. The Board will elect one of the
members of the Committee as Committee Chair.
Authority
The Committee is granted the authority to investigate any matter or activity
involving financial accounting and financial reporting, as well as the internal
controls of the Company. In that regard, the Committee will have the authority
to approve the retention of external professionals to render advice and counsel
in such matters. All employees will be directed to cooperate with respect
thereto as requested by members of the Committee.
Meetings
The Committee is to meet at least four times annually and as many additional
times as the Committee deems necessary. The Committee Chair will prepare the
meeting agenda and overview of issues to be discussed. Prior to preparation of
the meeting agenda, input should be sought from the Chief Executive Officer, the
Chief Financial Officer, and the internal and external auditors of the Company.
The Committee members will have sole discretion in determining the meeting
attendees and agenda.
The Corporation's internal auditor shall be notified of Audit Committee meetings
and he/she may participate in them. The internal auditor may request that the
Chairman convene a meeting to discuss a matter, which the
<PAGE>
internal auditor specifies, and the Chairman shall convene a meeting within a
reasonable time following such request, if the Chairman deems necessary.
The Corporation's independent auditors shall be invited to meetings where the
agenda includes a subject related to the audit of the financial reports.
The Committee is to meet in separate executive sessions with the Chief Financial
Officer, independent accountants and the internal auditor at least once each
year and at other times when considered appropriate.
Attendance
Committee members will strive to be present at all meetings. As necessary or
desirable, The Committee Chair may request that members of management and
representatives of the independent accountants and internal audit be present at
Committee meetings.
Minutes
Minutes of each meeting are to be prepared and sent to Committee members, Board
members, the Chief Executive Officer, the Chief Financial Officer and Corporate
Counsel.
Specific Duties
1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable requirements of the SEC, the NASD, Israel law
and other laws or regulations that apply to the Company.
2. Review with the Company's management, internal auditor and independent
accountants the Company's accounting and financial reporting controls. As a
part of such review, determine what changes, if any, need to be made to
improve the adequacy of such controls.
3. Review with the Company's management, internal auditor and independent
accountants the significant accounting and reporting principles, practices
and procedures applied by the Company in preparing its financial
statements. Discuss with the independent accountants their judgements about
the quality, not just the acceptability, of the Company's accounting
principles used in financial reporting.
4. Review the scope of the internal auditor's work plan for the year and
receive a summary report of major findings by the internal auditor and how
management is addressing the conditions reported.
5. Review the scope the independent accountants' annual audit. The Committee's
review should include an explanation from the independent accountants of
the factors considered by the accountants in determining the audit scope,
including the major risk factors. The independent accountants should
confirm to the Committee that no limitations have been placed on the scope
or nature of their audit procedures. The Committee will review annually
with management the fee arrangement with the independent accountants.
6. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent accountants
and the Company as contemplated by Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees".
7. Review annually with general management and financial management the
details of each category of the balance sheet in order to development a
detailed understanding of the financial condition of the Company. This
review should take into consideration the accounting policies and practices
of the Company with the objective of making certain that they result in a
balance sheet that properly reflects the financial condition of the Company
in accordance with generally accepted accounting principles.
8. Review the interim financial statements with management and the independent
accountants before the filing of the Company's Quarterly Report on Form 10-
Q. In addition, the Committee shall discuss the results of the quarterly
review and any other matters required to be communicated to the Committee
by the independent accountants under generally accepted auditing standards,
including SAS 71, as amended from time to time. The Committee Chair may
represent the entire Committee for the purposes of this review.
9. At the completion of the annual audit, review with management, internal
audit and the independent accountants the following:
A-2
<PAGE>
a. The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to
shareholders and on Form 10-K. Review the MD&A and other sections of
the annual report before its release and consider whether the
information is adequate and consistent with members' knowledge about
the Company and its operations.
b. Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the year
in accounting principles and their application.
c. Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the audit.
Inquire about the cooperation received by the independent accountants
during their audit, including access to all requested records, data
and information. Inquire of the independent accountants whether there
have been any disagreements with management, which, if not
satisfactorily resolved, would have caused them to issue a nonstandard
report on the Company's financial statements.
d. The summary of uncorrected misstatements aggregated by the independent
auditor that were determined by management to be immaterial, both
individually and in the aggregate, to the financial statements taken
as a whole. Obtain representations from management that any unrecorded
audit adjustments recommended by the independent accountants are not
material to the financial statements .
e. Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended
from time to time relating to the conduct of the audit.
f. If deemed appropriate after such review and discussion, recommend to
the Board that the financial statements be included in the Company's
annual report on Form 10-K.
10. After preparation by management and review by the internal auditor and
independent accountants, approve the report required under SEC rules to be
included in the Company's annual proxy statement.
11. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel.
12. Discuss with the chief financial officer the organization, the staffing,
and the quality of the Company's financial and accounting organization.
13. Elicit the comments of management regarding the responsiveness of the
independent accountants to the Company's needs and the quality of the
staffing of the independent accountant's audit team.
14. Meet with management, internal audit and the independent accountants to
discuss any relevant significant recommendations that the independent
accountants may have, particularly those characterized as `material' or
`serious'. Typically, the independent accountants in the form of a Letter
of Comments and Recommendations will present such recommendations to the
Committee. The Committee should review responses of management to the
Letter of Comments and Recommendations from the independent accountants and
receive follow-up reports on action taken concerning the aforementioned
recommendations.
15. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
16. Approve or initiate recommendations relating to the internal audit
function, including organizational issues, staffing levels, personnel
selection, compensation, and performance assessment. Recommend to the Board
the selection, retention or termination of the internal auditor of the
Company.
17. Review the Company's policies relating to the avoidance of conflicts of
interest and review past or proposed transactions between the Company and
members of management as required by the Law, as well as policies and
procedures with respect to officers' expense accounts and perquisites,
including the use of corporate assets. The Committee shall consider the
results of any review of these policies and procedures by the Company's
internal auditor or independent auditors.
18. Review with management, corporate counsel, the internal auditor and the
independent accountants the methods used to establish and monitor the
Company's policies with respect to unethical or illegal activities by
Company employees that may have a material impact on the financial
statements.
19. Review with management, corporate counsel, the internal auditor and the
independent accountants any legal and regulatory matters that may have a
material impact on the financial statements of the Company in order to be
satisfied that all such matters have been considered in the preparation of
the financial statements. Review the findings of any examinations by
regulatory agencies.
20. As the Committee may deem appropriate, obtain and consider expert advice as
to Audit Committee related rules of the NASD, Statements on Auditing
Standards and other accounting, legal and regulatory provisions.
21. Regularly update the Board about Committee activities and make appropriate
recommendations.
A-3
<PAGE>
Revocable Proxy
Ordinary Shares
ACCORD NETWORKS LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE EXTRAORDINARY
MEETING TO BE HELD JANUARY 12, 2001.
The undersigned hereby appoints Jules L. DeVigne and Sigi Gavish, and each
of them, proxies, with full power of substitution, to act for and in the name of
the undersigned to vote all ordinary shares of Accord Networks Ltd. that the
undersigned is entitled to vote at the extraordinary meeting of shareholders to
be held January 12, 2001 at Accord's offices located at 94 Derech Em Hamoshavot,
Petach-Tikva, 49130 Israel, and at any and all adjournments thereof, as
indicated below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR"
THE ELECTION OF THE TWO NOMINEES NAMED IN PROPOSAL 1 AND "FOR" PROPOSALS 2, 3, 4
AND 5. If any other business is properly presented to the shareholders at the
extraordinary meeting, this proxy card will be voted by the proxies in their
best judgment. At the present time, the Board of Directors knows of no other
business to be presented at the meeting.
If the undersigned elects to withdraw this proxy card on or before the time
of the extraordinary meeting or any adjournments thereof and notifies the
secretary of Accord at or prior to the extraordinary general meeting of the
decision of the undersigned to withdraw this proxy card, then the power of said
proxies shall be deemed terminated and of no further force and effect. If the
undersigned withdraws this proxy card in the manner described above and prior to
the extraordinary meeting and does not submit a duly executed and subsequently
dated proxy card to Accord, the undersigned may vote in person at the
extraordinary meeting all ordinary shares of Accord owned by the undersigned as
of the record date, December 6, 2000.
(Continued, and to be signed and dated, on the reverse side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
1. The election of Eren Privman and Gila Silber Fiengold as external directors
in accordance with Section 239 of the Israel Companies Law, 1999, to hold
office for a period of three years and until their successors are elected
and qualified.
[_] FOR ALL NOMINEES
[_] WITHHOLD AUTHORITY (as marked below)
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
Eren Privman Gila Silber Fiengold
2. Ratification and approval of the remuneration, including the grant of
options, to be provided to Accord's external directors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Authorization for Jules L. DeVigne to fill the positions of chief executive
officer and chairman of the board of directors for a period of up to three
years from the date of the extraordinary general meeting.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Authorization and approval of an automatic annual increase as of January
1/st/ of each year, beginning as of January 1, 2001, of the aggregate
number of ordinary shares reserved under Accord's 2000 Shares Ownership and
Option Plan and Accord's 2000 Share Option Plan by the number of shares
equal to four percent of the total number of issued and outstanding
ordinary shares and outstanding options granted by Accord as of the close
of business on December 31/st/ of the previous year.
[_] FOR [_] AGAINST [_] ABSTAIN
5. Ratification and approval of an increase from US$5 million to up to US$25
million in Accord's directors' and officers' liability insurance coverage
and corresponding premium payments made by Accord.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the extraordinary general meeting and any
adjournments thereof.
Do you plan to attend the Extraordinary Meeting? YES [_] NO [_]
Please mark, date and sign exactly as your name appears on this proxy card.
When shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If the holder is a corporation or a partnership, the full corporate or
partnership name should be signed by a duly authorized officer.
____________________________________________ Date:__________________
Signature
____________________________________________ Date:__________________
Signature, if shares held jointly
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE.
-2-
