Sapiens International Corp NV – ‘20-F’ for 12/31/02 – EX-3

On:  Friday, 6/27/03, at 11:17am ET   ·   For:  12/31/02   ·   Accession #:  930413-3-1991   ·   File #:  0-20181

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Annual Report of a Foreign Private Issuer   —   Form 20-F
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer             84    450K 
 2: EX-1        Underwriting Agreement                                17     88K 
 3: EX-3        Articles of Incorporation/Organization or By-Laws      3     13K 
 4: EX-10       Material Contract                                      1      5K 
 5: EX-99.1     Miscellaneous Exhibit                                  1      7K 

EX-3   —   Articles of Incorporation/Organization or By-Laws

EX-3
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EXHIBIT 3 
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[FORMULA SYSTEMS (1985) LTD. LETTERHEAD]

                                                                October 20, 2002

Itzick Sharir                                                                   
President & CEO                                                                 
Sapiens International Corporation N.V.                                          

Re: OFFER TO CONVERT PREFERRED SHARES AND EXERCISE OPTION                       
Dear Itzick,                                                                    

Pursuant to the Share Purchase Agreement, dated as of January 24, 2001 (the     
"Agreement"), between Formula System (1985) Ltd., together with Yarnfield       
International Limited (collectively the "Investors"), and Sapiens International 
Corporation N.V. (the "Company"), the Investors invested $15 million into the   
Company in return for 10,000 shares of Series F Convertible Preferred Shares    
(the "Series F Preferred"). In accordance with the terms of the Agreement, the  
Company granted to the Investors an option to invest up to an additional $15    
million on the same terms of the original investment, as adjusted, at any time  
on or before December 25, 2003.                                                 

Pursuant to the terms of the Agreement, the conversion price of the Series F    
Preferred into common shares has been adjusted to $1.14 per common share. This  
adjusted conversion price applies both to the original investment and to any    
future exercise of the option to make an additional investment.                 

According to the redemption rights of the Series F Preferred, if the Investors  
do not choose to convert their Series F Preferred shares to common shares prior 
to March 5, 2004, the Company must then redeem the Series F Preferred at a      
redemption price of $1,500 per share of Series F Preferred (currently a total of
$15,000,000) in either cash or the number of common shares of the Company equal 
to $15 million divided by the average closing price of the common shares during 
the thirty days preceding the redemption date. If the redemption were to be     
implemented today, the average closing price of the Company's common shares     
would be $0.78 per share.                                                       

In furtherance of discussions that we have held with you and other              
representatives of the Company regarding your request that the Investors convert
their Series F Preferred shares into common shares and exercise their option to 
invest additional capital, we are pleased to make the following offer:          

1.   The Investors will convert all of their outstanding Series F     
     Preferred shares into common shares at a reduced conversion price
of $0.83 per common share (the "Reduced Conversion Price"). 

2.   Formula shall exercise two-thirds of the option granted to the   
     Investors (i.e. an additional investment of $10 million) promptly
   following shareholder approval of the transactions contemplated
     by this offer. The number of common shares that the Company shall
issue to Formula pursuant to this exercise of the Investors'
  option shall be calculated according to the Reduced Conversion
Price.                                                      

3.   The remaining one-third of the Investors' option ($5 million)    
   shall be assigned by Yarnfield to Formula and shall be governed
by the original                                             

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EXHIBIT 3 
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[FORMULA SYSTEMS (1985) LTD. LETTERHEAD]

    terms of the Agreement, except for the Reduced Conversion Price,
     which shall apply to the remaining portion of the option as well.

4.   The practical result of these revisions to the original          
   investment and exercise of two-thirds of the option shall be as
follows:                                                    

FORMULA: Formula shall convert its 6,666 shares of Series F 
 Preferred into common shares at the Reduced Conversion Price.
    Formula shall invest an additional $10 million in return for the
number of common shares equal to $10 million divided by the 
    Reduced Conversion Price. Formula shall have an option to invest
an additional $5 million in return for common shares at the 
Reduced Conversion Price, under the original terms of the   
Agreement.                                                  

   YARNFIELD: Yarnfield shall convert its 3,334 shares of Series F
 Preferred into common shares at the Reduced Conversion Price.

Under the present circumstances in which the Company needs additional investment
capital and Formula is willing to exercise immediately its option to invest an  
additional $10 million into the Company more than one year in advance of the    
expiration of the Investors' option, the reduction of the conversion price to   
the Reduced Conversion Price of $0.83 is justifiable, particularly in light of  
the fact that the current market price of the Company's common shares is        
approximately [$0.74].                                                          

Please favor us with an early reply to our offer. Our timing is such that we    
need to complete the steps necessary to consummate the transaction contemplated 
by this offer, (meaning the shareholders approval), by December 31, 2002.       
Our offer as set forth herein shall remain valid and irrevocable through        
December 31, 2002.                                                              

Respectfully yours,                                                             

By: _________________-_________________                                         
Formula System (1985) Ltd.(directly or through a subsidiary)                    

By: _________________-_________________                                         
Yarnfield International Limited                                                 

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EXHIBIT 3 
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 [YOSSI AVRAHAM & CO ADVOCATES LETTERHEAD]

                                                               December 10, 2002

Formula Systems (1985) Ltd.                                                     
(DIRECTLY OR TROUGH ITS SUBSIDIARIES)               YARNFIELD INTERNATIONAL LTD.
Attn: Bruria Gross-Prushansky                       Attn: Ron Zukerman          

RE: OFFER TO CONVERT PREFERRED SHARES AND 
EXERCISE OPTION DATED OCTOBER 20, 2002

     Reference is hereby made to your offer to Sapiens International Corporation
N.V. (the "COMPANY"), dated October 20, 2002, to convert preferred shares of the
Company and exercise a certain option (the "OFFER").                            

    As you already know, the Company has resolved to accept the Offer. This is
merely a formal acceptance notice on behalf of the Company that is being given  
to you for the sake of good order only.                                         

                        Sincerely,

                       /s/ [illegible]

                       Beni Maidenberg, Adv.

                        Yossi Avraham & Co., Advocates

CC: Yuval Hadari, Sapiens International Corporation N.V.                        
Steve Kronengold, Sapiens International Corporation N.V.                

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘20-F’ Filing		Date		First		Last			Other Filings
		3/5/04		1
		12/25/03		1
Filed on:		6/27/03
For Period End:		12/31/02		2					6-K
		12/10/02		3
		10/20/02		1		3
		1/24/01		1
									List all Filings