As filed with the Securities and Exchange Commission on January 3, 2005
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NESS TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 7371 98-0346908
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
2003 STOCK OPTION PLAN
2003 ISRAELI SHARE OPTION PLAN
2001 STOCK OPTION PLAN
1999 ISRAEL SHARE OPTION PLAN
APAR HOLDING CORP. EMPLOYEE EQUITY PLAN
(FULL TITLES OF THE PLANS)
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NESS TOWER
ATIDIM HIGH-TECH INDUSTRIAL PARK
BUILDING 4
TEL AVIV 61580, ISRAEL
TELEPHONE: +972 (3) 766-6800
RAVIV ZOLLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NESS TECHNOLOGIES, INC.
3 UNIVERSITY PLAZA, SUITE 600
HACKENSACK, NEW JERSEY 07601
TELEPHONE: (201) 488-7222
Copy to:
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & Wolosky LLP
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 451-2300
FACSIMILE: (212) 451-2222
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FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
(Approximate Date of Commencement of Proposed Sale to the Public)
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered(1) Offering Price per Share Aggregate Offering Price(2) Registration Fee
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Common stock, par value $.01 per share: 7,083,010 $7.54(2) $53,391,175.73(2) $6,284.14
shares subject to outstanding options
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Common stock, par value $.01 per share: 2,243,885 $14.70(3) $32,985,109.50(3) $3,882.35
shares authorized and reserved for
issuance(4)
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(1) Pursuant to Rule 416, the registration statement also covers such
indeterminate additional shares of common stock as may become issuable as a
result of any future anti-dilution adjustment in accordance with the terms
of the 2003 Stock Option Plan, 2003 Israeli Share Option Plan, 2001 Stock
Option Plan, 1999 Israel Share Option Plan, and Apar Holding Corp. Employee
Equity Plan (collectively, the "Plans").
(2) Pursuant to Rule 457(h)(1) and (c) under the Securities Act of 1933,
calculated on the basis of the average of the weighted average exercise
price of outstanding options to purchase shares of common stock under the
Plans.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) and (c) under the Securities Act of 1933 on the
basis of the average of the high and low prices reported for shares of
common stock of the Registrant on the Nasdaq National Market on December
27, 2004.
(4) Includes 382,058 shares of common stock issued upon the exercise of options
exercised prior to the filing of this Registration Statement.
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EXPLANATORY NOTES
Ness Technologies, Inc. has prepared this registration statement in
accordance with the requirements of Form S-8 under the Securities Act of 1933,
to register shares of our common stock, $0.01 par value per share, issuable
under our 2003 Stock Option Plan, 2003 Israeli Share Option Plan, 2001 Stock
Option Plan, 1999 Israel Share Option Plan, and Apar Holding Corp. Employee
Equity Plan, which we refer to collectively as the plans.
This Form S-8 includes a reoffer prospectus prepared in accordance with
Part I of Form S-3 under the Securities Act. The reoffer prospectus may be
utilized for reoffers and resales of shares of our common stock acquired
pursuant to the plans and consulting agreements, by selling stockholders who
exercised stock options prior to the initial filing of this registration
statement or who may be deemed "affiliates" (as such term is defined in Rule 405
Securities Act) of the Company.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
We will provide documents containing the information specified in Part 1 of
Form S-8 to employees as specified by Rule 428(b)(1) under the Securities Act.
Pursuant to the instructions to Form S-8, we are not required to file these
documents either as part of this registration statement or as prospectuses or
prospectus supplements pursuant to Rule 424 under the Securities Act.
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PROSPECTUS
2,968,752 SHARES
NESS TECHNOLOGIES
COMMON STOCK
This prospectus relates to the reoffer and resale by certain selling
stockholders of shares of our common stock that have been or may be issued by us
to the selling stockholders upon the exercise of stock options granted under our
stock option plans or pursuant to other grants of stock options to non-employee
directors. We have not previously registered the offer and sale of the shares to
the selling stockholders. This prospectus also relates to certain underlying
options that have not as of this date been granted. If and when such options are
granted to persons required to use the prospectus to reoffer and resell the
shares underlying such options, we will distribute a prospectus supplement. The
shares are being reoffered and resold for the account of the selling
stockholders. We will not receive any of the proceeds from the resale of the
shares.
The selling stockholders have advised us that the resale of their shares
may be effected from time to time in one or more transactions on the Nasdaq
National Market, in negotiated transactions or otherwise, at market prices
prevailing at the time of the sale or at prices otherwise negotiated. See "Plan
of Distribution." We will bear all expenses in connection with the preparation
of this prospectus.
Our common stock is listed on the Nasdaq National Market under the symbol
"NSTC." The last reported sale price for our common stock on December 30, 2004
was $14.81 per share. On September 20, 2004, we effected a 0.7193-for-one
reverse split of our common stock and all share and per share amounts and option
information in this prospectus has been adjusted to reflect the reverse stock
split.
Our principal executive office in the United States is located at 3
University Plaza, Suite 600, Hackensack, New Jersey 07601. Our telephone number
there is (201) 488-7222. Our principal executive office in Israel is located at
Ness Tower, Atidim High-Tech Industrial Park, Building 4, Tel Aviv 61580,
Israel. Our telephone number there is +972 (3) 766-6800.
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Investing in the common stock involves risks that are described in the
"Risk Factors" section beginning on page 6 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is January 3, 2005.
TABLE OF CONTENTS
INCORPORATION BY REFERENCE.........................................5
THE COMPANY........................................................6
RISK FACTORS.......................................................6
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS.................17
USE OF PROCEEDS...................................................17
SELLING STOCKHOLDERS..............................................17
PLAN OF DISTRIBUTION..............................................20
LEGAL MATTERS.....................................................20
WHERE YOU CAN FIND MORE INFORMATION...............................20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES........................................21
You should rely only on the information contained in this
prospectus. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. The selling stockholders will not make
an offer to sell these securities in any jurisdiction where an offer or sale is
not permitted. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this prospectus
only, regardless of the time of delivery of this prospectus or of any sale of
our common stock. Our business, financial condition, results of operations and
prospects may have changed since that date.
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INCORPORATION BY REFERENCE
The following documents filed by us with the SEC are incorporated by
reference in this prospectus:
(1) Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2004;
(2) Our Current Report on Form 8-K, filed September 30, 2004;
(3) Our Current Report on Form 8-K, filed October 13, 2004;
(4) Our Current Report on Form 8-K, filed October 26, 2004;
(5) Our Current Report on Form 8-K, filed November 4, 2004;
(6) Our Registration Statement on Form S-1 (SEC File No. 333-115260), as
amended, initially filed May 7, 2004;
(7) Our Registration Statement on Form S-4 (SEC File No. 333-120389) filed
November 12, 2004; and
(8) The description of our common stock contained in our Registration
Statement on Form 8-A, filed on September 23, 2004 pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended.
All documents subsequently filed with the SEC by us pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post-effective amendment which indicates that all
securities offered herein have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be part hereof from the respective dates of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof or of the related prospectus to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.
You may request a copy of these filings, excluding the exhibits to such
filings which we have not specifically incorporated by reference in such
filings, at no cost, by writing or telephoning us at the following address:
Ness Technologies, Inc.
Ness Tower
Atidim High-Tech Industrial Park
Building 4
Tel Aviv 61580, Israel
Telephone: +972 (3) 766-6800
Attention: Corporate Secretary
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THE COMPANY
We are a global provider of information technology, or IT, services and
end-to-end business solutions designed to help clients improve their
competitiveness and effectiveness. End to end business solutions encompass all
stages of a client's business process and incorporate all technologies and IT
services related to that process. Our portfolio of solutions and services
includes outsourcing, system integration and application development, software
and consulting, and quality assurance and training.
We provide services to a significant number of clients in the commercial,
industrial and government sectors. We have a highly skilled workforce of
experienced IT employees and consulting professionals across our key vertical
markets. The primary industries, or verticals, we serve include government and
defense, financial services, life sciences and healthcare, telecommunications
and utilities, and independent software vendors, or ISVs. We combine our
knowledge of these vertical markets and our clients' businesses with our
technical expertise to deliver tailored solutions to our clients, many of whom
are subject to rigorous regulatory requirements.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING CIRCUMSTANCES OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN THAT EVENT, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE,
AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT. UNLESS OTHERWISE INDICATED, ALL
REFERENCES IN THIS PROSPECTUS TO "NESS," WE," "US" AND "OUR" REFER TO NESS
TECHNOLOGIES, INC. AND ITS SUBSIDIARIES AND AFFILIATES.
RISKS RELATING TO OUR BUSINESS
IF WE FAIL TO MANAGE OUR GROWTH, OUR BUSINESS COULD BE DISRUPTED AND OUR
PROFITABILITY WILL LIKELY DECLINE.
We have experienced rapid growth in recent periods through both
acquisitions and organic growth. The number of our employees increased from
approximately 2,240 as of December 31, 2001 to approximately 4,856 as of
September 30, 2004. We expect our growth to continue to significantly strain our
management and other operational and financial resources. In particular,
continued growth increases the integration challenges involved in:
o recruiting, training and retaining skilled technical, marketing and
management personnel;
o maintaining high quality standards;
o preserving our corporate culture, values and entrepreneurial environment;
o developing and improving our internal administrative infrastructure,
particularly our financial, operational, communications and other internal
controls; and
o maintaining high levels of client satisfaction.
The rapid execution necessary to exploit the market for our business model
requires an effective planning and management process. Our systems, procedures
or controls may not be adequate to support the growth in our operations, and our
management may not be able to achieve the rapid execution necessary to exploit
the market for our business model. Our future operating results will also depend
on our ability to expand our development, sales and marketing organizations.
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If we are unable to manage growth effectively, our profitability will likely
decline.
WE MAY ENGAGE IN ACQUISITIONS, STRATEGIC INVESTMENTS, PARTNERSHIPS, ALLIANCES OR
OTHER VENTURES THAT ARE NOT SUCCESSFUL, OR FAIL TO INTEGRATE ACQUIRED BUSINESSES
INTO OUR OPERATIONS, WHICH MAY ADVERSELY AFFECT OUR COMPETITIVE POSITION AND
GROWTH PROSPECTS.
We have in the past engaged in acquisitions, strategic investments,
partnerships and alliances. We may acquire or make strategic investments in
complementary businesses, technologies, services or products, or enter into
strategic partnerships or alliances with third parties in the future in order to
expand our business. We may be unable to identify suitable acquisition,
strategic investment or strategic partnership candidates, or if we do identify
suitable candidates, we may not complete those transactions on terms
commercially favorable to us or at all, which may adversely affect our
competitive position and our growth prospects.
If we acquire another business, we may face difficulties, including:
o integrating that business' personnel, products, technologies or services
into our operations;
o retaining the key personnel of the acquired business;
o failing to adequately identify or assess liabilities of that business;
o failure of that business to fulfill its contractual obligations;
o failure of that business to achieve the forecasts we used to determine the
purchase price; and
o diverting our management's attention from normal daily operations of our
business.
These difficulties could disrupt our ongoing business and increase our
expenses. As of the date of this prospectus, we have no agreements to enter into
any material acquisition, investment, partnership, alliance or other joint
venture transaction.
BECAUSE WE DERIVE A SIGNIFICANT PORTION OF OUR REVENUES FROM THE ISRAELI
GOVERNMENT, A REDUCTION OF GOVERNMENT SPENDING IN ISRAEL ON IT SERVICES WOULD
REDUCE, POSSIBLY MATERIALLY, OUR REVENUES AND PROFITABILITY.
We perform work for a wide range of Israeli governmental agencies,
including defense, education, justice and finance, which collectively
represented approximately 12% of our pro forma revenues in 2003. In 2003,
Israeli government spending was reduced generally, including IT services,
adversely affecting our revenues. Any further reduction in Israeli government
spending for political or economic reasons would reduce, possibly materially,
our revenues and profitability. The Israeli economy has experienced a recession
over the last three years. Although our revenues derived from agencies of the
Israeli government grew each year during that period, the size of the overall
Israeli IT services market decreased, putting pressure on our growth rates. As
Israel re-enters a period of economic growth, we do not expect any additional
short-term decrease.
QUARTERLY FLUCTUATIONS IN OUR RESULTS OF OPERATIONS COULD CAUSE OUR STOCK PRICE
TO DECLINE OR FLUCTUATE.
We have experienced, and expect to continue to experience, significant
fluctuations in our quarterly results of operations. During the past six
quarters, our net income ranged from approximately $0.2 million to approximately
$3.7 million. In future periods, our operating results could be below public
expectations, which would likely cause the market price of our common stock to
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decline. Numerous factors, some of which are beyond our control, may affect our
quarterly results of operations, including:
o the size, timing and terms and conditions of significant projects;
o variations in the duration, size and scope of our projects;
o contract terminations or cancellation or deferral of projects;
o our ability to manage costs, including personnel and support services
costs, and investments required by us to maintain our existing operations
and support future growth;
o currency exchange fluctuations;
o changes in pricing policies by us or our competitors;
o the introduction of new services by us or our competitors; and
o acquisition and integration costs related to possible acquisitions of other
businesses.
During recent periods, our quarterly results have fluctuated as a result of
the number of working days in each period and the seasonality of client demand
in the IT services industry. Typically our fourth quarter is strongest, when
client demand is greatest, and the second and third quarters are weakest, when
the number of working days in the quarter is lowest in Israel, currently our
largest employee location. We expect these factors to continue to be significant
in the future, although we believe that the impact of the number of working days
on our results of operations will decrease as our international business
continues to grow.
Our clients typically retain our services for set engagements pursuant to
contracts that may be terminated by them with little or no notice and without
termination fees. The termination, cancellation or deferral of one or more
significant projects could materially and adversely affect our operating results
in any fiscal quarter. In addition, we base our current and future expense
levels on our internal operating plans and sales forecasts, and our near-term
operating costs are, therefore, to a large extent, fixed. As a result, we may
not be able to sufficiently reduce our costs on a timely basis in any quarter to
compensate for an unexpected near-term shortfall in revenues.
IF WE FAIL TO ATTRACT AND RETAIN HIGHLY SKILLED IT PROFESSIONALS, WE MAY NOT
HAVE THE NECESSARY RESOURCES TO PROPERLY STAFF PROJECTS.
Our success depends largely on the contributions of our employees and our
ability to attract and retain qualified personnel, including technology,
consulting, engineering, marketing and management professionals. Competition for
qualified personnel in the IT services industry, in the markets in which we
operate, particularly in India and the United States, is intense and,
accordingly, we may not be able to retain or hire all of the personnel necessary
to meet our ongoing and future business needs. If we are unable to attract and
retain the highly skilled IT professionals we need, we may have to forego
projects for lack of resources or be unable to staff projects optimally. In
addition, the competition for highly skilled employees may require us to
increase salaries of highly skilled employees, and we may be unable to pass on
these increased costs to our clients, which would reduce our profitability.
IF OUR CLIENTS TERMINATE SIGNIFICANT CONTRACTED PROJECTS OR CHOOSE NOT TO RETAIN
US FOR ADDITIONAL PROJECTS, OR IF WE ARE RESTRICTED FROM PROVIDING SERVICES TO
OUR CLIENTS' COMPETITORS, OUR REVENUES AND PROFITABILITY MAY BE NEGATIVELY
AFFECTED.
Our clients typically retain us on a non-exclusive basis. Many of our
client contracts, including those that are on a fixed price, fixed timeframe
basis, can be terminated by the client with or without cause upon 90 days'
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notice or less and generally without termination related penalties.
Additionally, our contracts with clients are typically limited to discrete
projects without any commitment to a specific volume of business or future work
and may involve multiple stages. In addition, the increased breadth of our
service offerings may result in larger and more complex projects for our clients
that require us to devote resources to more thoroughly understanding their
operations. Despite these efforts, our clients may choose not to retain us for
additional stages or may cancel or delay planned or existing engagements due to
any number of factors, including:
o financial difficulties of a current client;
o a change in strategic priorities;
o a demand for price reductions; and
o a decision by our clients to utilize their in-house IT capacity or work
with our competitors.
These potential terminations, cancellations or delays in planned or
existing engagements could make it difficult for us to use our personnel
efficiently. In addition, some of our client contracts restrict us from engaging
in business with certain competitors of our clients during the term of the
agreements and for a limited period following termination of these agreements.
Any of the foregoing factors may negatively impact our revenues and
profitability.
IF WE FAIL TO MEET OUR CLIENTS' PERFORMANCE EXPECTATIONS, OUR REPUTATION MAY BE
HARMED, CAUSING US TO LOSE CLIENTS OR EXPOSING US TO LEGAL LIABILITY.
As an IT services provider, our ability to attract and retain clients
depends to a large extent on our relationships with our clients and our
reputation for high quality professional services and integrity. As a result, if
a client is not satisfied with our services or solutions, including those of
subcontractors we engage, our reputation may be damaged. In addition, a number
of our contracts provide for incentive based or other pricing terms pursuant to
which some of our fees are contingent on our ability to meet revenue
enhancement, cost-saving or other contractually defined performance goals. Our
failure to meet these goals or a client's expectations in such performance based
contracts may result in a less profitable or an unprofitable engagement.
Moreover, if we fail to meet our clients' performance expectations, we may lose
clients and be subject to legal liability, particularly if such failure has a
consequential adverse impact on our clients' businesses.
In addition, many of our projects are critical to the operations of our
clients' businesses. Our exposure to legal liability may be increased in the
case of outsourcing contracts in which we become more involved in our clients'
operations. While our contracts typically include provisions designed to limit
our exposure to legal claims relating to our services and the solutions we
develop, these provisions may not adequately protect us or may not be
enforceable in all cases. The general liability insurance coverage that we
maintain, including coverage for errors or omissions, is subject to important
exclusions and limitations. We cannot be certain that this coverage will
continue to be available on reasonable terms or will be available in sufficient
amounts to cover one or more large claims, or that the insurer will not disclaim
coverage as to any future claim. A successful assertion of one or more large
claims against us that exceeds our available insurance coverage or changes in
our insurance policies, including premium increases or the imposition of large
deductible or co-insurance requirements, could adversely affect our
profitability.
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WE MAY BE REQUIRED TO BE RESPONSIBLE FOR THE PERFORMANCE OF BUSINESS PARTNERS WE
DO NOT CONTROL, WHICH COULD LOWER OUR MARGINS AND REDUCE PROFITABILITY.
In connection with some of our more complex engagements, we have been
required, and may in the future be required, to assume contingent responsibility
for the performance of business partners. Our being required to perform the
third party obligations of these commitments could have a material adverse
affect on our margins and profitability because we would be required to incur
additional costs, possibly without any corresponding recovery against the third
parties. While we will continue to manage liabilities or risks through rigorous
transaction review, we expect that clients may require us to assume certain
additional contractual obligations and potential liabilities when we are
responsible for the performance of business partners we do not control.
IF WE FAIL TO COMPLETE FIXED PRICE CONTRACTS ON BUDGET AND ON TIME, OUR
REPUTATION MAY BE HARMED, CAUSING US TO LOSE CLIENTS AND NEGATIVELY AFFECTING
OUR PROFITABILITY.
We offer a portion of our services on a fixed price basis, rather than on a
time-and-materials basis. In each of 2001 and 2002, revenues from fixed price
projects accounted for approximately 24% of our total revenues and increased to
26% in 2003. For the nine months ended September 30, 2004, revenues from fixed
price projects accounted for approximately 18.9% of our total revenues. Under
these contractual arrangements, we bear the risk of cost overruns, completion
delays and wage inflation. If we fail to estimate accurately the resources and
time required to complete a project or fail to complete our contractual
obligations within the scheduled timeframe, our profitability may suffer.
Historically, we have not had any cost overruns that have had a material impact
on our profitability. However, we cannot be certain that this will continue to
be the case.
OUR SUCCESS DEPENDS IN PART UPON THE SENIOR MEMBERS OF OUR MANAGEMENT TEAM, AND
OUR INABILITY TO ATTRACT AND RETAIN THEM COULD HAVE A NEGATIVE EFFECT ON OUR
ABILITY TO OPERATE OUR BUSINESS.
We are highly dependent on the senior members of our management team,
particularly Aharon Fogel, our chairman, Raviv Zoller, our president and chief
executive officer, and Tuvia Feldman, our chief operating officer. Mr. Fogel has
a strong reputation and significant business experience in the public and
private sectors in Israel. Mr. Zoller has been with us since our inception, as
our chief financial officer for two years and our president and chief executive
officer since 2001, and has been instrumental in securing important client
contracts. Mr. Feldman has been managing our operations since 2000 and is in
charge of many of our successful methodologies and best practices. We do not
maintain key man life insurance for any of the senior members of our management
team. Competition for senior management in our industry is intense, and we may
not be able to retain our senior management personnel or attract and retain new
senior management personnel in the future. The loss of one or more members of
our senior management team could have a negative effect on our ability to
attract and retain clients, execute our business strategy and otherwise operate
our business, which could reduce our revenues, increase our expenses and reduce
our profitability.
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DISRUPTIONS IN OUR TELECOMMUNICATIONS INFRASTRUCTURE COULD HARM OUR ABILITY TO
OPERATE AND TO DELIVER OUR SERVICES EFFECTIVELY, WHICH COULD RESULT IN CLIENT
DISSATISFACTION AND A REDUCTION OF OUR REVENUES AND RESULTS OF OPERATIONS.
A significant element of our global delivery model is to continue to
leverage and expand our global development centers. Our global development
centers are linked with a network architecture that uses multiple
telecommunication service providers and various links with alternate routing,
including some routing via virtual private networks on the internet. We may not
be able to maintain active voice and data communications between our various
global development centers and between our global development centers and our
clients' sites at all times. Any significant loss or impairment of our ability
to communicate could result in a disruption in our business, which could hinder
our performance or our ability to complete client projects on time. This, in
turn, could lead to client dissatisfaction and have a material adverse effect on
our operations.
OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS MAY FORCE US TO INCUR
UNANTICIPATED COSTS.
Our success will depend, in part, on our ability to obtain and maintain
protection in the United States and other countries for certain intellectual
property incorporated into our software solutions and our proprietary
methodologies. We may be unable to obtain patents relating to our technology.
Even if issued, patents may be challenged, narrowed, invalidated or
circumvented, which could limit our ability to prevent competitors from
marketing similar solutions that limit the effectiveness of our patent
protection and force us to incur unanticipated costs. In addition, existing laws
of some countries in which we provide services or solutions may offer only
limited protection of our intellectual property rights.
While we attempt to retain intellectual property rights arising from client
engagements, our clients often have the contractual right to such intellectual
property. For intellectual property that we own, we rely upon a combination of
trade secrets, confidentiality, nondisclosure and other contractual
arrangements. These measures may not adequately prevent or deter infringement or
other misappropriation of our intellectual property, and we may not be able to
detect unauthorized use of, or take appropriate and timely steps to enforce, our
intellectual property rights.
IF WE ARE UNABLE TO SECURE NECESSARY ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO
FUND OUR OPERATIONS OR STRATEGIC GROWTH.
In order to achieve our strategic business objectives, we may be required
to seek additional financing. For example, future acquisitions may require
additional equity and/or debt financing. In addition, we may require further
capital to continue to develop our technology and infrastructure and for working
capital purposes. These financings may not be available on acceptable terms, or
at all. Our failure to secure additional financing could prevent us from
completing acquisitions, developing new technologies and competing effectively,
all of which would have a negative impact on our continued development and
growth.
OUR CLIENTS' COMPLEX REGULATORY REQUIREMENTS MAY INCREASE OUR COSTS, WHICH COULD
NEGATIVELY IMPACT OUR PROFITS.
Many of our clients, particularly those in the financial services, life
sciences, healthcare and defense verticals, are subject to complex and
constantly changing regulatory requirements. On occasion, these regulatory
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requirements change unpredictably. These regulations may increase our potential
liabilities if our services are found to contribute to a failure by our clients
to comply with the requirements applicable to them and may increase compliance
costs as regulatory requirements increase or change. These increased costs could
negatively impact our profits.
RISKS RELATED TO INTERNATIONAL OPERATIONS
OUR INTERNATIONAL OPERATIONS SUBJECT US TO RISKS INHERENT IN DOING BUSINESS ON
AN INTERNATIONAL LEVEL, ANY OF WHICH COULD INCREASE OUR COSTS AND HINDER OUR
GROWTH.
We currently operate in 14 countries and intend to further penetrate key
markets, primarily in North America and Europe, while establishing offshore
development centers in lower-cost Asian markets. We expect to devote significant
resources to this effort but may not be successful in this regard. Risks
inherent in our international business activities include:
o difficulties in staffing international projects and managing international
operations;
o difficulties in collecting accounts receivable;
o local competition, particularly in North America and Europe;
o imposition of public sector controls; o trade and tariff restrictions;
o price or exchange controls;
o limitations on repatriation of earnings;
o foreign tax consequences; and
o the burdens of complying with a wide variety of foreign laws and
regulations.
One or more of these factors may have a material adverse effect on our business,
financial condition or results of operations.
IF WE FAIL TO ACHIEVE PLANNED GROWTH IN OUR OFFSHORE FACILITIES, OUR ABILITY TO
FULFILL CLIENT COMMITMENTS PROFITABLY OR TO FULFILL THEM AT ALL MAY BE
COMPROMISED.
Our growth strategy relies in part on the expansion of our offshore
development centers. If we fail to retain needed employees in India and other
offshore locations, or to manage growth in these regions, our business,
financial condition and results of operations may be adversely affected. Wage
costs in India have historically been significantly lower than wage costs in
North America and Western Europe for comparably skilled professionals. However,
wages in India are currently increasing at a faster rate than in North America
and Western Europe, which could result in increased costs for IT professionals,
particularly project managers and other mid-level professionals. We may need to
increase the levels of our employee compensation more rapidly than in the past
to remain competitive. Compensation increases may hinder our planned growth and
could materially adversely affect our business, financial condition and results
of operations.
REGIONAL INSTABILITY IN ISRAEL AND INDIA MAY ADVERSELY AFFECT BUSINESS
CONDITIONS IN THOSE REGIONS, WHICH MAY DISRUPT OUR OPERATIONS AND NEGATIVELY
AFFECT OUR REVENUES AND PROFITABILITY.
We generated approximately 68% of our revenues in Israel in 2003, or 60% on
a pro forma basis, assuming completion of our acquisition of Apar Holding Corp.
on January 1, 2003. In addition, our principal offices and a substantial portion
of our employees are located in Israel. Therefore, political, economic and
military conditions in Israel directly affect our operations.
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Since the establishment of the State of Israel in 1948, a number of armed
conflicts have taken place between Israel and its Arab neighbors. Since
September 2000, there has been a marked increase in hostilities between Israel
and the Palestinians. We cannot predict the effect on our business of any
increase in the degree of violence by the Palestinians against Israel or the
effect of military action elsewhere in the Middle East. The future of peace
efforts between Israel and its Arab neighbors remains uncertain. Any future
armed conflicts or political instability in the region would likely negatively
affect business conditions and adversely affect our results of operations.
Furthermore, several countries restrict or prohibit business with Israel or
companies that do business in Israel. These restrictive laws and policies may
severely limit our ability to provide services in those countries.
Some of our employees in Israel are currently obligated to perform up to 36
days, depending on rank and position, of military reserve duty annually and are
subject to being called for active duty at any time under emergency
circumstances. If a military conflict or war arises, these individuals could be
required to serve in the military for extended periods of time. Our operations
could be disrupted by the absence for a significant period of one or more of our
executive officers or key employees or a significant number of other employees
due to military service. Any consequent disruption in our operations could
adversely affect our profitability.
We also generate revenues from services we deliver from India. India has
from time to time experienced instances of civil unrest and hostilities with
Pakistan. In recent years, there have been military confrontations between India
and Pakistan that have occurred in the region of Kashmir and along the
India-Pakistan border. Although the relations between the two countries are
currently improving, military activity or terrorist attacks in the future could
adversely affect the Indian economy by disrupting communications and making
travel more difficult, which may have a material adverse effect on our ability
to deliver services from India.
OUR INTERNATIONAL OPERATIONS SUBJECT US TO CURRENCY EXCHANGE FLUCTUATIONS, WHICH
COULD NEGATIVELY IMPACT OUR PROFITABILITY.
To date, most of our sales have been denominated in NIS and dollars, while
a significant portion of our expenses, primarily labor expenses in India, is
incurred in the local currencies of countries in which we operate. For financial
reporting purposes, we translate all non United States denominated transactions
into dollars in accordance with United States generally accepted accounting
principles. As a result, we are exposed to the risk that fluctuations in the
value of these currencies relative to the dollar could increase the dollar cost
of our operations and therefore have an adverse effect on our profitability.
POTENTIAL ANTI-OUTSOURCING LEGISLATION COULD IMPAIR OUR ABILITY TO SERVICE OUR
CLIENTS.
In the past few months, the issue of outsourcing of services abroad by
American companies has become a topic of political discussions in the United
States. Measures aimed at limiting or restricting outsourcing by United States
companies are under discussion in Congress and in as many as one-half of the
state legislatures. While no substantive anti-outsourcing legislation has been
introduced to date, given the intensifying debate over this issue, the
introduction of such legislation is possible. If introduced, such measures are
likely to fall within two categories: (1) measures that extend restrictions on
outsourcing by federal government agencies and on government contracts with
firms that outsource services directly or indirectly, and (2) measures that
affect private industry, such as tax disincentives or intellectual property
transfer restrictions. If any of these measures become law, our ability to
service our clients could be impaired.
-13-
TERRORIST ATTACKS OR A WAR COULD NEGATIVELY AFFECT OUR FINANCIAL RESULTS AND
PROSPECTS.
Terrorist attacks, such as the attacks of September 11, 2001 in the United
States, and other acts of violence or war, like the recent conflict in Iraq,
could affect us or our clients by disrupting normal business practices for
extended periods of time and reducing business confidence. In addition, these
attacks may make travel more difficult and may effectively curtail our ability
to serve our clients' needs, any of which could negatively affect our financial
results and prospects.
RESTRICTIONS ON IMMIGRATION MAY AFFECT OUR ABILITY TO COMPETE FOR AND PROVIDE
SERVICES IN OUR CLIENTS' COUNTRIES, WHICH COULD HAMPER OUR GROWTH AND CAUSE OUR
REVENUES TO DECLINE.
A portion of our revenues is derived from offshore outsourcing, which
requires some personnel from our offshore locations in India and elsewhere to
travel to client sites for rotational assignments. The ability of those IT
professionals to work in North America, Europe and in other countries depends on
their ability to obtain the necessary visas and work permits. The United States
has recently reduced the number of H-1B visas authorized annually, and has also
increased the level of scrutiny in granting H-1B, L-1 and ordinary business
visas. A number of European countries are considering changes in immigration
policies as well. The inability of key project personnel to obtain necessary
visas could delay or prevent our fulfillment of client projects, which could
hamper our growth and cause our revenues to decline.
IF THE GOVERNMENTS OF INDIA OR ISRAEL WERE TO REDUCE OR WITHDRAW TAX BENEFITS
AND OTHER INCENTIVES THEY PROVIDE TO US, OUR NET INCOME WILL DECREASE.
Currently, we benefit from the tax benefits that India provides to the
export of IT services. These benefits provide a complete exemption from
corporate income tax for exported IT services, compared to an ordinary corporate
tax rate of approximately 36%. As a result of these incentives, our operations
in India have been subject to relatively low tax rates. When these tax benefits
are eliminated on March 31, 2009 as scheduled, or if they are eliminated or
reduced earlier as the result of political change in India, our tax expense will
increase, reducing our profitability.
Our business operations in Israel benefit from a tax benefit granted to
Israeli industrial companies, regarding the ability to file consolidated tax
returns for our Israeli subsidiaries, which allows us to offset gains with
losses in our Israeli subsidiaries. If the ability to file consolidated tax
returns is reduced or eliminated for Israeli industrial companies, the IT
industry or for our Israeli subsidiaries, our tax expense would increase,
reducing our profitability. We currently have no reason to anticipate that this
benefit will be withdrawn.
RISKS RELATING TO OUR STOCK
THERE HAS BEEN LIMITED MARKET FOR OUR COMMON STOCK. OUR STOCK PRICE IS LIKELY TO
BE HIGHLY VOLATILE AND COULD DROP UNEXPECTEDLY.
Prior to our initial public offering that commenced on September 29, 2004,
there was no public market for our common stock, and we cannot assure you that
an active trading market be sustained. The market price may fluctuate
significantly in response to a number of factors, including the following,
several of which are beyond our control:
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o changes in financial estimates or investment recommendations by securities
analysts relating to our stock;
o changes in market valuations of IT service providers and other high
technology companies;
o announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
o loss of a major client or changes in our employee utilization rate; and o
changes in key personnel.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We could be the target of similar litigation in the future.
Securities litigation, regardless of merit or ultimate outcome, would likely
cause us to incur substantial costs, divert management's attention and
resources, harm our reputation in the industry and the securities markets and
reduce our profitability.
YOUR ABILITY TO INFLUENCE CORPORATE DECISIONS MAY BE LIMITED BECAUSE OUR
EXECUTIVE OFFICERS, DIRECTORS AND MAJOR STOCKHOLDERS BENEFICIALLY OWN
APPROXIMATELY 46.4% OF OUR COMMON STOCK.
Our executive officers, directors and stockholders who beneficially own 5%
or more of our outstanding common stock beneficially own, in the aggregate,
shares representing approximately 46.4% of our outstanding common stock. As a
result of their stock ownership, if these stockholders were to choose to act
together, they would likely be able to control all matters submitted to our
stockholders for approval, including the election of directors and approval of
any merger, consolidation or sale of all or substantially all of our assets.
This concentration of voting power could delay or prevent an acquisition of our
company on terms that other stockholders may desire.
PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY PREVENT OR DELAY
A CHANGE OF CONTROL OF US AND COULD ALSO LIMIT THE MARKET PRICE OF OUR COMMON
STOCK.
Provisions of our certificate of incorporation and bylaws, as well as
provisions of Delaware corporate law, may discourage, delay or prevent a merger,
acquisition or other change in control of our company, even if such a change in
control would be beneficial to our stockholders. These provisions may also
prevent or frustrate attempts by our stockholders to replace or remove our
management. These provisions include:
o prohibiting the stockholders from fixing the number of our directors;
o authorizing our board of directors to designate the terms of and issue new
series of preferred stock without additional stockholder approvals;
o limiting the individuals who may call a special meeting to our chairman,
chief executive officer, the majority of our board of directors or the
majority of our stockholders;
o requiring advance notice for stockholder proposals and nominations; and
o prohibiting stockholders from acting by written consent, unless unanimous.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which limits business combination transactions with
stockholders of 15% or more of our outstanding voting stock that our board of
directors has not approved. These provisions and other similar provisions make
it more difficult for stockholders or potential acquirers to acquire us without
negotiation. These provisions may apply even if some stockholders may consider
the transaction beneficial to them.
-15-
These provisions could limit the price that investors are willing to pay in
the future for shares of our common stock. These provisions might also
discourage a potential acquisition proposal or tender offer, even if the
acquisition proposal or tender offer is at a premium over the then current
market price for our common stock.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements within the meaning of
Section 27A of Securities Act, Section 21E of the Securities Exchange Act of
1934, as amended, or the Exchange Act, and the Private Securities Litigation
Reform Act of 1995, including statements regarding our expected financial
position, business and financing plans. These forward looking statements reflect
our views with respect to future events and financial performance. The words
"believe," "expect," "plan" and "anticipate" and similar expressions identify
forward looking statements. Although we believe that the expectations and
assumptions reflected in such forward looking statements are reasonable, the
expectations and assumptions may prove to be incorrect. Important factors that
could cause actual results to differ materially from these expectations are
disclosed in this prospectus. All subsequent written and oral forward looking
statements attributable to us or individuals acting on our behalf are expressly
qualified in their entirety by these cautionary statements. We caution readers
not to place undue reliance on these forward looking statements, which speak
only as of the date of this prospectus. We undertake no obligation to publicly
update or revise any forward looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
We also use market data and industry forecasts and projections throughout
this prospectus, which we have obtained from market research, publicly available
information and industry publications. These sources generally state that the
information they provide has been obtained from sources believed to be reliable,
but that the accuracy and completeness of the information are not guaranteed.
The forecasts and projections are based on industry surveys and the preparers'
experience in the industry, and the projected amounts may not be achieved.
Similarly, although we believe that the surveys and market research others have
performed are reliable, we have not independently verified this information.
USE OF PROCEEDS
We will receive the exercise price of the options when exercised by the
holders thereof. Such proceeds will be used for working capital purposes. We
will not receive any of the proceeds from the reoffer and resale of the shares
of common stock by the selling stockholders.
SELLING STOCKHOLDERS
This prospectus relates to the reoffer and resale of shares of our common
stock issued to the stockholders who exercised stock options prior to the
initial filing of this registration statement or that may be issued to the
stockholders who are deemed to be affiliates of Ness under the plans or other
grants to non-employee directors.
The following table sets forth (i) the number of shares of our common stock
beneficially owned by each selling stockholder at December 15, 2004 (ii) the
number of shares of our common stock to be offered for resale by each selling
stockholder and (iii) the number and percentage of shares of our common stock to
be held by each selling stockholder after completion of the offering:
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Number of Number of shares of
shares of Common Stock/
Number of shares of Common Percentage of Class
Common Stock Stock to be to be Owned After
Owned at Offered for Completion of the
Name December 15, 2004 Resale Offering
- ---- ----------------- ------ --------
Aharon Fogel(2) 390,238(1) 438,192 0/0
Raviv Zoller(3) 505,581(1) 625,464 0/0
Yaron Garmazi(4) 23,977(1) 71,930 0/0
Rajeev Srivastava(5) 762,974 53,948 749,487/2.4
Tuvia Feldman(6) 159,012(1) 204,567 0/0
Lea Atad(7) 599,417 485,528 130,673/*
Yoram Michaelis(8) 164,437(1) 199,204 0/0
Shachar Efal(9) 135,708 120,124 50,351/*
Michael Zinderman(10) 58,508(1) 125,642 0/0
Ivan Hruska(11) 38,825(1) 68,334 0/0
Uri Ben-Ari(12) 44,357(1) 97,106 0/0
Efrat Shapira(13) 13,787(1) 37,763 0/0
Hagai Lavi (14) 1,184,447 25,176 1,176,055/ 3.7
Satyam C.
Cherukuri(15) 0 15,000 0/0
Dan S. Suesskind(16) 0 15,000 0/0
Noah Caspi 27,261 27,261 0/0
Itzhak Kedem 27,261 27,261 0/0
Baruch Izon 57,400 57,400 0/0
Girish Satpute 25,895 25,895 0/0
Dror Hevion 68,334 68,334 0/0
Moshe Oved 143,860 143,860 0/0
Nir Kaplushnik 27,261 27,261 0/0
Naveen Kumar 3,536 3,536 0/0
Tanweer Ahmad 1,010 1,010 0/0
Yael Kalai 3,956 3,956 0/0
- -------------------------
* Represents less than one percent
(1) Consists of shares of common stock issuable upon exercise of stock options
that are currently exercisable or exercisable within 60 days of December
15, 2004.
-18-
(2) Mr. Fogel has served as our chairman of the board of directors since 1999.
(3) Mr. Zoller has served as our president and chief executive officer since
June 2001 and has served as a member of our board of directors since
October 4, 2004. From October 1999 to May 2001, Mr. Zoller served as our
chief financial officer.
(4) Mr. Garmazi has served as our chief financial officer since June 2004.
(5) Mr. Srivastava has served as president of Ness Global Services since the
effective date of our acquisition of Apar Holding Corp. in June 2003 and
has served as a member of our board of directors since August 2003. From
June 1996 to June 2003, Mr. Srivastava served as chief executive officer of
Apar, which he co-founded.
(6) Mr. Feldman has served as our chief operating officer since June 2001. From
April 2000 to May 2001, Mr. Feldman served as our vice president of
operations.
(7) Consists of (i) 460,352 shares of common stock issuable upon exercise of
currently exercisable stock options and (ii) 130,673 shares of common stock
issuable upon exercise of an option granted by Nesstech LLC to Ms. Atad.
Ms. Atad has served as our executive vice president of strategic accounts
since June 2001. From November 1999 to July 2001, Ms. Atad served as
president of our Business Solutions Group.
(8) Mr. Michaelis has served as president of IT Services, Ness Israel, since
January 2004. From April 2000 to December 2003, Mr. Michaelis served as
president of our enterprise Solutions Group.
(9) Consists of (i) 85,357 shares of common stock issuable upon exercise of
currently exerciseable stock options and (ii) 50,351 shares of common stock
held by Socrates Trusts Ltd. for the benefit of Mr. Efal. Mr. Efal has
served as president of Managed Services, Ness Israel, since January 2004.
From November 1999 to December 2003, Mr. Efal served as president of our
Integration and Networking Group.
(10) Mr. Zinderman has served as president of the Telecom & Systems, Ness
Israel, since April 2002. From April 2000 to April 2002, Mr. Zinderman
served as the division manager and vice president of Ness Telecom & Systems
Group, and from June 1988 to March 2002, he served as the division manager
and vice president of Real Time & Systems Group of ATL, an entity acquired
in 1999.
(11) Mr. Hruska has served as president of Ness Europe since April 2004. From
September 2002 to March 2004, he served as managing director of Ness CEE.
From May 2000 to September 2002, he served at Ness CEE (formerly APP prior
to our acquiring it in 2002) as vice president for sales and marketing.
(12) Mr. Ben-Ari has served as our executive vice president of marketing since
May 2003. From January 2002 to May 2003, Mr. Ben-Ari served as vice
president of our e-Business division.
(13) Ms. Shapira has served as our vice president of human resources since June
2001. From June 2000 to June 2001, Ms. Shapira served as the human
resources manager at Ness ING.
(14) These shares are held of record by GLY High-Tech Investments Inc. Mr. Lavi
and his wife are the sole stockholders of GLY and Mr. Lavi has sole voting
and investment power over, and therefore may be deemed to be the beneficial
owner of, shares of common stock held by GLY. The address of GLY is c/o
Tulchinsky Stern & Co., 22 Kanfei Nesharim Street, Jerusalem, Israel. Mr.
Lavi has served as a member of our board of directors since May 1999. Since
August 2001, Mr. Lavi has served as an executive director in our corporate
-19-
sales unit. Mr. Lavi served as senior vice president of marketing at Ness
Technologies Israel from October 1999 to July 2001.
(15) Dr. Cherukuri has served as a member of our board of directors since
October 4, 2004.
(16) Mr. Suesskind has served as a member of our board of directors since
October 4, 2004.
PLAN OF DISTRIBUTION
It is anticipated that all of the shares of our common stock will be
offered by the selling stockholders from time to time in the open market, either
directly or through brokers or agents, or in privately negotiated transactions.
The selling stockholders have advised us that they are not parties to any
agreement, arrangement or understanding as to such sales.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the shares of
common stock offered hereby have been passed upon for us by Olshan Grundman
Frome Rosenzweig & Wolosky LLP, New York, New York, one of whose members holds
options to purchase 10,790 shares of our common stock, which are being
registered in the registration statement which contains this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-8, including
exhibits and schedules, under the Securities Act of 1933, as amended, with
respect to the shares of our common stock to be sold in this offering. This
prospectus does not contain all the information contained in the registration
statement. For further information with respect to us and the shares that may be
sold pursuant to the prospectus, we refer you to the registration statement and
the exhibits and schedules attached to the registration statement. Statements
contained in this prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete. When we make such
statements, we refer you to the copies of the contracts or documents that are
filed as exhibits to the registration statement because those statements are
qualified in all respects by reference to those exhibits.
We are subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, and file annual, quarterly, and
current reports, proxy statements, and other information with the SEC. You may
read and copy all or any portion of the registration statement or any reports,
statements or other information that we file at the SEC's public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference room. The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. Our SEC filings are also
available at the SEC's web site at http://www.sec.gov or at our web site at
http://www.ness.com.
-20-
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to our directors, officers
or persons controlling Ness, we have been advised that it is the SEC's opinion
that such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable.
21
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Ness Technologies, Inc. (the "Registrant")
with the SEC are incorporated by reference in this registration statement on
Form S-8 (the "Registration Statement"):
(1) Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2004;
(2) Our Current Report on Form 8-K, filed September 30, 2004;
(3) Our Current Report on Form 8-K, filed October 13, 2004;
(4) Our Current Report on Form 8-K, filed October 26, 2004;
(5) Our Current Report on Form 8-K, filed November 4, 2004;
(6) Our Registration Statement on Form S-1 (SEC File No. 333-115260), as
amended, initially filed May 7, 2004;
(7) Our Registration Statement on Form S-4 (SEC File No. 333-120389) filed
November 12, 2004; and
(7) The description of our common stock contained in our Registration
Statement on Form 8-A, filed on September 23, 2004 pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended.
All documents subsequently filed with the SEC by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered herein have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be part hereof from the respective dates of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof or of the related prospectus to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
One of the members of Olshan Grundman Frome Rosenzweig & Wolosky LLP, our
counsel, holds options to purchase 10,790 shares of our common stock, which are
being registered in this Registration Statement.
II-1
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Registrant provides that we shall
indemnify to the fullest extent permitted by Delaware General Corporation Law,
or the DGCL, any person whom it may indemnify thereunder, including the
directors, officers, employees and agents of the Registrant. In addition, the
Registrant's Certificate of Incorporation eliminates, to the extent permitted by
the DGCL, personal liability of directors to the Registrant and its stockholders
for monetary damages for breach of fiduciary duty.
The Registrant's authority to indemnify its directors and officers is
governed by the provisions of Section 145 of the DGCL, as follows:
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or her equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
II-2
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
against such liability under this section.
(h) For purposes of this section, references to the "corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
II-3
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to herein determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
The Registrant has entered into Indemnification Agreements with each of its
directors and certain executive officers (as well as directors and certain
executive officers of the Registrant's subsidiaries), whereby it has agreed to
indemnify, to the fullest extent permitted by applicable law, each such director
and officer from and against any and all expenses (including attorneys' fees),
judgments, fines, penalties, excise taxes and amounts paid in settlement or
incurred by such director or officer for or as a result of action taken or not
taken while such director or officer was acting in his capacity as the director
or executive officer of the Registrant or its affiliates.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
*4.1 Specimen Certificate for the Registrant's common stock.
4.2 Form of Stock Option Agreement.
*4.3 Apar Holding Corp. Employees' Equity Plan.
*4.4 Ness Technologies, Inc. 1999 Share Option Plan.
*4.5 Ness Technologies, Inc. 2001 Stock Option Plan.
II-4
*4.6 Ness Technologies, Inc. 2003 Israeli Share Option Plan.
*4.7 Ness Technologies, Inc. 2003 Stock Option Plan.
5 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP.
23.1 Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young
Global.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of RSM & Co.
23.4 Consent of Olshan Grundman Frome Rosenzweig &Wolosky LLP (contained in
Exhibit 5).
24 Powers of Attorney (included on the signature page of the initial filing
of this Registration Statement).
- ------------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (SEC File No. 333-115260), as amended, initially filed May 7,
2004.
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purposes of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-5
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tel Aviv, State of Israel on the 30th day of
December, 2004.
NESS TECHNOLOGIES, INC.
By: /s/ Raviv Zoller
------------------------------------
Raviv Zoller
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Raviv Zoller and Yaron Garmazi as his
true and lawful attorney-in-fact, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments, including post-effective
amendments to this registration statement, and any related registration
statement filed pursuant to Rule 462(b) of the Act and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting along, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Aharon Fogel Chairman of the Board December 30, 2004
- -------------------------------------------------------
Aharon Fogel
President, Chief Executive
/s/ Raviv Zoller Officer and December 30, 2004
- ------------------------------------------------------- Director (principal executive
Raviv Zoller officer)
Chief Financial
/s/ Yaron Garmazi Officer (principal December 30, 2004
- ------------------------------------------------------- financial and accounting officer)
Yaron Garmazi
/s/ Rajeev Srivastava Director December 30, 2004
- -------------------------------------------------------
Rajeev Srivastava
/s/ Henry Kressel Director December 30, 2004
- -------------------------------------------------------
Henry Kressel
II-7
/s/ Morris Wolfson Director December 30, 2004
- -------------------------------------------------------
Morris Wolfson
/s/ Hagai Lavi Director December 30, 2004
- -------------------------------------------------------
Hagai Lavi
/s/ Satyam C. Cherukuri Director December 30, 2004
- -------------------------------------------------------
Satyam C. Cherukuri
/s/ Dan S. Suesskind Director December 30, 2004
- -------------------------------------------------------
Dan S. Suesskind
II-8
EXHIBIT INDEX
*4.1 Specimen Certificate for the Registrant's common stock.
4.2 Form of Stock Option Agreement.
*4.3 Apar Holding Corp. Employees' Equity Plan.
*4.4 Ness Technologies, Inc. 1999 Share Option Plan.
*4.5 Ness Technologies, Inc. 2001 Stock Option Plan.
*4.6 Ness Technologies, Inc. 2003 Israeli Share Option Plan.
*4.7 Ness Technologies, Inc. 2003 Stock Option Plan.
5 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP.
23.1 Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young
Global.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of RSM & Co.
23.4 Consent of Olshan Grundman Frome Rosenzweig &Wolosky LLP (contained in
Exhibit 5).
24 Powers of Attorney (included on the signature page of the initial filing
of this Registration Statement).
- ------------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (SEC File No. 333-115260), as amended, initially filed May 7,
2004.
II-9
