Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Indicate by check mark if the Registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the Registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Attached hereto and incorporated herein by reference is the notice
and proxy statement for the extraordinary general meeting of shareholders of the Company scheduled for October 26, 2020.
This Form 6-K is incorporated by reference into the Company's Registration
Statements on Form S-8 filed with the Securities and Exchange Commission on May 2, 2013 (Registration No. 333-188286), on October
29, 2015 (Registration No. 333-207654), on July 25, 2017 (Registration No. 333-219441), on May 23, 2018 (Registration No. 333-225122)
and on July 24, 2019 (File No. 333-232776) and its Registration Statements on Form F-3 filed with the Securities and Exchange Commission
on February 25, 2016 (Registration No. 333-209702), on July 23, 2018 (File No. 333-226278) and on July 24, 2019 (File No. 333-232777).
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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REDHILL BIOPHARMA LTD.
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(the "Registrant")
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Date: September 22, 2020
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By:
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/s/ Dror Ben-Asher
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Dror Ben-Asher
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Chief Executive Officer
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REDHILL BIOPHARMA LTD.
21 Ha'arba'a Street
Tel-Aviv 6473921
Israel
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
To Be Held on October 26, 2020
The Extraordinary General Meeting of Shareholders
of RedHill Biopharma Ltd. (the “Company”), will be held at the offices of the Company, 21 Ha'arba'a Street, 16th
Floor, Tel-Aviv, Israel, on October 26, 2020, at 3:00 p.m. Israel time, or at any adjournments thereof (the “General Meeting”),
for the following purposes:
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1.
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To approve an amendment to the Company's Compensation Policy regarding the D&O insurance premium;
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2.
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To approve an amendment to the Amended and Restated Articles of Association of the Company to add
a forum selection provision;
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3.
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To approve amendments to the employment terms of Mr. Dror Ben-Asher, the Company’s Chief
Executive Officer;
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4.
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To approve an amendment to the employment terms of Mr. Rick Scruggs, the Company’s Chief
Commercial Officer;
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5.
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To approve the repricing of options exercisable into American Depository Shares (“ADSs”)
of the Company granted to Mr. Rick Scruggs;
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6.
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To approve the extension of options to purchase ADSs of the Company previously granted to members
of the board of directors; and
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7.
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To approve the extension of options to purchase ADSs of the Company previously granted to Mr. Dror
Ben-Asher.
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The Company is currently unaware of any other
matters that may be raised at the General Meeting. Should any other matters be properly raised at the General Meeting, the persons
designated as proxies shall vote according to their own judgment on those matters.
Only holders of record of ordinary shares, par
value NIS 0.01 per share (the “Ordinary Shares”), and holders of record of ADSs, evidenced by American Depositary Receipts
issued by The Bank of New York Mellon at the close of business on September 22, 2020 shall be entitled to receive notice of and
to vote at the General Meeting.
The Board of Directors recommends that you vote
FOR the proposals, as specified on the enclosed form of proxy.
Whether or not you plan to attend the General
Meeting, it is important that your ADSs or ordinary shares be represented. Accordingly, you are kindly requested to complete, date,
sign and mail the enclosed proxy in the envelope provided at your earliest convenience so that it will be received no later than
four hours prior to the General Meeting. Execution of a proxy will not in any way affect a shareholder’s right to attend
the General Meeting and vote in person, and any person giving a proxy has the right to revoke it at any time before it is exercised.
Shareholders
who hold Ordinary Shares through members of the Tel-Aviv Stock Exchange and intend to vote their Ordinary Shares either in person
or by proxy must deliver to the Company, no later than October 26, 2020, at 11:00 a.m. Israel time, an ownership certificate confirming
their ownership of the Ordinary Shares on September 22, 2020 (the “Record Date”), which certificate must be approved
by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting
at General Meeting) of 2000, as amended.
ADS
holders should return their proxies by the date set forth on their form of proxy.
Shareholders wishing to express their position
on an agenda item for this General Meeting may do so by submitting a written statement (“Position Statement”) to the
Company’s offices, c/o Mr. Micha Ben Chorin, at 21 Ha'arba'a Street, Tel-Aviv, 6473921 Israel, by no later than October 18,
2020. Any Position Statement received, that is in accordance with the guidelines set by the Companies Law, will be furnished to
the U.S. Securities and Exchange Commission (the “Commission”) on Form 6-K, and will be made available to the public
on the Commission’s website at http://www.sec.gov.
If within half an hour from the time
appointed for the General Meeting a quorum is not present, the General Meeting shall be adjourned to the next business day following
the day of the scheduled General Meeting, at the same time and place, or at another day, time and place prescribed by the Board
of Directors in a notification to the shareholders.
This Notice and the documents mentioned therein,
as well as the proposed resolutions on the agenda, can be viewed at the Company's registered office on 21 Ha'arba'a Street, Tel-Aviv,
Tel: +972 3 541 3131, Sunday through Thursday between 10:00-15:00, and also will be made available to the public on the Commission’s
website at http://www.sec.gov.
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By Order of the Board of Directors,
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Dror Ben-Asher
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Chairman of the Board of Directors
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Tel-Aviv, Israel
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September 22, 2020
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REDHILL BIOPHARMA LTD.
21 Ha'arba'a Street
Tel-Aviv 6473921
Israel
PROXY STATEMENT
FOR EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
To Be Held on October 26, 2020
This Proxy Statement is furnished to the
holders of ordinary shares, par value NIS 0.01 per share (the “Ordinary Shares”), and to holders of American
Depository Shares (“ADSs”), evidenced by American Depositary Receipts issued by The Bank of New York Mellon
(“BNY Mellon”), of RedHill Biopharma Ltd. (the “Company” or “RedHill”) in connection with
the solicitation by the board of directors of the Company (the “Board of Directors” or the “Board”)
of proxies for use at the Extraordinary General Meeting of Shareholders (the “General Meeting”), to be held on
Monday, October 26, 2020, at 3:00 p.m. Israel time at the offices of the Company, 21 Ha'arba'a Street, 16th Floor,
Tel-Aviv, Israel, or at any adjournments thereof.
It is proposed at the General Meeting to adopt the following proposals or
to consider the following items:
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1.
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To approve an amendment to the Company's Compensation Policy regarding the D&O insurance premium;
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2.
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To approve an amendment to the Amended and Restated Articles of Association of the Company to add
a forum selection provision;
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3.
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To approve amendments to the employment terms of Mr. Dror Ben-Asher, the Company’s Chief
Executive Officer;
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4.
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To approve an amendment to the employment terms of Mr. Rick Scruggs, the Company’s Chief
Commercial Officer;
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5.
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To approve the repricing of options exercisable into ADSs of the Company granted to Mr. Rick Scruggs;
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6.
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To approve the extension of options to purchase ADSs of the Company previously granted to members
of the board of directors; and
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7.
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To approve the extension of options to purchase ADSs of the Company previously granted to Mr. Dror
Ben-Asher.
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The Company is currently unaware of any other
matters that may be raised at the General Meeting. Should any other matters be properly raised at the General Meeting, the persons
designated as proxies shall vote according to their own judgment on those matters.
Shareholders may present proposals for consideration
at the General Meeting by submitting their proposals to the Company no later than Sunday, October 18, 2020 in accordance with applicable
law.
Shareholders Entitled to Vote
Only holders of ADSs and Ordinary Shares
of record at the close of business on September 22, 2020 (the “Record Date”), shall be entitled to receive notice of
and to vote at the General Meeting. At the close of business on September 21, 2020, the Company had outstanding 374,086,048 Ordinary
Shares (represented by 37,408,604 ADSs), each of which is entitled to one vote on each of the matters to be presented at the General
Meeting.
Proxies
A form of proxy card for use at the General
Meeting is attached to this Proxy Statement and has been sent to the holders of ADSs together with a prepaid return envelope for
the proxy. By executing the proxy card and appointing “proxies”, holders of ADSs and Ordinary Shares may vote at the
General Meeting, whether or not they attend.
ADS holders should return their proxies
in the enclosed form to BNY Mellon by the date set forth on the proxy card. If a properly executed proxy is received by the BNY
Mellon by the date set forth on the proxy card, all of the Ordinary Shares represented by the proxy shall be voted as indicated
on the proxy card.
Shareholders who hold ordinary shares
through members of the Tel-Aviv Stock Exchange Ltd. ("TASE"), who did not convert their ordinary shares to ADSs,
may vote in the General Meeting in person or vote through the attached form of proxy card, which also serves as their voting
card, by completing, dating, signing and mailing the proxy card to the Company’s offices so that it is received by the
Company no later than Monday October 26, 2020 at 11:00 a.m. Israel time, and must also provide the Company with a copy of
their identity card, passport or certificate of incorporation (as the case may be), and an ownership certificate confirming
their ownership of the Company’s ordinary shares on the Record Date. Such certificate must be approved by a recognized
financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General
Meeting) of 2000, as amended.
Subject to applicable law and the rules of the NASDAQ Stock Market, in the absence of
instructions, the ADSs and Ordinary Shares represented by properly executed and received proxies will be voted FOR all of the
proposed resolutions to be presented at the General Meeting for which the Board of Directors recommends a “FOR”.
Holders of ADSs and Ordinary Shares may revoke their proxies at any time before the deadline for receipt of proxies by filing
with the Company (in the case of holders of Ordinary Shares) or with BNY Mellon (in the case of holders of ADSs) a written
notice of revocation or duly executed proxy bearing a later date.
Expenses and Solicitation
The Board of Directors is soliciting proxies
for use at the General Meeting. The Company expects to mail this Proxy Statement and the accompanying proxy cards to ADS holders
on or about October 1, 2020. In addition to solicitation of proxies to holders of ADSs by mail, certain officers, directors, employees
and agents of the Company, may solicit proxies by telephone, mail or other personal contact. The Company shall bear the cost of
the solicitation of the proxies, including postage, printing and handling and shall reimburse the reasonable expenses of brokerage
firms and others for forwarding materials to beneficial owners of ADSs or Ordinary Shares. In addition, we have retained Kingsdale
Advisors (“Kingsdale”) to assist in the solicitation of proxies.
This proxy statement and proxy card shall also
serve as a voting deed (ktav hatzba’a), as such term is defined under the Israel Companies Law 1999 (the “Companies
Law”).
Quorum and Voting
Two or more shareholders holding ADSs or Ordinary
Shares conferring in the aggregate at least twenty-five percent (25%) of the voting power of the Company, present in person or
by proxy at the General Meeting and entitled to vote thereat, shall constitute a quorum. If within half an hour from the time appointed
for the General Meeting a quorum is not present, the General Meeting shall be adjourned to the next business day following the
day of the scheduled meeting, at the same time and place, or at such other day, time and place as shall be prescribed by the Board
of Directors in a notification to the shareholders. At such reconvened meeting, any one (1) shareholder present in person or by
proxy shall constitute a quorum regardless of the number of Ordinary Shares represented.
The approval of Proposals 2, 4, 5 and 6 each
requires the affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy,
and voting on the matter presented.
The approval of Proposals 1, 3 and 7 each requires
the affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and
voting on the matter presented, provided that one of the following two alternatives must apply: (i) such majority vote at the General
Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company
(as defined in the Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting
at the General Meeting in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the
non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%)
of the total voting rights in the Company.
For this purpose, “personal interest”
is defined under the Companies Law as: (1) a shareholder’s personal interest in the approval of an act or a transaction of
the Company, including (i) the personal interest of any of his or her relatives (which includes for these purposes the foregoing
shareholder’s spouse, siblings, parents, grandparents, descendants, and spouse’s descendants, siblings, and parents,
and the spouse of any of the foregoing); (ii) a personal interest of a corporation in which a shareholder or any of his/her aforementioned
relatives serve as a director or the Chief Executive Officer, owns at least 5% of its issued share capital or its voting rights
or has the right to appoint a director or Chief Executive Officer; and (iii) a personal interest of an individual voting via a
power of attorney given by a third party (even if the empowering shareholder has no personal interest), and the vote of an attorney-in-fact
shall be considered a personal interest vote if the empowering shareholder has a personal interest, and all with no regard as to
whether the attorney-in-fact has voting discretion or not, but (2) excludes a personal interest arising solely from the fact of
holding shares in the Company.
Please note that you are required to indicate
on the proxy card with respect to Proposals 1, 3 and 7 whether you are a controlling shareholder of the Company, or acting on its
behalf or not, and whether you have a personal interest in the approval of the proposals as provided above or not. If you fail
to so indicate on the proxy card, your vote may not be counted with respect to the proposal(s) for which you failed to provide
notification.
Shareholders wishing to express their position
on an agenda item for this General Meeting may do so by submitting a written statement (“Position Statement”) to the
Company’s offices, c/o Mr. Micha Ben Chorin, at 21 Ha'arba'a Street, Tel-Aviv, 6473921 Israel. Any Position Statement received,
that is in accordance with the guidelines set by the Israel Companies Law, will be furnished to the U.S. Securities and Exchange
Commission (the “Commission”) on Form 6-K, and will be made available to the public on the Commission’s website
at http://www.sec.gov.
Position Statements must be submitted to the
Company by no later than Sunday, October 18, 2020.
Director Independence
Our board of directors has determined that
all of the Company’s directors are independent for the purposes of the Nasdaq Listing Rules, other than Mr. Dror Ben-Asher
and Mr. Rick Scruggs.
Reporting Requirements
The Company is subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), applicable to foreign private
issuers. The Company fulfills these requirements by filing reports with the Commission. The Company’s filings are available
to the public on the Commission’s website at http://www.sec.gov.
As a foreign private issuer, the Company is
exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. The circulation of this
notice and proxy statement should not be considered as an admission that the Company is subject to the proxy rules under the Exchange
Act.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
EACH OF THE PROPOSALS.
Except as specifically provided herein, the lack
of a required majority for the adoption of any resolution presented shall not affect the adoption of any other resolutions for
which the required majority was obtained.
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We request
you to carefully read this entire Proxy Statement, including the documents we refer to in this Proxy Statement. If you have
any questions, need assistance in voting, or need additional material, please contact our Proxy Solicitation Agent, Kingsdale
Advisors:
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+ 1 (866) 581-1392 (toll-free
in North America)
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+1 (416) 867-2272 (collect
call outside of North America)
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e-mail: contactus@kingsdaleadvisors.com
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PROPOSAL NO. 1
AMENDMENT TO THE COMPANY’S COMPENSATION POLICY REGARDING
THE D&O INSURANCE PREMIUM
Under the Companies Law, the terms of employment
and service, which include D&O insurance coverage of officers and directors of public companies, such as the Company, must
be determined in accordance with a directors and officers compensation policy (the “Compensation Policy”) (except in
limited circumstances set forth in the Companies Law). All companies subject to the Companies Law are required to review and re-approve
their Compensation Policy based on the guidelines specified in the Companies Law every three years.
The Compensation Committee and Board of Directors
have approved an amendment to the Compensation Policy to remove the reference to the maximum annual premium that may be paid by
the Company for D&O insurance policies and recommended its approval by the shareholders in light of a leniency recently published
by the Israeli Securities Authority. The proposed amendments to the Compensation Policy as provided in Appendix A are
marked against the current Compensation Policy.
In recent years, there have been significant
changes in the D&O insurance policy market, in particular due to continued increase in class action lawsuits filed against
companies traded on the U.S. public markets. These changes have caused to numerous major traditional leading D&O insurers to
limit their exposure to claims, leading to significantly increased premiums for D&O insurance policies, and in particular for
companies in the life science sector. As a result of the significantly increased premiums, the Company's Compensation Committee,
followed by the Board of Directors, approved an amendment to the Compensation Policy to remove the limitations on the maximum annual
premium payable under D&O insurance policies (currently US $2 million).
It is proposed that at the General Meeting,
the following resolution be adopted:
“RESOLVED to approve
an amendment to the Company’s Compensation Policy to remove the limitations on the maximum annual premium payable under D&O
insurance policies.”
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter presented, is required
for shareholders to approve this resolution provided that either: (i) such majority vote at the General Meeting shall include at
least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined in the Companies
Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in
person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the non-controlling shareholders
mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights
in the Company.
THE COMPENSATION COMMITTEE AND BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AMENDMENT TO THE COMPENSATION POLICY.
PROPOSAL NO. 2
AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF THE COMPANY TO ADD A FORUM SELECTION PROVISION
Currently, our Articles
of Association (the Articles”) do not include a forum selection provision. In response to a March 2020
decision in the Delaware Supreme Court validating federal forum selection provisions, the Board of Directors considered
the adoption of an exclusive forum selection provision. In light of this Delaware Supreme Court decision in Salzburg
et al. v. Matthew Sciabacucchi, No. 346, 2019 (Del.) and additional considerations discussed below, our Board of Directors has
determined that it is in the best interests of the Company to include an exclusive forum selection provision in
our Articles. For avoidance of any doubt, the Amendment is not being proposed in anticipation of any specific litigation or transaction.
The Company is seeking
shareholder approval to amend our Articles to add a new section to the Articles to provide that, unless we consent in writing to
the selection of an alternative forum: (i) the federal district courts of
the United States shall be the exclusive forum for the resolution of any claim arising under the Securities Act of 1933, as amended
(the “federal forum selection provision”); and (ii) the Tel Aviv District Court (Economic Division) shall be the exclusive
forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim
of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s
shareholders, or (c) any action asserting a claim arising pursuant to any provision of the Israeli Companies Law 5759-1999
or the Israeli Securities Law 5728-1968 (the “Israeli forum selection provision”) (together, the “Amendment”).
Any person or entity
purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company shall be
deemed to have notice of and consented to these provisions.
The Company believes
that adopting the Amendment is in the best interests of the Company and its shareholders for the following reasons: (i)
the federal forum selection provision allows for the consolidation of multi-jurisdiction litigation and reduces the risk that the
outcome of cases in multiple jurisdictions could be inconsistent; (ii) the Amendment
will help avoid state court forum shopping and provide for efficiencies in managing the procedural aspects of securities litigation;
and (iii) the Amendment provides that all intra-corporate disputes be litigated in the State of Israel, where the Company is incorporated
and whose law governs such disputes. Moreover, the Israeli courts have developed considerable expertise in dealing with corporate
law issues involving Israeli public companies, as well as a substantial and influential body of case law construing Israel’s
corporate law and long-standing precedent regarding corporate governance.
The
Amendment will only regulate the forum where shareholders may file certain claims; it does not restrict the ability of
our shareholders to bring such claims, nor does it affect the remedies available if such claims are successful. Moreover, the Company
will retain the ability to consent to an alternative forum in circumstances where the Company determines that its interests
and those of its shareholders are best served by permitting a particular dispute to proceed in a forum other than the
federal district courts or State of Israel, as applicable.
Given
these considerations, the Board of Directors has determined that it is in the best interests of the Company that the Articles be
amended to include these exclusive forum selection provisions. There is, however, uncertainty as to whether a court
would enforce these provisions. In addition, although we are seeking approval of these provisions for the reasons cited above,
if these provisions are approved and implemented, this Amendment may also have the effect of limiting investors’ ability
to bring a claim in a judicial forum that they find favorable.
If approved, the amendment
would enable us to amend our Articles by adding a new Article 38 to the Articles to read as follows:
FORUM
SELECTION
38.
Unless the Company consents in writing to the selection of an alternative forum, and other than with respect to
plaintiffs or a class of plaintiffs which may be entitled to assert in the courts of the State of Israel, with respect to any causes
of action arising under the Securities Act of 1933 as amended, the federal district courts of the United States of America shall
be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act
of 1933, as amended; and (b) unless the Company consents in writing to the selection of an alternative forum, the
Tel Aviv District Court (Economic Division) shall be the exclusive forum for (i) any derivative action or proceeding
brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee of the Company, to the Company or the Company’s shareholders, or (iii) any action asserting a claim
arising pursuant to any provision of the Israeli Companies Law 5759-1999 or the Israeli Securities Law 5728-1968. Any person or
entity purchasing or otherwise acquiring or holding any interest in shares of the Company shall be deemed to have
notice of and consented to these provisions.
It is proposed that
at the General Meeting the following resolution be adopted:
“RESOLVED,
to amend the Company’s Amended and Restated Articles of Association to add a federal forum selection provision and an Israeli
forum selection provision, as described in the Proxy Statement.”
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this resolution.
The
Board of Directors recommend THAT THE SHAREHOLDERS VOTE FOR the approval of AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF THE COMPANY.
PROPOSAL NO. 3
AMENDMENTS TO THE EMPLOYMENT TERMS OF
MR. DROR BEN-ASHER, THE COMPANY’S CHIEF EXECUTIVE OFFICER
The Companies Law requires that the terms of
service and employment of a company’s chief executive officer be approved by the compensation committee, the board of directors
and the shareholders of the company, except in the limited circumstances set forth in the Companies Law. In addition, the
Companies Law provides that transactions between a company and its directors regarding their terms of office as director, and with
respect to their terms of employment in other positions in the company, are subject to the approval of such company's Compensation
Committee, as applicable, board of directors and shareholders.
Mr. Dror Ben-Asher has served as the Company's
Chief Executive Officer and Chairman of the Board of Directors since its incorporation until today. In light of Mr. Ben-Asher's
contribution to the Company, and in accordance with the Compensation Policy, the Compensation Committee and Board of Directors
have determined that the proposed revisions to the terms of employment described below are appropriate, reasonable and reflect
the significant contribution of Mr. Ben-Asher to the Company.
When discussing revisions to the terms of
employment of Mr. Ben-Asher, the Compensation Committee and the Board of Directors took into consideration, inter alia: (a) the
Board of Directors considers Mr. Ben-Asher as a major factor in setting the Company's business strategy and a key factor for the
Company's successful business execution; (b) the Company's achieved strategic milestones during the last years as a results of
Mr. Ben-Asher's leadership and contribution; (c) Mr. Ben-Asher's fixed compensation has not been updated for the last three years
and reflect significantly lower compensation than market benchmark; and (d) Mr. Ben-Asher also serves as the Chairman of the Board
of Directors with no additional compensation. The proposed revised terms of compensation which will be effective starting on October
1, 2020, comply with the Company’s Compensation Policy.
The Compensation Committee and Board found its
advisable and appropriate to recommend to the shareholders to provide for a revision to the terms of employment of Mr. Ben-Asher
as follows (i) an increase of the annual base salary of Mr. Ben-Asher from NIS 1,260,000 ($360,000 based on the representative
U.S. dollar – NIS rate of exchange of 3.5) to NIS 2,310,000 ($660,000 based on the representative U.S. dollar – NIS
rate of 3.5); (ii) increased benefits relating to advance notice of termination (increase from six months to 12 months), company
car reimbursement expenses (increased from NIS 6,000 monthly to NIS 7,500 monthly), annual medical checkup, and medical private
insurance for a cost of up to $1,000 annually and (iii) to incorporate the terms of the change in control employee retention plan
(the "CIC Plan") in Mr. Ben-Asher’s employment terms as described below.
In 2018, the Company adopted the CIC Plan,
providing for payment to Company employees, other than to the chief executive officer, in the event of a “Change in Control”
events (as defined below), subject to the satisfaction of various conditions. Compensation to employees would be in amount of up
to 12 months’ salary depending on employee seniority and years with the Company.
A “Change in Control” under the
CIC Plan is defined as follows:
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i.
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The consummation of any merger, consolidation, reorganization, or similar transaction or series
of related transactions of the Company with another entity, other than a merger, consolidation, reorganization, or similar transaction
or series of related transactions which would result in the shareholders of the Company immediately preceding the transaction beneficially
owning, immediately after the transaction, at least 50% of the combined voting power of the outstanding securities of the surviving
or resulting entity (or its parent);
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ii.
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Any “person” (as such term is used in Sections 13(d) and 14(d) of the U.S. Exchange
Act of 1934 (“Exchange Act”)) or “group” (two or more persons acting as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding, or disposing of the applicable securities referred to herein) becomes
the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then-outstanding
voting securities;
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iii.
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The election of a board of directors over a three-year period or less, the majority of which is
not supported by at least a majority of the then existing board of directors of the Company; or
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iv.
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Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions)
of all or substantially all of the assets of the Company (other than to an entity controlled by the Company).
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The benefits under the CIC Plan will be paid
if the Company’s total equity value will be at least $250 million at the time of the Change in Control event, and the payment
will depend on the employee's continued employment with the Company as follows: (i) in case of termination of employment (by the
Company) during the first year after the Change in Control event the payment will be paid at the end of the employment period;
and (ii) otherwise at the end of the period agreed with the new controlling shareholder (but not more than two years).
The CIC Plan provides that payment to
top management shall not exceed an amount equal to six months’ salary for management that has been employed by the
Company less than three years at the time of the occurrence of the Change in Control and an amount not to exceed 12
months’ salary for management that has been employed by the Company for more than three years at the time of the
occurrence of the Change in Control event. Due to the importance of Mr. Ben-Asher to the success of the Company and his key
role in leading the Company, the Board of Directors and Compensation Committee find it advisable and appropriate to recommend
to the shareholders to approve an amendment to the employment terms of Mr. Ben-Asher to provide for a payment equal to total
of 18 months’ salary upon the occurrence of a Change in Control. Mr. Ben-Asher has been employed by the Company since
2009.
It is proposed that at the General Meeting the
following resolution be adopted:
“RESOLVED, to approve the amendments
to the employment terms of Mr. Dror Ben-Asher as described in the proxy statement”.
The affirmative
vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter
presented, is required for shareholders to approve this resolution provided that either: (i) such majority vote at the General
Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company
(as defined in the Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting
at the General Meeting, in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the
non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%)
of the total voting rights in the Company.
The
COMPENSATION COMMITTEE AND THE Board of Directors recommend THAT THE SHAREHOLDERS VOTE FOR the approval of the AMENDMENTs TO EMPLOYMENT
TERMS OF MR. DROR BEN-ASHER.
PROPOSAL NO. 4
AMENDMENT TO THE EMPLOYMENT TERMS OF MR. RICK SCRUGGS, THE COMPANY
CHIEF COMMERCIAL OFFICER
The Companies Law provides that transactions
between a company and its directors regarding their terms of office as director, and with respect to their terms of employment
in other positions in the company, are subject to the approval of such company’s audit committee or compensation committee,
as applicable, board of directors and shareholders.
Mr. Rick D. Scruggs has served as the Company’s
Chief Commercial Officer since February 2020 and has served as its Chief Operations Officer, U.S. Operations since January 1,
2019 and as a member of the Board of Directors since January 1, 2016. Mr. Scruggs has significant business development and
commercial experience in the biopharma industry, including as the former Executive Vice President of Business Development at Salix
Pharmaceuticals.
As described in Proposal 3 above, the Company
adopted in 2018 the CIC Plan providing for payment to Company employees, other than to the chief executive officer, in “Change
in Control” events, subject to the satisfaction of various conditions. Compensation to employees would be up to 12 months’
salary depending on employee seniority and years with the Company. The terms of the CIC are summarized in Proposal 3 above.
Due to the importance of Mr. Scruggs to the
success of the Company, the Compensation Committee and Board of Directors find it advisable and appropriate to recommend to the
shareholders to approve an amendment to the employment terms of Mr. Scruggs to incorporate the terms of the CIC Plan. Under the
terms of the CIC Plan, Mr. Scruggs would be entitled to a payment upon a Change in Control equal to six months’ salary if
he is employed by the Company less than three years at the time of the occurrence of the Change in Control event and a payment
equal to 12 months’ salary if he is employed by the Company for more than three years at the time of the occurrence of the
Change in Control event. Mr. Scruggs has been employed by the Company since January 2019.
It is proposed that at the General Meeting the
following resolution be adopted:
“RESOLVED,
to approve the amendment to the employment terms of Mr. Rick D. Scruggs as described in the proxy statement.”
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this resolution.
The
compensation committee and the Board of Directors recommend a vote FOR the approval of Amendment to the employment terms of Mr.
Scruggs.
PROPOSAL NO. 5
REPRICING OF OPTIONS EXERCISABLE INTO ADSs OF THE COMPANY PREVISOLY
GRANTED TO MR. RICK SCRUGGS
Earlier this year, the Compensation Committee
and the Board of Directors approved the repricing of all options to purchase ADSs that were outstanding at the time of such approval
in order to incentive the Company's officers, team members and consultants to continue to contribute to the Company's success and
results of operations. This was due to the fact that the exercise price of each option to purchase ADSs granted by the Company
under the RedHill Biopharma Ltd. Amended and Restated Award Plan (2010) (the "Plan") exceeded the then current price
per ADS on the Nasdaq. On May 4, 2020, the Company shareholders approved the repricing of the options held by Mr. Scruggs and the
Company directors immediately prior to the date of that shareholders meeting as required under the Israeli Companies Law 5759-1999
("Companies Law") on the same terms as the Company employees.
The repricing plan, previously approved by
the Compensation Committee and the Board, provided that each of the existing options would be repriced to an exercise price
(called, the “Updated Exercise Price”) equal to fifty percent (50%) of the original exercise price of each such
option, but not less than $6.00; provided that (x) the exercise price will lowered to $5.00 if the Company generates (a) at
least $75 million of net revenues or negative Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) of less than $55 million in 2020; (b) at least $100 million of net
revenues or negative EBITDA of less than $40 million in 2021; or (c) at least $130 million of net
revenues or negative EBITDA of less than $20 million in 2022, and (y) the exercise price will lowered to
$4.30, if the Company generates (a) at least $75 million of net revenues and negative EBITDA of less than $55
million in 2020; (b) at least $100 million of net revenues and negative EBITDA of less than $40 million in 2021; or
(c) at least $130 million of net revenues and negative EBITDA of less than $20 million in 2022.
Following the last shareholders meeting, the
Compensation Committee and the Board of Directors approved the repricing of the options that had been granted under the Plan since
their previous approvals of the repricing of options. In the context of this recent approval of the repricing, the Compensation
Committee and the Board also approved the repricing of options to acquire 75,000 ADSs granted to Mr. Scruggs (which has an exercise
price of $6.84) on the same terms as the repricing of options approved for other grantees who were granted options under the Plan
during this period; provided that the Updated Exercise Price of these options held by Mr. Scruggs shall not be less than the closing
price per share on the date of the General Meeting. As with all other optionees, Mr. Scruggs would need to accept the terms of the repricing for it to be effective.
It is proposed that at the General Meeting,
the following resolution be adopted:
"RESOLVED, to approve the repricing
of the options to acquire 75,000 ADSs granted to the Mr. Rick Scruggs on the terms described in the proxy statement."
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this resolution.
THE COMPENSATION COMMITTEE AND THE BOARD
OF DIRECTORS RECOMMEND THAT YOU VOTE FOR THE APPROVAL OF THE REPRICING OF OPTIONS GRANTED TO MR. SCRUGGS.
PROPOSAL NO. 6
EXTENSION OF OPTIONS TO PURCHASE ADSs OF THE COMPANY PREVIOUSLY
GRANTED TO BOARD OF DIRECTORS MEMBERS
On March 19, 2014, the Company granted options
to purchase an aggregate of 64,000 ADSs at an exercise price of $14.80 per ADS to the members of the Board of Directors pursuant
to the Plan (the "2014 Options") which options expire seven years following the grant date. In order to incentivize
and reward them for their dedication and commitment to the Company, the Company's Compensation Committee and the Board of Directors
approved the extension of the exercise period for the 2014 Options by three additional years until March 19, 2024. Following such
extension, the term of the 2014 Options will have the maximum term permitted under the Plan and may not be further extended.
The proposed extension of the 2014 Options would
be on the same terms as the current terms and conditions of the 2014 Options.
It is proposed that at the General Meeting,
the following resolution be adopted:
"RESOLVED, to approve the extension
until March 19, 2024 of the exercise period of options to purchase 64,000 ADSs granted to the members of the Board of Directors,
with all other terms remaining unchanged."
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this resolution.
THE COMPENSATION COMMITTEE AND THE BOARD
OF DIRECTORS RECOMMEND THAT YOU VOTE FOR THE APPROVAL OF EXTENSION OF OPTIONS GRANTED TO THE BOARD MEMBERS.
PROPOSAL NO. 7
EXTENSION OF OPTIONS TO PURCHASE ADSs OF THE COMPANY PREVIOUSLY
GRANTED TO MR. DROR BEN-ASHER
The Companies Law requires that the terms of
service and employment of a company’s chief executive officer be approved by the compensation committee, the board of directors
and the shareholders of the company, except in the limited circumstances set forth in the Companies Law. In addition, the
Companies Law provides that transactions between a company and its directors regarding their terms of office as director, and with
respect to their terms of employment in other positions in the company, are subject to the approval of such company's audit committee
or Compensation Committee, as applicable, board of directors and shareholders.
On March 19, 2014, the Company granted options
to purchase 45,000 ADSs to Mr. Ben-Asher at an exercise price of $14.80 per ADS, which options expire seven years following the
grant date. In order to incentivize Mr. Ben-Asher and to reward him for his dedication and commitment to the Company, the Company's
Compensation Committee and the Board of Directors approved the extension of the exercise period of such options by three additional
years until March 19, 2024. Following such extension, the term of the options will have the maximum term permitted under the Plan
and may not be further extended.
The proposed extension of the options would
be on the same terms as the current terms and conditions of the options.
It is proposed that at the General Meeting,
the following resolution be adopted:
"RESOLVED, to approve the extension
until March 19, 2024 of the exercise period of options to purchase 45,000 ADSs granted to Mr. Ben-Asher, with all other terms remaining
unchanged."
The affirmative vote of at least a majority
of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter presented, is required
for shareholders to approve this resolution provided that either: (i) such majority vote at the General Meeting shall include at
least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined in the Companies
Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in
person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the non-controlling shareholders
mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights
in the Company.
The
Compensation Committee and the Board of directors recommend a vote FOR the approval of extension of options to acquire Adss
of Mr. Dror Ben-Asher.
Other than as set forth above, as of the mailing
of this Proxy Statement, management knows of no other business to be transacted at the General Meeting, but, if any other matters
are properly presented at the General Meeting, the persons named in the enclosed form of proxy will vote upon such matters in accordance
with their best judgment.
By order of the Board of Directors
Dror Ben-Asher
Chairman of the Board of Directors
Dated: September 22, 2020
Appendix A – Amendment to the Compensation Policy
Exemption, Indemnification and
Insurance
Board member and Officer liability insurance
(claims made): the Company may obtain a liability insurance policy for Board members and Officers, which would apply to Officers
of the Company and/or of its subsidiaries, as they may be, from time to time, subject to the following terms and conditions: (a)
the total insurance coverage under the insurance policy shall not exceed US $100 million; (b) the annual premium payable
by the Company for the insurance premium shall not exceed US $2 million annually and (bc) the purchase
of such policy shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall determine that
such policy reflects the current market conditions, and it shall not materially affect the Company's profitability, assets or
liabilities.
Board member and Officer’s liability insurance
(run-off): should the Company sell its operations (in whole or in part) and/or in case of merger, spin-off or any other significant
business combination involving the Company and/or part or all of its assets, the Company may obtain a Board member and Officer’s
liability insurance policy (run-off) for Board members and Officers in office with regard to the relevant operations, subject
to the following terms and conditions: (a) the insurance term shall not exceed 7 years; (b) the coverage amount shall not exceed
US $100 million; (c) the premium payable by the Company shall not exceed US $2 million annually and (cd)
the purchase of such policy shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall
determine that such policy reflects the current market conditions, and it shall not materially affect the Company's profitability,
assets or liabilities.
12179 RedHill Biopharma Ltd VIF Proof 2 For Against Abstain For Against Abstain MAIL • Mark, sign and date your Voting Instruction Form. • Detach your Voting Instruction Form. • Return your Voting Instruction Form in the postage - paid envelope provided. Extraordinary General Meeting of RedHill Biopharma Ltd. to be held on October 26, 2020 For Holders as of September 22, 2020 All votes must be received by 12:00 p.m. EST, on October 22, 2020. Copyright © 2020 Mediant Communications Inc. All Rights Reserved Please Sign Here Please Date Above Please Sign Here Please Date Above Please separate carefully at the perforation and return just this portion in the envelope provided. Authorized Signatures - This section must be completed for your instructions to be executed. EVENT # CLIENT # PROXY TABULATOR FOR REDHILL BIOPHARMA LTD. P.O. BOX 8016 CARY, NC 27512 - 9903 1. To approve an amendment to the Company’s Compensation Policy regarding the D&O insurance premium ; 1 a . Are you a controlling shareholder or do you have a personal interest in the approval of proposal 1 above? (Response required for vote to be counted . ) 2. To approve an amendment to the Amended and Restated Articles of Association of the Company to add a forum selection provision; 3. To approve amendments to the employment terms of Mr. Dror Ben - Asher, the Company’s Chief Executive Officer; 3 a . Are you a controlling shareholder or do you have a personal interest in the approval of proposal 3 above? (Response required for vote to be counted . ) 4. To approve an amendment to the employment terms of Mr. Rick Scruggs, the Company’s Chief Commercial Officer; 5. To approve the repricing of options exercisable into American Depository Shares (“ADSs”) of the Company granted to Mr. Rick Scruggs; 6. To approve the extension of options to purchase ADSs of the Company previously granted to members of the board of directors; and 7. To approve the extension of options to purchase ADSs of the Company previously granted to Mr. Dror Bern - Asher. 7 a . Are you a controlling shareholder or do you have a personal interest in the approval of proposal 7 above? (Response required for vote to be counted . ) For Against Abstain Yes No Yes No Yes No Date: Extraordinary General Meeting of RedHill Biopharma Ltd. October 26, 2020 See Voting Instruction On Reverse Side. Please make your marks like this: Use pen only 12179 RedHill Biopharma Ltd VIF.indd 1 9/17/2020 5:40:30 PM
12179 RedHill Biopharma Ltd VIF Proof 2 REDHILL BIOPHARMA LTD. Instructions to The Bank of New York Mellon, as Depositary (Must be received prior to 12 : 00 p . m . EST on October 22 , 2020 ) The undersigned registered owner of American Depositary Shares hereby requests and instructs The Bank of New York Mellon, as Depositary, to endeavor, in so far as practicable, to vote or cause to be voted the amount of Shares or other Deposited Securities represented by such Shares of RedHill Biopharma Ltd . registered in the name of the undersigned on the books of the Depositary as of the close of business on September 22 , 2020 at the Extraordinary General Meeting of the Shareholders of RedHill Biopharma Ltd . to be held on October 26 , 2020 or any postponement or adjournment thereof in respect of the resolutions specified on the reverse . NOTES: 1. Please direct the Depositary how it is to vote by placing an “X” in the appropriate box opposite each agenda item . 2. If you do not vote or if your voting instructions are not received before the deadline, you will be deemed to have given a discretionary proxy to the Company to vote the shares represented by your ADRs pursuant to the terms and conditions of the ADRs and the Deposit Agreement under which they are issued . PROXY TABULATOR FOR REDHILL BIOPHARMA LTD. P.O. BOX 8016 CARY, NC 27512 - 9903 12179 RedHill Biopharma Ltd VIF.indd 2 9/17/2020 5:40:31 PM
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