AGREEMENT AND PLAN OF MERGER BY AND AMONG TOP IMAGE SYSTEMS LTD., KOFAX HOLDINGS INTERNATIONAL LTD.. TORNELY LTD. AND KOFAX, INC.

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Exhibit 2.1

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

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iii

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AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (together with all annexes, letters, schedules and exhibits hereto, this "Agreement"), dated as of February 3, 2019, is by and among Kofax, Inc., a company organized under the Laws of the State of Delaware ("Ultimate Parent"), Kofax Holdings International Ltd., a private limited company incorporated under the Laws of England and Wales ("Parent"), Tornely Ltd., a company organized under the Laws of the State of Israel and a wholly-owned direct subsidiary of Parent ("Merger Sub"), and Top Image Systems Ltd., a company organized under the Laws of the State of Israel (the "Company").   Ultimate Parent is made a party to this Agreement solely for purposes of Section 8.9 hereof.  Certain capitalized terms used in this Agreement are defined in Article IX, and Article IX includes an index of all capitalized terms used in this Agreement.

 

RECITALS

 

WHEREAS, the parties hereto intend to enter into a transaction whereby Merger Sub will merge with and into the Company (the "Merger") on the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of Sections 314-327 of the Companies Law 5759-1999 of the State of Israel (together with the rules and regulations promulgated thereunder, the "ICL"), pursuant to which each outstanding ordinary share, nominal value NIS 0.04 per share, of the Company (the "Company Ordinary Shares"), shall be converted into the right to receive cash, as set forth herein, and following which Merger Sub will cease to exist and the Company will become a wholly owned subsidiary of Parent, all upon the terms and subject to the conditions of this Agreement;

 

WHEREAS, the board of directors of the Company (the "Company Board of Directors") has unanimously:  (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement, taken together, are fair to, and in the best interests of, the Company and its shareholders (the "Company Ordinary Shareholders") and that, considering the financial condition of the merging companies, no reasonable concern exists that, as a result of the Merger, the Surviving Company will be unable to fulfill the obligations of the Company to its creditors; (ii) approved this Agreement, the Merger and the other transactions contemplated hereby; and (iii) determined to recommend that the Company Ordinary Shareholders approve this Agreement, the Merger and the other transactions contemplated hereby;

 

WHEREAS, the boards of directors of Parent and Merger Sub have each unanimously approved this Agreement, the Merger and the other transactions contemplated hereby, and the board of directors of Merger Sub has:  (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement, taken together, are fair to, and in the best interests of, Merger Sub and its sole shareholder 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; and (ii) determined to recommend that the sole shareholder of Merger Sub approve this Agreement, the Merger and the other transactions contemplated hereby;

 

WHEREAS, simultaneously with the execution and delivery of this Agreement, the sole shareholder of Merger Sub has approved this Agreement, the Merger and the other transactions contemplated by this Agreement;  and

 

WHEREAS, simultaneously with the execution and delivery of this Agreement, as a condition to Parent's entering into this Agreement and as an inducement thereto, certain Company Ordinary Shareholders have entered into voting agreements in the form attached hereto as Exhibit A (the "Voting Agreements"), dated as of the date hereof, with Parent, pursuant to which, among others, such Company Ordinary Shareholders have agreed to vote such Company Ordinary Shareholders' Company Ordinary Shares in favor of the approval of the Merger and adoption of this Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements contained in this Agreement, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, the parties hereby agree as follows:

 

ARTICLE I

THE MERGER

 

Section 1.1           The Merger.

 

Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the ICL, at the Effective Time, Merger Sub (as the target company (Chevrat Ha'Ya'ad) in the Merger) shall be merged with and into the Company (as the absorbing company (HaChevra Ha'Koletet) in the Merger).  As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Company and shall (a) become a wholly owned direct Subsidiary of Parent, (b) continue to be governed by the Laws of the State of Israel, (c) maintain a registered office in the State of Israel, and (d) succeed to and assume all of the rights, properties and obligations of Merger Sub and the Company in accordance with the ICL.

 

Section 1.2           Closing.

 

Unless this Agreement shall have been terminated in accordance with Article VII, the Closing will occur at the offices of Meitar Liquornik ▇▇▇▇ ▇▇▇▇▇▇ Tal, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Israel, at 10:00 a.m. (local time), on the second (2^nd) Business Day following the date on which each of the conditions set forth in Article VI is satisfied or, to the extent permitted by Law, waived by the party entitled to waive such condition (except for any conditions that by their nature can only be satisfied on the Closing Date, but subject to the satisfaction of such conditions or waiver by the party entitled to waive such conditions), or another time, date or place as is agreed to in writing by the parties. The date on which the Closing occurs is referred to herein as the "Closing Date".

 

Section 1.3           Effective Time.

 

As soon as practicable after the determination of the date on which the Closing is to take place, each of the Company and Merger Sub shall (and Parent shall cause Merger Sub to), in coordination with each other, deliver to the Registrar of Companies of the State of Israel (the "Companies Registrar") a notice (the "Merger Notice") of the contemplated Merger and the proposed date of the Closing on which the Companies Registrar is requested to issue a certificate evidencing the Merger in accordance with Section 323(5) of the ICL (the "Certificate of Merger") after notice that the Closing has occurred is served to the Companies Registrar, which the parties shall deliver on the Closing Date.  The Merger shall become effective upon the issuance by the Companies Registrar of the Certificate of Merger in accordance with Section 323(5) of the ICL.  For the avoidance of doubt, and notwithstanding any provision of this Agreement to the contrary, it is the intention of the parties hereto that the Merger shall be declared effective and that the issuance by the Companies Registrar of the Certificate of Merger in accordance with Section 323(5) of the ICL shall both occur on the Closing Date, as a condition to Closing. The time at which the Merger becomes effective is referred to herein as the "Effective Time".

Section 1.4           Effect of the Merger.

 

The Merger shall have the effects set forth in the ICL and this Agreement.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, by virtue of, and simultaneously with, the Merger and without any further action on the part of Parent, Merger Sub, the Company or any shareholder of the Company, (i) Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Company, (ii) all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Company, (iii) all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Company, and (iv) all the rights, privileges, immunities, powers and franchises of the Company (as the Surviving Company) shall continue unaffected by the Merger in accordance with the ICL.

 

Section 1.5           Memorandum and Articles of Association.

 

(a)          At the Effective Time, the Articles of Association of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Articles of Association of the Surviving Company.

 

(b)          Unless otherwise determined by Parent prior to the Effective Time, the Memorandum of Association of the Company, as in effect immediately prior to the Effective Time, shall be the Memorandum of Association of the Surviving Company until thereafter amended as provided therein or by applicable Law.

 

Section 1.6            Directors and Officers of the Surviving Company.

 

(a)          Directors.  The parties shall take all actions necessary so that the directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be appointed and serve as the directors of the Surviving Company until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be, in accordance with the Surviving Company's articles of association.

 

(b)          Officers.  At the Effective Time, the officers of the Company immediately before the Effective Time shall be the officers of the Surviving Company, until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.

 

Section 1.7            Effects on Share Capital.

 

(a)          Share Capital.  Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, the following shall occur:

 

(i)          Conversion of Company Ordinary Shares.  Each Company Ordinary Share, issued and outstanding immediately prior to the Effective Time, other than Company Ordinary Shares canceled pursuant to Section 1.7(a)(ii), shall automatically be converted into and represent the right to receive $0.86 (0 U.S. Dollars and 86 cents) in cash (the "Merger Consideration"), without interest and less applicable Taxes required to be withheld, payable upon the surrender of the certificate representing such Company Ordinary Share (or receipt of an "agent's message" or other acceptable evidence of transfer if such Company Ordinary Share is uncertificated) in the manner provided in Article II (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit in the manner provided in Article II).  The amount of cash each Effective Time Holder is entitled to receive shall be rounded to the nearest cent, and computed after aggregating all cash amounts for all Company Ordinary Shares held by such Effective Time Holder.

 

(ii)          Parent-Owned Shares and Shares Held in Treasury.  Each Company Ordinary Share held in the treasury of the Company or owned by Parent or any direct or indirect wholly-owned Subsidiary of the Company or of Parent immediately prior to the Effective Time, if any, shall be canceled and retired without any conversion or consideration paid in respect thereof and shall cease to exist.

 

(iii)          Share Capital of Merger Sub.  Each Ordinary Share, with no par value, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically and without further action converted into one validly issued, fully paid and nonassessable Ordinary Share, par value four Israeli Agorot (NIS 0.04) per share, of the Surviving Company and such Ordinary Shares shall constitute the only outstanding share capital of the Surviving Company.  Each certificate evidencing ownership of such shares of Merger Sub immediately prior to the Effective Time shall, as of the Effective Time, evidence ownership of such shares of the Surviving Company.

 

(b)          Adjustment to the Merger Consideration.  The Merger Consideration shall be adjusted appropriately to reflect the effect of any share split, reverse share split, share dividend (including any dividend or any non-cash distribution of securities convertible into Company Ordinary Shares), reclassification, combination, exchange of shares or other like change with respect to Company Ordinary Shares occurring, or with a record date, on or after the date hereof and prior to the Effective Time, and such adjustment to the Merger Consideration shall provide to the holders of Company Ordinary Shares the same economic effect as contemplated by this Agreement prior to such action.

 

(c)           Company Options.

 

(i)          Subject to clause (ii) below, at the Effective Time, each Company Option whether vested or unvested, shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) equal to the product of (i) the excess, if any, of (A) the Merger Consideration over (B) the exercise price per Company Ordinary Share for such Company Option and (ii) the total number of shares underlying such Company Option (the "Option Consideration"), less applicable Taxes required to be withheld with respect to such payment pursuant to Section 2.6.  From and after the Effective Date, all Company Options shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of Company Options shall cease to have any rights with respect thereto or arising therefrom, except the right to receive the Option Consideration payable hereunder.  If the exercise price per Company Ordinary Share for any Company Option is equal to or greater than the Merger Consideration (an "Underwater Option"), such Underwater Option shall be canceled without payment of consideration.

 

(ii)          Prior to the Effective Time, the Company shall take all action that may be reasonably necessary (under the Company Equity Incentive Plans and otherwise, including providing Company Optionholders with notice of their rights with respect to any such Company Options as provided herein and/or obtaining such Company Optionholders' consents, to the extent required, and including providing the holders of Underwater Options notice of their right to exercise their Underwater Options in accordance with the Company Equity Incentive Plans) to effectuate the provisions of this Section 1.7(c) and to ensure that, from and after the Effective Time, Company Optionholders have no rights with respect thereto other than those specifically provided in this Section 1.7(c).

 

(iii)          The amount of cash each Company Optionholder is entitled to receive for the Company Options held by such holder shall be rounded to the nearest cent and computed after aggregating cash amounts for all Company Options held by such holder.

 

(iv)          As of the Effective Time, the Company Equity Incentive Plans shall terminate and all rights under any provision of any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the share capital of the Company or any of its Subsidiaries shall be cancelled.

 

(d)           Company RSUs.

 

(i)          At the Effective Time, each Company RSU whether vested or unvested, shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) (to the extent such payment does not trigger Taxes under Code Section 409A) equal to the product of (i) the Merger Consideration and (ii) the number of Company Ordinary Shares subject to such Company RSUs (the "RSUs Consideration"), less applicable Taxes required to be withheld with respect to such payment, and paid in accordance with the applicable terms and conditions of such Company RSU and Code Section 409A.    From and after the Effective Date all Company RSUs shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Company RSU shall cease to have any rights with respect thereto or arising therefrom, except the right to receive the RSUs Consideration payable hereunder.

 

(ii)          Prior to the Effective Time, the Company shall take all action that may be reasonably necessary (under the Company Equity Incentive Plans and otherwise, including providing Company RSUs Holders with notice of their rights with respect to any such Company RSUs as provided herein and/or obtaining such Company RSUs Holders' consents, to the extent required) to effectuate the provisions of this Section 1.7(d) and to ensure that, from and after the Effective Time, Company RSUs have no rights with respect thereto other than those specifically provided in this Section 1.7(d).

 

(iii)         The amount of cash each Company RSUs Holder is entitled to receive for the Company RSUs held by such holder shall be rounded to the nearest cent and computed after aggregating cash amounts for all Company RSUs held by such holder.

 

ARTICLE II

EXCHANGE OF CERTIFICATES

 

Section 2.1            Paying Agent.

 

Prior to the Effective Time (but in no event later than three (3) Business Days prior to the Closing Date), Parent (i) shall select a bank or trust company reasonably acceptable to the Company to act as the paying agent for the Merger (the "Paying Agent") and, in connection therewith, shall enter into an agreement with the Paying Agent in form satisfactory to Parent and reasonably acceptable to the Company; and (ii)  may select an information agent reasonably acceptable to the Company (the "Information Agent") to assist in obtaining any requisite residency certificate and/or other declaration for Israeli Tax withholding purposes and, in connection therewith, shall enter into an agreement with the Information Agent in a form satisfactory to Parent and reasonably acceptable to the Company.

 

Section 2.2            Exchange Fund.

 

At the Closing, Parent shall deposit (or cause to be deposited) with the Paying Agent, for payment to the holders of Company Ordinary Shares (including Company Ordinary Shares issued upon exercise of Company 102 Options and Company ▇▇▇ ▇▇▇▇ that are held by the 102 Trustee ("Company 102 Shares")) pursuant to the provisions of Article I, an amount of cash equal to the aggregate consideration to which such holders of Company Ordinary Shares become entitled under Article I (such cash amount being referred to herein as the "Exchange Fund").  The Exchange Fund shall be invested by the Paying Agent, as directed by Parent or the Surviving Company; provided that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in deposit accounts, certificates of deposit or banker's acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $500 million (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise). Any interest and other income resulting from such investments shall be paid to Parent.  To the extent that there are any losses with respect to any investments of the Exchange Fund, or the Exchange Fund diminishes for any reason below the level required for the Paying Agent to promptly pay the cash amounts contemplated by Section 1.7(a)(i), Parent shall, or shall cause the Surviving Company to, promptly replace or restore the cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times maintained at a level sufficient for the Paying Agent to make such payments contemplated by Section 1.7(a)(i).  The receipt of the Exchange Fund by the Paying Agent shall be sufficient to discharge the Parent's obligation to pay the amount of cash in question, and the Parent shall have no responsibility or liability, under any circumstances, for the allocation thereof among the Company Ordinary Shareholders.  The Exchange Fund shall not be used for any other purpose.

 

Section 2.3            Payment Procedures with respect to Company Ordinary Shares.

 

Promptly following the Effective Time, Parent and the Surviving Company shall cause the Paying Agent to mail to each holder of record (as of immediately prior to the Effective Time) of (i) a certificate or certificates (the "Certificates") which immediately prior to the Effective Time represented outstanding Company Ordinary Shares and (ii) uncertificated Company Ordinary Shares (the "Uncertificated Shares"), in each case, whose shares were converted into the right to receive the Merger Consideration pursuant to Section 1.7(a)(i) (A) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent) (the "Letter of Transmittal"), (B) a declaration and/or a valid withholding certificate in which the beneficial owner of Company Ordinary Shares (other than Company 102 Shares) provides certain information necessary for Parent to determine whether any amounts need to be withheld from the Merger Consideration payable to such beneficial owner pursuant to the terms of the Ordinance (in each case, subject to the terms of the Withholding Tax Ruling, if obtained), the Code, or any provision of state, local, Israeli or other non-U.S. Law, and/or (C) instructions (including instructions from the Paying Agent) for use in effecting the surrender of the Certificates and Uncertificated Shares in exchange for the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II.  Upon surrender of Certificates (or affidavit of loss in lieu thereof) for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with the Letter of Transmittal and the declaration for Tax withholding purposes and/or a valid withholding certificate (and such other documents as may reasonably be required by the Paying Agent), duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates shall be entitled to receive in exchange therefor an amount in cash equal to the Merger Consideration to which the holder thereof is entitled pursuant to Section 1.7(a)(i) (less any applicable withholding Taxes payable in respect thereof), and the Certificates so surrendered shall forthwith be canceled.  Upon receipt of an "agent's message" by the Paying Agent (or such other evidence, if any, of transfer as the Paying Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, together with the Letter of Transmittal and the declaration for Tax withholding purposes and/or a valid withholding certificate, as applicable (and such other documents as may reasonably be required by the Paying Agent or Parent), duly completed and validly executed in accordance with the instructions thereto, the holders of such Uncertificated Shares shall be entitled to receive in exchange therefor an amount in cash equal to the Merger Consideration to which the holder thereof is entitled pursuant to Section 1.7(a)(i) (less any applicable withholding Taxes payable in respect thereof), and the transferred Uncertificated Shares so surrendered shall forthwith be canceled.  The Paying Agent shall accept such Certificates and transferred Uncertificated Shares upon compliance with such reasonable terms and conditions as the Paying Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices.  No interest shall be paid or accrued for the benefit of holders of the Certificates and Uncertificated Shares on the Merger Consideration payable upon the surrender of such Certificates and Uncertificated Shares pursuant to this Article II.  Until so surrendered, outstanding Certificates and Uncertificated Shares shall be deemed from and after the Effective Time, to evidence only the right to receive the Merger Consideration, without interest thereon, payable in respect thereof pursuant to the provisions of this Article II.  No Effective Time Holder shall be entitled to receive any amount held by the Paying Agent, unless such holder surrenders its Certificate (or affidavits of loss in lieu thereof) or Uncertificated Share and an executed Letter of Transmittal for payment in accordance with this Section 2.3.  Payments and deliveries to be made under this Agreement shall be made in US dollars by check or wire transfer of immediately available funds to such address or bank accounts as shall be set forth in the Letter of Transmittal.  Notwithstanding anything to the contrary in this Section 2.3, any Merger Consideration payable in respect of Company 102 Shares shall be transferred by the Paying Agent, in accordance with the terms of this Section 2.3 (including the requirement to surrender the Certificates and Letter of Transmittal by the 102 Trustee with respect to such Company 102 Shares), to the 102 Trustee, for the benefit of the beneficial owners thereof, and be released by the 102 Trustee to the beneficial holders of such Company 102 Shares, in accordance with the requirements of Section 102 of the Ordinance and the Option Tax Ruling, if obtained.

 

Section 2.4            Payment Procedures With Respect to Company Options and Company RSUs.

 

(i)          At or as soon as practicable following the Effective Time on the Closing Date, Parent shall transfer (i) the aggregate Option Consideration with respect to Company Options subject to Section 102 of the Ordinance (the "Company 102 Options"), and (ii) the aggregate RSUs Consideration with respect to RSUs granted under Section 102 of the Ordinance (the "Company 102 RSUs" and, together with the Company 102 Options, the "Company 102 Securities"), to the 102 Trustee, on behalf of holders of Company 102 Options and Company 102 RSUs, as the case may be, in accordance with Section 102 of the Ordinance and the Options Tax Ruling, if obtained (the "102 Amounts").  The 102 Amounts shall be held in trust by the 102 Trustee pursuant to the applicable provisions of Section 102 of the Ordinance and the Options Tax Ruling, if obtained, and shall be released by the 102 Trustee, together with any interest earned thereon by virtue of the investment of such amounts by the 102 Trustee, in accordance with the terms and conditions of Section 102 of the Ordinance and the Options Tax Ruling, if obtained.

 

(ii)          At or as soon as practicable following the Effective Time on the Closing Date, Parent shall promptly deposit the aggregate amount of funds payable in respect of Company Options and Company RSUs (other than Company 102 Securities) pursuant to Article I with the Company or the applicable employing Subsidiary of the holder thereof, at one or more accounts designated by the Company prior to Closing for the benefit of the holders of such Company Options and Company RSUs (other than Company 102 Securities).

 

Section 2.5            Transfers of Ownership.

 

In the event that a transfer of ownership of Company Ordinary Shares is not registered in the share transfer books or ledger of the Company, or if the Merger Consideration is to be paid in a name other than that in which the Certificates or Uncertificated Shares surrendered in exchange therefor are registered in the share transfer books or ledger of the Company, the Merger Consideration may be paid to a Person other than the Person in whose name the Certificate or Uncertificated Share so surrendered is registered in the share transfer books or ledger of the Company only if such Certificate or Uncertificated Shares are properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of such Certificate or Uncertificated Shares, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer Taxes have been paid or are otherwise not payable.

 

Section 2.6            Required Withholding.

 

(a)           Notwithstanding anything to the contrary hereunder, Parent, its Subsidiaries, the Company, its Subsidiaries, the Surviving Company, the 102 Trustee, the Paying Agent and any other third-party paying agent (each a "Payor") shall be entitled to deduct and withhold from any payment made pursuant to this Agreement (including the Merger Consideration and payments made pursuant to Section 1.7(c) (Company Options) or Section 1.7(d) (Company RSUs)) and any consideration otherwise deliverable under this Agreement such amounts as of each of Parent, the Company, the Paying Agent or any of their Affiliates or agents determines it may be required to be deducted and withheld with respect to the making of such payment or delivery of consideration under the Withholding Tax Ruling and the Options Tax Ruling, if obtained, the Code, the Ordinance, or under any provision of state, local, Israeli or other non-U.S. Tax Law; provided, however, that with respect to withholding of Israeli Tax, in the event any holder of record of Company Ordinary Shares, Company Options or Company RSUs provides the Payor with a Valid Tax Certificate issued by the Israel Tax Authority (the "ITA") regarding the withholding (or exemption from withholding) of Israeli Tax from the consideration payable in respect thereof in accordance with this Article II, or other treatment with respect to Israeli Tax, at least five (5) Business Days prior to any payment payable pursuant to this Agreement, then the deduction and withholding of any amounts under the Ordinance or any other provision of Israeli Law or requirement, if any, from the Merger Consideration,  the Option Consideration or RSUs Consideration, as applicable, payable to such holder of record of Company Ordinary Shares, Company Options or Company RSUs, as applicable, shall be made only in accordance with the provisions of such Valid Tax Certificate To the extent amounts are so withheld and paid over to the appropriate Governmental Entity, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

(b)          Notwithstanding the provisions of Section 2.6(a) above and subject to any other provision to the contrary in the Withholding Tax Ruling, with respect to Israeli Taxes, the consideration payable to each holder of record of Company Ordinary Shares shall be retained by the Paying Agent for the benefit of each such holder of record of Company Ordinary Shares for a period of up to one hundred eighty (180) days from Closing (the "Withholding Drop Date") unless Parent or Paying Agent is otherwise instructed explicitly by the ITA (during which time no Payor shall make any payments to any holder of record of Company Ordinary Shares or withhold any amounts for Israeli Taxes from the payments deliverable pursuant to this Agreement, except as provided below and during which time each holder of record of Company Ordinary Shares may obtain a Valid Tax Certificate).  If a holder of record of Company Ordinary Shares delivers, no later than five (5) Business Days prior to the Withholding Drop Date, a Valid Tax Certificate to Payor, then the deduction and withholding of any Israeli Taxes shall be made only in accordance with the provisions of such Valid Tax Certificate and the balance of the payment that is not withheld shall be paid to such holder of record of Company Ordinary Shares concurrently therewith subject to any non-Israeli withholding which is applicable to the payment (if any).  If any holder of record of Company Ordinary Shares (i) does not provide Payor with a Valid Tax Certificate, by no later than five (5) Business Days before the Withholding Drop Date, or (ii) submits a written request with Payor to release its portion of the consideration prior to the Withholding Drop Date and fails to submit a Valid Tax Certificate at or before such time, then the amount to be withheld from such holder of record of Company Ordinary Shares' portion of the consideration shall be calculated according to the applicable withholding rate as reasonably determined by Parent in accordance with applicable Law which amount shall be increased by the interest plus linkage differences as defined in Section 159A of the Ordinance for the time period between the fifteenth (15th) calendar day of the month following the month during which the Closing occurs and the time the relevant payment is made.  Unless otherwise determined in the Withholding Tax Ruling, any withholding made in New Israeli Shekels with respect to payments made hereunder in Dollars shall be calculated based on a conversion rate in such manner as the Payor reasonably determines to be in compliance with applicable Law (but in any event not lower than the conversion rate on the Closing Date) and any currency conversion commissions will be borne by the applicable payment recipient and deducted from payments to be made to such payment recipient.

 

Section 2.7            No Liability.

 

Notwithstanding anything to the contrary set forth in this Agreement, none of the Paying Agent, Parent, Merger Sub, the Surviving Company or any other party hereto shall be liable to a holder of Company Ordinary Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

Section 2.8            Distribution of Exchange Fund to Parent.

 

Any portion of the Exchange Fund that remains undistributed to the holders of the Certificates or Uncertificated Shares on the date that is twelve (12) months after the Effective Time shall be delivered to Parent upon demand, and any holders of Company Ordinary Shares that were issued and outstanding immediately prior to the Merger who have not theretofore surrendered their Certificates or Uncertificated Shares representing such Company Ordinary Shares for exchange pursuant to the provisions of Article II shall thereafter look for payment of the Merger Consideration, without interest, payable in respect of the Company Ordinary Shares represented by such Certificates or Uncertificated Shares solely to Parent, as general creditors thereof, for any claim to the applicable Merger Consideration to which such holders may be entitled pursuant to the provisions of Article I.

 

Section 2.9            No Further Ownership Rights in Company Ordinary Shares.

 

From and after the Effective Time, all Company Ordinary Shares shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Certificate or Uncertificated Shares theretofore representing any Company Ordinary Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration payable therefor upon the surrender thereof in accordance with the provisions of Article II.  The Merger Consideration paid in accordance with the terms of Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Ordinary Shares.  From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Company of Company Ordinary Shares that were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time.  If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Company for any reason, they shall be canceled and exchanged as provided in Article II.

 

Section 2.10          Lost, Stolen or Destroyed Certificates.

 

In the event that any Certificates shall have been lost, stolen or destroyed, the Paying Agent shall pay the Merger Consideration in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof and agreeing to indemnify and hold harmless Parent from and against any losses in connection therewith (such affidavit to be in a form attached to the Letter of Transmittal).

 

Section 2.11          No Interest; No Further Dividend.

 

No interest shall accumulate on any amount payable in connection with the Merger.  No dividends or other distributions with respect to shares of the Surviving Company with a record date on or after the Effective Time shall be paid to the holder of any unsurrendered Certificates.

 

Section 2.12          Necessary Further Actions

 

If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Company with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the directors and officers of the Surviving Company are fully authorized in the name and on behalf of the Company and the Company Ordinary Shareholders to take all such lawful and necessary action.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as (i) disclosed in the Company Disclosure Letter delivered by the Company to Parent prior to the execution of this Agreement (it being acknowledged and agreed that disclosure of any item in any Section or subsection of the Company Disclosure Letter shall be deemed disclosed with respect to any other Section or subsection of the Company Disclosure Letter to the extent that the relevance of any disclosed event, item or occurrence in the Company Disclosure Letter to such other Section or subsection is readily apparent on its face as to matters and items that are the subject of the corresponding representation or warranty in this Agreement), and (ii) set forth in the Company Reports (to the extent it is reasonably apparent that any such disclosure set forth in the Company Reports would qualify the representations and warranties contained herein and other than, in each case, any matters required to be disclosed for purposes of Section 3.3 (Capitalization), Section 3.8 (Company Reports; Financial Statements), and Section 3.9(b) (Absence of Company Material Adverse Effect) of this Agreement which matters shall be specifically disclosed in Sections 3.3, 3.8, and 3.9(b) of the Company Disclosure Letter, respectively, and further excluding from the Company Reports (1) any exhibits thereto and any items included therein that are incorporated by reference to Company Reports filed prior to December 31, 2016 other than exhibits or items included in or incorporated by reference to Company Reports filed after December 31, 2016 and (2) any risk factor disclosures, disclosures about market risk or other cautionary, predictive or forward-looking disclosures contained therein), the Company represents and warrants to each of the other parties hereto as follows:

 

Section 3.1            Organization and Good Standing; Charter Documents

 

(a)           The Company and each of its Subsidiaries (i) is a company limited by shares, corporation or other entity that is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of its jurisdiction of incorporation or organization, as applicable, (ii) has full corporate (or, in the case of any Subsidiary that is not a corporation, other) power and authority to own, lease and operate its properties and assets and to conduct its business as presently conducted and (iii) is duly qualified or licensed to do business as a foreign corporation and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except, with respect to clauses (ii) and (iii), where the failure to be so qualified or licensed would not reasonably be expected to have a Company Material Adverse Effect.

 

(b)           The Company has delivered to Parent (or included as an exhibit to the Company 20-F) complete and correct copies of the certificate of incorporation and by-laws (or similar organizational documents) of the Company and each Subsidiary of the Company, each as amended to date, and each as so delivered is in full force and effect.  The Company is not in violation of any of the provisions of the Company Articles of Association or the Company Memorandum.  Neither the Company nor any of its Subsidiaries has filed for bankruptcy or filed for reorganization under the U.S. federal bankruptcy Laws or similar state or foreign Law, has become insolvent or has become subject to conservatorship or receivership.

 

Section 3.2            Authority for Agreement.

 

The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to obtaining the Company Required Vote, to consummate the Merger and the other transactions contemplated by this Agreement.  This Agreement has been duly executed and delivered by the Company.  No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery by the Company of this Agreement or any other Transaction Document to which it is, or is specified to be, a party, the performance by the Company of its covenants and obligations hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby, other than obtaining the Company Required Vote, for the consummation of transactions contemplated hereby, and assuming the due authorization, execution and delivery by Parent and Merger Sub, this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited against the Company by (i) bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the enforcement of creditors' rights or remedies in general as from time to time in effect or (ii) the exercise by courts of equity powers (the "Bankruptcy and Equity Exception").

 

Section 3.3            Capitalization.

(a)           The authorized share capital of the Company consists of 115,000,000 Company Ordinary Shares and 10,000,000 Preferred Shares, nominal value NIS 0.04 per share.  As of January 31, 2019 (the "Capitalization Date"), 18,464,737 Company Ordinary Shares are issued and outstanding, and no Company Ordinary Shares are held in the Company's treasury and no Preferred Shares are issued and outstanding.  As of the Capitalization Date, 2,422,785 Company Ordinary Shares are issuable pursuant to outstanding Company Ordinary Shares-Based Awards consisting solely of (i) 2,250,099 Company Options outstanding pursuant to the Company Equity Incentive Plans, each such Company Option entitling the holder thereof to purchase one Ordinary Share (assuming vesting of all unvested options), and (ii) Company RSUs outstanding for 172,686 Company Ordinary Shares (which will vest no later than immediately prior to the Closing).   Except as set forth above and in Section 3.4, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound relating to the issued or unissued Equity Interests of the Company or any of its Subsidiaries, or securities convertible into or exchangeable for such Equity Interests, or obligating the Company or any of its Subsidiaries to issue or sell any of its shares or other Equity Interests, or securities convertible into or exchangeable for such shares of, or other Equity Interests in, the Company or any of its Subsidiaries.

 

(b)           Except as set forth above or in the Company Articles of Association, there are no outstanding contractual obligations to which the Company or any of its Subsidiaries is a party affecting or requiring the repurchase, redemption, issuance, creation or disposition of, any Equity Interests in the Company or any of its Subsidiaries.  All outstanding Company Ordinary Shares are duly authorized and validly issued, fully paid and nonassessable, free of any Encumbrances other than Encumbrances imposed upon the holder thereof by reason of the acts or omissions of such holder, not subject to any preemptive rights or rights of first refusal created by statute, and issued in compliance in all material respects with all applicable securities Laws.

 

(c)           There are no outstanding bonds, debentures, notes or other instruments of the Company granting the holder thereof the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which the Company's Shareholders may vote.  The copy of the Company Equity Incentive Plans that are filed as an exhibit to the Company Reports is a complete and correct copies thereof as in effect on the date hereof.  Except for the Company Equity Incentive Plans, there are no equity incentive or share-based compensation plans in effect with respect to the Equity Interests of the Company or any of its Subsidiaries. Section 3.3(c) of the Company Disclosure Letter sets forth a list of the holders of Company Options, Company RSUs and/or Company Ordinary Shares-Based Awards as of the Capitalization Date, the maximum number of Company Ordinary Shares subject to such Company Option, Company RSU, or Company Ordinary Shares-Based Award, the expiration date of such Company Option, Company RSU or Company Ordinary Shares-Based Award, the price at which such Company Option, Company RSU or Company Ordinary Shares-Based Award may be exercised (if any), the Company Ordinary Shares Plan under which such Company Option, Company RSU or Company Ordinary Shares-Based Award was issued, whether such Company Option, Company RSU or Company Ordinary Shares-Based Award is currently intended to qualify as a nonqualified stock option or incentive stock option pursuant to the Code, whether each such Company Option, Company RSU or Company Ordinary Shares-Based Award was granted and is subject to Tax pursuant to Section 3(i) of the Ordinance or Section 102 of the Ordinance and the applicable sub-section of Section 102 of the Ordinance, and for Company Options, Company RSUs or Company Ordinary Shares-Based Awards subject to Section 102(b)(2) or Section 102(b)(3) of the Ordinance the date of deposit of such Company Option,  Company RSU or Company Ordinary Shares-Based Award with the 102 Trustee.

 

(d)           As of the date hereof, except for the Voting Agreements, there are no shareholder agreements, voting trusts, proxies or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound with respect to the voting or registration of Company Ordinary Shares or share capital of any its Subsidiaries or preemptive rights with respect thereto.

 

(e)            There are no accrued and unpaid dividends with respect to any outstanding shares or other Equity Interests of the Company or any of its Subsidiaries.

 

(f)            Except as provided in the Company Memorandum or the Company Articles of Association, there are no preemptive rights of first refusal, co-sale rights, "drag-along" rights or registration rights granted by the Company with respect to the Company's share capital.

 

(g)           There are no rights or obligations, contingent or otherwise (including rights of first refusal in favor of the Company), of the Company or any of its Subsidiaries, to repurchase, redeem or otherwise acquire any shares of the Company or any of its Subsidiaries or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such Subsidiary or any other Person.

 

(h)           The aggregate consideration payable under  Article I as of the Closing shall not exceed $16,028,183.80 ("Aggregate Consideration"), with such Aggregate Consideration consisting of amounts not to exceed (1) $15,879,673.80 with respect to holders of the Company's Ordinary Shares (including in respect of previously vested RSUs), (2) $148,509.96 with respect to holders of Company RSUs, and (3) $0 with respect to holders of Company Options; provided, that, the Company shall not be deemed to have breached this Section 3.3(h)  solely by virtue of proper exercises and/or vesting of Company Options and/or Company RSUs outstanding as of the date of this Agreement (and set forth in Section 3.3(i)  of the Company Disclosure Letter) in accordance with their terms, so long as the net effect of such exercise does not increase the Aggregate Consideration.

 

(i)            Section 3.3(i) of the Company Disclosure Letter sets forth the vesting schedule of each Company Option, Company RSU and Company Ordinary Shares-Based Award.

 

Section 3.4            Company Subsidiaries.

 

Section 3.4 of the Company Disclosure Letter contains a correct and complete list of all of the Subsidiaries of the Company, the jurisdiction of organization, capitalization, the individuals who comprise the board of directors or comparable body of each Subsidiary, and the ownership interest of the Company or its Subsidiaries in each Subsidiary. The Company or one of its Subsidiaries is the record and beneficial owner of all outstanding shares and other Equity Interests of each Subsidiary of the Company and all such shares are duly authorized, validly issued, fully paid and nonassessable.  All of the outstanding shares and other Equity Interests of each Subsidiary of the Company are owned (directly or through another Subsidiary) by the Company free and clear of all Encumbrances, other than Permitted Encumbrances. Except for the share capital of, or other Equity Interests in, the Subsidiaries set forth in Section 3.4 of the Company Disclosure Letter, the Company does not own or have the right or obligation to acquire, directly or indirectly, any Equity Interest in, any Person.

 

Section 3.5             No Conflict; Required Filings and Consents.

(a)           Assuming compliance with the matters, and receipt of the approvals, referenced in Section 3.5(d) and the obtainment of the Company Required Vote, the execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation of the Merger and the other transactions contemplated by this Agreement will not, (i) conflict with or violate any provision of the Company Articles of Association or Company Memorandum, or the equivalent organizational documents of any Subsidiary of the Company, (ii) conflict with or violate any Law applicable to the Company or its Subsidiaries or any property or asset of the Company or any of its Subsidiaries, or (iii) result in a breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, give to others (immediately or with notice or lapse of time or both) any right of termination, consent, amendment, acceleration or cancellation of, result in a loss of a material benefit under (except to the extent of termination thereof solely by virtue of any "termination for convenience" provision included therein), result (immediately or with notice or lapse of time or both) in triggering any payment or other obligations, or result (immediately or with notice or lapse of time or both) in the creation of an Encumbrance (other than a Permitted Encumbrance) on any property or asset of the Company or its Subsidiaries pursuant to, any Company Material Contract, except in the case of clauses (ii) and (iii) above for any such conflicts, violations, breaches, defaults or other occurrences that would not reasonably be expected to have a Company Material Adverse Effect.

 

(b)           The affirmative vote of the holders of a majority of the outstanding Company Ordinary Shares present and voting at the Shareholders Meeting, voting as a single class, in favor of approving this Agreement is the only vote of the holders of any class or series of the Company's share capital necessary to approve and adopt this Agreement, the Merger and the other transactions contemplated hereby.

 

(c)           The Company Board of Directors has unanimously (i) approved this Agreement, the Merger and the other transactions contemplated hereby, (ii) determined that the Merger and the other transactions contemplated hereby, taken together, are at a price and on terms that are fair to, advisable and in the best interests of the Company and the Company Ordinary Shareholders, and (iii) recommended the approval and adoption of this Agreement by the Company Ordinary Shareholders (the "Company Recommendation").

 

(d)           No consent, approval, Order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Entity, is required to be made or obtained by the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby or compliance with the provisions hereof, except for (i) the filings and approvals under the Antitrust Laws set forth on Section 3.5(d) of the Company Disclosure Letter, (ii) the filing with the SEC of the Proxy Statement, as may be required in connection with this Agreement, the Merger and the other transactions contemplated hereby, (iii) any filings or notifications required or that may be required under the rules and regulations of Nasdaq or the Exchange Act or Israeli Securities Law of the transactions contemplated hereby, (iv) the filings of with the Companies Registrar in accordance with Section 5.5, and (v) the IIA Notice.

 

Section 3.6            Compliance.

 

(a)           Compliance with Laws; Permits.  Except in each case as would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and its Subsidiaries hold all Company Permits, (ii) all such Company Permits are in full force and effect, (iii) the Company and its Subsidiaries are in compliance with, and have for the past two (2) years been in compliance with, the terms of the Company Permits and all applicable Law, (iv) the Company and its Subsidiaries have for the past two (2) years been, and are, in compliance with all applicable listing, corporate governance and other rules and regulations of the Nasdaq and (v) no such Company Permit shall cease to be effective as a result of the transactions contemplated by this Agreement.  To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has received any written notice that the Company or any of its Subsidiaries is not in material compliance with the terms of any material Company Permit or any applicable Law.  To the Knowledge of the Company, no investigation or review by any Governmental Entity with respect to the Company or any of its Subsidiaries or their respective businesses is pending or threatened.

 

(b)           Prohibited Payments.  Except for matters that, individually or in the aggregate, would not have a Company Material Adverse Effect, none of the Company, any Subsidiary of the Company or to the Knowledge of the Company,  any director, officer, agent, or employee of the Company or any Subsidiary of the Company or other Person acting for or on behalf or at the direction of the Company or any Subsidiary of the Company has, in the course of its actions for, or on behalf of, any of them (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic Government Official from corporate funds; (iii) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic Government Official or (iv) otherwise violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (including the rules and regulations promulgated thereunder, the "FCPA"), or of any applicable Law enacted in any jurisdiction in connection with or arising under the OECD Convention Combating Bribery of Foreign Public Officials in International Business Transactions (the "OECD Convention").  To the Knowledge of the Company, during the last five (5) years, neither the Company nor any Subsidiary of the Company has received any communication that alleges that the Company or any Subsidiary of the Company, or any Representative or other Person acting for or on behalf or at the direction thereof is, or may be, in material violation of, or has, or may have, any material Liability under, the FCPA or the OECD Convention.

 

(c)           Import/Export Compliance.  The Company and each of its Subsidiaries has at all times conducted its export transactions in accordance with (a) all applicable Israeli and U.S. international trade Laws, including, where applicable, the International Emergency Economic Powers Act, as amended; the Trading With the Enemy Act, as amended; the Executive Orders and regulations administered by the U.S. Department of the Treasury, Office of Foreign Assets Control ("OFAC") imposing embargoes and restrictions on transactions with designated countries and parties, including individuals and entities designated on OFAC's list of Specially Designated Nationals and Blocked Persons ("SDN List"); the anti-boycott regulations administered by the U.S. Department of Commerce ("Commerce"), and the U.S. Department of the Treasury; the Export Administration Act of 1979, as amended; the Export Administration Regulations; the Arms Export Control Act, as amended; and the International Traffic in Arms Regulations and (b) all other applicable international trade Laws in other countries in which the Company conducts business, except for any instances of noncompliance that would not have a Company Material Adverse Effect.  Without limiting the foregoing and except in each case as would not have a Company Material Adverse Effect, during the last (5) years:  (i) none of the Company, any Subsidiary of the Company, any officer, director, or employee of the Company and, to the Knowledge of the Company, any agent or other Person acting for, on behalf of, or at the direction of the Company or any Subsidiary of the Company has (A) been or is designated on any sanctions list of any Governmental Entity, including the SDN List, Commerce's Denied Persons List, the Commerce Entity List, and the U.S. Department of State's Debarred List, (B) participated in any transaction involving such designated persons or entities, or any country that is subject to U.S. comprehensive sanctions administered by OFAC or (C) participated in any transaction involving international terrorism or nuclear, chemical or biological weapons proliferation.

 

Section 3.7            Litigation.

 

Except as would not have or reasonably be expected to have a Company Material Adverse Effect, (i) there is no litigation, action or proceeding (each an "Action") pending against the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any current or former executive of the Company or any of its Subsidiaries with respect to any acts or omissions in connection with any such executive officer's employment with the Company or any of its Subsidiaries, or any properties or assets of the Company or of any of its Subsidiaries, and, (ii) to the Knowledge of the Company, there are no Actions threatened or any claims, suits, charges, demands, directives, governmental investigations or inquiries, notices of violation or subpoenas pending or threatened against the Company or any of its Subsidiaries, or any current or former executive of the Company or any of its Subsidiaries with respect to any acts or omissions in connection with their employment with the Company or any of its Subsidiaries, or any properties or assets of the Company or of any of its Subsidiaries; and (iii) neither the Company nor any Subsidiary of the Company is subject to any outstanding Order.

 

Section 3.8            Company Reports; Financial Statements.

 

(a)          The Company has timely filed all Company Reports required to be filed with the SEC since January 1, 2016.  No Subsidiary of the Company is subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.  Each Company Report has complied in all material respects as of its date (or, if amended prior to the date hereof, as finally amended prior to the date hereof) with the applicable requirements of the Securities Act, and the rules and regulations promulgated thereunder, or the Exchange Act, and the rules and regulations promulgated thereunder, as applicable, each as in effect on the date so filed (or amended).  None of the Company Reports (including any financial statements or schedules included or incorporated by reference therein) contained, when filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively) any untrue statement of a material fact or omitted, as the case may be, to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(b)          Each of the Chief Executive Officer and Chief Financial Officer of the Company has made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with respect to the applicable Company Reports filed prior to the date hereof (collectively, the "Certifications") and the statements contained in such Certifications are accurate in all material respects as of the filing thereof.

 

(c)          The Company has made available (including via the SEC's ▇▇▇▇▇ system, as applicable) to Parent all of the Company Financial Statements and all material correspondence (if such correspondence has occurred since January 1, 2016 through the date hereof) between the SEC on the one hand, and the Company and any of its Subsidiaries, on the other hand. As of the date hereof, there are no outstanding or unresolved comments in comment letters from the SEC staff with respect to any of the Company Reports. To the Knowledge of the Company, as of the date hereof, none of the Company Reports is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC investigation. The Company Financial Statements for the fiscal year ended December 31, 2016 and the fiscal year ended December 31, 2017 included in the Company Reports complied as of the dates thereof in all material respects with applicable requirements of the Exchange Act and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company at the respective dates thereof and the consolidated results of its operations and changes in cash flows for the periods indicated.  As of the date hereof, the books and records of Company and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.  As of the date hereof, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Kasierer, a member firm of Ernst & Young Global has not resigned or been dismissed as independent public accountants of the Company as a result of or in connection with any disagreements with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

 

(d)          The Company and its Subsidiaries have implemented and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.  Such internal controls are sufficient to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP.  Since January 1, 2016 through the date hereof, the Company has disclosed to the Company's auditors and the audit committee of the Company Board of Directors (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls, and the Company has made available to Parent copies of any material written materials relating to each of the foregoing.  The Company has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) designed to ensure that information relating to the Company, including its consolidated Subsidiaries, required to be disclosed in the reports the Company files or submits under the Exchange Act is made known to the Company's management by others within those entities.  Such disclosure controls and procedures are reasonably designed to ensure that the Company's management is timely alerted to material information required to be included in the Company's periodic reports required under the Exchange Act.

 

(e)          The Company has for the past two (2) years been in compliance in all material respects with the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.

 

(f)           The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K promulgated under the Exchange Act, for senior financial officers, applicable to its principal financial officer, comptroller or principal accounting officer, or persons performing similar functions. The Company has promptly disclosed, by filing a Form 6-K, any change in or waiver of the Company's code of ethics, as required by Section 406(b) of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. To the Knowledge of the Company, there have been no violations of provisions of the Company's code of ethics since its adoption.

 

(g)          There are no Liabilities of the Company or any of its Subsidiaries that are material to the Company and its Subsidiaries taken as a whole, are required by GAAP to be set forth on the Company Financial Statements and are not set forth on the Company Financial Statements (or the notes thereto), other than (i) Liabilities incurred by or on behalf of the Company under, or otherwise permitted by, this Agreement or otherwise in connection with the transactions contemplated by this Agreement, (ii) Liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2017, none of which would reasonably be expected to have a Company Material Adverse Effect, and (iii) Liabilities for performance of the Company's obligations under its Contracts.

 

Section 3.9            Absence of Certain Changes or Events.

 

Since December 31, 2017, except as disclosed in the Company Reports filed or furnished after such date, and except as specifically contemplated by, or as disclosed in, this Agreement, (a) the Company and its Subsidiaries have conducted their businesses in all material respects in the ordinary course consistent with past practice, and (b) since and through such dates, there has not been, with respect to either the Company or any of its Subsidiaries, (i) any action that, if taken (or committed to be taken) during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.1 or (ii) any Company Material Adverse Effect.

 

Section 3.10          Taxes.

 

(a)          The Company and each of its Subsidiaries has timely filed and will timely file with the appropriate Governmental Entities all income and other material Tax Returns that are required to be filed by it prior to the Effective Time.  All such Tax Returns were true, correct and complete in all material respects and, in the case of Tax Returns to be filed, will be correct and complete in all material respects.  All income and other material Taxes due and owing by the Company and each of its Subsidiaries (whether or not shown on such Tax Returns) have been timely paid and, in the case of Tax Returns to be filed, will be timely paid (taking into account customary extensions in the ordinary course of business).  Neither the Company nor any of its Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return.  No claim has ever been made in writing by an authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation in that jurisdiction.  There are no security interests or other Encumbrances on any of the assets of the Company or its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, other than liens for Taxes not yet due and payable.

 

(b)          The Company and its Subsidiaries have timely withheld and paid to the appropriate Governmental Entity all income and other material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other Third Party.

 

(c)          There is no dispute concerning any Tax Liability of the Company or any of its Subsidiaries raised by any Governmental Entity in writing to the Company or any of its Subsidiaries that remains unpaid, and neither the Company nor any of its Subsidiaries has received written notice of any threatened audits or investigations relating to any Taxes.

 

(d)          Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to, or requested, any extension of time with respect to a Tax assessment or deficiency.

 

(e)          The unpaid Taxes of the Company and its Subsidiaries did not, as of September 30, 2018, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the balance sheet set forth in the Company Financial Statements as of such date (disregarding any notes thereto). Neither the Company nor any of its Subsidiaries has incurred any Tax Liability since September 30, 2018 other than a Tax Liability in the ordinary course of business.

 

(f)           The Company has made available to Parent complete and accurate copies of all income Tax Returns filed by the Company and any of its Subsidiaries on or prior to the date hereof for all Tax periods beginning on or after December 31, 2014.

 

(g)          There are no agreements relating to the allocating or sharing of Taxes to which the Company or any of its Subsidiaries is a party (other than any agreements entered into in the ordinary course of business not primarily related to Taxes).

 

(h)          Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated group of corporations within the meaning of Section 1504 of the Code or within the meaning of any similar provision of Law to which the Company or any of its Subsidiaries may be subject, other than the affiliated group of which the Company or a Subsidiary is the common parent or (ii) has any Liability for the Taxes of any Person (other than any of the Company or its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of Law) as a transferee or successor, by contract or otherwise (other than pursuant to any agreements entered into in the ordinary course of business not primarily related to Taxes).

 

(i)           Neither the Company nor any of its Subsidiaries has constituted either a "distributing corporation" or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code.  Neither the Company nor any of its Subsidiaries has been (i) a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, or (ii) a real estate company (Igud Mekarkein) for Israeli Tax purposes.

 

(j)           Neither the Company nor any of its Subsidiaries has agreed, or is required, to make any material adjustments after the Closing Date pursuant to Section 481(a) of the Code or any similar Law by reason of a change in accounting method initiated by it or any other relevant party prior to the Closing Date, and the IRS has not proposed any such adjustment or change in accounting method in writing nor, to the Knowledge of the Company, otherwise proposed any material adjustment or change in accounting method, nor does the Company or any of its Subsidiaries have any application pending with any Governmental Entity requesting permission for any changes in accounting methods that relate to the business or assets of the Company or any of its Subsidiaries.

 

(k)          No closing agreement pursuant to Section 7121 of the Code (or any predecessor provision) or any similar provision of any state, local or non-U.S. Tax Law has been entered into by or with respect to the Company or any of its Subsidiaries.

 

(l)           Neither the Company nor any of its Subsidiaries has participated in a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4(b).

 

(m)          Neither the Company nor any of its Subsidiaries is a party to any Contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code (or any corresponding provision of state, local or non-U.S. Tax Law) arising out of the transactions contemplated by this Agreement.

 

(n)          Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any excess loss account described in Treasury Regulation under Code Section 1502 (or any corresponding or similar provision of Law); (ii) any installment sale made prior to the Closing Date; (iii) any prepaid amount received or deferred revenue accrued on or prior to the Closing Date; (iv) any election under Section 108(i) of the Code (or any corresponding or similar provision of Law); (v) any ownership of "United States property" (as defined in Code Section 956(c)) on or prior to the Closing by the Company or any of its Subsidiaries that is a "controlled foreign corporation" (within the meaning of Code Section 957(a)); (vi) the Company or any of its Subsidiaries that is a "controlled foreign corporation" (within the meaning of Code Section 957(a)) having "subpart F income" (within the meaning of Code Section 952(a)) or "global intangible low-taxed income" (within the meaning of Code Section 951A(b)) prior to the Closing; or (vii) any election under or operation of Code Section 965.

 

(o)          Neither the Company nor any of its Subsidiaries has any indemnity obligation for any Taxes imposed under Section 4999 or 409A of the Code.

 

(p)          Neither the Company nor any of its Subsidiaries (i) has performed or was part of any action or transaction that is classified as a "reportable transaction" under Section 131C(2)(g) of the Ordinance and the regulations promulgated thereunder, or (ii) has obtained an "Opinion", as defined in Section 131D of the Ordinance, nor has it taken a position regarding taxation classified as a "Reportable Position", as defined in Section 131E of the Ordinance or similar provision under the Israel Value Added Tax Law of 1975 and the Israeli Land Taxation Law (Appreciation and Acquisition) of 1963.

 

(q)          Section 3.10(q) of the Company Disclosure Letter lists all the "taxation decisions" (hachlatat misui) that each of the Company and any of its Subsidiaries has obtained from the ITA.  Other than the taxation decisions listed in Section 3.10(q) of the Company Disclosure Letter, there are no Tax rulings, requests for rulings, private letter rulings, technical advice memoranda, similar agreement, or closing agreements relating to Taxes for which the Company or any of its Subsidiaries is reasonably expected to be liable that could affect the Company's or any of its Subsidiaries' Liability for Taxes for any taxable period ending after the Closing Date.

 

(r)           Any related-party transaction and related-party balances, including transactions that are subject to Section 85A of the Ordinance or Section 482 of the Code (or any similar provision of Law relating to Taxes) conducted by the Company or any of its Subsidiaries has been on an arm's-length basis in accordance with any applicable Law.

 

(s)          None of the Company's Subsidiaries that is organized outside of Israel (i) is or has been an Israeli resident as defined in Section 1 of the Ordinance or (ii) has or has had any assets that principally comprise, directly or indirectly, assets located in Israel, in either case as determined in accordance with the Israeli Law relating to Taxes.

 

(t)           Neither the Company nor any of its Subsidiaries has a permanent establishment in any other country except the country of its incorporation, income earned by any such entity is subject to Tax only in the country in which such entity is incorporated and such entity does not have any trade, business or income that may be subject to Tax outside its country of incorporation.

 

(u)          Neither the Company nor any of the Company's Subsidiaries is subject to any restrictions or limitations pursuant to Part E2 of the Ordinance or pursuant to any Tax ruling made with reference to the provisions of such Part E2 or otherwise.

 

(v)          Section 3.10(v) of the Company Disclosure Letter lists all Government Grants, including but not limited to Approved Enterprise Status from the Investment Center. The Company provided to Parent true and correct copies of all applications for Government Grants and of all letters of approval and rulings issued as well as supplements thereto related to the Government Grants and such applications and other documents. Section 3.10(v) of the Company Disclosure Letter details all currently outstanding financial Liabilities of the Company or any of its Subsidiaries under each of the Government Grants.  The Company and the Company's Subsidiaries are in compliance with all of the terms, conditions and requirements of their respective Government Grants and have duly fulfilled in all material respects all the undertakings relating thereto.  The Company has not modified the treatment of any Government Grants, revoked any election relating thereto, or undertaken any action disqualifying the Company or any of its Subsidiaries from treating such investments as Approved Enterprise or Privileged Enterprise.  Neither the execution, delivery or performance of this Agreement, nor the consummation of the Merger or any of the other transactions contemplated hereby, does, will or would reasonably be expected to (with or without notice or lapse of time or both) give rise to any right to revoke, withdraw, suspend, cancel, terminate or modify any Israeli Government Grant identified or required to be identified in Section 3.10(v) of the Company Disclosure Letter, and the consummation of the Merger shall not adversely affect the continued qualification for the incentives or the terms or duration thereof or require any recapture of any previously claimed Israeli Tax incentive, and no consent or approval of any Governmental Entity is required prior to the consummation of the Merger in order to preserve the entitlement of the Surviving Company or its Subsidiaries to any such Israeli Tax incentive. To the Company's Knowledge, there is no event or other set of circumstances which is reasonably expected to lead to or be the basis for (i) the revocation, annulment, withdrawal, suspension, cancellation, recapture or material modification of any of the Government Grants, (ii) the imposition of any material limitation on any Government Grant or any benefit available in connection with any Government Grant or (iii) a requirement that the Company or any of its Subsidiaries return or refund any benefits provided under any Government Grant.

 

(w)         Each Employee Plan that is intended to qualify as a capital gains route plan under Section 102 of the Ordinance ("Section 102 Plan") has received a favorable determination or approval letter or is otherwise approved by, or deemed approved by, passage of time without objection by the ITA.  All Company Options granted and Company Ordinary Shares issued under any Section 102 Plan have been granted or issued, as applicable, in compliance with the applicable requirements of Section 102 of the Ordinance (including the relevant sub-section of Section 102 of the Ordinance) and the written requirements and guidance of the ITA, including, without limitation, the adoption of the applicable board and shareholders resolutions, the full and timely filing of the necessary documents with the ITA, the submission of the application to the ITA to approve a Section 102 Plan, the appointment of an authorized trustee to hold the Company Options, and, if applicable, Company Ordinary Shares issued upon exercise of Company Options, the execution by each holder of Company 102 Options and Company 102 Shares of an undertaking to comply with the provisions of Section 102 of the Ordinance, and the timely deposit of such securities or related documents with such trustee, pursuant to the terms of Section 102 of the Ordinance and the guidance of the ITA published by the ITA on July 24, 2012 and clarification dated November 6, 2012.

 

(x)          As of the date hereof, neither the Company nor any of its Subsidiaries has retained earnings which would be subject to corporate Tax due to the distribution of a "dividend" from such earnings, as the term "dividend" is specifically defined by the ITA in the framework of the Law for the Encouragement of Capital Investment of 1959.

 

(y)          The Company and each of its Subsidiaries complies, and have always been compliant, with the requirements of Section 85A of the Ordinance and the regulations promulgated thereunder; all intercompany transactions between the Company and the Subsidiaries have met the requirements of Section 85A of the Ordinance and the regulations promulgated thereunder (or any corresponding provision of state, local or non-U.S. Tax Law); the prices and terms for the provision of any loan, property or services by or to the Company and the Subsidiaries are at arm’s length and all required documentation has been timely prepared or obtained and retained.

 

Section 3.11          Title to Personal Properties; Real Property.

 

(a)          Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) each of the Company and its Subsidiaries has good and marketable title to, or a valid leasehold interest in, all of its personal properties and assets reflected in the Company 20-F or acquired after December 31, 2017 (other than assets disposed of since December 31, 2017 in the ordinary course of business consistent with past practice), in each case free and clear of all Encumbrances other than Permitted Encumbrances, (ii) the personal property and assets of the Company and its Subsidiaries are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted, (iii) each of the Company and each of its Subsidiaries either owns, or has valid leasehold interests in, all personal properties and assets used by it in the conduct of its business and (iv) neither the Company nor any of its Subsidiaries has any legal obligation, absolute or contingent, to any other Person to sell or otherwise dispose of any of its tangible personal properties or assets (other than the sale of the Company's products in the ordinary course of business).

 

(b)          Neither the Company nor any of its Subsidiaries has any owned real property.

 

(c)          Section 3.11(c) of the Company Disclosure Letter contains a list of (i) all leases and other Contracts pursuant to which the Company or any Subsidiary holds any Leased Property (together, with all amendments, extensions, renewals, guaranties and other agreements with respect thereto, the "Leases") and (ii) all subleases and other Contracts pursuant to which the Company or any Subsidiary subleases, licenses or otherwise grants any Person the right to use or occupy any Leased Property.  The Leased Real Property comprises all of the real property used in the Company's business.  Each of the Company and its Subsidiaries has complied with the material terms of all Leases, and all Leases are in full force and effect, except for such non-compliances or failures to be in full force and effect that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.  The Company has made available to Parent and Merger Sub a true and complete copy of each Lease.  To the Knowledge of the Company, there are no material disputes with respect to the Leases.

 

(d)          Section 3.11(d) of the Company Disclosure Letter sets forth a true and complete list of all Leased Real Property Subleases and Leases (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto), including the date and name of the parties to thereto.  The Company has made available to Parent a true and complete copy of each of the Leased Real Property Subleases and Leases and, in the case of any oral agreement, a written summary of the material terms of such agreement.  With respect to each of the Leased Real Property Subleases and Leases, except as would not reasonably be expected to have a Company Material Adverse Effect:  (i) the other party to such lease is not an Affiliate of, and otherwise does not have any economic interest in, the Company or any of its Subsidiaries, and (ii) the other party to such lease has not subleased, licensed or otherwise granted any Person the right to use or occupy, the premises demised thereunder or any portion thereof.

 

Section 3.12          Officers, Directors, Employees and Affiliates.

 

(a)          Except as set forth on Section 3.12(a) of the Company Disclosure Letter, (i) neither the Company nor any of its Subsidiaries is a party to or bound by any Employment Agreement (other than offer letters or similar Contracts, in each case for at-will employment that do not provide for severance upon termination of employment or notice, in each case, greater than what is required by Law), providing for compensation in excess of $200,000 per annum and (ii) except as otherwise contemplated by Section 1.7, no severance or other payment will become due or benefits or compensation increase or accelerate as a result of the transactions contemplated by this Agreement, solely or together with any other event, including a subsequent termination of employment (other than as required by Law under non-U.S. jurisdictions).

 

(b)          Except for compensation and benefits received in the ordinary course of business as an employee or director of the Company or its Subsidiaries, to the Knowledge of the Company, no director, officer or other Affiliate or Associate of the Company or any entity in which any such director, officer or other Affiliate or Associate owns any beneficial interest (other than a beneficial interest in a publicly held corporation whose shares are traded on a national securities exchange or in the over-the-counter market and less than 5% of the shares of which is beneficially owned by any such Persons) is currently a party to or has any interest in (i) any partnership, joint venture, Contract, arrangement or understanding with, or relating to, the business or operations of the Company or its Subsidiaries in which the amount involved exceeds $250,000 per annum, (ii) any Contract for or relating to Indebtedness for borrowed money of the Company or its Subsidiaries, in excess of $250,000, or (iii) any property (real, personal or mixed), tangible or intangible, used or currently intended to be used in the business or operations of the Company or its Subsidiaries.

 

Section 3.13          Employee Benefit Plans.

 

(a)          Section 3.13(a) of the Company Disclosure Letter sets forth a true and complete list of each Company Benefit Plan, other than (i) any agreement, understanding or arrangement under which a single individual who is not an officer or director of the Company or a Company Subsidiary is eligible to receive immaterial compensation and/or benefits and that is terminable by the Company or a Company Subsidiary with no more than three (3) months' notice (other than as required by Law) without Liability or financial obligation of the Company or Company Subsidiary and (ii) any Contract that is superseded by the terms of Section 1.7 as contemplated herein.

 

(b)          With respect to each Company Benefit Plan, a complete and correct copy of each of the following documents (if applicable) has been made available to Parent:  (i) the most recent plan documents and all amendments thereto and all related trust agreements or other material documentation pertaining to other funding vehicles, (ii) the most recent summary plan description, and all related summaries of material modifications thereto, (iii) the most recent IRS Form 5500 (including schedules and attachments) and financial statements as filed and (iv) the most recent IRS determination or opinion letter issued with respect to each Company Plan intended to be qualified under Section 401(a) of the Code.

 

(c)          None of the Company or any of its Subsidiaries maintains, sponsors, contributes to or is required to contribute to or has any Liability under or with respect to any (i) "multiemployer plan" as defined in Section 3(37) of ERISA, (ii) "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA) subject to the funding requirements of Section 412 of the Code or Title IV of ERISA, (iii) "multiple employer plan" (within the meaning of Section 210 of ERISA or Section 413(c) of the Code), (iv) "multiple employer welfare arrangement" (as such term is defined in Section 3(40) of ERISA), or (v) plan, program, Contract, policy, arrangement or agreement that provides for material post-retirement or post-termination health, life insurance or other welfare-type benefits except as required under Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code and for which the beneficiary pays the entire cost of coverage. Neither the Company nor any of its Subsidiaries has any Liability by reason of at any time being considered a single employer with any other Person under Section 414 of the Code.

 

(d)          Each Company Benefit Plan that is intended to qualify under Section 401 of the Code has either received a current favorable determination or opinion letter from the IRS as to its qualified status or has applied (or has time remaining in which to apply) to the IRS for such a determination letter prior to the expiration of the requisite period under applicable Treasury Regulations or IRS pronouncements in which to apply for such determination letter and to make any amendments necessary to obtain a favorable determination or has been established under a standardized prototype plan for which an IRS opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer and, to the Knowledge of the Company, nothing has occurred, whether by action or failure to act, that caused or would reasonably be expected to adversely affect the qualification of such Company Benefit Plan.

 

(e)          The Company Benefit Plans have been established, maintained, funded and administered in accordance with their terms and applicable Law, except where the failure to so establish, maintain, fund and administer would not reasonably be expected to have a Company Material Adverse Effect.  With respect to each Company Benefit Plan, all required or recommended payments, premiums, contributions, distributions, reimbursements or accruals for all periods (or partial periods) ending prior to or as of the Effective Time shall have been timely made in all material respects in accordance with the terms of the Company Benefit Plan and the requirements of applicable Law, and all contributions, assessments, premiums, and other payments for any period ending on or before the Effective Time that are not yet due have been made or properly accrued in all material respects.

 

(f)           To the Knowledge of the Company, there have been no "prohibited transactions" (as defined in Section 406 of ERISA and Section 4975 of the Code) with respect to any Company Benefit Plan.  To the Knowledge of the Company, no "fiduciary" (as defined in Section 3(21) of ERISA) has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Company Benefit Plan.  There are no pending or, to the Knowledge of the Company, threatened in writing any Actions or claims (other than routine claims for benefits), arbitrations, audits, investigations, administrative or other proceedings relating to any Company Benefit Plan and, to the Knowledge of the Company, there is no reasonable basis for any such Action, claim, arbitration, audit, investigation, administrative or other proceeding.

 

(g)          The Company and its Subsidiaries and, to the Knowledge of the Company each other Person considered at any relevant time to be a single employer with the Company or any of its Subsidiaries under Section 414 of the Code, have complied, in all material respects, with the health care continuation requirements of Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Law, and neither the Company nor any of its Subsidiaries has incurred (whether or not assessed), or is reasonably expected to incur or to be subject to, any Tax or other penalty under PPACA (including with respect to the reporting requirements under Sections 6055 and 6056 of the Code, as applicable) or Section 4980B, 4980D or 4980H of the Code.  Except (i) as set forth on Section 3.13(g) of the Company Disclosure Letter, (ii) as contemplated by Section 1.7 and (iii) other than any agreement, understanding or arrangement under which a single individual who is not an officer or director of the Company or a Company Subsidiary that is terminable by the Company or a Company Subsidiary with no more than three (3) months' notice (other than as required by Law), the transactions contemplated by this Agreement (either alone or in connection with any other event) will not cause the acceleration of, vesting in, increase of or payment of, any benefits or compensation under any Company Benefit Plan and will not otherwise accelerate or materially increase any Liability under any Company Benefit Plan (other than as required by Law under non-U.S. jurisdictions).

 

(h)          Without limiting the generality of subsections (a) through (g) above, with respect to each Company Benefit Plan that is subject to any Laws of any jurisdiction other than the United States (whether or not United States Law also applies) (each, a "Foreign Benefit Plan"); (i) each Foreign Benefit Plan required to be registered or intended to meet certain regulatory or requirements for favorable tax treatment has been timely and properly registered and has been maintained in good standing in all material respects with the applicable regulatory authorities and requirements; (ii) all Foreign Benefit Plans that are required to be funded are fully funded, and adequate reserves have been established with respect to any Foreign Benefit Plan that is not required to be funded; and (iii) except as set forth on Section 3.13(h) of the Company Disclosure Letter, no Foreign Benefit Plan is a defined benefit plan (as defined in ERISA, whether or not subject to ERISA), seniority premium, termination indemnity, gratuity or similar type of plan or arrangement or has any unfunded or underfunded Liabilities.

 

Section 3.14          Labor Relations.

 

(a)          Section 3.14(a)(i) of the Company Disclosure Letter sets forth a true, correct and complete list of all employees of the Company and its Subsidiaries and includes each such employee's name, position, department, work location, supervisor, date of hire or engagement, status, actual scope of employment (e.g., full or part-time or temporary) exempt or non exempt status (for US Employees), salary, bonus and commission information. Section 3.14(a)(ii) of the Company Disclosure Letter sets forth, solely with respect to the Israeli employees, their pension arrangement and/or any other provident fund (including managers' insurance and further education fund), their respective contribution rates (by percentage) and the salary basis for such contributions, whether such employee, is subject to "Section 14 Arrangement", to the extent applicable (and, to the extent such employee is subject to the Section 14 Arrangement, an indication of whether such arrangement has been applied to such person from the commencement date of his employment and on the basis of his entire salary.  Other than their salaries (or as otherwise provided in Section 3.14(a)(ii) of the Company Disclosure Letter), the employees of the Company and its Subsidiaries are not entitled to any payment or benefit that may be reclassified as part of their determining salary for any purpose, including for calculating any social contributions.  The employment of each of the employees of the Company and its Subsidiaries is terminable by the Company (or by the relevant Subsidiary) with no more than one month prior notice.

 

(b)          The Company and its Subsidiaries are, and for the past two (2) years have been, in compliance with all applicable Laws and Orders governing or concerning labor or employment, except where the failure to so comply would not reasonably be expected to have a Company Material Adverse Effect.

 

(c)          The employees of the Company and its Subsidiaries have not been, and currently are not, represented by a labor union, labor organization, works council, or other employee representative and there is not and for the past two (2) years there has not been, to the Knowledge of the Company, any attempt or threat to organize any employees of the Company or its Subsidiaries.  There has not been, nor is there existent or, to the Knowledge of the Company, threatened, any strike, slowdown, picketing, work stoppage or other material labor dispute involving the employees of the Company or its Subsidiaries.  (i) Neither the Company nor any of its Subsidiaries is or has been a party to or bound by any collective bargaining agreement, labor union contract, trade union agreement or other Contract with any labor union, works council, other labor organization or body involving any employees or employee representatives (each a "Collective Bargaining Agreement"), except for Collective Bargaining Agreements applicable to all employees in Israel; (ii) neither the Company nor any of its Subsidiaries is or has ever been a member of any employers' association or organization; (iii) neither the Company nor any of its Subsidiaries has paid, is required to pay or has been requested to pay any payment (including professional organizational handling charges) to any employers' association or organization; (iv) except for extension orders which generally apply to all employees in Israel, no extension orders apply to the Company or to any of its Subsidiaries and no employee of the Company or its Subsidiaries benefits from any such extension orders; and (v) no Collective Bargaining Agreement is being negotiated or entered into by the Company or any of its Subsidiaries.

 

(d)          No Action for unpaid wages, bonuses, commissions, employment withholding Taxes, penalties, overtime or other compensation, benefits, child labor or record-keeping violations has been filed, is pending or, to the Knowledge of the Company, is threatened under the FLSA, the ▇▇▇▇▇-▇▇▇▇▇ Act, the ▇▇▇▇▇-▇▇▇▇▇▇ Act or the Service Contract Act, or any other Law.  No discrimination, illegal harassment and/or retaliation Action has been filed, is pending or, to the Knowledge of the Company, is threatened against the Company or any Subsidiary or employee, officer or director of the Company or any Subsidiary under the 1964 Civil Rights Acts, the Equal Pay Act, the ADEA, the ADA, the FMLA, the FLSA, ERISA or any other federal Law or comparable state fair employment practices act or foreign Law, including any provincial Law regulating discrimination in the workplace. To the Knowledge of the Company, no wrongful discharge, retaliation, libel, slander or other Action that arises out of the employment relationship between the Company or any of its Subsidiaries and their respective employees has been filed, is pending or, to the Knowledge of the Company, is threatened against the Company or any of its Subsidiaries under any applicable Law.

 

(e)          To the Knowledge of the Company, no employee of the Company or any of its Subsidiaries is in violation, in any material respect, of any term of any employment Contract, non-disclosure agreement, non-competition agreement or any restrictive covenant with a former employer relating to the right of any such employee to be employed by the Company or any of its Subsidiaries because of the nature of the business conducted by the Company or any of its Subsidiaries or to the use of trade secrets or proprietary information of others.  Neither the Company nor any of its Subsidiaries is required to have, and does not have, any affirmative action plans or programs.

 

(f)           Within the past two (2) years, neither the Company nor any of its Subsidiaries has implemented any plant closing or layoff of employees in violation of WARN.

 

(g)          To the Knowledge of the Company, no officer, executive or key employee has any intention to terminate his or her employment within the first twelve (12) months following the Closing, except as expressly contemplated by this Agreement.

 

(h)          Section 3.14(h) of the Company Disclosure Letter sets forth a true and complete list of all present independent contractors and consultants ("Contractors") to the Company or to its Subsidiaries, and includes each such Contractor's name, date of commencement, and rate of all regular compensation and benefits, bonus or any other compensation payable.  Except as set forth in Section 3.14(h) of the Company Disclosure Letter, all Contractors can be terminated on notice of thirty days or less to the Contractor. All non-Israeli Contractors providing services for the Company or any of its Subsidiaries are and all non-Israeli former Contractors who have provided services for the Company or any of its Subsidiaries were rightly classified and treated as independent contractors and would not reasonably be expected to be reclassified or otherwise deemed by any Governmental Authority as employees of the Company or its Subsidiaries, for any purpose whatsoever.  No non-Israeli Contractor providing services for the Company or its Subsidiaries is entitled to any rights under any applicable labor Laws.  All current and former Contractors providing services for the Company or its Subsidiaries have received all their rights to which they are and were entitled according to any applicable Law or Contract with the Company or its Subsidiaries.  Neither the Company nor any of its Subsidiaries is engaged with any personnel through manpower agencies.

 

(i)           Solely with respect to employees who reside or work in Israel ("Israeli Employees"): (i) other than extension orders (tzavei harchava) that apply to all employees in Israel neither the Company nor any Company Subsidiary was in the last seven (7) years or is subject to, and no Israeli Employee of the Company or any Company Subsidiary benefits from, any extension order (tzavei harchava) or any Contract or arrangement with respect to employment or termination thereof, (ii) all of the Israeli Employees are "at will" employees subject to the termination provisions included in employment agreements or applicable Law, including such provisions that apply to the Company's or any Company Subsidiary's employees generally or any part thereof under any applicable collective agreement or arrangement, (iii) the Company's and any Company Subsidiary's obligations to provide statutory severance pay to its Israeli Employees pursuant to the Severance Pay Law-1963 and vacation pursuant to the Israeli Annual Leave Law-1951 and any personal employment agreement have been satisfied or have been fully funded by contributions to appropriate insurance funds or accrued on the Financial Statements and where applicable the Company applies the provisions of Section 14 of the Severance Pay Law - 1963 with respect to such statutory severance pay, and (iv) the Company and each Company Subsidiary is in compliance in all material respects with all applicable Law, regulations, permits and Contracts relating to employment, employment practices, wages, bonuses, commissions and other compensation matters and terms and conditions of employment related to its Israeli Employees, including The Advance Notice of Discharge and Resignation Law, (5761-2001), The Notice to Employee (Terms of Employment) Law (5762-2002), The Prevention of Sexual Harassment Law (5758-1998), the Hours of Work and Rest Law, 1951, the Annual Leave Law, 1951, the Salary Protection Law, 1958, Law for Increased Enforcement of Labor Laws, 2011 and The Employment of Employee by Manpower Contractors Law (5756-1996).  The Company and each Company Subsidiary has not engaged any Israeli Employees whose employment would require special approvals, and there are no unwritten Company or any Company Subsidiary policies or customs which, by extension, entitle Israeli Employees to benefits in addition to what they are entitled by Law. The Company and each Company Subsidiary has no Knowledge of any circumstance that would be reasonably expected to give rise to any valid claim by a current or former Israeli Employee or contractor for compensation upon termination of employment (beyond the statutory severance pay, recuperation days, notice period and redemption of unused vacation days to which employees are entitled).  All amounts that the Company and each Company Subsidiary are legally or contractually required either (x) to deduct from their Israeli Employees' salaries or to transfer to such Israeli Employees' pension or provident, life insurance, incapacity insurance, continuing education fund or other similar funds or (y) to withhold from their Israeli Employees' salaries and benefits and to pay to any Governmental Entity as required by the Ordinance and Israeli National Insurance Law or otherwise have, in each case, been duly deducted, transferred, withheld and paid (other than routine payments, deductions or withholdings to be timely made in the normal course of business and consistent with past practice), and the Company and each Company Subsidiary does not have any outstanding obligations to make any such deduction, transfer, withholding or payment (other than such that has not yet become due).  The Company and each Company Subsidiary does not have any unsatisfied obligations of any nature to any of their former employees or Contractors, and their termination was in compliance with all material applicable Laws and Contracts. The Company and the Company's Subsidiaries have properly classified all Israeli Employees, Consultants and sales agents with respect to their position and all other aspects. The Company and each Company Subsidiary has not engaged any consultants, sub-contractors, sales agents or freelancers who, according to Israeli Law, would not be reasonably be expected to be reclassified by any Governmental Authority as employees of the Company or its Subsidiaries, for any purpose whatsoever or would be entitled to the rights of an employee vis-à-vis the Company or any Company Subsidiary, including rights to severance pay, vacation, recuperation pay (dmei havraa) and other employee-related statutory and contractual benefits.

 

Section 3.15          Contracts and Commitments.

 

(a)           Neither the Company nor any of its Subsidiaries is a party to, or is bound by, any Contract:

 

(i)          providing for aggregate future noncontingent payments by or to the Company or any of its Subsidiaries in excess of $500,000 in any fiscal year, other than Contracts with an employee, consultant or independent contractor relating to employment or the provision of services or Contracts that are terminable upon 90 days or fewer notice or that expire pursuant to their terms no later than 120 days after the date hereof;

 

(ii)          limiting the freedom of the Company to engage in any line of business or sell, supply or distribute any service or product (including with respect to the pricing thereof), or to compete with any entity or to conduct business in any geography, or that grants any exclusive rights to any party (other than any (x) non-exclusive licenses entered into in the ordinary course of business, (y) Contracts for which noncontingent payments by or to the Company or any of its Subsidiaries do not exceed $500,000 in any fiscal year or (z) Contracts that are terminable upon 90 days or fewer notice or that expire pursuant to their terms no later than 120 days after the date hereof) where such limitations or restrictions would have a Material Adverse Effect;

 

(iii)          involving any joint venture, partnership or similar arrangement that is material to the Company and its Subsidiaries, taken as a whole;

 

(iv)          pursuant to which the Company or any Subsidiary incurs, assumes or guarantees any Indebtedness for borrowed money in excess of $500,000;

 

(v)          containing severance or termination pay Liabilities related to termination of employment in excess of $200,000 (individually to any employee);

 

(vi)          providing for the supply, manufacturing, distribution or development of Company Products (where the remaining aggregate noncontingent payments to or by the Company are in excess of $500,000);

 

(vii)          providing for the acquisition, transfer, in-bound licensing, out-bound licensing, development, co-development, or sharing of any material Intellectual Property or Software or materially affecting the ability of the Company or any of its Subsidiaries to use or disclose any Intellectual Property or Software (other than license agreements providing for for commercially available software on standard terms and non-exclusive distribution, reseller and end-user customer and other non-exclusive agreements entered into in the ordinary course of business);

 

(viii)          that prohibits the payment of dividends or distributions in respect of the share capital of the Company or any of its Subsidiaries, prohibits the pledging of the share capital of the Company or any of its Subsidiaries or prohibits the issuance of guarantees by any of its Subsidiaries;

 

(ix)          that is a Collective Bargaining Agreement;

 

(x)          that provided for any acquisition of another entity by the Company or its Subsidiaries pursuant to which the Company or any of its Subsidiaries has continuing indemnification, "earn out" or other contingent payment or guarantee obligations; or

 

(xi)          that contains any material covenant granting "most favored nation" status that, following the Merger, would apply to or be affected by actions taken by Parent, the Surviving Company and/or their respective Subsidiaries or Affiliates.

 

Each Contract of the type described in the immediately preceding sentence, together with each of the Leased Real Property Subleases and Leases set forth on Section 3.11(d) of the Company Disclosure Letter, is collectively referred to herein as a "Company Material Contract."  The Company has heretofore made available to Parent a complete and correct copy of each Company Material Contract, including any amendments or modifications thereto.

 

(b)          Each Company Material Contract is binding on the Company or its Subsidiary party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, and, to the Knowledge of the Company, enforceable against each other party thereto (in each case, subject to the Bankruptcy and Equity Exception), and the Company and each of its Subsidiaries have performed all obligations required to be performed by them under each Company Material Contract and, to the Knowledge of the Company, each other party to each Company Material Contract has performed all obligations required to be performed by it under such Company Material Contract, in each case except as would not reasonably be expected to have a Company Material Adverse Effect.  To the Knowledge of the Company, the Company has not received during the last twelve (12) months, notice of any violation or default under (or any condition that with the passage of time or the giving of notice, or both, would cause such a violation of or default under) any Company Material Contract, except for violations or defaults that would not have or reasonably be expected to have a Company Material Adverse Effect.

 

(c)          To the Knowledge of the Company, as of the date hereof, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time), would reasonably be expected to:  (i) result in a material violation or breach of any provision of any Company Material Contract, (ii) give any Person the right to declare a default under any Company Material Contract, or (iii) give any Person the right to cancel terminate or modify any Company Material Contract, in each case, as would not have or would reasonably be expected to have a Company Material Adverse Effect.

 

Section 3.16          Intellectual Property.

 

(a)          Section 3.16(a) of the Company Disclosure Letter sets forth a complete and correct list of:  (i) all patented or registered Intellectual Property owned by the Company or one of its Subsidiaries, all pending patent applications, all trademark applications, all registered copyrights, copyright applications and all domain names or other applications for registration of Intellectual Property owned by the Company or one of its Subsidiaries (together the "Registered Company Intellectual Property"); and (ii) all material unregistered trademarks, material unregistered copyrights (including Software), trade names and service marks, owned by the Company or its Subsidiaries (the "Unregistered Company Intellectual Property"), including, to the extent applicable, the jurisdictions in which each such Intellectual Property right has been issued or registered or in which any application for such issuance and registration has been filed.  The necessary registration, maintenance and renewal fees in connection with the Registered Company Intellectual Property have been paid and the necessary documents and certificates in connection with the Registered Company Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in Israel, the United States or other foreign jurisdictions, as the case may be, for the purposes of perfecting, prosecuting, and maintaining the foregoing.  There are no actions that are required to be taken by Company within 90 days of the date of this Agreement with respect to any of the foregoing, except as set out in Section 3.16(a) of the Company Disclosure Letter.

 

(b)          The Company is the owner of all right, title and interest in and to the Registered Company Intellectual Property free and clear of all Encumbrances (other than Permitted Encumbrances) and, has sole and exclusive rights to the use thereof or the material covered thereby in connection with the services or products in respect of which such Registered Company Intellectual Property is being used by the Company or any of its Subsidiaries, subject to any license agreements to which the Company or any of its Subsidiaries is a party and pursuant to which the Company or any of its Subsidiaries licenses others to use any such Registered Company Intellectual Property.  The Company or one of its Subsidiaries owns, or is licensed under, or otherwise possesses sufficient rights to, the Intellectual Property or Software used in or necessary for the conduct of the business of the Company or its Subsidiaries as currently conducted.

 

(c)          To the Knowledge of the Company, there is no unauthorized use, disclosure, infringement or misappropriation of any Company Intellectual Property rights by any Third Party, including any employee or former employee of the Company or any of its Subsidiaries.  Neither the Company nor any of its Subsidiaries has brought or is bringing or has threatened any action, suit or proceeding for infringement or misappropriation of the Company Intellectual Property or breach of any license or agreement involving Company Intellectual Property against any Third Party.

 

(d)          Neither the Company nor any of its Subsidiaries is a party to any pending Action that involves a claim of infringement or misappropriation by the Company or any of its Subsidiaries of any Intellectual Property of any Third Party nor has any such Action been threatened in writing against the Company or any of its Subsidiaries nor has Company or any of its Subsidiaries received any demands that the Company or any of its Subsidiaries license any Intellectual Property from any Third Party.  To the Knowledge of the Company,  neither the conduct of the business of the Company and each of its Subsidiaries, nor the development, manufacture, sale, licensing or use of any of the Company Products used in or necessary to the course of Company's and each of its Subsidiaries' conduct of its respective business has infringed or misappropriated or is infringing or misappropriating (i) any Intellectual Property (other than patent rights) of any Third Party or (ii) any patent rights of any Third Party.  No Third Party has notified the Company in writing that it is challenging the ownership or use by the Company or any of its Subsidiaries, or the validity or enforceability of, any of the Company Intellectual Property.

 

(e)          The Company or its Subsidiaries have taken commercially reasonable steps to protect and preserve the confidentiality of all material trade secrets and material confidential information of the Company or its Subsidiaries.  Without limiting the foregoing, each of the Company and its Subsidiaries have instituted policies requiring each employee, consultant and independent contractor to execute proprietary information and confidentiality agreements substantially in the Company's standard forms, which forms have been made available to Parent.

 

(f)          The Company Intellectual Property was:  (i) developed by employees of the Company or its Subsidiaries within the scope of their employment:  (ii) developed by independent contractors who have assigned their rights (including Intellectual Property rights) to the Company or its Subsidiaries pursuant to written agreements; or (iii) otherwise acquired by the Company or its Subsidiaries from a Third Party pursuant to written agreements that include representations, warranties or indemnities from such Third Party relating to title to such Intellectual Property; and no current or former employees of the Company or its Subsidiaries have any claim, right (whether or not currently exercisable) or interest to or in any Company Intellectual Property and each such employee who is or was involved in the creation or development of any Company Intellectual Property has signed a valid, enforceable agreement containing a present assignment of Intellectual Property rights to the Company or its Subsidiaries without further payment being owed to any parties (including, with respect to Israeli employees, under Section 134 of the Israeli Patent Law-1967 (the "IPL")) and without any restrictions or obligations on the Company or its Subsidiaries' ownership thereof.  No Third Party that has licensed Intellectual Property to the Company or any of its Subsidiaries has ownership rights or license rights to improvements or derivative works made by the Company or any of its Subsidiaries in such Intellectual Property (other than those aspects of such improvements or derivative works that are protected by such licensed Intellectual Property).

 

(g)          Neither the Company nor any of its Subsidiaries have used Open Source Software in a manner that would create obligations for Company or its Subsidiaries with respect to, or grant, or purport to grant, to any Third Party, any rights or immunities, to any Company Intellectual Property or any other license requiring the Company or any of its Subsidiaries to disclose source code to any of the Company Products or grant any rights not specifically granted in the Company's or any of its Subsidiary's license agreement with such Third Party.

 

(h)          The Company and its Subsidiaries use commercially reasonable efforts to protect the Company Products and Software used internally by the Company or its Subsidiaries from becoming infected by viruses, worms, Trojan horses or similar disabling codes or programs.  To the Knowledge of the Company, (i) there are no defects in any of the Company Products that would prevent the same from performing materially in accordance with its user specifications, to the extent applicable, and (ii) the Company has not introduced viruses, worms, Trojan horses or similar disabling codes or programs in any of the Company Products.

 

(i)           Neither the Company nor any of its Subsidiaries has disclosed or delivered to any Third Party, agreed to disclose or deliver to any Third Party, or permitted the disclosure or delivery to any escrow agent of, any source code that is Company Intellectual Property and the confidentiality of which is material to the Company.  To the Knowledge of the Company, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, result in a requirement that any such source code be disclosed or delivered to any Third Party by the Company, any of its Subsidiaries or any person acting on their behalf.  To the Knowledge of the Company, there has been no unauthorized theft or disclosure of any source code of a Company Product.

 

(j)           Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company has not received any unresolved, written claims from Third Parties, and to its Knowledge is not aware of any unwritten claims from Third Parties, that any installation services, programming services, integration services, repair services, maintenance services, support services, training services, upgrade services or other services that have been performed by the Company or any Subsidiary for such Third Parties were in any material respect performed improperly or not in conformity with the terms and requirements of all applicable warranties and other Contracts and with all applicable Laws, in each case excluding bug reports or immaterial customer support issues arising in the ordinary course of business.

 

(k)          To the Knowledge of the Company, the Information Systems are adequate for the operation of its business as currently conducted, and the Company and its Subsidiaries have purchased sufficient license rights for all Software used by the Company and its Subsidiaries in such operations.

 

(l)           With respect to the Information Systems:  (i) the Company and its Subsidiaries have a commercially reasonable disaster recovery plan in place and have tested such disaster recovery plan for effectiveness, (ii) to the Knowledge of the Company, there have been no successful unauthorized intrusions or breaches of the security of the Information Systems which remain unresolved or have caused or would reasonably be expected to cause any liability to be incurred by the Company, (iii) there have not been any (A) material malfunctions that have not been remedied or replaced in all material respects, or (B) any unplanned downtime or service interruption which remains unresolved and (iv) the Company and its Subsidiaries have implemented or are in the process of implementing (or in the exercise of reasonable business judgment have determined that implementation is not yet in the best interest of the Company and its Subsidiaries) in a timely manner any and all security patches or security upgrades that are generally available for the Company's and its Subsidiaries' Information Systems.

 

(m)         Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and its Subsidiaries maintain and comply with a global data policy which to the Company's Knowledge reasonably ensures that the Company and its Subsidiaries are in compliance with all applicable Laws and legal requirements pertaining to data privacy and data security; and (ii) to the Knowledge of the Company, there has been no unauthorized access to or use of data, or loss, theft,  unintended or improper disclosure of, or security breaches relating to data (including personally identifiable information) used in the businesses of the Company and its Subsidiaries which remain unresolved or have caused or would reasonably be expected to cause any liability to be incurred by the Company.

 

(n)          There are no Contracts or arrangements to which the Company or any of its Subsidiaries is a party under which any Governmental Entity acquires rights with respect to any owned or exclusively licensed Company Products or owned or exclusively licensed Company Intellectual Property, nor, to the Knowledge of the Company, has any Governmental Entity acquired any rights as the result of providing any funding relating to the development of any Company Intellectual Property, including any government rights and prerogatives as defined under the IPL including rights under Section 55, Chapter 6 and Chapter 8 thereof.

 

(o)          No university, military, educational institution, research center, Governmental Entity, entity owned or controlled by any Governmental Entity, hospitals, medical centers or other institutions or organization (each, an "R&D Sponsor") has sponsored or provided funding for research and development conducted in connection with the business of the Company and the Company's Subsidiaries, or has any claim of right to, ownership of or other Lien on any owned or exclusively licensed Company Intellectual.  Neither the Company nor any of its Subsidiaries has participated in any standards-setting activities or joined any standards setting or similar organization that would affect the proprietary nature of any Company Intellectual Property or restrict the ability of the Company or any of the Company's Subsidiaries to enforce, license or exclude others from using any Company Intellectual Property.  To the Company's Knowledge, no Person (including any current and former employee, consultant or independent contractor of the Company or any of its Subsidiaries) who is or was involved in, or who has or will have contributed to, the creation or development of any of the owned Company Intellectual Property has performed services for, was an employee of, or was otherwise engaged (including as a graduate student) by any R&D Sponsor, during the time period in which such Person was engaged by the Company or any of its Subsidiaries or during the period such Person would be deemed under applicable Law to have contributed to the creation or development of Company Intellectual Property.  None of the Company Products or any products or Intellectual Property under development by Company or any of its Subsidiaries, directly or indirectly, is based upon, derived from, uses or incorporates any Intellectual Property that was developed using funding provided by the IIA, nor does the IIA or any Governmental Entity have any ownership interest in or right to restrict the sale, licensing, distribution or transfer of any Company Intellectual Property or Company Products.  Without limiting the foregoing, each item of Company Intellectual Property is freely transferable, conveyable and/or assignable by the Company and/or the Surviving Company to any entity located in any jurisdiction in the world without any restriction, constraint, control, supervision or limitation that could be imposed by the IIA or any other Governmental Entity.  Section 3.16(o) of the Company Disclosure Letter sets forth the amount of each Government Grant received by the Company or any of its Subsidiaries from the IIA and the aggregate amount of each such Government Grant.  Neither the Company nor any of its Subsidiaries has any outstanding royalty or similar obligations to the IIA under any such Government Grant.

 

Section 3.17          Insurance Policies.

 

Section 3.17 of the Company Disclosure Letter sets forth a list of all material insurance policies maintained by the Company or any of its Subsidiaries. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, as of the date hereof, (a) all current, material insurance policies of the Company and the Subsidiaries are in full force and effect and are valid and enforceable and cover against the risks as are customary in all material respects for companies of similar size in the same or similar lines of business and (b) all premiums due thereunder have been paid.  Neither the Company nor any of the Subsidiaries has received notice of cancellation or termination with respect to any material third party insurance policies (other than in connection with normal renewals of any such insurance policies) where such cancellation or termination would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.18          Brokers.

 

Other than the Company Financial Advisor, no broker, finder or investment banker (other than the Company Financial Advisor) is entitled to any brokerage, finder's or other fee or commission in connection with this Agreement, the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company, its Subsidiaries or any of their respective directors, officers or employees.

 

Section 3.19          Company Financial Advisor Opinion.

 

The Company Financial Advisor has delivered to the Company Board of Directors its opinion to the effect that, as of the date of such opinion, subject to the assumptions, limitations, qualifications and other matters set forth therein, the Merger Consideration to be received by the holders (other than Parent and its Affiliates) of Company Ordinary Shares pursuant to this Agreement is fair, from a financial point of view, to such holders. A copy of such opinion has been provided to Parent or, if a written opinion is not available as of the date hereof, will be provided to Parent as soon as practicable after the date hereof.

 

Section 3.20          Anti-Takeover Provisions.

 

The Company Board of Directors has taken all other necessary action so that any rights agreement or "poison pill" arrangement and any other takeover, anti-takeover, moratorium, "fair price," "control share," or similar Law applicable to the Company do not, and will not, apply to this Agreement, the Merger or the other transactions contemplated hereby.

 

Section 3.21          Environmental Matters.

 

Except for such matters that individually and in the aggregate have not had and would not reasonably be expected to have a Company Material Adverse Effect: (i) each of the Company and its Subsidiaries is, and has for the past two (2) years been, in compliance with all applicable Environmental Law and possesses and is, and has for the past two (2) years been, in compliance with all required Environmental Permits, (ii) there are no Environmental Claims pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries, (iii) to the Knowledge of the Company, none of the Company or any of its Subsidiaries or any of their predecessors has owned or operated any property or facility that is or has been contaminated by any Hazardous Materials, or has caused any releases or threatened releases of Hazardous Materials at any property currently or formerly owned or operated by the Company or any of its Subsidiaries or any of their predecessors or at any offsite disposal location in connection with the current or past operations of the Company or any of its Subsidiaries or their predecessors, which in each case would result in a Liability under Environmental Law or an Environmental Claim, (iv) to the Knowledge of the Company, there has been no exposure in violation of Environmental Law of any Person to any Hazardous Material, pollutant or contaminant in connection with the current or former properties, operations and activities of the Company and/or any of its Subsidiaries, (v) neither the Company nor any of its Subsidiaries has received any written claim or notice of violation from any Governmental Entity alleging that the Company or any of its Subsidiaries is in violation of, or has any Liability under, any Environmental Law, or regarding any Hazardous Materials which has not been resolved and (vi) neither the Company nor any of its Subsidiaries has assumed, undertaken, provided an indemnity with respect to, or otherwise become subject to, any Liability of any other Person relating to Environmental Law or Hazardous Materials.  All environmental reports, assessments, and audits in the possession or control of the Company or any of its Subsidiaries, in each case containing information relating to the Company and its Subsidiaries or their properties or operations have been made available to Parent.

 

Section 3.22          Customers and Vendors.

 

Section 3.22(a) of the Company Disclosure Letter lists the ten (10) largest customers of the Company (determined on the basis of aggregate revenues recognized by the Company and its Subsidiaries over the four consecutive fiscal quarter period ended September 30, 2018) (each, a "Major Customer"). Section 3.22(b) of the Company Disclosure Letter lists the ten (10) largest vendors of the Company (determined on the basis of aggregate purchases made by the Company and its Subsidiaries over the four consecutive fiscal quarter period ended September 30, 2018) (each, a "Major Vendor").  The Company has not received, as of the date of this Agreement, any written notice from any Major Customer or Major Vendor that it intends to terminate, or not renew, its Contract with the Company or its Subsidiaries.

 

Section 3.23          Information Supplied.

 

Neither the written information supplied, or to be supplied, by or on behalf of the Company for inclusion in the Proxy Statement or any other documents to be filed by Parent, Merger Sub or the Company with the SEC or any other Governmental Entity in connection with the Merger and the other transactions contemplated hereby, will, on the date of its filing or, in the case of the Proxy Statement, at the date it is first mailed to the Company Ordinary Shareholders and at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time prior to the Effective Time any event with respect to the Company or any of its Subsidiaries shall occur which is required to be described in the Proxy Statement, such event shall be so described, and an amendment or supplement shall be promptly filed with the SEC and, as required by Law, disseminated to the Company Ordinary Shareholders. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Merger Sub that is contained in any of the foregoing documents.

 

Section 3.24          No Other Representations or Warranties.

 

The Company acknowledges and agrees that, except as expressly set forth in the representations and warranties contained in Article IV, (i) none of Parent, Merger Sub or any of their respective Subsidiaries, or any of their respective Affiliates, stockholders or Representatives, or any other Person acting on behalf of any of the foregoing, has made or is making any representation or warranty, express or implied, including as to omission or completeness, with respect to Parent or Merger Sub or any of their respective Subsidiaries or any of their respective businesses or operations, and (ii) it has not relied upon or otherwise been induced by, and is not entitled to rely upon, any representation or warranty, express or implied, including as to omission or completeness, with respect to the Parent or Merger Sub or any of their respective Subsidiaries or any of their respective businesses or operations, including with respect to any information provided or made available to the Company or any of its Representatives in connection with this Agreement or any of the transactions contemplated hereby.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Subject to such exceptions as are disclosed in the Parent Disclosure Letter (it being acknowledged and agreed that disclosure of any item in any Section or subsection of the Parent Disclosure Letter shall be deemed disclosed with respect to any other Section or subjection of the Parent Disclosure Letter to the extent that the relevance of any disclosed event, item or occurrence in the Parent Disclosure Letter to such other Section or subsection is readily apparent on its face as to matters and items that are the subject of the corresponding representation or warranty in this Agreement), Parent and Merger Sub jointly and severally represent and warrant to the Company as follows:

 

Section 4.1           Organization and Good Standing.

 

Parent is a private limited company, duly incorporated and validly existing under the Laws of England and Wales.  Merger Sub is a company duly organized and validly existing under the Laws of the State of Israel.  Each of Parent and Merger Sub has full corporate or similar power and authority to own, lease and operate its properties and assets and to conduct its business as presently conducted and is duly qualified or licensed to do business as a foreign corporation or company and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except in each case as would not reasonably be expected to have a Parent Material Adverse Effect.

 

Section 4.2           Authority for Agreement.

 

Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated by this Agreement.  The execution, delivery and performance by Parent and Merger Sub of this Agreement, and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated by this Agreement, have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of Parent or Merger Sub, and no other votes or approvals of any class or series of share capital or shares of Parent or Merger Sub, are necessary to authorize this Agreement or to consummate the Merger or the other transactions contemplated hereby.  This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with its terms, subject the Bankruptcy and Equity Exception.

 

Section 4.3           No Conflict; Required Filings and Consents.

 

Assuming compliance with the matters, and receipt of the approvals referenced in Section 4.4, the execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub and the consummation of the Merger and the other transactions contemplated by this Agreement will not, (i) conflict with or violate the organizational documents of Parent or the articles of association of Merger Sub, (ii) conflict with or violate any Law applicable to Parent or its Subsidiaries or any property or asset of Parent or any of its Subsidiaries or (iii) result in a breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, give to others (immediately or with notice or lapse of time or both) any right of termination, amendment, acceleration or cancellation of, result (immediately or with notice or lapse of time or both) in triggering any payment or other obligations, or result (immediately or with notice or lapse of time or both) in the creation of an Encumbrance (other than a Permitted Encumbrance) on any property or asset of Parent or its Subsidiaries pursuant to, any Contract or other instrument or obligation to which Parent or any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries, or any property or asset of Parent or any of its Subsidiaries, is bound or affected, except in the case of clauses (ii) and (iii) for any such conflicts, violations, breaches, defaults or other occurrences that would not reasonably be expected to have a Parent Material Adverse Effect.

 

Section 4.4           Required Governmental Approvals.

 

The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, or registration or qualification with, any Governmental Entity, other than (a) applicable requirements, if any, of the Securities Act, the Exchange Act, or state securities Laws or "blue sky" Laws, (b) the execution by Parent of an IIA Undertaking, (c) the filings and approvals under the Antitrust Laws set forth on Section 3.5(d) of the Company Disclosure Letter, and (d) the filing of the Merger Proposal and Merger Notice with the Companies Registrar and all such other notices or filings required under the ICL with respect to the consummation of the Merger and the issuance of the Certificate of Merger by the Companies Registrar.

 

Section 4.5           Litigation.

 

There are no Actions pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries, including Merger Sub, that would reasonably be expected to have a Parent Material Adverse Effect.  Neither Parent nor any Subsidiary of Parent is subject to any outstanding Order, except as would not reasonably be expected to have a Parent Material Adverse Effect.

 

Section 4.6           Availability of Funds.

 

Parent has available to it as of the date hereof, and will have available to it at the Closing, sufficient funds on hand as necessary to satisfy all of Parent's and Merger Sub's obligations hereunder, including to pay the aggregate Merger Consideration, the ▇▇▇▇ Note and the Bridge Debt and all other amounts payable under this Agreement, including the fees and expenses of Parent and Merger Sub.  In no event shall the receipt or availability of any funds or financing by Parent or Merger Sub or any other financing or other transactions be a condition to any of Parent's or Merger Sub's obligations hereunder.

 

Section 4.7           Brokers.

 

No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with this Agreement, the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Sub or any of their respective directors, officers or employees, for which the Company may become liable.

 

Section 4.8           Merger Sub.

 

Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, and, prior to the Effective Time, Merger Sub will have engaged in no business and have no Liabilities or obligations other than in connection with the transactions contemplated by this Agreement.

 

Section 4.9           Solvency.

 

As of the Effective Time and immediately after giving effect to all of the transactions contemplated by this Agreement, including the Merger and all payments contemplated by this Agreement in connection with the Merger (including payment of all amounts payable under Article I of this Agreement in connection with or as a result of the Merger) and payment of all related fees and expenses of Parent, Merger Sub, the Company and their respective Subsidiaries in connection therewith, and assuming the accuracy as of the Effective Time in all material respects of those representations and warranties of the Company set forth in Article III that relate to the subject matter of clauses (i) through (iii) of this Section 4.9 (including Section 3.8):  (i) the amount of the "fair saleable value" of the assets of each of the Surviving Company and its Subsidiaries will exceed (A) the value of all liabilities of the Surviving Company and such Subsidiaries, including contingent and other liabilities, and (B) the amount that will be required to pay the probable liabilities of the Surviving Company and such Subsidiaries on their existing debts as such debts become absolute and matured, (ii) each of the Surviving Company and its Subsidiaries will not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged, and (iii) each of the Surviving Company and its Subsidiaries will be able to pay its liabilities, including contingent and other liabilities, as they mature.  For purposes of the foregoing, "not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged" and "able to pay its liabilities, including contingent and other liabilities, as they mature" means that such Person will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.

 

Section 4.10         Information Supplied.

 

Neither the written information supplied, or to be supplied, by or on behalf of Parent or Merger Sub for inclusion in the Proxy Statement or any other documents to be filed by Parent, Merger Sub or the Company with the SEC or any other Governmental Entity in connection with the Merger and the other transactions contemplated hereby, will, on the date of its filing or, in the case of the Proxy Statement, at the date it is mailed to Company Ordinary Shareholders and at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time prior to the Effective Time any event with respect to Parent or Merger Sub shall occur which is required to be described in the Proxy Statement, Parent shall promptly disclose such event to the Company. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to any information supplied by the Company that is contained in any of the foregoing documents.

 

Section 4.11          Shareholder, Labor and Employee Matters.

 

As of the date hereof, neither Parent nor Merger Sub has:  (a) entered into any employment agreement with any of the Company's shareholders, directors, officers or employees, (b) offered employment to any of the Company's shareholders, directors, officers or employees, (c) had discussions with any of the Company's shareholders, directors, officers or employees regarding the future terms of their employment after the Closing or (d) sold, or offered to sell, any direct or indirect equity interest in the Company to any of the Company's shareholders, directors, officers or employees.

 

Section 4.12          Share Ownership.

 

Parent is not an "interest holder" of the Company as defined in the ICL.  Neither Parent nor any subsidiary of the Parent directly or indirectly owns, beneficially or otherwise, any Company Ordinary Shares.

 

Section 4.13          Independent Investigation; No Other Representation.

 

Parent and Merger Sub hereby acknowledge (each for itself and on behalf of its Affiliates and Representatives) that, as of the date hereof, Parent, Merger Sub and their respective Affiliates and Representatives (a) have received access to (i) such books and records, facilities, equipment, contracts and other assets of the Company that Parent and Merger Sub and their respective Affiliates and Representatives, as of the date hereof, have requested to review and (ii) the electronic data room hosted by the Company in connection with the transactions contemplated by this Agreement, and (b) have had an opportunity to meet with the management of the Company and to discuss the business and assets of the Company.  Parent and Merger Sub hereby acknowledge and agree (each for itself and on behalf of its respective Affiliates and Representatives) that, except for the representations and warranties of the Company expressly set forth in Article III, (I) none of the Company nor any of its Subsidiaries (or any other Person) makes, or has made, any representation or warranty (whether express or implied) relating to the Company, its Subsidiaries or any of their respective businesses, operations, properties, assets, liabilities or otherwise in connection with this Agreement and the transactions contemplated by this Agreement, including as to the accuracy or completeness of any such information, and none of Parent, Merger Sub or any of their respective Affiliates or Representatives is relying on any representation or warranty except for those representations and warranties of the Company expressly set forth in Article III, (II) no Person has been authorized by the Company or any of its Subsidiaries to make any representation or warranty relating to the Company, its Subsidiaries or any of their respective businesses, operations, properties, assets, liabilities or otherwise in connection with this Agreement or the transactions contemplated hereby, except for those representations and warranties of the Company expressly set forth in Article III, and if made, such representation or warranty has not been and may not be relied upon by Parent, Merger Sub or any of their respective Affiliates or Representatives as having been authorized by the Company or any of its Subsidiaries (or any other Person), and (III) any estimate, projection, prediction, data, financial information, memorandum, presentation or any other materials or information provided or addressed to Parent, Merger Sub or any of their respective Affiliates or Representatives, including any materials or information made available in the electronic data room hosted by the Company in connection with the transactions contemplated by this Agreement or in connection with presentations by the Company's management, are not and shall not be deemed to be or include representations or warranties unless and to the extent any such materials or information is expressly the subject of any express representation or warranty of the Company set forth in Article III.  Parent and Merger Sub hereby acknowledge (each for itself and on behalf of its Affiliates and Representatives) that it has conducted, to its satisfaction, its own independent investigation of the business, operations and financial condition of the Company and its Subsidiaries and, in making its determination to proceed with the transactions contemplated by this Agreement, each of Parent, Merger Sub and their respective Affiliates and Representatives have relied on the results of their own independent investigation.  Notwithstanding the foregoing, nothing in this Section 4.13 serves to modify the representations and warranties of the Company contained in Article III (as modified by the Company Disclosure Letter) or the right of Parent and Merger Sub to rely thereupon.

 

ARTICLE V

 

COVENANTS

 

Section 5.1             Conduct of Business by the Company Pending the Merger.

 

(a)           The Company covenants and agrees that between the date of this Agreement and the earlier of the Effective Time and the date, if any, on which this Agreement is validly terminated pursuant to Article VII, except (A) as set forth in Section 5.1 of the Company Disclosure Letter, (B) as permitted or required by this Agreement, (C) as required by Law or (D) as consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall and shall cause each of its Subsidiaries to, (i) maintain its existence in good standing under applicable Law (where such concept is applicable), (ii) subject to the restrictions and exceptions set forth in Section 5.1(b) or elsewhere in this Agreement, conduct its business and operations in all material respects only in the usual, regular and ordinary course of business and in a manner consistent with past practice and (iii) use commercially reasonable efforts to, in all material respects, (A) preserve intact its assets, properties, Contracts or other legally binding understandings and business organizations, (B) keep available the services of its current officers and key employees and consultants and (C) preserve the current relationships of the Company and its Subsidiaries with customers, vendors, distributors, lessors, licensors, licensees and other Persons with which the Company or any of its Subsidiaries has significant business relations.

 

(b)           The Company covenants and agrees that between the date of this Agreement and the earlier of the Effective Time and the date, if any, on which this Agreement is validly terminated pursuant to Article VII, the Company shall not and shall cause each of its Subsidiaries not to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the applicable subsection of Section 5.1(b) of the Company Disclosure Letter or with the prior written approval of Parent, which approval shall not be unreasonably withheld, conditioned or delayed):

 

(i)          declare, set aside, establish a record date for, make or pay any dividends or other distributions (whether in cash, shares or property) in respect of any of its shares or other Equity Interests or enter into any agreement with respect to the voting of its shares or other Equity Interests, except dividends or other distributions from any Subsidiary of the Company to the Company or any wholly-owned Subsidiary of the Company;

 

(ii)          adjust, split, combine or reclassify any of its shares or that of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its shares or that of its Subsidiaries;

 

(iii)          repurchase, redeem or otherwise acquire, directly or indirectly, any shares of its or its Subsidiaries' share capital or any Company Rights or Subsidiary Rights (except in connection with (A) Tax withholdings and exercise price settlements upon the exercise of Company Options; (B) vesting, forfeiture or repurchase of Company RSUs outstanding on the date of this Agreement and in accordance with their present terms; or (C) transactions between the Company and a wholly owned Subsidiary or between wholly owned Subsidiaries;

 

(iv)          issue, deliver or sell, pledge or encumber any shares of its or its Subsidiaries' shares, or any Company Rights or other Equity Interests other than (A) issuances of Company Ordinary Shares in respect of any exercise of any Company Rights currently outstanding, including the vesting or settlement any Company Rights, (B) sales of Company Ordinary Shares pursuant to the exercise of Company Options if necessary to effectuate an optionee direction upon exercise or pursuant to the settlement of Company Right in order to satisfy Tax withholding obligations, or (C) transactions between the Company and a wholly owned Subsidiary or between wholly owned Company Subsidiaries;

 

(v)          cause, permit or propose any amendment to the articles of association or memorandum of association of the Company or amend any organizational document of any Subsidiary of the Company;

 

(vi)          incur, create, assume or otherwise become liable for any Indebtedness for borrowed money or assume, guaranty, endorse or otherwise agree to become liable or responsible for the Indebtedness for borrowed money of any other Person, except for the Bridge Debt; provided, that nothing contained herein shall prohibit the Company or any of its Subsidiaries from making guarantees or obtaining letters of credit or surety bonds for the benefit of commercial counterparties in the ordinary course of business consistent with past practice;

 

(vii)          (A) make any loans or advances to any other person other than (1) in the ordinary course of business consistent with past practice; (2) pursuant to existing agreements in effect prior to the execution of this Agreement; or (3) in accordance with the indemnification and expense advancement provisions of the Company Articles of Association or the Company Memorandum or (B) make any capital contributions to or investments in any other Person except for loans or capital contributions among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries;

 

(viii)          merge or consolidate with any other entity or adopt a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization or otherwise permit its corporate existence to be suspended, lapsed or revoked other than transactions between the Company and a wholly owned Subsidiary or between wholly owned Subsidiaries;

 

(ix)          alter, amend or create any obligations with respect to compensation, severance, benefits, change of control payments or any other payments to present or former employees, directors, individual service providers or Affiliates of the Company or any of its Subsidiaries, other than alterations or amendments (A) made with respect to non-officers and non-directors in the ordinary course of business consistent with past practice, (B) as expressly contemplated by Section 1.7, (C) required under applicable Law or by the terms of any Contract of the Company or any Subsidiary, as in effect on the date of this Agreement, or (D) required pursuant to the terms of a Company Benefit Plan or an agreement with a newly hired employee on terms consistent in all material respects with those provided to other employees of the Company or its Subsidiaries of comparable level;

 

(x)          hire any new officers (which for this purpose shall be employees with a title of the level of at least "vice president" or its equivalent);

 

(xi)          sell, license, mortgage, transfer, lease, pledge or otherwise subject to any Encumbrance (including by sale of shares or assets) or otherwise dispose of any business or material rights, properties or assets (including shares or other ownership interests of its Subsidiaries), except (A) pursuant to existing agreements in effect prior to the execution of this Agreement, (B) in the case of Encumbrances, for Permitted Encumbrances or Encumbrances created or perfected in connection with any Indebtedness permitted to be incurred, assumed or guaranteed pursuant to Section 5.1(b)(vi), (C) sales of products or services in the ordinary course of business, or dispositions of obsolete or worthless equipment, (D) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business, and (E) for transactions among the Company and its wholly owned Subsidiaries or among wholly owned Company Subsidiaries;

 

(xii)          acquire (by merger, consolidation or acquisition of shares or assets) any business for which the aggregate amount to be paid in respect of such business would exceed $500,000;

 

(xiii)          prepare or file any Tax Return inconsistent with past practice or, on any such Tax Return, take any position, make or change any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods (including positions, elections or methods that would have the effect of deferring income to periods ending after the Effective Time or accelerating deductions to periods ending on or before the Effective Time), settle or otherwise compromise any claim relating to Taxes, enter into any closing agreement or similar agreement relating to Taxes, otherwise settle any dispute relating to Taxes or request any ruling or similar guidance with respect to Taxes, enter into any Tax indemnity, sharing, allocation or similar agreement or closing agreement, adopt or change any accounting method in respect of Taxes, incur any liability for Taxes outside the ordinary course of business, fail to pay any Tax that becomes due and payable (including any estimated Tax payment), or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment, other than as set forth in Section 5.10 (Tax Ruling);

 

(xiv)         except (A) in the ordinary course of business consistent with the past practice, or (B) in accordance with the Company's budget described on Section 5.1(b)(xiv) of the Company Disclosure Letter, incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith;

 

(xv)          pay, discharge, settle, cancel, incur or satisfy any material Liabilities, other than the payment, discharge, settlement, cancellation, incurrence or satisfaction of Liabilities (A) in the ordinary course of business consistent with past practice, (B) as required by any applicable Law, (C) as accrued for in the Company Financial Statements, (D) as required by the terms of any Contract of the Company, as in effect on the date of this Agreement, or (E) not in excess of $150,000 individually or $250,000 in the aggregate;

 

(xvi)         apply for any Government Grant;

 

(xvii)        enter into, engage in or amend any transaction, Contract or understanding with any Related Party or any interested parties (Ba'alay Inyan);

 

(xviii)       enter into, modify, amend or terminate (A) any Contract that if so entered into, modified, amended or terminated would reasonably be likely to (x) have a Company Material Adverse Effect or (y) prevent or materially delay the consummation of the transactions contemplated by this Agreement or (B) any Company Material Contract, except (x) in the ordinary course of business, (y) for expirations, renewals or non-renewals in accordance with their terms or (z) as otherwise permitted pursuant to any other clause of this Section 5.1(b);

 

(xix)          terminate any officer (which for this purpose shall be employees with a title of "vice president" or its equivalent or more senior) of the Company or any of its Subsidiaries other than for good reason or for reasonable cause;

 

(xx)          enter into any transaction that could give rise to a disclosure obligation as a "reportable transaction" under Section 6011 of the Code and the regulations thereunder;

 

(xxi)          compromise, release, waive or settle any Action except for any Action (A) for which the Company has accrued for in the Company Financial Statements and as so accrued; or (B) with the amount is dispute, or the amount claimed does not exceed $150,000;

 

(xxii)         implement any employee layoffs without complying with WARN;

 

(xxiii)        abandon or allow to lapse or expire any registration or application for material Registered Company Intellectual Property; or

 

(xxiv)       knowingly commit, authorize, agree to take or enter into any letter of intent or similar agreement or arrangement with respect to any of the actions described in this Section 5.1(b).

 

(c)           Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the operations of the Company or any of its Subsidiaries prior to the Effective Time.  Prior to the Effective Time, each of Parent and Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries' respective operations.

 

Section 5.2            Access to Information and Employees.

 

(a)           From the date hereof to the Effective Time, the Company shall, and shall cause its Subsidiaries and the Representatives of the Company to, afford the Representatives of Parent and Merger Sub reasonable access during normal business hours to the officers, employees, agents (including outside accountants), properties, offices and other facilities, books and records, Contracts, commitments, work papers and other documents and information relating to the Company and its Subsidiaries as reasonably requested in advance by Parent and, during such period, the Company shall, and shall cause each of its Subsidiaries to, furnish or otherwise make available (including via ▇▇▇▇▇, if applicable) to Parent (i) a full and accurate copy of each report, schedule, form, statement and other document proposed to be filed or submitted by the Company pursuant to the requirements of domestic or foreign, federal or state, securities Laws not less than two (2) Business Days prior to such filing and a copy of any communication (including "comment letters") received by the Company from the SEC concerning compliance with the Exchange Act or from FINRA concerning the Company's compliance with the listing rules of Nasdaq, or any other securities' regulatory entity, and (ii) to the extent available, for the period beginning after the date of this Agreement and ending at the Effective Time, as soon as practicable after the end of each month, and in any event within forty five (45) days thereafter, a copy of the monthly consolidated financial statements of the Company, including statements of financial condition, results of operations and statements of cash flow.  Nothing in this Section 5.2(a) will require the Company to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company would:  (A) violate any of its or its Affiliates' respective obligations with respect to confidentiality; (B) result in a violation of applicable Law; or (C) result in loss of legal protection, including the attorney-client privilege and work product doctrine; provided that the Company shall (i) (if permitted by Law) provide notice to Parent that such information is being withheld pursuant to such law or privilege if such notice can, in the good faith discretion of the Company, be provided in a manner that would not result in such loss or violation and (ii) use commercially reasonable efforts to disclose such documents and information in a manner that would not result in such loss or violation.

 

(b)           No investigation pursuant to this Section 5.2 shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto.

 

(c)           With respect to any information that is disclosed pursuant to this Section 5.2, each of the parties hereto shall comply with, and shall cause each of its Representatives to comply with, all of its obligations under the Confidentiality Agreement and the parties agree that the provisions of the Confidentiality Agreement shall (i) apply to information disclosed pursuant to this Section 5.2; and (ii) survive termination of this Agreement in accordance with the terms of the Confidentiality Agreement.

 

Section 5.3            Reasonable Efforts; Notification.

 

(a)           Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and the Company agrees to use its reasonable best 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 hereto in doing, all things necessary, proper or advisable to fulfill all conditions to the obligations of the other parties hereto set forth in Article VI and to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by the Transaction Documents, including (i) using commercially reasonable efforts to take all acts necessary to cause such conditions to be satisfied and not to take acts that would reasonably be expected to result in such conditions not being so satisfied, (ii) obtaining all necessary actions or non-actions, waivers, consents, qualifications and approvals from Governmental Entities and making all necessary registrations, filings and notices and taking all reasonable steps as may be necessary to obtain any required approval, waiver or exemption from any Governmental Entity, (iii) obtaining all necessary consents, qualifications, approvals, waivers or exemptions from the non-governmental Third Parties set forth on Section 5.3(a) of the Company Disclosure Letter and (iv) converting any short-term investments (as classified in the consolidated financial statements of the Company and its Subsidiaries) into cash as of the Closing at the reasonable discretion of Parent and executing and delivering any additional documents or instruments, in each case to the extent necessary, proper or advisable to consummate the transactions contemplated by, and to fully carry out the purposes of, the Transaction Documents.

 

(b)          Without limiting the foregoing, (i) each of the Company, Parent and Merger Sub shall use its reasonable best efforts to make promptly (and in any event no later than ten (10) Business Days following the date hereof) any required submissions under the Israeli Restrictive Trade Practices Law 1988 in connection with the Merger with the Israeli Anti Trust Authority ("IAA") and any other Antitrust Laws which the Company and Parent determines should be made, in each case with respect to the Merger and the transactions contemplated hereby and (ii) Parent, Merger Sub and the Company shall cooperate with one another (A) in promptly determining whether any filings are required to be or should be made or consents, approvals, permits or authorizations are required to be or should be obtained under any foreign Law or regulation or whether any consents, approvals or waivers are required to be or should be obtained from other parties to Contracts material to the Company's business in connection with the consummation of the transactions contemplated by this Agreement and (B) in promptly making any such filings, furnishing information required in connection therewith and seeking to obtain timely any such consents, permits, authorizations, approvals or waivers.  Each of the Company and Parent shall (1) give the other party prompt notice of the commencement or threat of commencement of any Action by or before any Governmental Entity with respect to the Merger or any of the other transactions contemplated by this Agreement, (2) keep the other party informed as to the status of any such Action or threat, (3) to the extent applicable, promptly inform the other party of any material communication concerning the IAA or other Antitrust Laws to or from any Governmental Entity regarding the Merger and (4) to the extent applicable, furnish to the other party such information and assistance as the other may reasonably request in connection with any filing or other act undertaken in compliance with the IAA and any other Antitrust Laws.  Except as may be prohibited by any Governmental Entity, the Company and Parent 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 suit, claim, action, investigation or proceeding under or relating to the IAA or any other Antitrust Law, in each case, to the extent applicable.  Each of the Company and Parent will permit authorized Representatives of the other party to be present at each meeting or conference relating to any such legal proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to any Governmental Entity in connection with any such legal proceeding.  Notwithstanding anything herein to the contrary, neither Parent nor any of its Affiliates shall be required to, nor shall the Company (without the consent of Parent, which may be withheld in Parent's sole discretion), negotiate, commit to or effect by Order or otherwise, the sale, divestiture or disposition of any assets, properties or businesses or of the assets, properties or businesses to be acquired by it pursuant hereto or enter into any Order, accept any undertaking or condition or otherwise take or commit to take actions that would limit Parent's, the Company's or their respective Affiliates' freedom of action with respect to, or ability to retain, any of their businesses, product lines or assets, or otherwise limit Parent's or its Affiliates' ability to receive the full benefits of this Agreement.  In no event shall Parent or Merger Sub be required to pay any fee, penalty or other consideration to any third party for any consent or approval required for the consummation of the transaction contemplated by this Agreement under any Contract.  In addition, Parent and/or its controlled Affiliates shall execute and deliver an undertaking in customary form in favor of the IIA to comply with applicable Law (if and when required to do so).  All costs associated with any filings pertaining to any Antitrust Laws, if any, shall be borne by Parent and the Company shall be entitled to reimbursement for any expenses incurred by the Company in connection therewith.

 

(c)          Each of the Company, on the one hand, and Parent and Merger Sub, on the other, shall promptly (and in any event within five (5) Business Days) notify the other party in writing if it believes that such party has breached any representation, warranty, covenant or agreement contained in this Agreement that would, individually or in the aggregate, reasonably be likely to result in a failure of a condition set forth in Section 6.2 or Section 6.3 if continuing on the Closing Date.

 

(d)          If any Antitakeover Laws are or may become applicable to the Merger or any of the other transactions contemplated by this Agreement, the Company and the Company Board of Directors shall promptly grant such approvals and use commercially reasonable efforts to take such other lawful actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement or the Merger, as the case may be, and otherwise take such other commercially reasonable and lawful actions to eliminate or minimize the effects of such statute, and any regulations promulgated thereunder, on such transactions.

 

Section 5.4           Shareholders Meeting; Proxy.

 

(a)          As soon as reasonably practicable following the date of this Agreement, but in no event later than the fifth (5^th) Business Day after the date hereof, the Company shall (i) establish a record date for, duly call, give notice of, and, following the applicable notice period, convene and hold a special meeting of its shareholders (the "Company Shareholders Meeting") for the purpose of obtaining the Company Required Vote, (ii) publish the notice of the Company Shareholders Meeting and (iii) otherwise comply with the notice requirements applicable to the Company pursuant to the ICL and the regulations promulgated thereunder, the Company Articles of Association and Company Memorandum or any other applicable Law. As soon as reasonably practicable following the date of this Agreement, but in no event later than the fifteenth (15^th) Business Day after the date hereof, the Company shall prepare and furnish to the SEC under cover of Form 6-K a proxy statement for the Company Shareholders Meeting (the "Proxy Statement").  Unless this Agreement is terminated pursuant to Section 7.1 or as Parent and the Company may otherwise agree, the Company Shareholders Meeting shall be held no later than 45 days after publication of the notice of the Company Shareholders Meeting.  Subject to Section 5.6, the Company shall include the Company Board Recommendation in the Proxy Statement.

 

(b)          If the Company determines that it is required to file any document other than the Proxy Statement with the SEC in connection with the Merger pursuant to applicable Law (such document, as amended or supplemented, an "Other Required Company Filing"), then the Company shall promptly prepare and file such Other Required Company Filing with the SEC.  The Company shall cause the Proxy Statement and any Other Required Company Filing to comply as to form and substance in all material respects with the applicable requirements of the Exchange Act and the rules of the SEC and FINRA.  The Company may not file the Proxy Statement or any Other Required Company Filing with the SEC without providing Parent and its counsel a reasonable opportunity to review and comment thereon, which comments shall be considered by the Company in good faith.  On the date of filing, the date of mailing to the shareholders of the Company (if applicable) and at the time of the Company Shareholders Meeting, neither the Proxy Statement nor any Other Required Company Filing will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading.  Notwithstanding the foregoing, no covenant is made by the Company with respect to any information supplied by Parent, Merger Sub or any of their Affiliates for inclusion or incorporation by reference in the Proxy Statement or any Other Required Company Filing.  The information supplied by the Company or its Affiliates for inclusion or incorporation by reference in any Other Required Parent Filings will not, at the time that such Other Required Parent Filing is filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

 

(c)          If Parent, Merger Sub or any of their respective Affiliates is required to file any document with the SEC in connection with the Merger or the Company Shareholders Meeting pursuant to applicable Law (an "Other Required Parent Filing"), then Parent and Merger Sub shall, and shall cause their respective Affiliates to, promptly prepare and file such Other Required Parent Filing with the SEC.  Parent and Merger Sub shall cause, and shall cause their respective Affiliates to cause, any Other Required Parent Filing to comply as to form and substance in all material respects with the applicable requirements of the Exchange Act and the rules of the SEC and FINRA.  Neither Parent or Merger Sub nor any of their respective Affiliates may file any Other Required Parent Filing (or any amendment thereto) with the SEC without providing the Company and its counsel a reasonable opportunity to review and comment thereon, which comments shall be considered by Parent, Merger Sub or their respective Affiliates in good faith.  On the date of filing, the date of mailing to the Company Ordinary Shareholders (if applicable) and at the time of the Company Shareholders Meeting, no Other Required Parent Filing will knowingly contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading.  Notwithstanding the foregoing, no covenant is made by Parent or Merger Sub with respect to any information supplied by the Company or its Affiliates for inclusion or incorporation by reference in any Other Required Parent Filing.  The information supplied by Parent, Merger Sub and their respective Affiliates for inclusion or incorporation by reference in the Proxy Statement or any Other Required Company Filing will not, at the time that the Proxy Statement or such Other Required Company Filing is filed with the SEC, knowingly contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

 

(d)          Each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall furnish all information concerning it and its Affiliates, if applicable, as the other party may reasonably request in connection with the preparation and filing with the SEC of the Proxy Statement and any Other Required Company Filing or any Other Required Parent Filing.  If at any time prior to the Company Shareholders Meeting any information relating to the Company, Parent, Merger Sub or any of their respective Affiliates should be discovered by the Company, on the one hand, or Parent or Merger Sub, on the other hand, that should be set forth in an amendment or supplement to the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing, as the case may be, so that such filing would not include any misstatement 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, then the party that discovers such information will promptly notify the other, and an appropriate amendment or supplement to such filing describing such information will be promptly prepared and filed with the SEC by the appropriate party and, to the extent required by applicable Law or the SEC or its staff, disseminated to the stockholders of the Company.

 

(e)          The Company and its Affiliates, on the one hand, and Parent, Merger Sub and their respective Affiliates, on the other hand, may not communicate in writing with the SEC or its staff with respect to the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing, as the case may be, without providing the other a reasonable opportunity to review and comment on such written communication, which comments shall be considered by the filing party in good faith.

 

(f)          The Company, on the one hand, and Parent and Merger Sub, on the other hand, will advise the other, promptly after it receives notice thereof, of any receipt of a request by the SEC or its staff for (A) any amendment or revisions to the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing, as the case may be, (B) any receipt of comments from the SEC or its staff on the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing, as the case may be, or (C) any receipt of a request by the SEC or its staff for additional information in connection therewith.

 

(g)          In the event that Parent or any Person listed in Section 320(c) of the ICL casts any votes in respect of the Merger, Parent shall disclose to the Company its interest in the Company Ordinary Shares so voted.  At the Company Shareholders Meeting, Parent and Merger Sub shall cause any Company Ordinary Shares owned by them and their Affiliates (if any) to be voted in favor of the approval of this Agreement, the Merger and the other transactions contemplated by this Agreement.

 

(h)          Once the Company has established a record date, the Company shall not change such record date or establish a different record date for the Company Shareholders Meeting without the prior written consent of Parent.  In the event that the date of the Company Shareholders Meeting as originally called is for any reason adjourned or postponed or otherwise delayed, the Company agrees that unless Parent shall have otherwise approved in writing, it shall implement such adjournment or postponement or other delay in such a way that the Company does not establish a new record date for the Shareholders Meeting, as so adjourned, postponed or delayed.

 

(i)           The Company may not adjourn or postpone the Company Shareholders Meeting; provided, however, nothing herein shall prevent the Company from postponing or adjourning the Company Shareholders Meeting if (x) there are holders of an insufficient number of Company Ordinary Shares present or represented by a proxy at the Company Shareholders Meeting to constitute a quorum at the Company Shareholders Meeting or (y) the Company is required to postpone or adjourn the Company Shareholders Meeting by court order or a request from the SEC or its staff.

 

(j)           Subject to Section 5.6, at the Shareholders Meeting, the Company shall, through the Company Board of Directors, make the Company Recommendation and, unless there has been a Company Adverse Recommendation Change, the Company shall (x) take all reasonable lawful action to solicit the Company Required Vote, and (y) publicly reaffirm the Company Recommendation within two (2) Business Days after any request by Parent. Notwithstanding any Company Adverse Recommendation Change, unless this Agreement is validly terminated pursuant to, and in accordance with Article VII, this Agreement shall be submitted to the Company Ordinary Shareholders for the purpose of obtaining the Company Required Vote. The Company shall, upon the reasonable request of Parent, advise Parent at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Shareholders Meeting, as to the aggregate tally of the proxies received by the Company with respect to the Company Required Vote. Without the prior written consent of Parent, the adoption of this Agreement and the transactions contemplated hereby (including the Merger) shall be the only matter (other than procedural matters) which the Company shall propose to be acted on by the Company Ordinary Shareholders at the Shareholders Meeting.

 

Section 5.5           Merger Proposal; Certificate of Merger.

 

(a)          Subject to the ICL and the regulations promulgated thereunder, as promptly as practicable following the date hereof the Company and Merger Sub, as applicable, shall take the following actions within the timeframes set forth herein; provided, however, that any such actions or the timeframe for taking such action shall be subject to any amendment in the applicable provisions of the ICL and the regulations promulgated thereunder (and in case of an amendment thereto, such amendment shall automatically apply so as to amend this Section 5.5(a) accordingly):  (i) cause a merger proposal (in the Hebrew language) in the form of Exhibit B (the "Merger Proposal") to be executed in accordance with Section 316 of the ICL, (ii) deliver the Merger Proposal to the Companies Registrar within three (3) days from the calling of the shareholders meetings, (iii) the Company shall cause a copy of the Merger Proposal to be delivered to its secured creditors, if any, no later than three (3) days after the date on which the Merger Proposal is delivered to the Companies Registrar, (iv) promptly after the Company shall have complied with the preceding sentence and with clauses (i) and (ii) of this Section 5.5(a), but in any event no more than three (3) days following the date on which such notice was sent to the creditors, the Company and Merger Sub shall inform the Companies Registrar, in accordance with Section 317(b) of the ICL, that notice was given to their respective creditors, if any, under Section 318 of the ICL (and regulations promulgated thereunder), (v) each of the Company and, if applicable, Merger Sub, shall:  (x) publish a notice to its creditors, stating that a Merger Proposal was submitted to the Companies Registrar and that the creditors may review the Merger Proposal at the office of the Companies Registrar, Company's registered office or Merger Sub's registered offices, as applicable, and at such other locations as the Company or Merger Sub, as applicable, may determine, in (A) two daily Hebrew newspapers, on the day that the Merger Proposal is submitted to the Companies Registrar, (B) in a popular newspaper in New York as may be required by applicable Law; and (C) if required, in such other manner as may be required by applicable Laws and regulations, (y) within four (4) business days from the date of submitting the Merger Proposal to the Companies Registrar, send a notice by registered mail to all of the "Substantial Creditors" (as such term is defined in the regulations promulgated under the ICL) that the Company or Merger Sub, as applicable, is aware of, in which it shall state that a Merger Proposal was submitted to the Companies Registrar and that the creditors may review the Merger Proposal at such additional locations, if such locations were determined in the notice referred to in the immediately preceding clause (x); and (z) if applicable, send to the Company's "employees committee" (Va'ad Ovdim) or display in a prominent place at the Company's premises a copy of the notice published in a daily Hebrew newspaper (as referred to in clause (x)(A) of this Section 5.5(a), no later than three (3) business days following the day on which the Merger Proposal was submitted to the Companies Registrar, (vi) not later than three (3) days after the date on which the Company Required Vote is received, the Company shall (in accordance with Section 317(b) of the ICL and the regulations thereunder) inform the Companies Registrar of such approval, and (vii) in accordance with the customary practice of the Companies Registrar, the Company and Merger Sub shall request, following coordination with Merger Sub, that the Companies Registrar declare the Merger effective and issue the Certificate of Merger upon such date as the Company and Merger Sub shall advise the Companies Registrar.  For the avoidance of doubt, and notwithstanding any provision of this Agreement to the contrary, it is the intention of the parties that the Merger shall be declared effective and the Certificate of Merger shall be issued on the Closing Date, as a condition to the Closing taking place.  For purposes of this Section 5.5(a), "business day" shall have the meaning set forth in the Merger Regulations 5760-2000 promulgated under the ICL.

 

(b)           The sole shareholder of Merger Sub has approved the Merger subject to the satisfaction or waiver (to the extent permitted hereunder) of all the conditions to Closing (other than those that by their nature may only be satisfied or waived at Closing).  No later than three days after the date of such approval, Merger Sub shall (in accordance with Section 317(b) of the ICL and the regulations thereunder) inform the Companies Registrar of such approval.

 

Section 5.6             No Solicitation of Transactions.

 

(a)           On the date hereof, the Company will instruct and cause its Subsidiaries and its and their respective Representatives to immediately cease all discussions and negotiations with any Persons that may be ongoing with respect to an Acquisition Proposal, and deliver a written notice to each such Person to the effect that the Company is ending all discussions and negotiations with such Person with respect to any Acquisition Proposal and such notice shall also request such Person to promptly return or destroy all confidential information concerning the Company and its Subsidiaries made available to such Person in connection with a potential Acquisition Proposal. From the date hereof until the earlier of the Effective Time or the termination of this Agreement, the Company will not and will not authorize or permit any Subsidiary, or Representative to, directly or indirectly:

 

(i)             initiate, solicit, propose, knowingly encourage (including by providing information) or take any action to knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal;

 

(ii)           engage in, continue or otherwise participate in any discussions (other than to refer to this Agreement) or negotiations regarding, or provide any information or data concerning the Company or any of its Subsidiaries to any Person relating to, any Acquisition Proposal or any proposal or offer that would reasonably be expected to lead to an Acquisition Proposal;

 

(iii)          grant any waiver, amendment or release under any standstill or confidentiality agreement or any rights agreement or Takeover Statutes (provided that the Company shall not be required to enforce, and shall be permitted to waive, any provision that prohibits or purports to prohibit a confidential proposal being made to the Company Board of Directors (directly or indirectly through the Company's Representatives) or would restrict the Company's rights under this Agreement); or

 

(iv)          approve, endorse, recommend or execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement (which, for the avoidance of doubt, excludes any Acceptable Confidentiality Agreement) relating to an Acquisition Proposal or any proposal or offer that would reasonably be expected to lead to an Acquisition Proposal, or that contradicts this Agreement or requires the Company to abandon this Agreement.

 

(b)           Notwithstanding anything to the contrary contained in Section 5.6(a), at any time prior to, but not after, obtaining the Company Required Vote, the Company may:

 

(i)             provide information in response to a request therefor to a Third Party who has made an unsolicited bona fide written Acquisition Proposal after the date of this Agreement if and only if, prior to providing such information, the Company has received from such Third Party so requesting such information an executed Acceptable Confidentiality Agreement; provided that the Company shall promptly (and in any event within twenty-four (24) hours) make available to Parent any material information concerning the Company and its Subsidiaries that is provided to such Third Party making such Acquisition Proposal that is given such access and that was not previously made available to Parent or the Parent Representatives; or

 

(ii)            engage or participate in any discussions or negotiations with a Third Party who has made such an unsolicited bona fide written Acquisition Proposal;

 

provided that, prior to taking any action described in Section 5.6(b)(i) or Section 5.6(b)(ii), (A) the Company Board of Directors shall have determined in good faith, after consultation with outside legal counsel, that failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law, and (B) the Company Board of Directors shall have determined in good faith, after consultation with its independent financial advisor and outside legal counsel, that such Acquisition Proposal either constitutes a Superior Proposal or would reasonably be expected to result in a Superior Proposal; provided, further, that the Company and its Representatives may contact such Third Party to clarify the terms and conditions of such Acquisition Proposal prior to making any such determinations. The Company shall require any Third Party submitting an unsolicited Acquisition Proposal to provide a definitive agreement that marks any proposed changes to the terms of this Agreement.

 

(c)           Except as expressly provided by Section 5.6(d) or Section 5.6(e), at any time after the date hereof, neither the Company Board of Directors nor any committee thereof nor any of the directors, whether acting in their individual capacity or as a director, shall:

 

(i)          (A) withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Parent or the Merger Sub, the Company Recommendation with respect to the Merger, (B) adopt, approve or recommend to the Company Ordinary Shareholders or propose to adopt, approve or recommend to the Company Ordinary Shareholders an Acquisition Proposal, (C) fail to make a Required Reaffirmation within four (4) Business Days after Parent so requests in writing (it being understood that the Company Board of Directors shall have no obligation to so reaffirm the Company Recommendation on more than three occasions), (D) fail to recommend against any Acquisition Proposal subject to Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 within ten (10) Business Days after the commencement of such Acquisition Proposal or (E) fail to include the Company Recommendation in the Proxy Statement (any action described in clauses (A) through (E), a "Company Adverse Recommendation Change"); or

 

(ii)          cause or permit the Company or any of its Subsidiaries to enter into any Alternative Acquisition Agreement relating to any Acquisition Proposal.

 

(d)           Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to obtaining the Company Required Vote, if the Company has received a bona fide written Acquisition Proposal from any Person that is not withdrawn and that the Company Board of Directors concludes in good faith constitutes a Superior Proposal, then (x) the Company Board of Directors may effect a Company Adverse Recommendation Change with respect to such Superior Proposal, or (y) the Company Board of Directors may authorize the Company to terminate this Agreement to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal, if and only if:

 

(i)          the Company Board of Directors determines in good faith, after consultation with its independent financial advisor and outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law;

 

(ii)          the Company shall have complied in all material respects with its obligations under this Section 5.6 with respect to such Acquisition Proposal;

 

(iii)          the Company shall have provided prior written notice to Parent at least two (2) Business Days in advance (the "Notice Period"), to the effect that the Company Board of Directors has received a bona fide written Acquisition Proposal that is not withdrawn and that the Company Board of Directors concludes in good faith constitutes a Superior Proposal and, absent any revision to the terms and conditions of this Agreement, the Company Board of Directors has resolved to effect a Company Adverse Recommendation Change and/or to terminate this Agreement pursuant to Section 7.1(d), which notice shall specify the basis for such Company Adverse Recommendation Change and/or termination, including the identity of the party making the Superior Proposal and the material terms thereof; and

 

(A)          prior to effecting such Company Adverse Recommendation Change or termination, the Company shall, and shall cause their financial and legal advisors to, during the Notice Period, negotiate with Parent and the Parent Representatives in good faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and conditions of this Agreement, so that such Acquisition Proposal would cease to constitute a Superior Proposal; provided that in the event of any material revisions to the Acquisition Proposal that the Company Board of Directors has determined to be a Superior Proposal, the Company shall be required to deliver a new written notice to Parent and to comply with the requirements of this Section 5.6 (including this Section 5.6(d)) with respect to such new written notice; and

 

(B)          any such termination shall be in accordance with Section 7.1(e), including the payment of the Company Termination Fee in accordance with Section 7.2(b).

 

(e)          Nothing contained in this Section 5.6 shall be deemed to prohibit the Company or the Company Board of Directors from (i) complying with its disclosure obligations under U.S. federal or state Law with regard to an Acquisition Proposal or this Agreement, including taking and disclosing to its shareholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act (or any similar communication to Company Ordinary Shareholders) or (ii) making any "stop-look-and-listen" communication or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act and any such disclosures or communications shall not be considered a Company Adverse Recommendation Change unless explicitly provided to the contrary.

 

(f)          The Company agrees that it will promptly (and, in any event, within twenty-four (24) hours) notify Parent if any proposals or offers with respect to an Acquisition Proposal are received by, or any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the Company or any of its Representatives from or by, respectively, any Third Party indicating, in connection with such notice, the identity of the Person or group of Persons making such offer or proposal, and the material terms and conditions of any proposals or offers (including, if applicable, copies of any written requests, proposals or offers, including proposed agreements) and thereafter shall keep Parent reasonably informed, on a prompt basis, of the status and terms of any such proposals or offers (including any amendments thereto) and any material change in the status of any such discussions or negotiations.

 

(g)          The Company agrees that in the event any of its Representatives takes any action that, if taken by the Company, would constitute a breach of this Section 5.6, then the Company shall be deemed to be in breach of this Section 5.6.

 

(h)          Solely for purposes of this Section 5.6, it is understood and agreed that, in the absence of compelling legal authority to the contrary, the Company, the Company Board of Directors and the Company's outside legal counsel shall be entitled to rely on and deem applicable to the Company and the Company Board of Directors the Law applicable to corporations incorporated in Delaware for purposes of making the conclusions contemplated by this Section 5.6 (and providing advice with respect thereto) relating to the fiduciary obligations of such Person for purposes of this Agreement, and that references to the "fiduciary duties" of the Company Board of Directors and other terms of similar import shall, for purposes of this Agreement, include reference to such Delaware law, and shall assume that Israeli law follows Delaware law with respect thereto.  The immediately preceding sentence is intended only to govern the contractual rights of the parties to this Agreement; it being understood and agreed that nothing in this Agreement is intended to modify any fiduciary duties of the Company Board of Directors under applicable Law or give rise to any breach or violation of this Agreement on the part of the Company by reason of the fact that the Company Board of Directors has complied with the Law of the State of Israel, rather than the Delaware Law, governing the duties owed by a director of a company formed under the Laws of the State of Israel to such company, its shareholders or any other Person.

 

Section 5.7           Public Announcements.

 

Except as permitted under Section 5.4, Section 5.5 and Section 5.6, the Company and Parent shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any of the transactions contemplated by the Transaction Documents and shall not issue any such press release or make any such public statement without the prior consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed; provided that a party hereto may, without the prior consent of the other parties hereto, issue such press release or make such public statement as may be required by Law or Order or the applicable rules of Nasdaq if it has used its commercially reasonable efforts to consult with the other parties hereto and to obtain such party's consent but has been unable to do so prior to the time such press release or public statement is so required to be issued or made.

 

Section 5.8           Litigation.

 

Without limiting the obligations of the parties hereto in Section 5.3, prior to the Effective Time, the Company shall promptly notify Parent of all lawsuits or other legal proceedings, whether judicial or administrative, challenging, or seeking damages or other relief as a result of, the Merger, this Agreement or the transactions contemplated by the Transaction Documents ("Merger Litigation") including by providing copies of all pleadings with respect thereto) and thereafter keep Parent reasonably informed with respect to the status thereof.  The Company shall give Parent the opportunity to review and comment on all material filings or responses to be made by the Company in the defense, settlement or prosecution of any Merger Litigation; and consult on the settlement with respect to such Merger Litigation, and the Company will in good faith take such comments into account, and, no such settlement shall be agreed to without Parent's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).

 

Section 5.9           Directors' and Officers' Indemnification and Insurance.

 

(a)          For a period of six years from and after the Effective Time, the Surviving Company and its Subsidiaries shall (and Parent shall cause the Surviving Company and its Subsidiaries to) (i) honor and fulfill in all respects the obligations of the Company and its Subsidiaries under any and all indemnification agreements in the forms referenced on Section 5.9(a) of the Company Disclosure Letter between the Company or any of its Subsidiaries and any past and present officers and directors of the Company ("Indemnified Persons"); and (ii) indemnify, advance expenses to, and hold harmless all Indemnified Persons to the same extent and in the same manner such persons are indemnified as of the date of this Agreement by the Company pursuant to any indemnification agreements between such Indemnified Persons and the Company, the ICL, the Company Articles of Association and Company Memorandum for acts or omissions occurring at or prior to the Effective Time; provided, however, in the case of advancement of expenses, any person to whom expenses are advanced provides an undertaking, to the extent required by the ICL, to repay such advance if it is ultimately determined that such person is not entitled to indemnification.  The Articles of Association of the Surviving Company will contain provisions with respect to exculpation, advancement and indemnification that are at least as favorable to the Indemnified Persons as those contained in the Company Articles of Association and the Company Memorandum as in effect on the date hereof, which provisions will not be amended, repealed or otherwise modified for a period of not less than six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company, unless such a modification is required by Law.

 

(b)          From the Effective Time until the sixth anniversary of the Effective Time, Parent and the Surviving Company shall maintain in effect, for the benefit of the Indemnified Persons with respect to their acts and omissions as directors, officers, employees or agents of the Company occurring prior to the Effective Time, the existing policy of directors' and officers' liability insurance maintained by the Company as of the date of this Agreement in the form delivered by the Company to Parent prior to the date of this Agreement (the "Existing D&O Policy"), to the extent that directors' and officers' liability insurance coverage is commercially available; provided, however, that:  (i) Parent and the Surviving Company may substitute for the Existing D&O Policy a policy or policies of comparable coverage, including a "tail" insurance policy; and (ii) the Surviving Company shall not be required to pay annual premiums for the Existing D&O Policy (or for any substitute or "tail" policies) in excess of $375,250 (the "Maximum Premium") which amount, the Company hereby represents to be equal to two hundred fifty percent (250%) of the amount paid by the Company for coverage for its last full fiscal year.  In the event any future annual premiums for the Existing D&O Policy (or any substitute policies) exceed the Maximum Premium, the Surviving Company shall be entitled to reduce the amount of coverage of the Existing D&O Policy (or any substitute or "tail" policies) to the amount of coverage that can be obtained for a premium equal to the Maximum Premium so as to provide for a policy with the greatest coverage available for a cost not exceeding the Maximum Premium.

 

(c)          The rights set forth in this Section 5.9 are in addition to, and not in limitation of, and Parent shall, and shall cause the Surviving Company to, enforce and honor, to the fullest extent permitted by Law for a period of six (6) years from the Effective Time, the rights otherwise available to the current officers and directors of the Company and its Subsidiaries by Law, charter, bylaw or Contract, and shall operate for the benefit of, and shall be enforceable by, each of the Indemnified Persons and their Representatives and nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors' and officers' insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries for any of their respective directors, officers or other employees, it being understood and agreed that the indemnification provided for in this Section 5.9 is not prior to or in substitution for any such claims under such policies.

 

(d)          In the event Parent, the Surviving Company or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Company, as the case may be, shall assume the obligations set forth in this Section 5.9.

 

(e)          The obligations set forth in this Section 5.9 shall not be terminated, amended or otherwise modified in any manner that adversely affects any Indemnified Person (or any other person who is a beneficiary under the D&O Insurance or the "tail" policy referred to in Section 5.9(b) (and their heirs and representatives)) without the prior written consent of such affected Indemnified Person or other person who is a beneficiary under the D&O Insurance or the "tail" policy referred to in Section 5.9(b) (and their heirs and representatives).  Each of the Indemnified Persons or other persons who are beneficiaries under the D&O Insurance or the "tail" policy referred to in Section 5.9(b) (and their heirs and representatives) are intended to be third party beneficiaries of this Section 5.9, with full rights of enforcement as if a party thereto.  The rights of the Indemnified Persons (and other persons who are beneficiaries under the D&O Insurance or the "tail" policy referred to in Section 5.9(b) (and their heirs and representatives)) under this Section 5.9 shall be in addition to, and not in substitution for, any other rights that such persons may have under the Company Memorandum, the Company Articles of Association the equivalent organizational documents of any Subsidiaries, any and all indemnification agreements of or entered into by the Company or any of its Subsidiaries, or applicable Law (whether at law or in equity).

 

(f)           The obligations and liability of the Surviving Company, Parent and their respective Subsidiaries under this Section 5.9 shall be joint and several.

 

Section 5.10         Tax Ruling.

 

(a)          Following the date of this Agreement, and no later than fifteen (15) days after the date hereof (unless the Company and Parent mutually agree otherwise), the Company shall instruct its Israeli counsel, advisors and/or accountants to prepare and file with the ITA an application for a ruling (which shall be confirmed by Parent prior to its submission) confirming that (i) the conversion of the Company 102 Options in accordance with Section 1.7(c) and the Company ▇▇▇ ▇▇▇▇ in accordance with Section 1.7(d) shall not be regarded as a violation of the "requisite holding period" (as such term is defined in Section 102 of the Ordinance) so long as the respective Option Consideration, RSUs Consideration and the Merger Consideration are deposited with the 102 Trustee until the end of the respective holding period and (ii) the deposit of the respective Option Consideration, RSUs Consideration and Merger Consideration with the Paying Agent and the 102 Trustee shall not be subject to any withholding obligation (which ruling may be subject to customary conditions regularly associated with such a ruling) (the "Options Tax Ruling").  The Company shall include in the request for the Options Tax Ruling a request to exempt Parent, the Surviving Company, the Paying Agent and their respective agents from any withholding obligation with respect to the transfer of the 102 Amounts and the Merger Consideration payable in respect of Company 102 Securities to the 102 Trustee.  If the Options Tax Ruling is not granted prior to the Closing or in accordance with the instructions of the ITA, the Company shall seek to obtain prior to the Closing an interim Tax ruling confirming, among other things, that Parent and any Person acting on its behalf (including the Paying Agent) shall be exempt from Israeli withholding Tax in relation to any payments made with respect to any Company Options or Company Ordinary Shares (whether or not subject to Section 102 of the Ordinance) to the, Paying Agent, the 102 Trustee or the Company in connection with the Merger (the "Interim Options Tax Ruling").  To the extent that prior to the Closing an Interim Options Tax Ruling shall have been obtained, then all references herein to the Options Tax Ruling shall be deemed to refer to such Interim Options Tax Ruling, until such time that a final definitive Options Tax Ruling is obtained.

 

(b)          As soon as practicable following the date of this Agreement but in no event later than ten (10) Business Days after the date hereof, the Company shall instruct its Israeli counsel, advisors and accountants to prepare and file with the ITA an application for a ruling (which shall be confirmed by Parent prior to its submission) that (i) with respect to holders of Company Ordinary Shares, Company RSUs and Company Options that are non-Israeli residents (as defined in the Ordinance or as will be determined by the ITA), (A) exempting Parent, the Paying Agent, the Surviving Company and their respective agents from any obligation to withhold Israeli Tax at the source from any consideration payable or otherwise deliverable pursuant to this Agreement, including the Merger Consideration, or clarifying that no such obligation exists, or (B) clearly instructing Parent, the Paying Agent, the Surviving Company and their respective agents on how such withholding at the source is to be executed, and in particular, with respect to the classes or categories of holders of the Company Ordinary Shares from which Tax is to be withheld (if any), the rate or rates of withholding to be applied and how to identify any such non–Israeli residents; and (ii) with respect to holders of Company Ordinary Shares that are Israeli residents (as defined in the Ordinance or as will be determined by the ITA) (other than Company 102 Shares) (x) exempting Parent, the Paying Agent, the Surviving Company and their respective agents from any obligation to withhold Israeli Tax at the source from any consideration payable or otherwise deliverable pursuant to this Agreement, including the Merger Consideration, or clarifying that no such obligation exists, or (y) clearly instructing Parent, the Paying Agent, the Surviving Company and their respective agents on how such withholding at the source is to be executed, and in particular, with respect to the classes or categories of holders of the Company Ordinary Shares from which Tax is to be withheld (if any), the rate or rates of withholding to be applied (the "Withholding Tax Ruling").

 

(c)          Without limiting the generality of the foregoing, each of the Company and Parent shall cause their respective Israeli counsel, advisors and accountants to coordinate all activities, and to cooperate with each other, with respect to the preparation and filing of such application and in the preparation of any written or oral submissions that may be necessary, proper or advisable to obtain the Options Tax Ruling (including the Interim Options Tax Ruling) and the Withholding Tax Ruling.  The final text of the Interim Option Tax Ruling, the Option Tax Ruling and the Withholding Tax Ruling shall be subject to the prior written confirmation of Parent or its counsel, such confirmation not to be unreasonably withheld, conditioned or delayed.  The Company and its Representatives shall not make any application to, or conduct any negotiation with, the ITA with respect to any matter relating to the subject matter of the Options Tax Ruling and the Withholding Tax Ruling without prior coordination with Parent or its Representatives, and will enable Parent's Representatives, at the expense of Parent, to participate in all discussions and meetings relating thereto.  To the extent that the Parent's representatives elect not to participate in any meeting or discussion, the Company's Representatives shall provide a prompt and full report of the discussions held.  Subject to the terms and conditions hereof, the Company shall use commercially reasonable 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 Laws to obtain the Options Tax Ruling and the Withholding Tax Ruling, as promptly as practicable, however, if such ruling is not obtained for any reason whatsoever by the Closing Date, the Closing shall not be delayed or postponed.

 

(d)          The parties hereto understand and acknowledge that the Options Tax Ruling and the Withholding Tax Ruling may not be obtained or may contain such provisions, terms and conditions as the ITA may prescribe, which may be different from those detailed in this Section 5.10.  The parties further understand and acknowledge that the benefits to Company Ordinary Shareholders, Company Optionholders and Company RSUs Holders contemplated in this Section 5.10 may not be granted, or may not be granted in full.  If any of the Withholding Tax Ruling or the Options Tax Ruling is not obtained prior to the Closing Date, the Company shall instruct its Israeli counsel, advisors and accountants to apply to the ITA prior to the Closing Date for an extension of time with respect to the obligation to deduct or withhold Israeli Tax from the applicable consideration payable pursuant to this Agreement and if such extension is not granted to Parent's satisfaction prior to the date such payments become due and payable, Parent, Paying Agent, the 102 Trustee and/or the Surviving Company may make such payments and withhold any applicable Israeli Taxes in accordance with applicable Law.

 

Section 5.11          Conveyance Taxes.

 

The Company and Parent shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, share transfer and stamp taxes, any transfer, recording, registration and other fees, and any similar taxes which become payable in connection with the transactions contemplated by this Agreement that are required or permitted to be filed on or before the Effective Time.

 

Section 5.12          Delisting.

 

Each of the parties agrees to cooperate with each other in taking, or causing to be taken, all actions necessary to delist the Company Ordinary Shares from Nasdaq and terminate registration under the Exchange Act, provided that such delisting and termination shall not be effective until or after the Effective Time.

 

Section 5.13          Financing.

 

(a)          From the date hereof until the earlier of the Closing or the earlier termination of this Agreement in accordance with Article VII, the Company shall use its commercially reasonable efforts to provide to Parent, and shall use its commercially reasonable efforts to cause its Representatives (in each case with appropriate seniority and expertise, including in its or their accounting firms) to provide or cause to be provided to Parent, on a timely basis, such cooperation that is customary and reasonably requested by Parent in connection with the arrangement and consummation of any debt financing to be obtained by Parent or its Affiliates in connection with the transactions contemplated hereby (the "Debt Financing"), including using commercially reasonable efforts to (i) deliver to Parent and the Lender Parties such financial and other pertinent information regarding the Company and its Subsidiaries, in each case that is in the possession of the Company, as is customarily provided to lenders in syndicated senior secured credit facility financings and which is reasonably requested by Parent, including information related to the Company and its Subsidiaries required by regulatory authorities including under applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act, and information reasonably necessary to complete disclosure schedules required by the Lender Parties; (ii) execute and deliver customary definitive financing documentation, including pledge and security documents, guarantees, certificates (including a solvency certificate), instruments and other matters ancillary to the Debt Financing, and otherwise facilitating the pledging of collateral (including providing reasonable and customary information required in connection with the pledging and identification of bank accounts, insurance, real property (both owned and leased) and intellectual property, and delivering stock or other certificates for certificated securities (with transfer powers executed in blank)), and facilitating the delivery of legal opinions, as may be reasonably requested by Parent; (iii) take all corporate or similar administrative or organizational actions reasonably necessary to permit the consummation of the Debt Financing, such as by having the Company Board of Directors and officers provide any resolutions, consents or approvals on behalf of the Company as may be required by the Lender Parties reasonably necessary for consummation of the Debt Financing; and (iv) obtain customary payoff letters and collateral releases.

 

(b)          Notwithstanding the provisions of this Section 5.13, nothing in this Agreement will require the Company or any of its Subsidiaries to (i) waive or amend any terms of this Agreement or agree to pay any commitment or other fees or bear or reimburse any expenses or make any payment to obtain consent or to incur any liability with respect to or cause or permit any Encumbrance to be placed on any of its assets prior to the Closing in each case for which it has not received or otherwise become entitled to reimbursement or is not otherwise indemnified by or on behalf of Parent, in each case in connection with the Debt Financing, (ii) enter into any definitive agreement that is not contingent upon Closing or that would be effective prior to the Closing Date, (iii) give any indemnities, or otherwise incur any liability, the effectiveness of which is not conditioned on the occurrence of the Closing, (iv) take any action that will conflict with or violate its organizational documents or any applicable Law, (v) cooperate with Parent in connection with the Debt Financing to the extent it would interfere unreasonably with the business or operations of the Company or any of its Subsidiaries, (vi) take any action, or disclose any information, that would conflict with or violate any agreement to which the Company or any of its Subsidiaries is a party, (vii) provide access to or disclose any information to the extent such disclosure would reasonably be expected to result in the waiver of the attorney-client privilege, attorney work product protections or similar protections, (viii) prepare or deliver any financial statements or financial information or any other information or materials of any type to the extent such financial statements, financial information or other information or materials is not otherwise specifically required to be delivered by the Company to Parent pursuant to Section 5.2(a), or (ix) take any action that would authorize any formal corporate action that is not subject to the occurrence of the Closing.  Notwithstanding any other provision set forth herein, nothing herein shall require any director, manager or officer of the Company or any Subsidiary who will not continue to hold such position following the Closing to execute any resolution(s) or written consent(s), or any certification, instrument or agreement, in connection with the Debt Financing or any agreements or instruments entered into in connection therewith.

 

(c)          Parent shall, promptly upon request by the Company, reimburse the Company for all reasonable out-of-pocket costs incurred by the Company or its Subsidiaries in connection with the cooperation of the Company and its Subsidiaries with the arrangement of the Debt Financing.  Parent shall indemnify and hold harmless the Company, its Subsidiaries and its Representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by any of them in connection with the arrangement of the Debt Financing and the performance of their respective obligations under this Section 5.13 and any information utilized in connection therewith (other than those arising out of or resulting from the Company's or any of its Subsidiaries' gross negligence or willful misconduct).

 

(d)          Notwithstanding anything to the contrary set forth herein, the Company shall not be deemed in default of, or otherwise in breach of its obligations under, this Section 5.13, and the conditions set forth in Section 6.2(b) as it relates to this Section 5.13 shall be deemed satisfied, unless (i) the Company knowingly and intentionally materially breaches its obligations under this Section 5.13, and (ii) the Debt Financing has not been obtained primarily as a result of the Company's knowing and intentional material breach of its obligations under this Section 5.13.

 

Section 5.14          Payment of Indebtedness.

 

As of the Closing the Parent shall pay or cause to be paid the ▇▇▇▇ Note and the Bridge Debt in full in accordance with payoff letters to be delivered pursuant to Section 6.2(f) herein.

 

Section 5.15          Termination of 401(k) Plan.

 

At the written request of Parent provided no later than ten (10) days prior to the Closing Date, the Company shall or shall cause the applicable Subsidiary to adopt written resolutions (or take other necessary and appropriate action(s)) to terminate any Company Benefit Plan that is intended to qualify under Section 401(a) of the Code with a cash or deferred arrangement described in Section 401(k) of the Code (the "401(k) Plan") in accordance with its terms and the requirements of applicable Law, cease all contributions to, and fully vest all participants under the 401(k) Plan, such termination, cessation of contributions and vesting to be effective no later than the Business Day preceding the Closing Date. The Company shall provide Parent with an advance copy of such proposed resolutions (and any related documents) and a reasonable opportunity to comment thereon prior to adoption or execution.

ARTICLE VI

CONDITIONS PRECEDENT

 

Section 6.1           Conditions to Each Party's Obligation to Effect the Merger.

 

The obligations of the parties to effect the Merger on the Closing Date are subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

 

(a)          Company Required Vote.  The Company Required Vote shall have been obtained.

 

(b)          No Legal Prohibition.  No Governmental Entity of competent jurisdiction shall have (i) enacted, issued or promulgated any Law that is in effect and has the effect of making the Merger illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Merger, or (ii) issued or granted any Order that has the effect of making the Merger illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Merger.

 

(c)          Regulatory.  Any waiting period (and any extension thereof) applicable to the Merger under applicable Antitrust Laws or other Laws, in each case listed on Section 6.1(c) of the Company Disclosure Letter, shall have been terminated or shall have expired, and any approvals required to be obtained or filings required to be made prior to the Closing under applicable Antitrust Laws or other Laws, in each case listed on Section 6.1(c) of the Company Disclosure Letter, in connection with the Merger shall have been obtained or filed, as applicable.

 

(d)          Israeli Statutory Waiting Periods.  At least fifty (50) days shall have elapsed after the filing of the Merger Proposal with the Companies Registrar and at least thirty (30) days shall have elapsed after the approval of the Merger by the shareholders of each of the Company and Merger Sub.

 

(e)          Certificate of Merger.  The Company and Merger Sub shall have received the Merger Certificate from the Companies Registrar.

 

Section 6.2           Additional Conditions to Obligations of Parent and Merger Sub.

 

The obligations of Parent and Merger Sub to effect the Merger on the Closing Date are also subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

 

(a)          Representations and Warranties.  (i) Other than the representations and warranties set forth in Sections 3.1(a) (Organization), 3.2 (Authority), 3.3(a) (Capitalization), 3.3(h) (Aggregate Consideration) 3.3(i) (Vesting), 3.18 (Brokers) and 3.20 (Anti-Takeover Provisions), the representations and warranties of the Company set forth in this Agreement shall be true and correct (without giving effect to any materiality or Company Material Adverse Effect qualifications set forth therein) as of the date of this Agreement and as of the Closing Date as if made at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except for such failures to be true and correct which, individually or in the aggregate, have not had and would not have a Company Material Adverse Effect, (ii) the representations and warranties set forth in Section 3.1(a) (Organization), 3.2 (Authority), 3.18 (Brokers) and 3.20 (Anti-Takeover Provisions) shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if made at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date), (iii) the representations and warranties set forth in Section 3.3(a) (Capitalization) and  3.3(h) (Aggregate Consideration) shall be true and correct in all respects as of the date hereof and as of the Closing Date as if made at and as of the Closing Date, except where the failure to be so true and correct would not increase the aggregate Merger Consideration payable in the Merger by more than $400,000 and (iv) the representations and warranties set forth in Section 3.3(i) (Vesting) shall be true and correct in all respects as of the date hereof and as of the Closing Date as if made at and as of the Closing Date, except where the failure to be so true and correct would not increase the aggregate Merger Consideration payable with respect to Unvested Company Options and Unvested Company RSUs by more than $400,000.

 

(b)           Agreements and Covenants.  The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.

 

(c)           No Material Adverse Effect.  Since the date hereof, there shall not have occurred a Company Material Adverse Effect that is continuing as of the Closing Date.

 

(d)           Company Reports. All Company Reports required to be filed with the SEC prior to the Closing, other than the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 together with all exhibits thereto, shall have been filed.

 

(e)           Company's Deliverables.  Parent and Merger Sub shall have received each of the following:

 

(i)          a certificate of the Company, validly executed for and on behalf of the Company and in its name by a duly authorized officer thereof, certifying that the conditions set forth in Section 6.2(a) and Section 6.2(b) have been satisfied;

 

(ii)          a certificate, dated as of the Closing Date and executed on behalf of the Company by its Chief Executive Officer, certifying (A) the Company's Articles of Association in effect, (B) the Company's Memorandum of Association in effect, (C) resolutions of the Company Board of Directors approving the Merger, this Agreement and the other Transaction Documents, (D) the Company Required Vote, and (E) the incumbency of each of the Company's officers authorized to sign, on behalf of the Company, this Agreement and the other Transaction Documents executed or to be executed and delivered by the Company pursuant to this Agreement;

 

(iii)          the Paying Agent Agreement, executed by the Company and the Paying Agent; and

 

(iv)          the Shareholder Register of the Company, updated as of the Closing, after giving effect to the Merger.

 

(f)           Payoff Letters.  The Company shall have delivered to Parent payoff letters with respect to all Indebtedness for borrowed money of the Company and its Subsidiaries and any factoring arrangements of the Company and its Subsidiaries outstanding as of the Closing and releases of all Encumbrances securing such Indebtedness and factoring arrangements conditioned only on the payment of the amounts described in such payoff letters.

 

Section 6.3            Additional Conditions to Obligation of the Company.

 

The obligation of the Company to effect the Merger on the Closing Date is also subject to the following conditions:

 

(a)           Representations and Warranties.  The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as if made at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date).

 

(b)           Agreements and Covenants.  Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.

 

(c)           Parent's and Merger Sub's Deliverables.  The Company shall have received each of the following:

 

(i)            a certificate of Parent and Merger Sub, validly executed for and on behalf of Parent and Merger Sub and in their respective names by a duly authorized officer thereof, certifying that the conditions set forth in Section 6.3(a) and Section 6.3(b) have been satisfied;

 

(ii)           the Paying Agent Agreement, executed by Parent and the Paying Agent; and

 

(iii)          the IIA Undertaking.

 

ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

 

Section 7.1           Termination.

 

This Agreement may be terminated and the Merger (and the other transactions contemplated by the Transaction Documents) may be abandoned at any time prior to the Effective Time (notwithstanding if the Company Required Vote has been obtained or Parent has adopted this Agreement as the sole shareholder of Merger Sub) only as follows:

 

(a)          by the mutual written consent of the Company and Parent;

 

(b)          by the Company or Parent, if any Governmental Entity of competent jurisdiction shall have issued an Order or taken any other action, in either case permanently enjoining, restraining or otherwise prohibiting the Merger, and such Order or other action shall have become final and nonappealable; provided that the party seeking to terminate this Agreement pursuant to this clause (b) shall not have failed to use such efforts as required by Section 5.3 to prevent and oppose such Order or other action;

 

(c)          by either Parent or the Company, if at the Shareholders Meeting (giving effect to any adjournment or postponement thereof), the Company Required Vote shall not have been obtained;

 

(d)          by the Company in order to enter into an Alternative Acquisition Agreement for a Superior Proposal; provided that this Agreement may not be so terminated unless (i) the Company Board of Directors shall have complied with the applicable procedures set forth in Section 5.6 (other than (x) any materially cured breaches thereof or (y) any immaterial or inadvertent breaches thereof not intended to result in an Acquisition Proposal) and (ii) the payment as required by Section 7.2(b) has been made in full to Parent;

 

(e)          by Parent if the Company Board of Directors shall have made a Company Adverse Recommendation Change;

 

(f)           by either Parent or the Company, if the Merger shall not have been consummated prior to the date that is 120 days from the date of this Agreement (the "Outside Termination Date"); provided, further, that the right to terminate this Agreement under this Section 7.1(f) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the principal cause of, or results in, the failure of the Merger to occur on or before such date;

 

(g)          by Parent, if (i) there has been a breach by the Company of any representation, warranty, covenant or agreement contained in this Agreement that would, individually or in the aggregate, result in a failure of a condition set forth in Section 6.2(a) or Section 6.2(b) if continuing on the Closing Date and (ii) such breach (A) shall not have been cured before the Outside Termination Date, (B) is not capable of being cured before the Outside Termination Date or (C) the Company does not within thirty (30) days after receipt of written notice thereof initiate and sustain commercially reasonable efforts to cure such breach (it being understood that Parent may not terminate this Agreement pursuant to this Section 7.1(g) if such breach by the Company is so cured); provided that Parent may not terminate this Agreement pursuant to this Section 7.1(g) if Parent or Merger Sub is then in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement;

 

(h)          by the Company, if (i) there has been a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement contained in this Agreement that would, individually or in the aggregate, result in a failure of a condition set forth in Section 6.3(a) or Section 6.3(b) if continuing on the Closing Date and (ii) such breach (A) shall not have been cured before the Outside Termination Date, (B) is not capable of being cured before the Outside Termination Date or (C) Parent or Merger Sub does not within thirty (30) days after receipt of written notice thereof initiate and sustain commercially reasonable efforts to cure such breach (it being understood that the Company may not terminate this Agreement pursuant to this Section 7.1(h) if such breach by Parent or Merger Sub is so cured); provided that the Company may not terminate this Agreement pursuant to this Section 7.1(h) if the Company is then in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement;

 

(i)           by the Company, if (i) all of the conditions set forth in Section 6.1 and Section 6.2 have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the Closing), (ii) the Parent and Merger Sub fail to complete the Closing on the date the Closing should have occurred pursuant to Section 1.2, (iii) the Company has irrevocably notified Parent in writing that (A) the Company is ready, willing and able to consummate the Closing, and (B) all conditions set forth in Section 6.1 and Section 6.3 have been and continue to be satisfied (other than those conditions that by their terms are to be satisfied at the Closing, each of which is capable of being satisfied at the Closing) or that it is willing to waive any unsatisfied conditions set forth in Section 6.1 and Section 6.3, (iv) the Company has given Parent written notice at least three (3) Business Days prior to such termination stating the Company's intention to terminate this Agreement pursuant to this Section 7.1(i) if Parent and Merger Sub fail to consummate the Closing, and (v) Parent and Merger Sub fail to consummate the Closing on the later of the expiration of such three (3) Business Day period and the date set forth in the foregoing notice; or

 

(j)           by Parent (if Parent and Merger Sub are not in material breach of their representations, warranties, covenants or agreements under this Agreement), if the Company shall have breached any of its obligations under Section 5.4 (Shareholders Meeting; Proxy) or Section 5.6 (No Solicitation of Transactions) (other than (x) any materially cured breaches thereof or (y) any immaterial or inadvertent breaches thereof not intended to result in an Acquisition Proposal).

 

The party desiring to terminate this Agreement pursuant to subsection (b), (c), (d), (e), (f), (g), (h), (i) or (j) of this Section 7.1 shall give written notice of such termination to the other party in accordance with Section 8.2, specifying the provision or provisions hereof pursuant to which such termination is effected.  The right of any party hereto to terminate this Agreement pursuant to this Section 7.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, or any of their respective Affiliates or Representatives, whether prior to or after the execution of this Agreement.

 

Section 7.2           Expenses.

 

(a)          Expense Allocation.  Except as otherwise specified in this Section 7.2 or elsewhere in this Agreement or agreed in writing by the parties, all out-of-pocket costs and expenses incurred in connection with the Transaction Documents, the Merger and the other transactions contemplated hereby shall be paid by the party incurring such cost or expense.  Parent will pay, or will cause the Company to pay, the Company’s out-of-pocket costs and expenses incurred in connection with the Transaction Documents, the Merger and the other transactions contemplated hereby against delivery of invoices.

 

(b)          Company Termination Fee.  If this Agreement is (i) terminated (A) by the Company pursuant to Section 7.1(d) (Superior Proposal), or (B) by Parent pursuant to Section 7.1(e) (Adverse Recommendation), or (ii) (A) by Parent or the Company pursuant to Section 7.1(c) (No Vote), (B) following the execution of this Agreement and prior to the time at which a vote is taken on the adoption of this Agreement at the Shareholders Meeting (or an adjournment or postponement thereof) an Acquisition Proposal is publicly announced or shall become publicly known and not withdrawn (a "Competing Acquisition Proposal"), and (C) within twelve (12) months following the termination of this Agreement pursuant to Section 7.1(c), the foregoing Competing Acquisition Proposal is consummated or the Company enters into a definitive Contract to consummate the foregoing Competing Acquisition Proposal and such Competing Acquisition Transaction is subsequently consummated, the Company shall promptly, and in any event within five (5) Business Days after the date of such termination (except as provided in the proviso below), pay Parent the Company Termination Fee (less the amount of Parent Expenses previously paid to Parent pursuant to Section 7.2(c), if any) by wire transfer of immediately available funds (it being understood and agreed that Parent shall provide the Company with the applicable account information promptly upon request therefor); provided that, in the case of a termination pursuant to clause (ii), such payment shall be made substantially concurrently with the consummation of such Competing Acquisition Proposal; provided, further, that, for the purpose of clause (ii), each reference to 20% in the definition of Acquisition Proposal shall be replaced with 50%. For the avoidance of doubt, in no event shall the Company be obligated to pay, or cause to be paid, the Company Termination Fee on more than one occasion, whether or not the Company Termination Fee may be payable under more than one provision of this Agreement at the same or at different times and the occurrence of different events. If the Company becomes obligated to pay the Company Termination Fee pursuant to this Section 7.2(b), Parent and Merger Sub agree that Parent's right to receive the Company Termination Fee from the Company shall be Parent's and Merger Sub's sole and exclusive remedy against the Company and the Company Group and, upon payment of the Company Termination Fee, neither the Company nor any member of the Company Group shall have any liability or obligation to Parent or Merger Sub relating to or arising out of this Agreement or the transactions contemplated hereby.

 

(c)          Expense Reimbursement. In the event this Agreement is terminated (i) pursuant to Section 7.1(c) (No Vote) under circumstances in which the Company Termination Fee is not then payable pursuant to Section 7.2(b) and prior to the time of such termination by Parent, Parent and Merger Sub were not in breach of their representations, warranties, covenants or agreements under this Agreement or (ii) under Section 7.1(g) (Company Breach) and due to a willful breach by the Company, then the Company shall, following receipt of an invoice therefor, promptly (in any event within two (2) Business Days) pay up to $750,000 of Parent's reasonable and documented out-of-pocket fees and expenses (including legal fees and expenses) incurred by Parent and its Affiliates on or prior to the termination of this Agreement in connection with the transactions contemplated by this Agreement (the "Parent Expenses"), by wire transfer of same day funds to one or more accounts designated by Parent; provided, that the existence of circumstances which could require the Company Termination Fee to become subsequently payable by the Company pursuant to Section 7.2(b) shall not relieve the Company of its obligations to pay the Parent Expenses pursuant to this Section 7.2(c); provided, further, that the payment by the Company of Parent Expenses pursuant to this Section 7.2(c) shall not relieve the Company of any subsequent obligation to pay the Company Termination Fee pursuant to Section 7.2(b) except to the extent indicated in Section 7.2(b).

 

(d)          Acknowledgment.  The parties acknowledge that (i) the agreements contained in this Section 7.2 are an integral part of the transactions contemplated in this Agreement, (ii) the damages resulting from termination of this Agreement under circumstances where a Company Termination Fee is payable are uncertain and incapable of accurate calculation and therefore, the amounts payable pursuant to Section 7.2(b) are not a penalty but rather constitute liquidated damages in a reasonable amount that will compensate Parent for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, and (iii) without the agreements contained in this Section 7.2, Parent would not have entered into this Agreement.

 

Section 7.3           Effect of Termination.

 

In the event of termination of this Agreement by either the Company or 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 Parent Group or the Company Group, except that (a) the provisions of Section 5.2(c), Section 7.1, Section 7.2, this Section 7.3 and Article VIII (and the defined terms referenced therein) shall survive such termination; and (b)  nothing herein shall relieve any party or parties hereto, as applicable, from Liability for any fraud committed in connection with this Agreement or any of the transactions contemplated hereby.  In addition to the foregoing, no termination of this Agreement shall affect the obligations of the parties hereto set forth in the Confidentiality Agreement which shall survive termination of this Agreement in accordance with their respective terms and remain fully enforceable in accordance with its respective terms.

 

Section 7.4           Amendment.

 

This Agreement may be amended by the parties in writing by action of their respective boards of directors at any time before or after the Company Required Vote has been obtained and prior to the issuance of the Certificate of Merger by the Companies Registrar; provided, however, that, after the Company Required Vote shall have been obtained, no such amendment, modification or supplement shall be made which by Law requires the further approval of the Company Ordinary Shareholders without such further approval.  This Agreement may not be amended, changed or supplemented or otherwise modified except by an instrument in writing signed on behalf of all of the parties.

 

Section 7.5           Extension; Waiver.

 

At any time prior to the Effective Time, each of the Company, Parent and Merger Sub may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement or in any document delivered pursuant to this Agreement, or (c) subject to the provisions of Section 7.4, waive compliance with any of the agreements or conditions of the other parties 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 hereto against whom the waiver is to be effective.  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 those rights.

 

ARTICLE VIII

GENERAL PROVISIONS

 

Section 8.1           Nonsurvival 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 of the parties in this Agreement that by its terms contemplates performance after the Effective Time.

 

Section 8.2           Notices.

 

All notices, requests, claims, demands and other communications under this Agreement shall be in writing (and made orally if so required pursuant to any section of this Agreement) and shall be deemed given (and duly received) if delivered personally, sent by overnight courier to the parties hereto or sent by e-mail at the following addresses:

 

if to Parent, to

 

▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:  General Counsel
Email:  ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

 

with copies to (which shall not constitute notice):

 

▇▇▇▇▇ ▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇^▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:  Seth Boro; ▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇

E-mail:  ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

and

 

▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:  ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.; ▇▇▇▇▇ ▇. ▇▇▇, P.C.; ▇▇▇▇ ▇▇▇▇▇▇
Email:  ▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇.▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇

 

and

 

Meitar Liquornik ▇▇▇▇ ▇▇▇▇▇▇ Tal
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
Israel

 

Attention:  Ariel Aminetzah, Advocate, ▇▇▇▇ ▇▇▇▇, Advocate
Email:  ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

 

if to the Company, to

 

Top Image Systems Ltd.
Mixer House, Rokach Blvd 101

Israel
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
Email:  ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

with a copy to (which shall not constitute notice):

 

▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A
▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:  ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq, and  ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.

 

Email:  ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇; and ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

 

and

 

Schwell ▇▇▇▇▇▇▇▇▇▇▇ & Associates
▇▇▇▇ Building, 8 Rehov Hartum 
Har Hotzvim 
Jerusalem, 91451

 Israel
Attention:  ▇▇▇ ▇▇▇▇▇▇▇
Email:  ▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇

Section 8.3           Interpretation.

 

When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated.  The table of contents, headings and index of defined terms contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the word "include," "includes" or "including" is used in this Agreement, it shall be deemed to be followed by the words "without limitation."  Unless the context of this Agreement otherwise requires, (i) the words "hereof," "herein" and "hereby" refer to this Agreement, (ii) words using the singular or plural form also include the plural or singular form, respectively and (iii) words of any gender include each other gender.  The Company Disclosure Letter, as well as any schedules thereto and any exhibits hereto, shall be deemed part of this Agreement and included in any reference to this Agreement.  The word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends and such phrase shall not mean simply "if."  References to a Person are also to its permitted successors and assigns.  All references to "days" shall be to calendar days unless otherwise indicated as a "Business Day."  The phrases "provided to," "furnished to," "made available" and phrases of similar import when used herein, unless the context otherwise requires, means that a copy of the information or material referred to has been provided to the party to which such information or material is to be provided in the virtual dataroom set up by the Company in connection with this Agreement prior to the date hereof.

 

Section 8.4           Counterparts.

 

This Agreement may be executed in one or more counterparts, all of which shall be considered 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.

 

Section 8.5            Entire Agreement; No Third-Party Beneficiaries.

 

This Agreement (including the documents and instruments referred to herein, including the Confidentiality Agreement) (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter of this Agreement and (b) is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies hereunder, other than the Indemnified Persons intended to benefit from the provisions of Section 5.9, who shall have the right to enforce such provisions directly.

 

Section 8.6            GOVERNING LAW.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ISRAEL, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

Section 8.7            Assignment.

 

Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto; provided that prior to the Closing, Parent and Merger Sub may assign this Agreement (in whole but not in part) to Parent or any of its Affiliates and/or to any parties providing the Debt Financing pursuant to the terms thereof (including for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Debt Financing). No assignment by any party shall relieve such party of any of its obligations hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

 

Section 8.8            Remedies .

 

(a)           Remedies of Parent and Merger Sub.

 

(i)          Specific Performance.  Prior to the valid termination of this Agreement pursuant to Section 7.1, Parent and Merger Sub shall be entitled to seek and obtain an injunction, specific performance and other equitable relief to prevent breaches of this Agreement by the Company in the courts described in Section 8.11 and to enforce specifically the terms and provisions hereof, including the Company's obligation to consummate the Merger.

 

(ii)          Termination Fee.  Parent shall be entitled to payment of the Company Termination Fee if and when payable pursuant to Section 7.2(b).

 

(iii)         Expense Reimbursement. Parent shall be entitled to reimbursement of Parent Expenses if and when payable pursuant to Section 7.2(c).

 

(iv)         Termination.  Parent and Merger Sub shall be entitled to terminate this Agreement in accordance with Section 7.1.

 

(v)          Monetary Damages.  Upon termination of the Agreement and solely to the extent this Agreement is terminated, the Parent Group shall have the right to seek or obtain money damages from the Company under this Agreement for breach by the Company of any representations, warranties and covenants contained herein; provided, however, that, other than in the case of fraud, if the Company Termination Fee payable under Section 7.2(b) is paid, such payment shall be considered liquidated damages and no further monetary damages shall be payable to Parent Group under this Agreement or any of the Transaction Documents.

 

(b)          Remedies of the Company.

 

(i)            Specific Performance.  Prior to the valid termination of this Agreement pursuant to Section 7.1, the Company shall be entitled to seek and obtain an injunction, specific performance and other equitable relief to prevent breaches of this Agreement by Parent or Merger Sub in the courts described in Section 8.11 and to enforce specifically the terms and provisions hereof, including the Parent's and Merger Sub's obligation to consummate the Merger. For the avoidance of doubt, in no event shall the Company be entitled to a remedy of specific performance or other equitable remedies against any Lender Party, except to the extent that such Lender Party is an Affiliate of Parent.

 

(ii)           Termination.  The Company shall be entitled to terminate this Agreement in accordance with Section 7.1.

 

(iii)          Monetary Damages. Upon termination of the Agreement pursuant to Section 7.1(h) or Section 7.1(i), in each case in connection with an intentional and willful material breach by Parent or Merger Sub of any representation, warranty, covenant or agreement contained in this Agreement (but subject to the proviso below), the Company Group shall have the right to seek money damages from Parent or Merger Sub under this Agreement; provided, however, that the Company shall have the right to seek both specific performance and monetary damages simultaneously, so long as it may only obtain either specific performance or monetary damages and if monetary damages are so awarded, then the Agreement shall be deemed to have been validly terminated, pursuant to Section 7.1(h) or Section 7.1(i), as applicable. Under no circumstances will the collective monetary damages payable by Parent, Merger Sub or any of their Affiliates for such breaches exceed an amount equal to $2,404,228 in the aggregate for all such breaches (the "Parent Damages Cap"). In no event shall any member of the Company Group have the right to seek or obtain money damages or expense reimbursement (whether at law or in equity, in contract, in tort or otherwise) from Parent, Merger Sub or any other member of the Parent Group in an amount, in the aggregate, in excess of the Parent Damages Cap. Other than the obligations of Parent and Merger Sub to the extent expressly provided in this Agreement, in no event will any member of the Parent Group or any other Person other than Parent and Merger Sub have any liability for monetary damages or expense reimbursement (whether at law or in equity, in contract, in tort or otherwise) to the Company or any other Person relating to or arising out of this Agreement, the Merger or the other transactions contemplated hereby. In addition, notwithstanding anything in this Agreement to the contrary, the Company, each of its Subsidiaries and each other member of the Company Group hereby waives any claims against the Lender Parties (other than any Lender Party which is part of Parent Group) and hereby agrees that in no event shall the Lender Parties have any liability or obligation to the Company, any of its Subsidiaries or any other member of the Company Group relating to or arising out of this Agreement or the Debt Financing; provided that, notwithstanding the foregoing, nothing in this Section 8.8(b)(iii) shall in any way limit or modify the rights and obligations of Parent, Merger Sub or the Lender Parties under any Contracts entered into in connection with the Debt Financing. In addition to the rights of Parent and Merger Sub hereunder, Parent and Merger Sub shall be entitled, at Parent and Merger Sub's sole election, to settle any claims arising from or relating to this Agreement by agreeing to consummate the Merger in accordance with the terms of this Agreement.

 

(c)          Acknowledgement Regarding Available Remedies.  Solely to the extent that the right of specific performance is explicitly applicable under the terms of this Section 8.8, the parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy would occur in the event that the parties hereto do not perform their obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the Merger and the other transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such provisions.  Solely to the extent that the right of specific performance is explicitly applicable under the terms of this Section 8.8, the parties acknowledge and agree that the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 8.11 without proof of damages or otherwise, and that such explicit rights of specific enforcement are an integral part of the transactions contemplated by this Agreement and without such rights, none of the Company, Parent or Merger Sub would have entered into this Agreement.  Each party agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the other parties hereto have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or in equity to the extent that the right of specific performance is explicitly applicable under the terms of this Section 8.8.  The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (to the extent that the right of specific performance is explicitly applicable under the terms of this Section 8.8) shall not be required to provide any bond or other security in connection with any such order or injunction.

 

(d)          Sole Remedy.  The parties acknowledge and agree that the remedies provided for in this Section 8.8 shall be the parties' sole and exclusive remedies for any breaches of this Agreement or any claims relating to the transactions contemplated hereby.  In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action, known or unknown, foreseen or unforeseen, which exist or may arise in the future, that such party may have against the other party, the Parent Group or the Company Group, as the case may be, arising under or based upon any Law (including any securities Law, common law or otherwise) for any breach of the representations and warranties or covenants contained in this Agreement; provided that nothing in this Section 8.8 shall relieve any party from any liability for fraud.

 

Section 8.9            Payment Guarantee by and Representations of Ultimate Parent.

 

(a)          Ultimate Parent hereby irrevocably and unconditionally guarantees the due and punctual payment of all amounts due and payable by Parent and Merger Sub pursuant to Sections 1.7, 5.9 and 8.8(b) as and when due and payable.  The foregoing notwithstanding, Ultimate Parent may assert as a defense to such payment any defense to any such payment that Parent could assert pursuant to the terms of this Agreement, other than any such defense arising out of, due to or as a result of the Bankruptcy and Equity Exception with respect to Parent or an Affiliate of Parent. Ultimate Parent acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by this Agreement and that the guarantees and waivers of Ultimate Parent set forth herein are knowingly made in contemplation of such benefits.  The guaranty of Ultimate Parent herein is one of payment, not collection, and a separate action or actions may be brought and prosecuted against Ultimate Parent to enforce such guaranty, irrespective of whether any action is brought against Parent or Merger Sub.  Ultimate Parent expressly and irrevocably waives all suretyship defenses, all defenses on the basis of promptness, diligence, notice of acceptance hereof, presentment, demand for payment, notice of non-performance, default, dishonor, protest and all other notices of any kind, and all defenses which may be available by virtue of any valuation, stay, moratorium or other similar law now or hereafter in effect, and any right to require the marshaling of assets; provided, however, Ultimate Parent expressly reserves any rights of set-off or counterclaims and any other defenses that Parent or Merger Sub may have under the terms of this Agreement. Ultimate Parent's obligations under this Section 8.9 shall terminate 12 months after the Effective Time.

 

(b)          Ultimate Parent is a corporation duly organized and validly existing under the Laws of the State of Delaware.  Ultimate Parent has all requisite corporate power and authority to execute and deliver and perform its obligations under this Agreement.  The execution and delivery of this Agreement and the performance of Ultimate Parent’s obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Ultimate Parent and no other corporate proceedings on the part of Ultimate Parent are necessary to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.  This Agreement has been duly executed and delivered by Ultimate Parent and, assuming due execution and delivery by the Company, constitutes a valid and binding obligation of Ultimate Parent, enforceable against Ultimate Parent in accordance with its terms, except as the same may be limited by the Bankruptcy and Equity Exception.  As of the date of this Agreement, Ultimate Parent is an Affiliate of Parent.  No expirations of waiting periods are required and no filings, notices, reports, consents, registrations, approvals, permits or authorizations are required to be made or obtained by Ultimate Parent with, nor are any required to be obtained by Ultimate Parent from, any Governmental Entity, in connection with Ultimate Parent’s execution and delivery of this Agreement and the performance by Ultimate Parent of its obligations under this Agreement, or in connection with the continuing operation of the business of Ultimate Parent and its Subsidiaries following the Effective Time, except as would not prevent, materially delay or materially impair Ultimate Parent’s ability to perform its obligations pursuant to this Agreement. The execution, delivery and performance of this Agreement by Ultimate Parent do not, and the consummation by Ultimate Parent of the transactions contemplated by this Agreement, will not, constitute or result in (i) a breach or violation of, or a default under, the organizational documents of Ultimate Parent or any of its Subsidiaries, or (ii) conflict with or result in a violation of any Law or Order of any Governmental Entity, or by which any property or asset of Ultimate Parent is bound or affected, except in the case of clause (ii) as would not prevent, materially delay or materially impair Ultimate Parent’s ability to perform its obligations under this Agreement.

 

(c)          Except for the express written representations and warranties made by Ultimate Parent in this Agreement, Ultimate Parent does not make any express or implied representation or warranty with respect to itself, any of its Affiliates (other than Parent and Merger Sub) or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects in connection with this Agreement or the transactions contemplated by this Agreement.  Ultimate Parent expressly disclaims any such other representations or warranties, and the Company acknowledges and agrees that none of the Company or its Affiliates or Representatives has relied on or are relying on any representations or warranties regarding Ultimate Parent, other than the express written representations and warranties expressly set forth in this Section 8.9.

 

Section 8.10          Severability.

 

Any term or provision of this Agreement that is invalid or unenforceable shall not affect the validity or enforceability of the remaining terms and provision hereof.  If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid, illegal or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid, illegal or unenforceable term or provision with a term or provision that is valid, legal and enforceable and that comes closest to expressing the intention of the invalid, illegal or unenforceable term or provision, and this Agreement shall be enforceable as so modified.  In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid, illegal or unenforceable term or provision with a valid, legal and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable term.

 

Section 8.11          Consent to Jurisdiction; Venue.

 

Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the state courts of competent jurisdiction located in Tel Aviv-Jaffa, Israel for the purpose of any action arising out of or relating to this Agreement and the Confidentiality Agreement, and each of the parties hereto irrevocably agrees that all claims in respect to such action may be heard and determined exclusively in such courts.  Each of the parties hereto agrees that a final judgment in any action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  Each of the parties hereto irrevocably consents to the service of any summons and complaint and any other process in any other action relating to the Merger, on behalf of itself or its property, by the personal delivery of copies of such process to such party. Nothing in this Section 8.11 shall affect the right of any party hereto to serve legal process in any other manner permitted by Law.

 

ARTICLE IX

CERTAIN DEFINITIONS

 

"102 Trustee" shall mean IBI Capital Compensation and Trusts (2004) Ltd., the trustee appointed by the Company in accordance with the provisions of the Ordinance, and approved by the ITA, with respect to the Company 102 Securities.

 

"Acceptable Confidentiality Agreement" shall mean a confidentiality agreement containing terms no less favorable in the aggregate to the Company than the terms of the Confidentiality Agreement; provided, that an Acceptable Confidentiality Agreement shall not be required to contain any standstill or similar provisions or otherwise prohibit the making or amendment of any Acquisition Proposal.

 

"Acquisition Proposal" shall mean any inquiry, proposal or offer relating to (i) the acquisition of twenty percent (20%) or more of any class of the Equity Interests in the Company (by vote or by value) by any Third Party, (ii) any merger, consolidation, business combination, reorganization, share exchange, sale of assets, recapitalization, equity investment, joint venture, liquidation, dissolution or other transaction that would result in any Third Party acquiring assets (including share capital of or interest in any Subsidiary or Affiliate of the Company) representing, directly or indirectly, twenty percent (20%) or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (iii) the acquisition (whether by merger, consolidation, equity investment, share exchange, joint venture or otherwise) by any Third Party, directly or indirectly, of any class of Equity Interest in any entity that holds assets representing, directly or indirectly, twenty percent (20%) or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (iv) any tender offer or exchange offer, as such terms are defined under the Exchange Act, that, if consummated, would result in any Third Party beneficially owning twenty (20%) or more of the outstanding Company Ordinary Shares and any other voting securities of the Company (or instruments convertible to or exchangeable for twenty percent (20%) or more of such outstanding shares or securities) or (v) any combination of the foregoing.

 

"ADA" shall mean the Americans with Disabilities Act.

 

"ADEA" shall mean the Age Discrimination in Employment Act.

 

"Affiliate" of any Person shall mean another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

 

"Alternative Acquisition Agreement" shall mean any letter of intent, agreement in principle, merger agreement, share purchase agreement, asset purchase agreement, acquisition agreement, option agreement or similar agreement relating to an Acquisition Proposal.

 

"Antitakeover Laws" shall mean any "moratorium," "control share," "fair price," "affiliate transaction," "business combination" or other antitakeover Laws of any state or other jurisdiction.

 

"Antitrust Laws" shall mean any antitrust, unfair competition, merger or acquisition notification, or merger or acquisition control Laws under any applicable jurisdictions, whether federal, state, local or foreign.

 

"Associate" of any Person shall have the meaning assigned thereto by Rule 12b-2 under the Exchange Act.

 

"Bridge Debt" means that certain Indebtedness for borrowed money that has been incurred and may subsequently be incurred pursuant to the Bridge Documents.

 

"Bridge Documents" means that certain Note Purchase Agreement dated January 18, 2019 among the Company, the guarantors party thereto, the purchasers party thereto and HCP-FVE LLC, as Collateral Agent, and such other documents and instruments referenced therein or  executed pursuant thereto.

 

"Business Day" shall mean any day other than a Friday, Saturday, Sunday or a day on which banking institutions in San Francisco, California or Israel are authorized or obligated by Law or executive order to be closed.

 

"Closing" shall mean the closing of the Merger, as contemplated by Section 1.2.

 

"Code" shall mean the Internal Revenue Code of 1986, as amended.

 

"Company Articles of Association" shall mean the Company's Articles of Association as in effect as of the date hereof.

 

"Company Benefit Plan" shall mean each "employee benefit plan," as defined in Section 3(3) of ERISA (whether or not subject to ERISA), and each other share bonus, share purchase, share option, restricted shares, share appreciation right or other equity or equity-based, deferred-compensation, employment, consulting, retirement, welfare-benefit, bonus, incentive, commission, change in control, retention, severance, separation, vacation, paid time off, or fringe benefit or other benefit or compensation plan, policy, program, Contract, arrangement or agreement sponsored, maintained or contributed or required to be contributed to by the Company or any of its Subsidiaries or with respect to which the Company or any of its Subsidiaries has any Liability.

 

"Company Memorandum" shall mean the Memorandum of Association of the Company, as in effect as of the date hereof, including any amendments.

 

"Company Ordinary Shares-Based Award" shall mean each right of any kind to receive Company Ordinary Shares or benefits measured by the value of a number of Company Ordinary Shares, and each award of any kind consisting of Company Ordinary Shares, granted under Company Ordinary Shares Plans (including share appreciation rights, restricted shares, restricted share units, deferred share units and dividend equivalents), other than Company Options and Company RSUs.

 

"Company Option" shall mean each outstanding option to purchase Company Ordinary Shares under the Company Equity Incentive Plans.

 

"Company Optionholders" shall mean the holders of Company Options.

 

"Company Ordinary Shares Plans" shall mean all employee and director share plans of the Company (including the Company Equity Incentive Plans) and all individual consultant, employee, director or other Contracts that provide for any Company Ordinary Shares-Based Award.

 

"Company Disclosure Letter" shall mean the Company Disclosure Schedule dated the date hereof and delivered by the Company to Parent prior to the execution of this Agreement.

 

"Company Equity Incentive Plans" shall mean the Company's 1996, Employee Share Option Plan, the Company's 2000 Employee Share Option Plan, the Company's 2003 Employee Share Option Plan, as amended on August 29, 2013, the Company's ▇▇▇▇ ▇▇▇▇▇▇▇ Incentive Plan adopted on October 15, 2013 and the Company's Appendix – U.S. Taxpayers to the Company's ▇▇▇▇ ▇▇▇▇▇▇▇ Incentive Plan.

 

"Company Financial Advisor" shall mean Canaccord Genuity LLC.

 

"Company Financial Statements" shall mean all of the consolidated financial statements of the Company and its Subsidiaries included in the Company Reports.

 

"Company Group" shall mean, collectively, the Company, its Subsidiaries or any of their respective former, current or future directors, officers, employees, agents, general or limited partners, managers, members, shareholders, Affiliates or assignees or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, shareholder, Affiliate or assignee of any of the foregoing.

 

"Company Intellectual Property" shall mean Intellectual Property and Software that is used in the business of the Company or any of its Subsidiaries as currently conducted by the Company or any of its Subsidiaries and to which the Company or any of its Subsidiaries claims rights by virtue of ownership of title to such Intellectual Property and Software.

 

"Company Knowledge Person" shall mean each of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.

 

"Company Material Adverse Effect" shall mean, with respect to the Company, any Effect that is or would reasonably be expected to become materially adverse to the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided that in no event shall any of the following, alone or in combination, or any Effect to the extent any of the foregoing results from any of the following, be taken into account in determining whether there shall have occurred a Company Material Adverse Effect:  (i) changes in the Company's share price or trading volume, in and of itself, (ii) any failure by the Company to meet published revenue, earnings or other financial projections, or any failure by the Company to meet any internal budgets, plans or forecasts of revenue, earnings or other financial projections, in and of itself (provided that the exception in this clause (ii) and in clause (i) shall not in any way prevent or otherwise affect a determination that any Effect underlying such failures has resulted in, or contributed to, a Material Adverse Effect), (iii) changes in general economic conditions in Israel, the United States or any other country or region in the world, or changes in conditions in the global economy generally (to the extent such changes in each case do not disproportionately affect the Company relative to other companies in its industry), (iv) changes in conditions in the financial markets, credit markets or capital markets in Israel, the United States or any other country or region in the world, including (A) changes in interest rates in Israel, the United States or any other country and changes in exchange rates for the currencies of any countries and (B) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in Israel, the United States or any other country or region in the world, (v) changes in conditions in the industries in which the Company and its Subsidiaries conduct business, including changes in conditions in the software industry generally or the information security industry generally (to the extent such changes in each case do not disproportionately affect the Company relative to other companies in its industry), (vi) changes in political conditions in Israel, the United States or any other country or region in the world, (vii) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in Israel, the United States or any other country or region in the world (to the extent such acts in each case do not disproportionately affect the Company), (viii) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters or weather conditions in Israel, the United States or any other country or region in the world (to the extent such events in each case do not disproportionately affect the Company), (ix) the execution or announcement of this Agreement or the pendency or consummation of the transactions contemplated hereby, including the impact thereof on the relationships, contractual or otherwise, of the Company or any of its Subsidiaries with employees, customers, vendors or partners or the identity of Parent or any of its Affiliates as the acquiror of the Company, including any Action commenced after the date hereof in connection with the foregoing, (x) (A) any action taken, or failure to take action, in each case to which Parent has in writing expressly approved, consented to or requested, (B) any action taken in compliance with the terms of, or the taking of any action required by, this Agreement, (C) the failure to take any action prohibited by this Agreement, or (D) failure to timely file the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 together with all exhibits thereto, (xi) changes in Law, regulation or other legal or regulatory conditions (or the interpretation thereof) (to the extent such changes do not disproportionately affect the Company relative to other companies in its industry), (xii) changes in GAAP or other accounting standards (or the interpretation thereof), and (xiii) any matters expressly set forth in the Company Disclosure Letter; provided that, for purposes of this clause (xiii), the mere inclusion of a list of items such as Contracts, option grants, customers, vendors or intellectual property shall not be deemed to be disclosure of any issues under or liabilities with respect to the items on such list.

 

"Company Permits" shall mean all authorizations, licenses, permits, certificates, approvals and orders of all Governmental Entities necessary for the lawful conduct of the businesses of the Company and its Subsidiaries.

 

"Company Product" shall mean all products and services, including the provision of such products and services on a software-as-a-service, web-based application, or other service basis, provided by Company and its Subsidiaries.

 

"Company Reports" shall mean all forms, reports, statements, information and other documents (as supplemented and amended since the time of filing) filed or required to be filed by the Company with the SEC since December 31, 2015.

 

"Company Required Vote" shall mean the adoption of this Agreement by an affirmative vote of the holders of a majority of the outstanding Company Ordinary Shares present and voting at the Company Shareholders Meeting on the adoption of this Agreement.

 

"Company Rights" shall mean any options, warrants, convertible securities, subscriptions, share appreciation rights, voting interest, phantom share plans or share equivalents or other rights, agreements, arrangements or commitments (contingent or otherwise) obligating the Company to issue or sell any shares, or options, warrants, convertible securities, subscriptions or other equity interests in, the Company or which would otherwise alter the capitalization of the Company.

 

"Company RSUs Holders" shall mean the holders of Company RSUs.

 

"Company RSUs" shall mean each outstanding restricted share unit granted under the Company Equity Incentive Plans.

 

"Company Termination Fee" shall mean an amount in cash equal to $560,986 minus any amount paid to any member of Parent Group pursuant to Section 8.8(a)(v).

 

"Company 20-F" shall mean the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2017.

 

"Confidentiality Agreement" shall mean the Non-Disclosure and Confidentiality Agreement among the Company, Trident Capital, Inc., Kofax, Inc. and ▇▇▇▇▇ ▇▇▇▇▇, LLC dated August 2017.

 

"Contract" shall mean any written, oral or other agreement, contract, subcontract, lease, understanding, instrument, bond, mortgage, indenture, debenture, note, option, warrant, warranty, purchase order, license, permit, franchise, sublicense, insurance policy, or legally binding commitment or undertaking of any nature, each only if legally binding.

 

"Contractor" shall mean any independent contractor or consultant.

 

"Effect" shall mean any effect, change, event, occurrence, circumstance or development.

 

"Effective Time Holder" shall mean a Company Ordinary Shareholder as of immediately prior to the Effective Time.

 

"Employment Agreements" shall mean any Contracts, termination or severance agreements, change of control agreements or any other agreements respecting the terms and conditions of employment of any officer, employee or former employee.

 

"Encumbrance" shall mean any lien, mortgage, pledge, deed of trust, security interest, charge, encumbrance or other adverse claim or interest but excluding any transfer restrictions pursuant to any Company Memorandum, Company Articles of Association, similar governing documents of any Subsidiary or any applicable federal, State or foreign securities Laws.

 

"Environmental Claims" shall mean any and all Actions, Orders or Encumbrances by any Governmental Entity or other Person alleging potential responsibility or liability arising out of, based on or related to (1) the presence, release or threatened release of, or exposure to, any Hazardous Materials at any location or (2) circumstances forming the basis of any violation or alleged violation of, or Liability under, any Environmental Law.

 

"Environmental Laws" shall mean all Laws relating to pollution or protection of the environment or human health.

 

"Environmental Permits" shall mean all Company Permits required to be obtained by the Company in connection with its business under Environmental Laws.

 

"Equity Interest" shall mean any share, share capital, partnership, member or similar interest in any entity and any option, warrant, right or security convertible, exchangeable or exercisable therefor or other instrument or right the value of which is based on any of the foregoing.

 

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

 

"FLSA" shall mean the Fair Labor Standards Act.

 

"FMLA" shall mean the Family and Medical Leave Act.

 

"GAAP" shall mean United States generally accepted accounting principles.

 

"Government Official" shall mean any officer or employee of a Governmental Entity, including state-owned entities, or of a public organization or any person acting in an official capacity for or on behalf of any Governmental Entity or public organization.

 

"Governmental Entity" shall mean any federal, domestic, territorial, state or local governmental authority of any nature (including any government and any governmental agency, instrumentality, tribunal or commission, or any subdivision, department or branch of any of the foregoing) or body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

 

"Government Grant" shall mean any grants, incentives (including Tax incentives), funding, loan, support, subsidy, award, participation, exemption, status, cost sharing arrangement, reimbursement arrangement, credit, offset or other benefit, relief or privilege programs from the government of the State of Israel or any other Governmental Entity, or judicial or arbitral body thereof, any outstanding application to receive the same filed by the Company or any of its Subsidiaries, including, any material Tax or other incentive granted to, provided or made available to, or enjoyed by the Company or any of its Subsidiaries, under the Laws of the State of Israel, and further including without limitation, by or on behalf of or under the authority of the IIA, the Investment Center, the BIRD Foundation or any other bi/multi-national grant programs for research and development, the European Union, the Fund for Encouragement of Marketing Activities of the Israeli Government or any other Governmental Entity.

 

"▇▇▇▇ Note" means that certain Amended and Restated Convertible Note dated November 18, 2019, as amended made by the Company in favor HCP-FVE, LLC in the aggregate principal amount, as of the date of issuance, of $5,861,657.47.

 

"Hazardous Materials" shall mean all hazardous, toxic, explosive or radioactive substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos, polychlorinated biphenyls, radon gas and all other substances or wastes of any nature regulated, listed, defined or for which liability or standards of conduct may be imposed pursuant to any Environmental Law.

 

"IIA" shall mean the Israeli National Authority for Technological Innovation, previously known as the Research Committee of the Office of the Chief Scientist of the Israeli Ministry of Economy and Industry.

 

"IIA Notice" shall mean the written notice to the IIA regarding the change in ownership of the Company effected as a result of the Merger, required to be submitted to the IIA following the consummation of the Merger in accordance with the Israeli Encouragement of Industrial Research, Development and Innovation Law 5744-1984.

 

"IIA Undertaking" shall mean an undertaking by Parent in customary form in favor of the IIA to comply with the applicable Israeli Encouragement of Industrial Research, Development and Innovation Law 5744-1984.

 

"Indebtedness" shall mean any of the following Liabilities:  (i) indebtedness for borrowed money (including any principal, premium, accrued and unpaid interest, related expenses, prepayment penalties, commitment and other fees, sale or liquidity participation amounts, reimbursements, indemnities and all other amounts payable in connection therewith), (ii) Liabilities evidenced by bonds, debentures, notes or other similar instruments or debt securities, (iii) Liabilities under or in connection with letters of credit or bankers' acceptances or similar items (in each case whether or not drawn, contingent or otherwise), (iv) Liabilities related to the deferred purchase price of property or services (including deferred purchase price, "earn-out," or similar Liabilities related to prior acquisitions), other than trade payables incurred in the ordinary course of business or deferred revenue, (v) Liabilities arising from cash/book overdrafts, (vi) Liabilities under capitalized leases, (vii) Liabilities under conditional sale or other title retention agreements, (viii) Liabilities with respect to vendor advances, (ix) Liabilities arising out of interest rate and currency swap arrangements and any other arrangements designed to provide protection against fluctuations in interest or currency rates, (x) Liabilities or obligations for severance, change of control payments, stay bonuses, retention bonuses, success bonuses, and other bonuses and similar Liabilities and (xi) indebtedness of others guaranteed by the Company or its Subsidiaries or secured by any Encumbrance on the assets of the Company or its Subsidiaries.  Notwithstanding the foregoing, Indebtedness shall not include (A) any obligations or indebtedness among the Company and its wholly owned Company Subsidiaries or among wholly owned Company Subsidiaries, and (B) guarantees by the Company of obligations or indebtedness of Company Subsidiaries or guarantees by Company Subsidiaries of obligations or indebtedness of the Company or any Company Subsidiary.

 

"Investment Center" shall mean the Israeli Investment Center of the Israeli Ministry of Economy and Industry.

 

"Information Systems" shall mean the computer Software, computer firmware, computer hardware (whether general purpose or special purpose), electronic data processing, information, record keeping, communications, telecommunications, third party Software, networks, peripherals and computer systems, including any outsourced systems and processes, and other similar or related items of automated, computerized and/or Software systems that are used or relied on by the Company and its Subsidiaries.

 

"Intellectual Property" shall mean all of the following in any jurisdiction throughout the world:  (i) all trademarks, trademark registrations, trademark rights and renewals thereof, trade names, trade name rights, trade dress, corporate names, logos, slogans, all service marks, service ▇▇▇▇ registrations and renewals thereof, service ▇▇▇▇ rights, and all applications to register any of the foregoing, together with the goodwill associated with each of the foregoing, (ii) all issued patents, patent rights, and patent applications, (iii) all registered and unregistered copyrights, copyrightable works, copyright registrations, renewals thereof, and applications to register the same, (iv) all Internet domain names and Internet web-sites and the content thereof and (v) all confidential and proprietary information, including trade secrets, know-how, inventions, invention disclosures (whether or not patentable and whether or not reduced to practice), inventor rights, reports, quality records, engineering notebooks, models, processes, procedures, drawings, specifications, designs, ingredient or component lists, formulae, plans, proposals, technical data, financial, marketing, customer and business data, pricing and cost information, business and marketing plans, and customer and supplier lists and information.

 

"IRS" shall mean the Internal Revenue Service.

 

"Israeli Securities Law" shall mean the Israeli Securities Law, 5728-1968 and the rules and regulations promulgated thereunder.

 

"Knowledge" or any similar expression used with respect to the Company, shall mean the actual knowledge of any Company Knowledge Person after reasonable inquiry.

 

"Law" shall mean any federal, state, local or foreign statute, law, regulation, requirement, interpretation, permit, license, approval, authorization, decision, directive, decree, rule, ruling, Order, ordinance, code, policy or rule of common law of any Governmental Entity, including any judicial or administrative interpretation thereof.

 

"Leased Property" means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or any of its Subsidiaries.

 

"Leased Real Property Subleases and Leases" means all subleases, leases, licenses or other agreements pursuant to which the Company or any of its Subsidiaries conveys or grants to any Person a leasehold or subleasehold estate in, or the right to use or occupy, any Leased Property or portion thereof, including the right to all security deposits and other amounts and instruments deposited with or on behalf of the Company or any Subsidiary thereunder.

 

"Lender Parties" shall mean any lenders providing the Debt Financing, together with their respective Affiliates and the officers, directors, employees, affiliates, partners, controlling parties, advisors, agents and representatives of such lenders and such Affiliates.

 

"Liabilities" shall mean any and all debts, liabilities and obligations of any nature whatsoever, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, those arising under any Contract or undertaking and those arising as a result of any act or omission.

 

"Nasdaq" shall mean The Nasdaq Global Select Market.

 

"Open Source Software" shall mean any Software that is subject to the GNU General Public License (GPL), the Lesser GNU Public License (LGPL), any "copyleft" license or any other license that requires as a condition of use, modification or distribution of such Software that such Software or other Software combined or distributed with it be (i) disclosed or distributed in source code form; (ii) licensed for the purpose of making derivative works; (iii) redistributable at no charge; or (iv) licensed subject to a patent non-assert or royalty-free patent license.

 

"Order" shall mean any writ, judgment, injunction, consent, order, decree, stipulation, award or executive order of or by any Governmental Entity.

 

"Ordinance" shall mean the Israeli Income Tax Ordinance [New Version], 1961, as amended, and the rules and regulations promulgated thereunder.

 

"Parent Group" shall mean, collectively, Parent or any of its former, current or future directors, officers, employees, agents, general or limited partners, managers, members, shareholders, Affiliates or assignees or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, shareholder, Affiliate or assignee of any of the foregoing.

 

"Parent Material Adverse Effect" shall mean, with respect to Parent, any Effect that, individually or taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Parent Material Adverse Effect, is or would be reasonably likely to prevent or materially delay the performance by Parent of any of its obligations under this Agreement or the consummation of the Merger or the other transactions contemplated by the Transaction Documents.

 

"Permitted Encumbrances" shall mean:  (i) taxes, assessments and other governmental levies, fees or charges that are not due and payable as of the Closing Date, or that are being contested in good faith and for which appropriate reserves have been established in accordance with GAAP, (ii) mechanics, carriers, workmen, warehouseman, repairmen, lessors and materialmen liens and similar liens for labor, materials or supplies and leased equipment incurred in the ordinary course of business for amounts that are not due and payable, (iii) zoning, building codes and other land use Law regulating the use or occupancy of real property or the activities conducted thereon that are imposed by any Governmental Entity having jurisdiction over such real property that are not violated by the current use or occupancy of real property or the operation of the business thereon, (iv) easements, covenants, conditions, restrictions, defects and other similar matters of record affecting title to real property that do not or would not materially impair the use or occupancy of such real property in the operation of the business conducted thereon, (v) liens imposed by Law (other than Tax Law) (vi) non-exclusive licenses by the Company or a Subsidiary in the ordinary course of business consistent with past practice on its standard form of customer agreement as made available to Parent (vii) Encumbrances which are disclosed in the notes to the Financial Statements, or (viii) Encumbrances which would not reasonably be expected to materially impair the continued use of the applicable property for the purposes for which the property is currently being used.

 

"Person" shall mean any individual, corporation, partnership (general or limited), limited liability company, limited liability partnership, trust, joint venture, joint-share company, syndicate, association, entity, unincorporated organization or government, or any political subdivision, agency or instrumentality thereof.

 

"Proxy Statement" shall mean a proxy statement and any amendment or supplement thereto, relating to the Merger and this Agreement to be mailed to the Company Ordinary Shareholders in connection with the Company Shareholders Meeting.

 

"Representatives" shall mean officers, directors, employees, auditors, attorneys and financial advisors (including, with respect to the Company, the Company Financial Advisor).

 

"Required Reaffirmation" means the public reaffirmation by the Company of the Company Recommendation upon Parent's request.

 

"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" shall mean the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.

 

"SEC" shall mean the Securities and Exchange Commission.

 

"Securities Act" shall mean the Securities Act of 1933, as amended.

 

"Shareholders Meeting" shall mean a meeting of the Company Ordinary Shareholders to be called to consider this Agreement and the Merger.

 

"Software" shall mean any and all (A) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (B) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (C) descriptions, schematics, flow-charts and other work product used to design, plan, organize and develop any of the foregoing and (D) all documentation, including User Documentation, user manuals and training materials, relating to any of the foregoing.

 

"Subsidiary" of any Person shall mean any corporation, partnership, limited liability company, joint venture or other legal entity of which such Person (either directly or through or together with another Subsidiary of such Person) owns more than 50% of the voting shares or value of such corporation, partnership, limited liability company, joint venture or other legal entity.

 

"Subsidiary Rights" shall mean any options, warrants, convertible securities, subscriptions, share appreciation rights, phantom share plans or share equivalents or other rights, agreements, arrangements or commitments (contingent or otherwise) of any character issued or authorized by the Company or any Subsidiary of the Company relating to the issued or unissued share capital of the Subsidiaries of the Company or obligating the Company or any of its Subsidiaries to issue or sell any shares of, or options, warrants, convertible securities, subscriptions or other equity interests in, any Subsidiary of the Company.

 

"Superior Proposal" shall mean a bona fide written Acquisition Proposal (with all of the percentages included in the definition of Acquisition Proposal increased to 50%) that the Company Board of Directors determines in good faith, after consultation with independent financial advisor and outside legal counsel, and taking into consideration, among other things, all of the terms, conditions, impact and all legal, financial, regulatory and other aspects of such Acquisition Proposal and this Agreement (in each case taking into account any revisions to this Agreement made or proposed in writing by Parent prior to the time of determination), including financing, regulatory approvals, shareholder litigation, identity of the Person or group making the Acquisition Proposal and its or their financial means, breakup fee and expense reimbursement provisions and other events or circumstances beyond the control of the Company, (a) is reasonably likely to be consummated in accordance with its terms and (b) would result in a transaction more favorable to the Company Ordinary Shareholders from a financial point of view than the transactions provided for in this Agreement (after taking into account the expected timing and risk and likelihood of consummation).

 

"Surviving Company" shall mean the Company, as the company surviving the Merger.

 

"Tax" (and, with correlative meaning, "Taxes") shall mean any federal, state, local or foreign income, gross receipts, property, escheat, abandoned and unclaimed property, sales, use, license, estimated, franchise, employment, payroll, premium, withholding, value added, alternative or added minimum, ad valorem, transfer or excise tax, or any other tax of any kind whatsoever, together with any interest or penalty or addition thereto, whether disputed or not, imposed by any Governmental Entity.

 

"Tax Return" shall mean any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.

 

"Third Party" shall mean any Person or group (as defined in Section 13(d)(3) of the Exchange Act) other than the Company, Parent, Merger Sub or any Affiliates thereof.

 

"Transaction Documents" shall mean this Agreement, the Paying Agent Agreement, the Voting Agreements and all other agreements, instruments and documents to be executed by Parent, Merger Sub and the Company in connection with the transactions contemplated by such agreements.

 

"User Documentation" shall mean explanatory and informational materials concerning the Company products, in printed or electronic format, which the Company or any Subsidiary has released for distribution to end users with such Company products, which may include manuals, descriptions, user and/or installation instructions, diagrams, printouts, listings, flow-charts and training materials, contained on visual media such as paper or photographic film, or on other physical storage media in machine readable form.

 

"Valid Tax Certificate" means a valid certificate, ruling or any other written instructions regarding Tax withholding, issued by the ITA in form and substance satisfactory to Parent, that is applicable to the payments to be made pursuant to this Agreement stating that no withholding, or reduced withholding, of Tax is required under Israeli Law with respect to such payment or providing other instructions regarding such payment or withholding (including transfer of the withholding Tax amount to a trustee).  For the sake of clarity, the Withholding Tax Ruling and the Options Tax Ruling (and the Interim Option Tax Ruling, if applicable) will be considered Valid Tax Certificates.

 

"WARN" shall mean the United States Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar Law.

 

Other Defined Terms.  Each of the following terms is defined in the Section set forth opposite such term: