Section 3.8Litigation. As of the date hereof, except as disclosed in Parent’s 10-Q for the fiscal quarter ended July 1, 2007, there is no suit, arbitration, action or proceeding pending, or to the Parent’s Knowledge, threatened against or affecting the Parent or any of its Subsidiaries that, individually or in the aggregate with similar suits, arbitrations, actions or proceedings, would reasonably be expected to be material to the Parent and its Subsidiaries taken as a whole, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Parent or any of its Subsidiaries that is, or which would reasonably be expected to be, individually or in the aggregate with any similar judgments, decrees, injunctions, rules or orders, material to the Parent and its Subsidiaries taken as a whole.
Section 3.9Information Supplied. None of the information supplied or to be supplied by the Parent or Merger Sub for inclusion or incorporation by reference in any Company Disclosure Document, at the time filed at, the time provided to the Company’s shareholders or, if applicable, creditors, or at the time of the Company Meetings, 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 were made not misleading. Notwithstanding the foregoing, neither the Parent nor Merger Sub makes any representation or warranty with respect to any information supplied by the Company which is contained or incorporated by reference in the Company Disclosure Documents.
Section 3.10Merger Sub Board Approval. The Merger Sub board of directors has unanimously: (a) determined that the Merger is fair to, and in the best interests of, Merger Sub and its shareholders, and that, considering the financial position of the merging companies, no reasonable concern exists that the Surviving Company will be unable to fulfill the obligations of Merger Sub to its creditors existing as of immediately prior to the Closing; (b) approved this Agreement, the Merger and the other Transactions; and (c) determined to recommend that the shareholder of Merger Sub approve this Agreement, the Merger and the other Transactions.
Section 3.11Absence of Material Adverse Effect. Between December 31, 2006 and the date of this Agreement, there has not been any Material Adverse Effect on the Parent.
Section 3.12Tax Matters. Neither the Parent nor any of its Subsidiaries has taken any action or knows of any fact, agreement, plan or other circumstance that is reasonably likely to prevent the Merger from constituting a reorganization within the meaning of Section 368(a) of the Code. It is the intention of Parent and its Subsidiaries to continue at least one significant historic business line of the Company and its Subsidiaries, taken together, or to use at least a significant portion of their business assets, taken together, in a business, in each case within the meaning of Section 1.368-1(d) of the United States Income Tax Regulations.
Section 3.13Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions, has engaged in no other business activities, has incurred no material liabilities, and has conducted its operations only as contemplated hereby. The Parent indirectly owns, beneficially and of record, all of the issued and outstanding shares of Merger Sub.
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ARTICLE 4
CONDUCT PRIOR TO THE EFFECTIVE TIME
Section 4.1Conduct of Business by the Company. Except as otherwise expressly contemplated by this Agreement, as required by applicable Legal Requirements, as set forth in Section 4.1 of the Company Disclosure Letter or as consented to in writing by the Parent (which consent or denial of such request for consent shall not be unreasonably delayed), during the period from the date of this Agreement to the earlier to occur of the Effective Time or termination of this Agreement pursuant to Article 7, 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 and in compliance in all material respects with all applicable Legal Requirements, pay its material debts and Taxes when due (subject to good faith disputes over such debts or Taxes), pay or perform other material obligations when due, and, to the extent consistent therewith, use commercially reasonable efforts to (x) preserve intact their current business organizations, (y) keep available the services of their current officers and key employees and (z) preserve their relationships with those Persons having business dealings with them, in each case to the end that their goodwill and ongoing businesses shall not be impaired in any material respect.
Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier to occur of the Effective Time or termination of this Agreement pursuant to Article 7, except as otherwise expressly contemplated by this Agreement, as set forth on Section 4.1 of the Company Disclosure Letter, as required by applicable Legal Requirements, or as consented to in writing by the Parent (which consent or denial of such request for consent shall not be unreasonably delayed), the Company shall not, and shall not permit any of its Subsidiaries to:
| (a) Waive any stock repurchase rights, accelerate, (other than in accordance with written agreements outstanding on the date hereof and disclosed on Section 2.3 or 2.11(b) of the Company Disclosure Letter), amend or change the period of exercisability of any Company Share Option, reprice any Company Share Option or authorize cash payments in exchange for any Company Share Option, or allow any new offering period to begin under the ESPP; |
| (b) (i) Grant any severance or termination pay to any officer, employee or consultant, except pursuant to written Employment Agreements existing, or written policies existing, on the date hereof and included in Section 2.11(b)(ii) of the Company Disclosure Letter, or as required by applicable Legal Requirements; or (ii) adopt any new severance plan, agreement, custom, policy or arrangement or amend or modify or alter in any manner any severance plan, agreement, custom, policy or arrangement existing on the date hereof, or (iii) grant any equity based compensation, whether payable in cash or shares, including any Company Share Options, except (x) pursuant to written Employment Agreements existing on the date hereof and included in Section 2.11(b)(ii) of the Company Disclosure Letter; and (y) the issuance of Company Shares upon exercise of vested Company Share Options and as permitted pursuant to Section 4.1(f); |
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| (c) Transfer or license to any third Person or otherwise extend, amend or modify in any material respect any rights of any third Person to Company Intellectual Property, including Company Registered Intellectual Property Rights or any other Intellectual Property Rights that are used or held for use in the business of the Company, or enter into any agreements or make other commitments or arrangements to grant, transfer or license to any Person future Intellectual Property Rights, other than non-exclusive licenses granted in the ordinary course of business consistent with past practices;provided that any such non-exclusive license providing for aggregate committed or reasonably expected consideration in excess of $500,000 over the term of such license shall require prior written notice to the Parent andprovided,further, that in no event, despite the Company’s past practices, shall the Company or any Subsidiary of the Company: (i) license on an exclusive basis or sell or otherwise transfer (including any joint ownership interests), or offer to so exclusively license or sell (or otherwise transfer (including any joint ownership interests), any Company Intellectual Property or any other Intellectual Property Rights that are used or held for use in the business of the Company, including Company Registered Intellectual Property; or (ii) enter into any agreement limiting the right of the Surviving Company or any of its Subsidiaries to engage in any line of business or to compete with any Person; (iii) grant “most favored nation” status or similar preferential terms to any Person; (iv) enter into any agreement or arrangement limiting the right of the Surviving Company or any of its Subsidiaries to use, sell, license, assign, transfer, convey, dispose of, or otherwise commercially exploit or enforce (including any non-asserts) the Company Intellectual Property or any other Intellectual Property Rights that are used or held for use in the business of the Company, including without limitation Company Registered Intellectual Property; or (v) enter into any agreement or arrangement containing any provision requiring or purporting to require the Parent to grant to any third party any right to any Intellectual Property Right owned by, or licensed to, the Parent. |
| (d) Except for the Cash Distribution to be made pursuant to Section 5.12(a), declare, set aside or pay any dividends on or make any other distributions (whether in cash, shares, equity securities or property) in respect of any share capital (other than to the Company or any wholly-owned subsidiary of the Company) or split, combine or reclassify any shares of capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any share capital; |
| (e) Purchase, redeem or otherwise acquire, directly or indirectly, any share capital of the Company or its Subsidiaries or any options, warrants, calls or rights to acquire any such shares, except in connection with (i) withholding to satisfy tax obligations with respect to Company Share Options, (ii) acquisitions without the payment of any consideration in connection with the forfeiture of equity awards or (iii) acquisitions in connection with the cashless exercise of Company Share Options, in each case subject to applicable Legal Requirements; |
| (f) Issue, deliver, sell, authorize, pledge or otherwise encumber (or propose any of the foregoing with respect to) any share capital or any securities convertible into or exercisable or exchangeable for share capital, or subscriptions, rights, warrants or options to acquire any share capital or any securities convertible into share capital, or enter into other Contracts of any character obligating it to issue any such shares or convertible securities, other than the issuance, delivery and sale of Company Shares pursuant to the exercise of Company Share Options outstanding as of the date of this Agreement; |
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| (g) Cause or permit or propose any amendments to the Company Charter Documents (or similar governing instruments of any of its Subsidiaries); |
| (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a substantial portion of the assets of, or by any other manner, any business or any Person or division thereof, or otherwise acquire or agree to acquire all or substantially all of the assets of any of the foregoing, enter into any joint ventures, strategic partnerships or similar alliances or form or agree to form any Subsidiaries; |
| (i) (i) Sell, lease, license, encumber, convey, assign, sublicense or otherwise dispose of or transfer any properties or assets or any interest therein (other than through licensing permitted by clause (c)), other than the sale, lease or disposition of property or assets which are not material, individually or in the aggregate, to the business of the Company and its Subsidiaries taken as a whole in the ordinary course of business consistent with past practice; (ii) modify, amend or terminate any existing Contract affecting the use, possession or operation of any properties or assets, other than the modification, amendment or termination of Contracts affecting the use, possession or operation of property or assets which are not material, individually or in the aggregate, to the business of the Company and its Subsidiaries taken as a whole; or (iii) grant or otherwise create or consent to the creation of any Lien, other than Permitted Liens, affecting any owned or leased real property or any part thereof; |
| (j) (i) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables consistent with past practice; or (ii) make any loans, advances or capital contributions to any Person (other than the Company or any of its Subsidiaries), except deposits, prepayments and other credits to suppliers or accounts receivable, prepaid royalties or notes receivable from customers, in each case made in the ordinary course of business consistent with past practice; |
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| (k) (i) Adopt or amend any Employment Agreement or Company Employee Plan, except as may be required by applicable Legal Requirements; or enter into any employment Contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will,” except as may be required by Legal Requirements, and who are not officers of the Company or any Subsidiary of the Company); (ii) commit to or agree to pay or pay any special bonus or special remuneration to any director or employee except, in each case, as may be required by any existing employee benefit plan, policy, arrangement, program or Contract disclosed in Section 2.11(b) of the Company Disclosure Letter; (iii) commit to increase or increase the salaries or wage rates or benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants except, in each case, as may be required by applicable Legal Requirements or by any existing employee benefit plan, policy, arrangement, program or Contract disclosed on Section 2.11(b) of the Company Disclosure Letter, or change or break with any material past customs or unwritten policies of the Company with respect to benefits not required by law with respect to its employees, including by way of example only, payment of severance pay in Israel under circumstances in which it is not legally required; (iv) take any action to accelerate the vesting or payment, or fund or any other way secure payment of compensation or benefits under any Company Employee Plans, to the extent not already provided in such plans disclosed on Section 2.11(b) of the Company Disclosure Letter; (v) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Employee Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (vi) forgive any loans to any of its directors, officers or employees; |
| (l) (i) Pay, discharge, or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms in existence as of the date hereof; (ii) waive the benefits of, agree to modify in any material manner, terminate, release any Person from or knowingly fail to enforce any confidentiality, standstill or similar Contract to which the Company or any of its Subsidiaries is a party or of which the Company or any of its Subsidiaries is a beneficiary; or (iii) settle any litigation (whether or not commenced prior to the date of this Agreement) other than a settlement reimbursable from insurance or calling solely for a cash payment in an aggregate amount less than $100,000 and in any case including a full release of the Company and its affiliates, as applicable; |
| (m) Modify or amend, or terminate, any material Company Contract, or waive, release or assign any material rights or claims thereunder; |
| (n) Revalue any of its assets (including writing down the value of capitalized inventory or writing off notes or accounts receivable) or make any change in accounting methods, principles or practices except (i) as required by GAAP or by any Governmental Entity or the Financial Accounting Standards Board (or similar organization), or (ii) as required by change in applicable Legal Requirements; |
| (o) (i) Hire any employee at or above the director level; (ii) increase the net number of employees of the Company and its Subsidiaries (taken as a whole by more than 15 engineering or marketing employees or by more than 3 non-engineering or marketing employees; or (iii) intentionally cause or encourage more than a 2% reduction or intention to terminate employment in its engineering and/or marketing departments; |
| (p) Other than (i) fees and expenses payable to Lehman Brothers pursuant to the engagement letter referred to in Section 2.16 and (ii) fees and expenses payable to legal, accounting and other professional service advisors on the terms disclosed in Section 4.1(p) of the Company Disclosure Letter, make any individual or series of related payments outside of the ordinary course of business (including payments to legal, accounting or other professional service advisors) in excess of $200,000 in the aggregate; |
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| (q) Enter into any new Contract or series of related Contracts (other than any extension or renewal of any existing Contract on substantially similar terms as the Contract being extended or renewed) requiring the Company or any of its Subsidiaries to pay in excess of $50,000 over the term of such Contract or series of related Contracts or any other Contract that would otherwise be material to the Company, except as otherwise permitted by any of the other paragraphs of this Section 4.1 or as contemplated (both as to timing and amount) by the general expense expenditure budget referred to in Section 4.1(q) of the Company Disclosure Letter; |
| (r) Make any material Tax election inconsistent with existing Tax elections, 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 material Tax ruling or any Tax ruling related to or which could reasonably be expected to delay the Transactions (or assist any shareholder doing so) other than the Israeli Tax Rulings; |
| (s) apply for or receive any Grant; |
| (t) make any capital expenditures except as contemplated (both as to timing and amount) by the capital expenditure budgets referred to in Section 4.1(t) of the Company Disclosure Letter; or |
| (u) Commit or agree in writing or otherwise to take any of the actions described in Section 4.1(a) through (t). |
Section 4.2Conduct of Business by the Parent. During the period from the date of this Agreement to the Effective Time or termination of this Agreement pursuant to Article 7, except as otherwise expressly contemplated by this Agreement, as required by applicable Legal Requirements or as consented to in writing by the Company (which consent or denial of such request for consent) shall not be unreasonably delayed), the Parent shall not, and shall not permit any of its Subsidiaries to:
| (i) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, shares, equity securities or property) in respect of any shares of capital stock (other than to the Parent or a wholly owned Subsidiary of the Parent), or redeem, repurchase or acquire any shares of capital stock; |
| (ii) Be party to any (or adopt a plan or agreement of) complete or partial liquidation, dissolution or similar transaction involving the Parent; |
| (iii) Acquire or agree to acquire, by merging, purchasing a substantial portion of the assets of or equity in, or by any other manner, any Person or portion thereof, or otherwise acquire or agree to acquire any assets, licenses or rights (other than the acquisition of inventory in the ordinary course of business consistent with past practice), if the entering into of a definitive agreement relating to or the consummation of such acquisition, merger or consolidation would reasonably be expected to materially delay the consummation of the Transactions; |
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| (iv) Permit Merger Sub to conduct any business or undertake any activities except as required to perform its obligations hereunder; or |
| (v) Commit or agree in writing or otherwise to take any of the actions described in Section 4.2(i) through (v). |
Section 4.3No Control of Other Party’s Business. Nothing contained in this Agreement is intended to give the Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct the Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of the Parent 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.
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1Government Filings.
| (a) The Company shall cause all documents (including any financial statements included or incorporated therein) it files or furnishes from the date of this Agreement to the Effective Time with the SEC pursuant to the Exchange Act to (i) comply in all material respects with the applicable requirements of the Exchange Act and the Sarbanes-Oxley Act and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall cause all financial statements included in such filings to comply as to form, as of their respective dates of filing with the SEC, in all material respects with applicable Accounting Rules, to be prepared in accordance with GAAP (except, in the case of unaudited statements, for the absence of footnotes) applied on a consistent basis (except as may be indicated in the notes thereto) and to fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal recurring non-material year-end audit adjustments). The Parent shall cause all documents (including any financial statements included or incorporated therein) it files or furnishes from the date of this Agreement to the Effective Time with the SEC pursuant to the Exchange Act to (i) comply in all material respects as to form with the applicable requirements of the Exchange Act and the Sarbanes-Oxley Act and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Parent shall cause all financial statements included in such filings to comply as to form, as of their respective dates of filing with the SEC, in all material respects with applicable Accounting Rules, to be prepared in accordance with GAAP (except, in the case of unaudited statements, for the absence of footnotes) applied on a consistent basis (except as may be indicated in the notes thereto) and to fairly present in all material respects the consolidated financial position of the Parent and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal recurring non-material year-end audit adjustments). |
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| (b) The Parent and the Company intend that the Parent Common Stock to be issued pursuant to this Agreement in connection with the Merger will be securities exempt from registration under the Securities Act by reason of Section 3(a)(10) thereof in reliance on the Court Approval. The parties acknowledge that the effect of such exemption is that (i) shares of Parent Common Stock issued to Persons who are not “affiliates” of the Parent or the Company for purposes of Rule 145 under the Securities Act are not subject to restrictions on resale arising under U.S. Securities laws and (ii) shares of Parent Common Stock issued to Persons who are “affiliates” of the Parent or the Company for purposes of Rule 145 under the Securities Act may be resold pursuant to Rule 145 under the Securities Act. |
| (c) As promptly as practicable after the date of this Agreement, each of the Company and the Parent shall prepare and file any other filings required to be filed by it under the Exchange Act or any other federal, foreign or related Legal Requirements relating to the Merger and the other Transactions (the “Other Filings”). Each of the Company and the Parent shall notify the other promptly upon the receipt of any comments or other communication from any government officials and of any request by any government officials for amendments or supplements to any Other Filing, or for additional information and shall supply the other with copies of all correspondence between such party or any of its representatives, on the one hand, and any government officials, on the other hand, with respect to any Other Filing. All filings by the Company in connection with the Transactions, including the Company Disclosure Documents, and any amendment or supplement thereto, and all Other Filings, shall be subject to the prior review of the Parent. Each of the Company and the Parent shall cause all documents that it is responsible for filing with the SEC or other Governmental Entities under this Section 5.1(c) to comply as to form and substance in all material respects with applicable Legal Requirements, including, as applicable, (i) the Exchange Act, (ii) the Securities Act, (iii) the rules and regulations of Nasdaq, and (iv) the requirements of the Companies Law and the Israeli Securities Law, 1968. Whenever any event occurs which is required to be set forth in an amendment or supplement to any Other Filing, the Company or the Parent, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with any government officials, and/or mailing to the shareholders or, if applicable, creditors, of the Company, such amendment or supplement. |
| (d) The Company Disclosure Documents shall include: (i) the recommendation of the board of directors of the Company to the Company’s shareholders that they vote in favor of approval of this Agreement, the Merger and the other Transactions, subject to the right of the board of directors of the Company to withdraw, amend, modify or change its recommendation in favor of this Agreement, the Merger and the other Transactions in compliance with Section 5.2(e); and (ii) the opinion of Lehman Brothers referred to in Section 2.19. |
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Section 5.2Court Approval.
| (a) As promptly as practicable after the execution and delivery of this Agreement and in accordance with Sections 350 and 351 of the Companies Law, the Company shall submit to the district court of Tel Aviv-Jaffa (the “Applicable Court”) a first motion to convene, in the manner set forth in the Companies Law and the regulations promulgated pursuant to Sections 350 and 351 of the Companies Law (the “Arrangement Regulations”) and as shall be ordered by the Applicable Court, shareholders and, if required by the Applicable Court, creditors meetings (the “Company Meetings”) for the approval of the terms and conditions of an arrangement between the Company and its shareholders and/or creditors, including this Agreement, the Merger, the Cash Distribution and the other Transactions, (the “Merger Proposal”) by a majority in number representing at least 75% of the votes cast in the Company Meetings, (i) which majority shall include, for the purpose of approving any issues which may be considered to be an interested party transaction in accordance with Section 270(4) of the Companies Law, the affirmative votes of at least one third (1/3) of the shares represented at the Company Meetings held by Persons who are not affiliated with any controlling shareholder of the Company as defined in Section 268 of the Companies Law (the “Non-Controlling Shares”), without taking into account any abstaining participants or (ii) that the total number of Non-Controlling Shares voted against the Merger Proposal does not exceed 1% of the aggregate voting rights in the Company (the “Section 350 Vote”). In such motion the Company will inform the Applicable Court that upon the approval of the Merger Proposal by the requisite majority at the Company Meetings, and subsequently by the Applicable Court, such court approval would be relied upon by the Parent as an approval of the Merger Proposal for the purpose of qualifying the issuance of Parent Common Stock hereunder for the Section 3(a)(10) exemption from the registration requirements of the Securities Act. As part of the notice of the Company Meetings, the Company will deliver to each of its shareholders and, if required by the Applicable Court, creditors a notice of the meetings, the order of the court to convene the meetings, the application for the approval of the proposed Merger Proposal submitted to the court, a power of attorney to attend the meetings in accordance with the Companies Law and a proxy card for the vote (the “Information Statement”). The Information Statement will include a description of the rights of a shareholder or a creditor, as applicable, to object to the Merger Proposal, information on the hearing scheduled before the Applicable Court and any position of the Company’s board of directors with respect to the advisability of the Merger, which shall comply with Section 5.1 and Section 5.2. The Parent agrees to provide the Company for inclusion in the Information Statement information with respect to itself and its Subsidiaries consistent in scope and detail as would be required to be contained in a registration statement under the Securities Act. Following the approval of the Merger Proposal by the shareholders and, if applicable, the creditors as set forth above, the Company will submit to the Applicable Court a second motion for (i) the approval of the arrangement and the Merger Proposal and the order of all actions to be taken in accordance with the Merger Proposal; and (ii) to hold a hearing on the fairness of the Merger Proposal regardless of whether or not any objections to the Merger Proposal are raised (these approvals when obtained shall be collectively referred to as the “Court Approval”). |
| (b) Each of the Company and the Parent shall cause their respective Israeli counsel, advisors and accountants to coordinate all activities, and to cooperate with each other, with respect to the preparation and filing of the Merger Proposal and all documents filed with respect to the Court Approval. In addition, each of the Company and the Parent shall at all times comply with all the procedures detailed in the Companies Law and the Arrangement Regulations and shall make all necessary actions in order to minimize the term of such procedures. |
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| (c) Subject to the terms of Section 5.2(d) and Section 5.7, the Company shall use commercially reasonable efforts to solicit from its shareholders and, if applicable, creditors, proxies in favor of the approval of the Merger Proposal. The Company shall call, notice, convene, hold, conduct and solicit all proxies in connection with the Company Meetings in compliance with all applicable Legal Requirements, including the Companies Law, the Company Charter Documents, and the rules of Nasdaq, as applicable. The Company may adjourn or postpone the Company Meetings: (i) if and to the extent necessary to provide any necessary supplement or amendment to the Company Disclosure Documents to the Company’s shareholders or, if applicable, creditors, in advance of a vote on the Merger Proposal; or (ii) if, as of the time for which the Company Meetings are originally scheduled (as set forth in the Company Disclosure Documents), there are insufficient Company Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Meetings; or (iii) pursuant to the order or stipulation of the Applicable Court or as a result of an order or stipulation of the Applicable Court that requires a vote of a class of shareholders other than the holders of Company Shares or a class of creditors other than the classes contemplated by the Company in the Merger Proposal. The Company’s obligation to call, give notice of, convene and hold the Company Meetings in accordance with this Section 5.2(c) shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal (as defined in Section 5.7(a)) or by any withdrawal, amendment, modification or change of the recommendation of the board of directors of the Company in favor of the approval of the Merger Proposal. |
| (d) Unless the board of directors of the Company shall have withdrawn, amended, modified or changed its recommendation in favor of the Merger Proposal in compliance with Section 5.2(e): (i) the board of directors of the Company shall recommend that the Company’s shareholders vote in favor of and approve the Merger Proposal at the Company Meetings; (ii) the Company Disclosure Documents shall include a statement to the effect that the board of directors of the Company has recommended that the Company’s shareholders vote in favor of and approve the Merger Proposal at the Company Meetings; and (iii) neither the board of directors of the Company nor any committee thereof shall withhold, amend, modify, change or resolve or publicly propose to withhold, withdraw, amend, modify or change, in each case in a manner adverse to the Parent, the recommendation of the board of directors of the Company that the Company’s shareholders vote in favor of and approve the Merger Proposal. |
| (e) Nothing in this Agreement shall prevent the board of directors of the Company from withdrawing, amending, modifying or changing its recommendation in favor of the approval of the Merger Proposal if: (i) a Superior Proposal (as defined in Section 5.7(a)) is made to the Company and is not withdrawn; (ii) neither the Company nor any of its representatives shall have violated the terms of Section 5.7 other than immaterial violations not related to the relevant Acquisition Proposal and the Company is not then in material breach of this Agreement; (iii) the board of directors of the Company concludes in good faith, after consultation with its outside counsel, that, in light of such Superior Proposal, the withdrawal, amendment, modification or changing of such recommendation is required in order for the board of directors of the Company to comply with its fiduciary obligations to the Company’s shareholders under applicable Legal Requirements (which, for purposes of this Section 5.2(e)(iii), shall be deemed to consist of Israeli Legal Requirements and in addition, in order to determine the appropriate standards that would apply to such fiduciary obligations, the board of directors of the Company may also consider Delaware Legal Requirements); and (iv) the Merger Proposal has not yet been approved by the Company’s shareholders or, if applicable, creditors, at the Company Meetings. |
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Section 5.3Merger Sub General Meeting. Merger Sub shall hold its general meeting no later than the date of the Company Meetings, and the Parent (as the sole shareholder of Merger Sub) shall approve this Agreement, the Merger and the other Transactions at such general meeting. In addition, Merger Sub and the Parent shall take all reasonable necessary actions to facilitate the Merger and the other Transactions as shall be required by the Applicable Court.
Section 5.4Israeli Approvals.
| (a) Each party to this Agreement shall use its reasonable best efforts to deliver and file, as promptly as practicable after the date of this Agreement, each notice, report or other document required to be delivered by such party to, or filed by such party with, any Israeli Governmental Entity with respect to the Merger. Without limiting the generality of the foregoing: |
| (i) as promptly as practicable after the date of this Agreement, the Company and the Parent shall prepare and file any notifications required under the Israeli Restrictive Trade Practices Law in connection with the Merger; |
| (ii) the Company and the Parent shall respond as promptly as practicable to any inquiries or requests received from the Commissioner of Israeli Restrictive Trade Practices for additional information or documentation; and |
| (iii) the Company and the Parent shall use their reasonable best efforts to obtain, as promptly as practicable after the date of this Agreement, the OCS Approval, the Investment Center Approval, and any other consents and Approvals that may be required pursuant to Israeli Legal Requirements in connection with the Merger. In this connection the Parent shall provide to the OCS and the Investment Center any information, and shall execute any undertakings, customarily requested by such authorities as a condition to the OCS Approval or Investment Center Approval (including if requested, the standard undertaking with respect to the observance by the Parent, as shareholder of the Company or the Surviving Company, of the requirements of The Encouragement of Research and Development in Industry Law, 5744-1984 of the State of Israel (together with the regulations promulgated thereunder, the “R&D Law”). |
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| (b) Each party to this Agreement shall: (i) give the other parties prompt notice of the commencement of any legal proceeding by or before any Israeli Governmental Entity with respect to the Transactions; (ii) keep the other parties informed as to the status of any such legal proceeding; and (iii) promptly inform the other parties of any communication to the Commissioner of Israeli Restrictive Trade Practices, the OCS, the Investment Center, the Israeli Securities Authority, the Israeli Tax Authority, the Companies Registrar or any other Israeli Governmental Entity regarding the Transactions. The parties to this Agreement 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 pursuant to a joint defense agreement separately agreed to. In addition, except as may be prohibited by any Israeli Governmental Entity or by any Israeli Legal Requirement, in connection with any such legal proceeding under or relating to the Israeli Restrictive Trade Practices Law or any other Israeli antitrust or fair trade law, each party hereto will permit authorized representatives of the other party to be present at or participate in each meeting, conference or substantive telephone conversation relating to any such legal proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to any Israeli Governmental Entity in connection with any such legal proceeding. |
| (c) As soon as reasonably practicable after the execution of this Agreement, the Parent shall cause its Israeli counsel to prepare and file with the Israeli Securities Authority an application for an exemption from the requirements of the Israeli Securities Law, 5728-1968 concerning the publication of a prospectus in respect of the exchange of Company Options for the Assumed Options, pursuant to Section 15D of the Securities Law of Israel. The Company shall cooperate with the Parent in connection with the preparation and filing of such application and in the preparation of any written or oral submissions that may be necessary, proper or advisable to obtain such exemption. |
Section 5.5Tax Matters.
| (a) As soon as reasonably practicable after the date hereof, the Company and the Parent shall cause their respective Israeli counsel and accountants to prepare and file with the Israeli Income Tax Commissioner applications for four rulings: |
| (i) one ruling confirming that the conversion or assumption by the Parent of Company Share Options into options (the “Assumed Options”) to purchase shares of Parent Common Stock, in respect of Company Share Options subject to Sections 3(i) or Section 102 of the Ordinance, will not result in an immediate taxable event for the person holding such Company Share Options and, with respect to Company Share Options subject to Section 102 of the Ordinance, will not affect the original length of the holding period required with respect to such Company Share Options, which ruling may be subject to such terms regularly associated with such rulings (the “IsraeliOption Tax Ruling”); |
| (ii) a second ruling confirming that the obligation of any Israeli shareholder consenting to such ruling to pay capital gains tax on the exchange of the Company Shares for Parent Common Stock will qualify for deferral in accordance with the provisions of Section 104H of the Ordinance and the terms and conditions customary to such rulings (the “104H Ruling”); |
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| (iii) a third ruling (the “Israeli Withholding Tax Ruling”) that either (x) exempts the Parent, the Exchange Agent and the Surviving Company from any obligation to withhold Israeli Tax at source from any consideration payable or otherwise deliverable pursuant to this Agreement, whether pursuant to Section 104H of the Ordinance or otherwise, or clarifies that no such obligation exists, or (y) clearly instructs the Parent, the Exchange Agent or the Surviving Company how such withholding at source is to be executed, and in particular, with respect to the classes or categories of holders or former holders of Ordinary Shares or Company Share Options from which Tax is to be withheld (if any), the rate or rates of withholding to be applied; and |
| (iv) a fourth ruling (the “Cash Distribution Tax Ruling”, and together with the 104H Ruling, the Israeli Option Tax Ruling and the Israeli Withholding Tax Ruling, the “Israeli Tax Rulings”) confirming that the distribution of funds transferred from Saifun (BVI) Limited to the Company to the holders of Company Shares will either (x) not be subject to Israeli withholding requirements or (y) be subject to Israeli withholding requirements as will be set out in the Cash Distribution Tax Ruling. |
| (b) Each of the Company and the Parent shall cause their respective Israeli counsel, advisors and accountants to coordinate all activities, and to cooperate with each other, with respect to the preparation and filing of such applications for the Israeli Tax Rulings and in the preparation of any written or oral submissions that may be necessary, proper or advisable to obtain the Israeli Tax Rulings. The Company, its representatives and advisors shall not make any application to, or conduct any negotiation with, the Israeli Tax authorities with respect to any matter relating to the subject matter of the Israeli Tax Rulings without prior coordination with the Parent, and will enable the Parent’s representatives and advisors to participate in all discussions and meetings relating thereto. To the extent that the Parent’s representatives and advisors elect not to participate in any meeting or discussion, the Company’s representatives and advisors shall provide a prompt and full report of the discussions held. In any event, the final text of the Israeli Tax Rulings shall in all circumstances be subject to the prior written consent of the Parent, not to be unreasonably withheld or delayed, it being understood that the Parent may withhold such consent if any Israeli Tax Ruling imposes restrictions or limitations upon the Parent or the Company and/or fails to fully address the matters described in subsections 5.5(a)(i), 5.5(a)(iii) and 5.5(a)(iv) above to the reasonable satisfaction of the Parent. |
| (c) Subject to the terms and conditions hereof, the Company shall use its reasonable best efforts to promptly take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to obtain the Israeli Tax Rulings, as promptly as practicable. |
| (d) Each of the Company and the Parent shall cause all documents that it is responsible for filing with any Governmental Entity under Sections 5.4 and 5.5 to comply as to form and substance in all material respects with the applicable Legal Requirements. Whenever any event occurs which is required to be set forth in an amendment or supplement to any such document or filing, the Company or the Parent, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with the applicable Government Entity, such amendment or supplement. |
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Section 5.6Confidentiality; Access to Information.
| (a) The parties acknowledge that the Parent and the Company have previously executed a Mutual Non-Disclosure Agreement, dated as of June 28, 2007 (the “Confidentiality Agreement”), which Confidentiality Agreement will continue in full force and effect in accordance with its terms and shall apply to any information obtained pursuant to Section 5.6(b). Without limiting the generality of the foregoing, the Parent, Merger Sub and the Company shall not, and shall each use their respective reasonable best efforts to cause its representatives not to, use information obtained pursuant to this Section 5.6 for any purpose unrelated to consummation of the Transactions. |
| (b) Upon reasonable notice, except (i) as the Company reasonably determines (after consultation with Parent and receiving and considering the advice of the Company’s outside legal counsel) is required by applicable Legal Requirements, or (ii) as would reasonably be expected to violate or result in a loss or impairment of any attorney-client or work-product privilege (it being understood that the parties shall use reasonable best efforts to cause such information to be provided in a manner that does not result in such violation, loss or impairment, which reasonable best efforts shall include entering into one or more joint defense or community of interest agreements on customary terms if counsels to the parties reasonably conclude that such agreements are likely to preserve the privilege), the Company shall, and shall cause each of its Subsidiaries to, afford to the Parent and to its officers, employees, accountants, counsel, financial advisors and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to all its properties, books, contracts, commitments, personnel and records so that the Parent may obtain all information concerning the business as its may reasonably request (including the status of product development efforts (provided that the Parent and its representatives shall conduct any such activities in such a manner as not to interfere unreasonably 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 the Parent (a) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of U.S. or Israeli federal or state securities laws and (b) all other information concerning its business, properties and personnel as the Parent may reasonably request (including the Company’s outside accountants work papers). No review or information obtained pursuant to this Section 5.6(b) shall limit the Parent’s or Merger Sub’s reliance on or the enforceability of any representation or warranty made by the Company herein. |
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Section 5.7No Solicitation.
| (a) From and after the date of this Agreement until the earlier to occur of the Effective Time or termination of this Agreement pursuant to Article 7, and except as otherwise provided for in this Agreement, the Company and its Subsidiaries will not, nor will they authorize or knowingly permit any of their respective officers, directors, controlled Affiliates or employees or any of their respective investment bankers, attorneys or other advisors or representatives to, directly or indirectly: (i) solicit, initiate, or take any action intended to encourage or induce the making, submission or announcement of any Acquisition Proposal; (ii) engage or participate in any discussions or negotiations with any Person (other than any officer, director, controlled Affiliate or employee of the Parent or any of its Subsidiaries or any investment banker, attorney or other advisor or representative of the Parent or any of its Subsidiaries) regarding, or furnish to any Person any information with respect to, or take any other action intended to facilitate, any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to, any Acquisition Proposal; (iii) approve, endorse or recommend any Acquisition Proposal; or (iv) enter into any letter of intent or similar document or any contract, agreement or commitment contemplating or otherwise relating to any Acquisition Transaction. Notwithstanding the above, prior to the approval of the Merger Proposal at the Company Meetings, nothing contained in this Agreement (including this Section 5.7) shall prohibit the board of directors of the Company, in response to an unsolicited written Acquisition Proposal that is not withdrawn, from engaging or participating in discussions or negotiations with and furnishing information to the party making such Acquisition Proposal,provided that the board of directors of the Company: (A) in good faith and after consultation with the Company’s financial advisors and outside legal counsel, concludes that the offer is, or would reasonably be likely to result within 20 (twenty) Business Days of the receipt of such Acquisition Proposal in, a Superior Proposal, and (B) determines in good faith after consultation with its outside legal counsel that such action is required in order for the board of directors of the Company to comply with its fiduciary obligations to the Company’s shareholders under applicable Legal Requirements (which, for purposes of this clause (B), shall be deemed to consist of Israeli Legal Requirements and in addition, in order to determine the appropriate standards that would apply to such fiduciary obligations, the board of directors of the Company may also consider Delaware Legal Requirements); andprovided further that (x) prior to, or concurrently with, furnishing any such information to, or entering into discussions or negotiations with, such party, the Company gives the Parent written notice of the identity of such Person or group and of the Company’s intention to furnish information to, or enter into discussions or negotiations with, such party and (y) the Company receives from such party an executed confidentiality agreement at least as restrictive as the Confidentiality Agreement (but permitting disclosure to the Parent required under this Agreement); and (z) prior to or contemporaneously with furnishing any such information to such party, the Company furnishes such information to the Parent (to the extent such information has not been previously furnished by the Company to the Parent). The Company and its Subsidiaries will immediately cease any and all existing discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions in this Section 5.7 by any officer, director, controlled Affiliate or employee of the Company or any of its Subsidiaries or any investment banker, attorney or other representative retained by the Company or any of its Subsidiaries or any other Person who shall have entered into a Voting Undertaking shall be deemed to be a breach of this Section 5.7 by the Company. |
For purposes of this Agreement:
| (i) “Acquisition Proposal” means any offer or proposal (other than an offer or proposal by the Parent or Merger Sub or any other Person acting in concert with the Parent or Merger Sub) relating to an Acquisition Transaction; |
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| (ii) “Acquisition Transaction” shall mean any transaction or series of related transactions other than the Transactions involving: (A) any acquisition or purchase from the Company or any other Person by any Person or “group” (as defined in Section 13(d) of the Exchange Act) of more than a 20% interest in the total outstanding voting securities of the Company or any tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of the total outstanding voting securities of the Company or any merger, consolidation, business combination, arrangement or similar transaction involving the Company pursuant to which the shareholders of the Company immediately preceding such transaction hold less than 80% of the equity interests in the surviving or resulting entity of such transaction; (B) any sale, lease, exchange, transfer, license (other than in the ordinary course of business consistent with past practice), acquisition or disposition of more than 20% of the consolidated assets of the Company and its Subsidiaries (including any shares of share capital, partnership interests or similar ownership interests of the Company’s Subsidiaries); or (C) any liquidation, dissolution, recapitalization or other significant corporate reorganization of the Company; and |
| (iii) “Superior Proposal” shall mean any bona fide, unsolicited written Acquisition Proposal to acquire all (but not less than all) of the outstanding voting securities of the Company not solicited or initiated in violation of Section 5.7(a) which: (A) is not subject to any financing contingency (or contains a reverse break-up fee payable, among other circumstances, in the event of any failure to obtain any financing which effectively limits the acquiring party’s liability in the event that financing is not obtained), (B) and with respect to which the board of directors of the Company shall have in good faith determined (taking into account the advice of the Company’s financial advisors) that the acquiring party is reasonably capable of consummating such proposed Acquisition Transaction on the terms proposed and that receipt of all governmental and regulatory approvals required to consummate such proposed Acquisition Transaction is likely in a reasonable time period without significant condition or litigation; and (C) the board of directors of the Company shall have in good faith determined (taking into account the advice of the Company’s financial advisors) that the proposed Acquisition Transaction, taking into account all the terms and conditions of such Acquisition Proposal, is more favorable to the shareholders of the Company, from a financial point of view (taking into account both long-term and short-term considerations), than the Transactions (taking into account any proposed modifications by the Parent in response thereto). |
| (b) In addition to the obligations of the Company set forth in Section 5.7(a), the Company as promptly as practicable, and in any event within 48 hours, shall notify the Parent of: (i) any request for information in connection with, or which the Company reasonably concludes would lead to, any Acquisition Proposal; (ii) the receipt of any Acquisition Proposal, or any inquiry with respect to or which the Company reasonably concludes would lead to any Acquisition Proposal; (iii) the material terms and conditions of such request, Acquisition Proposal or inquiry; and (iv) the identity of the Person or group making any such request, Acquisition Proposal or inquiry. The Company shall keep the Parent informed in all material respects of the status and details (including material amendments or proposed amendments) of any such request, Acquisition Proposal or inquiry. In addition to the foregoing, the Company shall: (i) provide the Parent with at least 48 hours prior written notice (or such lesser prior notice as provided to the members of the board of directors of the Company) of any meeting of the board of directors of the Company at which the board of directors of the Company is reasonably expected to consider an Acquisition Proposal; and (ii) provide the Parent with at least five Business Days prior written notice (or such lesser prior notice as provided to the members of the board of directors of the Company) of any meeting of the board of directors of the Company at which the board of directors of the Company is reasonably expected to withdraw, amend, modify or change its recommendation in favor of the approval of the Merger Proposal or recommend a Superior Proposal to its shareholders, and together with such notice provide a copy of drafts of definitive documentation relating to such Superior Proposal. |
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| (c) Nothing contained in this Agreement shall prohibit the Company from taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act or Section 329 of the Companies Law or any other applicable section of the Companies Law with respect to a tender of exchange offer;provided,however, that, except as contemplated by Section 5.2(e), neither the Company nor its board of directors nor any committee thereof shall withdraw, amend, modify, change or supplement, or publicly propose to withdraw, amend, change or supplement, its position with respect to the Merger Proposal or approve, endorse or recommend, or publicly propose to approve, endorse or recommend, an Acquisition Proposal. In addition, it is understood and agreed that, for all purposes of this Agreement, a factually accurate public statement by the Company that describes the Company’s receipt of an Acquisition Proposal and the operation of this Agreement with respect thereto, or any “stop, look and listen” communication by the Board of Directors of the Company pursuant to Rule 14d-9(f) of the Exchange Act or any other applicable section of the Companies Law with respect to a tender of exchange offer, or any similar communication to the shareholders of the Company, shall not constitute a Triggering Event or a withdrawal, amendment, modification, change or supplement, or a public proposal by the board of directors of the Company to withdraw, amend, modify, change or supplement, its position with respect to the Merger Proposal or an approval, endorsement or recommendation with respect to an Acquisition Proposal. |
Section 5.8Public Disclosure. The Parent and the Company will use commercially reasonable efforts to consult with each other before issuing, and provide each other the opportunity to review and comment upon any press release or other public statements or employee communications with respect to the Merger and the other Transactions, and shall not issue any such press release or make any such public statement or issue such employee communication prior to such consultation, except as either party may determine is required by applicable Legal Requirements, the SEC or by obligations pursuant to any listing agreement with any national securities exchange or national trading system (in which case reasonable efforts to consult with the other party will be made prior to any such release or public statement). Each of the Parent and the Company may make any public statement in response to specific questions 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 the Parent or the Company in accordance with this Section 5.8. The parties agree that the initial press release to be issued with respect to the Transactions shall be a joint release in the form heretofore agreed to by the parties.
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Section 5.9Commercially Reasonable Efforts; Regulatory Filings. Subject to Section 5.10 and the last sentence of this Section 5.9, each of the parties shall use all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective the Merger and the other Transactions in the most expeditious manner practicable, including using commercially reasonable efforts to accomplish the following: (i) causing the conditions precedent set forth in Article 6 to be satisfied; (ii) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, rulings, exemptions, orders and authorizations from Governmental Entities and the making of all necessary registrations, declarations and filings (including registrations, declarations and filings with Governmental Entities, if any) and the taking of all commercially reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity in connection with the consummation of the Merger and other Transactions; and (iii) the execution or delivery of any additional instruments reasonably necessary to consummate the Transactions contemplated by, and to fully carry out the purposes of, this Agreement. In connection with and without limiting the foregoing, the Company, the Parent and their respective boards of directors shall, if any state takeover statute or similar statute or regulation is or becomes applicable to the Merger, this Agreement or any of the Transactions, use commercially reasonable efforts to ensure that the Merger and the other Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger, this Agreement and the Transactions. Notwithstanding anything to the contrary contained in this Agreement, neither the Parent nor the Company shall have any obligation under this Agreement: (i) to dispose or transfer or cause any of its Subsidiaries to dispose of or transfer any assets, or to commit to cause the Company or any of its Subsidiaries to dispose of any assets; (ii) to discontinue or cause any of its Subsidiaries to discontinue offering any product or service, or to commit to cause the Company or any of its Subsidiaries to discontinue offering any product or service; (iii) to license or otherwise make available, or cause any of its Subsidiaries to license or otherwise make available, to any Person, any technology, software or other proprietary asset, or to commit to cause the Company or any of its Subsidiaries to license or otherwise make available to any Person any technology, software or other proprietary asset; (iv) to hold separate or cause any of its Subsidiaries to hold separate any assets or operations (either before or after the Closing Date), or to commit to cause the Surviving Company or any of its Subsidiaries to hold separate any assets or operations; (v) subject to the undertakings required by Section 5.4, to make or cause any of its Subsidiaries to make any commitment (to any Governmental Entity or otherwise) regarding its future operations or the future operations of the Surviving Company or any of its Subsidiaries or that would affect its discretion in determining the terms of any Contract or relationship with any Person; or (vi) to contest or defend against any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Transactions.
Section 5.10Third Party Consents. As soon as practicable following the date hereof, the Company will use commercially reasonable efforts to obtain any consents, waivers and approvals under any of its or its Subsidiaries’ respective Contracts required to be obtained in connection with the consummation of the Transactions, including those Contracts set forth or required to be set forth in Section 2.5 of the Company Disclosure Letter,providedthat the Company shall not be required to (i) make any material financial accommodation or (ii) pay or commit to pay to any such Person whose consent is being solicited any material amount of cash or other consideration, or make any commitment to incur any other material liability or other obligation due to such Person.
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Section 5.11Share Options and Employee Benefits.
| (a) Share Options. At the Effective Time, each outstanding Company Share Option under the Company Option Plans or under any agreement disclosed in Section 2.3 of the Company Disclosure Letter1, whether or not vested, shall by virtue of the Transactions be assumed by the Parent. Each Company Share Option so assumed by the Parent under this Agreement will continue to have, and be subject to, the same terms and conditions of such options immediately prior to the Effective Time (including any repurchase rights or vesting provisions and provisions regarding the acceleration of vesting on certain transactions), except that: (i) each Company Share Option will be solely exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of Company Shares that were issuable upon exercise of such Company Share Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, and; (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Share Option will be equal to the quotient determined by dividing the exercise price per Company Share at which such Company Share Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent,provided that the adjustments pursuant to the foregoing clauses (i) and (ii) shall be made after giving effect to the adjustments to the Company Share Options contemplated by Section 5.12(b) below. The Parent shall comply with the terms of all such Company Share Options and use its commercially reasonable efforts to ensure, to the extent required by, and subject to the provisions of, the applicable Company Option Plan and permitted under the Code or other relevant Legal Requirements that any Company Share Options that are intended to qualify for tax treatment under Section 422 of the Code prior to the Effective Time and that any Company Share Options that are intended to qualify for tax treatment under Section 102 of the Ordinance prior to the Effective Time continue to so qualify, with the same rights, after the Effective Time, subject to the terms of the Israeli Options Tax Ruling, if obtained. The Parent shall take all corporate actions necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of all Company Share Options pursuant to the terms set forth in this Section 5.11(a). Prior to the Effective Time, the Company shall take all actions necessary (including making any required amendments and/or obtaining any required consents) to effect the transactions contemplated by this Section 5.11(a).2 |
1 Treatment of non-Plan options subject to due diligence.
2 To be confirmed in due diligence, including whether any consents are required to assume options. |
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| (b) 401(k) Plan. The Company will adopt, or will cause to be adopted, all necessary corporate resolutions to terminate each 401(k) Plan sponsored or maintained by the Company, effective as of no later than one day prior to the Closing (but such termination may be contingent upon the Closing). Immediately prior to such termination, the Company will make all necessary payments to fund the contributions: (i) necessary or required to maintain the tax-qualified status of the 401(k) Plan; (ii) for elective deferrals made pursuant to the 401(k) Plan for the period prior to termination; and (iii) for employer matching contributions (if any) for the period prior to termination. For this purpose, the term “401(k) Plan” means any plan intended to be qualified under Code Section 401(a) which includes a cash or deferred arrangement intended to qualify under Code Section 401(k). The Company shall provide the Parent with a copy of resolutions duly adopted by the Company’s board of directors so terminating any such 401(k) Plan. |
| (c) The Parent intends that, for one year after the Effective Time, the Parent will cause the Surviving Corporation and its Subsidiaries to arrange for each Employee who was participating in any of the Company Employee Plans immediately before the Effective Time to participate in benefit plans (which may be the Company Employee Plans) providing benefits (other than incentive or equity compensation) that are substantially equivalent in the aggregate to the benefits (other than incentive or equity compensation) provided under the Company Employee Plans in which such Employees were participating before the Effective Time (the “Counterpart Plans”). To the extent applicable, participants in such Counterpart Plans shall receive full credit for years of service with any one or more of the Company, any of the Company’s Subsidiaries and prior employers to the extent such service is taken into account under the Company Employee Plans and to the extent such service credit does not result in the duplication of benefits. To the extent applicable, the Parent and/or its Subsidiaries shall use commercially reasonable efforts to give credit under those of its Counterpart Plans that are welfare benefit plans for all amounts credited toward deductibles and out-of-pocket maximums, and time accrued against applicable waiting periods, by Employees (in each case including their eligible dependents), in respect of the applicable plan year in which the Effective Time occurs. With respect to any changes in medical plans, the Parent and/or its Subsidiaries (including the Surviving Company) shall use commercially reasonable efforts to waive all requirements for evidence of insurability, eligibility waiting periods and pre-existing conditions otherwise applicable to Employees under the Counterpart Plans in which Employees become eligible to participate on or following the Effective Time (to the extent that such conditions were covered under the Company Employee Plans immediately prior to the Effective Time). Nothing in this Section 5.11(c) shall be construed to entitle any Employee to continue his or her employment for any period of time. |
| (d) Nothing contained in this Agreement (including this Section 5.11) shall: (i) amend, or be deemed to amend, any Company Employee Plan; (ii) provide any Person not a party to this Agreement with any right, benefit or remedy with regard to any Company Employee Plan or a right to enforce any provision of this Agreement; or (iii) limit in any way the ability of the Parent or the Surviving Company to amend or terminate any particular Company Employee Plan at any time. |
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Section 5.12Cash Distribution.
| (a) The Company shall declare (subject to obtaining the Court Approval), and immediately prior to the Effective Time the Company shall pay, a cash distribution equal to $158,296,472 in the aggregate to all holders of record of Company Shares as of immediately prior to the Effective Time pro rata in accordance with their holdings of Company Shares (as the same may be adjusted pursuant to Section 5.12(c), the “Cash Distribution”, and the amount of such distribution payable in respect of each Company Share as of the record date shall be referred to as the “Per Share CashDistribution Amount”). The Company shall apply to the Applicable Court to receive approval for a capital reduction in order to enable the Cash Distribution together with and as part of the application for the Court Approval, and the terms “Merger Proposal” and “Court Approval” shall include, in addition to the approval of the Merger, the approval of the Cash Distribution. The provision of Sections 5.2(b) and 5.4 regarding the coordination and cooperation of the Parent and the Company and the use of all reasonable efforts shall apply to the obtaining of the approval of the court for the Cash Distribution. The Company shall deduct and withhold from the Cash Distribution such amounts as may be required to be deducted or withheld therefrom under the Code, the Ordinance, or under any provision of state, local, Israeli or other foreign law or any other applicable Legal Requirement. |
| (b) In addition, prior to making the Cash Distribution, the Company shall take all actions necessary (including making any required amendments and/or obtaining any required consents) to provide that, upon the Cash Distribution, each then-outstanding Company Share Option shall automatically be adjusted as follows: (i) each such Company Share Option will be solely exercisable (or will become exercisable in accordance with its terms) for that number of whole Company Shares equal to the product of the number of Company Shares that were issuable upon exercise of such Company Share Option immediately prior to the Cash Distribution multiplied by the Cash Distribution Adjustment Ratio, rounded down to the nearest whole number of Company Shares and; (ii) the per share exercise price for the Company Shares issuable upon exercise of such Company Share Option will be equal to the quotient determined by dividing the exercise price per Company Share at which such Company Share Option was exercisable immediately prior to the Cash Distribution by the Cash Distribution Adjustment Ratio, rounded up to the nearest whole cent. For these purposes, the “CashDistribution Adjustment Ratio” shall be equal to (x) (x) the closing sale price of one Company Share as reported on the Nasdaq for the trading day immediately prior to the making of the Cash Distribution, divided by (y) the difference of the closing sale price of one Company Share as reported on the Nasdaq for the trading day immediately prior to the making of the Cash Distribution less the Per Share Cash Distribution Amount. |
| (c) Notwithstanding the foregoing, in the event Parent shall inform the Company that it is necessary, in order to cause the representation and warranty of the Parent and Merger Sub set forth in the third sentence of Section 3.3 herein to be true and correct in all respects, to effect a reduction in the Exchange Ratio, the Exchange Ratio shall be reduced by an amount, not to exceed 0.0191, as may be determined by Parent to cause such representation and warranty to be true and correct. In the event of any such reduction to the Exchange Ratio, the Company shall increase the Cash Distribution by an amount, not to exceed $5,006,083, by $26,209.86 for every 0.0001 decrease in the Exchange Ratio. |
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Section 5.13Parent Board of Directors. At the Effective Time, the board of directors of the Parent shall consist of (a) each of the directors of the Parent immediately prior to the Effective Time and (b) Dr. Boaz Eitan. Dr. Eitan shall serve as a Class A and Class II director of the Parent, to hold office until the Parent’s 2010 annual meeting of stockholders. Prior to the Effective Time, the board of directors of the Parent shall take all necessary action to increase the size of the board of directors of the Parent as necessary and to elect Dr. Eitan to the board of directors of the Parent as a Class A and Class II director, in each case as of the Effective Time.
Section 5.14Form S-8. Within ten (10) Business Days following the Effective Time, the Parent shall, if no registration statement is in effect covering such shares of Parent Common Stock, file a registration statement on Form S-8 (or any successor form) with respect to the shares of Parent Common Stock subject to any Company Share Options held by current employees to the extent registrable on Form S-8 (or any successor form) and shall use all reasonable efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such options remain outstanding.
Section 5.15Notification.
| (a) The Company shall give prompt notice to the Parent upon acquiring Knowledge that any representation or warranty made by it contained in this Agreement has become untrue or inaccurate, or of any failure of the Company to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied;provided,however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. |
| (b) The Parent shall give prompt notice to the Company upon acquiring Knowledge that any representation or warranty made by it or Merger Sub contained in this Agreement has become untrue or inaccurate, or of any failure of the Parent or Merger Sub to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Section 6.2(a) or 6.2(b) would not be satisfied;provided,however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. |
Section 5.16Indemnification, Exculpation and Insurance.
| (a) From and after the Effective Time, the Parent shall, and shall cause the Surviving Company to, fulfill and honor in all respects the obligations of the Company pursuant to any indemnification and exculpation agreements disclosed in Section 5.16(a) of the Company Disclosure Letter between the Company and its directors and officers (the “Indemnified Parties”) and any indemnification and exculpation provisions under the Company Charter Documents as in effect on the date hereof including with respect to matters, acts or omissions occurring in connection with the approval of or entering into this Agreement or the consummation of the Transactions. |
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| (b) The Parent shall cause the Articles of Association of the Surviving Company to contain provisions with respect to indemnification and exemption that are at least as favorable to the Indemnified Parties as those contained in the Company Articles of Association as in effect on the date hereof, which provisions will not be amended, repealed or otherwise modified for a period of seven years from the Effective Time in any manner that would adversely affect the rights thereunder of the Indemnified Persons, unless such modification is required by Legal Requirements. |
| (c) The Parent shall, or shall cause the Surviving Company to, maintain a policy or policies of officers’ and directors’ liability insurance for acts and omissions occurring prior to the Effective Time (“D&O Insurance”) with coverage in amount and scope no less favorable in the aggregate than the Parent’s existing directors’ and officers’ liability insurance coverage for a period of seven years after the Effective Time;provided,however, that, if the existing D&O Insurance expires, is terminated or cancelled during such seven-year period, the Surviving Company will use commercially reasonable efforts to obtain D&O Insurance in such amount and scope;provided, further, that in lieu of such coverage, the Surviving Company may substitute a prepaid “tail” policy for such coverage, which, notwithstanding anything in Section 4.1 to the contrary, the Company may obtain prior to the Closing. In no event shall the aggregate cost for such coverage under this Section 5.16(c) be more than $1,500,000. |
| (d) If the Parent or the Surviving Company or any of their respective successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all its properties and assets to any Person, the Parent shall cause proper provisions to be made so that the successors and assigns of the Parent or the Surviving Company assume the obligations set forth in this Section 5.16. The provisions of this Section 5.16 are (i) intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his or her heirs and his or her representatives and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by Contract or otherwise. The obligations of the Parent and the Surviving Company under this Section 5.16 shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party to whom this Section 5.16 applies without the express written consent of such affected Indemnified Party (it being expressly agreed that the Indemnified Party to whom this Section 5.16 applies shall be third party beneficiaries of this Section 5.16). |
Section 5.17Listing of Parent Common Stock. The Parent shall use its reasonable best efforts to cause the Parent Common Stock issuable in the Merger to be approved for listing on Nasdaq, subject to official notice of issuance, as promptly as practicable after the date hereof, and in any event prior to the Closing Date.
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Section 5.18Company Affiliates; Restrictive Legend. The Company shall deliver to the Parent at least thirty days prior to the Closing Date, a letter identifying all Persons who are, at the time of such letter, “affiliates” of the Company for purposes of Rule 145 under the Securities Act (the “Company Affiliates”). The Company shall use commercially reasonable efforts to cause each such Person to deliver to the Parent at least twenty days prior to the Closing Date, a written agreement substantially in the form of Exhibit B. The Parent will give stop transfer instructions to its transfer agent with respect to any shares of Parent Common Stock received pursuant to the Merger by any Company Affiliate who has signed an Affiliate Agreement and who continues to be an “affiliate” of the Company for purposes of Rule 145 under the Securities Act, and there will be placed on the certificates representing such shares of Parent Common Stock, or any substitutions therefor, a legend stating in substance that the shares were issued in a transaction to which Rule 145 promulgated under Securities Act applies and may only be transferred (i) in conformity with Rule 145 or (ii) in accordance with a written opinion of United States counsel, reasonably acceptable to the Parent, in form and substance that such transfer is exempt from registration under the Securities Act.
Section 5.19Agreements to be Terminated. The Company shall terminate the Company’s Registration Rights Agreement, dated as of October 2, 2000, as amended, and the Company’s Shareholder Rights Agreement, dated as of September 2, 2000, as amended, effective as of and contingent upon the Closing, such that each such agreement shall be of no further force or effect immediately following the Effective Time. In the event the Merger does not close for any reason, the Parent shall not have any liability to the Company, any other party to any such agreement or any other Person for any costs, claims, liabilities or damages in connection with such terminations.
Section 5.20Tax Treatment. Each of the Parent and the Company shall use commercially reasonable efforts to cause the Merger to constitute a reorganization within the meaning of Section 368(a) of the Code. Neither Parent, the Company nor any of their Subsidiaries, unless required by law, will take any Tax reporting position inconsistent with the characterization of the Merger as a reorganization within the meaning of Section 368(a) of the Code. It is the intention of Parent and its Subsidiaries to continue at least one significant historic business line of the Company and its Subsidiaries, taken together, or to use at least a significant portion of their business assets, taken together, in a business, in each case within the meaning of Section 1.368-1(d) of the United States Income Tax Regulations.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1Conditions 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) The Court Approval approving the Merger Proposal (including the Merger and the Cash Distribution) shall have been obtained. |
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| (b) The shares of Parent Common Stock issuable to the Company’s shareholders as contemplated by this Agreement shall have been approved for listing on Nasdaq, subject to official notice of issuance. |
| (c) No injunction, judgment, order, decree, statute, law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued by any court or other Governmental Entity of competent jurisdiction or other similar legal restraint or prohibition (collectively, “Restraints”) shall be in effect, and there shall not be pending any suit, action or proceeding by any Governmental Entity, in each case in connection with the Merger or any of the other Transactions, (i) preventing the consummation of the Merger, (ii) prohibiting or limiting the ownership or operation by the Surviving Company or the Parent and their respective Subsidiaries of any material portion of the business or assets of the Surviving Company or the Parent and their respective Subsidiaries taken as a whole in a jurisdiction where such entity has substantial operations or from which it derives substantial revenues, or compelling the Surviving Company or the Parent and their respective Subsidiaries to dispose of or hold separate any material portion of the business or assets of the Surviving Company or the Parent and their respective Subsidiaries, taken as a whole in a jurisdiction where such entity has substantial operations or from which it derives substantial revenues, or (iii) which otherwise could reasonably be expected to have a Material Adverse Effect on the Company or the Parent, as applicable. Any notification, waiting period, or approval requirements under the competition laws of any applicable foreign jurisdictions shall have been satisfied if legally required to be so satisfied by Closing. |
| (d) All Approvals required pursuant to Israeli legal requirements for the consummation of the Merger and the other Transactions shall have been obtained, including the OCS Approval and the Investment Center Approval. Notwithstanding the foregoing, other than as set forth in Sections 6.2(d) and 6.3(h) below, the Israeli Tax Rulings shall not be required as a condition to the consummation of the Transactions pursuant to this Section 6.1(d). |
Section 6.2Conditions to Obligations of the Company. 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 the Parent and Merger Sub set forth herein (other than the representations and warranties set forth in the first two sentences and the final sentence of Section 3.2 (the “Parent Capitalization Representations”) and the representation and warranty set forth in Section 3.11 (absence of Material Adverse Effect)) shall be true and correct as of the date hereof and as of the Effective Time, with the same effect as if made at and as of such time (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 where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent (ii) the Parent Capitalization Representations shall be true and correct in all material respects as of the dates set forth therein; and (iii) the representation and warranty set forth in Section 3.11 shall be true and correct in all respects. The Company shall have received a certificate signed on behalf of the Parent by an authorized signatory of the Parent to such effect. |
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| (b) The Parent 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. The Company shall have received a certificate signed on behalf of the Parent by an authorized signatory of the Parent to such effect. |
| (c) Since the date of this Agreement, there shall have been no Material Adverse Change in the Parent on or before the Closing Date that shall not have been cured by the Closing Date, and the Company shall have received a certificate signed on behalf of the Parent by an authorized signatory of the Parent to such effect. |
| (d) The 104H Ruling with respect to the shareholdings of the Voting Undertaking Shareholders in the Company shall have been obtained from the ITA,provided, however, this condition shall be deemed to be satisfied if: (i) the Eitan Group Shareholders do not apply for a 104H Ruling within 15 days of execution of this Agreement or do not diligently pursue the obtaining of the 104H Ruling from ITA; (ii) a 104H Ruling has been offered by the ITA on terms and subject to conditions which are customary and standard under the circumstances; or (iii) a 104H Ruling is not available on customary terms as a result of the particular tax circumstances of one or more of the Eitan Group Shareholders. |
Section 6.3Conditions to Obligations of the Parent and Merger Sub. The obligation of the Parent and Merger Sub to effect the Merger is further subject to satisfaction or waiver of the following conditions:
| (a) (i) The representations and warranties of the Company set forth herein (other than the representations and warranties set forth in the first three sentences of Section 2.3(a) and in the first sentence of Section 2.3(d) (collectively, the “Company Capitalization Representations”), the representations and warranties set forth in Sections 2.4 (Authority), 2.15(b)(xv) (funds invested through Saifun (BVI) Limited), 2.16 (Brokers), 2.19 (Opinion of Financial Advisor), 2.20 (Board Approval) and 2.21 (Inapplicability of Certain Statutes) (collectively, the “Excluded CompanyRepresentations”) and the representation and warranty set forth in clause (a) of the third sentence of Section 2.9) shall be true and correct as of the date hereof and as of the Effective Time, with the same effect as if made at and as of such time (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 where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company; (ii) the Company Capitalization Representations shall be true and correct in all material respects as of the dates set forth therein,provided that the condition set forth in this Section 6.3(a)(ii) shall be deemed satisfied with respect to Company Shares or rights to acquire Company Shares if the actual number of Company Shares or rights to acquire Company Shares as of the date hereof is greater than the applicable number thereof represented in the Company Capitalization Representations by no more than 0.5%;(iii) the Excluded Company Representations shall be true and correct in all material respects as of the dates set forth therein; and (iv) the representation and warranty set forth in clause (a) of the third sentence of Section 2.9 shall be true and correct in all respects. The Parent shall have received a certificate signed on behalf of the Company by the chief executive officer of the Company to such effect. |
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| (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. The Parent shall have received a certificate signed on behalf of the Company by the chief executive officer of the Company to such effect. |
| (c) Since the date of this Agreement, there shall have been no Material Adverse Change in the Company on or before the Closing Date that shall not have been cured by the Closing Date, and the Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. |
| (d) In the event that any of the individuals set forth in Schedule B have not entered into Retention and Noncompetition Agreements concurrent with the execution of this Agreement, each of such individuals shall have entered into Retention and Noncompetition Agreements. Each of the Retention and Noncompetition Agreements with the individuals set forth in Schedule B shall be in full force and effect at the Effective Time. Each of the Lock-Up Agreements shall be in full force and effect at the Effective Time. |
| (e) Consents (in form and substance satisfactory to the Parent) from the counter-parties to each of the Contracts listed on Section 6.3(e) of the Company Disclosure Letter shall have been obtained by the Company or the relevant Subsidiary of the Company that is party to such Contract. |
| (f) Neither the Parent nor the Company shall have received any written or oral indication from the Investment Center or the Israeli income tax authorities to the effect that the consummation of the Merger will materially jeopardize or adversely affect the tax status and benefits of the Company, including its Approved Enterprise tax status and its status as an industrial company, and the Parent shall have received a certificate signed on behalf of the Company by the chief executive officer of the Company and the chief financial officer of the Company to such effect (only with respect to the Company). |
| (g) If approval of the Israeli Commissioner of Restrictive Trade Practices is required in order to effect the Transactions, such approval shall have been obtained without any conditions (other than a response with standard conditions) or, alternatively, the waiting period prescribed under the RTPA, including any extensions thereof, shall have expired without receipt of a response from the Israeli Commissioner of Restrictive Trade Practices. |
| (h) The Cash Distribution Tax Ruling shall have been obtained from the ITA, and the characterization by the ITA of the Cash Distribution shall not reasonably be expected to result in any negative impact to the Surviving Company or the Parent other than any reduction in equity inherent in the Cash Distribution. |
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| (i) All directors of the Company shall have executed and delivered to the Parent resignation letters in substantially the form attached as Exhibit D. |
ARTICLE 7
TERMINATION
Section 7.1Termination. 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:
| (a) by mutual written consent of the Parent and the Company; |
| (b) by either the Parent or the Company if the Merger shall not have been consummated by April 30, 2008 (the “End Date”), but the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to any party whose action or failure to act results in the failure of the Merger to be consummated by such time and such action or failure to act constitutes a breach of this Agreement;provided, that if (A) after the date of this Agreement and prior to such termination an Acquisition Proposal shall have been made known to the Company or shall have been publicly made directly to the shareholders of the Company or shall have otherwise become publicly known or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition Proposal, and (B) the Company or any of its Subsidiaries enters into any letter of intent or similar document or any written Contract (other than a confidentiality agreement) providing for such or any other Acquisition Proposal or consummates such or any other Acquisition Proposal within twelve (12) months of such termination (in each case, changing the 20% and 80% amounts referred to in the definitions thereof in Section 5.6(a) to 50% for purposes of this Section 7.1(b)), then the Company shall, concurrently with the consummation of the transactions contemplated by such letter of intent or similar document or written Contract or the consummation of such Acquisition Proposal, pay to the Parent Eight Million Dollars ($8,000,000) (the “Termination Fee”) by wire transfer of immediately available funds; |
| (c) by either the Parent or the Company if any Restraint having any of the effects set forth in Section 6.1(d) shall be in effect and shall have become final and nonappealable; |
| (d) by either the Parent or the Company (i) if the required approval of the shareholders of the Company contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the required vote at the respective meetings or (ii) by the Parent if the Applicable Court shall have denied or rejected the motion for the Court Approval, and regardless of whether the circumstances set forth in theproviso to this Section 7.1(d) shall have occurred, the Company shall, no later than two Business Days after any termination referred to in subclause (i), pay to the Parent an amount equal to the aggregate amount of fees and expenses incurred by the Parent in connection with this Agreement and the Transactions in an amount not to exceed Two Million Dollars ($2,000,000) (the “Parent Expenses”) by wire transfer of immediately available funds, and the amount of any such Parent Expenses paid by the Company to the Parent shall be credited against any subsequent payment by the Company to the Parent of the Termination Fee pursuant to this Section 7.1(d);provided, that, in the case of any termination referred to subclause (i) or (ii), if (A) after the date of this Agreement and prior to such termination an Acquisition Proposal shall have been made known to the Company or shall have been publicly made directly to the shareholders of the Company or shall have otherwise become publicly known or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition Proposal, and (B) the Company or any of its Subsidiaries enters into any letter of intent or similar document or any written Contract (other than a confidentiality agreement) providing for such or any other Acquisition Proposal or consummates such or any other Acquisition Proposal within twelve (12) months of such termination (in each case, changing the 20% and 80% amounts referred to in the definitions thereof in Section 5.6(a) to 50% for purposes of this Section 7.1(d)), then the Company shall, concurrently with the consummation of the transactions contemplated by such letter of intent or similar document or written Contract or the consummation of such Acquisition Proposal, pay to the Parent an amount equal to the Termination Feeminus any Parent Expenses previously paid by the Company to the Parent by wire transfer of immediately available funds; |
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| (e) by the Company, upon a breach of any representation, warranty, covenant or agreement on the part of the Parent or Merger Sub set forth in this Agreement, or if any representation or warranty of the Parent or Merger Sub shall have become untrue, in either case such that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue,provided, that if such inaccuracy in the Parent’s or Merger Sub’s representations and warranties or breach by the Parent or Merger Sub is curable by the Parent or Merger Sub through the exercise of its commercially reasonable efforts, then the Company may not terminate this Agreement under this Section 7.1(e) for thirty days after delivery of written notice from the Company to the Parent and Merger Sub of such breach,provided that the Parent or Merger Sub, as applicable, continues to exercise commercially reasonable efforts to cure such breach or inaccuracy (it being understood that the Company may not terminate this Agreement pursuant to this paragraph (e) if such breach or inaccuracy by the Parent or Merger Sub is cured during such thirty day period); |
| (f) by the Parent, upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue,provided, that if such inaccuracy in the Company’s representations and warranties or breach by the Company is curable by the Company through the exercise of its commercially reasonable efforts, then the Parent may not terminate this Agreement under this Section 7.1(f) for thirty days after delivery of written notice from the Parent to the Company of such breach,provided the Company continues to exercise commercially reasonable efforts to cure such breach or inaccuracy (it being understood that the Parent may not terminate this Agreement pursuant to this paragraph (f) if such breach or inaccuracy by the Company is cured during such thirty day period);provided further that if (A) after the date of this Agreement and prior to such termination an Acquisition Proposal shall have been made known to the Company or shall have been publicly made directly to the shareholders of the Company or shall have otherwise become publicly known or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition Proposal, and (B) the Company or any of its Subsidiaries enters into any letter of intent or similar document or any written Contract (other than a confidentiality agreement) providing for such or any other Acquisition Proposal or consummates such or any other Acquisition Proposal within twelve (12) months of such termination (in each case, changing the 20% and 80% amounts referred to in the definitions thereof in Section 5.6(a) to 50% for purposes of this Section 7.1(f)), then the Company shall, concurrently with the consummation of the transactions contemplated by such letter of intent or similar document or written Contract or the consummation of such Acquisition Proposal, pay to the Parent the Termination Fee by wire transfer of immediately available funds; |
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| (g) by the Parent, if after the date of this Agreement a Material Adverse Effect has occurred with respect to the Company;provided, that if such Material Adverse Effect is curable by the Company through the exercise of its commercially reasonable efforts, then the Parent may not terminate this Agreement under this Section 7.1(g) for thirty days after delivery of written notice from the Parent to the Company of such Material Adverse Effect,provided the Company continues to exercise commercially reasonable efforts to cure such Material Adverse Effect (it being understood that the Parent may not terminate this Agreement pursuant to this paragraph (g) if such Material Adverse Effect is cured during such thirty day period); |
| (h) by the Company, if after the date of this Agreement a Material Adverse Effect has occurred with respect to the Parent;provided, that if such Material Adverse Effect is curable by the Parent through the exercise of its commercially reasonable efforts, then the Company may not terminate this Agreement under this Section 7.1(h) for thirty days after delivery of written notice from the Company to the Parent of such Material Adverse Effect,provided the Parent continues to exercise commercially reasonable efforts to cure such Material Adverse Effect (it being understood that the Company may not terminate this Agreement pursuant to this paragraph (h) if such Material Adverse Effect is cured during such thirty day period); |
| (i) by the Parent if a Triggering Event (as defined below) shall have occurred, in which event the Company shall, no later than two Business Days after such termination, pay to the Parent the Termination Fee and the Parent Expenses by wire transfer of immediately available funds; |
| (j) by the Company in order to enter into a binding definitive agreement providing for a Superior Proposal (an “Alternative Agreement”) if: (i) the board of directors of the Company shall have determined in good faith after consultation with its outside legal counsel that entering into such Alternative Agreement is required in order for the board of directors of the Company to comply with its fiduciary obligations to the Company’s shareholders under applicable Legal Requirements (which, for purposes of this Section 7.1(j)(i), shall be deemed to consist of Israeli Legal Requirements and in addition, in order to determine the appropriate standards that would apply to such fiduciary obligations, the board of directors of the Company may also consider Delaware Legal Requirements); (ii) the Company shall have given the Parent at least five Business Days prior written notice of its intention to enter into such Alternative Agreement (which notice may be given concurrently with the notice contemplated by Section 5.7(b)), which notice shall be accompanied by a correct and complete copy of such Alternative Agreement and all annexes, exhibits, schedules and other agreements related thereto (and the Company shall thereafter promptly provide the Parent with correct and complete copies of any amendments or proposed amendments thereto) and during such period shall give the Parent the opportunity to meet with the Company to suggest such modifications to the terms hereof that the Parent may deem advisable; (iii) immediately prior to such termination, the Company shall have paid the Parent the Termination Fee and the Parent Expenses; and (iv) substantially concurrent with such termination the Company enters into such Alternative Agreement. |
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A “Triggering Event” shall be deemed to have occurred if: (i) the board of directors of the Company or any committee thereof shall for any reason have withheld or withdrawn, or shall have amended, modified or changed in a manner adverse to the Parent, its recommendation in favor of, the approval of this Agreement, the Merger or the other Transactions; (ii) the Company shall have failed to include in the Company Disclosure Documents the recommendation of the board of directors of the Company in favor of the approval of the Merger Proposal; (iii) the board of directors of the Company or any committee thereof shall have approved, endorsed or recommended any Acquisition Proposal; (iv) the provisions of Section 5.7 of this Agreement shall have been materially breached; (v) the Company shall have entered into any letter of intent or similar document or any agreement, contract or commitment accepting any Acquisition Proposal; (vi) any Person or “group” (as defined in Section 13(d) of the Exchange Act) shall have acquired or purchased from the Company or from any officer or director of the Company or any Voting Undertaking Shareholder more than a 15% interest in the total outstanding voting securities of the Company or any of its Subsidiaries; or (vii) a tender or exchange offer relating to securities of the Company shall have been commenced by a Person unaffiliated with the Parent and the Company shall not have sent to its security holders 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, a statement disclosing that the Company recommends rejection of such tender or exchange offer.
The Company acknowledges that the agreements contained in this Section 7.1 with respect to payment of the Termination Fee and Parent Expenses are an integral part of the Transactions (it being understood that in no event shall the Company be required to pay more than one Termination Fee), and that without these agreements the Parent would not enter into this Agreement; accordingly, if the Company fails to pay any amount due pursuant to this Section 7.1, then the Company shall (in addition to the Termination Fee and/or Parent Expenses, as applicable) pay to the Parent its costs and expenses (including reasonable attorneys’ fees and expenses) in connection with collecting such amount due, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made. Parent’s acceptance of the Termination Fee shall constitute conclusive evidence that this Agreement has been validly terminated. The Parent’s right to receive a Termination Fee in the circumstances provided in this Agreement is the exclusive remedy available to the Parent and Merger Sub for any failure of the Merger and other Transactions to be consummated in those circumstances, and the Company shall have no further liability with respect to this Agreement or the Transactions, except in the event of a knowing and intentional breach of this Agreement.
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Section 7.2Notice of Termination; Effect of Termination. Any termination of this Agreement under Section 7.1 above will be effective immediately upon (or, if the termination is pursuant to Section 7.1(e), (f), (g) or (h) and theproviso therein is applicable, thirty days after) the delivery of 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 the Parent as provided in Section 7.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of the Parent or the Company, except (i) to the extent that such termination results from the knowing and intentional breach by a party of any of its representations, warranties, covenants or agreements in this Agreement, and (ii) notwithstanding the foregoing, Section 7.1 (and the obligation to pay Parent Expenses and the Termination Fee as provided therein), this Section 7.2 and Article 8 shall survive any termination of this Agreement. No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 8.1 shall not limit any covenant or agreement which by its terms contemplates performance after the Effective Time.
Section 8.2Fees and Expenses. Except with respect to Termination Fees and Parent Expenses as set forth in Section 7.1, all fees and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses whether or not the Merger is consummated.
Section 8.3Amendment. Subject to applicable Legal Requirements, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed by each of the Parent and the Company.
Section 8.4Extension; 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 on the part of a party to any 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 8.5Notices. 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 telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):
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| | (a) | If to the Parent or Merger Sub, to: |
| | Spansion Inc.
915 DeGuigne Drive
Sunnyvale, California
Telecopy No.: +1 (408) 616-6659
Attention: Office of General Counsel |
| | With a copy (which shall not constitute notice) to: |
| | O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, California 94111 USA
Telecopy No.: +1 (415) 984-8701
Attention: Michael J. Kennedy
Michael S. Dorf |
| | Yigal Arnon & Co.
22 Rivlin Street
Jerusalem 91000 Israel
Telecopy No.: +972 (2) 623-9236
Attention: Barry Levenfeld |
| | (b) | If to the Company, to: |
| | Saifun Semiconductors Ltd.
6 Arie Regev Street,
Sappir Industrial Park, Netanya 42504, Israel
Telecopy No.: +972-9-892-8425
Attention: Chief Executive Officer and Chief Financial Officer |
| | With a copy (which shall not constitute notice) to: |
| | Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105 USA
Telecopy No.: +1 (415) 268-7522
Attention: Bruce A. Mann
Michael G. O'Bryan |
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| | Eitan, Mehulal, Pappo, Barath & Co.
10 Abba Eban Blvd.
Herzliya 46120, Israel
Telecopy No.: + 972-9-972-6001
Attention: Guy Hadar |
Section 8.6Interpretation. 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 nor 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. The parties intend that each provision of this Agreement shall be given full separate and independent effect. Although the same or similar subject matters may be addressed in different provisions of this Agreement, the parties intend that, except as expressly provided in this Agreement, each such provision shall be read separately, be given independent significance and not be construed as limiting any other provision of this Agreement (whether or not more general or more specific in scope, substance or content).
Section 8.7Definitions. For purposes of this Agreement:
| (a) “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, where “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. |
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| (b) “Business Day” means any day other than Saturday, Sunday or any other day on which banks are legally permitted to be closed in San Francisco, California. |
| (c) “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. |
| (d) “Knowledge” of any Person which is not an individual means the actual knowledge of such Person’s directors and executive officers and the knowledge that any of such Persons would be reasonably expected to have in the conduct of their respective duties. |
| (e) “Material Adverse Change” or “Material Adverse Effect” means, when used in connection with the Company or the Parent, any change, effect, event, occurrence, condition or development that (i) is or is reasonably likely to be materially adverse to the business, assets (including intangible assets), properties, results of operations or condition (financial or otherwise) of such party and its Subsidiaries, taken as a whole, or (ii) prevents or materially delays the consummation of the Merger or the Cash Distribution, other than, in the case of (i) or (ii), any change, effect, event, occurrence, condition or development relating to (A) general economic conditions (and not having a materially disproportionate effect on such party relative to other industry participants), (B) the industry in which such party operates in general, including changes in Legal Requirements or generally accepted accounting principles or accounting standards generally applicable to participants in such industry (and not having a materially disproportionate effect on such party relative to other industry participants), (C) any declaration of war by or against, or an escalation of hostilities involving, or an act of terrorism against, any country where such party or its major sources of supply have substantial operations or where such party derives substantial revenues (and not having a materially disproportionate effect on such party relative to others having substantial operations in or deriving substantial revenues from such country), (D) the impact of the announcement or pendency of this Agreement or the consummation of the Merger or the other Transactions on relationships, contractual or otherwise, with customers, suppliers, distributors or partners, (E) the failure by such party to meet internal projections or forecasts, analyst expectations or publicly announced earnings or revenue projections, or decreases in such party’s stock price (including as a result of a failure to meet such projections, forecasts or analyst expectations), in and of itself (for the avoidance of doubt this clause (E) shall not preclude the other party from asserting that the underlying cause of any such failure or decrease in stock price is a Material Adverse Effect), or (F) any claim or litigation arising from allegations of breach of fiduciary duty with respect to the Company or the Parent relating to this Agreement, the Merger or the other Transactions;provided, in each case, that the party claiming such effect shall have the burden of proving such effect. |
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| (f) “Permitted Lien” shall mean (i) any Lien for Taxes not yet due or being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established in accordance with GAAP on the financial statements included in the Company Filed SEC Reports, (ii) Liens securing indebtedness or liabilities that are reflected in the Company Filed SEC Reports, (iii) such immaterial non-monetary Liens or other imperfections of title, if any, 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, (C) any supplemental Taxes or assessments not shown by the public records and (D) title to any portion of the premises lying within the right of way or boundary of any public road or private road, (iv) Liens imposed or promulgated by Legal Requirements with respect to real property and improvements, including zoning regulations, (v) Liens disclosed on existing title reports or existing surveys (in either case copies of which title reports and surveys have been delivered or made available to the Parent), and (vi) mechanics’, carriers’, workmen’s, repairmen’s and similar Liens, incurred in the ordinary course of business consistent with past practice. |
| (g) “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. |
| (h) “Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person. |
Section 8.8Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered (whether delivered by telecopy 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 8.9Entire 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 Company Disclosure Letter and the Parent Disclosure Letter (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 the provisions of Section 5.16 are not intended to confer upon any Person, other than the parties, any rights or remedies.
Section 8.10Severability. If any term or other provision of this Agreement or the application hereof is 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. 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 the court making such determination shall have the power to and shall, subject to the discretion of such court, reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.
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Section 8.11Other Remedies; Specific Performance. Except as otherwise provided herein, and subject to Sections 7.2 and 8.1 hereof, 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 one 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 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 8.12GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY OTHER CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR OTHERWISE) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK;PROVIDED, HOWEVER, THAT (I) MATTERS INVOLVING THE INTERNAL CORPORATE AFFAIRS OF THE PARENT, MERGER SUB OR THE COMPANY, SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH SUCH CORPORATION OR COMPANY IS ORGANIZED, AND (II) PROVISIONS RELATED TO THE COURT APPROVAL, THE MERGER AND THE CASH DISTRIBUTION THAT ARE REQUIRED UNDER ISRAELI LAW TO BE GOVERNED BY ISRAELI LAW WILL BE SO GOVERNED.
Section 8.13Venue; Waiver of Jury Trial. In addition, each of the parties (a) consents to submit itself to the personal jurisdiction of any Federal court (and if such Federal court finds that it can not exercise jurisdiction, any New York state court) sitting in New York City in the State of New York and higher courts sitting in other locations with jurisdiction with respect to any appeals from such courts, if any dispute arises out of this Agreement or any of the Transactions, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, including (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), (iii) to the fullest extent permitted by applicable law, that (1) the suit, action or proceeding in any such court is brought in an inconvenient forum, (2) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts and (c) agrees that it will not bring any action relating to this Agreement or any of the Transactions in any court other than a Federal court (or if such Federal court finds that it can not exercise jurisdiction) such New York state court sitting in New York City in the State of New York. EACH OF THE PARENT, MERGER SUB, AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS. Each party to this Agreement hereby agrees that in connection with any such action process may be served in the same manner as notices may be delivered under Section 8.5 and irrevocably waives any defenses or objections it may have to service in such manner.
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Section 8.14Assignment. 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;provided,however, that the Parent may assign any of its rights and interests under this Agreement to any of its Subsidiaries without the Company’s consent;provided,further,however, that any such assignment shall not relieve the Parent of its obligations hereunder. 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 the preceding two sentences shall be void. Subject to the preceding three sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns.
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Each of the Parent, Merger Sub and the Company has caused this Agreement to be duly executed and delivered as of the date first written above.
| | SPANSION INC.
By: /s/ Bertrand Cambou
———————————————————————
Name: Bertrand Cambou
Title: President and Chief Executive Officer |
| | ATLANTIC STAR MERGER SUB LTD.
By: /s/ Bertrand Cambou
———————————————————————
Name: Bertrand Cambou
Title: Authorized Signatory |
| | SAIFUN SEMICONDUCTORS LTD.
By: /s/ Boaz Eitan
———————————————————————
Name: Dr. Boaz Eitan
Title: Chief Executive Officer and Chairman |
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Annex I
DEFINED TERMS INDEX
Defined Term
| Section
|
|---|
| | |
| Accounting Rules | 2.7(e) |
| Acquisition Proposal | 5.7(a) |
| Acquisition Transaction | 5.7(a) |
| Agreement | Preamble |
| Affiliate | 8.7(a) |
| Affiliate Agreements | Recitals |
| Alternative Agreement | 7.1(i) |
| Applicable Court | 5.2(a) |
| Applicable Company Date | 2.7(a) |
| Applicable Parent Date | 3.6(c) |
| Approved Enterprise | 2.15(b) |
| Approvals | 2.5(b) |
| Arrangement Regulations | 5.2(a) |
| Assumed Options | 5.5(a) |
| Blue Sky Laws | 2.5(b) |
| Business Day | 8.7(b) |
| Cash Distribution | 5.12(a) |
| Cash Distribution Adjustment Ratio | 5.12(b) |
| Cash Distribution Tax Ruling | 5.5(a)(iv) |
| Certificate | 1.4(c) |
| Closing | 1.2 |
| Closing Date | 1.2 |
| Code | 1.4(f) |
| Companies Law | Recitals |
| Company | Preamble |
| Company Affiliates | 5.18 |
| Company Charter Documents | 2.2 |
| Company Contract | 2.18 |
| Company Disclosure Document | 2.12 |
| Company Disclosure Letter | Article 2 |
| Company Employee Plan | 2.11(a) |
| Company Filed SEC Reports | 2.7(a) |
| Company Intellectual Property | 2.17(a) |
| Company Meetings | 5.2(a) |
| Company Option Plan | 1.3(d) |
| Company Registered Intellectual Property Rights | 2.17(b) |
| Company Share Options | 1.3(d) |
| Company Shares | 1.3(b) |
| Confidentiality Agreement | 5.6(a) |
| Contract | 8.7(c) |
| Control | 8.7(a) |
| Copyrights | 2.17(a) |
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Defined Term
| Section
|
|---|
| | |
|---|
| Counterpart Plans | 5.11(c) |
| Court Approval | 5.2(a) |
| D&O Insurance | 5.16(b) |
| Director Resignations | Recitals |
| Effective Time | 1.2 |
| Employee | 2.11(a) |
| Employment Agreement | 2.11(a) |
| End Date | 7.1(b) |
| Environmental Laws | 2.6(a) |
| ERISA | 2.11(a)(iv) |
| ERISA Affiliate | 2.11(a)(v) |
| ESPP | 1.3(d) |
| Exchange Act | 2.3(a) |
| Exchange Agent | 1.4(a) |
| Exchange Ratio | 1.3(b) |
| Excluded Company Representations | 6.3(a) |
| 401(k) Plan | 5.11(c) |
| GAAP | 2.7(e) |
| Governmental Entity | 2.3(b) |
| Grants | 2.22 |
| Group | 5.7(a) |
| Hazardous Material | 2.6(a) |
| Indemnified Parties | 5.15(a) |
| Information Statement | 5.2(a) |
| Intellectual Property Rights | 2.17(a) |
| International Employee Plan | 2.11(a) |
| Investment Center | 2.5(b) |
| Investment Center Approval | 2.5(b) |
| IRS | 2.11(c) |
| Israeli Employees | 2.11(j) |
| Israeli Option Tax Ruling | 5.5(a) |
| Israeli Tax Rulings | 5.5(a)(iv) |
| Israeli Withholding Tax Ruling | 5.5(a) |
| Knowledge | 8.7(d) |
| Legal Requirements | 2.3(b) |
| Lehman Brothers | 2.16 |
| Liens | 2.3(c) |
| Lock-up Agreements | Recitals |
| Mask Works | 2.17(a) |
| Material Adverse Change | 8.7(e) |
| Material Adverse Effect | 8.7(e) |
| Merger | Recitals |
| Merger Proposal | 5.2(a) |
| Merger Sub | Preamble |
| Nasdaq | 1.3(f) |
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Defined Term
| Section
|
|---|
| | |
|---|
| Non-Controlling Shares | 5.2(a) |
| OCS | 2.5(b) |
| OCS Approval | 2.5(b) |
| 104H Ruling | 5.5(a) |
| Ordinance | 1.4(c) |
| Other Filings | 5.1(c) |
| Parent | Preamble |
| Parent Capitalization Representations | 6.2(a) |
| Parent Class C Common Stock | 3.2 |
| Parent Common Stock | 1.3(b) |
| Parent Common Stock Closing Price | 1.3(f) |
| Parent Disclosure Letter | Article 3 |
| Parent Expenses | 7.1(d) |
| Parent Filed SEC Reports | 3.6(a) |
| Parent Notes | 3.2 |
| Parent Preferred Stock | 3.2 |
| Patents | 2.17(a) |
| Per Share Cash Distribution Amount | 5.12(a) |
| Per Share Consideration | 1.3(b) |
| Person | 8.7(f) |
| PTO | 2.17(b) |
| Publicly Available Software | 2.17(l) |
| R&D Law | 5.4(a) |
| Registered Intellectual Property | 2.17(a) |
| Restraints | 6.1(c) |
| Retention and Noncompetition Agreements | Recitals |
| Returns | 2.15(b) |
| RTPA | 2.5(b) |
| Sarbanes-Oxley Act | 2.7(a) |
| SEC | 2.7(a) |
| Section 350 Vote | 5.2(a) |
| Securities Act | 2.5(b) |
| Severance Pay Law | 2.11(k) |
| Subsidiary | 8.7(g) |
| Superior Proposal | 5.7(a) |
| Surviving Company | 1.1 |
| Tax | 2.15(a) |
| Termination Fee | 7.1(b) |
| Trademarks | 2.17(a) |
| Transactions | Recitals |
| Triggering Event | 7.1 |
| Uncertificated Shares | 1.4(c) |
| URLs | 2.17(a) |
| Voting Undertakings | Recitals |
| Voting Undertaking Shareholders | Recitals |
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