AGREEMENT OF MERGER
Exhibit 99.1
Execution
Version
|
AGREEMENT OF MERGER
among:
Mellanox
Technologies, Ltd.,
an
Israeli public company;
Mondial
Acquisition Corporation Ltd.,
an
Israeli private company; and
an
Israeli public company
___________________________
Dated as
of November 29, 2010
___________________________
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Section
1.
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1
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1.1
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Definitions
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1
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1.2
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Other
Terms
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10
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Section
2.
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11
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2.1
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Merger
of Merger Sub into the Company
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11
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2.2
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Effect
of the Merger
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11
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2.3
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Closing;
Effective Time
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11
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2.4
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Effect
on Shares
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12
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2.5
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Closing
of the Company’s Transfer Books
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12
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2.6
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Payment
Procedures
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13
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2.7
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Articles
of Association of the Surviving Corporation; Officers and Directors of the
Surviving Corporation
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14
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2.8
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Further
Action
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14
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2.9
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Withholding
Tax
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15
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Section
3.
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Representations
and Warranties of the Company
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15
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3.1
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Due
Organization; Subsidiaries; Etc.
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15
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3.2
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Charter
Documents; Minutes
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16
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3.3
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Capitalization,
Etc.
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16
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3.4
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Filings
with Securities Regulators; Financial Statements
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18
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3.5
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Absence
of Changes
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19
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3.6
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Title
to Tangible Assets
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21
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3.7
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Receivables;
Customers; Suppliers
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22
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3.8
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Inventories;
Equipment; Real Property
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22
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3.9
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Intellectual
Property
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23
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3.10
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Contracts
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27
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3.11
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Liabilities
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29
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3.12
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Compliance
with Legal Requirements
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29
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3.13
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Certain
Business Practices
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29
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3.14
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Governmental
Grants and Authorizations
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30
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3.15
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Tax
Matters
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31
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3.16
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Employee
and Labor Matters; Benefit Plans
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33
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3.17
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Environmental
Matters
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39
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3.18
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Insurance
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39
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3.19
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Transactions
with Affiliates; Potential Conflicts of Interest
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40
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3.20
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Legal
Proceedings
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40
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3.21
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Products
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40
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3.22
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Authority;
Binding Nature of Agreements
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41
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3.23
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No
Existing Discussions
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41
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3.24
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Vote
Required
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41
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3.25
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Non-Contravention;
Consents
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42
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3.26
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Fairness
Opinion
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43
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3.27
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Financial
Advisors; Transaction Expenses
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43
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3.28
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No
Ownership of Parent Ordinary Shares
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43
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3.29
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Export
Compliance
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43
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3.30
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Full
Disclosure
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44
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i
Section
4.
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Representations
and Warranties of Parent and Merger Sub
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44
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4.1
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Corporate
Organization
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44
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4.2
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Authority;
Binding Nature of Agreement
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44
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4.3
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No
Shareholder Vote Required
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44
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4.4
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Non-Contravention;
Consents
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45
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4.5
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Share
Ownership
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45
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4.6
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Financing
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45
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4.7
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Proxy
Statement
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45
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4.8
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Absence
of Litigation
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45
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4.9
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Merger
Sub
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46
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4.10
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Broker
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46
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4.11
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HSR
Fair Market Valuation Determination
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46
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Section
5.
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Certain
Covenants of the Company and Parent
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46
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5.1
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Access
and Investigation
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46
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5.2
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Operation
of the Company’s Business
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48
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5.3
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Certain
Tax Matters
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51
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5.4
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No
Solicitation
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51
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Section
6.
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Additional
Covenants of the Parties
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54
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6.1
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Merger
Proposal
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54
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6.2
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Proxy
Statement
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55
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6.3
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Company
General Meeting
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55
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6.4
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Regulatory
Approvals
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56
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6.5
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Company
Compensatory Awards
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57
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6.6
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Directors
and Officers Indemnification and Liability Insurance
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60
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6.7
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Additional
Agreements
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61
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6.8
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Disclosure
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61
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6.9
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Securityholder
Litigation
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62
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Section
7.
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Conditions
Precedent to Obligations of Parent and Merger Sub
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62
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7.1
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Accuracy
of Representations
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62
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7.2
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Performance
of Covenants
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63
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7.3
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Company
Shareholder Approval
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63
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7.4
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Consents
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63
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7.5
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Certificates
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63
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7.6
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Resignations
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63
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7.7
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Employees
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63
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7.8
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No
Material Adverse Effect
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63
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7.9
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Antitrust
Clearances
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64
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7.10
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No
Restraints
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64
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7.11
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No
Governmental Litigation
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64
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7.12
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No
Other Litigation
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64
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ii
Section
8.
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Conditions
Precedent to Obligation of the Company
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64
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8.1
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Accuracy
of Representations
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64
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8.2
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Performance
of Covenants
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64
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8.3
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Company
Shareholder Approval
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64
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8.4
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Documents
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65
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8.5
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XXX
Xxx
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00
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8.6
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No
Restraints
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65
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8.7
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No
Governmental Litigation
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65
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Section
9.
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Termination
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65
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9.1
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Termination
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65
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9.2
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Effect
of Termination
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66
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9.3
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Expenses;
Termination Fees
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67
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Section
10.
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Miscellaneous
Provisions
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68
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10.1
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Amendment
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68
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10.2
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Waiver
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68
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10.3
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No
Survival of Representations and Warranties
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68
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10.4
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Entire
Agreement; Counterparts
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68
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10.5
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Governing
Law; Venue
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69
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10.6
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Specific
Performance
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69
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10.7
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Attorneys’
Fees
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69
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10.8
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Assignability
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69
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10.9
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Notices
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69
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10.10
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Severability
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71
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10.11
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No
Other Representations and Warranties.
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71
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10.12
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Construction
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72
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Schedule 1
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Voting
Undertaking Company Shareholders
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Schedule 1.1(t)
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Designated
Employees
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Schedule 5.2
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Operation
of the Company’s Business
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Schedule 5.3
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Certain
Tax Matters
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Schedule 6.5(a)
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Company
Compensatory Awards
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Schedule 7.4
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Consents
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Schedule 10.12(f)
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Knowledge
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iii
AGREEMENT
OF MERGER
This
Agreement of Merger (this “Agreement”) is
entered into as of November 29, 2010, by and among Mellanox Technologies, Ltd.,
a public company formed under the laws of the State of Israel (“Parent”); Mondial
Acquisition Corporation Ltd., a private company formed under the laws of the
State of Israel and a wholly owned subsidiary of Parent (“Merger Sub”); and
Voltaire Ltd., a public company formed under the laws of the State of Israel
(the “Company”). Certain
capitalized terms used in this Agreement are defined in Section
1.
A. Parent,
Merger Sub and the Company intend to effect a merger of Merger Sub into the
Company (the “Merger”) in
accordance with this Agreement and the Israeli Companies Law. Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. The
respective boards of directors of Parent, Merger Sub and the Company have
approved this Agreement and approved the Merger and have approved and declared
advisable this Agreement, in each case in accordance with the provisions of the
Israeli Companies Law.
C. In
order to induce Parent to enter into this Agreement and to consummate the
Merger, concurrently with the execution and delivery of this Agreement, certain
shareholders and holders of Company Options and Company RSUs as set forth on
Schedule 1
(collectively, the “Voting Undertaking Company
Shareholders”) are entering into and delivering certain undertakings to
Parent (the “Voting
and Support Agreements”).
The
parties, intending to be legally bound, agree as follows:
Section
1.
1.1 Definitions. For
purposes of this Agreement, the following terms shall have the following
meanings:
(a) “Acquired Companies”
means the Company and its Subsidiaries.
(b) “Acquired Company
Contract” means any Contract (i) to which any of the Acquired Companies
is a party, (ii) by which any of the Acquired Companies or any asset or right of
any of the Acquired Companies is or may become bound or under which any of the
Acquired Companies has, or may become subject to, any obligation, or (iii) under
which any of the Acquired Companies has or may acquire any right or
interest.
(c) “Acquired Company IP”
means any Intellectual Property Rights or Technology owned or purported to be
owned by any of the Acquired Companies, excluding for the avoidance of doubt,
Licensed IP.
1
(d) “Acquired Company IP
Contract” means any Acquired Company Contract that contains any
assignment or license of, or covenant not to assert or enforce any Intellectual
Property Right, or that otherwise grants any right (i) from an Acquired Company
to any Acquired Company IP or any other Intellectual Property Rights or
Technology developed by, with, or for any Acquired Company or licensed from a
third party to any Acquired Company (“Outbound IP
Agreements”), or (ii) to an Acquired Company of any Acquired Company IP
or Intellectual Property Rights or Technology (“Inbound IP
Agreements”); in the case of each of (i) and (ii), that relate to
Acquired Company IP, other Intellectual Property Rights or Technology that are
incorporated into any Acquired Company Product, or are material to, used in or
are necessary to the operation of the business as currently
conducted.
(e) “Acquired Company
Product” means any product or service of the Acquired Companies that (i)
is currently being, or, (ii) since January 1, 2001, has been, developed, sold,
supplied, distributed, offered, marketed, promoted, licensed, provided, made
available, installed, maintained, supported or serviced by or on behalf of any
of the Acquired Companies.
(f) “Acquisition Proposal”
means any offer, proposal, inquiry or indication of interest (other than an
offer, proposal or indication of interest by Parent or Merger Sub and their
Affiliates or other persons acting in concert with Parent or Merger Sub) for or
otherwise relating to any Acquisition Transaction.
(g) “Acquisition
Transaction” means any transaction or series of transactions
involving:
(i) any
merger, consolidation, business combination or similar transaction involving the
Company pursuant to which either the Company’s shareholders immediately prior to
such transaction would own less than 85% of any class of equity securities of
the entity surviving or resulting from such transaction (or the ultimate parent
entity thereof),
(ii) any
sale or other disposition of assets of the Acquired Companies representing 15%
or more of the consolidated assets of the Acquired Companies, in a single
transaction or a series of related transactions,
(iii) any
issuance, sale or other disposition of securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable for, such
securities) in each case by the Company to any Person or group representing 15%
or more of the voting power of the Company, or
(iv) any
transaction in which any Person shall acquire beneficial ownership of, or the
right to acquire beneficial ownership of, or any group shall have been formed
which beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the outstanding voting share capital of the Company.
(h) “Book-Entry Shares”
means Company Shares held in uncertificated book-entry form.
(i) “Business Day” means
any day other than (i) a Saturday or Sunday, or (ii) a day on which banks
located in the State of California or the State of Israel are legally permitted
or required to close in either the State of California or the State of
Israel.
(j) “Chief Scientist”
means the Office of the Chief Scientist of the Ministry of Industry, Trade and
Labor of the State of Israel.
2
(k) “Code” means the
Internal Revenue Code of 1986, as amended.
(l)
“Companies Registrar”
means the Registrar of Companies of the State of Israel.
(m) “Company Options”
means the options to purchase Company Shares, whether or not vested, granted
under the Company Share Plans.
(n) “Company RSUs” means
restricted share units denominated in Company Shares issued under the Company
Share Plans.
(o) “Company Share Plans”
means the Company 2007 Incentive Compensation Plan, the Company 2003 Section 102
Stock Option/Stock Purchase Plan, the Company 2001 Section 102 Stock
Option/Stock Purchase Plan and the Company 2001 Stock Option Plan, in each case,
as amended.
(p) “Company Shares” means
the ordinary shares, nominal value NIS 0.01 per share, of the
Company.
(q) A
“Company Triggering
Event” shall be deemed to have occurred if (i) the
Company shall have breached (or be deemed to have breached) any provision
contained in Section 5.4 or Section 6.3, (ii) a
tender offer or exchange offer relating to 25% or more of the outstanding
Company Shares shall have been commenced and the Company shall not have sent to
its shareholders, within ten (10) Business Days after the commencement of such
tender offer or exchange offer, a statement disclosing that the Company
recommends rejection of such tender offer or exchange offer, (iii) an
Acquisition Proposal (which for this purpose only, each reference to “85%” and
“15%” appearing in the definition of an “Acquisition Transaction,” shall be
“75%” and “25%,” respectively) is publicly announced, and the Company fails to
issue a press release announcing its opposition to such Acquisition Proposal
within five (5) Business Days after such Acquisition Proposal is announced, and
(iv) (x) the Company General Meeting, including any adjournments and
postponements thereof, shall have been held and completed and the Company’s
shareholders shall have taken a final vote on the proposal to approve the
Merger, and (y) the Merger shall not have been approved at such meeting by
the Required Company Shareholder Vote (and shall not have been approved at any
adjournment or postponement thereof) and the Required Company Shareholder Vote
would have been obtained but for a material breach of Section 1(a), (b) or (c)
of any of the Voting and Support Agreements by any Voting Undertaking Company
Shareholder.
(r) “Consent” means any
approval, consent, ratification, permission, waiver or authorization (including
any Governmental Authorization).
(s) “Contract” means any
written, oral or other agreement, arrangement, contract, subcontract, lease,
instrument, note, indenture, bond, debenture, option, warranty, purchase order,
license, sublicense, insurance policy, or benefit plan or legally binding
commitment, undertaking, understanding or forbearance of any
nature.
(t) “Designated Employees”
means the key employees set forth on Schedule 1.1(t) as
such list is adjusted as provided in Schedule
1.1(t).
3
(u) “Encumbrance” means
any lien, exclusive license or covenant not to assert Intellectual Property
Rights, pledge, hypothecation, attachment, charge (including any floating
charge), mortgage, security interest, debenture, encumbrance, option, right of
first refusal, preemptive right, community property interest or other
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, or any
restriction on the use, possession, exercise or transfer of any other attribute
of ownership of any asset).
(v) “Entity” means any
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any private company, public company, company limited by
shares, limited liability company or joint stock company), firm, society or
other enterprise, association, organization or entity.
(w) “Environmental Law”
means any Israeli, United States or other federal, state, local or foreign Legal
Requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
(x) “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.
(y) “ERISA Affiliate” of
any entity means any other entity that, together with such entity, would be
treated as a single employer within the meaning of Section 414(b), (c) or (m) of
the Code or Section 4001(b)(1) of ERISA.
(z) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(aa) “Excluded Contract”
means an Acquired Company Contract that constitutes one of the following types
of Contracts: (i) nondisclosure or confidentiality Contracts entered
into the ordinary course of business consistent with past practice, (ii)
Contracts for Standard Software, (iii) purchase orders or order
acknowledgments entered into in the ordinary course of business consistent with
past practices, (iv) for purposes of Outbound IP Contracts only, Contracts
authorizing any customer or end user to use an Acquired Company Product that
does not contain exclusive licenses to Acquired Company IP, (v) internet terms
of use, (vi) Contracts that have expired or been terminated prior to the date of
execution of this Agreement and do not have any surviving licenses or grants of
rights by any Acquired Company with respect to any Intellectual Property Rights
or Technology, and (vii) invention assignment Contracts entered into with
employees, officers, independent contractors or consultants in the ordinary
course of business consistent with past practice, unless such Contracts contain
license grants to specific Licensed IP.
(bb) “FINRA” means the
Financial Industry Regulatory Authority.
(cc) “Governmental
Authorization” means any United States, Israeli or other permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
4
(dd) “Governmental Body”
means any (i) nation, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature,
(ii) federal, state, local, municipal, foreign or other government, or
(iii) United States, Israeli or other governmental or quasi-governmental
authority of any nature (including any governmental division, department,
agency, commission, registrar, instrumentality, office, official, ministry,
fund, foundation, center, organization, unit, body or Entity and any court or
other tribunal).
(ee)
“Governmental
Grant” means any grant, incentive, tax incentive, subsidy, award,
participation, exemption, status, cost-sharing arrangement, reimbursement
arrangement, credit, offset or other benefit, relief or privilege provided or
made available by or on behalf of or under the authority of the Chief Scientist,
the Investment Center, the State of Israel, the BIRD Foundation, the European
Union, the Fund for Encouragement of Marketing Activities of the Israeli
Government or any other Governmental Body.
(ff) “HSR Act” means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
(gg) “Intellectual Property
Rights” means and includes all (i) United States, Israeli and foreign
patents and patent applications (and any patents that issue as a result of those
patent applications), and any renewals, reissues, reexaminations, extensions,
continuations, continuations-in-part, divisions and substitutions relating to
any of the patents and patent applications, as well as all related foreign
patent and patent applications that are counterparts to such patents and patent
applications, (ii) rights in United States, Israeli and foreign trademarks,
trade names, service marks, service names, trade dress, logos, slogans, 800
numbers, and corporate names, whether registered or unregistered, and the
goodwill associated therewith, together with any registrations and applications
for registration thereof, (iii) rights in works of authorship including any
United States, Israeli and foreign copyrights and rights under copyrights,
whether registered or unregistered, including moral rights, and any
registrations and applications for registration thereof, (iv) rights in
databases and data collections (including knowledge databases, customer lists
and customer databases) under the laws of the United States, Israel or any other
jurisdiction, whether registered or unregistered, and any applications for
registration therefor, (v) trade secrets and other rights in know-how and
confidential or proprietary information (including any business plans, designs,
technical data, customer data, financial information, pricing and cost
information, bills of material, or other similar information), (vi) URL and
domain name registrations, and (vii) other similar or equivalent proprietary or
intellectual property rights now known or hereafter recognized in any
jurisdiction worldwide.
(hh) “Investment Center”
means the Investment Center of the Ministry of Industry, Trade and Labor
established under the Israel Law for the Encouragement of Capital Investments,
1959.
(ii) “IRS” means the United
States Internal Revenue Service.
(jj) “ISA” means the
Israeli Securities Authority.
5
(kk) “Israeli Companies
Law” means the Israeli Companies Law, 5759-1999 (including those portions
of the Israeli Companies Ordinance [New Version] 5743-1983 that continue to be
in effect).
(ll) “Israeli District
Court” means the Tel-Aviv-Jaffa District Court of the State of Israel or
any other court in the State of Israel of competent jurisdiction.
(mm) “Israeli Restrictive Trade
Practices Law” means the Israeli Restrictive Trade Practices Law,
1988.
(nn) “Israeli Securities
Law” means the Israeli Securities Law, 1968.
(oo) “Israeli Tax
Commissioner” means the Tax Commissioner appointed pursuant to the
Israeli Tax Ordinance.
(pp) “Israeli Tax
Ordinance” means the Israeli Income Tax Ordinance [New
Version].
(qq) “Legal Proceeding”
means any action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding), hearing
(other than ex parte hearings not involving a party), inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel (whether in the United Status, Israel or
elsewhere), including any application by a creditor to the Israeli District
Court.
(rr) “Legal Requirement”
means any United States, Israeli or other federal, state, local, municipal or
foreign law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling, extension order or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body (or under the
authority of FINRA, the NASD or the Nasdaq Stock Market), including any
qualification, criterion, requirement or condition promulgated, stipulated or
set forth in any Governmental Grant or in any certificate of approval for any
Governmental Grant.
(ss) “Licensed IP” means
all rights under an Acquired Company Contract relating to Intellectual Property
Rights and Technology licensed to the Acquired Companies and incorporated into
the Acquired Company Products, or material to, used in or are necessary to
the operation of the business as currently conducted (other than Standard
Software).
6
(tt) An
event, violation, inaccuracy, circumstance or other matter, or series of related
events, violations, inaccuracies, circumstances or other matters, will be deemed
to have a “Material
Adverse Effect” on the Acquired Companies if such event, violation,
inaccuracy, circumstance or other matter, or related series thereof, (considered
together with all other matters that, disregarding all “Material Adverse Effect”
and other materiality qualifications and similar qualifications in the Company’s
representations and warranties, constitute exceptions to the representations and
warranties of the Company set forth in this Agreement) (i) had or would
reasonably be expected to have a material adverse effect on the business,
financial condition, operations or
financial performance of the Acquired Companies, taken as a whole or (ii) would
prevent or materially impair, alter or delay the ability of the Company to
consummate the Merger or to perform any of its material obligations under this
Agreement; provided, however, that with
respect to clause (i) above, in determining whether a “Material Adverse
Effect” has occurred or may or would occur, the following shall not be
considered: (A) conditions, or changes after the date hereof in such conditions,
in the economy, securities markets, credit markets, currency markets or other
financial markets in the United States or in Israel, (B) political conditions,
or changes after the date hereof in such conditions, in the United States or
Israel; or acts of war, sabotage or terrorism, including any escalation or
general worsening of any such acts of war, sabotage or terrorism, in the United
States or Israel, other than any of the foregoing to the extent that it causes
any direct damage or destruction to or renders physically unusable or
inaccessible any material facility or property of the Acquired Companies, (C)
acts of God or natural disasters in the United States or Israel, other than any
of the foregoing to the extent that it causes any direct damage or destruction
to or renders physically unusable or inaccessible any material facility or
property of the Acquired Companies, (D) (1) the termination or potential
termination of, or the failure or potential failure to renew or enter into,
Contracts with actual or potential customers, suppliers, distributors,
resellers, licensors or other business partners, or (2) any Legal Proceeding
made or brought by any of the current or former shareholders of the Company, on
their own behalf or on behalf of the Company, against the Company or any of its
directors or officers, in each of clauses (1) and (2) to the extent
directly resulting from the announcement or pendency of this Agreement, (E) the
taking of any action specifically required by this Agreement, or the failure to
take any action to which Parent has approved or consented in writing or
otherwise requested in writing, (F) the failure to take any action specifically
prohibited by Section 5.2 for which the
Company has sought Parent’s approval or consent and Parent has denied in writing
such approval or consent, (G) changes after the date hereof in U.S. GAAP or
other accounting standards, or the interpretation thereof, or (H) any failure by
the Company to meet any analysts’ estimates or projections of the Company’s
revenue, earnings or other financial performance or results of operations, or
any failure by the Company to meet any internal budgets, plans or forecasts of
its revenues, earnings or other financial performance or results of operations
(but not, in each case, the underlying cause of such failures unless such
underlying cause would otherwise be excepted from this definition); provided, however, that the
exceptions set forth in clauses (A), (B), (C) and (G) of the foregoing proviso
may be taken into account for purposes of determining whether a “Material
Adverse Effect” has occurred or may or would occur to the extent that the
Acquired Companies are disproportionately affected thereby relative to other
companies in the same industries and geographies in which the Acquired Companies
operate. An event, violation, inaccuracy, circumstance or other
matter, or series of related events, violations, inaccuracies, circumstances or
other matters, will be deemed to have a “Material Adverse
Effect” on Parent if such event, violation, inaccuracy, circumstance or
other matter, or related series thereof, (considered together with all other
matters that, disregarding all “Material Adverse Effect” and other materiality
qualifications and similar qualifications in Parent’s representations and
warranties, constitute exceptions to the representations and warranties of
Parent set forth in this Agreement) had or would reasonably be expected to have
a material adverse effect on (y) the business, financial condition,
operations or
financial performance of Parent and its Subsidiaries, taken as a whole, or (z)
the ability of Parent to consummate the Merger or to perform any of its
material obligations under this Agreement; provided, however, that a
decline in Parent’s stock price shall not, in and of itself, be deemed to
constitute a Material Adverse Effect on Parent.
(uu) “Materials of Environmental
Concern” means and includes chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.
7
(vv) “NASD” means the
National Association of Securities Dealers, Inc.
(ww) “Parent Designated
Person” means Xxxx Xxxxxxx or Xxxxxxx Xxxx.
(xx) “Parent Ordinary
Shares” means the ordinary shares, nominal value NIS 0.0175 per share, of
Parent.
(yy) “Per Share Merger
Consideration” means a cash amount equal to US$8.75, without
interest.
(zz) “Person” means any
individual, Entity or Governmental Body.
(aaa)
“Proxy
Statement” means the Proxy Statement to be sent to the Company’s
shareholders in connection with the Company General Meeting.
(bbb)
“Registered IP”
means all patents, registered copyrights (including mask works), registered
trademarks, registered domain names, and all applications for any of the
foregoing.
(ccc) “Representatives”
means officers, directors, employees, agents, attorneys, accountants and
advisors.
(ddd) “SEC” means the United
States Securities and Exchange Commission.
(eee) “Securities Act” means
the Securities Act of 1933, as amended.
(fff) “Securities
Regulations” means the Securities Act (and the rules and regulations
promulgated thereunder), the Exchange Act (and the rules and regulations
promulgated thereunder), the Israeli Securities Law (and the rules and
regulations promulgated thereunder) and the rules and regulations of the SEC,
the ISA, FINRA, the NASD and the Nasdaq Stock Market.
(ggg) “Securities
Regulators” means the SEC, the ISA, FINRA, the NASD and the Nasdaq Stock
Market.
(hhh) “Standard Software”
means non-customized software solely in executable or object code form that (i)
is licensed pursuant to a nonexclusive, software license, (ii) is not
incorporated into, or used directly in the development, manufacturing or
distribution of, any Acquired Company Products, and (iii) is generally available
on standard terms for either (A) annual payments by any Acquired Company of
$50,000 or less, or (B) aggregate payments by any Acquired Company of $100,000
or less.
(iii) “Subsidiary” of any
Person means any Entity of which such Person directly or indirectly owns,
beneficially or of record, (i) an amount of voting securities or other interests
in such Entity that is sufficient to enable such Person to elect at least a
majority of the members of such Entity’s board of directors or other governing
body, or (ii) at least 50% of the outstanding equity or financial interests of
such Entity.
8
(jjj) “Superior Proposal”
means any bona fide written offer or proposal (on its most recently amended or
modified terms, if amended or modified) made by a Person other than Parent or
Merger Sub or any Person acting in concert with Parent or Merger Sub that (i)
(A) provides for any merger, consolidation, business combination or similar
transaction, or tender offer or exchange offer, in each case, involving the
Company pursuant to which the Company’s shareholders immediately prior to such
transaction would own less than 50% of the voting power of the entity surviving
or resulting from such transaction (or the ultimate parent entity thereof), or
(B) provides for any sale or other disposition directly or indirectly of assets
of the Acquired Companies representing 50% or more of the consolidated assets of
the Acquired Companies, and (ii) is on terms which the Company’s board of
directors in good faith concludes (after consultation with a financial advisor
of U.S. nationally recognized reputation and outside legal counsel) are more
favorable from a financial point of view to the Company’s shareholders (in their
capacities as shareholders) than the transactions contemplated by this
Agreement, including any revisions hereto and after taking into account any
termination fees or expense reimbursement obligations and likelihood and timing
of consummation, and (iii) is, in the good faith judgment of the Company,
reasonably likely to be financed and completed.
(kkk) “Tax” means any and
all taxes, customs, duties, tariffs, imposts, deficiencies, assessments, levies
or other like governmental charges, including, without limitation, income, gross
receipts, excise, real or personal property, ad valorem, value added, estimated,
alternative minimum, stamp, sales, withholding, social security, occupation,
use, service, service use, license, net worth, payroll, franchise, transfer and
recording taxes and charges, imposed by the IRS, the Israeli Tax authority or
any other taxing authority (whether domestic or foreign including, without
limitation, any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, fines, penalties, linkage differentials (hefreshei hatzmada) or
additional amounts attributable to, or imposed upon, or with respect to, any
such amounts.
(lll) “Tax Return” means any
return (including any information return), report, statement, declaration,
estimate, schedule, notice, notification, form, election, certificate or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
(mmm) “Technology” means and
includes diagrams, inventions (whether or not patentable), invention
disclosures, know-how, methods, network configurations and architectures,
proprietary information, protocols, schematics, design information, bills of
material, build instructions, tooling requirements, manufacturing processes,
specifications, technical data, software code (in any form, including source
code and executable or object code), build scripts, test scripts, algorithms,
APIs, subroutines, techniques, user interfaces, URLs, IP cores, net lists, GDSII
files, photomasks, domain names, web sites, works of authorship, documentation
(including instruction manuals, samples, studies, and summaries), databases and
data collections, any other forms of technology, in each case whether or not
embodied in any tangible form and including all tangible embodiments of any of
the foregoing.
(nnn) “Transaction Expenses”
means fees and expenses of the Company incurred in connection with the
transactions contemplated by this Agreement, including, without limitation, any
fees and expenses of legal counsel, financial advisors, investment bankers and
accountants, proxy solicitors, public relations firms and investor relations
firms.
9
(ooo)
“U.S. GAAP”
means United States generally accepted accounting principles.
1.2 Other
Terms. In
addition to the terms defined in Section 1.1, the
following terms are defined in the Sections noted below:
Defined Term
|
Section
|
|
102
Trust Period
|
6.5(e)
|
|
102
Trustee
|
6.5(e)
|
|
Acquired
Company Benefit Plans
|
3.16(a)
|
|
Acquired
Company Reporting Documents
|
3.4(a)
|
|
Acquired
Company SEC Reporting Documents
|
3.4(a)
|
|
Agreement
|
Preamble
|
|
Award
Exchange Ratio
|
6.5(a)
|
|
Cashed
Out Compensatory Awards
|
6.5(b)
|
|
Change
of Recommendation
|
5.4(d)
|
|
Closing
|
2.3
|
|
Closing
Date
|
2.3
|
|
COBRA
|
3.16(h)
|
|
Company
|
Preamble
|
|
Company
Board Recommendation
|
6.3(b)
|
|
Company
Compensatory Award
|
6.5(a)
|
|
Company
Disclosure Schedule
|
3
|
|
Company
Financial Advisor
|
3.26
|
|
Company
General Meeting
|
6.3(a)
|
|
Company
Share Certificate
|
2.5
|
|
Company
Unaudited Interim Balance Sheet
|
3.4(c)
|
|
Confidentiality
Agreement
|
5.1(c)
|
|
Effective
Time
|
2.3
|
|
Exchange
Fund
|
2.6(a)
|
|
Existing
Policy
|
6.6(c)
|
|
Expenses
|
9.3(a)
|
|
Fee
|
9.3(b)
|
|
Foreign
Plan
|
3.16(k)
|
|
Funded
Know-how
|
3.14(a)
|
|
Indemnification
Agreements
|
6.6(a)
|
|
Indemnified
Persons
|
6.6(a)
|
|
Interim
Option Ruling
|
6.5(e)
|
|
Israeli
Option Tax Ruling
|
6.5(e)
|
|
IT
Systems
|
3.9(o)
|
|
Knowledge
|
Schedule
10.12(f)
|
|
Malicious
Code
|
3.21(b)
|
|
Material
Contract
|
3.10(a)
|
|
Merger
|
Preamble
|
|
Merger
Certificate
|
2.3
|
|
Merger
Proposal
|
6.1
|
|
Merger
Sub
|
Preamble
|
10
Merger
Sub Notice
|
2.3
|
|
Open
Source License
|
3.9(m)
|
|
Outside
Date
|
9.1(b)
|
|
Parent
|
Preamble
|
|
Paying
Agent
|
2.6(a)
|
|
Pre-Closing
Period
|
5.1(a)
|
|
Required
Company Shareholder Vote
|
3.24
|
|
Permitted
Liens
|
3.6
|
|
Xxxxxxxx-Xxxxx
Act
|
3.4(e)
|
|
Section
102
|
6.5(e)
|
|
Significant
Customer
|
3.7(a)
|
|
Significant
Supplier
|
3.7(c)
|
|
Superior
Proposal Notice
|
5.4(c)
|
|
Surviving
Corporation
|
2.1
|
|
Voting
and Support Agreements
|
Recitals
|
|
Voting
Undertaking Company Shareholders
|
Recitals
|
Section
2.
2.1 Merger of Merger Sub into
the Company. Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time, Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will
continue as the surviving corporation in the Merger (the “Surviving
Corporation”).
2.2 Effect of the
Merger. The
Merger shall have the effects set forth in this Agreement and in the applicable
provisions of the Israeli Companies Law. At the Effective Time, all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Merger Sub
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
2.3 Closing; Effective
Time. The
consummation of the transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of Xxxxxx, Xxx & Xxxxxx in Tel Aviv, Israel, at 10:00
a.m. (local time) on a date to be mutually designated by Parent and the Company
(the “Closing
Date”), which shall be no later than the third (3rd)
Business Day after the later to occur of (a) the satisfaction or waiver of the
last to be satisfied or waived of the conditions set forth in Sections 7 and
7.11 (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of such conditions), (b) the 50th day
after the delivery of the Merger Proposal to the Companies Registrar, and (c)
the 30th day
after the approval of the Merger by the shareholders of the Company and Merger
Sub. Promptly after the Closing, Merger Sub, in coordination
with the Company, shall deliver to the Companies Registrar a notice (the “Merger Sub Notice”)
in the form required by the Companies Registrar informing the Companies
Registrar that (y) the Merger was approved by the general meeting of Merger Sub,
and (z) no notice was given to the creditors of Merger Sub in accordance with
Section 318 of the Israeli Companies Law because Merger Sub has no creditors and
requesting the Companies Registrar to issue a certificate evidencing the
completion of the Merger in accordance with Section 323(5) of the Israeli
Companies Law after notice that the Closing has occurred (the “Merger
Certificate”). The Merger shall become effective upon the
issuance by the Companies Registrar, after the Closing, of the Merger
Certificate in accordance with Section 323(5) of the Israeli Companies Law (the
“Effective
Time”).
11
2.4 Effect on
Shares.
(a) At
the Effective Time, by virtue of the Merger and without any further action on
the part of Parent, Merger Sub, the Company or any shareholder of the
Company:
(i) any
Company Shares then held by the Company or any wholly owned Subsidiary of the
Company (or held in the Company’s treasury) shall remain outstanding, and no Per
Share Merger Consideration or any other consideration shall be delivered in
exchange therefor,
(ii) any
Company Shares then held by Parent, Merger Sub or any other wholly owned
Subsidiary of Parent shall remain outstanding, and no Per Share Merger
Consideration or any other consideration shall be delivered in exchange
therefor,
(iii) except
as provided in clauses (i) and (ii) above and subject to Section 2.4(b) and the
other terms and conditions of this Agreement, each Company Share then
outstanding shall be deemed to have been transferred to Parent in exchange for
the right to receive the Per Share Merger Consideration,
(iv) each
Company Compensatory Award shall be assumed by Parent or exchanged for the right
to receive a cash payment, in each case, subject to and in accordance with Section 6.5,
and
(v) each
Ordinary Share, nominal value NIS 0.01 per share, of Merger Sub then outstanding
shall be converted into one Ordinary Share, nominal value NIS 0.01 per share, of
the Surviving Corporation.
(b) If,
between the date of this Agreement and the Effective Time, the outstanding
Company Shares are changed into a different number, class or category of shares
by reason of any share split, division or subdivision of shares, share dividend,
issuance of bonus shares, consolidation of shares, reverse share split,
reclassification, recapitalization or other similar transaction, then the Per
Share Merger Consideration shall be appropriately adjusted.
2.5 Closing of the Company’s
Transfer Books. At
the Effective Time (a) all holders of certificates representing Company Shares
that were outstanding immediately prior to the Effective Time shall cease to
have any rights as shareholders of the Company; and (b) the share transfer books
of the Company shall be closed with respect to all Company Shares outstanding
immediately prior to the Effective Time. No further transfer of any
such Company Shares shall be made on such share transfer books after the
Effective Time. If, after the Effective Time, a valid certificate
previously representing any Company Shares (a “Company Share
Certificate”) is presented to the Paying Agent or to the Surviving
Corporation or Parent, such Company Share Certificate shall be canceled and
shall be exchanged as provided in Section 2.6.
12
2.6 Payment
Procedures.
(a) On
or prior to the Closing Date, Parent shall select a reputable bank or trust
company to act as paying agent in the Merger (the “Paying
Agent”). Promptly, and in any event within three (3) Business
Days, after the Effective Time, Parent shall deposit or cause to be deposited
with the Paying Agent cash in an amount equal to the total amount required for
the payments in Section 2.4(a)(iii) and
2.4(a)(iv). The
cash amount so deposited with the Paying Agent is referred to as the “Exchange
Fund.”
(b) As
soon as reasonably practicable after the Effective Time, the Paying Agent will
mail to the record holders of Company Shares as of immediately prior to the
Effective Time, whether such Company Shares are represented by Certificates or
Book-Entry Shares, (i) a letter of transmittal in customary form and containing
such provisions as Parent may reasonably specify (including a provision
confirming that delivery of Company Share Certificates or Book-Entry Shares
shall be effected, and risk of loss and title to Company Share Certificates or
Book-Entry Shares shall pass, only upon delivery of such Company Share
Certificates or Book-Entry Shares to the Paying Agent), and (ii) instructions
for use in effecting the surrender of Company Share Certificates or Book-Entry
Shares in exchange for the consideration payable pursuant to Section 2.4(a)(iii) and
2.4(a)(iv) for
the number of Company Shares previously represented by such Company Share
Certificates or Book-Entry Shares, together with a duly executed letter of
transmittal and such other documents as may be reasonably required pursuant to
such instructions by the Paying Agent or Parent. Until surrendered as
contemplated by this Section 2.6, all
Company Share Certificates or Book-Entry Shares shall be deemed, from and after
the Effective Time, to represent only the right to receive the consideration
payable pursuant to Section 2.4(a)(iii) and
2.4(a)(iv) as
contemplated by Section
2. If any Company Share Certificate shall have been lost,
stolen or destroyed, Parent may, in its discretion and as a condition to the
payment of the consideration payable pursuant to Section 2.4(a)(iii),
require the owner of such lost, stolen or destroyed Company Share Certificate to
provide an appropriate affidavit of loss and to deliver a bond (in such sum as
Parent may reasonably direct) as indemnity against any claim that may be made
against the Paying Agent, Parent or the Surviving Corporation with respect to
such Company Share Certificate.
(c) Upon
surrender of a Company Share Certificate (or affidavit of loss and bond as
indemnity, in accordance with Section 2.6(b), in lieu
thereof) or Book-Entry Share for cancellation to the Paying Agent, together with
a letter of transmittal duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Company Share Certificate or
Book-Entry Share shall be entitled to receive the Per Share Merger Consideration
in exchange therefor pursuant to Section 2.4(a)(iii), to
be mailed (or made available for collection by hand if so elected by the
surrendering holder) within five (5) Business Days following the later to occur
of (i) the Paying Agent’s receipt of the Exchange Fund, and (ii) the Paying
Agent’s receipt of such Company Share Certificate (or affidavit of loss and bond
as indemnity, in accordance with Section 2.6(b), in lieu
thereof) or Book-Entry Share, and the Company Share Certificate or Book-Entry
Share so surrendered shall forthwith be cancelled within five (5) Business
Days.
(d) No
interest shall be paid or accrued for the benefit of the holders of the Company
Share Certificate or Book-Entry Shares on the consideration payable to such
holders pursuant to this Agreement.
13
(e) Any
portion of the Exchange Fund that remains undistributed to holders of Company
Share Certificates or Book-Entry Shares as of the date twelve (12) months after
the date on which the Merger becomes effective shall be delivered to Parent upon
demand, and any holders of Company Share Certificates or Book-Entry Shares who
have not theretofore surrendered their Company Share Certificates or Book-Entry
Shares in accordance with this Section 2.6 shall
thereafter look only to Parent for payment of the Per Share Merger Consideration
pursuant to Section 2.4(a)(iii). Parent
or as otherwise instructed by Parent shall be the owner of any interest or other
amounts earned on the Exchange Fund and Per Share Merger
Consideration.
(f) Neither
Parent nor the Surviving Corporation shall be liable to any holder or former
holder of Company Shares or to any other Person with respect to any Per Share
Merger Consideration delivered to any public official pursuant to any applicable
abandoned property law, escheat law or similar Legal Requirement. In
the event that this Agreement is terminated for any reason and any cash has been
transmitted to the Paying Agent, such cash shall promptly be returned to Parent
or as otherwise instructed by Parent.
2.7 Articles of Association of
the Surviving Corporation; Officers and Directors of the Surviving
Corporation.
(a) The
parties shall take all actions necessary so that the Articles of Association of
Merger Sub as in effect immediately prior to the Effective Time shall be the
Articles of Association of the Surviving Corporation immediately after the
Effective Time, which the parties agree shall be effected by replacing the
Articles of Association of the Surviving Corporation immediately after the
Effective Time by written consent by Parent as the sole shareholder of the
Surviving Corporation, until duly amended as provided therein or by applicable
law.
(b) The
parties shall take all actions necessary so that the board of directors of
Merger Sub at the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Articles of Association of the Surviving
Corporation, which the parties agree shall be effected by the appointment of
such board of directors by written consent of Parent as the sole shareholder of
the Surviving Corporation.
(c) The
parties shall take all actions necessary so that from and after the Effective
Time, the individuals designated by Parent not later than ten (10) days prior to
the Closing Date shall be the executive officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Articles of Association of the Surviving Corporation, which the parties agree
shall be effected by the appointment of such executive officers by written
consent of the board of directors of the Surviving Corporation appointed
pursuant to Section
2.7(b).
2.8 Further
Action. If,
at any time after the Effective Time, any further action is determined by Parent
to be necessary or desirable to carry out the purposes of this Agreement or to
vest the Surviving Corporation with full right, title and possession of and to
all rights and assets of Merger Sub and the Company, the officers and directors
of the Surviving Corporation and Parent shall be fully authorized (in the name
of Merger Sub, in the name of the Company and otherwise) to take such
action.
14
2.9 Withholding
Tax. Each
of Parent, the Surviving Corporation, the Paying Agent and Merger Sub shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Shares or Company
Compensatory Award, including Company Shares or Company Compensatory Awards held
by the 102 Trustee, the amounts required to be deducted and withheld from any
payment pursuant to this Agreement under the Code, the Israeli Tax Ordinance or
any other applicable state, local, Israeli or foreign Tax law; provided, however, that,
without derogating from the foregoing in this Section 2.9, in
the event any holder provides Parent or the Surviving Corporation with a valid
approval or ruling issued by the applicable Governmental Authority regarding the
withholding (or exemption from withholding or interim ruling with respect to the
obligation to withhold) of Israeli Tax from the aggregate consideration payable
to such holder in a form reasonably satisfactory to Parent, then the deduction
and withholding of any amounts under the Israeli Tax Ordinance or any other
provision of Israeli law or requirement, if any, from the aggregate
consideration payable to such holder shall be made only in accordance with the
provisions of such approval or ruling or interim ruling. To the extent that
amounts are so withheld by the Parent, the Surviving Corporation, the Paying
Agent, or Merger Sub, as the case may be, such withheld amounts shall be
remitted to the applicable Governmental Body not sooner than two (2) days prior
to the due date under applicable law and when so remitted shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Shares in respect of which such deduction and withholding was made.
Section
3. Representations and
Warranties of the Company.
Except
(a) as disclosed in and reasonably apparent from the Acquired Company Reporting
Documents publicly available on the SEC website as of the date of this
Agreement, or (b) as disclosed in a document of even date herewith delivered by
the Company to Parent and Merger Sub concurrent with the execution of this
Agreement (the “Company Disclosure
Schedule”) (provided, however, that the
Company Disclosure Schedule shall be arranged in separate parts corresponding to
the numbered and lettered Sections contained in Section 3, and the
information disclosed in any numbered or lettered part shall be deemed to relate
to and to qualify only the particular representation or warranty set forth in
the corresponding numbered or lettered Section in Section 3 and any
other numbered or lettered Sections in Section 3 to the
extent that it is reasonably apparent on its face that such disclosure should
also qualify such other Sections), the Company represents and warrants to Parent
and Merger Sub as follows:
3.1 Due Organization;
Subsidiaries; Etc.
(a) Part 3.1(a) of the Company Disclosure
Schedule sets forth each Subsidiary of the Company. Neither
the Company nor any of its Subsidiaries owns any shares of, or any equity
interest of any nature in, any other Entity. None of the Acquired
Companies has agreed or is obligated to make, or is bound by any Contract under
which it may become obligated to make, any future investment in or capital
contribution to any other Entity.
(b) The
Company is a public company duly organized and validly existing under the laws
of the State of Israel, and no proceedings have been commenced to strike the
Company from the Registry of Companies maintained by the Companies
Registrar. The Company has all necessary power and authority (i) to
conduct its business in the manner in which its business is currently being
conducted, (ii) to own and use its assets in the manner in which its assets are
currently owned and used, and (iii) to perform its obligations under all
Contracts by which it is bound. Each of the Company’s Subsidiaries is
duly organized and is validly existing and in good standing under the laws of
the jurisdiction of its organization, and has all necessary power and authority
(A) to conduct its business in the manner in which its business is currently
being conducted, (B) to own and use its assets in the manner in which its assets
are currently owned and used, and (C) to perform its obligations under all
Contracts by which it is bound, except in each case where the failure to be so
duly organized or in good standing would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Companies.
15
(c) Each
of the Acquired Companies is qualified to do business as a foreign corporation,
and, to the extent applicable in each such jurisdiction, is in good standing,
under the laws of all jurisdictions where the nature of its business requires
such qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Acquired Companies.
3.2 Charter Documents;
Minutes. The
Company has made available to Parent accurate and complete copies of the
memorandum of association and articles of association and other charter and
organizational documents of the respective Acquired Companies, including all
amendments thereto. The Company has made available to Parent accurate
and complete copies of the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) that have occurred on or after January 1, 2007 of the shareholders or
equityholders, as applicable, of each Acquired Company, the board of directors
of the Company, all committees thereof and the boards of directors or equivalent
governing body of each Acquired Company other than the Company. There has not been any
material violation of any of the provisions of the memorandum of association and
articles of association or bylaws (or equivalent constituent documents),
including all amendments thereto, of each Acquired Company, and no Acquired
Company has taken any action that is inconsistent in any material respect with
any resolution adopted by the Company’s shareholders, the board of directors of
the Company or any committee thereof.
3.3 Capitalization,
Etc.
(a) The
authorized share capital of the Company is NIS 2,000,000 divided into
200,000,000 Company Shares, of which 21,312,857 Company Shares have been issued
and are outstanding as of the date of this Agreement. All of the
outstanding Company Shares have been duly authorized and validly issued, and are
fully paid and nonassessable. There are no Company Shares held by any
of the Acquired Companies. No holder of any Company Shares, is
entitled or subject to any preemptive right, right of participation, right of
maintenance or similar right to purchase Company Shares from the Company; none
of the outstanding Company Shares, and no holder of Company Shares, is subject
to any right of first refusal in favor of any of the Acquired Companies; and
there is no Acquired Company Contract to which the Company is a party, or, to
the Knowledge of the Company, any other Acquired Company Contract, relating to
the voting or registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or granting any option or similar
right with respect to), any Company Shares. None of the Acquired
Companies is under any obligation, or is bound by any Contract pursuant to which
it may become obligated, to repurchase, redeem or otherwise acquire any Company
Shares.
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(b) As
of the date of this Agreement (i) 5,602,866 Company Shares are reserved for
issuance pursuant to outstanding options to purchase Company Shares and
outstanding Company RSUs, and (ii) 281,157 Company Shares are reserved for
future issuance pursuant to the Company Share Plans. Part 3.3(b) of the Company Disclosure
Schedule sets forth the following information with respect to each
Company Compensatory Award outstanding as of the date of this Agreement (i) the
particular Company Share Plan pursuant to which such Company Compensatory Award
was granted, (ii) the name of the optionee, (iii) the type of Company
Compensatory Award, (iv) the number of Company Shares subject to such Company
Compensatory Award, (v) any applicable exercise price or purchase price of such
Company Compensatory Award, (vi) the date on which such Company Compensatory was
granted, (vii) the applicable vesting schedule (including details as to the
circumstances in which vesting will be accelerated), and the extent to which
such Company Compensatory Award is vested and, if applicable, exercisable as of
the date of this Agreement, (viii) whether such Company Compensatory Award was
granted with terms that would allow it to qualify for any special Tax treatment,
and (ix) the date on which such Company Compensatory Award
expires. The Company has made available to Parent accurate and
complete copies of the Company Share Plans and any other option plans or other
incentive plans pursuant to which there are outstanding Company Compensatory
Awards, and the forms of all option and other equity award agreements evidencing
such outstanding Company Compensatory Awards. The Company Share Plans
and each other option plan and other incentive plan of the Company are qualified
under Section 102 of the Israeli Tax Ordinance, and all actions necessary
to maintain the qualification of the Company Share Plans and each such other
option plan or other incentive plan under Section 102 of the Israeli Tax
Ordinance have been taken.
(c) The
Company owns, beneficially and of record, all of the issued and outstanding
shares or other equity interests of each of its Subsidiaries. All of
the outstanding shares of the Company’s Subsidiaries have been duly authorized
and are validly issued, are fully paid and nonassessable and are owned by the
Company free and clear of any Encumbrances, except for restrictions on transfers
arising under applicable securities laws.
(d) There
is no (i) outstanding subscription, option, call, warrant or right, in each case
whether or not currently exercisable, to acquire from an Acquired Company any
shares or other securities of such Acquired Company, (ii) outstanding
security, instrument or obligation of an Acquired Company that is or may become
convertible into or exchangeable for any shares or other securities of any
Acquired Company, or (iii) stockholder rights plan or similar plan commonly
referred to as a “poison pill,” or Contract under which any Acquired Company is
or may become obligated to sell or otherwise issue any shares or any other
securities. No holder of any debt security or indebtedness of any of
the Acquired Companies, and no other creditor of any of the Acquired Companies,
has or may acquire any general voting rights or other voting rights, approval
rights or similar rights with respect to the Merger or with respect to the
election of directors or the business affairs of any of the Acquired
Companies.
(e) All
outstanding Company Shares, all outstanding Company Compensatory Awards and all
outstanding securities of each Subsidiary of the Company have been issued and
granted in material compliance with (i) all applicable securities laws and other
applicable Legal Requirements, and (ii) all requirements set forth in applicable
Contracts.
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3.4 Filings with Securities
Regulators; Financial Statements.
(a) To
the extent not otherwise publicly available on the SEC website as of the date of
this Agreement, the Company has made available to Parent accurate and complete
copies of each registration statement, each proxy statement and each other
statement, report, schedule, form or other document filed by each of the
Acquired Companies with any of the Securities Regulators since July 25, 2007,
including all exhibits, supplements and amendments thereto (all such statements,
reports, schedules, forms, documents, exhibits, supplements and amendments,
including those publicly available on the SEC website as of the date of this
Agreement, being referred to herein as the “Acquired Company Reporting
Documents” and all Acquired Company Reporting Documents filed with the
SEC, the “Acquired
Company SEC Reporting Documents”). All statements, reports,
schedules, forms and other documents (and all exhibits, supplements and
amendments) required to have been filed by each of the Acquired Companies with
the respective Securities Regulators have been so filed on a timely
basis. As of the time it was filed with the applicable Securities
Regulator (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) (i) each of the Acquired Company
Reporting Documents complied in all material respects with the requirements of
all applicable Securities Regulations and other Legal Requirements, and (ii)
none of the Acquired Company Reporting Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
Company is, and has at all times since July 25, 2007 been, in compliance with
the applicable listing, maintenance and other rules and regulations of The
NASDAQ Stock Market and has not received any notice asserting any non-compliance
with any of such rules and regulations.
(b) The
financial statements (including any related notes) contained in the Acquired
Company SEC Reporting Documents (i) comply as to form in all material respects
with the rules and regulations of the SEC with respect thereto, (ii) were
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods covered (except as may be indicated in the notes to such financial
statements and except that unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount), and
(iii) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates thereof
and the consolidated results of operations, changes in shareholders’ equity and
cash flows of the Company and its Subsidiaries for the periods covered thereby
(subject in the case of interim statements, to normal and recurring year-end
adjustments and to other adjustments described therein including the notes
thereto).
(c) The
Company has made available to Parent an unaudited consolidated balance sheet of
the Company and its Subsidiaries as of September 30, 2010 (the “Company Unaudited Interim
Balance Sheet”), and the related unaudited consolidated statement of
income of the Company and its Subsidiaries for the nine (9) months then
ended. The financial statements referred to in this Section 3.4(c) (i) were
prepared in accordance with U.S. GAAP applied on a basis consistent with the
basis on which the financial statements referred to in Section 3.4(b) were prepared
(except that such financial statements do not contain footnotes and are subject
to normal and recurring year-end adjustments which will not, individually or in
the aggregate, be material in amount), and (ii) fairly present in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of September 30, 2010 and the consolidated results of operations, changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries for the
nine (9) months ended September 30, 2010.
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(d) Any
financial statements delivered to Parent pursuant to Section 5.1 (i)
will be prepared in accordance with U.S. GAAP applied on a basis consistent with
the basis on which the financial statements referred to in Section 3.4(b) were prepared
(except that any such financial statements that are unaudited will not contain
footnotes and will be subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount), and (ii)
will fairly present in all material respects the consolidated financial position
of the Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of operations of the Company and its Subsidiaries for the
periods covered thereby (subject in the case of interim statements, to normal
and recurring year-end adjustments and to other adjustments described therein
including the notes thereto).
(e) The
Company is a “foreign private issuer” as such term is defined in Rule 3b-4
promulgated under the Exchange Act. The Company has established and maintains
disclosure controls and procedures and internal controls over financial
reporting (as such terms are defined in Rule 13a-15 under the Exchange Act) as
required by Rule 13a-15 under the Exchange Act. The Company’s auditor
has at all times been “independent” with respect to the Company within the
meaning of Regulation S-X under the Exchange Act and all non-audit services (as
defined in the Sarbanes Oxley Act of 2002 (the “Xxxxxxxx-Xxxxx Act”))
performed by the Company’s auditors for the Company were approved as required
under the Sarbanes Oxley Act. No independent public accountant of the
Company has resigned or been dismissed as independent public accountant of the
Company as a result of or in connection with any disagreement with the Company
on a matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. To the Knowledge of the
Company, none of the Acquired Companies nor any of their directors or executive
officers, in their capacity as such, is under any inquiry, investigation or
similar process by any Securities Regulator.
3.5 Absence of
Changes. Since
December 31, 2009 through the date hereof:
(a) there
has not been a Material Adverse Effect on the Acquired Companies;
(b) there
has not been any material loss, abandonment, damage or destruction to, or any
material interruption in the use of, any of the assets (including the Technology
assets embodied in the Acquired Company IP and the Licensed IP) of any of the
Acquired Companies, whether or not covered by insurance;
(c) none
of the Acquired Companies has (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares or other
securities (other than dividends or distributions made by an Acquired Company to
the Company), or (ii) repurchased, redeemed or otherwise reacquired any
shares or other securities;
(d) none
of the Acquired Companies has sold, issued or granted, or authorized the sale,
issuance or grant of (i) except for Company Shares issued upon the valid
exercise of outstanding Company Options or vesting of outstanding Company RSUs
in accordance with the terms of the Company Share Plans and the applicable award
agreements, any share or other security, (ii) except for Company Options
described in Part 3.3(b) of the Company Disclosure
Schedule, any option, warrant or right to acquire any share or any other
security, or (iii) any instrument convertible into or exchangeable for any share
or other security;
(e) none
of the Acquired Companies has amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any option
plan or other incentive plan, or (ii) any provision of any agreement
applicable to any outstanding option or other equity award;
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(f) there
has been no amendment to the memorandum of association, articles of association
or other charter or organizational documents of any of the Acquired Companies,
and none of the Acquired Companies has effected or been a party to any merger,
consolidation, amalgamation, arrangement, share exchange, business combination,
recapitalization, reclassification of shares, stock split, division or
subdivision of shares, stock dividend, issuance of bonus shares, reverse stock
split, consolidation of shares or similar transaction;
(g) none
of the Acquired Companies has formed any Subsidiary or acquired any equity
interest or other interest in any other Entity;
(h) none
of the Acquired Companies has made any capital expenditure which, when added to
all other capital expenditures made on behalf of the Acquired Companies since
December 31, 2009, exceeds US$4,000,000 in the aggregate;
(i)
none of the Acquired Companies has waived any material right
or remedy under, any Material Contract;
(j)
none of the Acquired Companies has (i) entered into, applied
for, requested, accepted, been approved for, elected to participate in, received
or become subject to or bound by any requirement or obligation relating to any
Governmental Grant, or permitted any Acquired Company IP or any other asset
owned or used by it to become bound by any requirement or obligation resulting
from any Governmental Grant, or (ii) amended or terminated, or waived any
material right or remedy related to, any Governmental Grant;
(k) none
of the Acquired Companies has (i) acquired, leased or licensed any material
right or other material asset from any other Person, including any Licensed IP,
(ii) sold, transferred or otherwise disposed of, or leased or licensed, or
incurred any Encumbrances other than Permitted Liens regarding any material
right or other material asset (including but not limited to Acquired Company IP)
to any other Person, or (iii) waived, abandoned or relinquished any rights under
an Acquired Company Contract, except in each case, for rights or other assets
acquired, leased, sold, transferred, licensed or disposed of in the ordinary
course of business and consistent with past practices;
(l)
none of the Acquired Companies has written off as obsolete or
otherwise any of its inventories, except in a manner consistent with past
practices;
(m) none
of the Acquired Companies has written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness, except in a manner consistent with past practices;
(n)
none of the Acquired Companies has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges or Encumbrances made in the ordinary course of
business and consistent with past practices;
(o) none
of the Acquired Companies has (i) lent money to any Person other than for
expense advancements to employees in the ordinary course of business, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
20
(p) none
of the Acquired Companies has (i) established or adopted any material
Acquired Company Benefit Plan, (ii) caused or permitted any material Acquired
Company Benefit Plan to be amended in any material respect, or (iii) paid any
material bonus or made any material profit sharing or similar payment to, or
materially increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers, employees or consultants;
(q) none
of the Acquired Companies has changed any of its pricing policies, product or
system return policies, product or system support policies or service policies,
product system modification or upgrade policies, or personnel policies or any of
its methods of accounting or accounting practices in any material
respect;
(r) none
of the Acquired Companies has made any material Tax election or changed any
material Tax accounting method, amended any material Tax Return, entered into
any material Tax allocation agreement, material Tax sharing agreement, material
Tax indemnity agreement or closing agreement related to any material Tax, or
agreed to an extension or waiver of the statute of limitations with respect to
the assessment or determination of material Taxes;
(s) none
of the Acquired Companies has commenced or settled any Legal
Proceeding;
(t) none
of the Acquired Companies has entered into any arrangement, the result of which
is the loss, expiration or termination of any license or right under or to any
Licensed IP used in the development, manufacture or support of any Acquired
Company Product or incorporated in or provided with any Acquired Company
Product;
(u) none
of the Acquired Companies has entered into any material transaction or taken any
other material action outside the ordinary course of business or inconsistent
with past practices; and
(v) none
of the Acquired Companies has agreed or committed to take, or has authorized the
taking of, any of the actions referred to in clauses (b) through (v) of this
sentence.
3.6 Title to Tangible
Assets. The
Acquired Companies own, and have good, valid and marketable title to, (a) all
tangible assets reflected as owned by the Acquired Companies on the Company
Unaudited Interim Balance Sheet, except for current assets disposed of in the
ordinary course of business since the date of the Company Unaudited Interim
Balance Sheet, and (b) all other assets reflected in the books and records of
the Acquired Companies as being owned by any of the Acquired
Companies. All of such tangible assets are owned by the Acquired
Companies, free and clear of any Encumbrances, except for the following (“Permitted
Liens”) (i) any lien for current taxes not yet due and
payable, (ii) minor liens that have arisen in the ordinary course of business
and that do not, in any case or in the aggregate, materially detract from the
value of the assets subject thereto or materially impair the operations of any
of the Acquired Companies, and (iii) liens described in Part 3.6 of the Company
Disclosure Schedule.
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3.7 Receivables; Customers;
Suppliers.
(a) All
existing accounts receivable of the Acquired Companies, including without
limitation those accounts receivable reflected on the Company Unaudited Interim
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since September 30, 2010 and have not yet been collected,
(i) represent valid obligations of customers of the Acquired Companies
arising from bona fide transactions entered into in the ordinary course of
business, and (ii) are current. The Company currently expects all
such accounts receivable referenced in the preceding sentence to be collected in
full when due, without any counterclaim or set off.
(b) Part 3.7(b) of the Company Disclosure
Schedule accurately identifies, and provides an accurate and complete
breakdown of the revenues received from, each of the ten (10) largest customers
in each of 2007, 2008 and 2009 and the first nine (9) months of 2010 (each, a
“Significant
Customer”). None of the Acquired Companies has received any
written notice or communication prior to the date of this Agreement of any
outstanding material disputes with a Significant Customer. None of the Acquired
Companies has agreed to accept returns of any Acquired Company
Products. None of the Acquired Companies has received any written
notice or communication from any Significant Customer that such customer shall
not continue as a customer of the Acquired Companies (or the Surviving
Corporation or Parent) after the Closing or that such customer intends to
terminate or materially modify existing Contracts with an Acquired Company (or
the Surviving Corporation or Parent).
(c) Part 3.7(c)3.7(a) of the Company Disclosure
Schedule accurately identifies, and provides an accurate and complete
breakdown of the amounts paid to each of the ten (10) largest suppliers of
products or services to the Acquired Companies, in each of 2007, 2008 and 2009,
and in the first nine (9) months of 2010 (each, a “Significant
Supplier”). None of the Acquired Companies has received as of
the date of this Agreement any written notice or communication of any
outstanding material disputes with a Significant Supplier. To the
Knowledge of the Company, none of the Acquired Companies has received prior the
date of this Agreement any written notice or communication from any Significant
Supplier that such supplier shall not continue as a supplier of the Acquired
Companies (or the Surviving Corporation or Parent) after the Closing or that
such supplier intends to terminate or materially and adversely modify existing
Contracts with an Acquired Company (or the Surviving Corporation or
Parent).
3.8 Inventories; Equipment; Real
Property.
(a) Part 3.8(a) of the Company Disclosure
Schedule provides an accurate and complete breakdown of all inventories
(including raw materials, supplies, products in process and finished products by
the following types: single data rate, host channel adapter, cable, DDR,
Ethernet, QDR, RMA product and raw material) of the Acquired Companies as of
September 30, 2010. All inventories of the Acquired Companies,
whether or not reflected in the Company Unaudited Interim Balance
Sheet:
(i) are
of such quality and quantity as to be usable and saleable by the Acquired
Companies in the ordinary course of business;
(ii) have
been priced at the lower of cost or market value using the methods described in
the notes to the audited consolidated balance sheet of the Acquired Companies
for the year ended December 31, 2009; and
(iii) to
the Knowledge of the Company, are free of any material defects or
deficiencies.
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The
inventory levels maintained by the Acquired Companies as of the date hereof are
not excessive in light of the normal operating requirements of the Acquired
Companies and are adequate for the conduct of the operations of the Acquired
Companies in the ordinary course of business.
(b) All
material items of equipment and other tangible assets owned or leased to
the Acquired Companies are adequate for the uses to which they are being put,
are in good and safe condition and repair (ordinary wear and tear excepted), are
adequate for the conduct of the business of the Acquired Companies in the manner
in which such business is currently being conducted and are consistent with the
amounts reported on the unaudited consolidated balance sheet of the Company and
its Subsidiaries as of September 30, 2010 made available to Parent pursuant to
Section 3.4(c).
(c) None
of the Acquired Companies owns any real property or any interest in real
property as of the date of this Agreement, except for the leaseholds created
under the real property leases identified in Part 3.8(c) of the Company Disclosure
Schedule.
3.9 Intellectual
Property.
(a) Part 3.9(a) of the Company
Disclosure Schedule accurately identifies as of the date of this
Agreement (i) each item of Registered IP in which any Acquired Company has or
purports to have an ownership interest, whether exclusively, jointly with
another Person, or otherwise, (ii) the jurisdiction in which such item of
Registered IP has been registered or filed and the applicable application,
registration or serial or other similar identification number, (iii) any other
Person that has an ownership interest in such item of Registered IP and the
nature of such ownership interest, and (iv) all unregistered trademarks of the
Acquired Companies that are used by an Acquired Company in connection with any
Acquired Company Products.
(b) Part 3.9(b) of the Company
Disclosure Schedule accurately identifies as of the date of this
Agreement all Acquired Company IP Contracts (other than Excluded
Contracts) pursuant to which Licensed IP is licensed to the Acquired
Companies and whether the license or licenses granted to the Acquired Company is
or are, as the case may be, exclusive or nonexclusive, and where if the license
is exclusive, the Acquired Company has granted an exclusive sublicense right to
any Person.
(c) Part 3.9(c) of the Company Disclosure
Schedule accurately identifies as of the date of this Agreement each
Acquired Company IP Contract (other than Excluded Contracts) pursuant to which
any Person has been granted any license under, or otherwise has received or
acquired any right, whether or not currently exercisable, or interest in, any
Acquired Company IP. No Acquired Company has transferred ownership
of, whether a whole or partial interest, or granted any exclusive right to use,
any Technology or Intellectual Property Right that an Acquired Company owns or
purports to own to any Person.
23
(d) The
Acquired Companies exclusively own all right, title and interest to and in the
Acquired Company IP free and clear of any Encumbrances, other than Permitted
Liens. The Acquired Companies have policies requiring that invention
assignment agreements and confidentiality agreements are signed by each
employee, officer, contractor or consultant of the Acquired Companies, and each
such employee, officer, contractor or consultant who is or was involved in the
creation or development of any Acquired Company IP has signed an enforceable
agreement containing an assignment to the applicable Acquired Company of all
Intellectual Property Rights in such Person’s contribution to the Acquired
Company IP, as well as confidentiality agreements, and for employees and
officers employed by an Acquired Company at any time since January 1, 2009,
non-competition agreements. To the Knowledge of the Company, no
current or former officer, director, employee, consultant or contractor of an
Acquired Company has any claim, right (whether or not currently exercisable), or
ownership interest in any Acquired Company IP other than moral rights or other
rights that cannot be assigned or waived. To the Knowledge of the
Company, no current employee of any of the Acquired Companies is (i) bound by or
otherwise subject to any Contract restricting him from performing his duties for
any of the Acquired Companies, (ii) in violation of any term of any employment,
consulting, invention assignment agreement, patent disclosure agreement,
non-competition agreement, or non-solicitation Contract with an Acquired
Company, or (iii) in breach of any Contract with any former employer or other
Person concerning Intellectual Property Rights or confidentiality due to his
activities as an employee of any of the Acquired Companies.
(e) Part 3.9(e) of the
Disclosure Schedule contains a complete and accurate list of all
Contracts pursuant to which any of the Acquired Companies is obligated to pay
royalties or license fees, or any other equivalent fees or payment obligations
for the manufacture, sale or distribution of any Acquired Company Product or the
use of any Acquired Company IP or Licensed IP. No Person who has
licensed Technology or Intellectual Property Rights to an Acquired Company has
an ownership interest in or license rights to any derivative works or
improvements made by the Acquired Companies to such Technology or Intellectual
Property Rights that are incorporated into any Acquired Company Product, or are
material to, used in or are necessary to the operation of the business as
currently conducted.
(f) To
the Knowledge of the Company, all Acquired Company IP is valid and
enforceable. The Acquired Companies have made all filings and
payments and taken all other actions required to be made or taken to maintain
each item of Acquired Company IP that is Registered IP owned or exclusively
licensed by an Acquired Company in full force and effect by the applicable
deadline and otherwise in accordance with all applicable Legal Requirements to
the extent such actions, if not taken, would result in such Registered IP being
rendered invalid or unenforceable or, with respect to actions taken since July
25, 2007, deemed lapsed or abandoned. No interference, opposition,
reissue, reexamination, or other Proceeding (other than ex parte re-examinations
of which the Company has not been provided notice) is, or since July 25, 2007
has been, pending or, to the Knowledge of the Company, threatened, in which the
scope, validity or enforceability of any Acquired Company IP is being or has
been contested or challenged. No application for a patent or a
material copyright, mask work or trademark registration or any other type of
material Registered IP owned or purported to be owned by any Acquired Company
filed by or on behalf of any of the Acquired Companies at any time since July
25, 2007 has been abandoned, allowed to lapse or rejected. To the
Knowledge of the Company, none of the Acquired Companies has engaged in patent
or copyright misuse or any fraud or inequitable conduct in connection with any
Registered IP owned by the Acquired Companies. To the Knowledge of
the Company, the Acquired Companies and their patent counsel have complied with
their duty of candor and disclosure and have made no material misrepresentations
in the filings submitted to the applicable Governmental Authorities with respect
to all patents included in the Acquired Company IP. To the Knowledge
of the Company, no trademark or trade name currently owned or used by any of the
Acquired Companies conflicts or interferes with any trademark or trade name
owned, used and applied for by any other Person. To the Knowledge of
the Company, no event or circumstance (including a failure to exercise adequate
quality controls and an assignment in gross without the accompanying goodwill)
has occurred or exists that has resulted in, or could reasonably be expected to
result in, the abandonment of any material trademark (whether registered or
unregistered) currently owned, or used by any of the Acquired
Companies. Part 3.9(f) of the Company
Disclosure Schedule sets forth a detailed listing with respect to each
item of such Registered IP and all actions, filings and payment obligations due
to be made to the United States Patent and Trademark Office and United States
Copyright Office and corollary governmental offices in Israel, and to the
Knowledge of the Company, any other applicable foreign Governmental Body, within
90 days following the date of this Agreement.
24
(g) To
the Knowledge of the Company, no Person has infringed, misappropriated or
otherwise violated, and no Person is currently infringing, misappropriating or
otherwise violating, any Acquired Company IP that is incorporated into, or
material to the development, manufacturing or distribution of, any Acquired
Company Products.
(h) Neither
the execution, delivery or performance of this Agreement nor the consummation of
any of the transactions or agreements contemplated by this Agreement will, with
or without notice or the lapse of time, result in, or give any other Person the
right or option to cause or declare, (i) a loss of, or an Encumbrance on, any
Acquired Company IP, (ii) a breach of, termination of, or acceleration or
modification of any right or obligation under any Contract listed or required to
be listed in Parts
3.9(b) or 3.9(c) of the Company Disclosure Schedule, (iii) the release,
disclosure, or delivery of any Acquired Company IP by or to any escrow agent or
other Person, or (iv) the grant, assignment, or transfer to any other Person of
any license or other right or interest under, to, or in any Technology or
Intellectual Property. The representation and warranty in this Section 3.9(h) shall
not be deemed or construed as an express or implied representation and warranty
regarding any right or option that arises from a Contract (other than the
Agreement) entered into by Parent or its Affiliates or any obligations of Parent
or any of its Affiliates under any such Contracts.
(i) To
the Knowledge of the Company, each of the Acquired Companies owns or otherwise
has the right to use all Technology and Intellectual Property Rights that is
used in or necessary for the conduct of the business of the Acquired Companies
as currently conducted. The representation and warranty in this Section 3.9(i) shall
not be deemed or construed as an express or implied representation and warranty
regarding no infringement, misappropriation, or violation of any Intellectual
Property Right of any other Person.
(j) To
the Knowledge of the Company, no Acquired Company has infringed,
misappropriated, or violated any Intellectual Property Right of any other
Person.
(k) No
infringement, misappropriation or similar claim or Legal Proceeding is pending
or threatened in writing against any Acquired Company or, to the Knowledge of
the Company, against any Person who may be entitled to be indemnified or
reimbursed by any Acquired Company with respect to such claim or Legal
Proceeding. Since July 25, 2007, no Acquired Company has received any
notice or other communication (in writing) relating to any actual, alleged or
suspected infringement, misappropriation or violation of any Intellectual
Property Right of another Person by any Acquired Company.
25
(l) No
source code owned or exclusively licensed to any Acquired Company and included
in any Acquired Company Product has been delivered, licensed or made available
to any escrow agent or other Person who is not, as of the date of this
Agreement, an employee or contractor of the Company. No Acquired
Company has any duty or obligation (whether present, contingent or otherwise) to
deliver, license or make available the source code for any Acquired Company
Product to any escrow agent or other Person. No event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, result in the delivery,
license or disclosure of any source code for any Acquired Company Product to any
other Person who is not, as of the date of this Agreement, an employee or
contractor of any Acquired Company.
(m) No
software included in any Acquired Company Product is subject to any “copyleft”
or other obligation or condition, including without limitation any obligation or
condition under any “open source” license such as the GNU Public License, Lesser
GNU Public License or other licenses approved as open source licenses under the
open source definition of the Open Source Initiative, that (i) requires, or
conditions the use or distribution of such Acquired Company Product or portion
thereof on, (A) the disclosure, licensing or distribution of any source code for
any portion of such Acquired Company Product, or (B) the granting to licensees
of the right to make derivative works or other modifications to such Acquired
Company Products or portions thereof, or (ii) otherwise impose any limitation,
restriction or condition (other than notice and disclosure requirements relating
to the licensed source code itself) on the right or ability of any Acquired
Company to use, distribute or charge for any Acquired Company Product (“Open Source
License”).
(n) No
funding, facilities or personnel of any Governmental Body or any public or
private university, college or other educational or research institution was
used, directly or indirectly, by any Acquired Company, and to the Company’s
Knowledge any other Person, to develop or create, in whole or in part, any
Acquired Company IP. None of the Acquired Companies is or has
ever been a member or promoter of, or a contributor to, any industry standards
body or similar organization to the extent resulting in a requirement or
obligation for any of the Acquired Companies to grant or offer to any other
Person any license or right to any Acquired Company IP.
(o) There
have been no material operational or continued failures, disruptions,
substandard performances, failures, outages or other adverse events in the past
eighteen months affecting any of the information technology systems used by the
Acquired Companies (“IT Systems”) that
have resulted in, any material disruption to or adverse impact on the operation
of any of the respective businesses of the Acquired
Companies. Without limiting the foregoing, (i) each Acquired Company
has taken commercially reasonable steps and implemented commercially reasonable
procedures to provide that its IT Systems are free from Malicious Code, and (ii)
each Acquired Company has in effect, and taken commercially reasonable steps in
compliance with, industry standard disaster recovery plans, procedures and
facilities for its business and has taken all commercially reasonable steps to
safeguard the security and the integrity of its IT Systems, including, without
limitation, taking commercially reasonable steps to provide for the back-up and
recovery of data and information. To the Knowledge of the Company,
there have been no material unauthorized intrusions or breaches of security with
respect to the IT Systems.
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3.10 Contracts.
(a) Part 3.10(a) of the
Company Disclosure Schedule identifies each Acquired Company Contract
that constitutes a “Material Contract”, other than an Excluded Contract, in
effect as of the date hereof. For purposes of this Agreement, each of
the following shall be deemed to constitute a “Material
Contract”:
(i) any
Contract relating to the employment of, or the performance of services by, any
director, officer or consultant that provides for annual cash compensation in
excess of US$125,000, and any Contract pursuant to which any of the Acquired
Companies is or may become obligated to make any severance, termination, bonus
or relocation payment exceeding US$25,000 in the aggregate to any current or
former director, officer or consultant;
(ii) any
Contract pursuant to which any Intellectual Property Rights or Technology that
is currently being used by any Acquired Company is or has been licensed, sold,
assigned or otherwise conveyed or provided to any Acquired Company (other than
Excluded Contracts);
(iii) any
Contract pursuant to which any Intellectual Property Right or Technology is or
has been licensed, whether or not such license is currently exercisable, sold,
assigned or otherwise conveyed or provided to a third party by any Acquired
Company, or pursuant to which any Acquired Company has agreed not to enforce any
Intellectual Property Right against any third party, except for Contracts
entered into in the ordinary course of business consistent with past practice
pursuant to the Company’s standard form provided to Parent prior to the date of
this Agreement;
(iv) any
Contract that provides for indemnification or exculpation of any director,
officer, employee, agent, consultant or independent contractor;
(v) any
Contract imposing any restriction on the right or ability of any Acquired
Company (A) to compete with any other Person, (B) to acquire any product or
other asset or any services from any other Person, (C) to solicit, hire or
retain any Person as an employee, consultant or independent contractor, (D) to
develop, sell, supply, distribute, offer, support or service any Acquired
Company Product or any technology or other assets to or for any other Person, or
(E) to perform any services for any other Person, to transact business or deal
in any other manner with any other Person;
(vi) any
Contract (A) restricting or otherwise relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, (B) providing any
Person with any preemptive right, right of participation, right of maintenance
or any similar right with respect to any securities, or (C) providing any of the
Acquired Companies with any right of first refusal with respect to, or right to
purchase or otherwise acquire, any securities;
(vii) any
Contract incorporating or relating to any guaranty, any warranty or any
indemnity or similar obligation for Acquired Company Products;
(viii) any
Contract relating to any currency hedging or forward currency
transaction;
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(ix)
any Contract imposing any “no-shop” or “standstill” obligation or any similar
obligation on any of the Acquired Companies;
(x) any
confidentiality or non-disclosure Contract;
(xi) any
Contract (A) relating to any Governmental Grant, or (B) to which any
Governmental Body is a party or under which any Governmental Body has any rights
or obligations;
(xii) any
distributor, original equipment manufacturer, reseller, value added reseller,
sales, agency or manufacturer’s representative Contract;
(xiii) any
Contract under which an Acquired Company provides services to a third party,
including any consulting, development, integration or support services
Contract;
(xiv) any
Contract providing for “most favored nation” terms, including such terms for
pricing;
(xv) any
Contract relating to marketing and advertising of the Acquired
Companies;
(xvi) any
product agreement, joint venture agreement, profit-sharing agreement,
cost-sharing agreement, joint ownership agreement, revenue-sharing agreement,
strategic alliance agreement, cooperation agreement, partnering agreement or
similar Contract;
(xvii) any
Contract purporting to bind, or purporting to restrict or otherwise apply to the
activities of, any future affiliate of any of the Acquired Companies other than
existing Subsidiaries of any of the Acquired Companies;
(xviii) any
Contract that has a term of more than 30 days and that may not be terminated by
an Acquired Company (without penalty) within 30 days after the delivery of a
termination notice by such Acquired Company;
(xix) any
Contract that contemplates or may involve the payment or delivery of cash or
other consideration in an amount or having a value in excess of US$250,000 in
the aggregate, or that contemplates or may involve the performance of services
having a value in excess of US$250,000 in the aggregate;
(xx) any
Contract evidencing, or under which any of the Acquired Companies has incurred
or may incur, any indebtedness for borrowed money, including any loan agreement,
credit agreement, credit facility, line of credit, letter of credit or
promissory note; and
(xxi) any
Contract, if a breach of such Contract would reasonably be expected to have a
Material Adverse Effect on the Acquired Companies.
The
Company has made available to Parent an accurate and complete copy of each
Acquired Company Contract that constitutes a Material Contract as of the date of
this Agreement.
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(b) Each
Acquired Company Contract that constitutes a Material Contract is valid and in
full force and effect, and is enforceable in accordance with its terms, subject
to (i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(c) None
of the Acquired Companies has violated or breached in any material respect, or
committed any material default under, any Acquired Company Contract that
constitutes a Material Contract, except for any such violation, breach or
default that has been (i) cured by the applicable Acquired Company, or (ii)
waived in writing by the other party or parties to such Acquired Company
Contract, such that, in the case of both clauses (i) and (ii), the other party
or parties to such Acquired Company Contract do not have any right of
termination or other remedy related to such violation, breach or
default. To the Knowledge of the Company, no other Person has
violated or breached in any material respect, or committed any material default
under, any Acquired Company Contract that constitutes a Material
Contract. Since July 25, 2007, none of the Acquired Companies has
received any written notice or other communication regarding any material breach
of, or material default under, any Acquired Company Contract that constitutes a
Material Contract that has not since been (A) cured by the applicable Acquired
Company, or (B) waived in writing by the other party or parties to such Acquired
Company Contract, such that, in the case of both clauses (A) and (B), the other
party or parties to such Acquired Company Contract does not have any right of
termination or other remedy related to such breach or default.
3.11 Liabilities. None
of the Acquired Companies has any accrued, contingent or other liabilities of
any nature, either matured or unmatured (whether or not required to be reflected
on a balance sheet in accordance with generally accepted accounting principles,
and whether due or to become due), except for (a) liabilities identified as
such in the “liabilities” column of the Company Unaudited Interim Balance Sheet,
(b) normal and recurring current liabilities that have been incurred by the
Acquired Companies since September 30, 2010 in the ordinary course of
business and consistent with past practices, and (c) liabilities described
in Part 3.11 of
the Company Disclosure Schedule. None of the Acquired Companies has,
since July 25, 2007, been a general partner of, or has otherwise been liable for
any of the debts or other obligations of, any general partnership, limited
partnership or other Entity.
3.12 Compliance with Legal
Requirements. Each
of the Acquired Companies is, and has at all times since July 25, 2007 been, in
compliance in all material respects with all applicable Legal
Requirements. Since July 25, 2007, none of the Acquired Companies has
received any written notice or other communication from any Governmental Body
regarding any actual or possible material violation of, or failure to comply
with, any material Legal Requirement. The business of the Acquired Companies as
currently conducted does not require a license from the Israeli Ministry of
Defense or an authorized body thereof pursuant to Section 2(a) of the Control of
Products and Services Declaration (Engagement in Encryption), 1974, as amended,
or authorization from the U.S. Department of State, pursuant to the
International Traffic in Arms Regulations.
3.13 Certain Business
Practices. None
of the Acquired Companies, and no director, officer, agent or employee of any of
the Acquired Companies acting on their behalf, has (a) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended (or any similar Israeli or other Legal Requirement), (c) made
any payoff, influence payment, bribe, rebate, kickback or unlawful payment to
any Person, or (d) agreed, committed, offered or attempted to take any of the
actions described in clauses (a) through (c) of this sentence.
29
3.14 Governmental Grants and
Authorizations.
(a) Part 3.14(a) of the
Company Disclosure Schedule identifies each Governmental Grant that has
been or is provided or available to any of the Acquired Companies as of the date
of this Agreement. The Company has made available to Parent accurate
and complete copies of (i) all applications and related documents and
correspondence submitted by the respective Acquired Companies to the Investment
Center, the Chief Scientist, the Fund for the Encouragement of Marketing
Activities for the Israeli Government, the European Union, the U.S.-Israel
Science and Technology Foundation and any other Governmental Body related to
Governmental Grants, and (ii) all certificates of approval and letters of
approval (and supplements thereto) granted to the respective Acquired Companies
by the Investment Center, the Chief Scientist, the Fund for the Encouragement of
Marketing Activities for the Israeli Government, the European Union, the
U.S.-Israel Science and Technology Foundation and any other Governmental Body
related to Governmental Grants. In each such application submitted on
behalf of any Acquired Company, such Acquired Company has accurately and
completely disclosed all information required by such
application. Each Acquired Company is in compliance, in all material
respects, with the terms, conditions, requirements and criteria of all
Governmental Grants and has duly fulfilled, in all material respects, all
conditions, undertakings and other obligations relating thereto. To
the Knowledge of the Company, no event has occurred, and no circumstance or
condition exists, that would reasonably be expected to give rise to or serve as
the basis for (i) the annulment, revocation, withdrawal, suspension,
cancellation, recapture or modification of any Governmental Grant, (ii) the
imposition of any material limitation on any Governmental Grant or any benefit
available in connection with any Governmental Grant, or (iii) a requirement that
any Acquired Company return or refund any benefits provided under any
Governmental Grant. The Company has not transferred any know-how (as
such term is defined in the Israeli Law for the Encouragement of Industrial
Research and Development – 1984) developed using funds received by the Company
from the Chief Scientist (“Funded
Know-how”). The Company has not deposited any Funded Know-how
in escrow. The Company has paid in full all royalty obligations
with respect to grants received by the Company from the Chief Scientist, and it
has no future royalty obligations with respect to such grants. The
consummation of the Merger and the other transactions contemplated by this
Agreement (A) will not adversely affect the ability of any of the Acquired
Companies to obtain the benefit of the Governmental Grant for the remaining
duration thereof, and (B) will not result in (1) the failure of any of the
Acquired Companies to comply with any of the terms, conditions, requirements and
criteria of any Governmental Grant, or (2) any claim by any Governmental Body or
other Person that any Acquired Company is required to return or refund, or that
any Governmental Body is entitled to recapture, any benefit provided under any
Governmental Grant. No Consent of any Governmental Body or other
Person is required to be obtained prior to the consummation of the Merger in
order to preserve the entitlement of any of the Acquired Companies to any
Governmental Grant. No Governmental Body (y) has awarded any
participation or provided any support to any of the Acquired Companies, or (z)
is or may become entitled to receive any royalties or other payments from any of
the Acquired Companies.
30
(b) Part 3.14(b) of the
Company Disclosure Schedule sets forth, with respect to each Governmental
Grant referred to in Part 3.14(a) of the
Company Disclosure Schedule: (i) the total amount of the
benefits received by the Acquired Companies under such Governmental Grant and
the total amount of the benefits available for future use by the Acquired
Companies under such Governmental Grant, (ii) the time period in which the
respective Acquired Companies received, or will be entitled to receive, benefits
under such Governmental Grant, (iii) a general description of any research and
development program for which such Governmental Grant was approved, (iv) a
description of all current and future payment obligations of the Acquired
Companies under such Governmental Grant, (v) any royalty or other repayment
schedule applicable to such Governmental Grant and the total payment or
repayment due, (vi) the type of revenues from which royalty or other payments
are required to be made under such Governmental Grant, and (vii) the total
amount of any payments made by the Acquired Companies prior to the date of this
Agreement with respect to such Governmental Grant.
(c) The
Acquired Companies hold all material Governmental Authorizations necessary to
enable the Acquired Companies to conduct their business in the manner in which
such business is being conducted. All such Governmental
Authorizations held by the respective Acquired Companies are valid and in full
force and effect. Each Acquired Company is, and at all times since
July 25, 2007 has been, in compliance with the material terms and requirements
of such Governmental Authorizations. Since July 25, 2007 and to the
date of this Agreement, none of the Acquired Companies has received any notice
or other communication from any Governmental Body or any other Person regarding
(i) any actual or possible violation of or failure to comply with any term or
requirement of any such Governmental Authorization, or (ii) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any such Governmental Authorization.
(d) Part 3.14(d) of the
Company Disclosure Schedule identifies as of the date of this Agreement
(i) each approval of “Approved Enterprise” status that has been granted by the
Investment Center to any of the Acquired Companies, and (ii) the benefits
received by the Acquired Companies, or to which the Acquired Companies are
entitled, pursuant to such approval. Each of the Acquired Companies
that has been granted any approval for “Approved Enterprise” status by the
Investment Center has fully complied with all terms and conditions included in
such approval.
3.15 Tax
Matters.
(a) Each
of the Acquired Companies has (i) timely filed, or has caused to be timely filed
on its behalf, after taking into account any extension of time within which to
file, all material Tax Returns required to be filed by it, which Tax Returns
were complete and correct in all material respects, and (ii) timely paid, or has
caused to be timely paid on its behalf, all material Taxes required to have been
paid by it, except for Taxes that are being contested in good faith by
appropriate proceedings and for which reserves have been established in
accordance with U.S. GAAP. The most recent financial statements
contained in the Acquired Company Reporting Documents reflect, to the Knowledge
of the Company, a reserve (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) for all Taxes payable
by the Acquired Companies for all taxable periods and portions thereof through
the date of such financial statements in accordance with U.S. GAAP, whether or
not shown as being due on any Tax Returns. No deficiencies for any
material amount of Taxes have been proposed, asserted or assessed against any of
the Acquired Companies as of the date hereof, and no requests for waivers of the
time to assess any such material Taxes are pending or have been
granted. Subject to exceptions as would not be material, no claim has
ever been made in writing by a Governmental Body in a jurisdiction where any of
the Acquired Companies does not file a Tax Return that any of the Acquired
Companies is or may be subject to taxation by that jurisdiction in respect of
Taxes that would be covered by or the subject of such Tax
Return.
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(b) As
of the date hereof, no examination or audit of any material Tax Return of any of
the Acquired Companies or any administrative or judicial proceeding in respect
of any material amount of Tax is currently in progress or, to the Knowledge of
the Company, threatened.
(c) None
of the Acquired Companies (i) is or has ever been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
affiliated, combined or unitary Tax Returns, other than a group the common
parent of which was the Company, (ii) is a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement, or (iii) has any material
liability for Taxes of another person (other than the Acquired Companies) as a
transferee or successor.
(d) Each
of the Acquired Companies has timely withheld and paid all material Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any current or former director, officer, employee, independent
contractor or consultant of any of the Acquired Companies, creditor, depositor,
stockholder or other third party, and has complied in all material respects with
any applicable information reporting, filing or similar requirements with
respect to any such payments.
(e) There
is no agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of any of
the Acquired Companies that, considered individually or considered collectively
with any other such Contracts, could reasonably be expected to give rise
directly or indirectly to the payment of any amount that would not be deductible
pursuant to Section 280G or Section 162 of the Code (or any comparable
provision under state Tax laws or under Israeli or other foreign Tax
laws).
(f) None
of the Acquired Companies has participated in any “listed transaction” within
the meaning of Treasury Regulations Section 1.6011-4(b)(2) or Section
301.6111-2(b)(2). None of the Acquired Companies has participated in
any “reportable transaction” under Ordinance Section 131(g), and the respective
regulations promulgated thereunder.
(g) During
the five-year period ending on the date hereof, none of the Acquired Companies
was a “distributing corporation” or a “controlled corporation” in a transaction
intended to be governed by Section 355 of the Code.
(h) None
of the Acquired Companies will be required to include any material item of
income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Effective Time as a
result of any (i) change in the method of accounting for a taxable period
ending on or prior to the date hereof, (ii) “closing agreement” as described in
Section 7121 of the Code (or any corresponding or similar provision of
state, local, Israeli or other foreign income Tax law) executed on or prior to
the date hereof, (iii) intercompany transactions or any excess loss account
described in Treasury Regulations under Section 1502 of the Code (or any
corresponding provision of state, local, Israeli or foreign income Tax law),
(iv) installment sale or open transaction disposition made on or prior to
the Effective Time, or (v) prepaid amount received on or prior to the
Effective Time.
32
(i) None
of the Acquired Companies is subject to any restrictions or limitations pursuant
to Part E2 of the Ordinance or pursuant to any tax ruling made with reference to
the provisions of Part E2.
(j) Each
of the Acquired Companies is tax resident only in the country in which it is
incorporated. None of the Acquired Companies (except for the
Subsidiaries of the Company incorporated in Israel) is managed and controlled
from Israel. None of the Acquired Companies has elected, under
Section 897(i) of the Code, to be taxed as a United States domestic
corporation. No Acquired Company (i) is or was a “surrogate foreign
corporation” within the meaning of Section 7874(a)(2)(B) of the Code or is
treated as a U.S. corporation under Section 7874(b) of the Code, or (ii) was,
with the exception of Voltaire, Inc., created or organized in the United States
such that such entity would be taxable in the United States as a domestic entity
pursuant to Treasury Regulations Section 301.7701-5(a).
(k) None
of the Acquired Companies has or has had a permanent or fixed establishment,
branch, residence or other taxable presence, as defined in any applicable Tax
treaty, law or regulation, in any country outside its country of
formation.
(l) Any
related party transactions subject to Section 85A of the Ordinance conducted by
each of the Acquired Companies have been on an arm’s length basis in accordance
with Section 85A of the Ordinance.
(m) In
relation to goods and services tax or value added or other similar Tax, each of
the Acquired Companies (i) has been duly registered and is a taxable person,
(ii) has complied, in all material respects, with all statutory requirements,
orders, provisions, directives or conditions, (iii) has not been required by the
relevant authorities of customs and excise to give security, (iv) has collected
and timely remitted to the relevant Taxing Authority all output value added tax
which it was required to collect and remit under any applicable law, and (v) has
not received a refund for input value added tax for which it is not entitled
under any Applicable Law.
3.16 Employee and Labor Matters;
Benefit Plans.
(a) Part 3.16(a) of the
Company Disclosure Schedule identifies as of the date of this Agreement
each “employee benefit plan” as defined in Section 3(3) of ERISA, each
employment, severance, change in control or similar contract, plan, arrangement
or policy (excluding employment offer letters and employment agreements, in each
case, that can be terminated without incurring any liability other than accrued
wages, benefits and any statutorily required payments or benefits) and each
other material plan or arrangement providing for compensation, bonuses,
commissions, vacation, deferred compensation, incentive compensation, share
purchase, share option, phantom shares, death and disability benefits,
termination pay, hospitalization, medical, insurance, flexible benefits,
supplemental unemployment benefits, profit-sharing, pension or retirement, in
each case, whether or not written and whether or not funded, that is maintained,
sponsored, contributed to or required to be contributed to by any of the
Acquired Companies or any of their ERISA Affiliates for the benefit of any
current or former employee, consultant, independent contractor or director of
any of the Acquired Companies or with respect to which any of the Acquired
Companies has or may have any material liability or obligation. (All
plans, programs and agreements of the type referred to in the prior sentence are
referred to in this Agreement as the “Acquired Company Benefit
Plans.”)
33
(b) With
respect to each Acquired Company Benefit Plan, the Company has made available to
Parent (i) an accurate and complete copy of such Acquired Company
Benefit Plan (including all amendments thereto), except for individual award
agreements for Company Compensatory Awards that do not provide for vesting
acceleration, in which case each form of such agreement has been made available
to Parent, (ii) an accurate and complete copy of the annual report, if required
under ERISA or under any other Legal Requirement, with respect to such Acquired
Company Benefit Plan for each of the last two years, (iii) an accurate and
complete copy of the most recent summary plan description, together with each
Summary of Material Modifications, if required under ERISA, with respect to such
Acquired Company Benefit Plan, (iv) if such Acquired Company Benefit Plan is
funded through a trust, insurance policy or any third party funding vehicle, an
accurate and complete copy of the trust, insurance policy or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof, (v) accurate and complete copies
of all material Contracts relating to such Acquired Company Benefit Plan,
including service provider agreements, insurance contracts, leasing agreements,
minimum premium contracts, stop-loss agreements, investment management
agreements, subscription and participation agreements and recordkeeping
agreements, and (vi) an accurate and complete copy of the most recent
determination or opinion letter received from the Internal Revenue Service with
respect to such Acquired Company Benefit Plan (if such Acquired Company Benefit
Plan is intended to be qualified under Section 401(a) of the
Code).
(c) None
of the Acquired Companies nor any ERISA Affiliate of the Acquired Companies
sponsors, maintains or contributes or is obligated to contribute to, or has in
the past six (6) years sponsored, maintained or contributed or has been
obligated to contribute to, any Acquired Company Benefit Plan subject to Title
IV of ERISA, any non-U.S. defined benefit plan, any multiemployer plan within
the meaning of Section 4001(a)(3) or 3(37) of ERISA or any “multiple employer
plan” as such term is defined in Section 413(c) of the Code.
(d) Each
Acquired Company Benefit Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter and its related
trust has been determined to be exempt from taxation under Section 501(a) of the
Code, has pending or has time remaining in which to file, an application for
such determination from the Internal Revenue Service or such Acquired Company
Benefit Plan and trust are entitled to rely upon a favorable opinion letter from
the Internal Revenue Service, and to the Knowledge of the Company there is no
reason why any such determination letter should be revoked or not be
issued. Each Acquired Company Benefit Plan has been maintained
and operated in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
ERISA and the Code, which are applicable to such Acquired Company Benefit Plan
as well as in material compliance with any applicable agreement. No
events have occurred with respect to any Acquired Company Benefit Plan that
could result in a material payment or assessment by or against the Company of
any excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D,
4980E or 5000 of the Code.
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(e) With
respect to each Acquired Company Benefit Plan other than a Foreign Plan, (i)
except as would not result in material liability to the Acquired Companies, all
payments due from any Acquired Company and ERISA Affiliate of any Acquired
Company to date have been timely made, and (ii) all amounts properly accrued to
date as liabilities of the Acquired Companies which have not been paid are
properly recorded on the books of the applicable Acquired Company and, to the
extent required by GAAP, adequate reserves are reflected on the financial
statements of the Company.
(f) None
of the Acquired Companies has announced its intention to amend or modify in any
material respect or terminate any Acquired Company Benefit Plan or adopt any
material arrangement or program which, if established as of the date of this
Agreement, would come within the definition of an Acquired Company Benefit
Plan.
(g) No
Acquired Company Benefit Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee or
director of any of the Acquired Companies after any termination of service of
such employee or director (other than benefit coverage mandated by
Section 4980B of the Code and similar state Legal
Requirements).
(h) With
respect to any Acquired Company Benefit Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions of Section
4980B of the Code (“COBRA”) have been
complied with in all material respects.
(i) Neither
the execution, delivery or performance of this Agreement nor the consummation of
the Merger or any of the other transactions contemplated by this Agreement will
result (either by itself or in connection with an employee’s termination of
employment or any other event or circumstance) in any material bonus, golden
parachute, severance or other payment or obligation to any current or former
employee, consultant, independent contractor or director of any of the Acquired
Companies (whether or not under any Acquired Company Benefit Plan), or
materially increase the benefits payable or provided under any Acquired Company
Benefit Plan, or result in any acceleration of the time of payment, provision or
vesting of any such benefits.
(j) Each
Acquired Company Benefit Plan which is a “non-qualified deferred compensation
plan” (as such term is defined in Section 409A(d)(1) of the Code) has been
operated in good faith compliance since January 1, 2005 and has been maintained
and operated since January 1, 2009 in documentary and operational material
compliance with the requirements of Section 409A of the Code and applicable
guidance issued thereunder Each Company Option as to which any
portion vested on or after January 1, 2005, has an exercise price that is not
less than the fair market value (as determined in accordance with the
regulations promulgated under Section 409A of the Code) of the underlying
Company Share on the date of grant. Each Company RSU is either exempt
from, or complies with the requirements of, Section 409A of the
Code.
35
(k) Each
compensation and benefit plan maintained or contributed to by the Acquired
Companies or any ERISA Affiliate of the Acquired Companies under Legal
Requirements or applicable agreement, custom or rule of the relevant
jurisdiction outside of the United States, including managers insurance policy,
pension fund, provident fund and education fund (each such plan, a “Foreign Plan”) is
listed in Part 3.16(k) of the
Company Disclosure Schedule. As regards each Foreign Plan, (i)
such Foreign Plan is in material compliance with the provisions of the Legal
Requirements and applicable agreements of each jurisdiction in which such
Foreign Plan is maintained, to the extent those Legal Requirements are
applicable to such Foreign Plan, (ii) all contributions to, and payments from,
such Foreign Plan which may have been required to be made in accordance with the
terms of such Foreign Plan, and, when applicable, the Legal Requirements of the
jurisdiction in which such Foreign Plan is maintained, have been fully and
timely made or shall be made by the Closing Date, and all such contributions to
such Foreign Plan, and all payments under such Foreign Plan, for any period
ending before the Closing Date that are not yet, but will be, required to be
made, are reflected as an accrued liability on the Company Unaudited Interim
Balance Sheet in accordance with both Israeli GAAP and U.S. GAAP, (iii) each
Acquired Company and each ERISA Affiliate have materially complied with all
applicable reporting and notice requirements, and such Foreign Plan has obtained
from the Governmental Body having jurisdiction with respect to such Foreign Plan
any required determinations, if any, that such Foreign Plan is in material
compliance with the Legal Requirements of the relevant jurisdiction if such
determinations are required in order to give effect to such Foreign Plan, (iv)
such Foreign Plan has been administered in all material respects at all times in
accordance with its terms and applicable Legal Requirements, (v) to the
Knowledge of the Company, there are no pending investigations by any
governmental body involving such Foreign Plan, and no pending claims (except for
claims for benefits payable in the normal operation of such Foreign Plan), suits
or proceedings against such Foreign Plan or asserting any rights or claims to
benefits under such Foreign Plan, (vi) the consummation of the transactions
contemplated by this Agreement will not by themselves create or otherwise result
in any Liability with respect to such Foreign Plan, and (vii) except as required
by applicable Legal Requirements, no condition exists that would prevent any
Acquired Company and its ERISA Affiliates from terminating or amending any
Foreign Plan at any time for any reason in accordance with the terms of each
such Foreign Plan without the payment of any fees, costs or expenses (other than
the payment of benefits accrued on the Company Unaudited Interim Balance Sheet
in accordance with both Israeli GAAP and U.S. GAAP and any normal and reasonable
expenses typically incurred in a termination event). No Foreign Plan
has unfunded Liabilities that will not be offset by insurance or that are not
fully accrued on the financial statements of the Company or any
Subsidiary.
(l) Part 3.16(l) of the
Company Disclosure Schedule identifies as of the date of this Agreement
all employees of each of the Acquired Companies, and correctly reflects, in all
material respects, the following: current salary, compensation payable pursuant
to bonus, deferred compensation or commission arrangements, on-call increment,
overtime payment (global and deferred), full-time or part-time status,
short-term or temporary basis, vacation entitlement and accrued vacation or paid
time-off balance, travel pay or car maintenance or car entitlement, sick leave
entitlement and accrual, and recuperation pay entitlement and accrual, pension
entitlements and provident funds (including manager’s insurance, education fund
and health fund), their respective contribution rates and the salary basis for
such contributions, whether such employee, to the extent employed in Israel, is
subject to a Section 14 arrangement under the Severance Pay Law, and, to the
extent such employee is subject to a Section 14 arrangement, an indication of
whether such arrangement has been applied to such person from the commencement
date of their employment and on the basis of their entire salary, main work
location, share options, if any, or rights, such employee’s employer, date of
employment and position. No commitment, promise or undertaking has
been made by any Acquired Company with respect to any change in the compensation
payable to any such employee. None of the employees of the Acquired
Companies are currently on relocation, and the applicable law that applies to
their respective employment is the applicable law of their respective
jurisdiction where they perform their services.
36
(m) None
of the Acquired Companies is or has been a party to any collective bargaining
contract, collective labor agreement or other Contract or arrangement with a
labor union, trade union or other organization or body involving any of its
employees, or is otherwise required (under any Legal Requirement, under any
Contract or otherwise) to provide benefits or working conditions under any of
the foregoing. None of the Acquired Companies is a member in any
employers’ association or organization, and no employers’ association or
organization has made any demand for payment of any kind from the Acquired
Companies. None of the employees of the Acquired Companies are
represented by any labor union, labor organization, trade union, works council
or employee committee, and, to the Knowledge of the Company, there are no and
have been no union, works council or other employee organizing activities or
proceedings among any of their employees, nor does any question concerning
representation exist concerning such employees. None of the Acquired Companies
has recognized or received a demand for recognition from any collective
bargaining representative with respect to any of its employees. None
of the Acquired Companies has or is subject to, and no employee of any of the
Acquired Companies benefits from, any extension order (tzavei harchava), except for
those extension orders applicable to all employees in Israel. All of
the employees of the Acquired Companies in the United States are “at will”
employees.
(n) There
is no claim, demand, proceeding, administrative change, arbitration, mediation
or complaint that is pending or, to the Knowledge of the Company, has been
threatened against any Acquired Company by any current or former employee,
consultant, independent contractor or director of such Acquired Company or by
any third party with respect to any such current or former employee, consultant,
independent contractor or director. Without limiting the generality
of the foregoing, there are no unfair labor practice claims or charges that are
pending, or to the Knowledge of the Company, have been threatened against any of
the Acquired Companies. No Acquired Company has been subject to any
investigation by any Governmental Body responsible for the enforcement of labor
or employment laws, and no such investigation is in progress.
(o) Since
July 25, 2007, (i) there has been no labor strike, slowdown, lockout or stoppage
pending (or, to the Knowledge of the Company, threatened) against or affecting
any of the Acquired Companies, (ii) there has been no dispute between any of the
Acquired Companies and any group of its employees, and (iii) no event has
occurred and no circumstance or condition exists that could reasonably be
expected to give rise to any such labor strike, slowdown, stoppage or
dispute.
(p) Part 3.16(p) of the Company
Disclosure Schedule identifies as of the date of this Agreement each
employee of any of the Acquired Companies who is not fully available to perform
work because of long term leave of absence.
(q) There
is no Contract between any Acquired Company and any of its employees or
directors that cannot be terminated by such Acquired Company without notice, or
with notice of 30 days or less (or payment in lieu of such notice), without
giving rise to a claim for damages or compensation, except for statutory
severance pay.
(r) The
obligations of the Acquired Companies to provide severance pay to their
employees are fully funded or have been properly provided for in the Company
Unaudited Interim Balance Sheet in accordance with U.S. GAAP. All
other liabilities of the Acquired Companies relating to their respective
employees (including vacation accruals and recuperation pay accrual but
excluding liabilities for illness pay) were properly accrued in accordance with
U.S. GAAP.
37
(s) Each
of the Acquired Companies is and has been in compliance in all material respects
with all applicable Legal Requirements and Contracts relating to employment,
including, but not limited to, employment practices, wages, bonuses, hours of
work and rest, vacation entitlement, accrual and redemption, overtime payments,
pay slips requirements, Notification of Employment Conditions requirements,
immigration, discrimination layoffs and plant closings, employee privacy and
other compensation matters and terms and conditions of employment, including in
accordance with applicable employment Contracts. All obligations of
the Acquired Companies with respect to statutorily required severance payments
have been fully satisfied or have been funded by contributions to appropriate
insurance funds or were properly accrued in accordance with U.S.
GAAP. All obligations of the Acquired Companies to their employees
under Legal Requirements and applicable employment Contracts have been duly and
timely made in all material respects. All employees have valid visas
and work permits, if necessary, in order to work in their respective
jurisdictions.
(t) To
the Knowledge of the Company, there are no facts indicating that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a Material Adverse Effect on the labor relations of any of
the Acquired Companies, or (ii) any of the officers, key employees, consultants
or independent contractors of any Acquired Company intends to terminate his or
her employment or engagement with such Acquired Company.
(u) There
are no material personnel manuals, handbooks, policies, rules or procedures
applicable to employees of the Acquired Companies, other than those set forth in
Part 3.16(u) of
the Company Disclosure Schedule, true and complete copies of which have
been made available to Parent. There are no material customs or
customary practices regarding employees that could be deemed to be binding on
the Acquired Companies.
(v) No
employee of any of the Acquired Companies has been dismissed in the last twelve
months or has given notice of termination of his or her employment with the
relevant Acquired Company. None of the Acquired
Companies has any unsatisfied obligations of any material nature to any of its
former employees, independent contractors or consultants, and their termination
was in compliance with Legal Requirements and agreements.
(w) No
Person has any agreement, whether written or otherwise, with any of the Acquired
Companies under which that Person acts as a consultant, independent contractor
or in a similar capacity for the relevant Acquired Company, whether on a full or
part time, retainer basis or otherwise and is entitled to annual cash
compensation in excess of US$150,000. Part 3.16(w) of the
Company Disclosure Schedule sets forth as of the date of this Agreement
all payments and benefits payable or which the relevant Acquired Company is
bound to provide (whether now or in the future) to each such consultant or
similar provider, including fees, bonuses, commissions, expenses reimbursement
and any other benefit, and start date for each such consultant or similar
provider. To the extent the arrangements and agreements with the
Persons on Part 3.16(w) of the
Company Disclosure Schedule are in writing, true and complete copies of
which have heretofore been made available to Parent. All Persons
listed on Part 3.16(w) of the
Company Disclosure Schedule, as well as former consultants and
independent contractors, are and have been properly classified as independent
contractors, there has been no employer-employee relationship between the
relevant Acquired Company and any such Person and any service provider on its
behalf, and such Persons are not entitled to any rights under the labor and/or
employment laws of any applicable jurisdictions, including severance pay from
the applicable Acquired Company, and any such Persons have received all of the
rights and compensation to which they are entitled according to Legal
Requirements and agreements.
38
3.17 Environmental
Matters. Each
of the Acquired Companies (i) is in compliance with all applicable material
Environmental Laws, (ii) possesses all permits and other Governmental
Authorizations required under applicable material Environmental Laws, and (iii)
is in compliance in all material respects with the terms and requirements of
such Governmental Authorizations. None of the Acquired Companies has
as of the date of this Agreement received any written notice or other
communication (whether from a Governmental Body, citizens group, employee or
otherwise) asserting that any of the Acquired Companies is or was not in
compliance with any Environmental Law, and, to the Knowledge of the Company,
there are no circumstances that may prevent or interfere with the compliance by
any of the Acquired Companies with any Environmental Law in the
future. To the Knowledge of the Company, (A) no current or prior
owner of any property leased or controlled by any of the Acquired Companies has
received any written notice or other communication (from a Governmental Body,
citizens group, employee or otherwise) asserting that such current or prior
owner or any of the Acquired Companies is or was not in compliance with any
Environmental Law, (B) all property that is leased to, controlled by or used by
any of the Acquired Companies, and all surface water, groundwater and soil
associated with or adjacent to such property, is in clean and healthful
condition and is free of any material environmental contamination of any nature,
(C) none of the property leased to, controlled by or used by any of the
Acquired Companies contains any underground storage tanks, asbestos, equipment
using PCBs or underground injection xxxxx, and (D) none of the property leased
to, controlled by or used by any of the Acquired Companies contains any septic
tanks in which process wastewater or any Materials of Environmental Concern have
been disposed of. No Acquired Company has ever sent or transported,
or arranged to send or transport, any Materials of Environmental Concern to a
site that, pursuant to any applicable Environmental Law, (1) has been placed on
the “National Priorities List” of hazardous waste sites or any similar Israeli
or United States state list, (2) is otherwise designated or identified as a
potential site for remediation, cleanup, closure or other environmental remedial
activity, or (3) is subject to a Legal Requirement to take “removal” or
“remedial” action as detailed in any applicable Environmental Law or to make
payment for the cost of cleaning up the site.
3.18 Insurance. Copies
of all insurance policies and all self insurance programs and arrangements
relating to the business, assets, employees and operations of the respective
Acquired Companies, other than Acquired Company Benefit Plans, have been made
available to Parent. Each of such insurance policies is in full force
and effect, all premiums due and payable thereon have been paid, and the Company
has reasonably determined that the dollar amounts and scope of coverage of such
insurance policies (a) are adequate for the business engaged in by the Acquired
Companies, and (b) comply with the applicable requirements of all Acquired
Company Contracts and Legal Requirements. Since July 25, 2007, none
of the Acquired Companies has received any notice or other communication
regarding any actual or possible (i) cancellation or invalidation of any
insurance policy, (ii) refusal of any coverage or rejection of any material
claim under any insurance policy, or (iii) material adjustment in the amount of
the premiums payable with respect to any insurance policy. There is
no pending workers’ compensation claim or other claim under or based upon any
insurance policy of any of the Acquired Companies that is material to the
business of the Acquired Companies.
39
3.19 Transactions with
Affiliates; Potential Conflicts of Interest.
(a) Since
July 25, 2007, no event has occurred that would be required to be reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by the
SEC. Part 3.19(a) of the
Company Disclosure Schedule identifies each Person who is an “affiliate”
(as that term is used in Rule 145 under the Securities Act) of the Company as of
the date of this Agreement and all Company Shares and Company Compensatory
Awards held by each such Person as of the date of this
Agreement. Each transaction between any Acquired Company and any
affiliate of such Acquired Company has been properly authorized and approved in
accordance with the Israeli Companies Law and any other applicable Legal
Requirement.
(b) To
the Knowledge of the Company, no current or former officer or director of any of
the Acquired Companies, and no other Person that owns (beneficially or of
record) more than 5% of the outstanding shares of any of the Acquired Companies,
and no affiliate or relative of any such officer, director or other Person (i)
owns, directly or indirectly, any interest in, or is an officer, director,
employee or consultant of, any Person that is a competitor, lessor, lessee,
licensor, licensee, customer or supplier of or to any of the Acquired Companies,
(ii) owns, directly or indirectly, in whole or in part, any Acquired Company IP
or any other property that any of the Acquired Companies is using or the use of
which is necessary for the business of any of the Acquired Companies, (iii) has
any claim, charge, action or cause of action against any of the Acquired
Companies, except for any unasserted claims for accrued vacation pay, any
unasserted claims for accrued benefits under Acquired Company Benefit Plans and
any unasserted claims for compensation not yet payable and expense
reimbursements not yet due, (iv) has received or may have a right to receive,
from any of the Acquired Companies, any payment of any commission, fee or other
amount, or (v) has any indebtedness for borrowed money to, or from, any of the
Acquired Companies.
3.20 Legal
Proceedings.
(a) There
is no pending Legal Proceeding, and, to the Knowledge of the Company, no Person
has threatened to commence any Legal Proceeding (i) that involves any of the
Acquired Companies or any of the assets owned or used by any of the Acquired
Companies, or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement.
(b) There
is no material order, writ, injunction, judgment or decree to which any of the
Acquired Companies, or any of the assets owned or used by any of the Acquired
Companies, is subject.
3.21 Products.
(a) Each
Acquired Company Product confirms and complies in all material respects with the
terms and requirements of any applicable warranty or other Contract and with all
applicable Legal Requirements and published specifications.
40
(b) Each
Acquired Company Product implements industry standard measures designed to
prevent the introduction of code that might (i) disrupt, disable, harm or
otherwise impede in any manner the operation of a computer program or a computer
system or the equipment on which such code resides, or (ii) damage or destroy
any data or files residing on a computer or computer system, or compromise the
privacy or data security of a user, without the consent of the user of such
computer or computer system (“Malicious Code”) into
Acquired Company Products.
(c) Since
July 25, 2007 and to the date of this Agreement, no customer or other Person has
asserted or threatened in writing to assert any material claim against any of
the Acquired Companies under or based upon any warranty relating to any Acquired
Company Product.
3.22 Authority; Binding Nature of
Agreements. The
Company has all necessary right, power and authority to enter into and to
perform its obligations under this Agreement, except that consummation of the
Merger is subject to obtaining the Required Company Shareholder
Vote. The board of directors of the Company, at a meeting duly called
and held, pursuant to a unanimous vote of all its members, has (i) determined
that the Merger is fair and in the best interests of the holders of the Company
Shares, and that, taking the Company’s financial situation into account, there
is no reasonable concern that in consequence of the Merger the Surviving
Corporation will not be able to meet the Company’s obligations to its creditors
existing immediately prior to the Closing, (ii) authorized, approved and
declared advisable the execution, delivery and performance of this Agreement,
and all the transactions contemplated by this Agreement and any of the other
agreements referenced in this Agreement (to the extent applicable to the
Company), by the Company, (iii) approved and declared advisable the Merger, and
(iv) recommended the approval of the Merger by the holders of Company Shares and
directed that the Company take all action required to submit the Merger for
consideration by the Company’s shareholders at the Company General Meeting, in
each case in accordance with the provisions of the Israeli Companies
Law. No separate approval of the audit committee of the Company’s
board of directors or any other committee or organ of the Company or its board
of directors is necessary in connection with the Merger or any of the other
transactions contemplated by this Agreement. This Agreement
constitutes legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.23 No Existing
Discussions. None
of the Acquired Companies, and no Representative of any of the Acquired
Companies, is, or has at any time since October 27, 2010 through the date of
this Agreement been, engaged directly or indirectly in any discussions or
negotiations with any other Person relating to any Acquisition
Proposal.
3.24 Vote
Required. Assuming
the accuracy of the representation set forth in Section 4.5, the
affirmative vote of a majority of the voting power of the Company present and
voting at the Company General Meeting, excluding abstentions (the “Required Company Shareholder
Vote”) is the only vote of the holders of any shares of the Company
necessary to approve the Merger. The quorum required for the Company
General Meeting is two or more shareholders, present in person or by proxy and
holding shares conferring in the aggregate at least 25% of the voting power of
the Company. No vote or approval of (i) any creditor of any of the
Acquired Companies, (ii) any holder of any option granted by any of the Acquired
Companies, or (iii) any shareholder of any of the Company’s Subsidiaries is
necessary in order to approve or permit the consummation of the
Merger.
41
3.25 Non-Contravention;
Consents. Neither
(1) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, nor (2) the consummation of the
Merger, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene,
conflict with or result in a violation of (i) any of the provisions of the
memorandum of association, articles of association or other charter or
organizational documents of any of the Acquired Companies, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Companies;
(b) contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge the Merger or to exercise any remedy or
obtain any relief under, any Legal Requirement or any order, writ, injunction,
judgment or decree to which any of the Acquired Companies, or any of the assets
owned or used by any of the Acquired Companies, is subject;
(c) contravene,
conflict with or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, modify or exercise any right or remedy or require any refund or
recapture with respect to, any Governmental Grant, or any benefit provided or
available under any Governmental Grant, or other Governmental Authorization that
is held by any of the Acquired Companies or that otherwise relates to the
business of any of the Acquired Companies or to any of the assets owned or used
by any of the Acquired Companies;
(d) contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any Acquired Company Contract, or give any Person the
right to (i) declare a default or exercise any remedy under any Acquired
Company Contract, (ii) receive or require a rebate, chargeback, penalty or
change in delivery schedule under any Acquired Company Contract,
(iii) accelerate the maturity or performance or any rights or obligations
of any Acquired Company Contract, or (iv) cancel, terminate or modify any
term of Acquired Company Contract;
(e) result
in the imposition, creation or crystallization of any Encumbrance upon or with
respect to any asset owned or used by any of the Acquired Companies, except for
Permitted Liens; or
(f) result
in, or reasonably expected to increase the likelihood of, (i) the disclosure,
release or delivery to any escrowholder, trustee or other Person of any source
code of the Acquired Company Products, or (ii) the transfer of any material
asset of any of the Acquired Companies to any Person.
Except as
may be required by the Exchange Act, the Israeli Securities Law, the HSR Act,
the Israeli Restrictive Trade Practices Law, FINRA, the NASD and the Nasdaq
Stock Market, none of the Acquired Companies was, is or will be required to make
any delivery to or filing with or give any notice to, or to obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement,
or (y) the consummation of the Merger and any of the other transactions
contemplated by this Agreement.
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3.26 Fairness
Opinion. Prior
to the execution of this Agreement, the Company’s board of directors has
received the written opinion of Bank of America Xxxxxxx Xxxxx, financial advisor
to the Company (the “Company Financial
Advisor”), dated the date thereof, to the effect that, based on and
subject to the various qualifications and assumptions therein, the consideration
to be received by the shareholders of the Company in the Merger is fair to the
shareholders of the Company from a financial point of view, and such opinion has
not been withdrawn or modified. The Company will make available,
solely for information purposes, an accurate and complete copy of said written
opinion to Parent immediately following the execution of this
Agreement.
3.27 Financial
Advisors;
Transaction Expenses.
(a) Except
for the Company Financial Advisor, no broker, finder, financial advisor or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of any of the Acquired Companies. Part 3.27 of the Company
Disclosure Schedule sets forth the total of all fees, commissions and
other similar amounts that have been paid by the Acquired Companies to the
Company Financial Advisor and all fees, commissions and other similar amounts
that may become payable to the Company Financial Advisor by the Acquired
Companies if the Merger is consummated. The Company has made
available to Parent accurate and complete copies of all Contracts under which
any fees, commissions or other amounts have been paid to or may become payable
relating to the Merger, and all indemnification and other agreements, related to
the engagement of the Company Financial Advisor.
(b) Part 3.27 of the Company
Disclosure Schedule sets forth the Transaction Expenses paid through the
date hereof by the Company and the Company’s current reasonable estimate of such
Transaction Expenses from the date hereof through the Closing, presented on an
aggregate basis by category for each of the following categories of expenses:
legal counsel, financial advisors, investment bankers and accountants, proxy
solicitors, public relations firms and investor relations firms.
3.28 No Ownership of Parent
Ordinary Shares. None
of the Acquired Companies owns, beneficially or of record, any shares of Parent
Ordinary Shares.
3.29 Export
Compliance. The
Acquired Companies have conducted its export transactions in accordance with
applicable provisions of United States export control laws and regulations,
including, but not limited to, the Export Administration Act and implementing
Export Administration Regulations, the requirements of the Israeli Ministry of
Defense or an authorized body thereof, or any other Legal Requirements relating
to the development, commercialization, import or export of
technology.
43
3.30 Full
Disclosure. None
of the information supplied or to be supplied by or on behalf of any of the
Acquired Companies for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is mailed to the shareholders of
the Company or at the time of the Company General Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not false or
misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representations or warranty with respect to information
supplied by Parent or Merger Sub with respect to Parent or Merger Sub that is
contained in the Proxy Statement.
Parent
represents and warrants to the Company that, except as set forth in the Parent
SEC Documents:
4.1 Corporate
Organization. Each
of Parent and Merger Sub is a corporation duly organized and validly existing
under the laws of the jurisdiction of its organization or incorporation and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being
conducted. Each of Parent and Merger Sub is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing, individually or in the aggregate, would not
prevent or materially delay consummation of the transactions or otherwise
prevent Parent or Merger Sub from performing any of their material obligations
under this Agreement.
4.2
Authority; Binding Nature of
Agreement. Each
of Parent and Merger Sub has all necessary right, power and authority to enter
into and to perform its obligations under this Agreement. The board
of directors of Parent (at a meeting duly called and held) has authorized and
approved the execution, delivery and performance of this Agreement by
Parent. The board of directors of Merger Sub has unanimously (a)
determined that the Merger is fair to, and in the best interest of, Merger Sub
and its shareholders, and that, considering the financial position of the
merging companies, no reasonable concern exists that the Surviving Corporation
will be unable to fulfill the obligations of Merger Sub to its creditors, (b)
approved this Agreement and the Merger, and (c) resolved to recommend that the
sole shareholder of Merger Sub approve this Agreement, the Merger and the other
transactions pursuant to the terms hereof (which approval has been obtained
simultaneously with the execution of this Agreement). This Agreement constitutes
the legal, valid and binding obligation of Parent and Merger Sub, enforceable
against them in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
4.3 No Shareholder Vote
Required. No
vote of the holders of any class or series of Parent’s capital stock is
necessary to approve the Merger.
44
4.4 Non-Contravention;
Consents. Neither
the execution, delivery or performance of this Agreement by Parent or Merger
Sub, nor the consummation of the Merger by Parent or Merger Sub, will directly
or indirectly (with or without notice or lapse of time):
(a) contravene,
conflict with or result in a violation of any of the provisions of the
memorandum of association and articles of association and other charter and
organizational documents of either Parent or Merger Sub, or
(b) contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge the Merger or to exercise any remedy or
obtain any relief under, (i) any Legal Requirement, or (ii) any order, writ,
injunction, judgment or decree to which Parent or Merger Sub, or any of the
assets owned or used by Parent or Merger Sub, is subject.
Except as
may be required by the Exchange Act, the Israeli Securities Law, the HSR Act,
the Israeli Restrictive Trade Practices Law, FINRA, the NASD or the rules and
regulations of the Nasdaq Stock Market, Parent is not required to make any
filing with or give any notice to, or to obtain any Consent from, any Person at
or prior to the Closing in connection with (A) the execution, delivery or
performance of this Agreement by Parent or Merger Sub, or (B) the consummation
of the Merger by Merger Sub.
4.5 Share
Ownership. Neither
Parent, Merger Sub nor any Person referred to in Section 320(c) of the Israeli
Companies Law with respect to Parent and Merger Sub owns any Company
Shares.
4.6 Financing. Parent
currently has, and at the Effective Time, Parent and Merger Sub will have the
funds necessary to satisfy all of Parent’s and Merger Sub’s obligations under
this Agreement, including to pay all amounts payable pursuant to Section 2.4(a)(iii)
and Section
(a)(iv) and to pay all fees and expenses in connection
therewith. Parent’s and Merger Sub’s obligations hereunder are not
subject to a condition regarding Parent’s or Merger Sub’s obtaining funds to
consummate the Merger.
4.7 Proxy
Statement. The
information supplied by Parent and Merger Sub for inclusion in the Proxy
Statement, if any, shall not, as of the date first mailed to the shareholders of
the Company, and at the time of the Company Shareholders Meeting, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not false or
misleading. Notwithstanding the foregoing, Parent and Merger Sub make
no representation or warranty with respect to any information supplied by the
Company or any of its Representatives for inclusion in the Proxy
Statement.
4.8 Absence of
Litigation. There
is no Legal Proceeding pending or to the knowledge of Parent or Merger Sub,
threatened in writing against Parent or Merger Sub, or any property or asset of
Parent or Merger Sub, that, individually or in the aggregate, would prevent the
consummation of the Merger or seeks to prevent the consummation of the
Merger. Neither Parent nor Merger Sub nor any property or asset of
Parent or Merger Sub is subject to any settlement agreement or similar written
agreement with, any Governmental Body that is reasonably likely to prevent
consummation of the Merger.
45
4.9 Merger
Sub. All
of the outstanding capital stock of Merger Sub is owned directly by
Parent. Merger Sub is a newly formed entity with no liabilities other
than those liabilities that may be owed to Parent or pursuant to the terms of
this Agreement; provided that Parent and Merger Sub undertake that any amounts
owed by Merger Sub or, following the Effective Time, by the Surviving
Corporation, to Parent will be paid to it only to the extent such payment will
not derogate from the ability of the Surviving Corporation to fulfill its
obligations to its other creditors.
4.10 Broker. No
agent, broker, finder or investment banker (other than XX Xxxxxx) is entitled to
any brokerage, finder’s or other fee or commission payable by the Company in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
4.11 HSR Fair Market Valuation
Determination. Parent
has determined, or shall have determined by a date that is not more than sixty
(60) days prior to the Closing Date, by its Board of Directors, or properly
authorized designee, in good faith and in accordance with Title 16, Sections
801.10(b) and 802.4 of the U.S. Code of Federal Regulations, that the fair
market value of the HSR reportable assets to be acquired in connection with the
transaction is not greater than US$63.4 million; provided, however, that in the
event Parent determines that the fair market value of the HSR reportable assets
to be acquired in connection with the transaction is greater than $63.4 million,
Parent has informed the Company thereof. This representation and
warranty is made solely for the purpose of determining the applicability to the
transactions contemplated by this Agreement of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
5.1 Access and
Investigation.
(a) During
the period from the date of this Agreement through the earlier to occur of the
Effective Time and the termination of this Agreement in accordance with its
terms (the “Pre-Closing Period”),
subject to applicable Legal Requirements and antitrust laws, data
privacy/protection Legal Requirements and regulations relating to the exchange
of information, the Company shall, and shall cause the Representatives of the
Acquired Companies to (i) provide Parent and Parent’s Representatives with
reasonable access during normal business hours upon reasonable advance notice to
the respective Representatives, personnel and assets of the Acquired Companies
and to all existing books, records, Tax Returns, work papers and other documents
and information relating to the Acquired Companies, and (ii) provide or make
available Parent and Parent’s Representatives with such copies of the existing
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Companies, and with such additional financial,
operating and other data and information regarding the Acquired Companies, as
Parent may reasonably request. Without limiting the generality of the
foregoing, during the Pre-Closing Period, the Company shall promptly provide or
make available to Parent with copies of (A) all material operating and financial
reports prepared by the Company for the Company’s senior management, including
if any (1) copies of the unaudited monthly consolidated balance sheets of the
Company and its consolidated subsidiaries and the related unaudited monthly
consolidated statements of operations, statements of shareholders’ equity and
statements of cash flows, (2) copies of any sales forecasts, marketing plans,
development plans, write-off reports, hiring reports and capital expenditure
reports prepared for the Company’s senior management, and (3) to the extent not
otherwise publicly available in the Company’s filings with the SEC on the SEC
website, copies of the audited annual consolidated financial statements of the
Company and its consolidated subsidiaries, (B) any written materials or
communications sent by or on behalf of the Company to its shareholders, (C) any
material notice, document or other communication sent by or on behalf of any of
the Acquired Companies to any party to any Acquired Company Contract or sent to
any of the Acquired Companies by any party to any Acquired Company Contract
(other than any communication that relates solely to commercial transactions
between the Company and the other party to any such Acquired Company Contract
and that is of the type sent in the ordinary course of business and consistent
with past practices), (D) any notice, report or other document filed with or
delivered or sent to any Governmental Body in connection with the Merger or any
of the other transactions contemplated by this Agreement, and (E) any material
notice, report or other document received by any of the Acquired Companies from
any Governmental Body. Any investigation conducted pursuant to the
access contemplated by this Section 5.1
shall be conducted in a manner that does not unreasonably interfere with the
conduct of the business of the Acquired Companies or damage or destroy any
material property or assets of the Acquired Companies.
46
(b) During
the Pre-Closing Period, subject to applicable antitrust laws and regulations
relating to the exchange of information, Parent shall, and shall cause its
Representatives to (i) provide the Company and the Company’s Representatives
with reasonable access to Parent’s Representatives, personnel and assets and to
all existing books, records, Tax Returns, work papers and other documents and
information relating to Parent, and (ii) provide the Company and the Company’s
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to Parent, and with
such additional financial, operating and other data and information regarding
Parent, as the Company may reasonably request.
(c) Nothing
in this Agreement shall limit the confidentiality provisions of the
Confidentiality Agreement dated September 24, 2010 between the Company and
Parent (the “Confidentiality
Agreement”), which provisions shall remain in full force and effect in
accordance with their terms. In addition, and without limiting the
foregoing, Parent agrees that any business, marketing, technical, scientific or
other information disclosed by the Acquired Companies or their Representatives
in connection with the Merger, which, at the time of disclosure, is designated
as confidential (or like designation) shall be used, disclosed or copied only
for the purposes of, and only in accordance with, this Agreement and the
consummation of the Merger. Parent shall use, at a minimum, the same
degree of care as it uses to protect its own confidential information of a
similar nature, but no less than reasonable care, to prevent the unauthorized
use, disclosure or publication of such confidential information of the Acquired
Companies.
(d) Promptly
following the execution of this Agreement, the Company will make available any
written Acquisition Proposal received by the Company during the period beginning
January 1, 2010 and ending on the date of this Agreement.
47
5.2 Operation of the Company’s
Business.
(a) During
the Pre-Closing Period, except as (i) set forth in Schedule 5.2, (ii)
contemplated or permitted by this Agreement or required by Legal Requirements,
(ii) approved in writing (which shall include e-mail) by Parent through the
Parent Designated Person (which approval shall not be unreasonably withheld), or
(iii) required by the terms of any Contract (a copy of which has been made
available to Parent), (A) the Company shall ensure that each of the Acquired
Companies conducts its business and operations in the ordinary course and in
accordance with past practices, (B) the Company shall use commercially
reasonable efforts to ensure that each of the Acquired Companies (1) preserves
intact its current business organization, (2) keeps available the services of
its current officers and key employees and (3) maintains its current relations
consistent with prior business practices with material suppliers, customers,
landlords, creditors, licensors, licensees, and other Persons having contractual
or other business relationships with the respective Acquired Companies, (C) the
Company shall collect its receivables in the same manner and on the same terms
as such receivables have historically been collected, and (D) the Company shall
maintain its status as a “foreign private issuer” as such term is defined in
Rule 3b-4 promulgated under the Exchange Act.
(b) During
the Pre-Closing Period, except as (v) set forth in Schedule 5.2, (x)
contemplated or permitted by this Agreement or required by Legal Requirements,
(y) approved in writing (including by e-mail) by Parent through the Parent
Designated Person (which approval shall not be unreasonably withheld in the case
of clauses (iii), (vi), (vii), (viii), (ix), (xi), (xii), (xiv), (xvii) or
(xviii) or (xxiii) (to the extent it relates to clauses (iii), (vi), (vii),
(viii), (ix), (xi), (xii), (xiv), (xvii) or (xviii)) below), or (z) required by
the terms of any Contract (a copy of which has been made available to Parent),
the Company shall not, without the prior written consent of Parent, and shall
not permit any of the other Acquired Companies to:
(i) declare,
accrue, set aside or pay any dividend or make any other distribution in respect
of any shares or other securities, or repurchase, redeem or otherwise reacquire
any shares or other securities, except Company Shares repurchased, redeemed or
otherwise acquired from current or former employees or consultants of the
Acquired Companies pursuant to the exercise of repurchase rights or in
connection with Tax withholdings and exercise price settlements upon exercise of
Company Options or settlement of Company RSUs consistent with past
practices;
(ii) sell,
issue, grant or authorize the issuance or grant of (A) any shares or other
securities, (B) any option, call, warrant or right to acquire any shares or
other securities, or (C) any instrument convertible into or exchangeable for any
shares or other securities, except that the Company may issue Company Shares
upon the valid exercise of Company Options, or the vesting of Company RSUs,
outstanding as of the date of this Agreement and may grant Company Compensatory
Awards to employees hired on or after the date of this Agreement consistent with
past practices and in accordance with the limitations of clause (xiv)
below;
(iii) file,
amend or supplement any registration statement with respect to any shares or
other securities;
(iv) amend
or waive any of its rights under, or accelerate the vesting under, any provision
of any of the Company Share Plans or other incentive plans, any provision of any
agreement evidencing any outstanding share option, restricted share or
restricted share unit, or otherwise modify any of the terms of any outstanding
option, restricted share unit, warrant or other security or any related
Contract, except as otherwise provided in this Agreement;
48
(v) amend
or permit the adoption of any amendment to its memorandum of association or
articles of association or other charter or organizational documents, or effect
or become a party to any merger, consolidation, amalgamation, arrangement, share
exchange, business combination, recapitalization, reclassification of shares,
share split, division or subdivision of shares, share dividend, issuance of
bonus shares, reverse share split, consolidation of shares or similar
transaction;
(vi) form
any Subsidiary or acquire any equity interest or other interest in any other
Entity;
(vii) transfer
any assets to any Subsidiary, other than in the ordinary course of
business;
(viii) make
any capital expenditure in excess of US$75,000 individually or US$750,000 in the
aggregate;
(ix) enter
into or become bound by, or permit any of the assets owned or used by it to
become bound by or subject to, any Material Contract or Encumbrance, or amend or
terminate, or waive or exercise any material right or remedy under, any Material
Contract, other than in the ordinary course of business;
(x) acquire,
lease or license any right or other asset, other than Standard Software, from
any other Person or sell, transfer, pledge or otherwise dispose of, or lease or
license, any right or other asset to any other Person, except in each case for
assets acquired, leased, licensed, sold, transferred, pledged or disposed of by
the Company in the ordinary course of business and any non-exclusive license of
Acquired Company IP in the ordinary course of business, or abandon, waive or
relinquish any material right, other than in the ordinary course of
business;
(xi) other
than in the ordinary course of business consistent with past practices or in
accordance with existing accounting policies, write down the value of any of its
inventory, write off any receivables or otherwise revalue any of its
assets;
(xii) lend
money to any Person, or incur or guarantee any indebtedness for borrowed money,
other than any Affiliated Company or in the ordinary course of
business;
(xiii) establish,
adopt or amend in any material respect any Acquired Company Benefit Plan or any
plan, policy, arrangement or agreement that would be an Acquired Company Benefit
Plan if in effect as of the date of this Agreement, forgive any loans to any of
its directors, officers or employees, or pay any bonus or make any
profit-sharing or similar payment to, or increase the amount of the wages,
salary, commissions, fringe benefits or any other compensation or remuneration
payable to, any of its directors, officers, employees or
consultants;
(xiv) hire
any employee other than an employee who is not an officer to replace an employee
who is not an officer;
(xv) terminate
any Key Employee;
49
(xvi)
except as
required pursuant to an Acquired Company Benefit Plan or Israeli law or other
applicable Legal Requirement, make any severance or termination payment to any
officer or other employee;
(xvii)
change
any of its pricing policies, product return policies, product maintenance or
support polices, service policies, product modification or upgrade policies, or
personnel policies;
(xviii)
change
any of its methods of accounting or accounting practices in any respect, except
as required by applicable Legal Requirements;
(xix)
commence
any Legal Proceeding, other than for collections in the ordinary course of
business;
(xx)
settle
any Legal Proceeding having an amount at issue of more than
US$250,000;
(xxi)
enter
into any material transaction or take any other material action outside the
ordinary course of business or inconsistent with past
practices;
(xxii)
call or
convene any general or special meeting of the shareholders of the Company, other
than the Company General Meeting; or
(xxiii)
offer,
agree or commit to take any of the actions described in clauses (i) through
(xxii) of this Section 5.2(b).
(c) During
the Pre-Closing Period, promptly following such time as the Company has
Knowledge of the occurrence of any event described in clauses (i) through (vi)
below, the Company shall notify Parent in writing of (i) any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement, (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if
(A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement, (iii) any
material breach of any covenant or obligation of the Company, (iv) any event,
condition, fact or circumstance that would make the timely satisfaction of any
of the conditions set forth in Section 7 or 7.11 impossible or
unlikely or that has had or could reasonably be expected to have a Material
Adverse Effect on the Acquired Companies, (v) any notice or other communication
from any Person alleging that the Consent of such Person is or may be required
in connection with the Merger or any of the other transactions contemplated by
this Agreement, or (vi) any Legal Proceeding commenced or threatened
against, relating to or involving or otherwise affecting any of the Acquired
Companies that relates to the consummation of the Merger or any of the other
transactions contemplated by this Agreement. No notification given to Parent
pursuant to this Section 5.2(c) shall
limit or otherwise affect any of the representations, warranties, covenants or
obligations of the Company contained in this Agreement.
50
5.3 Certain Tax
Matters. During
the Pre-Closing Period except as set forth in Schedule
5.3:
(a) The
Company and each of its Subsidiaries will promptly notify Parent of any suit,
claim, action, investigation, proceeding or audit pending against or with
respect to the Company or any of its Subsidiaries in respect of any Tax and will
not settle or compromise any such suit, claim, action, investigation, proceeding
or audit or enter into any material closing agreement that would adversely
affect Parent’s Tax liability without Parent’s prior written
consent.
(b) Except
as required by an applicable Legal Requirement pertaining to Taxes, or with
Parent’s prior written consent (such consent not to be unreasonably withheld),
none of the Company or any of its Subsidiaries will (i) make or change any
material Tax election, (ii) file any material amended Tax Return, (iii) agree to
any material adjustment of any Tax attribute, (iv) change (or make a request to
any taxing authority to change) any of its methods of reporting income or
deductions for federal, state, local, Israeli or other foreign income Tax
purposes, (v) file any claim for a material refund of Taxes, or (vi) consent to
any extension or waiver of the limitation period applicable to any material Tax
claim or assessment that would adversely affect Parent’s Tax
liability.
(c) The
Company and each of its Subsidiaries will retain all books, documents and
records necessary for the preparation of Tax Returns and reports (including
previously filed Tax Returns and reports).
5.4 No
Solicitation
(a) Except
as otherwise permitted by this Section 5.4, until the
termination of this Agreement in accordance with the terms hereof, the Company
agrees that none of the Acquired Companies shall, and it shall not authorize or
permit the Acquired Companies’ Representatives, on its behalf, to, directly
or indirectly (i) solicit, initiate, knowingly encourage or knowingly facilitate
the making, submission or announcement of, any Acquisition Proposal, provided
that the parties acknowledge and agree that nothing in this clause (i) shall be
deemed to restrict in any manner the operation of the business of the Acquired
Companies, in the ordinary course of business, (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any nonpublic
information with respect to, or take any other action to facilitate the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, except to notify such Person as
to the existence of these provisions, (iv) approve, adopt, endorse or recommend
to its shareholders or any other Person any Acquisition Proposal, or (v) enter
into any letter of intent or similar document or any agreement, commitment or
understanding providing for or contemplating any Acquisition Proposal or a
transaction contemplated thereby. Except as permitted by Section 5.4 and subject
to compliance with its terms, the Company shall immediately terminate, and shall
cause each Acquired Company and its and each Acquired Company’s Representatives
to terminate immediately, all activities, discussions or negotiations, if any,
with any third party with respect to, or any that would reasonably be expected
to lead to, an Acquisition Proposal. The Company shall immediately
demand, and request its affiliates to immediately demand, that each person which
has heretofore executed a confidentiality agreement with it or any of its
affiliates or any Acquired Company or any of its or its affiliates’ or any
Acquired Company’s Representatives since January 1, 2010 with respect to such
Person’s consideration of a possible Acquisition Proposal (for the purposes of
this sentence only, shall substitute for each reference to “85%” and “15%”
appearing in the definition of an “Acquisition Transaction,” “75%” and “25%,”
respectively) to immediately return or destroy (and have such destruction
certified in writing by such Person to the Company hereunder) all confidential
information heretofore furnished by the Company or any of its affiliates or any
Acquired Company or any of its or its affiliates’ or any Acquired Company’s
Representatives to such Person or any of such Person’s affiliates or
Subsidiaries or any of such Person’s or such Person’s affiliates’ or
Subsidiaries’ Representatives with respect to such Person’s consideration of a
possible Acquisition Proposal.
51
(b) Promptly,
but in any event within twenty-four (24) hours, after receipt of any Acquisition
Proposal by the Company, or any request for nonpublic information or inquiry
which it reasonably believes would reasonably be expected to lead to an
Acquisition Proposal, the Company shall provide Parent with written notice of
the material terms and conditions of such Acquisition Proposal, request or
inquiry (including, for the avoidance of doubt, the financial terms and
conditions of such Acquisition Proposal, request or inquiry), and the identity
of the Person or group making any such Acquisition Proposal, request or inquiry,
and a copy of all written materials provided in connection with such Acquisition
Proposal, request or inquiry. After receipt of the Acquisition
Proposal, request or inquiry by the Company, it shall promptly keep Parent
informed in all material respects of the status and details (including material
amendments or proposed material amendments) of any such Acquisition Proposal,
request or inquiry and shall promptly provide to Parent a copy of all written
materials subsequently provided in connection with such Acquisition Proposal,
request or inquiry.
(c) If,
prior to the Company General Meeting, the Company receives an unsolicited
(including unsolicited by any Voting Undertaking Company Shareholder in breach
of its Voting and Support Agreement), bona fide written Acquisition Proposal
made after the date hereof which the Company’s board of directors (or any
committee thereof charged with such authority) has concluded in good faith,
after consultation with outside legal counsel, and after taking into account the
legal, financial, fiduciary and other aspects of such unsolicited bona fide
written Acquisition Proposal, (y) constitutes or is reasonably likely to
constitute a Superior Proposal and (z) that the failure to take some or all of
the actions set forth in clause (i) or clause (ii) below with respect to such
Acquisition Proposal would constitute a breach of its fiduciary obligations to
the Company’s shareholders under applicable Legal Requirements (which for this
purpose shall be deemed to consist of Israeli Legal Requirements and, in
addition, in order to determine the appropriate standards that would apply to
such fiduciary obligations, the Company’s board of directors may also consider
and act on the basis of Delaware Legal Requirements), the Company shall
promptly, but in any event in less than one (1) day following the date of such
conclusion (but in any event at least one (1) Business Day prior to taking the
actions set forth in (i) and (ii) below), provide to Parent written notice that
shall state expressly (A) that it has received an Acquisition Proposal which
constitutes or is reasonably expected to lead to a Superior Proposal, (B) that
the Company’s board of directors (or a committee thereof charged with such
authority) has made the conclusions set forth in clause (z) above, and (C) the
identity of the party making such Acquisition Proposal and the material terms
and conditions of the Acquisition Proposal (such notice, the “Superior Proposal
Notice”) and may then take the following actions:
52
(i) furnish
nonpublic information that could reasonably be expected to lead to an
Acquisition Proposal to the third party making such Acquisition Proposal, provided, that (y)
prior to so furnishing, the Company receives from the third party an executed
confidentiality agreement containing confidentiality provisions no more
favorable to the third party than the confidentiality provisions under the
Confidentiality Agreement, and (z) subject to
applicable antitrust laws and regulations relating to the exchange of
information, promptly following furnishing any such nonpublic information to
such third party, the Company furnishes a copy of such nonpublic information to
Parent hereunder (to the extent such nonpublic information has not been
previously so furnished), and
(ii) engage
in discussions and/or negotiations with the third party with respect to the
Acquisition Proposal.
(d) In
response to the receipt of a Superior Proposal that has not been withdrawn and
continues to constitute a Superior Proposal after compliance by the Company with
this Section 5.4(d), the
board of directors (or any committee thereof charged with such authority) of the
Company may (y) withhold or withdraw the Company Board Recommendation, or (z)
approve, adopt, endorse or recommend to its shareholders a Superior Proposal
(any of the foregoing actions, whether by the Company’s board of directors or a
committee thereof, a “Change of
Recommendation”), only if all of the following conditions are
met:
(i) the
Company General Meeting has not occurred,
(ii) the
board of directors (or any committee thereof charged with such authority) of the
Company has concluded in good faith, based on advice of its outside legal
counsel, and after taking into account the legal, financial, fiduciary and other
aspects of such unsolicited bona fide written Acquisition Proposal, that, in
light of such Superior Proposal, the failure of the board of directors to effect
a Change of Recommendation would constitute a breach of its fiduciary
obligations to its shareholders under applicable Legal Requirements (which for
this purpose shall be deemed to consist of Israeli Legal Requirements and, in
addition, in order to determine the appropriate standards that would apply to
such fiduciary obligations, the Company’s board of directors may also consider
and act on the basis of Delaware Legal Requirements), and
(iii) the
Company’s board of directors has (x) provided to Parent five (5) Business Days’
prior written notice of its intent to effect a Change of Recommendation (which
notice shall include reasonable details of the applicable Superior Proposal and
the manner in which it intends to effect the Change of Recommendation), provided
that such five (5) Business Day period shall be extended for an additional five
(5) Business Days following each modification of the financial or other
materials terms of such Superior Proposal so long as the Company’s board of
directors determines that such modified proposal continues to constitute a
Superior Proposal, (y) subject to applicable antitrust laws and regulations
relating to the exchange of information, made available to Parent all materials
and information made available to the Person making the Superior Proposal in
connection with such Superior Proposal, and (z) for such five (5) Business Day
period (plus each applicable extension) following the delivery to Parent of such
notice and the provision of the materials and information referred to in (y)
above, the Company shall, if requested by Parent, negotiate in good faith with
Parent to revise this Agreement with the goal that the Acquisition Proposal that
constituted a Superior Proposal would no longer constitute a Superior
Proposal.
53
(e) Unless
this Agreement has been terminated in accordance with Section 9.1 and
no Legal Proceeding to dispute such termination shall have been commenced by
Parent in good faith and is then pending, the Company agrees that it shall not
submit to the vote of its shareholders any Acquisition Proposal (whether or not
a Superior Proposal) or propose to do so. Nothing contained in this
Agreement shall be deemed to restrict the Company from making such disclosures
as may be required, based on the advice of the Company’s outside legal counsel,
by Israeli or U.S. federal securities laws or applicable fiduciary
duties.
(f) Nothing
contained in this Section 5.4 shall prohibit
the Company or the Company’s board of directors from (i) taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or making a statement required under Rule 14d-9 under the
Exchange Act, and (ii) making any disclosure to its stockholders that the
Company Board shall have determined in good faith (after consultation with its
outside legal counsel) is required under applicable Legal Requirements (which
for this purpose shall be deemed to consist of Israeli Legal Requirements and,
in addition, in order to determine the appropriate standards that would apply to
such fiduciary obligations, the Company’s board of directors may also consider
and act on the basis of Delaware Legal Requirements) and all applicable rules
and regulations of the SEC.
6.1 Merger
Proposal. As
promptly as reasonably practicable after the execution and delivery of this
Agreement, (a) the Company and Merger Sub shall cause a merger proposal (in the
Hebrew language) (the “Merger Proposal”) to
be executed in accordance with Section 316 of the Israeli Companies Law, (b) the
Company shall call the Company General Meeting, and (c) within three (3) days
from the date of calling of the Company General Meeting, the Company shall
deliver and file the Merger Proposal with the Companies
Registrar. Each of the Company and Merger Sub shall cause a copy of
the Merger Proposal to be delivered to each of their secured creditors no later
than three (3) days after the date on which the Merger Proposal is delivered to
the Companies Registrar, and shall promptly inform its non-secured creditors of
the Merger Proposal and its contents in accordance with Section 318 of the
Israeli Companies Law. Promptly after the Company and Merger Sub
shall have complied with the preceding sentence, the Company and Merger Sub
shall inform the Companies Registrar, in accordance with Section 317(b) of
the Israeli Companies Law, that notice was given to their respective creditors
under Section 318 of the Israeli Companies Law. In addition to the above, each
of the Company and, if applicable, Merger Sub, shall (i) publish a notice to its
creditors, stating that a Merger Proposal was submitted to the Companies
Registrar and that the creditors may review the Merger Proposal at the office of
the Companies Registrar, the Company’s registered offices or Merger Sub’s
registered offices, as applicable, and at such other locations as the Company or
Merger Sub, as applicable, may determine, in (A) two daily Hebrew newspapers
circulated in Israel, on the day that the Merger Proposal is submitted to the
Companies Registrar, (B) a newspaper circulated in New York City, no later than
three Business Days following the day on which the Merger Proposal was submitted
to the Companies Registrar, and (C) in such other manner as may be required by
applicable law and regulations, (ii) within four Business Days from the date of
submitting the Merger Proposal to the Companies Registrar, send a notice by
registered mail to all of the “Substantial Creditors” (as such term is defined
in the regulations promulgated under the Israeli Companies Law) of which the
Company or Merger Sub, as applicable, is aware, in which it shall state that a
Merger Proposal was submitted to the Companies Registrar and that the creditors
may review the Merger Proposal at such additional locations, if such locations
were determined in the notice referred to in sub-Section (i) above, and (iii)
send to the “workers committee” or display in a prominent place at the Company’s
premises, a copy of the notice published in a daily Hebrew newspaper (as
referred to in sub-Section (i)(A) above), no later than three (3) Business Days
following the day on which the Merger Proposal was submitted to the Companies
Registrar.
54
6.2 Proxy
Statement. As
promptly as practicable after the date of this Agreement, but in any event no
later than fifteen (15) calendar days after the date of this Agreement, the
Company shall prepare and cause to be mailed to the shareholders of the Company
the Proxy Statement and cause all required filings to be filed with the
SEC. The Company shall use all reasonable efforts (a) to cause
the Proxy Statement to comply with all applicable Legal Requirements (including
all applicable rules and regulations of the SEC), and (b) to respond
promptly to any (if any) comments of the SEC or its staff and any comments of
the ISA or its staff. Parent and its outside legal counsel shall be
given a reasonable opportunity to review and comment on the Proxy Statement and
any material related to the Company General Meeting (and any adjustment or
postponement thereof), in each case each time before either such document (or
any amendment thereto) is filed with the SEC or published, and reasonable and
good faith consideration shall be given to any comments made by such party and
its counsel. If any event relating to any of the Acquired Companies
occurs, or if the Company becomes aware of any information, that should be
disclosed in a supplement to the Proxy Statement, then the Company shall
promptly inform Parent thereof and shall promptly file such supplement with the
SEC and, if appropriate, promptly mail such supplement to the shareholders of
the Company.
6.3 Company General
Meeting.
(a) The
Company shall take all action necessary under all applicable Legal Requirements
to call (as promptly as reasonably practicable after the execution and delivery
of this Agreement), give notice of and hold a meeting of the holders of Company
Shares to vote on the proposal to approve the Merger (the “Company General
Meeting”). Subject to the notice requirements of the Israeli
Companies Law and the Articles of Association of the Company and to the
occurrence of any acts of war, sabotage, terrorism, acts of God or natural
disasters in Israel that prevent the Company from holding the Company General
Meeting after using reasonable best efforts to do so, the Company General
Meeting shall be held (on a date selected by the Company in consultation with
Parent) as promptly as practicable after the date of this Agreement, but in any
event no later than 45 days after the date of this Agreement. The
Company shall ensure that all proxies solicited in connection with the Company
General Meeting are solicited in compliance with all applicable Legal
Requirements and shall otherwise comply with all Legal Requirements applicable
to such meeting. The Company shall not permit the adjournment or
postponement of the Company General Meeting without the prior written consent of
Parent; provided, however, that if Parent so requests, the Company shall adjourn
or postpone the Company General Meeting for a period of up to 45 days. The
Company shall use its commercially reasonable efforts to obtain the Required
Company Shareholder Vote.
(b) Subject
to Section 5.4, the Proxy
Statement shall include a statement to the effect that the board of directors of
the Company recommends that the Company’s shareholders vote to approve the
Merger at the Company General Meeting (the recommendation of the Company’s board
of directors that the Company’s shareholders vote to approve the Merger being
referred to as the “Company Board
Recommendation”). Subject to Section 5.4, the
Company Board Recommendation shall not be withdrawn or modified in a manner
adverse to Parent, and no resolution by the board of directors of the Company or
any committee thereof to withdraw or modify the Company Board Recommendation in
a manner adverse to Parent shall be adopted or proposed.
55
(c) The
Company’s obligation to call, give notice of and hold the Company General
Meeting in accordance with Section 6.3(a) shall
not be limited or otherwise affected by the commencement, disclosure,
announcement or submission of any Acquisition Proposal, except if the Company
terminates this Agreement in accordance with Section 9.1 and no Legal
Proceeding to dispute such termination shall have been commenced by Parent in
good faith and is then pending.
(d) Promptly
after the approval of the Merger by the Company’s shareholders at the Company
General Meeting, the Company shall (in accordance with Section 317(b) of the
Israeli Companies Law) inform the Companies Registrar of the decision of the
Company General Meeting with respect to the Merger.
6.4 Regulatory
Approvals.
(a) Each
party shall use all commercially reasonable efforts to deliver and file, as
promptly as practicable after the date of this Agreement, each notice, report or
other document required to be delivered by such party to or filed by such party
with any Governmental Body with respect to the Merger, and to submit promptly
any additional information requested by such Governmental
Body. Without limiting the generality of the foregoing:
(i) Parent
shall not more than sixty (60) days, and not less than (40) forty days, prior to
the Closing Date determine by its Board of Directors or properly designated
designee in good faith and in accordance with Title 16, Sections 801.10(b) and
802.4 of the U.S. Code of Federal Regulations that the fair market value of the
HSR reportable assets to be acquired in connection with the transaction is not
greater than US$63.4 million; provided, however, that in the
event Parent determines that the fair market value of the HSR reportable assets
to be acquired in connection with the transaction is greater than $63.4 million,
then the provisions of Section 6.4(a)(ii)
and (iv) shall
apply;
(ii) in
the event Parent determines pursuant to Section 6.4(a)(i) that the
fair market value of the HSR reportable assets to be acquired in connection with
the transaction is greater than US$63.4 million, the Company and Parent shall
prepare and file notifications under the HSR Act as promptly as practicable
after the Parent informs Company of such determination;
(iii) the
Company and Parent shall respond as promptly as practicable to any inquiries or
requests received from any Governmental Body with respect to the
Merger;
(iv) in
the event such a filing is required, each of the Company and Parent agree that,
during the term of this Agreement, it will not withdraw its filing under the HSR
Act or any other applicable antitrust Legal Requirements without the written
consent of the other party or enter into any timing arrangement with any
Governmental Body without the written consent of the other party;
and
56
(v) the
Company shall use all commercially reasonable efforts to obtain, as promptly as
practicable after the date of this Agreement, all Consents that may be required
in connection with the Merger, including the approval of the Investment
Center.
(b) Each
party shall (i) give the other parties prompt notice of the commencement of any
Legal Proceeding by or before any Governmental Body with respect to the Merger,
(ii) keep the other parties informed as to the status of any such Legal
Proceeding, and (iii) promptly inform the other parties of any
communication to or from the any Governmental Body regarding the Merger or any
of the other transactions contemplated by this Agreement. The parties
will consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in connection
with any Legal Proceeding relating to the Merger. In addition, except
as may be prohibited by any Governmental Body or by any Legal Requirement, in
connection with any such Legal Proceeding under or relating to any antitrust or
fair trade law, each party will permit authorized Representatives of the other
party to be present at each meeting or conference relating to any such Legal
Proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding.
6.5 Company Compensatory
Awards.
(a) Except
as otherwise provided in Section 6.5(b) or on
Schedule
6.5(a), at the Effective Time by virtue of the Merger and without any
action on the part of the holders thereof, each Company Option, Company RSU and
other equity-based award denominated in Company Shares (each such award, a
“Company Compensatory
Award”) that is outstanding immediately prior to the Effective Time,
whether or not then vested or exercisable, shall be assumed by Parent and
converted automatically at the Effective Time into an option, restricted stock
unit award or other equity-based award, as the case may be, denominated in
Parent Ordinary Shares and which has other terms and conditions substantially
identical to those of the related Company Compensatory Award, except that (i)
the number of Parent Ordinary Shares subject to each such award shall be
determined by multiplying the number of Company Shares subject to such Company
Compensatory Award immediately prior to the Effective Time by a fraction (the
“Award Exchange
Ratio”), the numerator of which is the Per Share Merger Consideration and
the denominator of which is the average closing price of a Parent Ordinary Share
on NASDAQ over the five (5) trading days immediately preceding (but not
including) the date on which the Effective Time occurs (rounded down to the
nearest whole share), and (ii) if applicable, the exercise or purchase price per
Parent Ordinary Share (rounded upwards to the nearest whole cent) shall equal
(x) the per share exercise or purchase price per Company Share otherwise
purchasable pursuant to such Company Compensatory Award immediately prior to the
Effective Time divided by (y) the Award Exchange Ratio; provided, however, that in no
case shall the exchange of a Company Option be performed in a manner that is not
in compliance with the adjustment requirements of Section 409A of the Code and,
with respect to Company Options intended to qualify as incentive stock options
under Section 422 of the Code, Section 424 of the Code or Section 1.424-1 of the
Treasury Regulations. Notwithstanding the foregoing, nothing in this
Section 6.5 shall
restrict any holder of Company Compensatory Award from exercising any vested
portion of the Company Compensatory Award into Company Shares (including by way
of cashless exercise if allowed by the Company), at any time prior to the
Effective Time.
57
(b) Notwithstanding
the foregoing clause (a), each Company Compensatory Award that is held by a
person who is not an employee of, or a consultant to, the Company or any
Subsidiary of the Company as of the Effective Time (the “Cashed Out Compensatory
Awards”) shall not be assumed by Parent pursuant to this Section 6.5(b) and
shall, immediately prior to the Effective Time, be cancelled and extinguished
and the vested portion (and, in the case of non-employee members of the Company
Board, the unvested portion to the extent such unvested portion will
automatically vest on the Closing Date pursuant to the underlying grant
agreement or any other Acquired Company Benefit Plan) thereof shall
automatically be converted into the right to receive an amount in cash equal to
the product obtained by multiplying (i) the aggregate number of Company Shares
that were issuable upon exercise or settlement of the vested portion (and, in
the case of non-employee members of the Company Board, the unvested portion to
the extent such unvested portion will automatically vest on the Closing Date
pursuant to the underlying grant agreement or any other Acquired Company Benefit
Plan) of such Cashed Out Compensatory Award immediately prior to the Effective
Time (after giving effect to any acceleration provided under the terms of the
applicable Company Share Plan under which the Company Compensatory Award was
granted, the applicable award agreement and any other Acquired Company Benefit
Plan disclosed in Part 3.16(a) of the Company Disclosure
Schedule) and
(ii) the Per Share Merger Consideration, less any per share exercise price or
purchase price of such Cashed Out Compensatory Award. In the event
any Cashed Out Compensatory Award is subject to Section 409A of the Code, the
payment of the amount of cash with respect thereto shall be delayed to the
extent necessary to comply with Section 409A of the Code.
(c) The
Company shall take such action as may be reasonably necessary to provide that
following the Effective Time, no holder of a Company Compensatory Award or any
participant in any Company Share Plan, or other Acquired Company Benefit Plan or
employee benefit arrangement of the Company or under any employment agreement
shall have any right hereunder to acquire any Company Shares, any interest in
Company Shares (including any “phantom” stock or stock appreciation rights) or
any other interest in the equity of the Company, any of its Subsidiaries or the
Surviving Corporation, including in the event the assumption of the Company
Compensatory Awards is delayed in accordance with Section 6.5(e). Notwithstanding
the foregoing, on the first day of any fiscal year commencing after the date of
this Agreement and prior to the Effective Time, the Company shall cause the
number of shares reserved for issuance pursuant to the Company 2007 Incentive
Compensation Plan to increase by the maximum amount permissible under Section
4.1(y)(i) and (ii) of the Company 2007 Incentive Compensation Plan without
giving effect to Section 4.1(y)(iii) of the Company 2007 Incentive Compensation
Plan.
(d) As
soon as reasonably practicable following the date of this Agreement and in any
event prior to the Effective Time, the board of directors of the Company (or, if
appropriate, any committee administering the Company Share Plans) shall adopt
such resolutions that are necessary for the assumption and conversion of the
Company Compensatory Awards and Company Restricted Share Awards pursuant to this
Section 6.5.
58
(e) As
soon as reasonably practicable after the execution of this Agreement, the
Company shall instruct its Israeli counsel, advisors and accountants, in
coordination with Parent, to prepare and file with the Israeli Tax Authority an
application for a ruling in relation to the assumption by Parent of Company
Compensatory Awards granted to Israeli employees, service providers and officers
of the Company which will provide, among other things that (i) the assumption of
the Company Compensatory Awards will not result in a taxable event with respect
to such Company Compensatory Awards pursuant to Section 3(i) or Section 102 of
the Israeli Tax Ordinance (“Section 102”), and
with respect to such Company Compensatory Awards subject to Section 102 that tax
continuity shall apply including with regard to the requisite holding period
which will be deemed to have begun at the time of the grant of Company
Compensatory Awards and with regard to the classification of the gain, (ii) the
payments made in respect to Shares issued upon exercise or vesting of Company
Compensatory Awards granted under the capital gains route of Section 102 and
held by the trustee who is holding or controlling such Shares pursuant to the
provisions of Section 102 (the “102 Trustee”), shall
not constitute a violation of Section 102 if deposited with the 102 Trustee and
released only after the lapse of the minimum trust period required by Section
102 (the “102 Trust
Period”), (iii) Parent and anyone acting on its behalf shall be exempt
from withholding tax in relation to any payments made to the 102 Trustee (which
ruling may be subject to customary conditions regularly associated with such a
ruling) (the “Israeli
Option Tax Ruling”). Each of Company and Parent shall cause their
respective Israeli counsel, advisors and accountants to coordinate all
activities, and to cooperate with each other, with respect to the preparation
and filing of such application and in the preparation of any written or oral
submissions that may be necessary, proper or advisable to obtain the Israeli
Option Tax Ruling. Subject to the terms and conditions hereof,
Company shall use reasonable best efforts to promptly take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable Legal Requirements to obtain the Israeli Option
Tax Ruling as promptly as practicable. The final text of the Israeli
Option Tax Ruling or the Interim Option Ruling shall in all circumstances be
subject to the prior written confirmation of Parent or its counsel, which
consent shall not unreasonably be withheld, conditioned or
delayed. If the Israeli Option Tax Ruling is not granted prior to
Closing, the Company shall seek to receive prior to the Closing an interim tax
ruling confirming that Parent and anyone acting on its behalf shall be exempt
from Israeli withholding tax in relation to any payments made to the 102 Trustee
(the “Interim Option
Ruling”). In the event that the Israeli Option Tax Ruling has
not been received by the Closing, the Parent shall delay the assumption of the
Company Compensatory Awards held by Israeli residents until receipt of either
the Israeli Option Tax Ruling or a separate confirmation from the Israeli Tax
Authority that such assumption will not constitute a tax event in Israel. In the
event that the Israeli Option Tax Ruling has not been received within 180 days
of the Closing, and unless otherwise instructed by the Israeli Tax Authority,
the Parent will assume the Company Compensatory Awards as provided above and
shall withhold any amount that may be required under law.
(f) As
soon as reasonably practicable after the Effective Time, and in no event later
than ten (10) Business Days thereafter, Parent shall file with the SEC a
registration statement on Form S-8 with respect to the Parent Ordinary Shares
issuable upon exercise or vesting of the Company Compensatory Awards assumed by
Parent hereunder and Parent shall use commercially reasonable efforts to
maintain the effectiveness of such registration statement for so long as the
Company Compensatory Awards remain outstanding. Notwithstanding anything in this
Agreement to the contrary, Parent shall not issue any Parent Ordinary Shares in
respect of any Company Compensatory Awards until the Form S-8 to be filed as
herein provided has become effective.
59
6.6 Directors and Officers
Indemnification and Liability Insurance.
(a) From
and after the Effective Time, Parent shall cause the Surviving Corporation to
fulfill and honor the obligations of the Company pursuant to any indemnification
agreements of the Company, on the one hand, and any of its officers and
directors (collectively, the “Indemnified
Persons”), on the other hand (the “Indemnification
Agreements”), which agreements shall survive the Merger and continue in
full force and effect in accordance with their respective terms as in effect on
the date of this Agreement, and any indemnification, exculpation or advancement
of expenses provisions under the Articles of Association of the Company as in
effect immediately prior to the date hereof.
(b) Parent
shall cause the Articles of Association of the Surviving Corporation to contain
provisions with respect to indemnification and exemption that are at least as
favorable to the Indemnified Persons as those contained in the Company’s
Articles of Association as in effect on the date hereof, which provisions will
not be amended, repealed or otherwise modified for a period of seven years from
the Effective Date in any manner that would adversely affect the rights of the
Indemnified Persons thereunder, unless such modification is required by Legal
Requirements.
(c) From
the Effective Time until the seventh (7th)
anniversary of the Effective Time, Parent shall or shall cause the Surviving
Corporation to maintain in effect, for the benefit of the persons who were
directors and executive officers of the Company immediately prior to the
Effective Time with respect to their acts or omissions occurring prior to the
Effective Time, any existing policy of directors’ and officers’
liability insurance maintained by the Company for the benefit of such
directors and executive officers as of the date of this Agreement in the form or
forms disclosed by the Company to Parent prior to the date of this Agreement
(collectively the “Existing Policy”);
provided, however, that (i) the
Surviving Corporation may substitute for the Existing Policy a policy or
policies on comparably the same terms in the aggregate with respect to coverage
and amount to those of the Existing Policy in effect on the date hereof,
and (ii) the Surviving Corporation shall not be required to pay annual premiums
for the Existing Policy (or for any substitute policies) in excess of two
hundred percent (200%) of the aggregate premium paid by the Company and its
Subsidiaries in the year ended December 31, 2009 for such coverage, provided, however, that in the
event any future annual premiums for the Existing Policy (or any substitute
policies) exceed such cap, the Surviving Corporation shall be entitled to reduce
the amount of coverage of the Existing Policy (or any substitute policies) to
the amount of coverage that can be obtained for a premium equal to such cap.
Notwithstanding the foregoing, at any time prior to the Effective Time, the
Company shall have the right to, following notice to Parent, and shall at the
request of Parent, purchase a “tail” directors’ and officers’ liability
insurance policy, for a total premium in aggregate of no more than two hundred
seventy-five percent (275%) of the aggregate premium paid by the Company and its
Subsidiaries in the year ended December 31, 2009, covering the same persons
and providing the same terms with respect to coverage and amount as aforesaid,
and that by its terms shall provide coverage until the seventh (7th) anniversary of the
Effective Time, and upon the purchase of such insurance Parent’s and the
Surviving Corporation’s obligations pursuant to the first sentence of this Section 6.6(c)
shall be deemed satisfied.
(d) If
Parent or the Surviving Corporation or any of their successors or assigns shall
(i) consolidate with or merge into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfer all or substantially all of its properties and assets to any
person, then, and in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall assume all of the
obligations of Parent and/or the Surviving Corporation set forth in this Section 6.6.
60
(e) The
rights of each Indemnified Person under this Section 6.6 shall
survive consummation of the Merger and are intended to benefit, and shall be
enforceable by, each Indemnified Person. Parent shall pay all
reasonable expenses, including attorney fees, that may be incurred by any
Indemnified Person in enforcing the indemnity and other obligations under this
Section 6.6.
6.7 Additional
Agreements.
(a) Subject
to Section 6.7(b), Parent
and the Company shall use all reasonable efforts to take, or cause to be taken,
all actions necessary to consummate the Merger and make effective the other
transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, but subject to Section 6.7(b), each
party (i) shall make all deliveries and filings (if any) and give all notices
(if any) required to be made and given by such party in connection with the
Merger and the other transactions contemplated by this Agreement, (ii) shall use
all reasonable efforts to obtain each Consent (if any) required to be obtained
(pursuant to any applicable Legal Requirement or Contract, or otherwise) by such
party in connection with the Merger or any of the other transactions
contemplated by this Agreement, and (iii) shall use all reasonable efforts to
lift any restraint, injunction or other legal bar to the Merger. The
Company shall promptly deliver to Parent a copy of each such delivery or filing
made, each such notice given and each such Consent obtained by the Company
during the Pre-Closing Period.
(b) Notwithstanding
anything to the contrary contained in this Agreement, Parent shall not have any
obligation under this Agreement (i) to dispose or transfer or cause any of its
Subsidiaries to dispose of or transfer any assets, or to commit to cause any of
the Acquired Companies to dispose of any assets (other than payment of the
consideration pursuant to Section 2.4(a)(iii)
and 2.4(a)(iv)), (ii) to
discontinue or cause any of its Subsidiaries to discontinue offering any product
or service, or to commit to cause any of the Acquired Companies to discontinue
offering any product or service, (iii) to license or otherwise make available,
or cause any of its Subsidiaries to license or otherwise make available, to any
Person, any Technology or Intellectual Property Right, or to commit to cause any
of the Acquired Companies to license or otherwise make available to any Person
any Technology or Intellectual Property Right, (iv) to hold separate or cause
any of its Subsidiaries to hold separate any assets or operations (either before
or after the Closing Date), or to commit to cause any of the Acquired Companies
to hold separate any assets or operations, (v) to make or cause any of its
Subsidiaries to make any commitment (to any Governmental Body or otherwise)
regarding its future operations or the future operations of any of the Acquired
Companies, or (vi) to contest any Legal Proceeding relating to the Merger if
Parent determines in good faith that contesting such Legal Proceeding would not
be advisable.
(c) Unless
the board of directors of the Company shall have effected a Change in
Recommendation, the Company shall, at the reasonable request of Parent, execute
and deliver such further documents, certificates, agreements and instruments and
to take such other actions as may be necessary to evidence or effect the
consummation of this Agreement and the transactions contemplated by this
Agreement.
6.8 Disclosure. Parent
and the Company shall consult with each other before issuing any press release
or otherwise making any public statement with respect to the Merger or any of
the other transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company shall not, and shall
direct its Representatives not to, make any disclosure regarding the Merger or
any of the other transactions contemplated by this Agreement unless (a) Parent
shall have approved such disclosure (such approval not to be unreasonably
withheld or delayed), or (b) the Company shall have been advised in writing by
its outside legal counsel that such disclosure is required by applicable Legal
Requirements.
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6.9 Securityholder
Litigation. The Company shall control and shall give Parent,
at its sole cost and expense, the opportunity to participate in, the defense or
settlement of any securityholder litigation against the Company and/or its
directors relating to the transactions contemplated in this Agreement, and no
settlement shall be agreed to without Parent’s prior consent (such consent not
to be unreasonably withheld or delayed).
The
obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions:
7.1 Accuracy of
Representations. The representations and warranties of the Company set
forth in:
(a) this
Agreement (other than in Section 3.3,
Section
3.9(d),
Section 3.9(f),
Section 3.9(i),
Section 3.9(k),
Section 3.22,
Section 3.23,
Section 3.24
and Section
3.27) shall be true and correct (without giving effect to any
qualification as to materiality or “Material Adverse Effect” set forth therein)
as of the date of this Agreement and at and as of the Closing Date as though
made on or as of such date (other than, in each case, those representations and
warranties that address matters only as of a particular date or only with
respect to a specified period of time, that need only be true and correct
(without giving effect to any qualification as to materiality or “Material
Adverse Effect” set forth therein) as of such particular date or with respect to
such specified period), except where the failure of such representations and
warranties (as modified above, but including those representations and
warranties that address matters only as of a particular date or only with
respect to a specified period of time) to be true and correct as of the date
hereof or at and as of the Closing Date has not had, individually or in the
aggregate, a Material Adverse Effect;
(b) Section 3.3 shall be
true and correct in all respects as of the date hereof and at and as of the
Closing Date as though made on or as of such date, except where the failure of
such representations and warranties to be true and correct as of the date of
this Agreement and at and as of the Closing Date does not, directly or
indirectly, result in additional costs to Parent or the Surviving Corporation in
excess of $5,000,000 in the aggregate (excluding the issuance of Company Shares
upon the exercise of Company Compensatory Awards);
(c) each
of Section
3.9(d),
Section 3.9(f),
Section 3.9(i),
and Section
3.9(k), to the extent not qualified by materiality or “Material Adverse
Effect,” shall be true and correct in all material respects, and to the extent
so qualified, shall be true and correct in all respects, as of the date of this
Agreement and at and as of the Closing Date as though made on or as of such date
(except for those representations and warranties that address matters only as of
a particular date or only with respect to a specified period of time, that need
only be true and correct in all material respects, or in all respects, as
applicable, as of such particular date or with respect to such specified
period), except where the failure of such representations and warranties (as
modified above, but including those representations and warranties that address
matters only as of a particular date or only with respect to a specified period
of time) to be true and correct as of the date
hereof or at and as of the Closing Date has not, individually or in the
aggregate, materially impacted the Company’s ability to develop, support or
commercialize its current products and services; and
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(d) each of
Section 3.22, Section 3.23,
Section 3.24
and Section
3.27, to the extent not qualified by materiality or “Material Adverse
Effect,” shall be true and correct in all material respects, and to the extent
so qualified, shall be true and correct in all respects, as of the date of this
Agreement and at and as of the Closing Date as though made on or as of such date
(except for those representations and warranties that address matters only as of
a particular date or only with respect to a specified period of time, that need
only be true and correct in all material respects, or in all respects, as
applicable, as of such particular date or with respect to such specified
period).
7.2 Performance of
Covenants. Each
covenant or obligation that the Company is required to comply with or to perform
at or prior to the Closing shall have been complied with and performed in all
material respects. Notwithstanding the foregoing, any failure by the
Company to notify Parent in writing pursuant to Section 5.2(c)(i),
(ii) or (iv) shall not
constitute a failure of the Company to comply with or perform its covenants or
obligations for purposes of this Section 7.2; provided, however, that the
rights of Parent or Merger Sub are not materially prejudiced as a result of such
failure.
7.3 Company Shareholder
Approval. The
Merger shall have been duly approved by the Required Company Shareholder
Vote.
7.4 Consents. All
consents identified in Schedule 7.4 shall
have been obtained and shall be in full force and effect.
7.5 Certificates
(a) Parent
and the Company shall have received a certificate executed on behalf of the
Company by its Chief Executive Officer confirming that the conditions set forth
in Sections
7.1,
7.2, 7.3, 7.4, 7.7 and 7.8, have been
duly satisfied.
(b) Voltaire,
Inc. will provide to Parent at the Closing a certificate and notice to the IRS
pursuant to Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h),
executed by Voltaire, Inc. and in form and substance satisfactory to
Parent.
7.6 Resignations. Parent
shall have received the written resignations of all executive officers and
directors of each of the Acquired Companies, or evidence of an action taken by
the Company’s board of directors to ensure that such individuals are no longer
acting, as executive officers and directors, respectively, effective as of the
Effective Time.
7.7 Employees. Not
more than 33% of the Designated Employees shall have terminated their employment
with the Company or tendered their resignation to the Company, with such
resignation taking effect prior to the Closing.
7.8 No Material Adverse
Effect. Since
the date of this Agreement, there shall not have occurred and be continuing any
Material Adverse Effect on the Acquired Companies.
63
7.9 Antitrust
Clearances. If
an HSR notification has been submitted pursuant to Section 6.4(a)(i),
the waiting period applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated and any Consent required under any
applicable Israeli antitrust law or regulation shall have been
obtained.
7.10 No
Restraints. No
temporary restraining order, preliminary or permanent injunction or other order
preventing the consummation of the Merger shall have been issued by any court of
competent jurisdiction and remain in effect, and there shall not be any Legal
Requirement enacted or deemed applicable to the Merger that makes consummation
of the Merger illegal.
7.11 No Governmental
Litigation. There
shall not be instituted and pending any Legal Proceeding by a Governmental
Body challenging or seeking to restrain or prohibit the consummation of the
Merger.
7.12 No Other
Litigation. There
shall not be pending any Legal Proceeding by a Governmental Body that would be
reasonably likely to have a Material Adverse Effect on the Acquired Companies or
on Parent (a) seeking to prohibit or limit in any material respect Parent’s
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to any of the shares of any of the Acquired
Companies, or (b) which would materially and adversely affect the right of
Parent, or any of the Acquired Companies, to own the assets or operate the
business of the Acquired Companies.
The
obligation of the Company to effect the Merger and otherwise consummate the
transactions contemplated by this Agreement is subject to the satisfaction, at
or prior to the Closing, of the following conditions:
8.1 Accuracy of
Representations
(a) The
representations and warranties of Parent in this Agreement that do not contain
materiality qualifications shall have been accurate in all material respects as
of the date of this Agreement and shall be accurate in all material respects as
of the Closing Date as if made on and as of the Closing Date.
(b) The
representations and warranties of Parent in this Agreement that contain
materiality qualifications shall have been accurate in all respects as of the
date of this Agreement and shall be accurate in all respects as of the Closing
Date as if made on and as of the Closing Date.
8.2 Performance of
Covenants. All
of the covenants and obligations that Parent and Merger Sub are required to
comply with or to perform at or prior to the Closing shall have been complied
with and performed in all material respects.
8.3 Company Shareholder
Approval. The
Merger shall have been duly approved by the Required Company Shareholder
Vote.
64
8.4 Documents. The
Company shall have received a certificate executed on behalf of Parent by an
executive officer of Parent, confirming that the conditions set forth in Sections 8.1 and
8.2 have been
duly satisfied.
8.5 HSR Act. If
an HSR notification has been submitted pursuant to Section 6.4(a)(i),
the waiting period applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated; any similar waiting period under any
applicable Israeli antitrust law or regulation shall have expired or been
terminated; and any Consent required under any applicable Israeli antitrust law
or regulation shall have been obtained.
8.6 No
Restraints. No
temporary restraining order, preliminary or permanent injunction or other order
preventing the consummation of the Merger by the Company shall have been issued
by any court of competent jurisdiction and remain in effect, and there shall not
be any Legal Requirement enacted or deemed applicable to the Merger that makes
consummation of the Merger by the Company illegal.
8.7 No Governmental
Litigation. There
shall not be instituted and pending any Legal Proceeding by a Governmental
Body of competent jurisdiction challenging or seeking to restrain or
prohibit the consummation of the Merger.
9.1 Termination. This
Agreement may be terminated prior to the Effective Time, except as otherwise set
forth below, whether before or after approval of the Merger by the Company’s
shareholders:
(a) by
mutual written consent of Parent and the Company;
(b) by
either Parent or the Company if the Merger shall not have been consummated by
April 21, 2011 (the “Outside Date”); provided, however, that a party
shall not be permitted to terminate this Agreement pursuant to this Section 9.1(b) if the
failure to consummate the Merger by the Outside Date solely arises from or is
directly attributable to a failure on the part of the party seeking to terminate
this Agreement to perform any material obligation required to be performed by
such party at or prior to the Effective Time;
(c) by
either Parent or the Company if a court of competent jurisdiction or other
Governmental Body shall have issued a final and nonappealable order, decree or
ruling, or shall have taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
(d) by
either Parent or the Company if (i) the Company General Meeting, including any
adjournments and postponements thereof, shall have been held and completed and
the Company’s shareholders shall have taken a final vote on the proposal to
approve the Merger, and (ii) the Merger shall not have been approved at
such meeting by the Required Company Shareholder Vote (and shall not have been
approved at any adjournment or postponement thereof); provided, however, that a party
shall not be permitted to terminate this Agreement pursuant to this Section 9.1(d) if the
failure to obtain such shareholder approval solely arises from or is directly
attributable to a failure on the part of such party to perform any material
obligation required to be performed by such party at or prior to the Effective
Time;
65
(e) by
Parent at any time prior to the approval of the Merger by the Required Company
Shareholder Vote if a Company Triggering Event shall have occurred;
(f) by
Parent if (i) any of the Company’s representations and warranties contained in
this Agreement shall be inaccurate as of the date of this Agreement, or shall
have become inaccurate as of a date subsequent to the date of this Agreement (as
if made on such subsequent date), such that the condition set forth in Section 7.1 would not
be satisfied, or (ii) any of the Company’s covenants contained in this Agreement
shall have been breached such that the condition set forth in Section 7.2 would not
be satisfied; provided, however, that if an
inaccuracy in the Company’s representations and warranties or a breach of a
covenant by the Company is curable by the Company and the Company is continuing
to exercise all commercially reasonable efforts to cure such inaccuracy or
breach, then Parent may not terminate this Agreement under this Section 9.1(f) on
account of such inaccuracy or breach;
(g) by
the Company if (i) any of Parent’s representations and warranties contained in
this Agreement shall be inaccurate as of the date of this Agreement, or shall
have become inaccurate as of a date subsequent to the date of this Agreement (as
if made on such subsequent date), such that the condition set forth in Section 8.1 would not
be satisfied, or (ii) any of Parent’s covenants contained in this Agreement
shall have been breached such that the condition set forth in Section 8.2 would not
be satisfied; provided, however, that if an
inaccuracy in Parent’s representations and warranties or a breach of a covenant
by Parent is curable by Parent and Parent is continuing to exercise all
commercially reasonable efforts to cure such inaccuracy or breach, then the
Company may not terminate this Agreement under this Section 9.1(g) on account of
such inaccuracy or breach;
(h) by
the Company, in connection with a Change of Recommendation of the Company
pursuant to Section 5.4(d) following
compliance in full with all of the Company’s obligations under Section 5.4 in respect
of the applicable Change of Recommendation; provided, however, that the
Company shall not be permitted to terminate this Agreement pursuant to this
Section 9.1(h) unless,
on the date of such termination, the Company (A) enters into a definitive
agreement for any Acquisition Transaction other than the transaction
contemplated by this Agreement, and (B) makes the payments and pays any fees
required to be made to Parent pursuant to Section 9.3(a) or 9.3(b);
or
(i)
by Parent, if there shall have occurred and remain uncured any Material
Adverse Effect on the Acquired Companies since the date of this Agreement; provided, however, that if such
Material Adverse Effect is curable by the Company and the Company is continuing
to exercise all commercially reasonable efforts to cure such Material Adverse
Effect, then Parent may not terminate this Agreement under this Section 9.1(i) on
account of the occurrence of such Material Adverse Effect for a period of 45
days after Knowledge of the Company of the occurrence of such Material Adverse
Effect.
9.2 Effect of
Termination. In
the event of the termination of this Agreement as provided in Section 9.1,
this Agreement shall be of no further force or effect; provided, however, that (i)
this Section 9.2,
Section 9.3 and
Section 10
shall survive the termination of this Agreement and shall remain in full force
and effect, and (ii) the termination of this Agreement shall not relieve
any party from any liability for any fraud or intentional and knowing breach of
any representation, warranty or covenant contained in this
Agreement.
66
9.3 Expenses; Termination
Fees
(a) Except
as set forth in this Section 9.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that if this
Agreement is terminated by Parent or the Company pursuant to Section 9.1(d), by Parent
pursuant to 9.1(e) or 9.1(f) or by the
Company pursuant to Section 9.1(h), then the Company shall
make a nonrefundable cash payment to Parent, at the time specified in the next
sentence, in the sum of $2.5 million (“Expenses”) to
compensate Parent for fees and expenses incurred by or on behalf of Parent in
connection with the preparation and negotiation of this Agreement and otherwise
in connection with the Merger. In the case of termination of this Agreement by
the Company pursuant to Section 9.1(d) or 9.1(h), the
nonrefundable payment of Expenses pursuant to the proviso to the first sentence
of this Section 9.3 shall be
made by the Company concurrently with such termination; and in the case of
termination of this Agreement by Parent pursuant to Section 9.1(d), 9.1(e) or 9.1(f), the
nonrefundable payment of Expenses pursuant to the proviso to the first sentence
of this Section shall be made by the Company within two (2) Business
Days after such termination.
(b) Without
limiting the provisions of Section 10.6,
if
(i) this
Agreement is terminated by Parent or the Company pursuant to Section 9.1(d) and (x) at or
prior to the time of the Company General Meeting an Acquisition Proposal shall
have been publicly announced and not publicly withdrawn, and (y) the Company
enters into a binding agreement to consummate, or consummates, an Acquisition
Transaction in respect of such Acquisition Proposal within twelve (12) months
after the date of such termination (which for this purpose only, each
reference to “85%” and “15%” appearing in the definition of an “Acquisition
Transaction” shall be “50%”); or
(ii) this
Agreement is terminated by Parent pursuant to Section 9.1(e), or
(iii) this
Agreement is terminated by the Company pursuant to Section 9.1(h);
then
(without limiting any liability of the Company for any breach by the Company of
any provision of this Agreement), in any such case, the Company shall pay to
Parent, in cash at the time specified in the next sentence, a nonrefundable fee
in the amount of $8,700,000 (the “Fee”) less the amount
of any Expenses previously paid pursuant to Section 9.3(a). In
the case of termination of this Agreement by Parent or the Company pursuant to
Section
9.1(d), the Fee
less the amount of any Expenses previously paid pursuant to Section 9.3(a)
shall be paid immediately prior to the consummation of the Acquisition
Transaction or entry into the definitive agreement in respect of the Acquisition
Transaction, whichever is earlier. In the case of termination of this
Agreement by Parent pursuant to Section 9.1(e),
the Fee less the amount of any Expenses previously paid pursuant to Section 9.3(a)
shall be paid by the Company within two (2) Business Days after such
termination. In the case of termination of this Agreement by the
Company pursuant to Section 9.1(h),
the Fee less the amount of any Expenses previously paid pursuant to Section 9.3(a)
shall be paid by the Company concurrently with such
termination.
67
(c) Notwithstanding
anything to the contrary in this Agreement, each of Parent and Merger Sub
acknowledges and agrees, on behalf of itself and its affiliates, that the Fee is
not a penalty, but rather is liquidated damages in a reasonable amount that will
compensate Parent and Merger Sub in the circumstances in which the Fee is
payable for the efforts and resources expended and opportunity forgone while
negotiating this Agreement and in reliance on this Agreement and on the
expectation of the consummation of the Merger, which amount would otherwise be
impossible to calculate with precision.
(d) In
no event shall more than one (1) Fee be payable.
10.1 Amendment. This
Agreement may be amended with the approval of the respective boards of directors
of the Company and Parent at any time (whether before or after approval of the
Merger by the shareholders of the Company); provided, however, that after
any such approval of the Merger by the Company’s shareholders, no amendment
shall be made which by law requires further approval of the shareholders of the
Company without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of the parties.
10.2 Waiver
(a) No
failure on the part of any party to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any party in exercising
any power, right, privilege or remedy under this Agreement, shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No
party shall be deemed to have waived any claim arising out of this Agreement, or
any power, right, privilege or remedy under this Agreement, unless the waiver of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such party; and any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
10.3 No Survival of
Representations and Warranties. None
of the representations and warranties contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the
Merger.
10.4 Entire Agreement;
Counterparts. This
Agreement constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among or between any of
the parties with respect to the subject matter hereof and thereof; provided, however, that the
confidentiality provisions of the Confidentiality Agreement shall not be
superseded and shall remain in full force and effect in accordance with their
terms. This Agreement may be executed in several counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same instrument.
68
10.5 Governing Law;
Venue. This
Agreement shall be solely governed by, and construed in accordance with, the
laws of the State of Israel, without giving effect to any other choice of law or
conflict of law provision or rule (whether of the State of Israel or otherwise)
that would cause the application of the laws of any jurisdiction other than the
State of Israel. Any dispute arising under or in relation to this
Agreement shall be resolved in, and the sole and exclusive jurisdiction shall be
with, the competent court located in Tel Aviv, and each of the parties hereby
submits irrevocably to the jurisdiction of such courts. The parties
hereby (a) consent to and grant any such court jurisdiction over the person of
such parties and, to the extent permitted by law, over the subject matter of
such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 10.9 or
in such other manner as may be permitted by law shall be valid and sufficient
service thereof, (b) agree that they will not attempt to deny or defeat such
jurisdiction by motion or other request for leave from any such court, and (c)
agree that they will not bring any action relating to this Agreement or the
Merger in any court other than the court located in Tel Aviv. Each
party agrees that a final judgment in any action or proceeding in any such court
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
10.6 Specific
Performance. Each
of the Company and Parent agrees that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It
is accordingly agreed that each of the Company and Parent shall be entitled to
seek an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement, this being in
addition to any other remedy to which such party is entitled at law or in
equity.
10.7 Attorneys’
Fees. In
any action at law or suit in equity to enforce this Agreement or the rights of
any of the parties hereunder, the prevailing party in such action or suit shall
be entitled to receive a reasonable sum for its attorneys’ fees and all other
reasonable costs and expenses incurred in such action or suit.
10.8 Assignability. This
Agreement shall be binding upon, and shall be enforceable by and inure solely to
the benefit of, the parties and their respective successors and assigns; provided, however, that neither
this Agreement nor any of a party’s rights or obligations hereunder may be
assigned by such party without the prior written consent of the other party, and
any attempted assignment of this Agreement or any of such rights by such party
without such prior written consent shall be void and of no
effect. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any Person (other than the parties) any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, except for
the rights of the holders of the Company Shares and the Company Compensatory
Awards to receive the Per Share Merger Consideration and the provisions of Section 6.5.
10.9 Notices. Any
notice or other communication required or permitted to be delivered to any party
under this Agreement shall be in writing and shall be deemed properly delivered,
given and received when delivered (by hand, by registered mail, by courier or
express delivery service or by facsimile) to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in a written
notice given to the other parties):
69
if to
Parent or Merger Sub:
Mellanox
Technologies, Ltd.
Hermon
Bldg.
Yokneam,
Israel 20692
Attention: Chief
Executive Officer
with a
copy to:
Mellanox
Technologies, Inc.
000
Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention: Vice
President of Legal Affairs
with
copies (which shall not constitute notice) to:
Xxxxxx
& Xxxxxxx LLP
000 Xxxxx
Xxxxx
Xxxxx
Xxxx, Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxxx,
Xxx and Xxxxxx
Xxxx
Xxxxx
0
Xxxxxxxx Xxxxxx
Xxx Xxxx,
00000
Xxxxxx
Attn:
Xxxx Sol
Xxxxx Xxxxx
if to the
Company:
00
Xxxxxxx Xxxxxx
Ra’anana,
00000
Xxxxxx
Attn:
Chief Executive Officer
with a
copy to:
Voltaire,
Inc.
000
Xxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Chief Executive Officer
Chief Financial
Officer
70
with
copies (which shall not constitute notice) to:
Xxxxxxxx
& Xxxxxxxx LLP
000
Xxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 94
Attn:
Xxxxx Xxxx
Xxxxxxx Xxxxxxxx
Xxx Xxxxx
& Co., Law Offices
Attn: Xxx
Xxxxx, Adv.
Xxxx
Xxxxxx, Adv.
0 Xxxxxxx
Xxxxxx Xxx Xxxx 00000
10.10 Severability. If
any provision of this Agreement or any part of any such provision is held under
any circumstances to be invalid or unenforceable in any jurisdiction, then (a)
such provision or part thereof shall, with respect to such circumstances and in
such jurisdiction, be deemed amended to conform to applicable laws so as to be
valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
Agreement. Each provision of this Agreement is separable from every
other provision of this Agreement, and each part of each provision of this
Agreement is separable from every other part of such provision.
10.11 No Other Representations and
Warranties. Parent
and Merger Sub, on the one hand, and the Company, on the other hand, each
acknowledges and agrees that, in connection with this Agreement and the Merger,
except for the representations and warranties of the Company set forth in
Section 3, including the Company Disclosure Schedule, and of Parent set
forth in Section 4, (a) no party (or any of its affiliates, stockholders,
directors, officers, employees, agents, representatives, advisors or any other
person) makes, and no party (or any of its affiliates, stockholders, directors,
officers, employees, agents, representatives, advisors or any other person) has
made, any representations or warranties, express or implied, relating to such
party, its subsidiaries, its businesses or operations or otherwise, including
with respect to any information or materials, documents, estimates, projections,
forecasts or other forward-looking information, business plans or other material
provided or made available to the other party or any of its affiliates,
stockholders, directors, officers, employees, agents, representatives, advisors
or any other person (including in “data rooms” or management presentations) in
anticipation or contemplation of the Merger, and (b) any information or
materials, documents, estimates, projections, forecasts or other forward-looking
information, business plans or other material provided or made available to the
other party or any of its affiliates, stockholders, directors, officers,
employees, agents, representatives or advisors, or any other person (including
in “data rooms” or management presentations) in anticipation or contemplation of
the Merger shall not be deemed to be representations or warranties of a party
for purposes of this Agreement except to the extent any such information or
material is the subject of any representation or warranty set forth in this
Agreement. Each party acknowledges and agrees that it is not relying
on any representations or warranties, express or implied, relating to the other
party, its subsidiaries, its businesses or operations or otherwise, including
with respect to any information or materials, documents, estimates, projections,
forecasts or other forward-looking information, business plans or other material
provided or made available to such party or any of its affiliates, stockholders,
directors, officers, employees, agents, representatives, advisors or any other
person (including in “data rooms” or management presentations) in anticipation
or contemplation of the Merger, except to the extent of the representations and
warranties set forth in this Agreement.
71
10.12 Construction.
(a) For
purposes of this Agreement, whenever the context requires: the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include masculine and feminine
genders.
(b) The
parties agree that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Agreement.
(c) As
used in this Agreement, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words “without limitation.”
(d) Except
as otherwise indicated, all references in this Agreement to “Sections,”
“Exhibits” and “Schedules” are intended to refer to Sections of this Agreement
and Exhibits and Schedules to this Agreement.
(e) The
bold-faced headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.
(f) The
“Knowledge” of
the Company shall mean the knowledge of each executive officer or director of
the Company set forth on Schedule
10.12(f).
(g) Except
as otherwise indicated, (i) all references in this Agreement to dollar
amounts and to “$” are intended to refer to U.S. dollars, and (ii) all
references in this Agreement to “NIS” are intended to refer to New Israeli
Shekels.
(h) The
phrase “made available to Parent” when used herein, shall mean that true and
correct copies of the subject document, executed by all parties thereto as
applicable, were uploaded to the virtual data room established by the Company
prior to the date of this Agreement or were otherwise delivered to
Parent.
(i) The
English language version of this Agreement shall be controlling (and any
translation of this Agreement into the Hebrew language shall be for the
convenience of the parties only and shall not be taken into account in
connection with the construction or interpretation of this
Agreement).
72
Mellanox
Technologies, Ltd.
|
|||
|
By:
|
/s/ Xxxx Xxxxxxx | |
Name:
|
Xxxx Xxxxxxx | ||
Title:
|
CEO | ||
Mondial
Acquisition Corporation Ltd.
|
|||
By:
|
/s/ Xxxx Xxxxxxx | ||
Name:
|
Xxxx Xxxxxxx | ||
Title:
|
Director | ||
By:
|
/s/ Xxxxxx (Xxxxx) Xxxxxxx | ||
Name:
|
Xxxxxx (Xxxxx) Xxxxxxx | ||
Title:
|
CEO |
73