AGREEMENT AND PLAN OF MERGER by and among EPSILON 1 LTD. EPSILON 3 LTD. and ECI TELECOM LTD. Dated as of July 1, 2007
EXHIBITS
99.2
AGREEMENT
AND PLAN OF MERGER
by
and
among
EPSILON
1
LTD.
EPSILON
3
LTD.
and
ECI
TELECOM LTD.
Dated
as
of July 1, 2007
TABLE
OF CONTENTS
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Page
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DEFINITIONS
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Section
1.1
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Definitions
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2
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Section
1.2
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Other
Terms
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6
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ARTICLE
II
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THE
MERGER
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Section
2.1
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The
Merger
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8
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Section
2.2
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Closing
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8
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Section
2.3
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Effective
Time
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9
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Section
2.4
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Effect
of Merger
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9
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Section
2.5
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Directors
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9
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ARTICLE
III
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EFFECT
OF THE MERGER ON SHARE CAPITAL; PAYMENT
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Section
3.1
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Effect
on Share Capital
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10
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Section
3.2
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Exchange
of Certificates
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10
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Section
3.3
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Stock
Options; Restricted Company Shares.
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12
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Section
3.4
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Lost
Certificates
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13
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Section
3.5
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Transfers;
No Further Ownership Rights.
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13
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Section
3.6
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Withholding
Tax.
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13
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
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Section
4.1
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Organization;
Qualification.
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14
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Section
4.2
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Capitalization.
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14
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Section
4.3
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Authority.
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15
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Section
4.4
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Consents
and Approvals; No Violations; Voting.
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15
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Section
4.5
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SEC
Reports and Financial Statements
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16
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Section
4.6
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Absence
of Certain Changes or Events
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17
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Section
4.7
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Information
Supplied
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17
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Section
4.8
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Employee
Matters and Benefit Plans
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17
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Section
4.9
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Contracts
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20
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Section
4.10
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Litigation
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21
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Section
4.11
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Compliance
with Applicable Law
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22
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i -
TABLE
OF CONTENTS
(continued)
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Page
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Section
4.12
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Taxes
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22
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Section
4.13
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Property
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23
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Section
4.14
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Environmental
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24
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Section
4.15
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Insurance
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24
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Section
4.16
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Intellectual
Property
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25
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Section
4.17
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Insider
Interests
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26
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Section
4.18
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Brokers
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26
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Section
4.19
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Opinion
of Financial Advisor
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27
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Section
4.20
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Board
and Audit Committee Approval
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27
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Section
4.21
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Inapplicability
of Certain Statutes
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27
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Section
4.22
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Grants,
Incentives and Subsidies
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27
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Section
4.23
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Encryption
and Other Restricted Technology
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27
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Section
4.24
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Effect
of Transaction
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28
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Section
4.25
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No
Other Representations or Warranties
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28
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ARTICLE
V
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REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND MERGER SUB
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Section
5.1
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Organization,
Good Standing and Qualification
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28
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Section
5.2
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Purchaser
and Merger Sub
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28
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Section
5.3
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Corporate
Authority
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29
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Section
5.4
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Merger
Sub Board Approval
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29
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Section
5.5
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Share
Ownership
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29
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Section
5.6
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Governmental
Filings; No Violations; Etc.
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29
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Section
5.7
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Brokers
and Finders
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30
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Section
5.8
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Available
Funds
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30
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Section
5.9
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Interest
in Competitors.
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31
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Section
5.12
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Acknowledgement
of Disclaimer of Other Representations and Warranties.
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31
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ARTICLE
VI
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CONDUCT
PRIOR TO THE EFFECTIVE TIME AND ADDITIONAL AGREEMENTS
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Section
6.1
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Conduct
of Business by the Company
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31
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Section
6.2
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Specific
Activities
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32
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Section
6.3
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No
Control of Other Party's Business
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34
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Section
6.4
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Confidentiality;
Access to Information; Cooperation on Financing
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34
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Section
6.5
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No
Solicitation
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36
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Section
6.6
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Merger
Proposal
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39
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Section
6.7
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Shareholders
Approval
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40
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Section
6.8
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Filings;
Other Actions; Notification
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41
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Section
6.9
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Publicity
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42
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Section
6.10
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Approvals
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43
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Section
6.11
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Directors'
and Officers' Insurance; Indemnification Agreements
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44
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Section
6.12
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Merger
Sub Obligations
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45
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Section
6.13
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Leases
with the Israeli Land Administration
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45
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ii -
TABLE
OF CONTENTS
(continued)
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Page
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Section
6.14
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Employee
Matters
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46
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Section
6.15
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Conduct
of Business by Purchaser
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46
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ARTICLE
VII
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CONDITIONS
PRECEDENT
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Section
7.1
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Conditions
to Each Party's Obligation to Effect the Merger
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47
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Section
7.2
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Conditions
to Obligations of the Company to Effect the Merger
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47
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Section
7.3
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Conditions
to Obligations of Purchaser and Merger Sub to effect the
Merger
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48
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ARTICLE
VIII
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TERMINATION
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Section
8.1
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Termination
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48
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Section
8.2
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Notice
of Termination; Effect of Termination
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49
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Section
8.3
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Fees
and Expenses
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50
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ARTICLE
IX
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MISCELLANEOUS
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Section
9.1
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Amendment
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52
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Section
9.2
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Governing
Law and Venue
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52
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Section
9.3
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Extension;
Waiver
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53
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Section
9.4
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Notices
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53
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Section
9.5
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Interpretation
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54
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Section
9.6
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Counterparts
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55
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Section
9.7
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Entire
Agreement; Third-Party Beneficiaries
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55
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Section
9.8
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Severability
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55
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Other
Remedies; Specific Performance
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56
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Section
9.10
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Assignment
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56
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Section
9.11
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Non-
Survival of Representations, Warranties and Agreements
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56
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iii -
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER, dated as of July 1, 2007, by and among EPSILON 1 LTD.,
an
Israeli company ("Purchaser"),
EPSILON 3 LTD., an Israeli company and an indirect wholly owned subsidiary
of
Purchaser ("Merger
Sub"),
and
ECI TELECOM LTD., an Israeli company (the "Company").
Purchaser, Merger Sub and the Company are each referred to herein as a "Party",
and collectively as the "Parties".
RECITALS
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A.
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The
Parties hereto intend to enter into a transaction whereby Merger
Sub will
merge with and into the Company (the "Merger")
by way and upon the terms and conditions set forth in this Agreement
and
in accordance with the provisions of Sections 314-327 of the
Companies Law 5759-1999, of the State of Israel (the "Companies
Law"),
following which, Merger Sub will cease to exist, the Company will
become
an indirect wholly owned Subsidiary of Purchaser, and the Company
Shares
will be exchanged for the right to be paid the Merger
Consideration.
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B.
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The
board of directors of the Company has: (i) determined that this
Agreement, the Merger and the other transactions contemplated by
this
Agreement (collectively, the "Transactions")
are fair to, and in the best interests of, the Company 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 the Company to its creditors,
(ii) approved this Agreement, the Merger and the other Transactions
and (iii) determined to recommend to the shareholders of the Company
the approval of this Agreement, the Merger and the other
Transactions.
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C.
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The
board of directors of each of Purchaser and Merger Sub has approved
this
Agreement, the Merger and the other Transactions, and the board of
directors of Merger Sub has (i) determined 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 and (ii) recommended that the sole
shareholder of Merger Sub vote to approve this Agreement, the Merger
and
the other Transactions. Simultaneously with the execution and delivery
of
this Agreement, the sole shareholder of Merger Sub has approved this
Agreement, the Merger and the other
Transactions.
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D.
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Concurrently
with the execution and delivery of this Agreement and as a condition
to
and inducement of Purchaser's willingness to enter into this Agreement:
(i) the shareholders of the Company identified in Schedule A
are entering into voting undertakings in the form attached hereto
as
Exhibit A
(the "Voting
Undertakings")
and (ii) each of the directors of the Company set forth on
Schedule B
hereto is executing a resignation letter in substantially the form
attached as Exhibit B
hereto, the effectiveness of which is conditioned on the consummation
of
the Merger.
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E.
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Concurrently
with the execution and delivery of this Agreement and as a condition
to
and inducement of the Company's willingness to enter into this Agreement,
certain of the investors set forth in Section E of the Purchaser
Disclosure Schedule (the "Investors"),
each
an Affiliate of Purchaser and Merger Sub, have entered into a Limited
Guarantee, dated as of the date hereof, in favor of the Company with
respect to certain obligations of Purchaser and Merger Sub under
this
Agreement (the "Guarantees'').
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NOW,
THEREFORE,
in
consideration of the forgoing premises, and of the representations, warranties,
covenants and agreements contained herein, the Parties hereto, intending to
be
legally bound, hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
"102
Trustee"
means
the trustee appointed by the Company in accordance with the provisions of the
Ordinance, and approved by the Israeli Taxing Authority, with respect to Company
102 Securities.
"Affiliate"
of any
Person means another Person that directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with,
such first Person.
"Agreement"
means
this Agreement, together with all Exhibits and Schedules attached hereto, as
the
same may be amended from time to time in accordance with the terms
hereof.
"Articles
of Association"
mans
the articles of associations of the Company as of the date hereof.
"Board
of Directors"
means
the board of directors of the Company.
"Business
Day"
means
any day other than Friday, Saturday or any other day on which banks are legally
permitted to be closed in Israel.
"Code"
means
the U.S. Internal Revenue Code of 1986, as amended.
"Company
102 Securities"
means
(i) Company Share Options granted under Section 102(b)(2) of the Ordinance,
or granted under Section 102 of the Ordinance prior to January 1, 2003,
(ii) Company Shares issued upon the exercise of any such Company Shares Options
and held by the 102 Trustee pursuant to the Ordinance and (iii) Restricted
Company Shares.
"Company
Employee Plan"
means
each material plan, program, policy, contract, agreement or other arrangement,
other than an Employment Agreement, providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, funded or unfunded, including each "employee benefit plan", within
the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any ERISA
Affiliate for the benefit of any Employee, or with respect to which the Company
or any ERISA Affiliate has or may have any liability or obligation including
each International Employee Plan.
"Company
Intellectual Property Rights"
means
any Intellectual Property Rights, including Registered Intellectual Property
Rights, that are owned or used by the Company or any of its
Subsidiaries.
"Company-Owned
Intellectual Property Rights"
means
any Intellectual Property Rights, including Registered Intellectual Property
Rights, that are owned by the Company or any of its Subsidiaries.
-
2
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"Company
Product"
means
any product or service of the Company or any of its Subsidiaries currently
being
marketed, sold or licensed by the Company or any of its
Subsidiaries.
"Company
Shares"
means
ordinary shares, NIS 0.12 par value per share, of the Company.
"Confidentiality
Agreement"
means
the confidentiality agreement entered into in connection with the
Transactions.
"Contract"
means
any binding written, oral, electronic or other contract, lease, license,
sublicense, instrument, note, bond, indenture, option, warrant, purchase order,
arrangement, commitment, undertaking, obligation or understanding of any
nature.
"Control"
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or
otherwise.
"Employee"
means
any current employee, consultant or director of the Company or any ERISA
Affiliate.
"Employment
Agreement"
means
each management, employment, severance, consulting, relocation, repatriation,
expatriation, collective agreement or arrangement or other Contract between
the
Company or any ERISA Affiliate and any Employee.
"Encumbrances"
means
any liens, charges, security interests, mortgages, pledges, options, preemptive
rights, rights of first refusal or first offer, proxies, levies, voting trusts
or agreements, or other adverse claims or restrictions on title or transfer
of
any nature whatsoever.
"ERISA"
means
the Employee Retirement Income Security Act of 1974, as amended.
"ERISA
Affiliate"
means
any Subsidiary of the Company or other Person or entity under common Control
with the Company or any Subsidiary of the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Exchange
Act"
means
the Securities Exchange Act of 1934, and the rules and regulations promulgated
thereunder, as amended.
"GAAP"
means
generally accepted accounting principles as in effect in the United States
of
America at the time of the preparation of the subject financial
statements.
"Intellectual
Property"
means
any or all of the following: (i) works of authorship including computer
programs, source code and executable code, whether embodied in software,
firmware or otherwise, documentation, designs, files, records, schematics,
layouts, data and mask works; (ii) inventions (whether or not patentable),
improvements, and technology; (iii) proprietary and confidential
information, including trade secrets and know how; (iv) databases, data
compilations and collections and technical data; (v) logos, trade names,
trade dress, trademarks and service marks; (vi) domain names, web addresses
and sites; and (vii) methods and processes and software tools.
"Intellectual
Property Rights"
means
any and all worldwide, common law and/or statutory rights in or arising out
of:
(i) all United States and foreign patents and utility models and
applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof,
and
equivalent rights anywhere in the world in inventions and discoveries including
invention disclosures ("Patents");
(ii) all trade secrets and other proprietary rights in know-how and
confidential or proprietary information, in each case excluding any rights
in
respect of any of the foregoing that are protected by Patents; (iii) all
copyrights, copyrights registrations and applications therefor, and mask works
and mask work registrations and applications therefor ("Copyrights");
(iv) all uniform resource locators, e-mail and other internet addresses and
domain names and applications and registrations therefor ("URLs");
all
trade names, logos, common law trademarks and service marks, trademark and
service xxxx registrations and applications therefor and all goodwill associated
therewith ("Trademarks");
(v) all "moral" rights of authors and inventors, however denominated
throughout the world; and (vi) any corresponding or equivalent rights to
any of the foregoing.
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3
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"International
Employee Plan"
means
each Company Employee Plan and each government-mandated plan or program that
has
been adopted or maintained by the Company or any ERISA Affiliate, whether
informally or formally, or with respect to which the Company or any ERISA
Affiliate will or may have any liability, for the benefit of Employees who
perform services outside the United States. This shall include, in Israel,
manager's insurance or other provident or pension funds which are not
government-mandated but were set up to provide for the Company's legal
obligation to pay statutory severance pay (Pitzuay Piturim) under the Severance
Pay Law 5723-1963 ("Severance
Pay Law").
"Knowledge"
means
the actual knowledge after reasonable inquiry of the following officers of
the
Company or Purchaser, as the case may be, as to (i) the Company, those
executive officers set forth in Section 1.1 of the Company Disclosure
Schedule and (ii) Purchaser, those executive officers set forth in
Section 1.1 of the Purchaser Disclosure Schedule.
"Laws"
shall
mean any order, any federal, state, provincial, local or other statute, law,
rule of common law, or code of any kind, domestic or foreign, and the rules,
regulations, ordinances and standards promulgated thereunder and, where
applicable, any interpretation thereof by any Governmental Authority having
jurisdiction with respect thereto or charged with the administration
thereof.
"Legal
Requirements"
means
any Israeli or U.S. federal or state law, or material local or municipal law,
or
foreign or other law, statute, constitution, ordinance, code, edict, decree,
judgment, order, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under
the
authority of a Governmental Authority.
"Material
Adverse Effect"
means
any change, event or occurrence which, individually or in the aggregate, does
have or would reasonably be expected to have a material adverse effect on the
business, results of operations, or financial condition of the Company and
its
Subsidiaries taken as a whole, other than changes, events, occurrences or
effects relating to or arising from: (i) changes in general economic or
political conditions or financial credit or securities markets in general
(including changes in interest or exchange rates) in any country or region
in
which the Company or its Subsidiaries conduct a material portion of its
business, except to the extent such changes affect the Company and its
Subsidiaries in a materially disproportionate manner as compared to other
companies or businesses operating in any such country or region in the
technology sector, (ii) any events, circumstances, changes or effects that
affect the industries in which the Company or its Subsidiaries operates, except
to the extent such events, circumstances, changes or effects affect the Company
and its Subsidiaries in a materially disproportionate manner as compared to
other participants in the industry, (iii) any changes in Laws applicable to
the Company or any of its Subsidiaries or any of their respective properties
or
assets or changes in GAAP, in each case, occurring after the date of this
Agreement, (iv) acts
of war, armed hostilities or terrorism or any escalation or worsening of any
acts of war, armed hostilities or terrorism (other than such acts of war, armed
hostilities or terrorism, or escalation or worsening thereof, that cause any
damage or destruction to, or render physically unusable, any facility or
property of the Company or any of its Subsidiaries or otherwise disrupt in
any
material manner the business or operations of the Company or any of its material
Subsidiaries),
(v) the negotiation, announcement or performance of this Agreement and the
Transactions (including without limitation the impact thereof on relationships,
contractual or otherwise, with customers, suppliers, vendors, employees or
venture partners) or any action taken by the Company at the written request
of
or with the written consent of Purchaser, (vi) any decline in the market
price or decrease or increase in the trading volume of Company Shares,
(vii) any failure to meet internal or published projections, forecasts, or
revenue or earning predictions for any period and (viii) any litigation
arising from allegations of a breach of fiduciary duty or other violation of
applicable Law relating to this Agreement, the Merger or the other Transaction,
or the approval thereof (for the avoidance of doubt, the exceptions in clauses
(vi) and (vii) shall not prevent or otherwise affect a determination that the
underlying cause of such failure is a Material Adverse Effect).
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4
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"Memorandum
of Association"
means
the memorandum of association of the Company as of the date hereof.
"Nasdaq"
means
The Nasdaq Global Market, a.k.a. the Nasdaq Stock Market.
"Permitted
Encumbrance"
shall
mean (i) any statutory Encumbrance for Taxes not yet due or the amount of
validity of which is being contested in good faith by appropriate proceedings
and for which adequate accruals or reserves have been established on the
financial statements in accordance with GAAP, (ii) Encumbrances securing
indebtedness or liabilities that are reflected in the most recent Company SEC
Documents filed prior to the date hereof, (iii) such non-monetary Liens or
other imperfections of title, if any, that, do not individually or in the
aggregate, adversely affect the use of the relevant property or assets,
including (A) easements or claims of easements whether shown or not shown
by the public records, boundary line disputes, overlaps, encroachments and
any
matters not of record which would be disclosed by an accurate survey or a
personal inspection of the property, (B) rights of parties in possession,
and (C) title to any portion of the premises lying within the right of way
or boundary of any public road or private road, (iv) Encumbrances disclosed
on existing title reports or existing surveys, (v) Encumbrances under
applicable securities Laws, and (vi) mechanics', carriers', workmen's,
repairmen's and similar Encumbrances, incurred in the ordinary course of
business.
"Person"
means
any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Authority or other entity of any kind
or
nature.
"Registered
Intellectual Property Rights"
means
all United States, international and foreign: (A) issued Patents, including
pending applications therefor; (B) registered Trademarks and pending
applications to register Trademarks, including intent-to-use applications;
(C) Copyright registrations and pending applications to register
Copyrights; and (D) URL registrations and pending applications to register
URLs.
"Restricted
Company Shares"
means
restricted Company Shares issued under the Company's Employee Restricted Share
Incentive Plan 2005 pursuant to Section 102(b)(2) of the Ordinance and held
by
the 102 Trustee pursuant thereto.
"Securities
Act"
means
the Securities Act of 1933, and the rules and regulations promulgated
thereunder, as amended.
"Subsidiary"
means,
with respect to any Person, any other Person of which at least a majority of
the
securities or ownership interests having by their terms ordinary voting power
to
elect a majority of the board of directors or other Persons performing similar
functions is directly or indirectly owned or Controlled by such Person or by
one
or more of its Subsidiaries.
-
5
-
"Tax"
or,
collectively, "Taxes",
means:
(i) any and all United States, federal, provincial, state, local, Israeli
and other foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, linkage for inflation,
penalties and additions imposed with respect to such amounts; and (ii) any
liability for the payment of any amounts of the type described in
clause (i) as a result of being or ceasing to be a member of an affiliated,
consolidated, combined or unitary group for any period (including any liability
under United States Treas. Reg. Section 1.1502-6 or any comparable
provision of Israeli or other foreign, state or local Legal
Requirements).
"Total
Common Merger Consideration"
shall
mean the product of (x) the number of Company Shares issued and outstanding
(other than those shares cancelled pursuant to Section 3.1(a) and other
than Restricted Company Shares addressed in Section 3.3(b)) immediately prior
to
the Effective Time multiplied
by
(y) the Merger Consideration.
Section
1.2 Other Terms.
Accounting
terms not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings
ascribed to them under GAAP. In addition to the terms defined in
Section 1.1, the following terms are defined in the Sections of this
Agreement noted below:
|
Defined
Term
|
Section
|
|
|
102
Trust Period
|
6.10
(b)(ii)
|
|
|
Acquisition
Proposal
|
6.5
(h)
|
|
|
Aggregate
Merger Consideration
|
3.2
(a)
|
|
|
Antitrust
Requirements
|
4.4(a)
|
|
|
Approved
Enterprise
|
4.12(
d)
|
|
|
Book-Entry
Share
|
3.1
(c)
|
|
|
Break-Up
Fee
|
8.3
(b)
|
|
|
Certificates
|
3.1
(c)
|
|
|
Change
of Recommendation
|
6.5
(e)
|
|
|
Closing
|
2.2
|
|
|
Closing
Date
|
2.2
|
|
|
Companies
Law
|
Recitals
|
|
|
Companies
Registrar
|
2.3
|
|
|
Company
|
Preamble
|
|
|
Company
Acquisition Agreement:
|
6.5
(e)
|
|
|
Company
Charter Documents
|
4.1
|
|
|
Company
Contract
|
4.9
(b)
|
|
|
Company
Disclosure Schedule
|
Articles
IV
|
|
|
Company
Employees
|
6.14
(a)
|
|
|
Company
General Meeting
|
8.3
(c)
|
|
|
Company
Permits
|
4.11
|
|
|
Company
SEC Documents
|
4.5
(a)
|
|
|
Company
Share Option
|
3.3
(a)
|
|
|
Company
Shareholder Approval
|
4.3
|
|
|
Company
Shareholders' Meeting
|
6.7
|
|
|
Copyrights
|
1.1
|
|
|
Debt
Commitment Letters
|
5.8
|
-
6
-
|
Defined
Term
|
Section
|
|
Debt
Financing
|
5.8
|
|
|
Effective
Time
|
2.3
|
|
|
End
Date
|
8.1
(b)
|
|
|
Environmental
Law
|
4.14
(b)
|
|
|
Equity
Commitment Letters
|
5.8
|
|
|
Equity
Financing
|
5.8
|
|
|
Exchange
Fund
|
3.2
(a)
|
|
|
Excluded
Party
|
6.5
(b)
|
|
|
Excluded
Party Break-Up Fee
|
8.3(b)
|
|
|
Financing
|
5.8
|
|
|
Financing
Agreements
|
6.4
(d)
|
|
|
Financing
Commitments
|
5.8
|
|
|
Governmental
Authority
|
4.4
(a)
|
|
|
Governmental
Consents
|
4.4
(a)
|
|
|
Grants
|
4.22
|
|
|
Guarantees
|
Recitals
|
|
|
Hazardous
Substance
|
4.14
(c)
|
|
|
XXX
|
4.4
(a)
|
|
|
Indemnitee
|
6.11
|
|
|
Investment
Center
|
4.4
(a)
|
|
|
Investors
|
Recitals
|
|
|
IRS
|
4.8
(b)
|
|
|
Israeli
Employees
|
4.8
(i)
|
|
|
Israeli
Options Tax Ruling
|
6.10
|
|
|
Israeli
Withholding Tax Ruling
|
6.10
(b)
|
|
|
Leased
Property
|
4.13
(b)
|
|
|
Merger
|
Recitals
|
|
|
Merger
Certificate
|
2.3
|
|
|
Merger
Consideration
|
3.1
(b)
|
|
|
Merger
Proposal
|
6.6
(a)
|
|
|
Merger
Sub
|
Preamble
|
|
|
New
Plans
|
6.14(c)
|
|
|
Notice
Period
|
6.5
(e)
|
|
|
OCS
|
4.4
(a)
|
|
|
Option
Cash Payment
|
3.3
|
|
|
Option
Schedule
|
3.3
(b)
|
|
|
Ordinance
|
3.6
|
|
|
Party
|
Preamble
|
|
|
Patents
|
1.1
|
|
|
Paying
Agent
|
3.2
(a)
|
|
|
Purchaser
|
Preamble
|
|
|
Purchaser
Disclosure Schedule
|
Article
V
|
|
|
Purchaser
Expense Reimbursement
|
8.3
(c)
|
|
|
Purchaser
Liquidated Damages
|
8.3
(e)
|
|
|
Qualifying
Transaction
|
8.3
(b)
|
|
|
Real
Estate Assets
|
6.13
(c)
|
|
|
Recommendation
|
4.20
|
|
|
Representatives
|
6.4
(a)
|
|
|
Restraints
|
7.1
(e)
|
-
7
-
|
Defined
Term
|
Section
|
|
Restricted
Company Share Cash Payment
|
3.3
(a)
|
|
|
Returns
|
4.12
(a)
|
|
|
Xxxxxxxx-Xxxxx
Act
|
4.5
(a)
|
|
|
SEC
|
Article
IV
|
|
|
Severance
Pay Law
|
1.1
|
|
|
Solicitation
Period End Date
|
6.5
|
|
|
Substantial
Creditors
|
6.6
(b)
|
|
|
Superior
Proposal
|
6.5
(h)
|
|
|
Superior
Proposal Information
|
6.5(
e)
|
|
|
Superior
Termination
|
6.5
(e)
|
|
|
Surviving
Corporation
|
2.1
|
|
|
Surviving
Corporation Articles
|
2.4
(c)
|
|
|
Tail
Policy
|
6.11
(b)
|
|
|
Total
Cash Payments
|
3.3
|
|
|
Total
Options Cash Payments
|
3.3
|
|
|
Trademarks
|
1.1
|
|
|
Transactions
|
Recitals
|
|
|
URLs
|
1.1
|
|
|
Va'ad
Ovdim
|
6.6
(b)
|
|
|
Voting
Undertakings
|
Recitals
|
|
|
Withholding
Tax Extension
|
6.10
(b)
|
ARTICLE
II
THE
MERGER
Section
2.1 The
Merger.
Subject
to the satisfaction or waiver (to the extent permitted hereunder) of the
conditions set forth in Article VII, at the Effective Time and subject to
and upon the terms and conditions set forth in this Agreement and the applicable
provisions of Sections 314 through 327 of the Companies Law, Merger Sub (as
the target company (Chevrat Ha'Ya'ad)) shall be merged with and into the Company
(as the absorbing company (HaChevra Ha'Koletet)), the separate corporate
existence of Merger Sub shall thereupon cease, the Company shall continue as
the
surviving company (sometimes hereinafter referred to as the "Surviving
Corporation"),
the
Surviving Corporation shall continue to be governed by Israeli law and shall
become an indirect wholly owned Subsidiary of Purchaser and shall succeed to
and
assume all rights, properties and obligations of Merger Sub while all rights,
liabilities, privileges, debts, duties and powers of the Company shall continue
unaffected by the Merger in accordance with the Companies Law (other than as
contemplated by this Agreement and the related Transactions).
Section
2.2 Closing.
Unless
otherwise mutually agreed to in writing between the Parties, the closing of
the
Merger and the other Transactions (the "Closing")
shall
take place, subject to the terms and conditions of this Agreement, at the
offices of Xxxxx Xxxxxxx, Arad & Co., Xxx Xxxxx, 0 Xxxxxx Xxxxxx Xxxxxx, Xxx
Xxxx, Xxxxxx, at a time and date to be designated by the Parties which shall
be
no later than the second business day after the satisfaction or waiver (to
the
extent permitted hereunder) of the conditions set forth in Article VII
hereof (other than those conditions that by their nature may only be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions),
or at such other time, date and location as the Parties hereto shall mutually
agree. The date upon which the Closing actually occurs shall be referred to
herein as the "Closing
Date".
-
8
-
Section
2.3 Effective
Time.
As
soon
as practicable following the satisfaction or waiver (to the extent permitted
hereunder) of the conditions set forth in Article VII (other than those
conditions that by their nature may only be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions), Merger Sub shall,
in
coordination with the Company, deliver (and Purchaser shall cause Merger Sub
to
deliver) to the Registrar of Companies of the State of Israel (the "Companies
Registrar")
a
notice of the contemplated Merger and the proposed date of the Closing in which
the Companies Registrar is requested to issue a certificate evidencing the
Merger in accordance with Section 323(5) of the Companies Law (the
"Merger
Certificate")
after
notice that the Closing has occurred is served with the Companies Registrar.
The
Merger shall become effective upon issuance of the Merger Certificate by the
Companies Registrar (the "Effective
Time").
Section
2.4 Effect
of Merger.
At
the
Effective Time, by virtue of, and simultaneously with, the Merger and without
any further action on the part of Purchaser, Merger Sub, the Company or any
shareholder of the Company, the following shall occur:
(a) Merger
Sub shall be merged with and into the Company, the separate corporate existence
of Merger Sub shall cease and the Company shall continue as the Surviving
Corporation;
(b) all
of
the rights, privileges and powers of the Company and Merger Sub shall vest
in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation;
(c) the
Articles of Association of the Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Association of the Surviving
Corporation (the "Surviving
Corporation Articles"),
until
duly amended as provided therein or by applicable Law; and
(d) the
current officers of the Company shall remain the officers of the Surviving
Corporation until their successors shall have been duly elected or appointed
or
qualified or until their removal or resignation in accordance with the Surviving
Corporation Articles.
Section
2.5 Directors.
The
Parties shall take all actions necessary so that the directors of Merger Sub
at
the Effective Time shall, from and after the Effective Time, be appointed and
serve as the directors of the Surviving Corporation until their resignation
or
removal (as the case may be) in accordance with the Surviving Corporation
Articles.
-
9
-
ARTICLE
III
EFFECT
OF THE MERGER ON SHARE CAPITAL; PAYMENT
Section
3.1 Effect
on Share Capital.
At
the
Effective Time, by virtue of, and simultaneously with, the Merger and without
any action on the part of the Company, Merger Sub or the holders of any
securities of the Company or Merger Sub:
(a) Cancellation
of Company Securities.
Each of
the Company Shares held by the Company as dormant shares or held by Purchaser
or
Merger Sub immediately prior to the Effective Time shall automatically be
cancelled, retired and shall cease to exist, and no consideration or payment
shall be delivered in exchange therefor or in respect thereof.
(b) Conversion
of Company Securities.
Except
as otherwise provided in this Agreement, and except for Restricted Company
Shares, each Company Share issued and outstanding immediately prior to the
Effective Time (other than shares cancelled pursuant to Section 3.1(a)
hereof) shall be automatically converted into the right to receive $10.00 in
cash, without interest (the "Merger
Consideration").
All
Company Share Options and Restricted Company Shares shall be treated in
accordance with Section 3.3 hereof.
(c) Each
Company Share to be converted into the right to receive the applicable merger
consideration as provided in Section 3.1(b) shall be automatically
cancelled and shall cease to exist and the holders of certificates (the
"Certificates")
or
book-entry shares ("Book-Entry
Shares")
which
immediately prior to the Effective Time represented such Company Shares shall
cease to have any rights with respect to such Company Shares other than the
right to receive, upon surrender of such Certificates or Book-Entry Shares
in
accordance with Section 3.2 of this Agreement, the applicable Merger
Consideration, without interest thereon.
(d) Conversion
of Merger Sub Capital Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder thereof, each ordinary share, par value of NIS 0.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become fully paid ordinary shares, par value NIS 0.12
per
share, of the Surviving Corporation as shall be issued and outstanding as of
the
Effective Time and such ordinary shares shall constitute the only outstanding
shares of the Surviving Corporation.
(e) Adjustments.
Without
limiting the other provisions of this Agreement, if at any time during the
period between the date of this Agreement and the Effective Time, any change
in
the number of outstanding Company Shares shall occur as a result of a
reclassification, recapitalization, stock split (including a reverse stock
split), or combination, exchange or readjustment of shares, or any stock
dividend or stock distribution with a record date during such period, the
applicable Merger Consideration as provided in Section 3.1(b) shall be
equitably adjusted to reflect such change; provided
that in
no event shall the Aggregate Common Merger Consideration increase as a result
of
such change.
Section
3.2 Exchange
of Certificates.
(a) Designation
of Paying Agent; Deposit of Exchange Fund.
Prior
to the Effective Time, Purchaser shall designate a paying agent based in the
United States (the "Paying
Agent")
reasonably acceptable to the Company for the payment of the applicable merger
consideration as provided in Section 3.1(b). Immediately following the
issuance of the Merger Certificate by the Companies Registrar, Purchaser shall
deposit, or cause to be deposited with the Paying Agent for the benefit of
holders of Company Shares, Company Share Options and Restricted Company Shares,
cash constituting an amount equal to (i) the sum of the Total Common Merger
Consideration plus (ii) the Total Cash Payments (the "Aggregate
Merger Consideration",
and
such Aggregate Merger Consideration as deposited with the Paying Agent, the
"Exchange
Fund").
In
the event the Exchange Fund shall be insufficient to make the payments
contemplated by Section 3.1(b) and Section 3.3, Purchaser shall
promptly deposit, or cause to be deposited, additional funds with the Paying
Agent in an amount which is equal to the deficiency in the amount required
to
make such payment. The Paying Agent shall cause the Exchange Fund to be
(i) held in trust for the benefit of the holders of Company Shares and
Company Share Options and (ii) applied promptly to making the payments
pursuant to Section 3.1(b) and Section 3.3. The Exchange Fund shall
not be used for any purpose other than to fund payments pursuant to
Section 3.1 and Section 3.3, except as expressly provided for in this
Agreement.
-
10
-
(b) As
promptly as practicable following the Effective Time and in any event not later
than the second business day thereafter, the Surviving Corporation shall cause
the Paying Agent to mail or otherwise transmit (and to make available for
collection by hand) to each holder of record of a Certificate or Book-Entry
Share, which immediately prior to the Effective Time represented outstanding
Company Shares (x) a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
or
Book-Entry Shares, as applicable, shall pass, only upon proper delivery of
the
Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares to
the
Paying Agent and which shall be in the form and have such other provisions
as
Purchaser and the Company may reasonably specify, (y) instructions for use
in effecting the surrender of the Certificates or Book-Entry Shares in exchange
for the applicable Merger Consideration into which the number of Company Shares
previously represented by such Certificate or Book-Entry Shares shall have
been
converted pursuant to this Agreement (which instructions shall provide that
at
the election of the surrendering holder, Certificates or Book-Entry Shares
may
be surrendered, and the applicable merger consideration in exchange therefor
collected, by hand delivery) and (z) a declaration form in which the holder
of record of a Certificate or Book-Entry Share states whether such holder is
a
resident of Israel as defined in the Ordinance (as defined below) at the time
of
mailing to such holder any information statement in connection with approval
of
the Merger, including any other declarations that may be required for Israeli
Tax purposes.
(c) Upon
surrender of a Certificate (or affidavit of loss 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 Certificate or Book-Entry
Share shall be entitled to receive in exchange therefor the Merger Consideration
for each Company Share formerly represented by such Certificate or Book-Entry
Share, 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 or
(ii) the Paying Agent's receipt of such Certificate (or affidavit of loss
in lieu thereof) or Book-Entry Share, and the Certificate (or affidavit of
loss
in lieu thereof) or Book-Entry Share so surrendered shall be forthwith
cancelled. The Paying Agent shall accept such Certificates (or affidavits of
loss in lieu thereof) or Book-Entry Shares upon compliance with such reasonable
terms and conditions as the Paying Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices. No interest
shall
be paid or accrued for the benefit of holders of the Certificates or Book-Entry
Shares on the applicable Merger Consideration.
(d) Termination
of Exchange Fund.
Any
portion of the Exchange Fund which remains undistributed to the holders of
the
Certificates, Book-Entry Shares or Company Share Options for twelve (12) months
after the Effective Time shall be delivered to Purchaser, upon demand, and
any
such holders prior to the Merger who have not theretofore complied with this
Article III shall thereafter look only to Purchaser, as general creditors
thereof, for payment of their claim for cash, without interest, to which such
holders may be entitled.
-
11
-
(e) No
Liability.
None of
Purchaser, Merger Sub, the Company, the Surviving Corporation or the Paying
Agent shall be liable to any Person in respect of any cash held in the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificates or Book-Entry Shares
shall
not have been surrendered prior to two (2) years after the Effective Time (or
immediately prior to such earlier date on which any cash in respect of such
Certificate or Book-Entry Share would otherwise escheat to or become the
property of any Governmental Authority), any such cash in respect of such
Certificate or Book-Entry Share shall, to the extent permitted by applicable
Law, become the property of Purchaser, free and clear of all claims, rights
or
interest of any Person previously entitled thereto.
(f) Investment
of Exchange Fund.
The
Paying Agent shall invest any cash included in the Exchange Fund as directed
by
Purchaser or, after the Effective Time, the Surviving Corporation; provided
that
(i) no such investment shall relieve Purchaser or the Paying Agent from
making the payments required by this Article III, and following any losses
Purchaser shall promptly provide additional funds to the Paying Agent for the
benefit of the holders of Company Shares and Company Share Options in the amount
of such losses, (ii) no such investment shall have maturities that could
prevent or delay payments to be made pursuant to this Agreement, and
(iii) such investments shall be in short-term obligations of the United
States of America with maturities of no more than thirty (30) days or guaranteed
by the United States of America and backed by the full faith and credit of
the
United States of America or in commercial paper obligations rated A-1 or P-1 or
better by Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation,
respectively. Any interest or income produced by such investments will be
payable to the Surviving Corporation or Purchaser, as Purchaser
directs.
Section
3.3 Stock
Options; Restricted Company Shares.
(a)
As
of the
Effective Time, (x) each option to purchase Company Shares (each a "Company
Share Option")
that
is outstanding and unexercised immediately prior to the Effective Time (whether
vested or unvested) shall be cancelled, by virtue of the Merger and without
any
action on the part of any holder of any Company Share Option, in consideration
for the right to receive (in accordance with and subject to the Israeli Options
Tax Ruling, if applicable), as promptly as practicable following the Effective
Time (and in any event no later than the second Business Day thereafter), an
amount in cash equal to the product of (A) the number of Company Shares
previously subject to such Company Share Option and (B) the excess, if any,
of the Merger Consideration over the exercise price per Company Share previously
subject to such Company Share Option, less any required withholding Taxes (the
"Option
Cash Payment"
and the
sum of all such payments, the "Total
Option Cash Payments")
and
(y) the vesting of each Restricted Company Share that is outstanding shall
automatically accelerate and such Restricted Company Share shall be
automatically converted into the right to receive the Merger Consideration
(the
"Restricted
Company Share Cash Payment";
the
sum of all such payments, together with the Total Option Cash Payments, the
"Total
Cash Payments").
As of
the Effective Time, all Company Share Options and Restricted Company Shares
shall no longer be outstanding and shall automatically cease to exist, and
each
holder of a Company Share Option or Restricted Company Share shall cease to
have
any rights with respect thereto, except the right to receive the Option Cash
Payment or Restricted Company Share Cash Payment, as applicable. Prior to the
Effective Time, the Company shall take the actions necessary to effectuate
this
Section 3.3, including providing holders of Company Share Options and
Restricted Company Shares with notice of their rights with respect to any such
Company Share Options and Restricted Company Shares as provided
herein.
(b) As
promptly as practicable following the Effective Time and in any event not later
than the second business day thereafter, the Paying Agent shall transfer to
the
account designated by the plan administrator under the applicable plan the
portion of the Total Cash Payments to which holders of Company Share Options
and
Restricted Company Shares (other than Company 102 Securities) are entitled
to
receive pursuant to Section 3.3. As soon as reasonably practicable
thereafter, the applicable plan administrator, in coordination with the
Surviving Corporation, shall pay to each holder of a Company Share Option and
Restricted Company Share (other than holders of Company 102 Securities) the
amounts contemplated by Section 3.3, less applicable deductions and
withholding at the time of payment. All payments with respect to Company 102
Securities, as set forth on a schedule to be mutually agreed upon by Purchaser
and the Company on or prior to the Closing Date, which schedule shall be in
a
form reasonably satisfactory to Purchaser (the "Option
Schedule"),
shall
be delivered by the Paying Agent to the 102 Trustee, as soon as practicable
after the Effective Time, to be held and distributed pursuant to the agreement
with the 102 Trustee and applicable Legal Requirements (including, without
limitation, the provisions of Section 102 of the Ordinance and the
regulations and rules promulgated thereunder). The 102 Trustee shall comply
with
any applicable Israeli Tax withholding requirements with respect to the payment
in respect to Company 102 Securities and with such procedures as may be required
by the Israeli Options Tax Ruling, if obtained.
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12
-
Section
3.4 Lost
Certificates.
If
any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such Person of a bond, in such reasonable and customary amount as the
Surviving Corporation may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue
in
exchange for such lost, stolen or destroyed Certificate the applicable merger
consideration to which the holder thereof is entitled pursuant to this Article
III.
Section
3.5 Transfers;
No Further Ownership Rights. After
the
Effective Time, there shall be no registration of transfers on the stock
transfer books of the Company of Company Shares that were outstanding
immediately prior to the Effective Time. If valid Certificates are presented
to
the Surviving Corporation for transfer following the Effective Time, they
shall
be cancelled against delivery of the applicable merger consideration, as
provided for in Section 3.1(b) hereof, for each Company Share formerly
represented by such Certificates.
Section
3.6 Withholding
Tax. Each
of
Purchaser, the Surviving Corporation, the 102 Trustee, the Paying Agent and
Subsidiaries of the Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to
any holder of Company Shares or Company Share Options the amounts required
to be
deducted and withheld from any payment pursuant to this Agreement under the
Code, the Israeli Income Tax Ordinance New Version, 1961, as amended and
the
rules and regulations promulgated thereunder (the "Ordinance"),
or
any other applicable state, local, Israeli or foreign Tax law, provided,
however,
that
(i) in the event the Israeli Withholding Tax Ruling is obtained, deduction
and withholding of any amounts under the Ordinance or any other provision
of
Israeli law or requirement, if any, shall be made only in accordance with
the
provisions of the Israeli Withholding Tax Ruling; (ii) in the event a
Withholding Tax Extension is obtained, the parties shall fully comply with
the
provisions of any such Withholding Tax Extension; and (iii) in the event
any holder of record of Company Shares or Book-Entry Shares provides Purchaser
or the Surviving Corporation with a valid approval or ruling issued by the
applicable Governmental Authority regarding the withholding (or exemption
from
withholding) of Israeli Tax from the Merger Consideration in a form reasonably
satisfactory to Purchaser, then the deduction and withholding of any amounts
under the Ordinance or any other provision of Israeli law or requirement,
if
any, from the Merger Consideration payable to such holder of record of Company
Shares shall be made only in accordance with the provisions of such approval.
To
the extent that amounts are so withheld by the Paying Agent, the Surviving
Corporation, the 102 Trustee, applicable plan administrator or Purchaser,
as the
case may be, such withheld amounts (i) shall be remitted by
Purchaser,
the
Surviving Corporation, the Paying Agent, the 102 Trustee, applicable plan
administrator or Subsidiaries of the Surviving Corporation,
as
applicable, to the applicable Governmental Authority, and (ii) 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
by
the Purchaser, the Surviving Corporation, the Paying Agent, the 102 Trustee,
applicable plan administrator or Subsidiaries of the Surviving Corporation,
as
the case may be.
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Purchaser and Merger Sub that, except
(i) other than in the case of the representations and warranties set forth
in Section 4.2(a), as set forth in the Company SEC Documents filed with or
furnished to the Securities and Exchange Commission (the "SEC")
and
publicly available prior to the date of this Agreement or (ii) as set forth
in the disclosure schedule (the "Company
Disclosure Schedule")
delivered by the Company to Purchaser prior to the execution and delivery of
this Agreement (such disclosures being considered to be made for purposes of
the
specific section of the disclosure schedule in which they are made and for
purposes of all other sections to the extent the relevance of such disclosure
is
reasonably apparent on its face):
Section
4.1 Organization;
Qualification.
(a)
The
Company and each of its Subsidiaries is a corporation duly organized, validly
existing and, in jurisdictions where such concept is recognized, in good
standing under the laws of the jurisdiction of its organization and has
requisite corporate power and authority to own, license, use, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. The Company has made available to Purchaser true and complete
copies
of its Memorandum of Association and Articles of Association (together, the
"Company
Charter Documents")
and
the certificate of incorporation and bylaws (or similar organizational
documents) of each of its Subsidiaries other than those Subsidiaries described
on Section 4.2(c) of the Company Disclosure
Schedule.
(b) The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing (in jurisdictions where such concept is
recognized) in each jurisdiction in which the assets or property owned,
licensed, used, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good
standing would not have a Material Adverse Effect.
Section
4.2 Capitalization.
(a)
The
authorized share capital of the Company consists of 200,000,000 Company Shares.
At the close of business on June 17, 2007, (i) 120,160,650 (excluding
33,965 treasury shares) Company Shares were issued and outstanding and
(ii) 12,107,571 Company Shares were issuable upon the exercise of Company
Share Options to purchase Shares under the Company Option Plans. All outstanding
shares of capital stock of Company have been duly authorized and validly
issued
and are fully paid and nonassessable, and have not been issued in violation
of
any preemptive or similar rights. Except as set forth above in this
Section 4.2(a), and for changes since such date resulting from the exercise
of Company Options outstanding on such date in accordance with their terms,
there are no outstanding (x) shares of capital stock or other voting
securities of the Company, (y) securities of the Company convertible into
or exchangeable for shares of capital stock or other securities of the Company
or (z) subscriptions, options, warrants, puts, calls, phantom stock rights,
stock appreciation rights, stock-based performance units, agreements,
understandings, claims or other commitments or rights of any type granted
or
entered into by the Company or any of its Subsidiaries relating to the issuance,
sale, repurchase or transfer of any securities of the Company or that give
any
Person or entity the right to receive any economic benefit or right similar
to
or derived from the economic benefits and rights of securities of the Company.
There are no outstanding obligations of the Company or any of the Company's
Subsidiaries to repurchase, redeem or otherwise acquire any securities of
the
Company or any of the Company's Subsidiaries or to vote or to dispose of
any
shares of the capital stock of the Company or any of the Company's
Subsidiaries.
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(b) Section 4.2(b)
of the Company Disclosure Schedule lists each outstanding Company Option, the
holder thereof, the number of Company Shares issuable thereunder and the
exercise price thereof. Neither the Company nor any Subsidiary has agreed to
register any securities under the Securities Act or under any state securities
law or granted registration rights to any individual or entity.
(c) Section 4.2(c)
of the Company Disclosure Schedule lists each Subsidiary of the Company and
the
capitalization of each such Subsidiary. All the outstanding shares of capital
stock (or other securities having by their terms voting power to elect a
majority of directors or others performing similar functions) of each such
Subsidiary are owned by the Company, by another wholly owned Subsidiary of
the
Company or by the Company and another wholly owned Subsidiary of the Company,
free and clear of all Encumbrances (other than Encumbrances under applicable
securities Laws), and are duly authorized, validly issued, fully paid and
nonassessable. There are no (i) securities convertible into or exchangeable
for shares of capital stock or other securities of any Subsidiary of the
Company, or (ii) subscriptions, options, warrants, puts, calls, phantom
stock rights, stock appreciation rights, stock-based performance units,
agreements, understandings, claims or other commitments or rights of any type
granted or entered into by the Company or any of its Subsidiaries relating
to
the issuance, sale, repurchase or transfer of any securities of any Subsidiary
of the Company or that give any Person the right to receive any economic benefit
or right similar to or derived from the economic benefits and rights of
securities of any Subsidiary of the Company. Except for the capital stock of
its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any entity. The Company is not subject
to
any obligation or requirement to provide funds to or make any investment (in
the
form of a loan, capital contribution or otherwise) in any other
Person.
Section 4.3
Authority. The
Company has requisite corporate power and authority to execute and deliver
this
Agreement and to perform and consummate the Merger and the other Transactions.
The execution, delivery and performance of this Agreement and the consummation
by the Company of the Merger and of the other Transactions have been duly
authorized by necessary corporate action on the part of the Company and no
other
corporate proceedings on the part of the Company are necessary to authorize
this
Agreement or to consummate the other Transactions, other than, assuming the
accuracy of the representations set forth in Section 5.5 below, the Company
Shareholder Approval. This Agreement has been duly executed and delivered by
the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 4.4 Consents
and Approvals; No Violations; Voting.
(a)
The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Transactions do not and will not require
any
filing or registration with, notification to, or authorization, permit, consent
or approval of, or other action by or in respect of, any foreign or domestic
governmental body, self-regulatory organization, court, agency, commission,
official or regulatory or other authority (collectively, "Governmental
Authority")
other
than (i) the Merger Certificate, (ii) notice to the Office of the
Chief Scientist of the Israeli Ministry of Trade, Industry & Labor
("OCS")
to the
change in ownership of the Company to be effected by the Merger,
(iii) filings with, and approval by, the Investment Center of the Israeli
Ministry of Trade, Industry & Labor (the "Investment
Center")
of the
change in ownership of the Company to be effected by the Merger,
(iv) compliance with the rules and regulations of Nasdaq, (v) the
approval of the Israeli Land Administration (the "XXX")
to the
change in ownership of the Company to be effected by the Merger, pursuant to
the
lease agreements of the Company with the XXX, (vi) obtaining the Israeli
Withholding Tax Ruling and the Israeli Options Tax Ruling, (vii) notices
to, and approvals from, the Israeli Ministry of Defense, (viii) any consent,
approval, authorization, waiver or permit of, or filing with or notification
to,
any Governmental Authority under applicable U.S. or foreign competition,
antitrust, merger control or investment Laws ("Antitrust
Requirements"),
(ix) those set forth on Section 4.4 of the Company Disclosure Schedule
(clauses (i) through (ix), collectively, the "Governmental
Consents")
and
(x) where failure to obtain or make such filing or registration with,
notification to, or authorization, permit, consent or approval of, or other
action would not have, individually or in the aggregate, a Material Adverse
Effect. No Subsidiary of the Company is required to make any independent filings
with the SEC, the Nasdaq or any stock exchange.
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15
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(b) The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Transactions do not and will not
(i) conflict with or result in any breach of any provision of the Company
Charter Documents or any similar organizational documents of any of its
Subsidiaries, (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default under, or give rise
to
any right of termination, amendment, cancellation or acceleration or the
creation or acceleration of any right or obligation under or result in the
creation of any Encumbrance upon any of the properties or assets of the Company
or any of its Subsidiaries under, any of the terms, conditions or provisions
of
any note, bond, mortgage, indenture, deed of trust, loan, credit agreement,
lease, license, permit, concession, franchise, purchase order, sales order
contract, agreement or other instrument, understanding or obligation, whether
written or oral, to which the Company or any of its Subsidiaries is a party
or
by which any of its properties or assets may be bound or (iii) violate any
judgment, order, writ, preliminary or permanent injunction or decree or any
statute, law, ordinance, rule or regulation of any Governmental Authority
applicable to the Company, any of its Subsidiaries or any of their properties
or
assets, except in the case of clauses (ii) or (iii) for violations,
breaches, defaults, terminations, amendments, cancellations or accelerations
that would not have a Material Adverse Effect.
(c) Assuming
the accuracy of the representations set forth in Section 5.5 below, the
affirmative vote (in person or by proxy) of the holders of 75% of the Company
Shares present and voting at the Company Shareholders' Meeting, or any
adjournment or postponement thereof, in favor of the approval of this Agreement,
the Merger and the other Transactions (the "Company
Shareholder Approval")
is the
only vote or approval of the holders of any class or series of shares of the
Company or any of its Subsidiaries which is necessary to approve this Agreement,
the Merger and the other Transactions.
Section 4.5
SEC Reports and Financial Statements.
(a) The
Company has filed with or furnished to the SEC, on a timely basis, all forms,
reports, schedules, statements and other documents required to be filed by
it
since January 1, 2005 (collectively, the "Company
SEC Documents").
The
Company SEC Documents, as of their respective dates (or if amended prior to
the
date of this Agreement, as of the date of such amendment) (i) do not
contain any untrue statement of a material fact or omit to state a 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
misleading and (ii) comply in all material respects with the applicable
requirements of the Exchange Act, the Securities Act and the Xxxxxxxx-Xxxxx
Act
of 2002 (the "Xxxxxxxx-Xxxxx
Act"),
as
the case may be, and the applicable rules and regulations of the SEC thereunder.
(b) As
of
their respective dates (or if amended prior to the date of this Agreement,
as of
the date of such amendment), the financial statements of the Company included
in
the Company SEC Documents, including any related notes thereto, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be set forth in the notes thereto and subject, in the case of
the
unaudited statements, to normal, recurring audit adjustments not material in
amount) and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for
the
periods indicated.
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(c) The
Company has established and maintains disclosure controls and procedures and
internal controls over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange
Act) as required by Rule 13a-15 under the Exchange Act. The Company's disclosure
controls and procedures are reasonably designed to ensure that all material
information required to be disclosed by the Company in the reports that it
files
or furnishes under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC,
and that all such material information is accumulated and communicated to the
Company's management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications required pursuant to Sections 302
and 906 of the Xxxxxxxx-Xxxxx Act.
(d) Except
(a) as reflected or reserved against in the Company's financial statements
(as restated, or the notes thereto) included in the Company SEC Documents filed
with or furnished to the SEC and publicly available prior to the date of this
Agreement, (b) liabilities or obligations incurred in the ordinary course
of business since the date of such financial statements, (c) liabilities
permitted or contemplated by this Agreement in connection with the Merger and
the other Transactions, and (d) except as would not have a Material Adverse
Effect, neither the Company nor any of its Subsidiaries has any liabilities
or
obligations of any nature, whether or not accrued, contingent or otherwise,
that
would be required by GAAP to be reflected on a consolidated balance sheet (or
the notes thereto) of the Company and its Subsidiaries.
Section 4.6
Absence of Certain Changes or Events.
Since
December 31, 2006 through the date of this Agreement (a) except for the Merger
and the other Transactions the business of the Company and its Subsidiaries
has been conducted in all material respects in the ordinary course, consistent
with past practice, and (b) there has not been any Material Adverse
Effect.
Section 4.7
Information Supplied.
None
of
the information supplied by the Company for inclusion or incorporation by
reference in any document to be sent to the Company's shareholders in connection
with the Company Shareholders' Meetings at the time furnished (as amended or
supplemented) or at the time of the Company Shareholders' Meeting in connection
with the Transactions will contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading, except that no representation is made by the Company
with
respect to statements made therein based on information supplied by Purchaser
or
Merger Sub in writing for inclusion in any such document.
Section 4.8
Employee Matters and Benefit Plans.
(a) Section 4.8(a)(i)
of the Company Disclosure Schedule contains an accurate and complete list,
as of
the date hereof, of each material Company Employee Plan other than
legally-mandated plans, programs and arrangements, and Section 4.8(a)(ii)
of the Company Disclosure Schedule contains an accurate and complete list,
as of
the date hereof, of each Employment Agreement with Employees with the title
of
vice president or higher. Other than as set forth in Section 6.2, the
Company does not have any plan or commitment to establish any new Company
Employee Plan or Employment Agreement, to modify any Company Employee Plan
or
Employment Agreement (except to the extent required by Legal Requirement or
to
conform any such Company Employee Plan or Employment Agreement to the
requirements of any applicable Legal Requirement, in each case as previously
disclosed to Purchaser in writing or as required by this Agreement), or to
adopt
or enter into any Company Employee Plan or Employment Agreement. Except as
set
forth in Section 4.8(a) of the Company Disclosure Schedule, neither the
Company nor any ERISA Affiliate is obligated to provide an Employee with any
compensation or benefits pursuant to an agreement with a former employer of
such
Employee.
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(b) The
Company has provided or made available to Purchaser copies of: (i) all
documents reflecting the material terms of each Company Employee Plan and each
Employment Agreement including all amendments thereto and all related documents,
including, in the case of share option plans, the form of all share option
agreements evidencing any outstanding Company Share Options; (ii) the most
recent annual actuarial valuations, if any, prepared for each Company Employee
Plan or any International Employee Plan; (iii) the most recent annual
report (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Company Employee Plan; (iv) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any, with
respect to each Company Employee Plan; (v) all determination, opinion,
notification and advisory letters from the United States Internal Revenue
Service (the "IRS");
(vi) all written communications material to the Company and its
Subsidiaries since January 1, 2005 relating to any Company Employee Plan;
(vii) all material correspondence since January 1, 2005 to or from any
Governmental Authority relating to any Company Employee Plan; (viii) all
prospectuses prepared in connection with each Company Employee Plan; and
(ix) any approvals held by the Company or any ERISA Affiliate which enable
it to employ foreign employees or employees from "territories" currently
administered by Israel. Neither the Company nor any ERISA Affiliate (x) has
ever sponsored or contributed to a plan intended to be governed by
Section 401(k) of the Code, or (y) within the six years preceding the
date of this Agreement, sponsored or contributed to a plan intended to be
qualified under Section 401 of the Code.
(c) The
Company or the applicable ERISA Affiliate has performed in all material respects
all obligations required to be performed by it under, is not in default or
violation of, and has no Knowledge of any material default or violation by
any
other party to each Company Employee Plan and Employment Agreement, and each
Company Employee Plan and Employment Agreement has been established and
maintained in all material respects in accordance with its terms and in material
compliance with applicable Legal Requirements, including ERISA and the Code.
As
of the date hereof, there are no actions, suits or claims pending, or, to the
Company's Knowledge, threatened or reasonably anticipated against any Company
Employee Plan or Employment Agreement or against the assets of any Company
Employee Plan, except for claims for benefits in the ordinary course of
business. As of the date hereof, there are no audits, inquiries or proceedings
pending or, to the Company's Knowledge, threatened by the IRS, United States
Department of Labor or any other Governmental Authority with respect to any
Company Employee Plan.
(d) Neither
the Company nor any ERISA Affiliate has ever maintained, established, sponsored,
participated in, contributed to, or is obligated to contribute to, or otherwise
incurred any obligation or liability (including any contingent liability) under
any "multiemployer plan", as defined in Section 3(37) of ERISA, any plan
subject to Title IV of ERISA or Section 412 of the Code, any multiple
employer plan (as defined in ERISA or the Code), or any "funded welfare plan"
within the meaning of Section 419 of the Code. Any Company Employee Plan
intended to be qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code has either timely
applied for or obtained a favorable determination, notification, advisory and/or
opinion letter, as applicable, as to its qualified status from the IRS. For
each
Company Employee Plan that is intended to be qualified under Section 401(a)
of the Code, to the Company's Knowledge, there has been no event, condition
or
circumstance that has adversely affected or is likely to adversely affect such
qualified status, except such events, conditions or circumstances which could
be
corrected without the Company incurring a material liability. No Company
Employee Plan provides health benefits that are not fully insured through an
insurance contract.
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18
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(e) No
Company Employee Plan provides, or reflects or represents any liability material
to the Company and its Subsidiaries taken as a whole to provide post-termination
life, health or other welfare benefits to any Person for any reason, except
as
may be required by Section 601 through 608 of ERISA or other applicable
statute.
(f) The
Company and each ERISA Affiliate: (i) is not liable for any arrears of
wages or penalties with respect thereto, and (ii) is not liable for any
payment to any trust or other fund governed by or maintained by or on behalf
of
any Governmental Authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the ordinary course of business and consistent
with past practice). Each current Employee who resides in the United States
of
America is an "at-will" employee.
(g) As
of the
date hereof, no work stoppage or labor strike against the Company or any
Subsidiary of the Company is pending, or to the Knowledge of the Company,
threatened. The Company does not have Knowledge of any material activities
or
proceedings of any labor union to organize any Employees. Neither the Company
nor any of its Subsidiaries has engaged in any material unfair labor practices
within the meaning of the National Labor Relations Act. Neither the Company
nor
any Subsidiary of the Company is presently, nor has it been in the preceding
five years, a party to, or bound by, any collective bargaining agreement or
union contract with respect to Employees and no collective bargaining agreement
is being negotiated by the Company or any Subsidiary of the
Company.
(h) Each
International Employee Plan has been established, maintained and administered
in
material compliance with its terms and conditions and with the requirements
prescribed by Legal Requirements that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance
or
fully accrued. Except as required by Legal Requirement, or as disclosed in
Section 4.8(h) of the Company Disclosure Schedule, no condition exists that
would prevent the Surviving Corporation, its Subsidiaries or Purchaser from
terminating or amending any International Employee Plan at any time for any
reason without liability to the Surviving Corporation or its ERISA Affiliates
(other than ordinary administration expenses or routine claims for
benefits).
(i) Solely
with respect to Employees who reside or work in Israel ("Israeli
Employees"):
(i) neither the Company nor any Subsidiary of the Company is 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 Israeli Employees, neither the Company nor any Subsidiary
of the Company has recognized or received a demand for recognition from any
collective bargaining representative with respect to any of its Israeli
Employees, and neither the Company nor any Subsidiary of the Company has or
is
subject to, and no Israeli Employee of the Company or any Subsidiary of the
Company benefits from, any extension order (tzavei harchava) or any contract
or
arrangement with respect to employment or termination thereof, (ii) all of
the Israeli Employees are "at will" employees subject to the termination notice
provisions included in Employment Agreements or applicable Legal Requirements,
including such provisions that apply to Company Employees or any part thereof
under any applicable collective agreement or arrangement, (iii) the
Company's or the applicable Subsidiary of the Company's obligations to provide
statutory severance pay to its Israeli Employees pursuant to the Severance
Pay
Law have been satisfied or have been fully funded by contributions to
appropriate insurance funds or accrued on the Company's financial statements,
and (iv) the Company and the Subsidiaries of the Company are in compliance
in all material respects with applicable legal requirements and contracts
relating to employment, employment practices, wages, bonuses and other
compensation matters and terms and conditions of employment related to its
Israeli Employees, including The Advance Notice of Discharge and Resignation
Law,
(5761-2001),
The Notice to Employee (Terms of Employment) Law (5762-2002), The Prevention
of
Sexual Harassment Law (5758-1998), and The Employment of Employee by Manpower
Contractors Law (5756-1996). The Company and its Subsidiaries have not engaged
any Israeli Employees whose employment would require special approvals, and
there are no unwritten Company policies or customs which, by extension, entitle
Israeli Employees to material benefits in addition to what they are entitled
by
law. "Israeli
Employee"
shall
not include consultants, sales agents and other independent contractors. All
of
the Israeli Employees are terminable by the Company on 60 days' notice or less,
subject to the provisions of any Legal Requirement, including such provisions
that apply to Company Employees or any portion thereof under any applicable
collective agreement or arrangement.
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19
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Section 4.9
Contracts.
(a) As
of the
date of this Agreement, neither the Company nor any of its Subsidiaries is
a
party to or is bound by any of the following Contracts that are material to
the
Company and its Subsidiaries, taken as a whole:
(i) any
consulting or services Contract with any consultant (other than any Employment
Agreement) that is not terminable by the Company upon 60 days' notice or
less or that provides for an annual salary in excess of $150,000;
(ii) any
Contract whereby the Company or any of its Subsidiaries has assumed any
obligation of, or duty to warrant, indemnify, reimburse, hold harmless or
guaranty any obligation or liability of any other Person (including with respect
to the infringement or misappropriation by the Company or any of its
Subsidiaries or such other Person of the Intellectual Property Rights of any
Person other than the Company or any of its Subsidiaries), other than any
Contract entered into in connection with the sale or license of products or
services, or Intellectual Property or Intellectual Property Rights related
thereto, or any Contract entered into in the ordinary course of business
consistent with past practice;
(iii) any
Contract containing any covenant limiting in any respect the right of the
Company or any of its Subsidiaries to engage in any line of business or to
compete with any Person or granting any exclusive rights (including any
exclusive license or right to use any Intellectual Property Rights) or "most
favored nation" status or limiting, in any material respect, the Company's
right
to acquire material assets, securities or services of any third
parties;
(iv) any
Contract relating to the disposition or acquisition by the Company or any of
its
Subsidiaries after the date of this Agreement of assets not in the ordinary
course of business or pursuant to which the Company or any of its Subsidiaries
has any ownership interest in any corporation, partnership, joint venture or
other business enterprise other than the Company's Subsidiaries;
(v) any
Contract with any third party to manufacture, reproduce, sell or distribute
any
Company Products, except (A) Contracts with manufacturers, distributors,
customers or sales representatives in the ordinary course of business cancelable
by the Company or the applicable Subsidiary without penalty upon 90 days'
notice or less and (B) purchase orders entered into in the ordinary course
of business consistent with past practice;
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20
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(vi) any
mortgages, indentures, guarantees, loans or credit agreements, security
agreements or other Contracts relating to the borrowing of money or extension
of
credit, other than trade payables or extensions of credit by or to the Company
incurred in the ordinary course of business consistent with past practice,
or
any Contract under which the Company or any of its Subsidiaries acts as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation for borrowed money or other indebtedness of any Person
(other than the Company or its Subsidiaries);
(vii) any
Contract that contains any put, call or similar right pursuant to which the
Company or any of its Subsidiaries could be required to purchase or sell, as
applicable, any equity interests of any Person or assets outside of the ordinary
course of business;
(viii) any
material settlement agreement under which the Company or any of its Subsidiaries
has material ongoing obligations;
(ix) any
Contract under which the Company or any of its Subsidiaries has any liability
for the payment of any material amount of Taxes as a result of any express
or
implied obligation to indemnify any other Person or as a result of any
obligations under any agreements or arrangements with any other Person with
respect to such amounts and including any liability for Taxes of a predecessor
entity;
(x) each
real
property lease and each lease for personal property in each case involving
payments by the Company or any of its Subsidiaries in excess of $500,000
annually (including capitalized leases); and
(xi) any
other
Contract pursuant to which the Company and its Subsidiaries have aggregate
remaining payment obligations in excess of $1,000,000 over the term thereof,
other than Contracts entered into in the ordinary course of business consistent
with past practice.
(b) Neither
the Company nor any of its Subsidiaries, nor to the Company's Knowledge any
other party to, any Contract required to be disclosed in Section 4.9 or
4.17 of the Company Disclosure Schedule (any such contract, a "Company
Contract"),
is in
material breach, violation or default under, and neither the Company nor any
of
its Subsidiaries has received written notice that it has materially breached,
violated or defaulted under, any Company Contract. Each Company Contract is
a
legal, valid and binding obligation of the Company or the Subsidiary that is
a
party thereto, enforceable against the Company and such Subsidiary, and to
the
Company's Knowledge, the other parties thereto in accordance with its terms,
except for such failures to be legal, valid and binding or to be enforceable
as,
individually or in the aggregate with similar failures, would not reasonably
be
expected to be materially adverse to the Company and its Subsidiaries taken
as a
whole. The Company has made available to the Purchaser true and complete copies
of all Company Contracts that are in effect on the date of this Agreement.
Section 4.10
Litigation.
As
of the
date of this Agreement, there is no suit, claim, action, proceeding or
investigation pending before any Governmental Authority or, to the Knowledge
of
the Company, threatened by or against the Company or any of its Subsidiaries
that seeks to restrain the consummation of the Merger or which could, if
adversely determined, reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is subject to any
outstanding order, writ, judgment, decree, injunction or settlement of or with
any Governmental Authority that would have a Material Adverse
Effect.
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21
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Section 4.11
Compliance with Applicable Law.
The
Company and its Subsidiaries hold all permits, licenses, authorizations,
certificates, variances, exemptions, orders and approvals of all Governmental
Authorities necessary for the lawful conduct of their respective businesses
as
presently conducted and to own their assets and properties (the "Company
Permits"),
except for failures to hold such Company Permits that would not have a Material
Adverse Effect. The Company and its Subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply would not
have a Material Adverse Effect. The businesses of the Company and its
Subsidiaries have not been and are not being conducted in violation of any
law
except for violations that would not have a Material Adverse
Effect.
Section 4.12
Taxes.
(a) The
Company and each of its Subsidiaries has timely filed, or has caused to be
timely filed on its behalf, all material U.S. federal, state, local, Israeli
and
other foreign returns, estimates, declarations, information statements and
reports relating to Taxes ("Returns")
required to be filed by the Company and each of its Subsidiaries with any Tax
authority, and such Returns are true and correct in all material respects.
The
Company and each of its Subsidiaries have paid all material Taxes shown on
such
Returns that are due.
(b) The
Company and each of its Subsidiaries (i) has paid or accrued all material
Taxes it is required to pay or accrue and (ii) has withheld from each
payment or deemed payment made to its past or present employees, officers,
directors and independent contractors, suppliers, creditors, shareholders or
other third parties all material Taxes and other material deductions required
to
be withheld and has, within the time and in the manner required by Legal
Requirements, paid such withheld amounts to the proper governmental
authorities.
(c) No
material Tax deficiency is outstanding, proposed or assessed in writing against
the Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries executed any waiver of any statute of limitations on or extensions
of the period for the assessment or collection of any material Tax.
(d) No
audit
or other examination of any material Return of the Company or any of its
Subsidiaries is currently in progress, nor has the Company or any of its
Subsidiaries been notified in writing of any request for such an audit or other
examination, nor is any Tax authority (including for these purposes the
Investment Center with respect to the Company's status as an "Approved
Enterprise"
under
the Israeli Law for the Encouragement of Capital Investment, 5719-1959)
asserting in writing, or to the Company's Knowledge, threatening in writing
to
assert, against the Company or any of its Subsidiaries any claim for material
Taxes.
(e) No
material adjustment that is still pending relating to any Returns filed by
the
Company or any of its Subsidiaries has been proposed in writing by any Tax
authority. No written claim that could give rise to material Taxes has been
made
within the last five years in a jurisdiction in which the Company or any of
its
Subsidiaries does not file Returns, that the Company or any of its Subsidiaries
may be subject to taxation in that jurisdiction.
(f) Neither
the Company nor any of its Subsidiaries: (i) has ever been a member of an
affiliated group filing a consolidated Return, (ii) is a party to any Tax
sharing or Tax allocation agreement, arrangement or understanding (other than
customary tax indemnifications contained in credit or other commercial
agreements the primary purpose of which agreements does not relate to Taxes);
or
(iii) is liable for the Taxes of any other Person under United States
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, Israeli or other foreign Legal Requirements), as a transferee or
successor, by contract or otherwise.
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(g) There
are
no Encumbrances on the assets of the Company or any of its Subsidiaries relating
to or attributable to Taxes, except for Encumbrances for Taxes not yet due
and
payable or the amount or validity of which is being contested in good faith
by
appropriate proceedings.
(h) Neither
the Company nor any of its Subsidiaries has constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code: (i) in the two
years prior to the date of this Agreement, or (ii) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(i) The
Company believes, after reasonable diligence and inquiry, that it qualifies
as
an Industrial Company according to the meaning of that term in The Law for
the
Encouragement of Industry (Taxes), 5729-1969, and, to the Company's Knowledge,
the consummation of the Merger will not have any material and adverse effect
on
such qualification as an Industrial Company.
(j) (A) The
Company has been granted "approved enterprises" status under the Israeli Law
for
the Encouragement of Capital Investment, (5719-1959) in the tax exemption and
grants routes. To the Company's Knowledge, it is in compliance in all material
respects with all terms and conditions stipulated by such law, regulations
published thereunder and the instruments of approval for the specific
investments in the "approved enterprise" and (B) each of the Company and
its Subsidiaries is in compliance in all material respects with all terms and
conditions of any ruling of any Tax authority that applies to the Company,
the
Surviving Corporation or any Subsidiary for any taxable period (or portion
thereof) ending after the Closing Date.
(k) Section 4.12(k)
of the Company Disclosure Schedule lists each material Tax incentive, subsidy
or
benefit granted to or enjoyed by the Company and its Subsidiaries under the
Legal Requirements of the State of Israel, the period for which such Tax
incentive, subsidy or benefit applies, and the nature of such Tax incentive.
The
Company and its Subsidiaries have complied with all material Israeli Legal
Requirements to be entitled to claim such incentives, subsidies or benefits.
To
the Company's Knowledge, subject to receipt of the approval of the Investment
Center and other Governmental Consents required as explicitly set forth herein,
consummation of the Merger will not materially adversely affect the continued
qualification for the incentives, subsidies or benefits or the terms or duration
thereof or require any recapture of any previously claimed incentive, subsidy
or
benefit and no consent or approval of any Governmental Authority is required
prior to the consummation of the Merger in order to preserve the rights of
the
Surviving Corporation or its Subsidiaries to any such incentive, subsidy or
benefit, other than such rights the scope of which depends on the identity
of
the beneficial owners of Purchaser.
Section 4.13
Property.
(a) The
Company and each of its Subsidiaries has marketable title to, or in the case
of
leased properties and assets, valid leasehold interests in, all of their
properties and assets that are material to the Company and its Subsidiaries
taken as a whole, free and clear of all Encumbrances except: (a) such
Encumbrances or other imperfections of title, if any, as do not materially
detract from the value of or materially interfere with the present use of the
property affected thereby, and (b) Permitted Encumbrances. The
representations and warranties set forth in this Section 4.13 do not apply
to Intellectual Property, Intellectual Property Rights or other intellectual
property assets or rights. All leases pursuant to which the Company or any
of
its Subsidiaries lease from others material real or personal property are valid
and effective in accordance with their respective terms, and there is not,
under
any of such leases, any existing material default or event of default of the
Company or any of its Subsidiaries or, to the Company's Knowledge, any other
party (or any event which with notice or the lapse of time, or both, would
constitute a default and in respect of which the Company or any of its
Subsidiaries has not taken adequate measures to prevent such default from
occurring) that, in each case would be material to the Company and its
Subsidiaries taken as a whole.
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23
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(b) The
Company is the lawful leaseholder (or is entitled to be registered as such
with
the Israeli Land Administration) of the real properties described in
Section 4.13(b) of the Company Disclosure Schedule (the "Leased
Property").
Section 4.13(b) of the Company Disclosure Schedule contains a list of the
Leased Properties.
Section 4.14
Environmental.
(a) Except
as
would not have a Material Adverse Effect: (i) the Company and each of its
Subsidiaries are in compliance with applicable Environmental Laws, (ii) no
material amount of Hazardous Substances are present at or have been disposed
on
or released or discharged from, onto or under any of the properties currently
owned, leased, operated or otherwise used by the Company or its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures),
(iii) no material amount of Hazardous Substances was present at or disposed
on or released or discharged from, onto or under any of the properties formerly
owned, leased, operated or otherwise used by the Company or its Subsidiaries
during the period of ownership, lease, operation or use by Company or its
Subsidiaries, (iv) neither the Company nor any Subsidiary is subject to any
liability or obligation in connection with Hazardous Substances present at
any
location owned, leased, operated or otherwise used by any third party,
(v) neither the Company nor any Subsidiary has received any written notice,
demand, letter, claim or request for information alleging that the Company
or
any Subsidiary is or may be in violation of or liable under any Environmental
Law, and (vi) neither the Company nor any Subsidiary is subject to any
order, decree, injunction or other directive of any governmental authority
or is
subject to any indemnity agreement with any Person relating to Hazardous
Substances.
(b) As
used
herein, the term "Environmental
Law"
means
any international, national, provincial, regional, federal, state, municipal
or
local law, regulation, order, judgment, decree, permit, authorization, opinion,
common or decisional law (including, without limitation, principles of
negligence and strict liability) or agency requirement relating to the
protection, investigation or restoration of the environment (including, without
limitation, natural resources) or the health of human or other living organisms,
including, without limitation, the manufacture, introduction into commerce,
export, import, handling, use, presence, disposal, release or threatened release
of any Hazardous Substance or noise, odor, wetlands, pollution, contamination
or
any injury or threat of injury to Persons or property.
(c) As
used
herein, the term "Hazardous
Substance"
means
any element, compound, substance or other material (including any pollutant,
contaminant, hazardous waste, hazardous substance, chemical substance, or
product) that is listed, classified or regulated pursuant to any Environmental
Law, including, without limitation, any petroleum product, by-product or
additive, asbestos, presumed asbestos-containing material, asbestos-containing
material, medical waste, chlorofluorocarbon, hydrochlorofluorocarbon,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon.
Section 4.15
Insurance.
Section 4.15
of the Company Disclosure Schedule sets forth list of all material insurance
policies held by or on behalf of the Company or its Subsidiaries and a brief
description of such policies, including the names of the insurers, the principal
insured and each named insured, the policy number and period of coverage, the
annual premiums and a brief description of the interests insured by such
policies and the amount of any deductible. The insurance policies listed on
Section 4.15 of the Company Disclosure Schedule include all policies of
insurance that are required by material commercial contracts relating to the
Company or any of its Subsidiaries, in the amounts required under the respective
contracts. The insurance policies listed on Section 4.15 of the Company
Disclosure Schedule are in full force and effect, all premiums due and payable
thereon have been paid and no written notice of cancellation or termination
has
been received with respect to any such policy. The insurance policies referred
to in this Section 4.15 will remain in full force and effect and will not
in any way be affected by or terminate by reason of the Merger or any of the
other Transactions.
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24
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Section 4.16
Intellectual Property.
(a) Section 4.16(a)
of the
Company Disclosure Schedule sets forth a true and complete list as of the date
of this Agreement of all material Registered Intellectual Property Rights (other
than trade secrets, know-how and goodwill attendant to Registered Intellectual
Property Rights and other intellectual property rights not reducible to schedule
form) owned by the Company or its Subsidiaries.
(b) Except
as
would not be material to the Company and its Subsidiaries taken as a whole,
the
Company or its Subsidiary, as applicable, is the sole and exclusive owner of
the
Company-Owned Intellectual Property Rights, free and clear of all Encumbrances
other than Permitted Encumbrances.
(c) Subject
to Section 4.16(e) and except as would not be
material to the Company and its Subsidiaries taken as a whole,
(i) All
Intellectual Property Rights in works of authorship and all other materials
subject to copyright protection, including, the computer software,
documentation, software design, technical and functional specifications, and
in
all other materials subject to copyright protection, (1) were either
created by employees of the Company or its Subsidiaries within the scope of
their employment or are otherwise works made for hire, or all right, title
and
interest in and to such works of authorship have been legally and fully assigned
and transferred to the Company or its Subsidiary, as applicable or (2) are
licensed from third parties for use as currently used by the Company and its
Subsidiaries, (ii) all Intellectual Property Rights in all inventions and
discoveries, made, developed or conceived by any employee or independent
contractor of the Company or of any of its Subsidiaries, within the scope of
their employment (or other retention) by the Company or its Subsidiary, as
applicable, and included in Company-Owned Intellectual Property Rights, or
that
are the subject of one or more issued letters patent or patent application
and
that are included in Company-Owned Intellectual Property Rights, have been
assigned in writing to the Company or its Subsidiary, as applicable, to the
extent that ownership of any such Intellectual Property Rights do not vest
in
the Company or its Subsidiary, as applicable, by operation of Law, and
(iii) all employees and independent contractors of the Company and its
Subsidiaries involved in material development activities have signed documents
confirming that each of them will assign to the Company or its Subsidiary,
as
applicable, all Intellectual Property rights made, written, developed or
conceived by them within the scope of their employment (or other retention)
by
the Company or its Subsidiary and that are included in the Company-Owned
Intellectual Property Rights to the extent that ownership of any such
Intellectual Property Rights does not vest in the Company or its Subsidiary,
as
applicable, by operation of Law.
(d) Except
as
would not have a Material Adverse Effect, the Company and each of its
Subsidiaries has taken reasonable precautions to protect the secrecy,
confidentiality and value of such material know-how and/or trade secrets, and
former and current employees, of the Company and its Subsidiaries have executed
written agreements with the Company or one of its Subsidiaries designed to
protect the confidentiality of the Company Intellectual Property Rights, and
to
the Company's Knowledge, no employee of Company, the Company or its Subsidiaries
is in violation or breach of any term of any such written agreements that would
impair the Company Intellectual Property.
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25
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(e) (i)(1) To
the Company's Knowledge, none of the Intellectual Property owned by the Company
or any of its Subsidiaries, nor the conduct of their business, infringes upon
or
misappropriates the Intellectual Property Rights of any other Person, nor,
to
the Knowledge of the Company, is infringed upon or misappropriated by any other
Person or its property, and (2) none of the Company or any of its
Subsidiaries has received during the past eighteen (18) months any written
claim, any cease and desist or equivalent letter or any other written notice
of
any allegation that any of the Intellectual Property owned by the Company or
its
Subsidiaries that is material to the Company and its Subsidiaries, taken as
a
whole, infringes upon, misappropriates or otherwise violates the Intellectual
Property Rights of any third parties; (ii) to the Company's Knowledge,
there has been no unauthorized use by, unauthorized disclosure to or by or
infringement, misappropriation or other violation of any of the Company-Owned
Intellectual Property Rights by any third party and/or any current or former
officer, employee, independent contractor, consultant or any other agent of
the
Company or any of its Subsidiaries; and (iii) except as would not
reasonably be expected to be material to the Company and its Subsidiaries taken
as a whole, (1) none of the Company-Owned Intellectual Property Rights is
currently the subject of any suits, actions, or written claims or demands of
any
third party and no action or proceeding, whether judicial, administrative or
otherwise, has been instituted and is pending or, to the Company's Knowledge,
threatened that challenges or affects the Intellectual Property Rights of the
Company or any of its Subsidiaries in the same and, to the Company's Knowledge,
there is no such claim, demand, action or proceeding by a third party that
is
pending but unasserted against the Company or its Subsidiaries with respect
to
any of the Company-Owned Intellectual Property Rights, and (2) none of the
Company or any of its Subsidiaries has received during the past three (3) years
any formal written opinions of counsel (outside or inside) relating to
infringement, invalidity or unenforceability of any Intellectual Property
Rights.
(f) (i) All
registrations with and applications to Governmental Authorities in respect
of
the Registered Intellectual Property Rights owned by the Company and its
Subsidiaries which is material to the Company and its Subsidiaries are in full
force and effect and, to the Knowledge of the Company, valid; (ii) the
Company and each of its Subsidiaries is in compliance with all material
applicable government regulations regarding the manufacture, advertising, sale,
import, and export of the Intellectual Property and products incorporating
or
made using the Intellectual Property; and (iii) there are no restrictions
on the direct or indirect transfer of any license, or other contract or
agreement pursuant to which the Company or any of its Subsidiaries has been
granted a right, to use Company Intellectual Property Rights, or any interest
therein, held by and material to the Company and its Subsidiaries, except as
may
be contained in any such license, or other contract or agreement; and
(iv) none of the Company or any of its Subsidiaries is in default (nor with
the giving of notice or lapse of time or both, would be in default) under any
material license, or any other material contract or agreement pursuant to which
the Company or any of its Subsidiaries has been granted a right, to use the
Company Intellectual Property Rights.
Section 4.17
Insider Interests.
To
the
Company's Knowledge, no officer or director of the Company or any of its
Subsidiaries has any material interest in any material property, real or
personal, tangible or intangible, including inventions, patents, trademarks
or
trade names, used in the business of the Company or any of its
Subsidiaries.
Section 4.18
Brokers.
No
broker, investment banker or financial advisor or other Person, other than
Xxxxxxx Xxxxx & Co., the fees and expenses of which will be paid by the
Company pursuant to the engagement letter dated September 21, 2005 (a true
and
correct copy of which has been made available to Purchaser), is entitled
to any
broker's, finder's, financial advisor's or other similar fee or commission
in
connection with the Transactions based upon arrangements made by or on behalf
of
the Company or any of its Subsidiaries.
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26
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Section
4.19 Opinion
of Financial Advisor.
The
Company has received the written opinion of Xxxxxxx Sachs & Co., dated as of
July
1, 2007, to the effect that, as of such date, and subject to the various
assumptions and qualifications set forth therein, the Merger Consideration
to be
received by the Company's shareholders is fair, from a financial point of
view,
to such shareholders, a signed copy of which opinion will be made available
to
Purchaser promptly following its receipt.
Section
4.20 Board
and Audit Committee Approval.
(a) The
Board
of Directors has: (1) determined that this Agreement, the Merger and the
other Transactions are fair to, and in the best interests of, the Company
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 the Company to its creditors,
(2) approved this Agreement, the Merger and the other Transactions, and
(3) subject to the provisions of this Agreement, determined to recommend
that the shareholders of the Company approve this Agreement, the Merger and
the
other Transactions (the "Recommendation").
(b) The
audit
committee of the Board of Directors has approved this Agreement and the Merger
and the other Transactions, prior to the approval of the Board of
Directors.
Section
4.21 Inapplicability
of Certain Statutes.
Other
than as set forth in the Companies Law, the Company is not subject to any
business combination, control share acquisition, fair price or similar statute
that applies to the Merger or any other Transaction.
Section
4.22 Grants,
Incentives and Subsidies.
The
Company has made available to Purchaser copies of all documents evidencing
all
material pending and outstanding grants, incentives, exemptions and subsidies
from the government of the State of Israel or any agency thereof, or from
any
other Governmental Authority, granted to the Company or any of its Subsidiaries,
including the grant of Approved Enterprise Status from the Investment Center
and
grants from the OCS (collectively, "Grants")
and of
all related material letters of approval, certificates of completion, and
supplements and amendments thereto, granted to the Company, and all material
correspondence related thereto for the period after January 1, 2002. The
Company
and the applicable Subsidiary is in compliance, in all material respects,
with
the terms and conditions of all Grants which have been approved and has duly
fulfilled, in all material respects, all the undertakings required thereby.
Section
4.23 Encryption
and Other Restricted Technology.
The
Company's and its Subsidiaries' business as currently conducted does not
involve
the use or development of, or engagement in, encryption technology, or other
technology whose development, commercialization or export, requires the Company
or any of its Subsidiaries to obtain a license from the Israeli Ministry
of
Defense or an authorized body thereof pursuant to Section 2(a) of the
Declaration Regarding the Control of Commodities and Services (Engagement
in
Encryption Means), 1974 or other legislation regulating the development,
commercialization or export of technology.
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27 -
Section
4.24 Effect
of Transaction.
(a) Except
as
set forth in Section 4.24(a) of the Company Disclosure Schedules, the
execution of this Agreement and the consummation of the Transactions in and
of
themselves will not (i) constitute an event under any Company Employee
Plan, Employment Agreement, trust, loan or other agreement or arrangement
that
will or might result in any parachute payments (as defined in
subsection (b) below) or any material payment (whether of severance pay,
"gross-up", or indemnity or similar material payments), or any material
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in
benefits or obligation to fund benefits with respect to any Employee or
(ii) result in any payment, acceleration or vesting with respect to any
other security issued by the Company or any of its Subsidiaries.
(b) No
payment or benefit which will or may be made by the Company or its ERISA
Affiliates with respect to any Employee will be characterized as a "parachute
payment", within the meaning of Section 280G(b)(2) of the
Code.
Section
4.25 No
Other Representations or Warranties.
Except
for the representations and warranties contained in this Article IV, neither
the
Company nor any other Person on behalf of the Company makes any express or
implied representation or warranty with respect to the Company or its
Subsidiaries or their respective business, operations, assets, liabilities,
condition (financial or otherwise) or prospects, notwithstanding the delivery
or
disclosure to Purchaser or any of its Affiliates or Representatives of any
documentation, forecasts, projections or other information with respect to
any
one or more of the foregoing.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser
and Merger Sub, jointly and severally, hereby represent and warrant to the
Company as of the date hereof that, except as set forth in the disclosure
schedule (the "Purchaser
Disclosure Schedule")
delivered by Purchaser to the Company prior to the execution and delivery
of
this Agreement (such disclosures being considered to be made for purposes
of the
specific section of the disclosure schedule in which they are made and for
purposes of all other sections to the extent the relevance of such disclosure
is
reasonably apparent on its face):
Section
5.1 Organization,
Good Standing and Qualification.
Each
of
Purchaser and Merger Sub is a legal entity duly organized, validly existing
and,
in jurisdictions where such concept is recognized, in good standing under
the
Laws of its respective jurisdiction of organization and has requisite corporate
power and authority to own, lease and operate its properties and assets and
to
carry on its business as presently conducted. Neither Purchaser nor Merger
Sub
are in violation of any provision of its respective organizational
documents.
Section
5.2 Purchaser
and Merger Sub.
All
of
the issued and outstanding shares of Merger Sub are owned by a wholly owned
Subsidiary of Purchaser. Section 5.2 of the Purchaser Disclosure Schedule
sets forth the capitalization of Purchaser, including the record beneficial
holders of the equity securities of Purchaser. Each of Purchaser and Merger
Sub
were formed solely for the purpose of engaging in the transactions contemplated
by this Agreement, and neither Purchaser nor Merger Sub, nor any of their
respective Subsidiaries, has conducted any business prior to the date hereof
and
neither has any, and prior to the Effective Time neither will have any, assets,
liabilities or obligations of any nature other than those immaterial assets,
liabilities or obligations incident to its formation and pursuant to this
Agreement and the Merger and the other Transactions (except that Merger Sub
shall have no such assets, liabilities or obligations with respect to any
financing transactions to be entered into in connection with the Merger and
the
other Transactions).
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28 -
Section
5.3 Corporate
Authority.
Each
of
Purchaser and Merger Sub has requisite corporate power and authority and
has
taken the corporate action necessary in order to execute, deliver and perform
its obligations under this Agreement. This Agreement has been duly executed
and
delivered by each of Purchaser and Merger Sub and is a valid and binding
agreement of Purchaser and Merger Sub, enforceable (assuming the due execution,
delivery and performance of this Agreement by the Company) against each of
Purchaser and Merger Sub in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of
general applicability relating to or affecting creditors' rights and to general
equity principles. The execution and delivery of this Agreement by Purchaser
and
Merger Sub and the consummation by Purchaser and Merger Sub of the Merger
and
the other Transactions contemplated hereby, including the Financing, have
been
duly and validly authorized by the necessary corporate action of Purchaser
and
Merger Sub.
Section
5.4 Merger
Sub Board Approval.
The
board
of directors of Merger Sub has unanimously: (i) 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, (ii) approved this Agreement,
the Merger and the other Transactions, and (iii) 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).
Section
5.5 Share
Ownership.
As
of the
date of this Agreement, neither Purchaser, Merger Sub nor any Person referred
to
in Section 320(c) of the Companies Law with respect to Purchaser or Merger
Sub owns any Company Shares.
Section
5.6 Governmental
Filings; No Violations; Etc.
(a) Other
than with respect to procedures under the Companies Law and the necessary
filings and clearance, if any, under applicable Antitrust Requirements, no
notices, reports or other filings are required to be made by Purchaser or
Merger
Sub with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Purchaser or Merger Sub from, any
Governmental Authority in connection with the execution and delivery of this
Agreement by Purchaser and Merger Sub and the consummation of the Merger
and the
other Transactions or in connection with the continuing operation of the
business of Purchaser following the Effective Time.
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(b) The
execution, delivery and performance of this Agreement by Purchaser and Merger
Sub do not, and the consummation of the Merger and the other Transactions
will
not, (i) constitute or result in (a) a breach or violation of, or a
default under, the certificate of incorporation or by laws or comparable
organizational documents of Purchaser and Merger Sub, (b) with or without
notice, lapse of time or both, a breach or violation of, a termination (or
right
of termination) or a default under, the creation or acceleration of any material
obligation or the creation of any Encumbrance on any of the assets of Purchaser
or Merger Sub pursuant to, any material Contracts binding upon Purchaser
or
Merger Sub, or (c) any material change in the rights or obligations of any
party under any Contract binding on Purchaser or Merger Sub, (ii) violate
any
judgment, order, writ, preliminary or permanent injunction or decree or any
Law
applicable to Purchaser, Merger Sub or any of their respective Affiliates
or any
of their properties or assets, except in each case, for such breaches,
violations, defaults or changes that would not have a material adverse effect
on
Purchaser or Merger Sub's ability to timely consummate the Merger and the
Transactions.
Section
5.7 Brokers
and Finders.
No
broker, investment banker, financial advisor or other Person is entitled
to any
broker's, finder's, financial advisor's or other similar fee or commission
in
connection with the Transactions based upon arrangements made by or on behalf
of
Purchaser or Merger Sub or any of their respective Affiliates.
Section
5.8 Available
Funds.
(a) Section 5.8(a)
of Purchaser Disclosure Schedule attaches
copies
of
the
executed
commitment letters from Credit Suisse and Credit Suisse Securities (USA)
LLC
(collectively, the "Debt
Commitment Letters"),
pursuant to which, and subject to the terms and conditions thereof, the
respective
lender
parties thereto have committed to lend the respective
amounts
set forth therein to
the
borrowers set forth therein
Purchaser for the purpose of funding the Transactions (the "Debt
Financing").
Section 5.8(a) of Purchaser Disclosure Schedule attaches copies
of
the
executed
commitment letter
(the
"Equity
Commitment Letter"
and,
together with the Debt Commitment Letters, the "Financing
Commitments")
from
the Investors
named therein
pursuant
to which,
and
subject to the terms and conditions thereof, such Investors have committed
to
the Purchaser
to
invest the amounts set forth therein (the "Equity
Financing"
and
together with the Debt Financing, the "Financing").
(b) The
Financing Commitments have
been
executed in the forms so disclosed
and have
not been amended
or
modified in any respect
or
supplemented, other than as previously disclosed to the Company.
There
are no other agreements, side letters or arrangements relating to the Financing
Commitments,
other
than as previously disclosed to the Company.
No
event has occurred which, with or without notice, lapse of time or both,
would
constitute a default or breach on the part of Purchaser or Merger Sub under
any
term or condition of the Financing Commitments, and,
assuming the satisfaction of all conditions to closing under this Agreement,
neither
Purchaser nor Merger Sub has reason to believe that it will be unable to
satisfy
on a timely basis any term or condition of closing to be satisfied by it
contained in the Financing Commitments. Purchaser and/or Merger Sub have
fully
paid any and all commitment fees or other fees required by the Financing
Commitments to be paid
on or
prior to the date hereof.
The
aggregate proceeds from the Financing constitute all of the financing required
to be provided by Purchaser for the consummation by the Purchaser and the
Merger
Sub of
the
Transactions contemplated hereby, and are sufficient for the satisfaction
of all
of Purchaser's and Merger Sub's obligations under this Agreement, including
the
payment of the Aggregate Merger Consideration and the payment of all associated
costs and expenses of the Merger
required
to be paid by Purchaser or Merger Sub.
The
Financing Commitments set forth
all of
the conditions
precedent to the obligations of the parties thereunder to make the
Financing,
to the
extent contemplated to be provided at or prior to the consummation by the
Purchaser and Merger Sub of the Transactions contemplated hereby, available
to
borrowers thereunder on
the
terms therein.
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Section
5.9 Interest
in Competitors.
(a) Neither
Purchaser nor Merger Sub, nor any of their respective affiliates insofar
as such
affiliate-owned interests would be attributed to Purchaser or Merger Sub
under
any Antitrust Requirements, owns any interest(s) in any entity or Person
that
derives a substantial portion of its revenues from a line of business within
the
Company's principal lines of business. Section 5.9 of the Purchaser Disclosure
Schedule lists, as of the date of this Agreement, with respect to the funds
of
which Affiliates of Purchaser or Investors serve as general partner and
investment adviser, all portfolio company investees in which such funds own
more
than a five percent stake.
(b) Neither
Purchaser nor Merger Sub nor any of their controlling shareholders, directly
of
indirectly, (i) owns any shares in or controls any Subsidiary incorporated
under the laws of the State of Israel or otherwise registered to do business
in
the State of Israel, (ii) owns a factory or any other business, or
maintains an office or a branch, or retains an agent, representative,
distributor, or importer or operates through any other entity, or has the
ability to direct the activities of any entity, in the State of Israel and
(iii) since January 1, 2005, generated any revenues in the State of Israel
or conducted sales or provided services in the State of Israel.
Section
5.12 Acknowledgement
of Disclaimer of Other Representations and Warranties.
Purchaser
and Merger Sub each acknowledges and agrees that it (a) has had an
opportunity to discuss the business of the Company and its Subsidiaries with
the
management of the Company, (b) has had reasonable access to (i) the
books and records of the Company and its Subsidiaries and (ii) the
electronic data room maintained by the Company through IntraLinks for purposes
of the Transactions, (c) it has been afforded the opportunity to ask
questions of and receive answers from officers of the Company, and (d) has
conducted its own independent investigation of the Company and its Subsidiaries,
their respective businesses and the Transactions, and has not relied on any
representation, warranty or other statement by any Person on behalf of the
Company or any of its Subsidiaries or any other documentation, forecasts
or
other information, other than the representations and warranties of the Company
expressly contained in this Agreement.
ARTICLE
VI
CONDUCT
PRIOR TO THE EFFECTIVE TIME AND ADDITIONAL AGREEMENTS
Section
6.1 Conduct
of Business by the Company.
Except
as
otherwise expressly contemplated by this Agreement, as required by applicable
Legal Requirements, in connection with any activity permitted to be taken
by the
Company pursuant to Section 6.5(a), as set forth in Section 6.1 of the
Company Disclosure Schedule or as consented to in writing by Purchaser (which
consent shall not be unreasonably withheld, delayed or conditioned), during
the
period from the date of this Agreement until the earlier to occur of the
Effective Time or termination of this Agreement pursuant to Article VIII,
the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in all material respects in the ordinary course consistent
with past practice. To the extent consistent with the foregoing, the Company
shall and shall cause its Subsidiaries to, use commercially reasonable efforts
to: (i) preserve intact their current business organizations (except that
any of its wholly-owned Subsidiaries may be merged with or into, or be
consolidated with any of its other wholly-owned Subsidiaries or may be
liquidated into the Company or any of its Subsidiaries), (ii) keep
available the services of their current officers and key employees who are
integral to the operation of their businesses as presently conducted and
(iii) preserve their relationships with those Persons having business
relations with them; provided,
however,
that no
action by the Company or its Subsidiaries with respect to matters specifically
addressed by any provision of Section 6.2 shall be deemed a breach of this
Section 6.1 unless such action would constitute a breach of such specific
provision of Section 6.2.
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Section
6.2 Specific
Activities.
Without
limiting the generality of Section 6.1, during the period from the date of
this Agreement until the earlier to occur of the Effective Time or termination
of this Agreement pursuant to Article VIII, except as otherwise expressly
contemplated by this Agreement, as set forth in Section 6.2 of the Company
Disclosure Schedule, in connection with any activity permitted to be taken
by
the Company pursuant to Section 6.5(a), as required by applicable Legal
Requirements, or as consented to in writing by Purchaser (which consent shall
not be unreasonably withheld, delayed or conditioned), the Company shall
not,
and shall not permit any of its Subsidiaries to:
(a) cause,
permit or propose any amendments to the Company Charter Documents (or similar
governing instruments of any of its Subsidiaries);
(b) (i) except
for transactions among the Company and its wholly-owned Subsidiaries or among
the Company's wholly-owned Subsidiaries, declare or pay any dividends on
or make
other distributions in respect of any of its capital stock, (ii) adopt a
plan of complete or partial liquidation or a resolution providing for or
authorizing such liquidation, (iii) split, combine or reclassify any of its
capital stock or (vi) repurchase, redeem or otherwise acquire any shares of
capital stock, or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than the
acquisition of restricted shares upon forfeiture thereof;
(c) Except
for transactions among the Company and its wholly-owned Subsidiaries or the
Company's wholly-owned Subsidiaries, issue, deliver, sell, pledge or encumber,
or authorize or propose the issuance, delivery, sale, pledge or Encumbrance
of,
any shares of its capital stock or any other security or interest therein
other
than the issuance of restricted shares pursuant to a Company Employee Plan
which
has been properly approved by the Company prior to the date of this Agreement
or
the issuance of Company Shares upon the exercise of Company Share Options
outstanding on the date of this Agreement and in accordance with the existing
terms of such Company Share Options;
(d) acquire
or agree to acquire any material assets (including securities) or merge or
consolidate, with any Person or engage in any similar transaction or make
any
loans, advances or capital contributions to, or investments in, any other
Person
outside of the ordinary course of business consistent with past practice
other
than any amounts reflected in the Company's budget for 2007 provided to
Purchaser or permitted by Section 6.2(i) below;
(e) sell,
lease, license, pledge, encumber or otherwise dispose of any of its material
assets or any interest therein, other than in the ordinary course, or adopt
a
plan of merger, consolidation, restructuring or other
reorganization;
(f) incur
or
suffer to exist any indebtedness for borrowed money or guarantee any such
indebtedness, guarantee any debt of others, enter into any "keep-well" or
other
agreement to maintain any financial statement condition of another Person
or
enter into any arrangement having the economic effect of any of the foregoing,
except for working capital borrowings incurred in the ordinary course of
business pursuant to credit agreements or facilities in existence on the
date
hereof;
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(g) make
or
rescind any material Tax election, or agree to pay, settle or compromise
any
material Tax liability or consent to any extension or waiver of any limitation
period with respect to Taxes, or request, negotiate or agree to any Tax rulings,
or Tax sharing arrangement or agreement (except as provided
herein);
(h) amend,
in
any material respect, any Tax return, change an annual Tax accounting period,
adopt or change any material Tax accounting method (except as required by
applicable Law) or execute or consent to any waivers extending the statutory
period of limitations with respect to the collection or assessment of any
material Taxes;
(i) make
or
agree to make any capital expenditures in excess of the amount contemplated
by
the Company's 2007 budget other than capital expenditures that do not exceed
$1,000,000 in the aggregate;
(j) pay,
discharge, settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), or to propose
to pay,
discharge, settle or satisfy such claims, liabilities or obligations, in
each
case outside of the ordinary course of business that (i) involves
non-monetary relief that would materially restrict the operations of the
Company
or (ii) requires the payment of amounts after the Closing in excess of
$1,000,000 in the aggregate;
(k) (i)
modify or amend in any material respect any credit agreement or facility
or (ii)
modify or amend in any material respect or terminate any other material Contract
outside of the ordinary course of business;
(l) except
(1) as required pursuant to existing written agreements in effect on the
date hereof, Company Employee Plans in effect as of the date hereof, or written
agreements for newly hired employees or extensions of employment agreements
(on
substantially similar terms as in effect on the date hereof), all in the
ordinary course of business consistent with past practice, (2) as otherwise
required by Law, or (3) as provided pursuant to existing Employment
Agreement or other Contracts in effect on the date hereof, (i) increase the
compensation or benefits of any director, officer or employee, except for,
in
the cases on non-officer employees, increases in the ordinary course that
are
consistent with past practice (including, for this purpose, the normal salary,
bonus and equity compensation review process conducted each year),
(ii) adopt or amend in any material respect any Company Employee Plan (any
such amendment being required to comply in all respects with the other
provisions of this Section 6.2), (iii) enter into or amend or modify
any employment, consulting, severance, termination or similar agreement with
any
director, officer or employee, (iv) accelerate the payment of compensation
or benefits to any director, officer or employee, (v) take any action to
fund or in any other way secure the payment of compensation or benefits under
any Company Employee Plan or compensation agreement or arrangements, or
(vi) take any action that could give rise to severance benefits payable to
any officer, director, or employee of the Company or any of its Subsidiaries
as
a result of the consummation of the Merger or the other
Transactions;
(m) make
any
material change in accounting methods, principles or practices, except
(i) as required by GAAP, Regulation S-X of the Exchange Act or as
required by any Governmental Authority or the Financial Accounting Standards
Board (or similar organization), or (ii) as required by change in
applicable Legal Requirements;
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33 -
(n) enter
into any transaction with any of its Affiliates other than pursuant to
arrangements in effect on the date hereof or in connection with transactions
between or among the Company and wholly-owned Subsidiaries or Affiliates
of the
Company controlled by the Company;
(o) transfer
or license to any Person (other than with respect to inter-company transactions)
or otherwise extend, amend or modify in any material respect any material
rights
of such other Person or entity to Company Intellectual Property Rights, or
enter
into any agreements or make other commitments or arrangements to grant, transfer
or license to any Person future patent right, in each case other than
non-exclusive licenses the granting of which are advisable in connection
with or
to the sale or distribution of any product by the Company or any of its
Subsidiaries, in each case in the ordinary course of business consistent
with
past practice; provided
that in
no event shall the Company or any Subsidiary of the Company: (i) license on
an exclusive basis (other than supply and distribution agreements in the
ordinary course of business consistent with past practice) or sell any Company
Intellectual Property Rights which are material to the Company or any of
its
Subsidiaries; or (ii) enter into any agreement limiting in any material
respect the right of the Surviving Corporation or any of its Subsidiaries
to
engage in any line of business or to compete with any Person;
(p) enter
into any material Contract or series of related Contracts that (i) are not
in the ordinary course of business, and (ii) pursuant to which the Company
or any Subsidiary undertakes to assume any liability or undertaking in excess
of
$1,000,000 in the aggregate (except as expressly permitted under other
provisions of this Agreement); or
(q) authorize
any of, or commit or agree to take any of, the foregoing actions.
Section
6.3 No
Control of Other Party's Business.
Nothing
contained in this Agreement is intended to give Purchaser, directly or
indirectly, the right to control or direct the Company's or its Subsidiaries'
operations prior to the Effective Time, and to give the Company, directly
or
indirectly, the right to control or direct Purchaser's operations. Prior
to the
Effective Time, each of Purchaser and the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its and its Subsidiaries respective operations.
Section
6.4 Confidentiality;
Access to Information; Cooperation on Financing.
(a) Except
as
required by applicable Legal Requirements, upon reasonable notice, the Company
shall, and shall cause each of its Subsidiaries to, afford Purchaser and
its
officers, employees, accountants, counsel, financial advisors and other
representatives (collectively, "Representatives"),
with
reasonable access during normal business hours during the period prior to
the
Effective Time to all its properties, books, contracts, commitments, personnel
(including management team) and records so that Purchaser and Merger Sub
may
obtain all information concerning the business as it may reasonably request;
provided
that
Purchaser and its Representatives shall conduct any such activities in such
a
manner as not to unreasonably interfere with the business or operations of
the
Company, and during such period, the Company shall, and shall cause each
of its
Subsidiaries to, furnish promptly to Purchaser and Merger Sub:
(i) a
copy of
each report, schedule, registration statement and other document filed by
it
during such period pursuant to the requirements of U.S. federal or state
or
Israeli securities laws; and
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(ii) all
other
information concerning its business, properties and personnel as Purchaser
may
reasonably request; provided,
however,
that
the Company shall not be required to provide access to any information or
documents which would, in the reasonable judgment of the Company,
(A) breach any agreement with any third party, or (B) constitute a
waiver of, or result in an impairment of, the attorney-client or other privilege
held by the Company.
(b) Any
information obtained by any Person pursuant to this Section 6.4 shall be
subject to the Confidentiality Agreement. Without limiting the generality
of the
foregoing, Purchaser, Merger Sub and the Company shall not, and shall each
use
their respective best efforts to cause their Representatives not to, use
information obtained pursuant to this Section 6.4 for any purpose unrelated
to consummation of the Merger and the other Transactions. No review or
information obtained pursuant to this Section 6.4 shall limit Purchaser's
or Merger Sub's reliance on or the enforceability of any representation or
warranty made by the Company herein.
(c) Purchaser
acknowledges and agrees that the Company and its Affiliates and their respective
directors, officers, employees, agents and Representatives shall not have
any
responsibility for, or incur any liability to, any Person under, any financing
that Purchaser may raise in connection with the Transactions contemplated
hereby
or any cooperation provided pursuant to this Section 6.4 and that Purchaser
and Merger Sub shall indemnify and hold harmless the Company and its Affiliates
and their respective directors, officers and employees from and against any
and
all losses, damages, claims, costs or expenses suffered or incurred by any
of
them as a result of any action carried out by them under Section
6.4(e).
(d) Each
of
Purchaser and Merger Sub shall use, and shall cause their Affiliates to use,
reasonable best efforts to (i) obtain the Financing on the terms and
conditions described in the Financing Commitments (or terms no less favorable
to
Purchaser or the Company), and (ii) enter into definitive agreements with
respect thereto on the terms and conditions contained in the Financing
Commitments (or terms no less favorable to Purchaser or the Company), which
agreements shall be in effect no event later than the Closing. In the event
that
the Purchaser or the Merger Sub become aware that any portion of the Financing
has become unavailable in the manner or from the sources contemplated in
the
Financing Commitments, (A) Purchaser shall notify promptly the Company and
(B) Purchaser and Merger Sub shall use their reasonable best efforts to
arrange to obtain any such unavailable portion from alternative sources,
as
promptly as practicable following the occurrence of such event, including
entering into definitive agreements with respect thereto (such definitive
agreements entered into pursuant to the first or second sentence of this
Section 6.4(d) being referred to as the "Financing
Agreements").
Purchaser and Merger Sub shall, shall cause their Affiliates to, and shall
use
their reasonable best efforts to cause their Representatives to, satisfy
on a
timely basis the conditions, of the Financing Commitments, any alternative
financing commitments, and the Financing Agreements. Purchaser shall
(x) furnish executed copies of the Financing Agreements promptly upon their
execution, and (y) otherwise keep the Company reasonably informed of the
status of its efforts to arrange the Financing (or any replacement
thereof).
(e) Subject
to Section 6.4(c), the Company shall and shall cause its Subsidiaries to,
at Purchaser's sole expense, reasonably cooperate in connection with the
arrangement of the Financing as may be reasonably requested by Purchaser
(provided
that
such requested cooperation is not prohibited by applicable Legal Requirements
and does not unreasonably interfere with the ongoing operations of the Company
and its Subsidiaries). Such cooperation by the Company shall include, at
the
reasonable request of Purchaser, subject to Sections 6.4(a) and 6.4(b),
(i) using reasonable best efforts to provide to the lenders specified in
the Financing Commitments financial and other information in the Company's
possession with respect to the Merger, (ii) making the Company's senior
officers available to reasonably assist the lenders specified in the Financing
Commitments, (iii) assisting with the preparation of materials for
prospective lenders, rating agencies and similar documents and presentations,
and (iv) and otherwise reasonably cooperating in connection with the
consummation of the Financing; provided,
in any
event, that the Company's and its Representatives' cooperation shall be limited
to providing such information and such cooperation relating to the
Company or its Subsidiaries on a stand-alone basis without giving effect to
the Merger or Purchaser's post-Closing plans or any post-Closing projections.
Purchaser shall promptly reimburse the Company for any reasonable and documented
out-of-pocket expenses and costs incurred in connection with the Company's
or
its Affiliates' obligations under this Section 6.4(e). Notwithstanding
anything in this Agreement to the contrary, nothing in this Agreement shall
require the Company or any of its Subsidiaries to pay any commitment or other
similar fee or incur any other liability or obligation in connection with
the
Financing (or any replacements thereof).
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Section
6.5 No
Solicitation.
(a) During
the period beginning on the date of this Agreement and continuing until 11:59
p.m. (New York time) on the date that is 30 days after the date of this
Agreement (the "Solicitation
Period End Date"),
the
Company, its Subsidiaries, and their respective Representatives shall have
the
right to, directly or indirectly (i) solicit, initiate or encourage any
inquiry with respect to, or the making, submission or announcement of, any
Acquisition Proposal and (ii) participate in discussions or negotiations
regarding, and furnish to any Person information with respect to, and take
any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may lead to, an Acquisition Proposal; provided,
however,
that
the Company shall not, and shall not authorize or permit any of its Subsidiaries
or any Representative of the Company or its Subsidiaries to, provide to any
Person any material non-public information unless the Company receives from
such
third party an executed confidentiality agreement with confidentiality
provisions (including customary standstill and non-solicitation provisions
for
such a transaction) in form no more favorable, in the aggregate, to such
Person
than those confidentiality provisions contained in the Confidentiality
Agreement, provided
that the
Company shall promptly provide to Purchaser any material non-public information
concerning the Company or its Subsidiaries that is provided to any Person
given
such access but which was not previously provided to Purchaser and its
Representatives. Purchaser agrees that, during the period from the date hereof
to and including the tenth (10th)
Business Day after the Solicitation Period End Date, neither it nor any
Affiliate or Subsidiary of Purchaser shall, and that it shall use its reasonable
best efforts to cause its and their respective Representatives not to, knowingly
interfere with or knowingly participate in discussions with, any Person that
has
made, or is considering or participating in discussions or negotiations with
the
Company, its Subsidiaries or their respective Representatives regarding,
an
Acquisition Proposal.
(b) Subject
to the provisions of this Section 6.5, and except as it may relate to any
Person or group of related Persons from whom the Company has received, prior
to
the Solicitation Period End Date, a bona fide Acquisition Proposal that the
Board of Directors determines in good faith (such determination to be made
on or
prior to the Solicitation Period End Date), after consultation with its outside
legal counsel and independent financial advisor, constitutes or could reasonably
be expected to result in a Superior Proposal, including adequate sources
of
financing (each such Person or group, an "Excluded
Party";
provided,
however,
that
any such Person or group shall cease to be an Excluded Party at such time
after
the Solicitation Period End Date as negotiations between the Company and
such
Person or group with respect to Acquisition Proposal(s) made by such Person
or
group shall have terminated), (A) on the Solicitation Period End Date, the
Company shall, and shall cause its Subsidiaries to, and shall direct its
and
their respective Representatives to, immediately cease any solicitation,
encouragement, discussions or negotiations with any parties that may be ongoing
with respect to any Acquisition Proposal and (B) during the period
beginning on the Solicitation Period End Date and continuing until the Effective
Time or, if earlier, the termination of this Agreement in accordance with
Article VIII, the Company agrees that neither it nor any Subsidiary of the
Company shall, and that it shall direct its and their respective Representatives
not to, directly or indirectly, (i) solicit, participate in, initiate,
knowingly facilitate or encourage (including by way of furnishing information),
or knowingly take any other action designed or reasonably likely to facilitate
or encourage, any inquiries or the making of any proposal that constitutes,
or
may reasonably be expected to lead to, any Acquisition Proposal (including
by
way of making any public announcement of its intention to do any of the
foregoing), (ii) participate in any discussions or negotiations (including
by way of furnishing information) regarding any Acquisition Proposal, or
(iii) enter into any agreement (or agreement in principle) with respect to
an Acquisition Proposal (other than a confidentiality agreement contemplated
by
Section 6.5(c)). No later than two (2) Business Days after the Solicitation
Period End Date, the Company shall notify Purchaser in writing of the identity
of each Excluded Party and shall promptly provide to Purchaser a copy of
any
Acquisition Proposal made in writing provided to the Company or any of its
Subsidiaries prior to the Solicitation Period End Date and a written summary
of
the material terms of any such Acquisition Proposal not made in writing.
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(c) Notwithstanding
the limitations set forth in Section 6.5(b), at any time from the
Solicitation Period End Date and continuing until the earlier of the receipt
of
the Company Shareholder Approval and the termination of this Agreement pursuant
to Article VIII, if the Company or any of its Representatives receives an
unsolicited written Acquisition Proposal that the Board of Directors determines
in good faith, after consultation with its outside legal counsel and independent
financial advisor, (i) constitutes a Superior Proposal or (ii) could
reasonably be expected to result in a Superior Proposal, then the Company
may
take the following actions: (x) furnish non-public information to the
Person making such Acquisition Proposal (if, and only if, prior to so furnishing
such information, the Company receives from the Person an executed
confidentiality agreement with confidentiality provisions (including customary
standstill and non-solicitation provisions for such a transaction) in form
no
more favorable in the aggregate to such Person than those confidentiality
provisions contained in the Confidentiality Agreement) and (y) engage in
discussions or negotiations with such Person with respect to such Acquisition
Proposal.
(d) The
Company shall promptly (and in any event no later than 48 hours) notify
Purchaser in the event that the Company, its Subsidiaries or Representatives
receives (i) any Acquisition Proposal or (ii) any inquiry or request
for discussions or negotiations regarding any Acquisition Proposal, including
during the period from the date of this Agreement to the Solicitation Period
End
Date. The Company shall notify Purchaser promptly (and in any event no later
than 48 hours) of the identity of such Person and provide a copy of such
Acquisition Proposal, inquiry or request (or, where no such copy is available,
a
written description of such Acquisition Proposal, inquiry or request), including
any material modifications thereto or to any Acquisition Proposal made by
an
Excluded Party. The Company shall keep Purchaser reasonably informed on a
current basis (and in any event no later than 48 hours) after the occurrence
of
any material changes or developments of the status of any Acquisition Proposal,
inquiry or request (including the material terms and conditions thereof and
of
any material modification thereto). Without limiting the foregoing, the Company
shall promptly (within 48 hours) notify Purchaser orally or in writing if
it
determines to begin providing or making available information or to engage
in
discussions or negotiations concerning an Acquisition Proposal pursuant to
Section 6.5(c). The Company agrees that it will not enter into any
confidentiality agreement with any person subsequent to the date hereof which
prohibits the Company from providing any such information to Purchaser.
Notwithstanding the foregoing, during the period from the date of this Agreement
to the Solicitation Period End Date, the Company shall not be required to
disclose the identity of the Person making an Acquisition Proposal nor shall
the
Company be required to keep Purchaser informed as to the status of any
discussions or negotiations with such Person unless there has been a material
modification to the financial terms of the Acquisition Proposal or in the
event
the Board of Directors determines in good faith, after consultation with
its
outside legal counsel and independent financial advisor, that such Acquisition
Proposal (i) constitutes a Superior Proposal or (ii) could reasonably
be expected to result in a Superior Proposal in which case the Company shall
promptly (within 48 hours) notify Purchaser orally or in writing of such
facts.
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37 -
(e) Other
than in accordance with this Section 6.5, the Board of Directors shall not
(i) change, qualify, withdraw or modify, or propose publicly to change,
qualify, withdraw or modify, in a manner adverse to Purchaser, the approval
or
recommendation by the Board of Directors of the Merger or this Agreement
or the
other Transactions contemplated hereby; (ii) approve, adopt or recommend,
or propose publicly to approve, adopt or recommend, any Acquisition Proposal;
(iii) make any recommendation in connection with a tender offer or exchange
offer other than a recommendation against such offer (each of the foregoing,
a
"Change
of Recommendation");
or
(iv) authorize the Company to enter into any letter of intent, merger,
acquisition, or similar agreement with respect to any Acquisition Proposal
other
than any confidentiality agreement to be entered into by the Company as
contemplated by this Section 6.5 (each a "Company
Acquisition Agreement:");
provided,
however,
that,
in response to the receipt of a Superior Proposal that has not been withdrawn
or
abandoned, the Board of Directors may, at any time prior to obtaining the
Company Shareholder Approval, make either (x) a Change of Recommendation
and/or (y) terminate this Agreement in accordance with Section 8.1(c)
to enter into a Company Acquisition Agreement with respect to such Superior
Proposal (a "Superior
Termination");
provided further,
that,
the Board of Directors may not effect such Change of Recommendation or a
Superior Termination, in each case in connection with a Superior Proposal,
unless both of the following conditions have been met:
(i) the
Company shall have provided prior written notice to Purchaser, at least five
(5)
Business Days in advance (or three (3) Business Days if such written notice
is
provided on or prior to the Solicitation Period End Date) (as applicable,
the
"Notice
Period"),
of
its intention to effect a Change of Recommendation and/or Superior Termination
in response to such Superior Proposal, which notice shall in addition specify
the material terms and conditions (including price) of any such Superior
Proposal (including the identity of the Person or group of Persons making
the
Superior Proposal), and contemporaneously with providing such notice shall
have
provided a copy of the relevant proposed acquisition agreement and other
material documents related thereto (provided
that no
information need be provided regarding the terms, structure or other financial
information regarding any debt financing commitments) with the party making
such
Superior Proposal (all such addition specified information being deemed the
"Superior
Proposal Information");
and
(ii) prior
to
effecting such Change of Recommendation and/or Superior Termination in response
to a Superior Proposal, the Company shall, and shall cause its legal and
financial advisors to, during the Notice Period, negotiate with Purchaser
in
good faith (to the extent Purchaser desires to negotiate) to make such
adjustments to the terms and conditions of this Agreement so that such
Acquisition Proposal ceases to constitute a Superior Proposal.
(f) In
the
event that during the Notice Period any revisions are made to the Superior
Proposal to which the final proviso of Section 6.5(e) applies and the Board
of Directors or any committee thereof in its good faith judgment determines
such
revisions are material (it being agreed that any change in the purchase price
in
such Superior Proposal shall be deemed a material revision), the Company
shall
be required to deliver a new written notice to Purchaser and Merger Sub and
to
comply with the requirements of such proviso with respect to such new written
notice, except that the Notice Period shall be reduced to three (3) Business
Days (or two (2) Business Days if the first Notice Period under Section 6.5(e)
initially commences on or prior to the Solicitation Period End Date).
Notwithstanding anything to the contrary in this Agreement, no
"stop-look-and-listen" communication to the Company's shareholders of the
nature
contemplated by Rule 14d-9 of the Exchange Act shall be deemed to constitute
a
Change of Recommendation.
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38 -
(g) Nothing
in this Agreement shall prohibit or restrict the Board of Directors from
making
a Change of Recommendation to the extent that the Board of Directors determines
in good faith, for reasons not related to the receipt of an Acquisition
Proposal, after consultation with the Company's outside legal counsel, that
the
failure of the Board of Directors to effect a Change of Recommendation would
be
inconsistent with the directors' fiduciary duties under applicable Legal
Requirements.
(h) For
purposes of this Agreement, "Acquisition
Proposal"
shall
mean any inquiry, proposal or offer from any Person (other than Purchaser
and
its Subsidiaries) relating to, in a single transaction or series of related
transactions, any (A) acquisition of assets of the Company and its
Subsidiaries (including securities of Subsidiaries, but excluding sales of
assets in the ordinary course of business) equal to 20% or more of the Company's
consolidated assets or to which 20% or more of the Company's revenues or
earnings on a consolidated basis are attributable, (B) acquisition of 20%
or more of the outstanding Company Shares, (C) tender offer or exchange
offer that if consummated would result in any Person beneficially owning
20% or
more of the outstanding Company Shares, (D) merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution
or
similar transaction involving the Company or (E) any combination of the
foregoing types of transactions if the sum of the percentage of consolidated
assets, consolidated revenues or earnings and Company Shares involved is
20% or
more; in each case, other than the Transactions. As used in this Agreement,
"Superior
Proposal"
shall
mean any bona fide written Acquisition Proposal on terms which the Board
of
Directors of the Company determines in good faith, after consultation with
the
Company's outside legal counsel and independent financial advisor, to be
more
favorable from a financial point of view to the holders of Company Shares
than
the Merger, taking into account all the terms and conditions of such proposal
(including the likelihood and timing of consummation thereof), and this
Agreement (including any changes to the terms of this Agreement proposed
by
Purchaser to the Company in writing in response to such proposal or otherwise),
provided
that for
purposes of the definition of "Superior Proposal", the references to "20%"
in
the definition of Acquisition Proposal shall be deemed to be references to
"65%".
(i) Nothing
contained in this Section 6.5 shall prohibit the Company from
(i) disclosing to its shareholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Securities Exchange Act of 1934,
(ii) making any disclosure to its shareholders if the Board of Directors
has reasonably determined in good faith, after consultation with outside
legal
counsel, that the failure to do so would be inconsistent with any applicable
Legal Requirements, or (iii) complying with its disclosure obligations
under Israeli Law or the rules and regulations of Nasdaq, provided
that the
foregoing shall not, in itself, constitute a Change of
Recommendation;.
Section
6.6 Merger
Proposal.
Each
of
the Company and, if applicable, Merger Sub, shall, take the following actions
within the time frames set forth herein; provided,
however,
that
any such actions or the time frame for taking such action shall be subject
to
any amendment in the applicable provisions of the Companies Law and the
regulations promulgated
thereunder (and in case of an amendment thereto, such amendment shall
automatically apply so as to amend this Section 6.6
accordingly):
(a) As
promptly as reasonably practicable after the execution and delivery of this
Agreement:
(i) each
of
the Company and Merger Sub shall cause a merger proposal (in the Hebrew
language) in form attached hereto as Exhibit
C
(a
"Merger
Proposal")
to be
executed in accordance with Section 316 of the Companies
Law;
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39 -
(ii) the
Company shall call a general meeting of the shareholders of the Company,
it
being understood that the sole shareholder of Merger Sub has approved the
Merger
contemporaneously with the execution of this Agreement; and
(iii) within
three (3) days from the date that each of the foregoing general meetings
of
shareholders have been convened as aforesaid, the Company and Merger Sub
shall
jointly deliver the applicable Merger Proposal to the Companies Registrar.
Each
of the Company and Merger Sub shall cause a copy of its Merger Proposal to
be
delivered to its secured creditors, if any, 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 respective non-secured creditors, if any, of
its
Merger Proposal and its contents in accordance with Section 318 of the
Companies Law and the regulations promulgated thereunder.
(b) Promptly
after the Company and Merger Sub shall have complied with the provisions
of
Section 6.6(a) above and with subsections (i) and (ii) of this
Section 6.6(b), but in any event no later than three (3) business days (as
defined in the Companies Law) following the date on which such notice was
sent
to the creditors, each of the Company and Merger Sub shall inform the Companies
Registrar, in accordance with Section 317(b) of the Companies Law, that
notice was submitted to their respective secured and non-secured creditors
in
accordance with Section 318 of the Companies Law and the regulations
promulgated thereunder. 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 has been submitted
to
the Companies Registrar and that the creditors may review the Merger Proposal
at
the offices 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 (2)
daily Hebrew newspapers circulated in Israel, on the day that the Merger
Proposal is submitted to the Companies Registrar, (B) a newspaper
circulated in the United States, no later than three (3) Business Days following
the day on which the Merger Proposal was submitted to the Companies Registrar,
and (C) if required, in such other manner as may be required by any
applicable Law;
(ii) within
four (4) 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 Companies Law),
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, as specified in the notice referred to in
subsection (i) above; and
(iii) send
to
the Company "employees committee" ("Va'ad
Ovdim")
or
display in a prominent place at the Company premises, a copy of the notice
published in a daily Hebrew newspaper (as referred to in subsection (i)(A)
above), no later than three (3) Business Days following the day on which
the
Merger Proposal has been submitted to the Companies Registrar.
Section
6.7 Shareholders
Approval.
(a) The
Company Shareholders' Meeting.
The
Company will take, in accordance with applicable Law and its Articles of
Association, all action necessary to convene a meeting of its shareholders
(the
"Company
Shareholders' Meeting")
as
promptly as reasonably practicable, but in no event prior to August 27, 2007,
to
consider and vote for the approval of this Agreement, the Merger and the
other
Transactions. Subject to Section 6.5, the Board of Directors shall
recommend such approval subject to the notice requirements of the Companies
Law
and the rules and regulations promulgated thereunder and the Articles of
Association of the Company. The Company Shareholders' Meeting shall be held
as
promptly as reasonably practicable after the date hereof. The Company shall
call, notice, convene, hold and conduct the Company Shareholders' Meeting
in
compliance with applicable Legal Requirements including the Companies Law,
the
Articles of Association of the Company and the rules of Nasdaq. Subject to
the
provisions of Section 320(c) of the Companies Law, the approval of the
Merger requires the Company Shareholder Approval. The quorum required for
the
shareholders' meeting is at least two (2) shareholders, present in person
or by proxy, holding at least one-third (33.3%) of the issued and outstanding
share capital of the Company. The Company may adjourn or postpone the Company
Shareholders' Meeting: (i) if and to the extent necessary to provide any
necessary supplement or amendment of the notice to the Company's shareholders
in
advance of a vote on this Agreement, and the Merger and the other Transactions;
or (ii) if, as of the time for which the Company Shareholders' Meeting is
originally scheduled (as set forth in the notice for the Company Shareholders'
Meeting), the number of Company Shares present at the Company Shareholders'
Meeting (either in person or by proxy) is insufficient to constitute the
required quorum necessary to conduct the business of the Company Shareholders'
Meeting. The Company's obligation to call, give notice of, convene and hold
the
Company Shareholders' Meeting in accordance with this Section 6.7 shall not
be limited to or otherwise affected by the commencement, disclosure,
announcement or submission of any Acquisition Proposal, except in the event
that
the Company decides to terminate this Agreement pursuant to Section 8.1(c).
In the event that Purchaser or any of its Affiliates casts any votes in respect
of the Merger, Purchaser shall disclose to the Company its interest in such
shares so voted.
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40 -
(b) Approval
of Sole Shareholder of Merger Sub; Notification to Registrar of
Companies.
The
sole shareholder of Merger Sub has approved the Merger subject to the
satisfaction or waiver (to the extent permitted hereunder) of all the conditions
to Closing (other than those that by their nature may only be satisfied or
waived at Closing). No later than three days after the date of such approval,
Merger Sub shall (in accordance with Section 317(b) of the Companies Law
and the regulations thereunder) inform the Companies Registrar of such approval.
In accordance with the customary practice of the Companies Registrar, Merger
Sub
shall request, following coordination with Company, that the Companies Registrar
declare the Merger effective and issue the Certificate of Merger upon such
date
as Merger Sub shall advise the Companies Registrar, which date shall be not
later than the second Business Day immediately following the Closing. For
the
avoidance of doubt, and notwithstanding any provision of this Agreement to
the
contrary, it is the intention of the parties that the Merger shall be declared
effective and the Certificate of Merger shall be issued on the Closing Date,
as
soon as possible after the Closing shall have taken place, but not before
the
Closing shall have taken place.
(c) Covenants
of Purchaser with Respect to Information Statement.
None of
the information with respect to Purchaser or its Affiliates to be included
in
any information statement sent to the Company's shareholders will, at the
time
of the mailing or any amendments or supplements thereto, 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 misleading.
Section
6.8 Filings;
Other Actions; Notification.
(a) Subject
to the terms and conditions set forth in this Agreement, the Company and
Purchaser shall cooperate with each other and use (and shall cause their
respective Subsidiaries and Affiliates to use) their respective reasonable
best
efforts to take or cause to be taken all actions, and do or cause to be done
all
things, reasonably necessary, proper or advisable on its part under this
Agreement and applicable Laws to consummate and make effective the Merger
and
the other Transactions as soon as practicable, including (i) the obtaining
of all necessary actions or nonactions, consents and approvals from Governmental
Authorities, or other Persons necessary in connection with the consummation
of
the Transactions and the making of all necessary registrations and filings
(including filings with Governmental Authorities, if any) and the taking
of all
reasonable steps as may be necessary to obtain an approval from, or to avoid
an
action or proceeding by, any Governmental Authority or other Persons necessary
in connection with the consummation of the Transactions, (ii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions performed
or
consummated by such party in accordance with the terms of this Agreement,
including seeking to have any stay or temporary restraining order entered
by any
Governmental Authority vacated or reversed (iii) the execution and delivery
of any additional instruments necessary to consummate the Merger and other
Transactions to be performed or consummated by such party in accordance with
the
terms of this Agreement and to fully carry out the purposes of this Agreement,
and (iv) the execution by Purchaser and/or its Affiliates of an undertaking
in
customary form in favor of the OCS to comply with the applicable Law (if
required).
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41 -
(b) Subject
to applicable Law and the instructions of any Governmental Authority, each
of
the Company and Purchaser shall keep the other reasonably apprised of the
status
of matters relating to completion of the Transactions, including promptly
furnishing the other with copies of material notices or other communications
received by Purchaser or the Company, as the case may be, or any of their
Subsidiaries from any third party and/or any Governmental Authority with
respect
to such Transactions. Each of the Company and Purchaser shall give prompt
notice
to the other of any failure to the other Party's conditions to effect the
Merger. Neither the Company nor Purchaser shall permit any of its officers
or
any other Representatives to participate in any meeting with any Governmental
Authority in respect of any filings, investigation or other inquiry relating
to
the other Transactions unless it consults with the other Party in advance
and
shall, to the extent permitted by such Governmental Authority, give the other
Party the opportunity to attend and participate thereat.
(c) In
connection with this Section 6.8 and Section 6.10 of this Agreement,
neither the Company nor any of its Affiliates shall be required to pay or
commit
to pay any material amounts or incur any material liability unless directed
to
do so by Purchaser (in which case, such amounts or liabilities shall be the
responsibility of Purchaser upon termination of this Agreement). Each of
the
Parties hereto will furnish to the other such necessary information and
reasonable assistance as the other may request in connection with the
preparation of any required governmental filings or submissions and will
cooperate in responding to any inquiry from a Governmental Authority, including
immediately informing the other party of such inquiry, consulting in advance
before making any presentations or submissions to a Governmental Authority,
and
supplying each other with copies of all material correspondence, filings
or
communications between such Party and any Governmental Authority with respect
to
this Agreement.
Section
6.9 Publicity.
Each
of
the Company and Purchaser undertakes to consult with each other prior to
issuing
any immediate reports or press releases or otherwise making public announcements
with respect to the Merger and the other Transactions, except as may be required
by Law or by any listing agreement with or rules of any national securities
exchange or by the request of any Governmental Authority; provided,
however,
that
the name “Xxxxxxx” or any references thereto shall not, unless required by
applicable Law or by any listing agreement with, or rules, of any national
securities exchange or by the request of any Governmental Authority, be used
in
any respect, without the prior consent of Purchaser. Each of Purchaser and
the
Company may make any public statement in response to specific questions
presented by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as such statements
are substantially similar to previous press releases, public disclosures
or
public statements made by Purchaser or the Company in accordance with this
Section 6.9.
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Section
6.10 Approvals.
(a) Legal
Proceedings.
Each
of
the Company and Purchaser shall:
(i) give
the
other Parties prompt notice of the commencement of any legal proceeding by
or
before any Israeli Governmental Authority with respect to the Merger and
keep
the other Parties informed as to the status of any such legal proceeding;
and
(ii) promptly
inform the other Parties of any communication to the Commissioner of Israeli
Restrictive Trade Practices, the Investment Center, the Israeli Securities
Authority, the Israeli Tax Authority, the Companies Registrar or any other
Israeli Governmental Authority regarding the Merger or any of the other
Transactions. The Company and Purchaser 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 Israeli legal
proceeding relating to the Merger. In addition, except as may be prohibited
by
any Israeli Governmental Authority or by any Israeli Legal Requirement, in
connection with any such legal proceeding under or relating to the Restrictive
Trade Law or any other Israeli fair trade law, the Company and Purchaser
will
each permit authorized Representatives of the other Party to be present at
each
such meeting or conference relating to any such legal proceeding and to have
reasonable access to and be consulted in connection with any document, opinion
or proposal made or submitted to any Israeli Governmental Authority in
connection with any such legal proceeding.
(b) Israeli
Tax Ruling.
As
soon
as reasonably practicable after the execution of this Agreement, the Company
shall instruct its Israeli counsel, advisors and accountants to prepare and
file
with the Israeli Tax Authority applications for:
(i) a
ruling
which will be in form and substance to Purchaser's reasonable satisfaction,
providing, among other things: (i) with respect to holders of Company
Shares that are non-Israeli residents (as defined in the Ordinance), that
Purchaser will be exempt from any obligation to withhold Israeli Tax at source
from any consideration payable or otherwise deliverable pursuant to this
Agreement, including, without limitation, the Merger Consideration, or
clarifying that no such obligation exists; and (ii) with respect to holders
of Company Shares that are Israeli residents (as defined in the Ordinance),
clearly instructing Purchaser, in the absence of an exemption from Tax
withholding to be provided by any such holder prior to the Closing Date,
the way
such withholding at source is to be executed, and in particular the rate
or
rates of withholding to be applied (the "Israeli
Withholding Tax Ruling").
In
the event that the Israeli Withholding Tax Ruling is not obtained prior to
the
Closing Date, the Company shall instruct its Israeli counsel, advisors and
accountants to promptly apply to the Israeli Tax Authority for an extension
of
time with respect to the obligation to deduct or withhold Israeli Tax at
source
from any consideration payable or otherwise deliverable pursuant to this
Agreement (such extension, if granted by the Israeli Tax Authority, a
"Withholding
Tax Extension");
and
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43 -
(ii) a
ruling
which will be in form and substance to Purchaser's reasonable satisfaction,
providing, among other things, that the treatment of Company 102 Securities
contemplated by Section 3.3, prior to the lapse of the minimum trust period
required by Section 102 of the Ordinance (the "102
Trust Period"),
will
not be treated as a breach of the provisions of Section 102 of the
Ordinance, provided
that the
applicable Option Cash Payment and Restricted Company Share Cash Payment
paid to
holders of said Company 102 Securities is deposited for the duration of the
102
Trust Period with the 102 Trustee (the "Israeli
Options Tax Ruling").
Each
of
the Company and Purchaser 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 applications and in the
preparation of any written or oral submissions that may be necessary, proper
or
advisable to obtain the Israeli Withholding Tax Ruling and the Israeli Options
Tax Ruling.
Section
6.11 Directors'
and Officers' Insurance; Indemnification Agreements.
(a) From
and
after the Effective Time, Purchaser shall cause the Company and the Surviving
Corporation to fulfill and honor all the obligations of the Company pursuant
to
the indemnification agreements listed on Section 6.11 of the Company Disclosure
Schedule, with each individual who at the Effective Time is, or at any time
prior to the Effective Time was, a director or officer of the Company or
of any
current or former Subsidiary of the Company (each, an "Indemnitee"
and,
collectively, the "Indemnitees")
which
agreements shall survive the Transactions and continue in full force and
effect
in accordance with their respective terms. Without limiting the foregoing,
Purchaser, from and after the Effective Time until seven years from the
Effective Time, shall cause, unless otherwise required by Law, the articles
of
association, certificate of incorporation and by-laws (as applicable) and
comparable organizational documents of the Surviving Corporation and each
of its
Subsidiaries to contain provisions no less favorable to the Indemnitees with
respect to exculpation and limitation of liabilities of directors and officers,
insurance and indemnification than are set forth as of the date of this
Agreement in the Company Charter Documents and comparable organizational
documents of the relevant Subsidiaries, which provisions shall not be amended,
repealed or otherwise modified in a manner that would adversely affect the
rights thereunder of the Indemnitees with respect to exculpation and limitation
of liabilities or insurance and indemnification.
(b) The
Company may, at its request, require Purchaser to purchase at the Effective
Time, a "tail" policy (the "Tail
Policy"),
which
policy shall be exclusively "A side" coverage, from an insurer with a Standard
& Poor's rating of at least A, which (i) has an effective term of seven
(7) years from the Effective Time, (ii) covers each Indemnitee and
(iii) contains terms that are no less favorable than those of the Company's
directors' and officers' insurance policy in effect on the date of this
Agreement. If and to the extent such a policy has been purchased prior to
the
Effective Time, Purchaser shall, and shall cause the Surviving Corporation
to,
maintain such policy in effect and continue to honor the obligations thereunder.
(c) The
Indemnitees to whom this Section 6.11 applies shall be intended third party
beneficiaries of this Section 6.11. The provisions of this
Section 6.11 are intended to be for the benefit of each Indemnitee, his or
her successors, heirs or representatives. Purchaser shall pay all reasonable
expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnitee in enforcing the indemnity and other obligations provided in this
Section 6.11.
(d) This
Section 6.11 shall be binding upon Purchaser and the Surviving Corporation
and
their respective successors and assigns. In the event that Purchaser or the
Surviving Corporation or any of their respective successors or assigns
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or
transfers or conveys all or a majority 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 Purchaser or the Surviving Corporation, as applicable,
shall succeed to the obligations set forth in this Section 6.11. If the
Tail Policy is not purchased, for the seven-year period commencing immediately
after the Effective Time, Purchaser shall maintain in effect the Company's
current directors' and officers' liability insurance covering acts or omissions
occurring at or prior to the Effective Time with respect to those Persons
who
are currently (and any additional persons who prior to the Effective Time
become) covered by the Company's directors' and officers' liability insurance
policy on terms and scope with respect to such coverage, and in amount, not
less
favorable to such individuals than those of such policy in effect on the
date
hereof (or Purchaser may substitute therefor policies, issued by reputable
insurers, of at least the same coverage with respect to matters occurring
prior
to the Effective Time, including a "tail" policy); provided, however, that,
if
the aggregate annual premiums for such insurance shall exceed 300% of the
current aggregate annual premium, then Purchaser shall provide or cause to
be
provided a policy for the applicable individuals with the best coverage as
shall
then be available at an annual premium of 300% of the current aggregate annual
premium.
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Section
6.12 Merger
Sub Obligations.
Purchaser
shall cause Merger Sub to comply with all of its obligations under this
Agreement. During the period from the date of this Agreement through the
Effective Time, except as expressly provided in this Agreement, Merger Sub
shall
not, and Purchaser shall not permit Merger Sub to, conduct any business or
undertake any activities except as required to perform its express obligations
hereunder.
Section
6.13 Leases
with the Israeli Land Administration.
The
Company shall use its reasonable best efforts to:
(a) obtain
all permits, approvals and authorization from any third party or Governmental
Authority (including, without limitations, the local municipality and the
Israeli Land Administration) that are required in order to qualify the actual
current use of each Real Estate Asset (as defined below) by the Company as
lawful and permitted;
(b) pay
all
Taxes including, without limitations, appreciation Tax and permit fees ("hetel
hashbacha" and "dmey heter"") required in order to qualify the actual current
use of each Real Estate Asset by the Company as lawful and permitted;
and
(c) obtain
all approvals and permits (including, without limitations, all Tax approvals)
required in order to lawfully register the rights in all Real Estate Assets
in
the name of the Company in the records of the Israeli Land Administration
and/or
the Israeli Land Registration Chamber.
The
Company shall promptly inform Purchaser of any claim or legal proceeding
commenced against it or any of its officers or directors in connection with
the
Real Estate Assets. At the reasonable request of Purchaser, the Company shall
take any commercially reasonable action required to remove any material
Encumbrances from the Real Estate Assets and the rights pertaining thereto
for
the benefit of any Person other than the Company and its Subsidiaries. As
used
herein the term "Real
Estate Assets"
shall
mean those material real estate assets owned and/or purchased and/or leased
by
the Company from the Israeli Land Administration (or is entitled to be
registered as such with the Israeli Land Administration) set forth on
Section 6.13 of the Company Disclosure Schedule.
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Section
6.14 Employee
Matters.
(a) During
the one-year period commencing on the Closing Date, Purchaser shall provide
or
shall cause the Surviving Corporation to provide to continuing employees
of the
Company and any of its Subsidiaries ("Company
Employees")
compensation and benefits (other than equity based compensation plans) that
are,
in the aggregate, to any such employee, no less favorable than the compensation
and benefits being provided to Company Employees immediately prior to the
Effective Time under the Company Employee Plans (excluding any stay bonuses,
change of control or severance payments made in connection with or as a result
of the transactions contemplated by this Agreement).
(b) Without
limiting Section 6.14(a), Purchaser shall cause the Surviving Corporation
to honor, fulfill and discharge, the Company's and its Subsidiaries' obligations
under any Company Employee Plan and all existing collective agreements and
arrangements.
(c) For
purposes of eligibility under the Employee Benefit Plans of Purchaser, the
Company, the Company Subsidiaries and their respective Affiliates providing
benefits to any Company Employees after the Closing (the "New
Plans"),
and
for purposes of accrual of vacation and other paid time off and severance
benefits under New Plans, each Company Employee shall be credited with his
or
her years of service with the Company, the Company Subsidiaries and their
respective Affiliates (and any additional service with any predecessor employer)
before the Closing, to the same extent as such Company Employee was entitled,
before the Closing, to credit for such service under any similar Company
Employee Plan. In addition, and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Company
Employee Plan in which such Company Employee participated immediately before
the
replacement; and (ii) for purposes of each New Plan providing medical,
dental, pharmaceutical and/or vision benefits to any Company Employee, Purchaser
shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for such employee and his or her
covered dependents, and Purchaser shall cause any eligible expenses incurred
by
such employee and his or her covered dependents under an Company Employee
Plan
during the portion of the plan year of the New Plan ending on the date such
employee's participation in the corresponding New Plan begins to be taken
into
account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such employee
and his or her covered dependents for the applicable plan year as if such
amounts had been paid in accordance with such New Plan.
(d) Following
the Effective Time, Purchaser shall cause the Surviving Corporation and its
Subsidiaries to honor the collective bargaining agreements identified in
Section 6.14(d) of the Company Disclosure Schedule.
Section
6.15 Conduct
of Business by Purchaser.
Purchaser
and Merger Sub covenant and agree with the Company that between the date
hereof
and the Effective Time or the date, if any, on which this Agreement is
terminated pursuant to Section 8.1, each of Purchaser and Merger
Sub:
(a) shall
not, and shall not permit any of their respective Subsidiaries to, except
as
provided on Section 6.15 of the Purchaser Disclosure Schedule, issue, sell,
pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or Encumbrance of, (i) any shares of the capital stock or other
ownership interest in Purchaser or Merger Sub or any such Subsidiaries or
(ii) any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock or other ownership interests
in
Purchaser or Merger Sub or any such Subsidiaries; and
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46 -
(b) shall
not, and shall not permit any of its Affiliates to, acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial portion
of the
assets of or equity in, or by any other manner, any business or any Person
or
other business organization or division thereof, or otherwise acquire or
agree
to acquire any assets if such business or Person competes in any line of
business of the Company if the entering into of a definitive agreement relating
to or the consummation of such acquisition, merger or consolidation could
reasonably be expected to (i) impose any delay in the obtaining of, or
increase the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Authority necessary to consummate
the transactions contemplated by this Agreement or the expiration or termination
of any applicable waiting period, (ii) increase the risk of any
Governmental Authority entering an order prohibiting the consummation of
the
transactions contemplated by this Agreement, (iii) increase the risk of not
being able to remove any such order on appeal or otherwise or (iv) delay or
prevent the consummation of the Merger or the other Transactions contemplated
by
this Agreement.
ARTICLE
VII
CONDITIONS
PRECEDENT
Section
7.1 Conditions
to Each Party's Obligation to Effect the Merger.
The
respective obligation of each Party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholders
Approval.
The
Company Shareholder Approval shall have been obtained in accordance with
applicable Law and the Articles of Association of the Company.
(b) Governmental
Consents.
The
Governmental Consents listed on Section 7.1(b) of the Company Disclosure
Schedule shall have been obtained or the applicable waiting periods shall
have
expired or been terminated.
(c) Israeli
Statutory Waiting Periods.
At
least fifty (50) days shall have elapsed after the filing of the Merger
Proposals with the Companies Registrar and at least thirty (30) days shall
have
elapsed after the approval of the Merger by the shareholders of each of the
Company and Merger Sub.
(d) Certificate
of Merger.
The
Company and Merger Sub shall have received the Merger Certificate from the
Companies Registrar.
(e) Injunction.
No
injunction, judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court
or
other Governmental Authority of competent jurisdiction or other similar legal
restraint or prohibition (collectively, "Restraints")
preventing, enjoining, restraining, prohibiting or making illegal the
consummation of the Merger shall be in effect.
Section
7.2 Conditions
to Obligations of the Company to Effect the Merger.
The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) (i) The
representations and warranties of Purchaser and Merger Sub contained in
Section 5.2 and 5.5 shall be true and correct as of the Closing Date as if
made on and as of the Closing Date and (ii) the remaining representations
and warranties of Purchaser and Merger Sub set forth herein shall be true
and
correct as of the date hereof and as of the Closing Date (except to the extent
that any such representation or warranty is expressly made as of an earlier
specific date, in which case as of such date), except, in the case of (ii),
for
such failures to be true and correct as would not prevent consummation of
the
Merger or the performance of Purchaser's and Merger Sub's obligations hereunder.
The Company shall have received a certificate signed on behalf of Purchaser
by
the chief executive officer of Purchaser to such effect.
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47 -
(b) Purchaser
and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing
Date.
Section
7.3 Conditions
to Obligations of Purchaser and Merger Sub to effect the Merger.
The
obligation of Purchaser and Merger Sub to Effect the Merger is further subject
to satisfaction or waiver of the following conditions:
(a) The
representations and warranties of the Company contained in
(i) Section 4.3 shall be true and correct in all material respects as
of the Closing Date as if made on and as of the Closing Date,
(ii) Section 4.6(b) shall be true and correct as of the Closing Date
as if made on and as of the Closing Date, (iii) Section 4.2 shall be
true and correct as of the Closing Date in all but de
minimis
respects
(which for purposes of this Agreement shall mean an untruth, breach or violation
of such representation with respect to the fully diluted share capital of
the
Company which would result in an increase in the Aggregate Merger Consideration
of U.S. $3,000,000 or less in the aggregate) as if made on and as of the
Closing
Date (except to the extent such representation or warranty is expressly made
as
of a specific earlier date, in which case as of such date), and (iv) the
remaining representations and warranties of the Company set forth herein
shall
be true and correct as of the Closing
Date
(except
to the extent that any such representation or warranty is expressly made
as of a
specific earlier date, in which case as of such date) except for such failures
to be true and correct as would not have, individually or in the aggregate,
a
Material Adverse Effect. Purchaser shall have received a certificate signed
on
behalf of the Company by the chief executive officer of the Company to such
effect.
(b) The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date.
(c) Between
the date of this Agreement and the Closing Date, there shall not have been
any
Material Adverse Effect.
ARTICLE
VIII
TERMINATION
Section
8.1 Termination.
This
Agreement may be terminated at any time prior to the Effective Time, whether
before or after obtaining the requisite approval of the shareholders of the
Company and Merger Sub:
(a) by
mutual
written consent of Purchaser and the Company;
(b) by
either
Purchaser or the Company if:
(i) (i) the
Merger shall not have been consummated by November 30, 2007 (the
"End
Date")
and
(ii) the Party seeking to terminate this Agreement pursuant to this
Section 8.1(b)(i) shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have caused to
the
failure to consummate the Merger on or before such date; provided
that,
if, as of the End Date, all conditions to this Agreement shall have been
satisfied or waived (other than those that are satisfied by action taken
at the
Closing) other than the conditions set forth in Section 7.1(b), (c), (d) or
(e), then the Company or Purchaser may extend the End Date to January 31,
2008;
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48 -
(ii) if
the
Company Shareholders' Meeting shall have been duly held and the votes cast
at
such meeting (including any adjournment or postponement thereof) shall be
insufficient to constitute the Company Shareholder Approval;
(iii) any
Restraint having any of the effects set forth in Section 7.1(e) shall be in
effect and shall have become final and non-appealable, provided,
however,
that
the right to terminate this Agreement under this Section 8.1(b)(iii) shall
not be available to a Party if the issuance of such final, non-appealable
Restraint was primarily due to the failure of such Party to perform any of
its
obligations under this Agreement; or
(iv) if
the
other Party shall have breached or failed to perform in any material respect
any
of its representations, warranties, covenants or other agreements contained
in
this Agreement that (i) would give rise to the failure of a condition set
forth in Article VII and (ii) cannot be or has not been cured within
30 calendar days after receipt of written notice thereof from the other Party;
provided
that the
Party seeking termination shall not be in material breach of its obligations
under this Agreement;
(c) by
the
Company, in accordance with Section 6.5(e), provided
that it
has complied in all material respects with the provisions of Section 6.5
and that, to the extent required by Section 8.3, it has simultaneously paid
Purchaser the Break-Up Fee or the Excluded Party Break-Up Fee, as
applicable,
(d) by
Purchaser, in each case if Purchaser is not in material breach of its
obligations under this Agreement, if:
(i) the
Board
of Directors or any committee thereof shall have effected a Change of
Recommendation, or failed to include its recommendation of this Agreement
and
the Merger in the information statement to be sent to the Company's shareholders
pursuant to Section 6.7, or otherwise willfully and materially breaches the
provisions of Section 6.5 or 6.7; or
(ii) a
tender
or exchange offer relating to all of the Company Shares shall have been
commenced by a Person unaffiliated with Purchaser, and the Company shall
not
have sent to its shareholders pursuant to Rule 14d-9 or 14e-2 promulgated
under the Exchange Act or Section 329 of the Companies Law, within ten
Business Days after such tender or exchange offer is first commenced and
published sent or given, a statement disclosing that the Company recommends
rejection of such tender or exchange offer; or
(e) by
the
Company, if the conditions set forth in Section 7.1 and Section 7.3 of
this Agreement are satisfied (other than those conditions that by their terms
are to be satisfied at Closing) and Purchaser has failed to consummate the
Merger no later than five (5) Business Days after the Company's delivery
of
notice of such satisfaction to Purchaser.
Section
8.2 Notice
of Termination; Effect of Termination.
Any
termination of this Agreement under Section 8.1 above will be effective
immediately upon written notice of the terminating Party to the other Parties
hereto specifying the provision of this Agreement on which such termination
is
based. If this Agreement is terminated by either the Company or Purchaser
as
provided in Section 8.1, this Agreement shall forthwith become void and
shall have no further effect, without any liability or obligation on the
part of
Purchaser or the Company, except (i) for claims for damages to the extent
that such termination results from the willful and material breach by a Party
of
any of its representations, warranties, covenants or agreements in this
Agreement; provided,
that in
any event, the amount of damages to be paid by Purchaser for any such breach
shall be limited to the amount of the Purchaser Liquidated Damages and the
amount of damages to be paid by the Company and its Subsidiaries and Affiliates
for any such breach shall be limited to the amount of the Break-Up Fee, and
(ii) notwithstanding the foregoing, the Guarantee, the Confidentiality
Agreement, Section 8.1, this Section 8.2, Section 8.3 and
Article IX shall survive any termination of this Agreement in accordance
with their respective terms.
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49 -
Section
8.3 Fees
and Expenses.
(a) Expenses.
Whether
or not the Merger is consummated and except as otherwise provided in this
Agreement, including without limitation Section 8.3(b), each Party shall
bear its own expenses in connection with the Transactions.
(b) Termination
Fees.
Notwithstanding any provision in this Agreement to the contrary if:
(i) (A) prior
to the termination of this Agreement, any Acquisition Proposal (for purposes
of
this subsection, substituting 50% for the 20% threshold set forth in the
definition of Acquisition Proposal) or the bona fide intention of any Person
to
make an Acquisition Proposal is publicly proposed or publicly disclosed or
otherwise made known to the Company prior to, and not withdrawn at or prior
to
the time of, the relevant termination (each, a "Qualifying
Transaction"),
(B) this Agreement is terminated by Purchaser or the Company pursuant to
Section 8.1(b)(i) or Section 8.1(b)(ii) or by Purchaser pursuant to
Section 8.1(b)(iv) and (C) concurrently with or within twelve (12)
months after such termination, the Company enters into a definitive agreement
with respect to or consummates any Qualifying Transaction, then the Company
shall, concurrently with the consummation of the Qualifying Transaction,
pay to
Purchaser a fee of $45.0 million in cash (the "Break-Up
Fee")
(in
any event net of any Purchaser Expense Reimbursement previously paid by the
Company);
(ii) this
Agreement is terminated by the Company on or prior to the tenth Business
Day
following the Solicitation Period End Date pursuant to Section 8.1(c) in
connection with a Superior Proposal made by an Excluded Party, the Company
shall, concurrently with the consummation of such Superior Proposal, pay
to
Purchaser a fee of $22.5 million in cash (the "Excluded
Party Break-Up Fee");
provided,
however,
that if
the initial Notice Period begins on or prior to the tenth Business Day following
the Solicitation Period End Date, such tenth Business Day shall be tolled
until
the end of all applicable Notice Periods with respect to that specific Excluded
Party for which such written notice was delivered pursuant to
Section 6.5(e)(i) and the Company shall be entitled to pay the Excluded
Party Break-Up Fee rather than the Break-Up Fee as required by
Section 8.3(b)(iii) below if the Agreement is terminated by the Company
pursuant to Section 8.1(c) immediately following the end of all applicable
Notice Periods as a result of the Superior Proposal made by such Excluded
Party;
(iii) this
Agreement is terminated by the Company pursuant to Section 8.1(c)
(A) in connection with a Superior Proposal made by a Person other than an
Excluded Party, or (B) except as provided in Section 8.3(b)(ii) above,
on or after the eleventh
Business
Day following the Solicitation Period End Date in connection with a Superior
Proposal made by an Excluded Party, the Company shall, concurrently with
the
consummation of such Superior Proposal, pay to Purchaser the Break-Up Fee;
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50 -
(iv) this
Agreement is terminated by Purchaser pursuant to Section 8.1(d)(i) (unless
the Company terminated this Agreement pursuant to Section 8.1(c) in connection
with such Change of Recommendation) or Section 8.1(d)(ii), the Company
shall pay to Purchaser, within two (2) days of such termination, the Break-Up
Fee.
(c) If:
(i) (A) prior
to the termination of this Agreement, an Acquisition Proposal (for purposes
of
this subsection, substituting 50% for the 20% threshold set forth in the
definition of Acquisition Proposal) or the bona fide intention of any Person
to
make an Acquisition Proposal is publicly proposed or publicly disclosed or
otherwise made known to the Company prior to, and not withdrawn at or prior
to
the time of the Company General Meeting, and (B) following the occurrence
of an event described in the preceding clause (A), this Agreement is terminated
by the Company or Purchaser pursuant to Section 8.1(b)(i);
(ii) Purchaser
or the Company shall terminate this Agreement pursuant to
Section 8.1(b)(ii); or
(iii) Purchaser
shall terminate this agreement pursuant to Section 8.1(b)(iv);
then,
in
any such event, under clause (i), (ii) or (iii) of this Section 8.3(c), the
Company shall pay to Purchaser or its designees, as promptly as possible
(but in
no event later than two (2) Business Days following termination) following
the
delivery by Purchaser of an invoice therefor, all reasonable and documented
out-of-pocket fees and expenses incurred by Purchaser and Merger Sub in
connection with the transactions contemplated by this Agreement, including
the
Financing (the "Purchaser
Expense Reimbursement"),
provided
that the
Company shall not be required to pay more than an aggregate Purchaser Expense
Reimbursement pursuant to this Section 8.3(c) of (i) $6.0 million in the
case of Section 8.3(c)(ii), (ii) $9.0 million in the case of Section 8.3(c)(i)
and (iii) $12.5 million in the case of Section 8.3(c)(iii).
(d) The
Excluded Party Break-Up Fee, the Break-Up Fee and the Purchaser Expense
Reimbursement, as applicable, shall be paid in each case by wire transfer
of
same day funds as directed by Purchaser reasonably in advance and, once paid,
the Excluded Party Break-Up Fee, the Break-Up Fee and the Purchaser Expense
Reimbursement (in the case where the Excluded Party Break-Up Fee or the Break-Up
Fee is not otherwise payable) shall be the sole and exclusive remedy available
to Purchaser and Merger Sub following termination of this Agreement. Upon
payment of the Excluded Party Break-Up Fee or the Break-Up Fee and/or the
Purchaser Expense Reimbursement (in the case where the Excluded Party Break-Up
Fee or the Break-Up Fee is not otherwise payable), as applicable, the Company
shall have no further liability with respect to this Agreement or the
Transactions contemplated hereby to Purchaser, Merger Sub, their shareholders,
Affiliates or otherwise. Notwithstanding any provision in this Agreement
to the
contrary, in no event shall the Company be required to (i) pay both the
Excluded Party Break-Up Fee and the Break-Up Fee, (ii) pay either such fee
on more than one occasion, or (iii) pay aggregate Purchase Expense
Reimbursements in excess of the highest applicable cap set forth in Section
8.3(c). Any such payments shall be reduced by any amounts as may be required
to
be deducted or withheld therefrom under applicable Tax Law.
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51 -
(e) Notwithstanding
any provision in this Agreement to the contrary, if this Agreement is terminated
pursuant to Section 8.1(e), then in such event Purchaser shall pay to the
Company a fee of $45.0 million in cash (the "Purchaser
Liquidated Damages"),
such
payment to be made concurrently with termination of this Agreement by wire
transfer of same day funds as directed by the Company reasonably in advance,
it
being understood that in no event shall Purchaser be required to pay the
Purchaser Liquidated Damages referred to in this Section 8.3(e) on more
than one occasion and the Purchaser Liquidated Damages, once paid, shall
be the
sole and exclusive remedy available to the Company pursuant to this Agreement
(except to the extent provided in Section 8.2). Upon Payment of the Purchaser
Liquidated Damages, Purchaser and Merger Sub shall have no further liability
with respect to this Agreement or the Transactions to the Company, its
shareholders, affiliates or otherwise (except to the extent provided in Section
8.2). Any such payment shall be reduced by any amounts as may be required
to be
deducted or withheld therefrom under applicable Tax Law.
(f) Each
of
the Company and Purchaser acknowledges that the agreements contained in this
Section 8.3 are an integral part of the Transactions. In the event that the
Company shall fail to pay the Excluded Party Break-Up Fee, the Break-Up Fee
or
the Purchaser Expense Reimbursement when due or Purchaser shall fail to pay
the
Purchaser Liquidated Damages when due, the Company or Purchaser, as the case
may
be, shall reimburse the other Party for all reasonable costs and expenses
actually incurred or accrued by such other party (including reasonable fees
and
expenses of counsel) in connection with the collection under and enforcement
of
this Section 8.3. Each of the Parties acknowledges that the Excluded Party
Break-Up Fee, the Break-Up Fee, the Purchaser Expense Reimbursement and
Purchaser Liquidated Damages, as applicable, are, under the circumstances
of
this Agreement, reasonable compensation for damages that the relevant Party
expects to suffer in the circumstances in which such fees are payable.
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Amendment.
This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party to this Agreement; provided,
however,
that,
after approval of the Merger by shareholders of the Company, there shall
not be
any amendment that by Law or in accordance with the rules of any stock exchange
requires further approval by the shareholders of the Company without such
further approval of such shareholders nor any amendment or change not permitted
under applicable Law. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
Section
9.2 Governing
Law and 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-Jaffa, and each of the parties hereby
submits irrevocably to the jurisdiction of such courts. The parties hereby
(i) 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 9.4 or
in such other manner as may be permitted by Law shall be valid and sufficient
service thereof, (ii) agree that they will not attempt to deny or defeat
such jurisdiction by motion or other request for leave from any such court,
and
(iii) agree that they will not bring any action relating this Agreement or
the Transactions in any court other than the court located in Tel Aviv-Jaffa.
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.
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Section
9.3 Extension;
Waiver.
At
any
time prior to the Effective Time, a Party may (a) extend the time for the
performance of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties of the
other Parties contained in this Agreement or in any document delivered pursuant
to this Agreement or (c) waive compliance by the other Party with any of
the agreements or conditions contained in this Agreement. Any agreement by
a
Party to such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such Party. The failure of any
Party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
Section
9.4 Notices.
All
notices, claims, demands and other communications hereunder shall be in writing
and shall be deemed given when delivered personally or by internationally
recognized overnight courier (providing proof of delivery), or sent via fax
or
electronic email to the Parties at the following addresses, email addresses
or
fax numbers (or at such other address, email address or fax numbers as shall
be
specified by like notice):
(a) If
to the Purchaser or Merger Sub, to:
Epsilon
1
Ltd.
3
Xxxxxx
Xxxxxx Xxxxxx
Xxx-Xxxx,
00000
Xxxxxx
c/o
Xxxxx
Xxxxxxx, Arad & Co.
Fax
No.:
000-0-000-0000
Email
address: xxxxx@xxx-xxx.xxx
Attention:
Xxxxx Xxxxxxx
With
a
copy (which shall not constitute notice) to:
Xxxxxxxx
Chance US LLP
00
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No:
000-000-0000
Email
address: Xxxx.Xxxxxxxx@XxxxxxxxXxxxxx.xxx
Xxxxx.Xxxxxxx@XxxxxxxxXxxxxx.xxx
Attention:
Xxxx X. Xxxxxxxx, Esq.
G.
Xxxxx
Xxxxxxx, Esq.
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53 -
With
a
copy (which shall not constitute notice) to:
Meitar,
Liquornik, Geva & Lesham Xxxxxxxxx
00
Xxxx
Xxxxxx Xxxxxx Xxxx
Xxxxx
Xxx, 00000
Israel
Fax
No.:
000-0-000-0000
Email
address: xxx@xxxxxx.xxx
Attention:
Xxx Xxxx
(b) If
to the Company, to:
ECI
Telecom Ltd.
00
Xxxxxxx Xxxxxx
Xxxxxx
Xxxxx 00000, Xxxxxx
Fax
No:
000-0-000-0000
Email
address: xxxx.xxxxxxxxxx@xxxxxxx.xxx
Attention:
General Counsel
With
a
copy (which shall not constitute notice) to:
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx
Xxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No:
000-000-0000
Email
address: xxxx@xxxxxxx.xxx
xxxxx@xxxxxxx.xxx
Attention:
Xxxxx Xxx, Esq.
Xxxxxx
Xxxx, Esq.
With
a
copy (which shall not constitute notice) to:
Goldfarb,
Levy, Eran, Meiri & Co.
0
Xxxxxxxx Xxxxxx
Xxx
Xxxx
00000, Xxxxxx
Fax
No:
000-0-0000000
Email
address: xxxx.xxxx@xxxxxxxx.xxx
xxxx.xxxxx@xxxxxxxx.xxx
Attention:
Xxxxxx X. Xxxx, Adv.
Xxxx X.
Xxxxx, Adv.
Section
9.5 Interpretation.
When
a
reference is made in this Agreement to a section or article, such reference
shall be to a section or article of this Agreement, unless otherwise clearly
indicated to the contrary. Whenever the words "include," "includes" or including
are used in this Agreement they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "herewith" and words
of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement,
and
annex, article, section, paragraph, exhibit and schedule references are
references to the annex, articles, sections, paragraphs, exhibits and schedules
of this Agreement, unless otherwise specified. The plural of any defined
term
shall have a meaning correlative to such defined term and words denoting
any
gender shall include all genders and the neuter. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning. Any reference to a Party to this Agreement or any other agreement
or
document contemplated hereby shall include such Party's successors and permitted
assigns. A reference to any legislation or to any provision of any legislation
shall include any modification, amendment, re-enactment thereof, any legislative
provision substituted therefore and all rules, regulations and statutory
instruments issued or related to such legislation. The headings and captions
in
this Agreement are for reference only and shall not be used in the construction
or interpretation of this Agreement. The Parties have participated jointly
in
the negotiation and drafting of this Agreement. If any ambiguity or question
of
intent or interpretation arises, this Agreement shall be construed as if
drafted
jointly by the Parties, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provision
of this Agreement. No prior draft of this Agreement or any course of performance
or course of dealing shall be used in the interpretation or construction
of this
Agreement. No parole evidence shall be introduced in the construction or
interpretation of this Agreement unless the ambiguity or uncertainty in issue
is
plainly discernable from a reading of this Agreement without consideration
of
any extrinsic evidence.
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54 -
Section
9.6 Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall
be
considered (whether delivered by fax or otherwise) one and the same agreement
and shall become effective when one or more counterparts have been signed
by
each of the Parties and delivered to the other Parties, it being understood
and
agreed that all Parties need not sign the same counterpart.
Section
9.7 Entire
Agreement; Third-Party Beneficiaries.
This
Agreement and the documents and instruments and other agreements among the
Parties hereto as contemplated by or referred to herein, including the
Confidentiality Agreement, the Equity Commitment Letters, the Guarantees,
the
Company Disclosure Schedule and the Purchaser Disclosure Schedule:
(a) constitutes
the entire agreement among the Parties with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, both written
and
oral, among the parties with respect to the subject matter of this Agreement;
and
(b) except
for (1) the rights of the Company's shareholders and holders of Restricted
Company Shares to receive the Merger Consideration at the Effective Time,
(2) the right of the holders of Company Share Options to receive the Option
Cash Payment at the Effective Time, (3) subject to Article VIII hereof, the
right of the Company, on behalf of its shareholders and holders of Company
Share
Options, to collect the Aggregate Merger Consideration (or any portion thereof)
and/or pursue damages in the event of Purchaser's or Merger Sub's breach
of this
Agreement or fraud, which right is hereby acknowledged and agreed by Purchaser
and Merger Sub, and (4) the provisions of Section 6.11 hereof, this
Agreement is not intended to and shall not confer upon any Person other than
the
Parties hereto any rights or remedies hereunder.
Section
9.8 Severability.
If
any
term or other provision of this Agreement or the application hereof is declared
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of
the Merger is not affected in any manner materially adverse to any Party.
If the
final judgment of a court of competent jurisdiction or other authority declares
that any term or provision hereof is invalid, void or unenforceable, the
Parties
agree that they shall negotiate in good faith to modify this Agreement so
as to
effect the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the Merger be consummated as originally
contemplated to the fullest extent possible.
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55 -
Section
9.9 Other
Remedies; Specific Performance.
Except
as
otherwise provided herein, any and all remedies herein expressly conferred
upon
a Party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by Law or equity upon such Party, and the exercise by
a
Party of any remedy will not preclude the exercise of any other remedy. The
Parties hereto agree 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
the
Parties shall be entitled (without any requirement to post a bond or other
security) to seek one or more injunction or other equitable remedies to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they are entitled
at
Law or in equity.
Section
9.10 Assignment.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of Law or
otherwise by any of the Parties hereto without the prior written consent
of the
other Parties. No duties under this Agreement may be delegated, in whole
or in
part, by operation of Law or otherwise by any of the Parties hereto without
the
prior written consent of the other Parties. Any assignment or delegation
in
violation of this Section 9.10 shall be void. Subject to the aforesaid in
this Section 9.10, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the Parties and their respective
successors
and permitted assigns.
Section
9.11 Non-
Survival of Representations, Warranties and Agreements.
Except
as
set forth in Section 8.2, the representations, warranties and agreements in
this Agreement and any certificate delivered pursuant hereto by any Person
shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII of this Agreement, as the case may be, except that
this
Section 9.11 shall not limit any covenant or agreement of the Parties which
by its terms contemplates performance after the Effective Time or after
termination of this Agreement, including those contained in
Section 6.11.
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56 -
IN
WITNESS WHEREOF, Purchaser, Merger Sub and the Company have caused this
Agreement to be duly executed and delivered as of the date first
written.
|
EPSILON
1 LTD.
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||
| |
|
|
| By: |
/s/
Xxx Xxxxx
|
|
|
Name: Xxx
Xxxxx
|
||
|
Title:
Director
|
||
|
EPSILON
3 LTD.
|
||
| |
|
|
| By: |
/s/
Xxx Xxxxx
|
|
|
Name: Xxx
Xxxxx
|
||
|
Title:
Director
|
||
|
ECI
TELECOM LTD.
|
||
| |
|
|
| By: |
/s/
Rafi Maor
|
|
|
Name:
Rafi
Maor
|
||
|
Title:
President
and Chief Executive
Officer
|
||
