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PRESS RELEASES
TEL AVIV, Israel, May 9 /PRNewswire-FirstCall/ -- Scopus Video Networks
Ltd. (NASDAQ: SCOP), a provider of digital video networking products, today
announced that it will be mailing the following letter to shareholders in
connection with the Company's June 16, 2008 Special Meeting of Shareholders.
The letter provides additional details regarding the Special Meeting.
The full text of the letter follows:
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
of Scopus Video Networks Ltd. ("we," the "Company" or "Scopus") to be held at
our offices located at 10 Ha'amal Street, Park-Afek, Rosh-Ha'ayin 48092,
Israel on Monday, June 16, 2008, at 4:00 p.m., local time, and thereafter as
it may be adjourned from time to time (the "Meeting").
The Meeting is of particular importance. As you may know, on April 18,
2008, Optibase Ltd. ("Optibase"), a 37% shareholder of the Company, demanded
that we convene, within 21 days, a shareholder meeting to (1) approve a
resolution that will declassify our Board of Directors and (2) elect a slate
of directors proposed by Optibase, such that, following adoption of these
resolutions, our Board of Directors will be comprised by a majority of
Optibase's nominees. This demand came shortly after the negotiations between
Scopus and Optibase regarding a possible business combination were suspended.
See under "Important Background" below.
Your Board is willing to recognize the views of some investors, including
Optibase for that matter, who believe that a classified board structure may
reduce the accountability of directors to shareholders because the directors
on such a board do not face an annual election. However, in light of the
recent negotiations between the parties, your Board is concerned by the
timing of Optibase's proposals and their motives.
In light of the foregoing, your Board proposes an alternative resolution
(Proposal #1 on your proxy card), whereby the Board will be declassified, but
such declassification will become effective as of the next annual meeting of
shareholders, which is scheduled to take place by January 2009 at the latest.
Adopting this proposal will allow your Board, which is currently comprised by
directors who are not affiliated with Optibase, time to consider strategic
alternatives, including, if desirable, resuming negotiations of an arms
length transaction with Optibase. The Board therefore recommends a vote "FOR"
Proposal #1.
Your Board's unanimous view is that our proposal (Proposal #1), better
serves the interests of all of our shareholders. Optibase's proposals
(Proposals #2 and #3) are adequately addressed by Proposal #1 and are likely
to interfere with the ability of your Board to consider strategic
alternatives, including to negotiate an arms-length transaction with
Optibase. The Board therefore recommends a vote "AGAINST" Proposals #2 and #3.
Important Background
Commencing September 2007, we and Optibase held preliminary discussions
regarding a possible negotiated business transaction. During such
discussions, we explored a few alternatives, including a full merger of
Scopus and Optibase. Beginning January 2008, we engaged in preliminary
negotiations with Optibase regarding a possible acquisition by Scopus of
Optibase's operations through an asset purchase transaction.
During February and March 2008, these negotiations evolved and led to an
extensive due diligence and the exchange of draft transaction documents,
whereby we were considering to acquire Optibase's operations in consideration
for ordinary shares of Scopus. The proposed transaction entailed, among
others, a termination of the current classified structure of the Board and
appointment of representatives of Optibase to our Board. However, in early
April 2008, the negotiations strained, when, in our view, Optibase was
attempting to renegotiate some of the key terms of the transaction, primarily
the proposed consideration. We thereafter made a good faith attempt to
propose a viable solution, which was communicated to Optibase on April 14,
2008. Optibase responded by sending us its proposed shareholder resolutions
on Friday, April 18th, effectively "suspending" (using Optibase's own words)
the negotiations.
During the discussions and negotiations with Optibase, your Board held
numerous meetings to carefully evaluate the transaction and ensure that the
interests of all shareholders are protected. While we believe that a fair
transaction with Optibase could be achieved, Optibase has chosen to use its
position as a principal shareholder of the Company to attempt to replace your
Board. This, in our mind, will allow Optibase to impose a transaction which,
in your Board's view, would have provided disproportionate benefits to
Optibase to the detriment of our other shareholders. In other words, we
believe that Optibase's interest is not aligned with those of our other
shareholders.
For additional information, you are encouraged to read the description
under the section entitled "Introduction - important Background" in the Proxy
Statement.
Our Proposal (Proposal #1 in the Proxy Card)
As described above, your Board is concerned by the timing of Optibase's
proposals and their motives. To that end, your Board proposes to adopt a
proposal to declassify the Board, but only effective as of the next annual
meeting of shareholders. Adopting this proposal will allow your Board, which
is currently comprised by directors who are not affiliated with Optibase,
time to consider strategic alternatives, including resuming negotiations of
an arms-length transaction with Optibase. The Board therefore recommends a
vote "FOR" Proposal #1.
Optibase Proposals (Proposals #2 and #3 in the Proxy Card)
In its letter of April 18, 2008, Optibase proposed to (1) amend our
Articles of Association in a manner that will essentially repeal the current
classified structure of our Board and (2) subject to approval of the
foregoing resolution, elect Shlomo (Tom) Wyler, Alex Hilman, Yaron Simler,
Orit Leitman and Tali Yaron-Eldar to our Board.
In such letter, Optibase states that it believes "that the ability to
elect directors is the single most important use of the shareholder
franchise. Accordingly, directors should be accountable to shareholders on an
annual basis. The election of directors by classes, for three-year terms, in
our opinion, minimizes accountability and precludes the full exercise of the
rights of shareholders to approve or disapprove annually the performance of a
director or directors. We believe that Scopus' financial performance is
linked to its corporate governance policies and procedures, and the level of
management accountability they impose."
With the assistance of its independent legal advisors, your Board has
given Optibase's proposals and arguments significant consideration. While we
believe these are all fair, yet routine, arguments (that we believe are
adequately addressed by our Proposal #1), we cannot help but wonder on the
timing of such proposals and their motives in light of the recent
developments described above.
While Optibase states that our financial performance is linked to our
corporate governance policies and procedures, it does not attempt to share
with you (or us for that matter) its insight of how it intends to improve
financial performance or enhance shareholder value. Actually, we believe we
had a positive start to 2008, as demonstrated by our operating results for
the first quarter in 2008, including reaching a first quarter record of $16.4
million in revenues and continued improvement in other business fundamentals.
As far as we know, proposals to declassify the board and/or present a
proponent's nominees, tend to come with some proposed agenda or suggestions
in this respect. All that we could find in this respect (in the Schedule 13D
that Optibase filed with the SEC on April 18th), is that Optibase "reserves
the right to continue discussions with the Issuer's board of directors,
management and/or representatives with respect to a possible negotiated
business transaction." If this is indeed the "plan," we defer to you, our
shareholders, to determine what type of Board is more well-equipped to
continue such discussions.
Moreover, if Optibase desires to allow all shareholders to register their
views on the identity of the directors serving on the Board on an annual
basis, it should have allowed all shareholders ample time to suggest their
own candidates to the Board. By suggesting its own slate of directors at the
same meeting designed to restructure the manner in which directors have been
elected since we first went public in 2005, Optibase, in our view, hinders
the ability of other shareholders to exercise their rights to share in the
election process and, consequently, undermines the legitimacy of Optibase's
own arguments.
Retaining the classified board structure for a limited time, as proposed
by us in Proposal #1, would protect the Boards' independence and improve the
Board's ability to consider strategic alternatives and allow the Board an
opportunity to achieve a result which maximizes shareholder value. The Board
therefore recommends a vote "AGAINST" Proposals #2 and #3.
How to Vote
We encourage you to read carefully the proxy statement, which discusses
in detail the various matters to be voted upon at the Special Meeting. Your
vote is very important! Whether or not you plan to attend the meeting, it is
important that your shares be represented. Accordingly, you are kindly
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the pre-addressed envelope provided, so as to be received not
later than 48 hours before the Meeting. No postage will be required if mailed
in the United States.
As evident by our own Proposal #1, this is not a fight for keeping the
classified board structure. It is a contest for allowing us to execute our
strategic business plan and provide the Board an opportunity to achieve a
result which maximizes shareholder value. The Board urges you to send
Optibase a message by voting for Proposal #1 (and against Proposals #2 and
#3).
We appreciate your continuing interest in Scopus Video Networks Ltd.
Very truly yours,
David Mahlab
Chairman of the Board of Directors
About Scopus Video Networks
Scopus Video Networks (NASDAQ:SCOP) develops, markets and supports
digital video networking solutions that enable network operators to offer
advanced video services to their subscribers. Scopus' solutions support
digital television, HDTV, live event coverage and content distribution.
Scopus' comprehensive digital video networking solution offerintelligent
video gateways, encoders, decoders and network management products. Scopus'
solutions are designed to allow network operators to increase service
revenues, improve customer retention and minimize capital and operating
expenses.
Scopus' customers include satellite, cable and terrestrial operators,
broadcasters and telecom service providers. Scopus' products are used by
hundreds of network operators worldwide.
For more information visit: http://www.scopus.net
FORWARD-LOOKING STATEMENTS
This press release and the letter quoted herein may include
"forward-looking statements" that are not purely historical regarding our
intentions, hopes, beliefs, expectations and strategies for the future.
Forward-looking statements that are based on various assumptions may be
identified by the use of forward-looking terminology, such as "may,"
"expects," "intends," "believes," "view" and similar words and phrases. Such
forward-looking statements are inherently subject to known and unknown risks
and uncertainties. Actual results could differ materially from those set
forth in forward-looking statements due to a variety of factors, including
those set forth in our annual report on Form 20-F. Except as required by law,
Scopus does not undertake any obligation to update forward-looking statements
made herein.
Company Contact: Investor Relations Contact
Moshe Eisenberg Ehud Helft / Kenny Green
Chief Financial Officer GK Investor Relations
Tel: +972-3-900-7100 Tel: (US) +1-646-201-9246
Moshee@scopus.net info@gkir.com
SOURCE Scopus Network Technologies Ltd
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