AGREEMENT AND PLAN OF MERGER by and among PEPSICO, INC., SATURN MERGER SUB LTD. and SODASTREAM INTERNATIONAL LTD. Dated as of August 20, 2018

 

Exhibit 99.1

 

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

PEPSICO, INC.,

 

SATURN MERGER SUB LTD.

 

and

 

SODASTREAM INTERNATIONAL LTD.

 

Dated as of August 20, 2018

 

 

 

TABLE OF CONTENTS

 

		Page
Article I DEFINITIONS & INTERPRETATIONS		5
Section 1.1	Certain Definitions	5
Section 1.2	Additional Definitions	15
Section 1.3	Certain Interpretations	18
Article II THE MERGER		19
Section 2.1	The Merger	19
Section 2.2	The Closing	19
Section 2.3	Effective Time	19
Section 2.4	Effect of the Merger	20
Section 2.5	Articles of Association	20
Section 2.6	Directors and Officers	20
Section 2.7	Effects on Share Capital	20
Section 2.8	Payment Procedures	23
Section 2.9	No Further Ownership Rights in Company Shares	28
Section 2.10	Lost, Stolen or Destroyed Certificates	28
Section 2.11	No Interest	28
Section 2.12	Necessary Further Actions	28
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		29
Section 3.1	Organization; Good Standing	29
Section 3.2	Corporate Power; Enforceability	29
Section 3.3	Board and Shareholders Actions	30
Section 3.4	Non-Contravention	30
Section 3.5	Required Governmental Approvals	31
Section 3.6	Company Capitalization	31
Section 3.7	Subsidiaries	32
Section 3.8	Company Reports	34
Section 3.9	Company Consolidated Financial Statements	34
Section 3.10	No Undisclosed Liabilities	36
Section 3.11	Absence of Certain Changes	36
Section 3.12	Material Contracts	36
Section 3.13	Real Property	39
Section 3.14	Intellectual Property	40
Section 3.15	Tax Matters	43
Section 3.16	Employee Plans	46
Section 3.17	Labor Matters	48
Section 3.18	Permits	50
Section 3.19	Compliance with Laws; FCPA Matters	51
Section 3.20	Environmental Matters	52
Section 3.21	Litigation	53
Section 3.22	Insurance	53

 

 

TABLE OF CONTENTS (cont’d.)

 

		Page
Section 3.23	Related Party Transactions	53
Section 3.24	Brokers	53
Section 3.25	Opinion of Financial Advisor	53
Section 3.26	Anti-Takeover Statutes	54
Section 3.27	Proxy Statement	54
Section 3.28	Privacy; Data Protection; PCI Compliance	54
Section 3.29	No Other Representations or Warranties	54
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB		55
Section 4.1	Organization; Good Standing	55
Section 4.2	Corporate Power; Enforceability	55
Section 4.3	Non-Contravention	56
Section 4.4	Required Governmental Approvals	56
Section 4.5	Litigation	56
Section 4.6	Proxy Statement	57
Section 4.7	Ownership of Company Share Capital	57
Section 4.8	Brokers	57
Section 4.9	Ownership and Operations of Merger Sub	57
Section 4.10	Shareholder and Management Arrangements	58
Section 4.11	No Other Company Representations or Warranties	58
Section 4.12	Funds	58
Section 4.13	Non Reliance on Company Estimates, Projections, Forecasts, Forward Looking Statements and Business Plans	58
Section 4.14	Parent and Merger Sub Board Approval	59
Article V COVENANTS OF THE COMPANY		59
Section 5.1	Interim Conduct of Business	59
Section 5.2	No Solicitation	64
Section 5.3	Company Board Recommendation	66
Section 5.4	Access	69
Section 5.5	Certain Litigation	70
Section 5.6	Director Resignations	70
Article VI COVENANTS OF PARENT AND MERGER SUB		70
Section 6.1	Directors’ and Officers’ Indemnification and Insurance	70
Section 6.2	Employee Matters	73
Section 6.3	Obligations of Merger Sub and Buyer	75
Section 6.4	Manufacturing Facility	75
Section 6.5	Board Representation	75
Article VII ADDITIONAL COVENANTS OF ALL PARTIES		76
Section 7.1	Reasonable Best Efforts to Complete	76

 

 

TABLE OF CONTENTS (cont’d.)

 

		Page
Section 7.2	Regulatory Filings	77
Section 7.3	Company Shareholders Meeting	80
Section 7.4	Merger Proposal; Certificate of Merger	81
Section 7.5	Anti-Takeover Statute	82
Section 7.6	Notification of Certain Matters	82
Section 7.7	Public Statements and Disclosure	83
Section 7.8	Confidentiality	83
Section 7.9	Tax Rulings	84
Section 7.10	Nasdaq and TASE De-Listing of Company Shares; Transition Period SEC Reports	85
Article VIII CONDITIONS TO THE MERGER		86
Section 8.1	Conditions	86
Section 8.2	Conditions to the Obligations of Parent, Buyer and Merger Sub	86
Section 8.3	Conditions to the Company’s Obligations to Effect the Merger	87
Section 8.4	Frustration of Closing Conditions	88
Article IX TERMINATION, AMENDMENT AND WAIVER		88
Section 9.1	Termination	88
Section 9.2	Notice of Termination; Effect of Termination	90
Section 9.3	Fees and Expenses	90
Section 9.4	Effect of Termination Fee	92
Section 9.5	Amendment	92
Section 9.6	Extension; Waiver	93
Article X GENERAL PROVISIONS		93
Section 10.1	Survival of Representations, Warranties and Covenants	93
Section 10.2	Notices	93
Section 10.3	Assignment	95
Section 10.4	Entire Agreement	95
Section 10.5	Third Party Beneficiaries	95
Section 10.6	Severability	96
Section 10.7	Remedies	96
Section 10.8	Governing Law	96
Section 10.9	Consent to Jurisdiction	97
Section 10.10	Company Disclosure Letter References	97
Section 10.11	Counterparts	97

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of August 20, 2018 by and among PepsiCo, Inc., a North Carolina corporation (“Parent”), Saturn Merger Sub Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Parent (“Merger Sub”), and SodaStream International Ltd., a company organized under the laws of the State of Israel (the “Company”). All capitalized terms used in this Agreement shall have the respective meanings ascribed thereto in Article I.

 

WITNESSETH:

 

WHEREAS, promptly following the execution of this Agreement, Parent will (i) form a new wholly-owned subsidiary of Parent (“Buyer”) as a company to be organized under the laws of the Netherlands; (ii) cause Buyer to, and Buyer will, execute and deliver a joinder agreement to this Agreement and be bound hereunder (the “Joinder Agreement”); and (iii) contribute all of the issued and outstanding shares of capital stock of Merger Sub to Buyer;

 

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”), following which Merger Sub will cease to exist, the Company will become a wholly-owned subsidiary of Buyer, on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Board of Directors of the Company has: (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement are fair to, and in the best interests of, the Company and its shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the Surviving 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 shareholders of the Company approve this Agreement, the Merger and the other transactions contemplated hereby;

 

WHEREAS, the Boards of Directors of Parent and Merger Sub have each approved entry into this Agreement, the Merger and the other transactions contemplated hereby; and the Board of Directors of Merger Sub has further (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement are fair to, and in the best interests of, Merger Sub and its shareholder; (ii) determined 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 (iii) 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, immediately after the Closing but no earlier than January 2019, the shares of the Surviving Company will be transferred to Frito-Lay Trading Company (Europe) GmbH, a company organized under the laws of Switzerland and a wholly-owned indirect Subsidiary of Parent.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, 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, Parent, Merger Sub and the Company hereby agree as follows:

 

Article I

DEFINITIONS & INTERPRETATIONS

 

Section 1.1           Certain Definitions. For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:

 

“102 Trustee” shall mean the trustee appointed by the Company from time to time in accordance with the provisions of the Ordinance, and approved by the ITA, with respect to the Company 102 Securities and Company 102 Shares.

 

“Acquisition Proposal” shall mean any offer or proposal (other than an offer or proposal by Parent or Merger Sub) to engage in an Acquisition Transaction.

 

“Acquisition Transaction” shall mean any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) the purchase or other acquisition from the Company by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act), directly or indirectly, of more than twenty percent (20%) of the Company Shares outstanding as of the consummation of such purchase or other acquisition, or any tender offer or exchange offer by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) that, if consummated in accordance with its terms, would result in such Person or “group” beneficially owning more than twenty percent (20%) of the Company Shares outstanding as of the consummation of such tender or exchange offer; (ii) a merger, consolidation, business combination, scheme of arrangement or similar transaction involving the Company and/or any of its Subsidiaries having assets constituting more than twenty percent (20%) of the total consolidated assets of the Company and its Subsidiaries (except for any such transaction between or among two (2) or more of the Company’s Subsidiaries); (iii) a sale, lease, exchange, license, transfer, acquisition or disposition of more than twenty percent (20%) of the total consolidated assets of the Company and its Subsidiaries (including for this purpose the outstanding equity securities of the Company’s Subsidiaries); (iv) a recapitalization, restructuring, liquidation, dissolution or other winding up of the Company; or (v) any issuance by the Company individually or in the aggregate of over twenty percent (20%) of its equity securities.

 

 

“Affiliate” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

 

“Antitrust Laws” shall mean any Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or the creation or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the transactions contemplated by this Agreement.

 

“Business Day” shall mean any day other than a Friday, Saturday, Sunday or other day on which the banks in New York or Israel are authorized by Law or executive order to be closed.

 

“Company Balance Sheet” shall mean the unaudited consolidated balance sheet of the Company and its Subsidiaries as of June 30, 2018.

 

“Company Balance Sheet Date” shall mean June 30, 2018.

 

“Company Board” shall mean the Board of Directors of the Company.

 

“Company Intellectual Property Rights” shall mean Intellectual Property Rights (including any applications therefor) (i) owned, used or filed by the Company or any of its Subsidiaries; (ii) incorporated by the Company or any of its Subsidiaries in their products; or (iii) licensed to the Company or any of its Subsidiaries, in each case, that are used in the conduct of the business of the Company or any of its Subsidiaries as currently conducted, in each case of (i), (ii) and (iii) excluding any off-the-shelf Software.

 

“Company Material Adverse Effect” shall mean any circumstance, change, effect, event or development (each a “Change” and, collectively, “Changes”), individually or in the aggregate, and regardless of whether or not such Change constitutes a breach of the representations or warranties made by the Company in this Agreement, that is or is reasonably likely to (a) have a material adverse effect on the financial condition, properties, assets (including intangible assets), liabilities, business or results of operations of the Company and its Subsidiaries, taken as a whole or (b) prevent or materially impair the ability of the Company to consummate the Merger and perform its obligations under this Agreement; provided, however, that in the case of clause (a) only, no Change (by itself or when aggregated or taken together with any and all other Changes) resulting from or arising out of any of the following shall be deemed to be or constitute a “Company Material Adverse Effect,” and no Change (by itself or when aggregated or taken together with any and all other such Changes) resulting from or arising out of any of the following shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred or may, would or could occur:

 

 

(i)          general economic conditions (or changes in such conditions) in Israel, the United States or any other country or region in the world in which the Company or any of its Subsidiaries operates, or conditions in the global economy generally;

 

(ii)         conditions (or changes in such conditions) in the securities markets, capital markets, credit markets, currency markets or other financial markets in Israel, the United States or any other country or region in the world in which the Company or any of its Subsidiaries operates;

 

(iii)        conditions (or changes in such conditions) in the industries in which the Company and its Subsidiaries conduct business;

 

(iv)        political conditions (or changes in such conditions) in Israel, the United States or any other country or region in the world where the Company or any of its Subsidiaries has operations, or acts of war, armed hostilities, sabotage or terrorism (including any escalation or general worsening of any such acts of war, armed hostilities, sabotage or terrorism) in Israel, the United States or any other country or region in the world where the Company or any of its Subsidiaries has operations;

 

(v)         changes in Law or other legal or regulatory conditions (or the authoritative interpretation thereof) or changes in IFRS or other accounting standards applicable to the Company or its Subsidiaries (or the authoritative interpretation thereof) after the date hereof;

 

(vi)        earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions and other force majeure events in Israel, the United States or any other country or region in the world where the Company or any of its Subsidiaries has operations;

 

(vii)       the announcement of this Agreement or the pendency of the transactions contemplated hereby, the mere identity of Parent or any of its Affiliates or any public communication by Parent or Merger Sub of their plans or intentions with respect to any of the businesses of the Company or any of its Subsidiaries following the Closing, including the direct impact thereof on the relationships, contractual or otherwise, with officers, employees, customers, suppliers, distributors, resellers, licensors or other business partners of the Company or any of its Subsidiaries or labor unions or Governmental Authorities, in each case, other than to the extent relating to a breach of Section 3.4, Section 3.5 or Section 3.16(g);

 

(viii)      any action or omission required by Law;

 

(ix)         changes in the price of Company Shares or the trading volume of Company Shares, in and of itself, but not the underlying cause of such changes;

 

 

(x)          any failure of the Company to meet any securities analysts’ projections, internal projections, or forecasts or estimates of earnings or revenues, in and of itself, but not the underlying cause of such failure;

 

(xi)         any Legal Proceedings brought or threatened by any of the current or former shareholders of the Company (on their own behalf or on behalf of the Company) relating to this Agreement or any of the transactions contemplated hereby, including the Merger;

 

(xii)        (A) any action taken by Parent or any of its Affiliates in breach of this Agreement or (B) the omission of an action that was required to be taken by Parent or any of its Affiliates in breach of this Agreement; or

 

(xiii)       any matters disclosed in Section 1.1 of the Company Disclosure Letter;

 

except and only to the extent such effects directly or indirectly resulting from or arising out of the matters described in clauses (i) through (vi) above disproportionately affect the Company and its Subsidiaries, taken as a whole, as compared to other companies operating in the industry and geographic markets in which the Company and its Subsidiaries conduct business (in which case, only the extent of such disproportionate effects (if any) shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred or may, would or could occur).

 

“Company Optionholders” shall mean the holders of Company Options.

 

“Company Options” shall mean any options to purchase Company Shares outstanding under any of the Company Share Plans.

 

“Company PSUs” shall mean each award of performance-vesting restricted share units outstanding under any of the Company Share Plans.

 

“Company PSUs Holders” shall mean the holders of Company PSUs.

 

“Company RSUs” shall mean each award of time-vesting restricted share units outstanding under any of the Company Share Plans.

 

“Company RSUs Holders” shall mean the holders of Company RSUs.

 

“Company Share Plans” shall mean the Company’s 2010 Employee Share Option Plan and the Company’s 2007 Employee Share Option Plan, in each case as may be amended from time to time.

 

“Company Shareholders” shall mean holders of Company Shares.

 

 

“Company Software” shall mean all Software used in the conduct of the business of the Company or any of its Subsidiaries and owned or held for use by the Company or any of its Subsidiaries.

 

“Company Technology” shall mean all Technology used in the conduct of the business of the Company or any of its Subsidiaries and owned or held for use by the Company or any of its Subsidiaries.

 

“Continuing Employees” shall mean all employees of the Company and its Subsidiaries as of the Effective Time.

 

“Contract” shall mean any written or oral contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease or other legally binding instrument or arrangement.

 

“DOJ” shall mean the United States Department of Justice or any successor thereto.

 

“Effective Time Holder” shall mean a Company Shareholder as of immediately prior to the Effective Time.

 

“Environmental Law” shall mean all applicable federal, state, local or foreign Laws, codes, rules, orders, ordinances, permits, requirements, final governmental determinations, statutes and regulations promulgated thereunder, relating to pollution or the protection of the environment, as the foregoing are enacted and in effect on the Closing Date and in the jurisdiction in which the applicable site or premises are located, including without limitation, the following statutes and all regulations promulgated thereunder: the Israeli Licensing of Businesses Regulations (Disposal of Hazardous Substances), 1990; the Israeli Hazardous Substances Law, 1993; the Israeli Abatement of Nuisances Law, 1961; the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the Emergency Planning and Community ▇▇▇▇▇-▇▇-▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. § ▇▇▇▇▇ et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Federal Clean Air Act, 42 U.S.C. § 7401 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Toxic Substance Control Act, 15 U.S.C. § 2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 1801 et seq.; the Atomic Energy Act, 42 U.S.C. § 2014 et seq.; any state or local statute of similar effect; and any Laws relating to protection of the environment which regulate the management or disposal of Hazardous Substances.

 

“ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

 

“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

“EU Merger Regulation” shall mean Council Regulation (EC) No 139/2004 of 20 January 2004.

 

“FTC” shall mean the United States Federal Trade Commission or any successor thereto.

 

“Governmental Authority” shall mean any government, any governmental or regulatory entity or body, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body of competent jurisdiction, any stock exchange or similar self-regulatory organization, in each case whether federal, state, county, provincial, and whether local or foreign.

 

“Government Grant” shall mean any grant, incentive, qualification, subsidy, award, participation, exemption, status, cost sharing arrangement, reimbursement arrangement or other benefit, relief or privilege, from the government of the State of Israel or any other Governmental Authority, or judicial 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 Investment Center.

 

“Hazardous Substance” shall mean (i) any chemicals, substance, material or waste that is characterized or regulated under any Environmental Law as “hazardous,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “toxic,” “chemical substances,” “pesticides,” “contaminants,” or “oil” or (ii) any petroleum or petroleum products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls, urea formaldehyde foam insulation, radon and any other substance defined or designated as hazardous, toxic or harmful to human health, safety or the environment under any Environmental Law.

 

“HSR Act” shall mean the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

“IFRS” shall mean the International Financial Reporting Standards and interpretations thereof adopted by the International Accounting Standards Board.

 

“▇▇▇” shall mean the Israel Land Authority.

 

“▇▇▇ Approvals” shall mean the approvals by the ▇▇▇ regarding the change in ownership of the Company to be effected by the Merger.

 

 

“Indebtedness” shall mean, with respect to a Person, without duplication, (i) all indebtedness for borrowed money, (ii) all obligations evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business in respect of which such Person’s liability remains contingent), (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all reimbursement, payment or similar obligations, contingent or otherwise, under acceptance, letter of credit or similar facilities and (v) any liability of others described in clauses (i) through (iv) above which such Person has guaranteed or that is otherwise such Person’s legal liability (including pursuant to any keepwell agreement), and including in clauses (i) through (iv) above any accrued and unpaid interest or penalties thereon.

 

“Intellectual Property” shall mean all intellectual property, regardless of form, whether protected, created or arising under the Laws of Israel or any foreign jurisdiction, including: (i) published and unpublished works of authorship, including audiovisual works, collective works, computer programs, compilations, databases, derivative works, literary works, mask works, and sound recordings (“Works of Authorship”); (ii) inventions and discoveries, including articles of manufacture, business methods, compositions of matter, improvements, machines, methods, and processes and new uses for any of the preceding items (“Inventions”); (iii) trademarks, service marks, trade names (whether registered or unregistered), service names, brand names, brand marks, trade dress rights, Internet domain names, emblems, signs or insignia, words, names, symbols, devices, designs, and other designations, and combinations of the preceding items, used to identify or distinguish a business, good, group, product, or service or to indicate a form of certification, including logos, product designs, and product features and including all goodwill associated with the foregoing (“Trademarks”); (iv) design rights (registered or unregistered) and designs (“Designs”); (v) confidential and proprietary information, or non-public processes, that derive economic value from not being generally known or readily ascertainable through proper means, whether tangible or intangible, including to the extent embodied in algorithms, customer lists, ideas, designs, formulas, know-how, methods, processes, programs, prototypes, systems, techniques, specifications, Technology, concepts, trade secrets, discoveries and technical data and information (“Trade Secrets”); (vi) copyrights, whether registered or unregistered, and whether or not registrable, (including copyrights in Software), mask work rights and registrations and applications therefore and all moral and common law rights therein, including rights under Section 45 of the Israeli Copyright Law 2007 or under any other similar provision of any Law of any applicable jurisdiction (“Copyrights”); (vii) patents, patent applications, any reissues, reexaminations, divisionals, continuations, continuations-in-part and extensions thereof (“Patents”); (viii) all applications, registrations and permits related to any of the foregoing clauses; and (ix) any and all other similar proprietary rights in any jurisdiction.

 

 

“Intellectual Property Rights” shall mean all rights in, arising out of, or associated with Intellectual Property in any jurisdiction, including: (i) rights in, arising out of, or associated with Works of Authorship; (ii) rights in, arising out of, or associated with Inventions or Patents; (iii) rights in, arising out of, or associated with Designs; (iv) rights in, arising out of, or associated with Trademarks; and (v) rights in, arising out of, or associated with Trade Secrets and rights in, arising out of, or associated with Copyrights.

 

“Intervening Event” shall mean any Change that (i) is not known (or, if known, the consequences of which were not reasonably foreseeable) by the Company Board as of the date hereof and (ii) does not relate to any Acquisition Transaction, other than (A) any Acquisition Proposal, (B) the fact, in and of itself, that the Company exceeds any securities analysts’ projections, internal projections, or forecasts or estimates of earnings or revenue (however, the underlying reasons for such events may constitute an Intervening Event) and (C) changes, in and of itself, in the price of Company Shares or the trading volume of Company Shares (however, the underlying reasons for such events may constitute an Intervening Event).

 

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

 

“Investment Center Approval” shall mean the approval by the Investment Center regarding the change in ownership of the Company to be effected by the Merger.

 

“IRS” shall mean the United States Internal Revenue Service or any successor thereto.

 

“ISA” shall mean the Israeli Securities Authority.

 

“Israeli Securities Law” shall mean the Israeli Securities Law, 5728-1968, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

“Knowledge” of the Company, with respect to any matter in question, shall mean the actual knowledge of the Company’s Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer and General Counsel and, solely for purposes of Section 3.15, the Company’s Global Tax Manager, in each case without any duty of inquiry or investigation.

 

“Law” shall mean any and all applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, ordinance, code, Order, rule, regulation, ruling or other legal requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

 

“Legal Proceeding” shall mean any lawsuit, litigation, arbitration or other similarly formal legal proceeding (in each case, whether civil, criminal or administrative), brought by or pending before any Governmental Authority.

 

“Liabilities” shall mean any liability, obligation or commitment of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet prepared in accordance with IFRS).

 

 

“Lien” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, option, right of first refusal or preemptive right.

 

“Nasdaq” shall mean the Nasdaq Global Select Market.

 

“Order” shall mean any order, judgment, decision, decree, injunction, ruling, writ or assessment of any Governmental Authority (whether temporary, preliminary or permanent) that is binding on any Person or its property under applicable Law.

 

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

 

“Permitted Liens” shall mean any of the following: (i) Liens for Taxes, assessments and governmental charges or levies either not yet due and payable or delinquent or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established on the consolidated financial statements of the Company and its Subsidiaries in accordance with IFRS as adjusted in the ordinary course of business consistent with past practice through the Effective Time; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s or other similar common law or statutory Liens that are not yet due or that are being contested in good faith and by appropriate proceedings; (iii) Liens imposed by applicable Law (other than Tax Law); (iv) pledges or deposits to secure obligations under workers’ compensation Laws or similar legislation or to secure public or statutory obligations; (v) Liens the existence of which are disclosed in the Company Reports; (vi) statutory, common law or contractual liens of landlords; (vii) zoning, entitlement, conservation restriction and other land use and environmental regulations promulgated by Governmental Authorities, (viii) any right, interest, Lien or title of any lessor or sublessor under any Lease or other similar agreement or in any of the Leased Real Property; (ix) all matters of record as well as any matters that are shown on current surveys of real property made available to Parent; (x) non-exclusive licenses of Intellectual Property or Intellectual Property Rights granted in the ordinary course of business; (xi) Liens described in Section 1.1 of the Company Disclosure Letter; and (xii) any other Liens which, individually or in the aggregate, would not reasonably be expected to materially impair or interfere with the use of the property encumbered thereby as currently used or would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.

 

“Person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Authority.

 

“Representative” shall mean, with respect to any Person, any direct or indirect Subsidiary of such Person, or any officer, director, employee, investment banker, attorney or other authorized agent, advisor or representative of such Person or of any direct or indirect Subsidiary of such Person.

 

 

“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act” shall mean the United States ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

“SEC” shall mean the United States Securities and Exchange Commission or any successor thereto.

 

“Securities Act” shall mean the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

 

“Software” shall mean computer programs, including any and all software implementations of algorithms, models and methodologies whether in source code, object code or other form, databases and compilations, including any and all data and collections of data, descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing and all documentation, including user manuals and training materials related to any of the foregoing.

 

“Subsidiary” of any Person shall mean (i) a corporation more than fifty percent (50%) of the combined voting power of the outstanding voting shares of which is owned, directly or indirectly, by such Person or by one of more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof, (ii) a partnership of which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership, (iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member and has the power to direct the policies, management and affairs of such company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof.

 

“Superior Proposal” shall mean any bona fide written Acquisition Proposal on (i) terms that the Company Board (or any committee thereof) shall have determined in good faith (after consultation with its financial advisor and outside legal counsel), taking into account all relevant legal, financial and regulatory aspects and the terms of such Acquisition Proposal, the identity of the Person making such proposal and all other matters that the Company Board considers appropriate, would be more favorable to the Company Shareholders (in their capacity as such) from a financial point of view than the Merger and (ii) which the Company Board shall have determined in good faith (after consultation with its outside legal counsel and financial advisors) to be reasonably capable of being completed on the terms proposed, taking into account all financial, regulatory, legal and other aspects of such proposal; provided, however, that, for purposes of this definition of “Superior Proposal,” the term “Acquisition Transaction” shall have the meaning assigned to such term herein, except that each reference to “20%” in such definition shall be deemed to be a reference to “50%.”

 

 

“TASE” shall mean Tel Aviv Stock Exchange Ltd.

 

“Tax” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, including taxes based upon or measured by gross receipts, capital gain, windfall, income, profits, severance, property, production, sales, use, license, excise, franchise, employment, social security and occupation, and value added, ad valorem, withholding, payroll, recapture, taxes, alternative or add-on minimum, transfer, stamp, or environmental tax (including, for the avoidance of doubt, any liability arising from any Law relating to escheat or unclaimed property) or any other tax, custom, duty or other like assessment or charge of any kind whatsoever, together with all linkage differentials, interest, penalties and additions imposed with respect to such amounts and (ii) any liability for the payment of amounts determined by reference to amounts described in clause (i) as a result of being or having been a member of any group of corporations that files, will file, or has filed Tax Returns on an affiliated, combined, consolidated or unitary basis, as a result of any obligation under any agreement or arrangement (including any Tax sharing arrangement), as a result of being a transferee or successor, or otherwise.

 

“Technology” shall mean all designs, formulas, algorithms, procedures, techniques, ideas, know-how, Software (whether in source code, object code or human readable form), databases and data collections, Internet websites and web content, tools, inventions (whether patentable or unpatentable and whether or not reduced to practice), invention disclosures, developments, creations, improvements, works of authorship, other similar materials and all recordings, graphs, drawings, reports, analyses, other writings and any other embodiment of the above, in any form or media, whether or not specifically listed herein, and all related technology, documentation and other materials used in, incorporated in, embodied in or displayed by any of the foregoing, or used in the design, development, reproduction, maintenance or modification of any of the foregoing.

 

“Valid Tax Certificate” shall mean a valid certificate, ruling or any other written instructions regarding Tax withholding, issued by the ITA in form and substance reasonably satisfactory to Parent, that is applicable to the payments to be made pursuant to this Agreement stating that no withholding, or reduced rate of withholding, of Israeli Tax is required with respect to such payments or providing other instructions regarding such payments or withholding.

 

Section 1.2           Additional Definitions. The following capitalized terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each of the capitalized terms below:

 

  

Term		Section Reference
102 Amounts		Section 2.8(d)(i)
Agreement		Preamble
Alternative Acquisition Agreement		Section 5.3(b)
Approval		Section 3.5
Assignee		Section 10.3
Book-Entry Shares		Section 2.8(c)(ii)
Buyer		Recitals
Capitalization Date		Section 3.6(a)
Certificate of Merger		Section 2.3
Certificates		Section 2.8(c)
Charter Documents		Section 3.1
Closing		Section 2.2
Closing Date		Section 2.2
Code		Section 2.8(f)
Collective Bargaining Agreement		Section 3.17(a)
Companies Registrar		Section 2.3
Company		Preamble
Company 102 Options		Section 2.8(d)(i)
Company 102 PSUs		Section 2.8(d)(i)
Company ▇▇▇ ▇▇▇▇		Section 2.8(d)(i)
Company 102 Securities		Section 2.8(d)(i)
Company 102 Shares		Section 2.8(b)
Company Board Recommendation		Section 7.3(a)
Company Board Recommendation Change		Section 5.3(b)
Company Designated Directors		Section 6.5
Company Disclosure Letter		Article III
Company Plans		Section 6.2(c)
Company Reports		Section 3.8(a)
Company Securities		Section 3.6(b)
Company Shareholder Approval		Section 3.2
Company Shareholders Meeting		Section 7.3(a)
Company Shares		Section 2.7(a)
Confidentiality Agreement		Section 7.8
consolidated financial statements		Section 3.9(a)
Copyrights		Section 1.1
D&O Insurance		Section 6.1(c)
Designs		Section 1.1
Effective Time		Section 2.3
Employee Plans		Section 3.16(a)
Exchange Fund		Section 2.8(b)
FCPA		Section 3.19(b)
FDA		Section 3.19(c)
IAA		Section 7.2(a)
ICL		Recitals
Indemnified Persons		Section 6.1(a)
Information Agent		Section 2.8(a)
Interim Option Tax Ruling		Section 7.9(a)
Intervening Event Recommendation Change Notice		Section 5.3(d)

 

 

Inventions		Section 1.1
Israeli Employee		Section 3.17(d)
Israeli Employees		Section 3.17(d)
IT Systems		Section 3.14(i)
ITA		Section 2.8(f)
Joint Venture Interests		Section 3.7(f)
Leased Real Property		Section 3.13(b)
Leases		Section 3.13(b)
Letter of Transmittal		Section 2.8(c)
Material Contract		Section 3.12
Material Employee Plans		Section 3.16(a)
Maximum Annual Premium		Section 6.1(c)
Merger		Recitals
Merger Consideration		Section 2.7(a)
Merger Proposal		Section 7.4(a)
Merger Sub		Preamble
Notice Date		Section 7.3(a)
OECD Convention		Section 3.19(b)
Option Consideration		Section 2.7(c)
Options Tax Ruling		Section 7.9(a)
Outside Date		Section 9.1(c)
Parent		Preamble
Parent Plans		Section 6.2(c)
Patents		Section 1.1
Paying Agent		Section 2.8(a)
Permits		Section 3.18(a)
Prohibited Payment		Section 3.19(b)
Proxy Statement		Section 7.3(a)
PSUs Consideration		Section 2.7(d)
Recommendation Change Notice		Section 5.3(d)
Registered Intellectual Property		Section 3.14(a)
Related Party		Section 3.23
Reporting Tail Endorsement		Section 6.1(c)
RSUs Consideration		Section 2.7(d)(i)
Section 102 Plan		Section 3.16(g)
Subsidiary Securities		Section 3.7(d)
Surviving Company		Section 2.1
Tax Returns		Section 3.15(a)
Termination Fee		Section 9.3(b)(i)
Trade Control Laws		Section 3.19(d)
Trade Secrets		Section 1.1
Trademarks		Section 1.1
Transition Period SEC Report		Section 7.10(b)
Uncertificated Shares		Section 2.8(c)(ii)
Withholding Drop Date		Section 2.8(f)
Withholding Tax Ruling		Section 7.9(b)
Works of Authorship		Section 1.1

 

 

Section 1.3         Certain Interpretations.

 

(a)          Unless otherwise indicated, all references herein to Articles, Sections, Annexes, Exhibits or Schedules, shall be deemed to refer to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

 

(b)          Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”

 

(c)          The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.

 

(d)          Unless otherwise indicated or the context otherwise requires, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person.

 

(e)          Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

 

(f)          Any dollar or percentage thresholds set forth herein shall not be used as a benchmark for the determination of what is or is not “material” or a “Company Material Adverse Effect” under this Agreement.

 

(g)          Unless otherwise indicated, the terms “Dollars” and “$” mean U.S. dollars. Unless otherwise indicated, the term “NIS” means Israeli New Shekels.

 

(h)          When used herein, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not simply mean “if.”

 

(i)          The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

 

 

Article II

THE MERGER

 

Section 2.1          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 (the “Surviving Company”) and shall (a) become a wholly-owned direct Subsidiary of Buyer, (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 2.2          The Closing. Unless this Agreement shall have been terminated in accordance with Article IX, the closing of the Merger (the “Closing”) will occur at the offices of ▇▇▇▇▇▇, ▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Israel, at 9:00 a.m. (local time) not later than on the second (2^nd) Business Day following the date on which each of the conditions set forth in Article VIII 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 at such other time, date and location as the parties hereto shall mutually agree in writing. The date on which the Closing occurs is referred to herein as the “Closing Date”.

 

Section 2.3          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 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 (the time at which the Merger becomes effective is referred to herein as the “Effective Time”). 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.

 

 

Section 2.4          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, (a) Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Company, (b) all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Company, (c) all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Company, and (d) 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 2.5          Articles of Association. 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, subject to the provisions of Section 6.1, until such Articles of Association are duly amended as provided therein, herein and by applicable Law.

 

Section 2.6          Directors and Officers. 

 

(a)          Directors. The parties shall take all actions necessary so that the directors of Merger Sub at the Effective Time and the Company Designated Directors shall, from and after the Effective Time, be appointed and serve as the directors of the Surviving Company until, subject to Section 6.5, the earlier of their death, 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 individuals set forth on Section 2.6(b) of the Company Disclosure Letter shall be the officers of the Surviving Company, until the earlier of their death, resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.

 

Section 2.7          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 Shares. Each ordinary share, par value NIS 0.645 per share, of the Company (collectively, the “Company Shares”) issued and outstanding immediately prior to the Effective Time, other than Company Shares canceled pursuant to Section 2.7(a)(ii), shall automatically be converted into and represent the right to receive One Hundred Forty-Four Dollars (US $144.00) in cash (the “Merger Consideration”), without interest and less applicable withholding Taxes pursuant to Section 2.8(f), upon the surrender of such Company Share in the manner provided in Section 2.8 (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit in the manner provided in Section 2.10). The amount of cash each Effective Time Holder is entitled to receive shall be rounded up to the nearest cent, and computed after aggregating all cash amounts for all Company Shares held by such Effective Time Holder.

 

 

(ii)         Parent-Owned Shares and Shares Held in Treasury. Each Company Share held in the treasury of the Company or owned by Parent or any direct or indirect wholly-owned Subsidiary of the Company or 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, par value one Israeli Agora (NIS 0.01) per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically and without further action converted into one (1) validly issued, fully paid and nonassessable ordinary share, par value one Israeli Agora (NIS 0.01) per share, of the Surviving Company and all 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 stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Shares), reclassification, combination, exchange of shares or other like change with respect to Company 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 Shares the same economic effect as contemplated by this Agreement prior to such action.

 

(c)          Company Options.

 

(i)          Subject to Section 2.7(c)(ii) below, at the Effective Time, by virtue of the Merger, each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) equal to the product of (A) the excess, if any, of (1) the Merger Consideration over (2) the exercise price per Company Share for such Company Option and (B) the total number of shares underlying such Company Option (the “Option Consideration”), less applicable withholding Taxes pursuant to Section 2.8(f). From and after the Effective Time, all Company Options shall no longer be outstanding and shall cease to exist, and each holder of a 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 Share for any Company Option is equal to or greater than the Merger Consideration, such Company Option shall be canceled without payment of consideration.

 

(ii)         With respect to Company Options that are outstanding but unvested immediately prior to cancellation of such unvested Company Options at the Effective Time as provided herein, the vesting schedule thereof shall, immediately prior to the Effective Time, be accelerated, such that all outstanding Company Options at such time shall become vested.

 

 

(iii)        Prior to the Effective Time, the Company shall adopt resolutions and use reasonable best efforts to take other actions that are necessary under the Company Share Plans and/or award agreements (including providing Company Optionholders with notice of their rights with respect to any such Company Options as provided herein and/or seeking such Company Optionholders’ consents, in each case to the extent required by the terms of the applicable Company Share Plans or award agreements) to effectuate the provisions of this Section 2.7(c).

 

(iv)        The amount of cash each Company Optionholder is entitled to receive for the Company Options held by such holder pursuant to Section 2.7(c)(i) above shall be rounded up to the nearest cent and computed after aggregating cash amounts for all Company Options held by such holder.

 

(v)         As of the Effective Time, the Company Share 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 and Company PSUs.

 

(i)          At the Effective Time, by virtue of the Merger, each outstanding Company RSU outstanding immediately prior to the Effective Time, whether or not vested, shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) (provided, that such lump sum payment may be delayed in order to not trigger Taxes under Code Section 409A) equal to the product of (A) the Merger Consideration and (B) the number of Company Shares subject to such Company RSUs (the “RSUs Consideration”), less applicable withholding Taxes pursuant to Section 2.8(f), and paid in accordance with the applicable terms and conditions of such Company RSU and Code Section 409A. From and after the Effective Time, all Company RSUs shall no longer be outstanding and shall automatically 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)         With respect to Company RSUs that are outstanding but unvested immediately prior to cancellation of such unvested Company RSUs at the Effective Time as provided herein, the vesting schedule thereof shall, immediately prior to the Effective Time, be accelerated, such that all outstanding Company RSUs at such time shall become vested.

 

(iii)        At the Effective Time, by virtue of the Merger, each Company PSU outstanding immediately prior to the Effective Time, that vests pursuant to the terms of the applicable grant agreement shall be accelerated and become immediately vested, and shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) (provided, that such lump sum payment may be delayed in order not to trigger Taxes under Code Section 409A) equal to the product of (A) the Merger Consideration and (B) the number of Company Shares subject to such Company PSU (the “PSUs Consideration”), less applicable withholding Taxes pursuant to Section 2.8(f), and paid in accordance with the applicable terms and conditions of such Company PSU and Code Section 409A. Each Company PSU that does not vest in accordance with the applicable grant agreement shall be cancelled. From and after the Effective Time, all Company PSUs shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company PSU shall cease to have any rights with respect thereto or arising therefrom, except the right to receive the PSUs Consideration payable hereunder.

 

 

(iv)        Prior to the Effective Time, the Company shall adopt resolutions and use reasonable best efforts to take other actions that are necessary under the Company Share Plans and/or award agreements (including providing Company RSUs Holders and Company PSUs Holders with notice of their rights with respect to any such Company RSUs or Company PSUs (as applicable) as provided herein and/or seeking such Company RSUs Holders’ or Company PSUs Holders’ consents, in each case to the extent required by the terms of the applicable Company Share Plans or award agreements) to effectuate the provisions of this Section 2.7(d).

 

(v)         The amount of cash each Company RSUs Holder and Company PSU Holder is entitled to receive for the Company RSUs or Company PSUs held by such holder pursuant to Section 2.7(d)(i) and Section 2.7(d)(iii) above shall be rounded up to the nearest cent and computed after aggregating cash amounts for all Company RSUs and Company PSUs held by such holder.

 

Section 2.8           Payment Procedures.

 

(a)          Paying Agent. Prior to the Effective Time (but in no event later than three (3) Business Days prior to the Closing Date), Parent shall select (i) 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 reasonably satisfactory to the Company and Parent; and (ii) to the extent necessary in light of the provisions of the Withholding Tax Ruling, an information agent reasonably acceptable to the Company and Parent (the “Information Agent”) to assist in obtaining any requisite residency certificate and/or other declaration for Israeli Tax withholding purposes and/or a Valid Tax Certificate, as applicable, and, in connection therewith, shall enter into an agreement with the Information Agent in a form reasonably satisfactory to the Company.

 

(b)          Exchange Fund. On the Closing Date, Parent shall deposit (or cause to be deposited) with the Paying Agent, for payment to the holders of Company Shares (excluding Company Shares issued upon exercise of Company 102 Options or vesting of Company 102 RSUs and Company 102 PSUs (“Company 102 Shares”) in respect of which payment shall be transferred directly to the 102 Trustee) pursuant to the provisions of this Article II, an amount of cash equal to the aggregate consideration to which such holders of Company Shares become entitled under this Article II (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. 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 2.7(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 2.7(a)(i).

 

 

(c)          Payment Procedures with respect to Company Shares.

 

(i)          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 a certificate or certificates (the “Certificates”) which immediately prior to the Effective Time represented outstanding Company Shares whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.7(a)(i) (other than Company 102 Shares), (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 Tax Certificate (or such other forms as are required under any applicable Tax Law) in which the beneficial owner of Company 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 foreign Law, and/or (C) instructions (including instructions from the Paying Agent) for use in effecting the surrender of the Certificates 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 Tax Certificate (and such other documents as may reasonably be required by the Paying Agent or Parent consistent with customary practice), 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 2.7(a)(i) (less any applicable withholding Taxes pursuant to Section 2.8(f)), and the Certificates so surrendered shall forthwith be canceled.

 

 

(ii)         Promptly following the Effective Time, Parent and the Surviving Company shall (A) cause the Paying Agent to mail to each holder of uncertificated Company Shares registered in the Company’s electronic direct registration system immediately prior to the Effective Time (the “Uncertificated Shares”) whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.7(a)(i) (other than Company 102 Shares) and (B) cause the Information Agent to mail to each holder of Company Shares held in a book-entry account that immediately prior to the Effective Time represented any uncertificated Company Shares held of record by The Depository Trust Company (the “Book-Entry Shares”), in each case, whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.7(a)(i) (other than Company 102 Shares), a declaration and/or a Valid Tax Certificate (or such other forms as are required under any applicable Tax Law) in which the beneficial owner of Company 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 foreign Law. No holder of Uncertificated Shares or Book-Entry Shares shall be required to deliver a Certificate or an executed Letter of Transmittal to the Paying Agent to receive the Merger Consideration that such holder is entitled to receive pursuant to Section 2.7(a)(i). Upon delivery to the Paying Agent of the declaration for Tax withholding purposes and/or a Valid Tax Certificate (and such other documents as may reasonably be required by the Paying Agent or Parent consistent with customary practice), duly completed and validly executed in accordance with the instructions thereto, the holders of such Uncertificated Shares or Book-Entry 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 2.7(a)(i) (less any applicable withholding Taxes pursuant to Section 2.8(f)), and the transferred Uncertificated Shares and Book-Entry Shares so surrendered shall forthwith be canceled. The Paying Agent shall accept such Certificates, transferred Uncertificated Shares and Book-Entry Shares upon compliance with such reasonable terms and conditions as the Paying Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. No interest shall be paid or accrued for the benefit of holders of the Certificates, Uncertificated Shares and Book-Entry Shares on the Merger Consideration payable upon the surrender of such Certificates, Uncertificated Shares and Book-Entry Shares pursuant to this Section 2.8. Until so surrendered, outstanding Certificates, Uncertificated Shares and Book-Entry 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 who is a record holder of a Certificate 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) and an executed Letter of Transmittal for payment in accordance with this Section 2.8(c). Payments and deliveries to be made under this Agreement shall be made in U.S. 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 2.8(c), 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 2.8(c) (including, if applicable, 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.

 

 

(d)          Payment Procedures With Respect to Company Options, Company RSUs and Company PSUs.

 

(i)          On the Closing Date, Parent shall transfer (A) the aggregate Option Consideration with respect to Company Options subject to Section 102(b)(2) and Section 102(b)(3) of the Ordinance (the “Company 102 Options”), (B) the aggregate RSUs Consideration with respect to Company RSUs granted under Section 102(b)(2) and Section 102(b)(3) of the Ordinance (the “Company 102 RSUs”) and (C) the aggregate PSUs Consideration with respect to Company PSUs granted and subject to Taxes under Section 102(b)(2) and Section 102(b)(3) of the Ordinance (the “Company 102 PSUs” and, together with the Company 102 Options and the Company 102 RSUs, the “Company 102 Securities”), to the 102 Trustee, on behalf of holders of Company 102 Options, Company 102 RSUs and Company 102 PSUS, as the case may be, in accordance with Section 102 of the Ordinance and the Option 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 Option 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 Option Tax Ruling, if obtained.

 

(ii)         On the Closing Date, Parent shall promptly deposit the aggregate amount of funds payable in respect of Company Options, Company RSUs and Company PSUs (in each case, other than Company 102 Securities) pursuant to Section 2.7 with the Company at one or more accounts designated by the Company prior to Closing for the benefit of the holders of Company Options, Company RSUs and Company PSUs (in each case, other than Company 102 Securities), which amounts shall be paid by the Company to the respective holders thereof through the Company’s payroll system, subject to applicable withholdings.

 

(e)          Transfers of Ownership. In the event that a transfer of ownership of Company Shares is not registered in the stock 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, Uncertificated Shares or Book-Entry Shares surrendered in exchange therefor are registered in the stock 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, Uncertificated Share or Book-Entry Share so surrendered is registered in the stock transfer books or ledger of the Company only if such Certificate, Uncertificated Shares or Book-Entry Shares is 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 or other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of such Certificate, Uncertificated Shares or Book-Entry Shares, or established to the satisfaction of Parent (or any agent designated by Parent) that such Taxes have been paid or are otherwise not payable.

 

 

(f)          Withholding. Notwithstanding anything to the contrary hereunder, each of Parent, its Subsidiaries, the Company, its Subsidiaries, the Surviving Company, the 102 Trustee and 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 2.7(c) (Company Options) or Section 2.7(d) (Company RSUs)) and any consideration otherwise deliverable under this Agreement such amounts as each of Parent, the Company, the Paying Agent or any of their Affiliates or agents determines it may be required to deduct and withhold 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 Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “Code”), the Ordinance, or under any provision of applicable state, local, Israeli or non-Israeli Tax Law. To the extent amounts are so withheld and paid over to the appropriate Governmental Authority, 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. Notwithstanding the foregoing provisions and subject to any other provision to the contrary in the Withholding Tax Ruling, with respect to Israeli Taxes, the consideration payable to each Company Shareholder shall be retained by the Paying Agent for the benefit of each such Company Shareholder for a period of up to 180 days from Closing (the “Withholding Drop Date”), unless Parent or Paying Agent is otherwise instructed explicitly by the Israel Tax Authority (the “ITA”) (during which time no Payor shall make any payments to any Company Shareholder and withhold any amounts for Israeli Taxes from the payments deliverable pursuant to this Agreement, except as provided below and during which time each Company Shareholder may obtain a Valid Tax Certificate). If a Company Shareholder delivers, no later than three (3) Business Days prior to the Withholding Drop Date a Valid Tax Certificate to a 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 Company Shareholder concurrently therewith subject to any non-Israeli withholding which is applicable to the payment (if any). If any Company Shareholder (i) does not provide Payor with a Valid Tax Certificate, by no later than three (3) Business Days before the Withholding Drop Date, or (ii) submits a written request with Payor to release his 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 Company Shareholder’s portion of the consideration shall be calculated according to the applicable withholding rate as reasonably ‎determined by Parent which amount shall be increased by the interest plus linkage differences as defined in Section 159A of the Israeli Tax Ordinance for the time period between the fifteenth (15^th) 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.

 

(g)          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 Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

 

(h)          Distribution of Exchange Fund to Parent. Any portion of the Exchange Fund that remains undistributed to the holders of the Certificates, Uncertificated Shares or Book-Entry 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 Shares that were issued and outstanding immediately prior to the Merger who have not theretofore surrendered their Certificates, Uncertificated Shares or Book-Entry Shares representing such Company Shares for exchange pursuant to the provisions of this Section 2.8 shall thereafter look solely to Parent, and subject to the terms herein, Parent shall remain liable for payment of the Merger Consideration, without interest, payable in respect of the Company Shares represented by such Certificates, Uncertificated Shares or Book-Entry Shares, as general creditors thereof, for any claim to the applicable Merger Consideration to which such holders may be entitled pursuant to the provisions of this Article II.

 

Section 2.9           No Further Ownership Rights in Company Shares. From and after the Effective Time, all Company Shares shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Certificate, Uncertificated Shares and Book-Entry Shares theretofore representing any Company 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 Section 2.8. The Merger Consideration paid in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Shares. From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Company of Company 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, Uncertificated Shares or Book-Entry Shares are presented to the Surviving Company for any reason, they shall be canceled and exchanged as provided in this 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 a reasonable and customary agreement by such holder to indemnify and hold harmless Parent from and against any losses in connection therewith but, except as may be required by the Paying Agent, without requirement to post a bond (such affidavit to be in a form attached to the Letter of Transmittal). Delivery of such affidavit and agreement shall be deemed delivery of a Certificate with respect to the relevant Company Shares for purposes of this Article II.

 

Section 2.11         No Interest. No interest shall accumulate on any amount payable in respect of any Company Shares, Company Options, Company PSUs or Company RSUs in connection with the Merger.

 

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 Shareholders to take, and Parent shall, and shall cause the Surviving Company to take, all such lawful and necessary action.

 

 

Article III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as (a) set forth in the disclosure schedule delivered by the Company to Parent on the date of this Agreement (the “Company Disclosure Letter”), or (b) set forth in any Company Report filed with, or furnished to (and publicly available), the SEC by the Company since January 1, 2016 and at least one (1) Business Day prior to the date hereof (including all amendments thereto filed at least one (1) Business Day prior to the date hereof), or incorporated by reference into any such document (excluding in each case any disclosure under the headings “Risk Factors” or “Special Note Regarding Forward-Looking Information” or any disclosures that are similarly forward-looking, predictive or cautionary in nature), the Company hereby represents and warrants to Parent and Merger Sub as follows:

 

Section 3.1           Organization; Good Standing. The Company is a corporation duly organized and validly existing under the laws of the State of Israel, and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease, operate or otherwise hold its properties and assets. The Company is duly qualified to do business and is in good standing (to the extent either such concept is recognized under applicable Law) in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has delivered or made available to Parent a complete and correct copy of the articles of association, as amended to date, of the Company (the “Charter Documents”) and the Company is not in default in the performance, observation or fulfillment of such documents other than any such default that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.2           Corporate Power; Enforceability. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its covenants and obligations hereunder and, subject to obtaining the approval of this Agreement by holders of a majority of the Company Shares voted at the Company Shareholders Meeting (in person or by proxy) (not counting any absentee votes) (the “Company Shareholder Approval”), to consummate the transactions contemplated hereby. The execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder or the consummation of the transactions contemplated hereby, other than (assuming the accuracy of the representations and warranties in Section 4.7 below) obtaining the Company Shareholder Approval for the consummation of transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company, and this Agreement constitutes, assuming the due authorization, execution and delivery by the other parties thereto, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally, and (b) is subject to general principles of equity.

 

 

Section 3.3           Board and Shareholders Actions.

 

(a)          At a meeting duly called and held prior to the execution of this Agreement in compliance with the requirements of ICL and the Charter Documents, the Company Board has unanimously (i) determined that this Agreement, the Merger and the other transactions contemplated hereby are fair to, and in the best interests of, the Company and the Company Shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the Surviving Company will be unable to fulfill the obligations of the Company to its creditors, (ii) approved this Agreement, the Merger and the other transactions contemplated hereby, and (iii) subject to the provisions of this Agreement, resolved to recommend that the Company Shareholders vote for the approval of this Agreement, the Merger and the other transactions contemplated hereby.

 

(b)          Assuming the receipt of the Company Shareholder Approval, no other vote of holders of Company Shares is necessary in order to approve and adopt this Agreement and the Merger under the ICL and the Charter Documents.

 

Section 3.4           Non-Contravention. The execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder and the consummation by the Company of the transactions contemplated hereby do not and will not (a) contravene, violate or conflict with or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration or a right to challenge the transactions contemplated hereby under, result in a loss of a material benefit under, give rise to increased, additional, accelerated or guaranteed rights or entitlements of any Person under, (i) the Charter Documents of the Company, (ii) the charter, bylaws or other constituent documents of any of the Company’s Subsidiaries, (iii) any Material Contract, or (iv) assuming the Approvals referred to in Section 3.5 of this Agreement are obtained or made and subject to obtaining the Company Shareholder Approval (assuming the accuracy of the representations and warranties in Section 4.7 below), any material Law applicable to the Company or any of its Subsidiaries or by which any of their properties or assets are bound, or (b) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (a)(iii) and (b) above, for such violations, conflicts, defaults, terminations, accelerations or Liens which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

 

Section 3.5           Required Governmental Approvals. No consent, clearance, approval, Order or authorization of, or filing or registration with, or expiration or termination of any waiting period required by, or notification to (any of the foregoing being referred to herein as an “Approval”), any Governmental Authority is required on the part of the Company or any of its Subsidiaries in connection with the execution or delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder and the consummation by the Company of the transactions contemplated hereby, other than (a) the Investment Center Approval, (b) the ▇▇▇ Approval, (c) Approval under the HSR Act and other applicable Antitrust Laws, (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, (e) the filings and other Approvals as may be required under the Exchange Act or Israeli Securities Law, (f) the filings and other Approvals as may be required under the rules and regulations of Nasdaq and TASE, (g) receipt of the Options Tax Ruling and the Withholding Tax Ruling, (h) such filings and other Approvals as may be required solely by reason of Parent’s or Merger Sub’s (as opposed to any third party’s) participation in the Merger or the other transactions contemplated hereby, and (i) such other Approvals the failure of which to make or obtain, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

Section 3.6           Company Capitalization.

 

(a)          The registered (authorized) share capital of the Company consists of NIS 54,000,000 Company Shares, NIS 0.645 par value per share. At the close of business on August 17, 2018 (the “Capitalization Date”), (i) 22,710,497 Company Shares were issued and outstanding, (ii) no Company Shares were held by the Company in its treasury, (iii) no Company Shares were held by any direct or indirect Subsidiary of the Company, and (iv) there were outstanding Company Options to purchase 372,091 Company Shares, 435,789 outstanding Company RSUs, 160,000 outstanding Company PSUs and 619,660 Company Shares reserved for future grants under the Company Share Plans. Except as set forth above, at the close of business on the Capitalization Date, no shares or other voting securities of the Company were issued, reserved for issuance or outstanding. All outstanding Company Shares are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized, validly issued, fully paid, nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive rights, subscription right or any similar right under any provision of the ICL, the Charter Documents or any Contract to which the Company is otherwise bound. Since the Capitalization Date, the Company has not (x) issued any Company Shares, Company Options, Company PSUs or Company RSUs or other securities or rights to acquire Company Shares or other rights that give the holder thereof any economic benefit accruing to the holders of any Company Shares, other than pursuant to the exercise of Company Options or vesting and settlement of Company RSUs or Company PSUs outstanding as of the date hereof or as permitted by Section 5.1(b), or (y) granted, committed to grant or otherwise created or assumed any obligation with respect to any Company Options, Company PSUs or Company RSUs, other than as permitted by Section 5.1(b).

 

 

(b)          Section 3.6(b) of the Company Disclosure Letter lists each Company Option, Company PSU and Company RSU outstanding as of the Capitalization Date, the Company Share Plan under which such Company Option, Company PSU or Company RSU was issued, whether such Company Option, Company PSU or Company RSU is currently intended to qualify as a nonqualified stock option or incentive stock option pursuant to the Code, or otherwise, the name of the holder thereof, the residence of such holder, the grant date, expiration date, the number of Company Shares issuable thereunder, the exercise price, whether each such Company Option, Company RSU or Company PSU was granted and is subject to Tax pursuant to Section 3(i) of the Israeli Income Tax Ordinance or Section 102 of the Israeli Income Tax Ordinance and the applicable sub-section of Section 102 of the Ordinance, and for Company 102 Options, Company 102 RSUs and Company 102 PSUs the date of deposit of such Company Option with the 102 Trustee, including, only with respect to grants following July 24, 2012, also the date of deposit of the applicable board resolution and the date of deposit of the respective option agreement with the 102 Trustee. Except as set forth in this Section 3.6 (for the avoidance of doubt, including as contemplated by the last sentence of Section 3.6(a)), there are (i) no outstanding shares of, or other equity or voting interest in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of, or other equity or voting interest in, the Company, (iii) no outstanding options, warrants, rights or other commitments or agreements to acquire from the Company, or that obligates the Company to issue, any shares of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of, or other equity or voting interest in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any shares of, or other equity or voting interest (including any voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv), together with the share capital of the Company, Company Options, Company PSUs and Company RSUs, being referred to collectively as “Company Securities”) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. Neither the Company nor any of its Subsidiaries is a party to any Contract which obligates the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities, except in connection with the repurchase or acquisition of Company Shares pursuant to the terms of Company Share Plans.

 

(c)          Neither the Company nor any of its Subsidiaries is a party to any agreement relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any securities of the Company or any of its Subsidiaries.

 

Section 3.7           Subsidiaries.  

 

(a)          Section 3.7(a) of the Company Disclosure Letter contains a complete and accurate list of the name, jurisdiction of organization and capitalization of each Subsidiary of the Company.

 

 

(b)          Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its respective organization (to the extent either such concept is recognized under applicable Law), except where the failure to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each of the Company’s Subsidiaries has the requisite corporate power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate or otherwise hold its respective properties and assets. Each of the Company’s Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent either such concept is recognized under applicable Law), except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(c)          All of the outstanding share capital of, or other equity or voting interest in, each Subsidiary of the Company (i) has been duly authorized, validly issued and are fully paid and nonassessable and (ii) is owned, directly or indirectly, by the Company, free and clear of all Liens (other than Liens under applicable securities Laws).

 

(d)          There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of, or other equity or voting interest in, any Subsidiary of the Company, (ii) options, warrants, rights or other commitments or agreements to acquire from the Company or any of its Subsidiaries, or that obligate the Company or any of its Subsidiaries to issue, any share capital of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of, or other equity or voting interest in, any Subsidiary of the Company, (iii) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any share capital of, or other equity or voting interest (including any voting debt) in, any Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the share capital of the Subsidiaries of the Company, being referred to collectively as “Subsidiary Securities”), or (iv) other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any shares of any Subsidiary of the Company. Neither the Company nor any of its Subsidiaries is a party to any Contract which obligates the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.

 

(e)          None of such Subsidiaries is in default in any material respect in the performance, observation or fulfillment of its charter and other material organizational documents, other than any such default that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(f)          Section 3.7(f) of the Company Disclosure Letter sets forth, a true and complete list of all share capital, membership interests, partnership interests, Joint Venture Interests and other equity interests in any Person (other than a Subsidiary of the Company) owned, directly or indirectly, by the Company or any Subsidiary of the Company as of the date of this Agreement. The term “Joint Venture Interests” means interests in any corporation or other entity (including partnership, limited liability company and other business association) that is not a Subsidiary of the Company and in which the Company or one or more of its Subsidiaries owns an equity interest (other than equity interests held for passive investment purposes which are less than five percent (5%) of any class of the outstanding voting securities or other equity of any such entity).

 

 

Section 3.8          Company Reports.

 

(a)          Since January 1, 2016, the Company has filed all forms, reports and documents with the SEC, the TASE and the ISA that have been required to be filed by it under applicable Laws prior to the date hereof (all such forms, reports and documents, together with all documents filed or furnished on a voluntary basis and all exhibits and schedules thereto, the “Company Reports”). As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), (i) each Company Report complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and/or Israeli Securities Law, as the case may be, each as in effect on the date such Company Report was filed, and (ii) each Company Report did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. None of the Company’s Subsidiaries is required to file or furnish any forms, reports or other documents with the SEC, the TASE or the ISA. No executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with respect to any Company Report, except as disclosed in certifications filed with the Company Reports. To the Knowledge of the Company, none of the Company Reports is the subject of ongoing SEC, TASE or ISA review or investigation.

 

(b)          As of the date of this Agreement, the Company is a “foreign private issuer” as such term is defined under the Exchange Act.

 

(c)          Each Transition Period SEC Report (as defined in Section 7.10(b)) filed or furnished by the Company with or to the SEC prior to the Effective Time shall (i) not 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 made therein, in the light of the circumstances under which they were made, not misleading and (ii) comply in all material respects with the applicable provisions of the Exchange Act.

 

Section 3.9          Company Consolidated Financial Statements.  

 

(a)          The audited consolidated financial statements of the Company and its Subsidiaries (including all notes thereto) included in the Company Reports filed with the SEC (the “consolidated financial statements”) (i) have been prepared in accordance with IFRS consistently applied during the periods and at the dates involved (except as may be indicated in the notes thereto or as otherwise permitted), and (ii) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations, cash flows, comprehensive income/(loss) and changes in shareholders’ equity for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end adjustments). No financial statements of any Person other than the Company and the Company’s Subsidiaries are required by IFRS to be included in the consolidated financial statements of the Company.

 

 

(b)          The Company and its Subsidiaries maintain “disclosure controls and procedures” (as such terms are defined in Rule 13a-15 under the Exchange Act) that satisfy the requirements of Rule 13a-15 under the Exchange Act. Such disclosure controls and procedures are designed to provide reasonable assurance that all material information concerning the Company (including its Subsidiaries) and required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is made known on a timely basis to the individuals responsible for the preparation of the Company Reports filed with the SEC.

 

(c)          The Company maintains a system of internal accounting controls which is designed to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of consolidated financial statements in conformity with IFRS and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(d)          Since January 1, 2016, the Company’s principal executive officer and its principal financial officer have disclosed to the Company’s auditors and the audit committee of the Company Board, based on such officers’ most recent evaluation to the date of this Agreement, (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as such term is defined in paragraph (f) of Rule 13a-15 under the Exchange Act), which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information of the Company and its Subsidiaries on a consolidated basis and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company and its Subsidiaries’ internal controls over financial reporting (as such term is defined in paragraph (f) of Rule 13a-15 under the Exchange Act).

 

(e)          As of the date hereof, (i) there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to the Company Reports filed with the SEC, and, (ii) to the Knowledge of the Company, there are no SEC inquiries or investigations or other governmental inquiries or investigations pending, in each case regarding any accounting practice of the Company. The Company is in compliance in all material respects with (i) the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the Exchange Act and (ii) the applicable listing and corporate governance rules and regulations of Nasdaq and the TASE and the corporate governance and other requirements of the ICL.

 

(f)          Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC)), where the purpose of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s or such Company’s Subsidiary’s published consolidated financial statements or any Company Reports filed with the SEC.

 

 

Section 3.10       No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any liabilities or obligations (whether or not such liabilities or obligations are of a nature required to be reflected or reserved against on a balance sheet prepared in accordance with IFRS or in the notes thereto), other than (a) Liabilities reflected, accrued or otherwise reserved against in the Company Balance Sheet or in the consolidated financial statements and notes thereto of the Company and its Subsidiaries included in the Company Reports filed prior to the date of this Agreement, (b) Liabilities arising under this Agreement or incurred in connection with the transactions contemplated by this Agreement, (c) Liabilities incurred since the Company Balance Sheet Date in the ordinary course of business consistent with past practice and (d) Liabilities that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.11       Absence of Certain Changes.  Since the Company Balance Sheet Date through the date hereof (a) except for actions taken or not taken in connection with the transactions contemplated by this Agreement, the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice, (b) neither the Company nor any of its Subsidiaries has taken any action that, if taken after the date hereof, would constitute a breach of or require a consent under Sections 5.1(b)(i)-(xi), (b)(xvii) or (b)(xxi) (with respect to the foregoing specified clauses) (Interim Conduct of Business), and (c) there has not been or occurred, and no circumstances have existed or exist that constitute or would reasonably be expected to result in, a Company Material Adverse Effect.

 

Section 3.12       Material Contracts.  

 

(a)          For all purposes of and under this Agreement, a “Material Contract” shall mean:

 

(i)          any “material contract” listed as an exhibit to the Company’s annual report on Form 20-F for the year ending December 31, 2017;

 

(ii)         any Contract with a natural person either as an employee or an independent contractor (in each case, under which the Company or any of its Subsidiaries has continuing obligations as of the date hereof) that carries an aggregate annual base salary in excess of $200,000 per annum (excluding Contracts for “at-will” relationships or that are terminable by the Company or the applicable Subsidiary at its discretion, by notice of not more than ninety (90) days for a cost of less than $200,000);

 

 

(iii)        any currently effective non-statutory severance, termination, golden parachute, change-of-control or similar agreement with any current or former director or officer of the Company or any of its Subsidiaries;

 

(iv)        any Contract relating to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any of the Company’s share capital or other securities or any options, warrants or other rights to purchase or otherwise acquire any Company Shares, other securities or options, warrants or other rights therefor, except for the organizational document of the Company or of any Subsidiary of the Company or those Contracts under a Company Share Plan;

 

(v)         collective bargaining agreement or similar material Contract with any labor organization, council, union or association;

 

(vi)        Contract with (A) any current or former officer or director of the Company or any of their immediate family members (other than any Employee Plans), or (B) any “controlling shareholder” of the Company (as defined in the ICL);

 

(vii)       any Contract providing for Governmental Grants from any Governmental Authority;

 

(viii)      any Contract to which the Company or any of its Subsidiaries is a party that (A) contains any covenant by the Company or any of its Subsidiaries to not compete or engage in any line of business or to not engage in its business in any geographic location, or (B) restricts the development, manufacture, marketing or distribution of the products and services of the Company or any of its Subsidiaries, including any Contract with any Person granting such Person the exclusive right in any territory to sell or distribute any product, or other Contract providing “most favored nations” pricing terms for products, in each case, with respect to this clause (B), that is material to the Company and its Subsidiaries, taken as a whole;

 

(ix)         any Contract entered into after December 31, 2015 (A) relating to the disposition, acquisition or lease (directly or indirectly) by the Company or any of its Subsidiaries of a material amount of assets other than in the ordinary course of business consistent with past practice, (B) pursuant to which the Company or any of its Subsidiaries will acquire or has acquired any material interest in any other Person (other than the Company or any of its Subsidiaries) or other business enterprise for an amount in excess, in the aggregate, of $5,000,000, or (C) for the acquisition or disposition of any business and such Contract contains any profit sharing arrangements or “earn-out” arrangements or other contingent payment obligations under which obligations are continuing, in each case of the foregoing clauses (A), (B) and (C), with any outstanding material obligations of the Company and its Subsidiaries (taken as a whole) as of the date of this Agreement;

 

(x)          any Contract (including any so called take-or-pay or keepwell agreements) under which the Company or any of its Subsidiaries has directly or indirectly guaranteed Indebtedness for borrowed money, liabilities or obligations of any other Person (other than a Subsidiary of the Company) in excess of $1,000,000 (in each case other than endorsements for the purpose of collection in the ordinary course of business consistent with past practice);

 

 

(xi)         any Contract under which the Company or any of its Subsidiaries has, directly or indirectly, made any advance, loan, extension of credit or capital contribution to, or other investment in, any Person (other than the Company or any of its Subsidiaries) in excess of $1,000,000 (other than extensions of trade credit in the ordinary course of business consistent with past practice), excluding any cylinder loan Contracts entered into with retailers in the ordinary course of business;

 

(xii)        any Contract granting any Person a right of first refusal or first negotiation with respect to any sale of the Company or substantially all of its shares or assets;

 

(xiii)       any Contract imposing “standstill” obligations on the Company or any of its Subsidiaries;

 

(xiv)      any Contract that contains a license in respect of Intellectual Property that is material to the business of the Company and its Subsidiaries, taken as a whole (except for (A) licenses of commercially available, off-the-shelf, click-wrap or shrink-wrap Software and (B) licenses granted by the Company or any of its Subsidiaries in the ordinary course of business);

 

(xv)       any Contract that relates to the formation, creation, operation, management or control of any legal partnership or any joint venture entity pursuant to which the Company has an obligation (contingent or otherwise) to make a material investment in or material extension of credit to any Person (other than any such Contract solely between the Company or any of its wholly-owned Subsidiaries or solely among the Company’s wholly-owned Subsidiaries) or any material Contract involving the sharing of revenues, profits or losses by the Company or any of its Subsidiaries with any unaffiliated third party; and

 

(xvi)      any Contract that involves or relates to Indebtedness for borrowed money or under which the Company or any of its Subsidiaries has issued any note, bond, debenture or other evidence of Indebtedness for borrowed money to, any Person (other than the Company or any of its Subsidiaries) or any other note, bond, debenture or other evidence of Indebtedness for borrowed money of the Company or any of its Subsidiaries (other than in favor of the Company or any of its Subsidiaries) (whether incurred, assumed, guaranteed or secured by any asset), in each case (A) outside the ordinary course of business consistent with past practice, or (B) for a principal amount in excess of $5,000,000.

 

(b)          Section 3.12(b) of the Company Disclosure Letter contains a list of all Material Contracts (other than any Material Contract contemplated by clause (i) of the definition thereof) to which the Company or any of its Subsidiaries is a party as of the date of this Agreement. As of the date hereof, true and complete copies of all such Material Contracts have been (i) publicly filed with the SEC or (ii) made available to Parent.

 

 

(c)          Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) each Material Contract is valid and binding on the Company (and/or each such Subsidiary of the Company party thereto) and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, enforceable against the Company or each such Subsidiary of the Company party thereto, as the case may be, in accordance with its terms, except that such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally, and (B) is subject to general principles of equity, (ii) neither the Company nor any of its Subsidiaries that is a party thereto, nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default under, any such Material Contract, and, to the Knowledge of the Company, no circumstances exist and no event has occurred that with notice or lapse of time or both would or would be reasonably expected to constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or any other party thereto or are reasonably expected to contravene, conflict with, or result or give the Company or any of its Subsidiaries or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Material Contract, and (iii) none of the Company and the Company’s Subsidiaries has received written notice of any actual or alleged violation of, or failure to comply with, any material term or requirement of any Material Contract.

 

Section 3.13       Real Property.

 

(a)          Neither the Company nor any of its Subsidiaries owns any real property.

 

(b)          Section 3.13(b) of the Company Disclosure Letter contains a complete and accurate list, as of the date hereof, of all of the existing material leases (including the long-term lease with ▇▇▇), subleases or other agreements containing leases (i.e., embedded leases) (collectively, the “Leases”) under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any material real property (such property, the “Leased Real Property”). The Company has made available to Parent a complete and accurate copy of all Leases of Leased Real Property (including all material modifications, amendments, supplements, waivers and side letters thereto). The Company and/or its Subsidiaries have and own valid leasehold interests in the Leased Real Property, free and clear of all Liens, except for Permitted Liens. The Leased Real Property constitutes all material interests in real property used, occupied or held for use in connection with the business of the Company and the Company’s Subsidiaries.

 

(c)          Neither the Company nor any of its Subsidiaries has entered into any Lease granting to any Person, other than the Company or any of its Subsidiaries, any right to use or occupy, now or in the future, any material portion of the Leased Real Property.

 

(d)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) all of the Leases set forth in Section 3.13(b) or Section 3.13(c) of the Company Disclosure Letter are each in full force and effect and neither the Company nor any of its Subsidiaries is in breach of or default under, or has received written notice of any breach of or default under, any such Lease, and, (ii) to the Knowledge of the Company, no event has occurred that with notice or lapse of time or both would or would reasonably be expected to constitute a breach or default thereunder by the Company or any of its Subsidiaries or any other party thereto.

 

 

Section 3.14        Intellectual Property.  

 

(a)          Section 3.14(a) of the Company Disclosure Letter lists, as of the date hereof, all material (i) Patents that are owned solely or jointly, by the Company or any of its Subsidiaries; (ii) Design registrations that are owned solely or jointly, by the Company or any of its Subsidiaries, (iii) Trademarks owned by the Company or any of its Subsidiaries that are the subject of a registration or a pending application for registration (for the avoidance of doubt, including Internet domain names); and (iv) registered Copyrights and pending applications for registration of any Copyrights owned by the Company or any of its Subsidiaries, in each case, registered with the U.S. Patent and Trademark Office, U.S. Copyright Office, World Intellectual Property Office, or any similar corresponding foreign Governmental Authority (collectively, the “Registered Intellectual Property”). Each of the Company and its Subsidiaries has taken all steps reasonably necessary to maintain registrations of all Registered Intellectual Property that is material to the business of the Company and its Subsidiaries, taken as a whole, including by payment when due of all maintenance fees and annuities and the filing of all necessary renewals, statements and certifications, except for the abandonment, withdrawal and expiration of Registered Intellectual Property in the ordinary course of business consistent with past practice. Section 3.14(a) of the Company Disclosure Letter lists, as of the date hereof, the jurisdictions in which each such Registered Intellectual Property has been issued or registered or in which any application for such issuance and registration has been filed. Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, the Registered Intellectual Property is valid, subsisting and is not subject to any outstanding Legal Proceeding, order, judgment or decree adversely affecting the Company’s or its Subsidiaries’ use thereof or rights thereto.

 

 

(b)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have taken commercially reasonable measures to protect the confidentiality of the material Trade Secrets or any other non-public, proprietary information material to the businesses of the Company and its Subsidiaries, taken as a whole, that are owned by the Company or any of its Subsidiaries and the confidentiality of all Trade Secrets of any third party disclosed to the Company or any of its Subsidiaries subject to written non-disclosure agreements with the Company or any of its Subsidiaries, such Trade Secret expressly identified to the Company or any of its Subsidiaries upon disclosure as confidential and proprietary information. To the Knowledge of the Company, such Trade Secrets have not been disclosed to any Person except pursuant to written non-disclosure agreements, except for any disclosures that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, no employee, contractor or agent of the Company or any of its Subsidiaries or any other Person is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement relating to the protection, ownership, development, use or transfer of Company Intellectual Property Rights or Company Technology or any other Intellectual Property or Technology owned by the Company or any of its Subsidiaries, except for any disclosures that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no rights in any Company Intellectual Property Rights, have been transferred or granted by the Company or any of its Subsidiaries to any other Person except licenses of Intellectual Property or Intellectual Property Rights granted in the ordinary course of the business of the Company or any of its Subsidiaries. No rights in Company Software or Company Technology have been transferred or granted by the Company or any of its Subsidiaries to any other Person except for such transfers or grants that have not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(c)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company or one of its Subsidiaries is the owner of, or has valid and continuing rights to use the Company Intellectual Property Rights, free and clear of all Liens (other than Permitted Liens). Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company has valid and continuing rights to make, sell, license or otherwise use the Company Technology in connection with the conduct of the business of the Company and the Company’s Subsidiaries as presently conducted. To the Knowledge of the Company, there is no Intellectual Property or Technology other than Company Intellectual Property Rights and Company Technology that is material to or necessary for the operation of the businesses of the Company and its Subsidiaries, taken as a whole, or for the continued operation of the business of the Company and the Company’s Subsidiaries as presently conducted, except for shrink-wrap, click-wrap or other off-the-shelf or commercially available Intellectual Property or Technology that is readily available on reasonable terms through commercial distributors or in consumer retail stores. For clarity, the representations and warranties of the Company set forth in this Section 3.14(c) do not constitute representations and warranties of the Company regarding infringement, unauthorized use, misappropriation or similar violations of Intellectual Property Rights of a third Person, which are addressed in Section 3.14(d).

 

(d)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, the Company’s or any of its Subsidiaries’ use, practice or other commercial exploitation of the Company Intellectual Property Rights and Company Technology and the manufacturing, licensing, marketing, importation, offer for sale, sale or use of the Company Intellectual Property Rights and the Company Technology, and the operation and conduct of the Company’s and its Subsidiaries’ business as currently conducted, do not infringe, constitute an unauthorized use of, misappropriate, or otherwise violate the Intellectual Property Rights of a third Person.

 

 

(e)          Since January 1, 2016, neither the Company nor any of the Company’s Subsidiaries is a party to or the subject of any pending (for which the Company or any of the Company’s Subsidiaries has received written notice) or, to the Knowledge of the Company, threatened, Legal Proceeding, which involves a claim (i) against the Company or any of its Subsidiaries, of infringement, unauthorized use, or violation of any Intellectual Property or Technology of any Person, or challenging the ownership, use, validity or enforceability of any Company Intellectual Property Rights or Company Technology or (ii) contesting, challenging, or seeking to deny or restrict the right of the Company or any of its Subsidiaries to use, distribute, sell, exercise, lease, license, transfer or dispose of any Company Intellectual Property Rights or Company Technology, except in each case, for matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2016, neither the Company nor any of its Subsidiaries have received written notice of such threatened claim against the Company or any of its Subsidiaries of infringement, unauthorized use, or violation that the conduct of the Company’s business infringes, misappropriates, or otherwise violates the Intellectual Property Rights or Technology of a third Person or challenging the ownership, use, validity or enforceability of any Company Intellectual Property Rights or Company Technology, except in each case, for matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and its Subsidiaries are not subject to any Order that restricts or impairs the use of any Company Intellectual Property Rights owned by, or exclusively licensed to, the Company or any of its Subsidiaries that are material to the business of the Company and its Subsidiaries, taken as a whole.

 

(f)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) to the Knowledge of the Company, no Person (including employees and former employees of the Company or any of its Subsidiaries) is infringing, violating, misappropriating or otherwise misusing any Company Intellectual Property Rights owned by, or exclusively licensed to, the Company or any of its Subsidiaries or Company Technology, and (ii) neither the Company nor any of its Subsidiaries has filed in the last three (3) years preceding the date hereof any such claims against any Person (including employees and former employees of the Company or any of its Subsidiaries).

 

(g)          To the Knowledge of the Company, other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each present employee, independent contractor or consultant who conceived, developed or created or participated in creating any part of any Company Intellectual Property Rights or Company Technology, has executed an agreement with the Company or any of its Subsidiaries, as applicable, that subject to applicable Law (i) conveys to the Company or any of its Subsidiaries, as applicable, all right, title and interest in and to, or the right to use on a royalty-free basis, all Intellectual Property developed by such Person in connection with such Person’s engagement with the Company or any of its Subsidiaries, as applicable (or all such rights vest in the Company or one of its Subsidiaries as a matter of Law), and (ii) obligates such employee, consultant or independent contractor to keep any confidential information of the Company and its Subsidiaries, including Trade Secrets, confidential.

 

 

(h)          Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) there are no Contracts or arrangements to which the Company or any of its Subsidiaries is a party under which any Governmental Authority acquires rights with respect to any Company Software or Company Intellectual Property Rights owned by the Company or any of its Subsidiaries, nor has any Governmental Authority acquired any rights outside of any such Contracts, arrangements or subcontract as the result of providing any funding to the Company or any of its Subsidiaries relating to the development of any Company Intellectual Property Rights, and (ii) to the Knowledge of the Company, there are no Contracts or arrangements to which the Company or any of its Subsidiaries is a party under which any Governmental Authority acquires rights with respect to any Company Software or Company Intellectual Property Rights exclusively licensed to, the Company or any of its Subsidiaries.

 

(i)          The Company and its Subsidiaries have taken commercially reasonable steps in accordance with industry standards to secure its information technology systems (“IT Systems”) from unauthorized access or use by any Person, and to ensure the operation of the IT Systems, except where the failure to have taken such steps has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, and as of the date hereof, there has not been any malfunction with respect to any such IT Systems in the twelve (12) months preceding the date hereof that has not been remedied or replaced.

 

Section 3.15         Tax Matters. Except for such matters that have not resulted in and would not reasonably be expected to result in, individually or in the aggregate, material liabilities to the Company and its Subsidiaries (taken as a whole):

 

(a)          The Company and each of its Subsidiaries (i) have timely filed (taking into account any extensions of time in which to file) all U.S. federal, state, local and non-U.S. returns, estimates, claims for refund, information statements and reports or other similar documents with respect to Taxes (including amendments, schedules, or attachments thereto) relating to any and all Taxes (“Tax Returns”) required to be filed with any Governmental Authority by any of them and all such filed Tax Returns are true, correct and complete and were prepared in compliance with all applicable Laws and (ii) have timely paid, or have adequately reserved (in accordance with IFRS) on the most recent consolidated financial statements contained in the Company Reports for the payment of, all Taxes required to be paid (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items or carryforwards) for all taxable periods and portions thereof through the Company Balance Sheet Date and since then, the Company and the Company’s Subsidiaries have not incurred any liability for Taxes (i) outside the ordinary course of business consistent with past practice, or (ii) otherwise inconsistent with past custom and practice.

 

 

(b)          No deficiencies for any Taxes have been asserted in writing or assessed in writing, or to the Knowledge of the Company, proposed, against the Company or any of its Subsidiaries that are not subject to adequate reserves on the consolidated financial statements of the Company and its Subsidiaries (in accordance with IFRS) as adjusted in the ordinary course of business consistent with past practice through the Effective Time, nor has the Company or any of its Subsidiaries executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax. There are no Liens (other than Permitted Liens) on any of the assets of the Company or its Subsidiaries for Taxes.

 

(c)          No audit of any Tax Return of the Company or any of its Subsidiaries is presently in progress, nor has the Company or any of its Subsidiaries been notified in writing of any request for such an audit.

 

(d)          Neither the Company nor any of its Subsidiaries has performed or was part of any action or transaction that is classified as a “reportable transaction” under Section 131(g) of the Ordinance and the regulations promulgated thereunder or are subject to reporting obligations under Sections 131D and 131E of the Ordinance or similar provisions under the Israel Value Added Tax Law of 1975 and the Israeli Land Taxation Law (Appreciation and Acquisition) of 1963.

 

(e)          With respect to each transaction in which the Company or any of its Subsidiaries has participated that is a “reportable transaction” within the meaning of U.S. Treasury Regulation § 1.6011-4(b)(1) (or any similar provision of the Tax Laws of any other jurisdiction), such participation has been properly disclosed on IRS Form 8886 or as otherwise required under the Tax Laws of any other jurisdiction.

 

(f)          No extension of time within which to file any Tax Return required to be filed by the Company or any of its Subsidiaries is currently in effect.

 

(g)          No action, suit, investigation, claim or assessment is pending or, to the Knowledge of the Company, threatened with respect to Taxes for which the Company or any of its Subsidiaries may be liable.

 

(h)          No unresolved claim has been made by a Governmental Authority in a jurisdiction where the Company or any of its Subsidiaries does not pay Taxes or file Tax Returns asserting that the Company or such Subsidiary, respectively, is or may be subject to Taxes assessed by such jurisdiction.

 

(i)          Neither the Company nor any of its Subsidiaries is bound by any Tax indemnity, Tax sharing agreement or Tax allocation agreement or arrangement or any similar agreement with respect to Taxes, nor is there any other reason, as transferee or successor, by operation of Law or otherwise, that the Company or any of its Subsidiaries will have, as of the Closing Date, any liability for Taxes of any other entity.

 

(j)          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 would reasonably be expected to affect the Company’s or any of its Subsidiaries’ liability for Taxes for any taxable period ending after the Closing Date.

 

 

(k)          Neither the Company nor any of its Subsidiaries will be required to include or accelerate the recognition of any item in income, or exclude or defer any deduction or other tax benefit, in each case in any taxable period (or portion thereof) after Closing, as a result of any change in method of accounting, closing agreement, intercompany transaction, installment sale, or the receipt of any prepaid amount, in each case prior to Closing.

 

(l)          All Taxes that the Company or any of its Subsidiaries is required by law or contract to withhold or to collect from each payment made to any employee, contractor, consultant, shareholder or other person have been duly withheld and collected and have been duly and timely paid to the appropriate Governmental Authority. The Company and the Company’s Subsidiaries have complied with all record keeping and reporting requirements in connection with amounts paid or owing to any employee, independent contractor, creditor or shareholder.

 

(m)          Neither the Company, nor any of its Subsidiaries is or has been a member of any consolidated, unitary, combined or affiliated group within the meaning of Section 1504 of the Code (or any similar provision of Law relating to Taxes).

 

(n)          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.

 

(o)          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.

 

(p)          Neither the Company nor any of its Subsidiaries has been at any time a “United States real property holding corporation” for purposes of Sections 897 and 1445 of the Code or real property corporation (Igud Mekarke’in) within the meaning of such term under Section 1 of the Israeli Land Taxation Law (Appreciation and Acquisition), 5723-1963.

 

(q)          During the last three (3) years, neither the Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation” in a distribution intended to qualify under Section 355 of the Code (or any similar provision of Law relating to Taxes).

 

(r)          Section 3.15(r) of the Company Disclosure Letter lists all material Government Grants, including but not limited to Preferred Enterprise, Benefitted Enterprise and Approved Enterprise Status from the Investment Center. Section 3.15(r) of the Company Disclosure Letter details, as of the date hereof, all material outstanding financial liabilities of the Company or any of its Subsidiaries under such Government Grants (including any related Tax rulings). The Company and the Company’s Subsidiaries are in compliance in all material respects with the terms, conditions and requirements of their respective Government Grants and have duly fulfilled in all material respects all the undertakings relating thereto. To the Knowledge of the Company, as of the date hereof: (i) assuming the Investment Center Approval has been obtained, the Investment Center does not have any intention to revoke or materially modify any of the Israeli Government Grants, and (ii) no event has occurred or is anticipated that would reasonably be expected to give rise to the annulment, revocation, withdrawal, suspension, cancellation, recapture or modification of any qualification status for such Government Grants or a requirement that the Company return or refund any benefits provided under any Government Grant. As of the date hereof, neither the Company nor any of the Company’s 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).

 

 

(s)          The outstanding capital notes and the principal amount thereof, as of the date hereof, for which the Company or SodaStream Industries Ltd. is a lender and a Subsidiary of the Company is a borrower are set forth in Section 3.15(s) of the Company Disclosure Letter.

 

Section 3.16       Employee Plans.

 

(a)          Section 3.16(a) of the Company Disclosure Letter sets forth, as of the date hereof, a complete and accurate list of (i) each material employee benefit plan, including material bonus, stock option, stock purchase, restricted stock or other equity-based benefit, incentive compensation, profit sharing, savings, retirement, disability, vacation (entitlement and accrual), sick days (entitlement and accrual), deferred compensation, severance, termination, retention, change of control and other similar fringe, welfare or other employee benefit plan, program, agreement, contract, written policy or binding arrangement (whether or not in writing) maintained or contributed to for the benefit of any current or former employee, officer or director of the Company or any of its Subsidiaries, or with respect to which the Company or any of its Subsidiaries has any Liability (including any joint and several liability incurred in connection with any trade or business (whether or not incorporated) which is treated as a single employer with the Company or any of its Subsidiaries under Section 414 of the Code), and (ii) each employment agreement with each executive management employee of the Company ((i) and (ii) collectively the “Material Employee Plans” and, together with any other material employment agreement with respect to which the Company or one of its Subsidiaries is a party, the “Employee Plans”), in each case, excluding plans, agreements or other arrangements required to be established or contributed to by statute or regulatory agency.

 

(b)          No Employee Plan is (i) a “defined benefit plan” (as defined in and subject to Section 414 of the Code) subject to Title IV of ERISA, (ii) subject to Section 412 of the Code, or (iii) a “multiemployer plan” (as defined in and subject to Section 3(37) of ERISA). The Company and its Subsidiaries have no obligation to provide post-employment welfare benefits except to the extent required by Section 4980B of the Code or any similar law.

 

(c)          Each Employee Plan has been maintained, operated and administered in material compliance in all material respects with its terms and with all applicable Law.

 

 

(d)          There are no Legal Proceedings or other actions, suits or proceedings pending or, to the Knowledge of the Company, threatened on behalf of, or against any Employee Plan with respect to the administration or operation of such plans, other than (i) routine claims for benefits that have been or are being handled through an administrative claims procedure or (ii) Legal Proceedings or other actions, suits or proceedings that have not resulted in and would not reasonably be expected to result in, individually or in the aggregate, material liabilities to the Company and its Subsidiaries (taken as a whole).

 

(e)          To the Knowledge of the Company, each Employee Plan that is intended to be “qualified” under Section 401 of the Code may rely on a prototype opinion letter or has received a favorable determination letter from the IRS to such effect (or there remains sufficient time for the Company or its Subsidiaries to file an application for such determination letter from the IRS) and no such opinion or determination letter has been revoked. To the Knowledge of the Company, no fact, development or event has occurred or exists since the date of such determination or opinion letter that has materially and adversely affected the qualified status of any such Employee Plan nor has any such Employee Plan been amended since the date of its most recent determination opinion letter or application therefor in any respect that would materially and adversely affect its qualification.

 

(f)          Any amount that could be received (whether in cash or property or the vesting of property) as a result of the Merger or any other transaction contemplated hereby by any employee, officer or director of the Company or any of its Affiliates who is a “disqualified individual” (as such term is defined in proposed Treasury Regulation Section 1.280G-1) under any employment, severance or termination agreement, other compensation arrangement or Employee Plan currently in effect would not be characterized as an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code) and would not result in the imposition of an excise Tax under Section 4999 of the Code (or similar provisions of Law relating to Taxes). The Company is not a party to, nor is it otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of the excise Tax imposed by Section 4999 of the Code.

 

(g)          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 the ITA as such. All Company Options, Company RSUs and Company PSUs granted and Company Shares issued under any Section 102 Plan have been granted or issued, as applicable, in compliance in all material respects with the applicable requirements of Section 102 (including the relevant sub-section of Section 102) and the written requirements and guidance of the ITA, including, without limitation, the adoption of the applicable board and shareholders resolutions, the 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, Company RSUs and, if applicable, Company Shares issued upon exercise of Company Options, the execution by each holder of Company 102 Securities 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 and the guidance of the ITA published by the ITA on July 24, 2012 and clarification dated November 6, 2012.

 

 

(h)          Neither the execution or delivery by the Company of this Agreement nor the consummation by the Company of the transactions contemplated by this Agreement could (i) result in any material payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of the Company or any of its Subsidiaries, (ii) materially increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation, or (iv) result in any breach or violation of, or a default under, any Employee Plan.

 

(i)          To the Knowledge of the Company, except as required by applicable Law or the terms of any Employee Plans as in effect on the date hereof, neither the Company nor any of its Subsidiaries has any plan or commitment to amend in any material respect or establish any new material Employee Plan or to materially increase any benefits under any Employee Plan.

 

Section 3.17        Labor Matters.  

 

(a)          (i) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement, labor union contract, or trade union agreement with any labor organization or similar body representing employees of the Company or its Subsidiaries (each a “Collective Bargaining Agreement”) or is otherwise required (under any Law, any Contract, or otherwise) to provide benefits or working conditions under any of the foregoing, (ii) neither the Company nor any of its Subsidiaries is a member of any employers’ association or organization, (iii) no Collective Bargaining Agreement is being negotiated as of the date hereof by the Company or any of its Subsidiaries, (iv) to the Knowledge of the Company, as of the date hereof, no labor union, labor organization, works council, or group of employees of the Company or any of its Subsidiaries has made a demand for recognition or certification, and there are no activities or proceedings of any labor or trade union to organize any employees of the Company or any of its Subsidiaries and there is no pending written demand for recognition from any collective bargaining representative with respect to any of the employees of the Company or its Subsidiaries, and (v) there is not, and since January 1, 2016 until the date of this Agreement, there has not been, any strike, lockout, slowdown, or work stoppage against the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened that is reasonably expected to materially interfere in any material respect with the business activities of the Company and its Subsidiaries (taken as a whole).

 

(b)          Except as would not reasonably be expected to result in, individually or in the aggregate, a material liability to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are in compliance with applicable Laws and Orders with respect to employment and employment practices, terms and conditions of employment, pension and social contributions, worker classification, wages, hours of work, days of work, withholdings and all other Laws and Orders relating to employment of labor.

 

 

(c)          Except for matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice; (ii) as of the date hereof, there are not any unfair labor practice charges or complaints against the Company or any of its Subsidiaries pending, or, to the Knowledge of the Company, threatened, before any Governmental Authority responsible for supervising, administrating or regulating labor practices; (iii) as of the date hereof, there are no pending, or, to the Knowledge of the Company, threatened, union grievances against the Company or any of its Subsidiaries as to which there is a reasonable possibility of adverse determination; and (iv) as of the date hereof, neither the Company nor any of its Subsidiaries has received any written communication since January 1, 2016 of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation of the Company or any of its Subsidiaries and, to the Knowledge of the Company, no such investigation is pending.

 

(d)          Solely with respect to employees who reside or work in Israel or to whom Israeli law applies (“Israeli Employees”): (i) neither the Company nor any of its Subsidiaries has or is subject to, and no Israeli Employee of the Company or any of its Subsidiaries benefits from, any extension order (tzavei harchava) (other than extension orders applicable to all employees in Israel), (ii)  the Company’s or its applicable Subsidiary’s obligations to provide statutory severance pay to its Israeli Employees pursuant to the Severance Pay Law-1963, vacation pursuant to the Israeli Annual Leave Law-1951, and contributions to any funds, including all pension arrangements and any personal employment agreement or any other binding source, have been satisfied in all material respects or have been fully funded by contributions to appropriate funds or if not required to be fully funded under any source are fully accrued on the relevant consolidated financial statements in accordance with IFRS, and (iii) the Company and the Company’s Subsidiaries are in compliance in all respects material to the Company and its Subsidiaries, taken as a whole, 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, Foreign Employees Law-1991, and The Employment of Employee by Manpower Contractors Law (5756-1996). To the Knowledge of the Company, the Company and the Company’s Subsidiaries have not engaged any Israeli Employees whose employment would require special licenses, permits or approvals from any Governmental Authority. “Israeli Employee” shall not include any consultants, sales agents or other independent contractors. Except for matters that have not resulted in and would not, individually or in the aggregate, result in material liabilities to the Company or its Subsidiaries, taken as a whole, (A) all amounts that the Company and the Company’s Subsidiaries 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 Authority 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 (B) the Company and the Company’s Subsidiaries do not have any outstanding obligations to make any such deduction, transfer, withholding or payment (other than such that has not yet become due). To the Knowledge of the Company, the Company and the Company’s Subsidiaries have not engaged any consultants, sub-contractors, independent contractors, sales agents or freelancers who, according to Israeli Law, would be entitled to the rights of an employee vis-à-vis the Company or any of the Company’s Subsidiaries, including rights to severance pay, vacation, recuperation pay (dmei havraa) and other employee-related statutory benefits.

 

 

Section 3.18       Permits.

 

(a)          The Company and its Subsidiaries have, since January 1, 2016, complied, and are currently in compliance with, the terms of, and validly holds, all permits, licenses, authorizations, consents, approvals and franchises from Governmental Authorities required to conduct their businesses as currently conducted (“Permits”), except where the failure to comply with or validly hold any such Permits, have not had and would not reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except for matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries has received written notice of any Legal Proceeding relating to (A) any actual or alleged violation of, or failure to comply with, any term or requirement of any such Permit or (B) any actual or proposed revocation, withdrawal, suspension, cancellation, termination, nonrenewal or modification of any such Permit; (ii) to the Knowledge of the Company, no event has occurred and no circumstance exists that (with or without notice or lapse of time, or both) (A) constitute or would reasonably be expected to result, directly or indirectly, in a violation of, or a failure to comply with, any term or requirement of any such Permit or (B) would or would reasonably be expected to result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation, termination, nonrenewal or modification of any of such Permits; and (iii) all applications required to have been filed for the renewal of each such Permit have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been made with respect to each such Permit have been duly made on a timely basis with the appropriate Governmental Authority.

 

(b)          Section 3.18 of the Company Disclosure Letter lists, as of the date hereof, all Permits that are material to the Company and its Subsidiaries, taken as a whole, issued to the Company or any of its Subsidiaries by any Governmental Authority relating to the transportation of CO2 cylinders within a given jurisdiction.

 

(c)          The business of the Company and the Company’s Subsidiaries does not involve the use or development of, or engagement in, encryption technology, or other technology whose development, commercialization or export requires the Company or any of its Subsidiaries to obtain a license from the Israeli Ministry of Defense or an authorized body thereof pursuant to Section 2(a) of the Declaration Regarding the Control of Commodities and Services (Engagement in Encryption Means), 1974 or other legislation regulating the development, commercialization or export of technology.

 

 

Section 3.19         Compliance with Laws; FCPA Matters.

 

(a)          Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, the Company and each of its Subsidiaries are and have been at all times in the past five (5) years, in compliance in all material respects with all Law applicable to the Company and its Subsidiaries or their respective assets. Neither the Company nor any of its Subsidiaries has received any written communication since January 1, 2017 from a Governmental Authority that alleges that the Company or any of its Subsidiaries is not in compliance in any material respect with any Law.

 

(b)          Except as has not resulted or would not reasonably be expected to result in, individually or in the aggregate, material liabilities of the Company and its Subsidiaries, taken as a whole, neither the Company, the Company’s Subsidiaries nor, to the Knowledge of the Company, any of their respective directors, officers, employees, agents or distributors or any other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of their actions for or on behalf of the Company or its Subsidiaries, (i) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) or local anticorruption laws, (ii) violated or is in violation 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”), (iii) made, offered to make, promised to make or authorized the payment or giving of, directly or indirectly, any bribe, rebate, payoff, influence payment, kickback or other unlawful payment or gift of money or anything of value prohibited under any applicable Law addressing matters comparable to those addressed by the FCPA or the OECD Convention implementing legislation concerning such payments or gifts in any jurisdiction (any such payment, a “Prohibited Payment”), (iv) to the Knowledge of the Company, been subject to any investigation by any Governmental Authority with regard to any Prohibited Payment, or (v) violated or is in violation of any other Laws regarding use of funds for political activity or commercial bribery. The Company and each of its Subsidiaries have taken commercially reasonable measures to comply with the FCPA, and the Company and each of its Subsidiaries enforce such measures.

 

(c)          The Company has no Knowledge of any actual or threatened material enforcement action by the U.S. Food and Drug Administration (the “FDA”) or any analogous Governmental Authority which has jurisdiction over the operations of the Company or any of the Company’s Subsidiaries, and in the past five (5) years, neither the Company nor any of its Subsidiaries has received written notice of any pending or, to the Knowledge of the Company, threatened claim by the FDA or any analogous Governmental Authority which has jurisdiction over the operations of the Company or any of the Company’s Subsidiaries against the Company or the Company’s Subsidiaries.

 

(d)          The Company and each of its Subsidiaries are and have been at all times in the past five (5) years, in compliance in all respects material to the Company and its Subsidiaries, taken as a whole, with all statutory and regulatory requirements of the State of Israel, the United States, the European Union, the European Union member states and other jurisdictions in which the Company or its Subsidiaries operate related to export controls, economic sanctions, trade embargoes, import of goods and payment of customs duties and fees (“Trade Control Laws”). As of the date hereof, neither the Company nor any of the Company’s Subsidiaries has been cited or fined for past or present failure to comply with Trade Control Laws and, to the Knowledge of the Company, no investigation, audit or proceeding with respect to any alleged non-compliance is pending or threatened.

 

 

(e)          To the Knowledge of the Company, neither the Company nor any of the Company’s Subsidiaries is the target of any economic or trade sanctions administered or enforced under Trade Control Laws, nor is the Company or any of its Subsidiaries controlled by or owned, directly or, to the Knowledge of the Company, indirectly, individually or in the aggregate, 50% or more by individuals or entities identified on the Office of Foreign Assets Control’s Specially Designated Nationals List, by a person or entity listed on the EU’s Consolidated List of persons or entities subject to European Union sanctions or as “enemies” under the Israeli Trading with the Enemy Ordinance.

 

(f)          No Company operations are performed in the West Bank (including East Jerusalem), the Gaza Strip or the Golan Heights, other than sale of products in the ordinary course of business.

 

Section 3.20         Environmental Matters. Except for such matters as have not had, individually or in the aggregate, a Company Material Adverse Effect:

 

(a)          The Company and its Subsidiaries are in compliance with all applicable Environmental Laws and neither the Company nor any of the Company’s Subsidiaries has been notified in writing in the past three (3) years by a Governmental Authority that it is in violation of any Environmental Law.

 

(b)          Neither the Company nor any of its Subsidiaries has generated, used, handled, stored, disposed of or released any Hazardous Substance at any property that the Company or any of its Subsidiaries own or lease in violation of any Environmental Law and in a manner which has given or would be reasonably expected to give rise to any liabilities or investigatory, corrective or remedial obligations pursuant to Environmental Laws.

 

(c)          Neither the Company nor any of its Subsidiaries is a party to or is the subject of any pending or to the Knowledge of the Company threatened Legal Proceeding alleging any Liability or responsibility under or noncompliance with any Environmental Law. Neither the Company nor any of its Subsidiaries is subject to any Order by any Governmental Authority imposing any material liability or obligation on the Company and its Subsidiaries (taken as a whole) under any Environmental Law.

 

(d)          The Company and the Company’s Subsidiaries have obtained all Permits required by Environmental Law necessary to enable them to conduct their respective businesses as currently conducted and are in compliance with such Permits.

 

 

Section 3.21         Litigation. Except for matters that, individually or in the aggregate, have not had and would not reasonably be expected to have, a Company Material Adverse Effect, (a) there is no Legal Proceeding pending or, to the Knowledge of the Company, threatened in writing against the Company, any of its Subsidiaries or any of the respective properties of the Company or any of its Subsidiaries, (b) neither the Company nor any of its Subsidiaries is subject to any outstanding Order, and (c) to the Knowledge of the Company, there are no pending or threatened investigations of the Company or any of its Subsidiaries by any Governmental Authority.

 

Section 3.22         Insurance. Except for matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (a) all insurance policies maintained by the Company or any of its Subsidiaries are in full force and effect, (b) all premiums due and payable thereunder have been paid, (c) no written notice of cancellation has been received by the Company or any Subsidiary thereof with respect to such policies (other than in connection with ordinary renewals), (d) to the Knowledge of the Company, there is no existing event or circumstance which, with the giving of notice or lapse of time or both, would constitute a default, by any Person insured thereunder, and (e) there is no claim by the Company or any of its Subsidiaries pending under any of the insurance policies of the Company and its Subsidiaries as to which coverage has been denied or disputed by the underwriters of such policies.

 

Section 3.23         Related Party Transactions. Except for indemnification, compensation, employment or other similar arrangements between the Company or any of its Subsidiaries, on the one hand, and any director or officer thereof, on the other hand, there are no material transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and any current director or executive officer of the Company, or any person who has been a director or executive officer of the Company in the last three (3) years, or any of his or her immediate family member, or any known holder of five percent (5%) or more of the outstanding Company Shares (each, a “Related Party”), on the other hand. Each material transaction between the Company or any of its Subsidiaries, on the one hand, and a Related Party, on the other hand, has been authorized by all necessary corporate action on the part of the Company or such Subsidiary, including in compliance with the ICL.

 

Section 3.24         Brokers. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partners LP, there is no financial advisor, investment banker, broker, finder, agent or other Person that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who is entitled to any financial advisor’s, investment banking, brokerage, finder’s or similar fee or commission from the Company or any of its Subsidiaries in connection with this Agreement or the transactions contemplated by this Agreement. The Company has furnished to Parent a true and complete copy of the agreement between the Company or any of its Subsidiaries, on the one hand, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partners LP, on the other hand, relating to the Merger and the other transactions contemplated hereby.

 

Section 3.25         Opinion of Financial Advisor. The Company Board has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partners LP, financial advisor to the Company, dated as of the date of such opinion, to the effect that, as of the date of such opinion and based upon and subject to the qualifications and assumptions set forth therein, the Merger Consideration to be received by the holders of Company Shares, other than Company Shares that are the subject of Section 2.7(a)(ii), is fair, from a financial point of view, to such holders.

 

 

Section 3.26         Anti-Takeover Statutes. Assuming that the representations of Parent and Merger Sub set forth in Section 4.7 are accurate, other than as set forth in the ICL, no “moratorium,” “control share acquisition,” “fair price,” “interested shareholder,” “affiliate transaction,” “business combination” or similar antitakeover statute apply to this Agreement, the Merger or any other transaction contemplated by this Agreement. Neither the Company nor any of the Company’s Subsidiaries is bound by or has in effect any “poison pill” or similar shareholder rights plan.

 

Section 3.27         Proxy Statement.  The information supplied by the Company and its Representatives for inclusion or incorporation by reference in the Proxy Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which it is made, not misleading at the date it is first mailed to the Company Shareholders and at the time of the Company Shareholders Meeting and at the time of any amendment or supplement thereof. The Proxy Statement will, when filed with the ISA or furnished to the SEC, comply as to form in all material respects with all applicable Laws. The Proxy Statement shall contain (or incorporate by reference) all material information relating to the Company Shareholders’ decision to adopt and approve this Agreement and the Merger that is required by applicable Law. Notwithstanding the foregoing, no representation or warranty is made by the Company with respect to information supplied by Parent or Merger Sub or any of their Affiliates, directors, officers, employees, affiliates, agents or other Representatives for inclusion or incorporation by reference in any such document.

 

Section 3.28         Privacy; Data Protection; PCI Compliance. Other than as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, since January 1, 2016, the Company has been in compliance with all applicable Laws and Contracts (including, if applicable, the Payment Card Industry Data Security Standard) concerning data protection and the privacy rights of any identified or identifiable natural person.

 

Section 3.29         No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, neither the Company nor any other Person on behalf of the Company or any of its Subsidiaries makes any other express or implied representation or warranty whatsoever with respect to the Company or any of its Subsidiaries or with respect to any other information provided by or on behalf of the Company or any of its Subsidiaries. Without limiting the foregoing or anything else set forth in this Agreement, neither the Company nor any other Person will have or be subject to any liability or other obligation to Parent, Merger Sub or their respective Representatives or Affiliates or any other Person resulting from Parent’s, Merger Sub’s or their respective Representatives’ or Affiliates’ or such other Person’s use of any information, documents, projections, forecasts or other material made available to Parent, Merger Sub or their respective Representatives or Affiliates or such other Person, including any information made available in the electronic data room for “Project Saturn” run by IntraLinks and maintained by the Company for purposes of the transactions contemplated by this Agreement, marketing material, confidential information memorandum, management presentations, functional “break-out” discussions, responses to questions submitted on behalf of Parent, Merger Sub or their respective Representatives or in any other form in connection with the transactions contemplated by this Agreement, unless and to the extent any such information is expressly included in a representation or warranty contained in this Article III.

 

 

Article IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Parent and Merger Sub hereby represent and warrant to the Company as follows:

 

Section 4.1           Organization; Good Standing. Parent is a corporation duly organized and validly existing under the laws of its state of incorporation and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective material properties and assets. Merger Sub is a private limited company duly organized and validly existing under the laws of the State of Israel and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective properties and assets. Each of Parent and Merger Sub is qualified to do business and is in good standing (to the extent either such concept is recognized under applicable Law) in each jurisdiction where such qualification and good standing is necessary, except where the failure to be so qualified or in good standing does not and would not, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement. Parent has delivered or made available to the Company complete and correct copies of the memorandum of association, articles of association or other constituent documents, as amended to date, of Merger Sub.

 

Section 4.2           Corporate Power; Enforceability. Each of Parent and Merger Sub has the requisite corporate power and authority to execute and deliver this Agreement, to perform their respective covenants and obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Parent and Merger Sub of this Agreement, the performance by Parent and Merger Sub of their respective covenants and obligations hereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or other action on the part of Parent and Merger Sub, and no other corporate or other proceeding on the part of Parent or Merger Sub is necessary to authorize the execution and delivery by Parent and Merger Sub of this Agreement, the performance by Parent and Merger Sub of their respective covenants and obligations hereunder or the consummation by Parent and Merger Sub of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Merger Sub and constitutes, assuming the due authorization, execution and delivery by the Company, a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally, and (b) is subject to general principles of equity.

 

 

Section 4.3           Non-Contravention. The execution and delivery by Parent and Merger Sub of this Agreement, the performance by Parent and Merger Sub of their respective covenants and obligations hereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby do not and will not (a) violate or conflict with any provision of the articles of incorporation or bylaws or other organizational documents of Parent or the articles of association of Merger Sub, (b) violate, conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or Merger Sub is a party or by which Parent, Merger Sub or any of their properties or assets may be bound, (c) assuming the Approvals referred to in Section 3.4 are obtained or made, violate or conflict with any Law applicable to Parent or Merger Sub or by which any of their properties or assets are bound or (d) result in the creation of any Lien upon any of the properties or assets of Parent or Merger Sub, except in the case of each of clauses (b), (c) and (d) above, for such violations, conflicts, defaults, terminations, accelerations or Liens which would not, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement.

 

Section 4.4           Required Governmental Approvals. No Approval of any Governmental Authority is required on the part of Parent, Merger Sub or any of their Affiliates in connection with the execution and delivery by Parent and Merger Sub of this Agreement, the performance by Parent and Merger Sub of their respective covenants and obligations hereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby, other than (a) the Approval under the HSR Act and other applicable Antitrust Laws, (b) 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, and (c) such other Approvals the failure of which to make or obtain would not, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement.

 

Section 4.5           Litigation. As of the date hereof, there is no Legal Proceeding pending or, to the knowledge of Parent, threatened in writing against or affecting Parent or Merger Sub or any of their respective Affiliates or any of their respective properties that would, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement. As of the date hereof, neither Parent nor Merger Sub is subject to any outstanding Order that would, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement.

 

 

 

Section 4.6           Proxy Statement. The information supplied by Parent, Merger Sub or any of their Representatives for inclusion or incorporation by reference in the Proxy Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which it is made, not misleading at the date it is first mailed to the Company Shareholders and at the time of the Company Shareholders Meeting and at the time of any amendment or supplement thereof. Any document that is required to be filed or furnished by Parent, Merger Sub or any of their respective Affiliates with the ISA, the SEC or any other Governmental Authority in connection with the transactions contemplated by this Agreement will, when filed with or furnished to the SEC or such other Governmental Authority, comply as to form in all material respects with applicable Laws. Notwithstanding the foregoing, no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference in the Proxy Statement based on information supplied by the Company or any of its Affiliates, directors, officers, employees, affiliates, agents or other representatives for inclusion or incorporation by reference in any such document.

 

Section 4.7           Ownership of Company Share Capital. Neither Parent nor any of its Subsidiaries owns (beneficially or otherwise) any Company Shares or Company Securities or Subsidiary Securities (or any other economic interest through derivative securities or otherwise in the Company or any Subsidiary of the Company) except pursuant to this Agreement. None of the Persons referred to in Section 320(c) of the ICL with respect to Parent or Merger Sub owns any Company Shares. There are no voting trusts or other Contracts to which Parent or Merger Sub or any other Person controlling or controlled by Parent or Merger Sub is a party, with respect to the voting of the Company Securities or Subsidiary Securities.

 

Section 4.8           Brokers. No agent, broker, finder or investment banker is entitled to any brokerage, finder’s or similar fee or commission for which the Company or any of its Subsidiaries may become liable in connection with this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.

 

Section 4.9           Ownership and Operations of Merger Sub. The authorized share capital of Merger Sub consists solely of 100,000 ordinary shares, par value one Israeli Agora (NIS 0.01) per share, 1000 of which are issued and outstanding. All of the issued and outstanding shares of capital stock of Merger Sub are owned beneficially and of record by Parent and, immediately prior to the Effective Time, will be owned beneficially and of record by Buyer. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and, prior to the Effective Time, Merger Sub will not have engaged in any other business activities and will have incurred no Liabilities or obligations other than as contemplated by this Agreement.

 

 

Section 4.10        Shareholder and Management Arrangements. Except as expressly authorized by the Company in writing or as contemplated by this Agreement, as of the date hereof, neither Parent nor Merger Sub, nor any of their respective controlled Affiliates, is a party to any Contracts, with any shareholder, director, officer or other Affiliate of the Company or any of its Subsidiaries relating to this Agreement, the Merger or any other transactions contemplated by this Agreement, or the Surviving Company or any of its Subsidiaries, businesses or operations (including as to continuing employment) from and after the Effective Time.

 

Section 4.11        No Other Company Representations or Warranties. Except for the representations and warranties set forth in Article III, Parent and Merger Sub hereby acknowledge and agree that (x) neither the Company or any of its Subsidiaries, nor any of their respective Affiliates, shareholders, directors, officers, employees, agents, representatives or advisors, nor any other Person, has made or is making any other express or implied representation or warranty whatsoever with respect to the Company or any of its Subsidiaries or their respective businesses or operations, including with respect to any information provided or made available to Parent, Merger Sub or any of their respective Affiliates, shareholders, directors, officers, employees, agents, representatives or advisors, or any other Person, and (y) no Person has been authorized by the Company or any of its Subsidiaries to make any representation or warranty relating to the Company or any of its Subsidiaries or their respective businesses or operations.

 

Section 4.12        Funds. Parent has, and will have as of the Closing Date, sufficient cash available (including cash available from any Affiliates of Parent) to pay all amounts to be paid by Parent pursuant to and in connection with this Agreement. Parent’s obligations hereunder are not subject to a condition regarding Parent’s obtaining of funds to consummate the transactions contemplated hereunder.

 

Section 4.13        Non Reliance on Company Estimates, Projections, Forecasts, Forward Looking Statements and Business Plans. In connection with the due diligence investigation of the Company by Parent and Merger Sub and their Representatives, Parent and Merger Sub and their Representatives have received and may continue to receive after the date hereof from the Company and its Affiliates, shareholders, directors, officers, employees, agents, representatives and advisors certain estimates, projections, forecasts and other forward looking information, as well as certain business plan information, regarding the Company and its business and operations. Parent and Merger Sub hereby acknowledge and agree that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward looking statements, as well as in such business plans, with which Parent and Merger Sub are familiar. Accordingly, Parent and Merger Sub hereby acknowledge and agree that none of the Company or any of its Subsidiaries, nor any of their respective Affiliates, shareholders, directors, officers, employees, agents, representatives or advisors, nor any other Person, has made or is making any express or implied representation or warranty with respect to such estimates, projections, forecasts, forward looking statements or business plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward looking statements or business plans).

 

  

Section 4.14         Parent and Merger Sub Board Approval. The Boards of Directors of Parent and Merger Sub have each approved entry into this Agreement, the Merger and the other transactions contemplated hereby, and the Board of Directors of Merger Sub has further unanimously: (i) determined that the Merger is fair to, and in the best interest of, Merger Sub and its sole shareholder, (ii) approved this Agreement, the Merger and the other transactions contemplated hereby, (iii) determined 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 (iv) resolved to recommend that the sole shareholder of Merger Sub approve this Agreement, the Merger and the other transactions contemplated hereby, pursuant to the terms hereof (which approval has been obtained simultaneously with the execution of this Agreement).

 

Article V

COVENANTS OF THE COMPANY

 

Section 5.1         Interim Conduct of Business.

 

(a)          Except (i) as expressly contemplated or required by this Agreement, (ii) required by applicable Law, (iii) as set forth in Section 5.1 of the Company Disclosure Letter, or (iv) as approved by Parent (which approval shall not be unreasonably withheld, conditioned or delayed), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective Time, the Company shall, and shall cause its Subsidiaries to: (A) carry on its business in the ordinary course of business and, to the extent consistent therewith, shall use commercially reasonable efforts to preserve its business organization intact, keep available the services of the current officers and key employees of the Company and its Subsidiaries, and preserve the current relationships of the Company and each of its Subsidiaries with customers, suppliers, distributors and other Persons with whom the Company or any of its Subsidiaries has significant business relations; (B) notify and consult with Parent as promptly as reasonably practicable after receipt of any material communication from any Governmental Authority or inspections of any manufacturing site and before making any material submission to any Governmental Authority; and (C) (1) comply in all material respects with its consultation obligations towards its employees and representatives, if any, in Israel, Germany, France and elsewhere in connection with the Merger and the other transactions contemplated hereunder, to the extent such obligations are required to be carried out under applicable Law as determined by the Company based on legal advice, (2) update Parent as promptly as reasonably practicable in a detailed manner with respect to any significant discussions that have taken place between the Company and representatives of its employees, if any, in respect of the Merger or the other transactions contemplated hereunder and (3) except as otherwise provided in Section 7.7, as promptly as reasonably practicable, coordinate with Parent any communications (whether written or oral) with the Company’s employees or their representatives, if any, in respect of the Merger or the other transactions contemplated hereunder or any such matters resulting from, connected to, or driven by, them.

 

  

(b)          Except (i) as expressly contemplated or required by this Agreement, (ii) required by applicable Law, (iii) as set forth in Section 5.1 of the Company Disclosure Letter, or (iv) as approved by Parent (which approval shall not be unreasonably withheld, conditioned or delayed), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective Time, the Company shall not do any of the following and shall not permit any of its Subsidiaries to do any of the following (it being understood and hereby agreed that if any action is expressly permitted by any of the following subsections or by Section 5.1 of the Company Disclosure Letter, such action shall be expressly permitted under all other subsections of this Section 5.1(b) and shall be expressly permitted under Section 5.1(a)):

 

(i)          cause or propose any material amendment to the articles of association of the Company or amend in any material respect any organizational document of any Subsidiary of the Company or adopt any shareholder rights plan or “poison pill”;

 

(ii)         issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber any Company Securities or any Subsidiary Securities, except (A) for the issuance and sale of Company Shares pursuant to Company Options, Company PSUs or Company RSUs outstanding on the date of this Agreement upon the exercise or vesting (as applicable) thereof and in accordance with their present terms or (B) that a wholly-owned Subsidiary of the Company may issue Subsidiary Securities to the Company or to another wholly-owned Subsidiary of the Company;

 

(iii)        directly or indirectly acquire, repurchase, redeem or otherwise obtain any Company Securities or Subsidiary Securities, except in connection with Tax withholdings and exercise price settlements upon the exercise of Company Options or vesting of Company RSUs outstanding on the date of this Agreement and in accordance with their present terms;

 

(iv)        (A) split, combine, subdivide or reclassify any share capital, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its share capital or (B) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any of its share capital, or make any other actual, constructive or deemed distribution in respect of the shares capital, except for cash dividends that would not give rise to withholding tax or dividend income not exempt from tax made by any direct or indirect Subsidiary of the Company to the Company or one of its Subsidiaries;

 

(v)         adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, except for the transactions contemplated by this Agreement;

 

 

(vi)        (A) incur, modify or assume any Indebtedness for borrowed money or guarantee any Indebtedness for borrowed money of another Person (other than a wholly-owned Subsidiary of the Company) or issue any debt securities or other rights to acquire any debt securities of the Company or any of its Subsidiaries, except for (1) Indebtedness incurred in the ordinary course of business consistent with past practice or (2) Indebtedness in an amount not to exceed $500,000 in the aggregate, (B) make any loans, advances or capital contributions to or investments in any other Person (other than the Company or any direct or indirect wholly-owned Subsidiaries), except for business expense advances in the ordinary course of business consistent with past practice to employees of the Company or any of its Subsidiaries, extensions of credit to customers or expense advances to suppliers, in each case in the ordinary course of business consistent with past practice, or (C) mortgage or pledge any of its or its Subsidiaries’ assets, tangible or intangible, that are material to the Company and its Subsidiaries, taken as a whole, or create exist any Lien thereupon (other than Permitted Liens or Liens granted in connection with any outstanding Indebtedness of the Company or any of its Subsidiaries or the incurrence of any Indebtedness for borrowed money permitted under this Section 5.1(b)(vi));

 

(vii)       except as required by applicable Law or pursuant to the terms of any Employee Plan or any Contract in effect as of the date of this Agreement: (A) grant or provide any severance or termination payments or benefits to any of its directors, officers or employees, (B) increase the compensation, bonus or pension, welfare, severance, or other benefits of, or pay any bonus to, any of its directors, officers, or employees, (C) establish, adopt, materially amend, or terminate any Employee Plan or amend the terms of any outstanding equity-based awards, (D) take any action to accelerate the vesting or payment, fund, or in any other way secure the payment of compensation or benefits under any Employee Plan, (E) forgive any loans to any of its directors, officers or employees, (F) announce, implement, or effect any reduction in labor force, layoff, early retirement program, severance program, or other program or effort concerning the termination of employment of its employees, other than routine employee terminations consistent with past practices, or (G) adopt or enter into any Collective Bargaining Agreement, works council agreement, or any other labor union Contract applicable to its employees;

 

(viii)      except as may be required by applicable Law or IFRS (or any interpretation thereof), make any material change in any of the accounting principles or practices used by the Company or any of its Subsidiaries (including any change in depreciation or amortization policies), or make any material change in internal accounting controls or disclosure controls and procedures;

 

(ix)         make or agree to make any new capital expenditure or expenditures that, individually, is in excess of $1,000,000 or, in the aggregate, are in excess of $5,000,000, except for capital expenditures that are contemplated by the Company’s 2018 budget, as such capital expenditures are set forth in Section 5.1(b)(ix) of the Company Disclosure Letter;

 

(x)          (A) acquire or agree to acquire (by merger, consolidation or acquisition of stock or assets or by any other manner) (1) any business or other Person or any equity interest therein or (2) any assets that are material, individually or in the aggregate, to the Company and the Company’s Subsidiaries, taken as a whole, except for purchases of inventory, services or supplies in the ordinary course of business consistent with past practice, or (B) enter into any Contract (other than inter-company Contracts) with respect to a joint venture, strategic alliance, partnership or a similar relationship;

 

 

(xi)         transfer, sell, lease, license, mortgage, pledge surrender, encumber, divest, cancel, abandon, or allow to lapse or expire or otherwise dispose of any of the material assets, Intellectual Property, product lines or business of the Company or any of its Subsidiaries, other than (A) pursuant to Contracts in effect as of, and disclosed to Parent prior to, the date of this Agreement, or (B) in connection with the distribution or sale of inventory in the ordinary course of business consistent with past practice;

 

(xii)        prepare or file any income Tax Return or other material Tax Return in a manner materially inconsistent with past practice (or fail to prepare and timely file such Tax Return required to be filed (after taking into account extensions therefor) before the Closing) or, on any such Tax Return, take any material position inconsistent with past practice, make or change any material Tax election, change any material transfer pricing arrangement or policy, settle or otherwise compromise any material claim relating to Taxes, settle any material dispute relating to Taxes, surrender any right to claim a material Tax refund, adopt or change any accounting method in respect of a material amount of Taxes, enter into any Tax indemnity, sharing, allocation agreement or closing agreement, or consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment, request any ruling or similar guidance with respect to Taxes or take any action that could jeopardize any existing rulings, requests for rulings or other incentives in each case with respect to Taxes, other than as set forth in Section 7.9 (Tax Rulings);

 

(xiii)       (A) other than in the ordinary course of business, discharge, settle or satisfy any claims, liabilities, litigation or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (1) the payment, discharge, settlement or satisfaction of claims in an amount not in excess of $500,000 individually or $2,000,000 in the aggregate or (2) the payment, discharge, settlement or satisfaction of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company Reports or incurred in the ordinary course of business consistent with past practice after the date of the most recent balance sheet included in such consolidated financial statements, in each case of cause (1) and (2) that do not impose any injunctive relief on the Company or any of its Subsidiaries and does not involve the admission of wrongdoing by the Company, any of its Subsidiaries or any of their respective officers or directors; or (B) cancel any material Indebtedness for borrowed money or waive any claims or rights with a value in excess of $500,000 individually or $2,000,000 in the aggregate, other than among the Company and its wholly-owned Subsidiaries or solely among its wholly-owned Subsidiaries or other than reflected or reserved in the Company Reports;

 

(xiv)      apply for any material Government Grant from any Governmental Authority;

 

 

(xv)       enter into, engage in or amend any transaction or Contract with any Related Party or any interested parties (Ba’alay Inyan), except for compensation, employment or other similar arrangements between the Company or any of its Subsidiaries, on the one hand, and any director or officer thereof, on the other hand, but subject to the other applicable provisions of this Section 5.1(b);

 

(xvi)      cancel or fail to renew, other than in good faith, any material insurance policies with respect to any assets material to the Company and its Subsidiaries, taken as a whole, without replacing such coverage with a comparable amount of insurance coverage to the extent available on commercially reasonable terms;

 

(xvii)     enter into any non-compete, exclusivity, non-solicitation or similar agreement that would restrict or limit, in any material respect, the operations of the Company or any of its Affiliates;

 

(xviii)    enter into any new line of business outside of its existing business;

 

(xix)       initiate or engage in any new operations in the West Bank (including East Jerusalem), the Gaza Strip or the Golan Heights;

 

(xx)        other than in the ordinary course of business, (A) enter into any Contract that would constitute a Material Contract, (B) modify or amend on terms materially adverse to the Company and its Subsidiaries, taken as a whole, any Material Contract, (C) terminate any Material Contract (other than the expiration of any such Material Contract in accordance with its terms), or (D) waive, release, or assign any material rights or claims under any Material Contract;

 

(xxi)       delay payment of receivables or otherwise manage payables, receivables, current assets, current liabilities or working capital in any manner, with respect to such delays or such management, other than in the ordinary course of business consistent with past practice;

 

(xxii)      voluntarily fail to make any material filing, pay any fee, or take any other action necessary to maintain in full force and effect all material Permits if failing to make any such filing, pay any such fee or take any other necessary action would reasonably be expected to be materially adverse to the Company and its Subsidiaries, taken as a whole; or

 

(xxiii)     enter into a Contract, or otherwise resolve or agree in any legally binding manner, to take any of the actions prohibited by this Section 5.1(b).

 

(c)          Notwithstanding the foregoing, nothing in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the business or operations of the Company or its Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.

 

 

Section 5.2          No Solicitation.

 

(a)          The Company shall and shall cause its Subsidiaries, and shall direct its and their respective Representatives, to immediately cease any and all existing discussions, communications or negotiations with any Persons (other than Parent, Merger Sub and any designees of Parent or Merger Sub) conducted heretofore with respect to any Acquisition Proposal.

 

(b)          Subject to Section 5.2(c), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective Time, the Company and its Subsidiaries shall not, nor shall they authorize or knowingly permit any of their respective Representatives to, directly or indirectly, (i) solicit or initiate the making, submission or announcement of, or knowingly encourage, facilitate or assist the making of, any inquiry, offer or proposal which constitutes or is reasonably likely to lead to an Acquisition Proposal, (ii) furnish to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) any information relating to the Company or any of its Subsidiaries, or afford to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) access to the business, properties, assets, books, records or other information, or to any personnel, of the Company or any of its Subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or the intent to knowingly encourage, facilitate or assist, an Acquisition Proposal or any inquiries or the making of any proposal or other communication that would reasonably be expected to lead to an Acquisition Proposal, or (iii) participate or engage in discussions or negotiations with any Person with respect to an Acquisition Proposal (other than with Parent, Merger Sub or any designees of Parent or Merger Sub and other than to inform any Person of the provisions of this Section 5.2). The Company agrees that any breach of the restrictions set forth in this Section 5.2 by it or any of its Subsidiaries or any of its or any of its Subsidiaries’ Representatives shall be deemed a breach of this Agreement by the Company.

 

(c)          Notwithstanding anything to the contrary set forth in this Section 5.2 or elsewhere in this Agreement, prior to the Effective Time, the Company Board (or any committee thereof), may, directly or indirectly through the Company’s Representatives, (i) contact any Person and its advisors that has made an Acquisition Proposal for the purpose of clarifying the proposal and any material terms and conditions and likelihood of consummation thereof, so as to determine whether such proposal constitutes or could reasonably be expected to lead to a Superior Proposal, (ii) participate or engage in discussions or negotiations with any Person that has made a bona fide, written and unsolicited Acquisition Proposal that did not result from a breach of this Section 5.2 and that the Company Board (or any committee thereof) determines in good faith, after consultation with its financial advisor and outside legal counsel, either constitutes or could reasonably be expected to lead to a Superior Proposal, and/or (iii) furnish to any Person that has made an Acquisition Proposal that did not result from a breach of this Section 5.2 of the type referred to clause (ii), any non-public information relating to the Company or any of its Subsidiaries and/or afford to any Person that has made such an Acquisition Proposal that did not result from a breach of this Section 5.2 access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its Subsidiaries, in each case under this clause (iii) pursuant to a confidentiality agreement that is no less favorable to the Company, in the aggregate, than the Confidentiality Agreement, except that any such confidentiality agreement need not contain any standstill or similar provision; provided, however, that in the case of any action taken pursuant to the preceding clauses (ii) or (iii), (A) within twenty-four (24) hours following such determination, the Company gives Parent written notice of the identity of such Person and the material terms of such Acquisition Proposal including any modifications thereto (unless such Acquisition Proposal is in written form, in which case the Company shall give Parent a copy thereof including any modifications thereto) and of the Company’s intention to participate or engage in discussions or negotiations with, or furnish non-public information to, such Person, and shall in no event begin providing such information to such Person prior to providing such notice to Parent, and (B) as soon as reasonably practicable after furnishing any non-public information about the Company and its Subsidiaries to such Person (and in any event within twenty-four (24) hours thereafter), the Company furnishes such non-public information to Parent to the extent such information has not been previously furnished by the Company to Parent.

 

 

(d)          In addition to the obligations of the Company set forth in Section 5.2(c), the Company shall promptly (and in any event within twenty-four (24) hours from the time at which the Company becomes aware) notify Parent in writing if the Company becomes aware of the receipt by the Company or any of its Representatives of (i) any Acquisition Proposal, (ii) any request for information that would reasonably be expected to lead to an Acquisition Proposal, or (iii) any inquiry with respect to, or which would reasonably be expected to lead to, any Acquisition Proposal, the terms and conditions of such Acquisition Proposal, request or inquiry (unless such Acquisition Proposal, request or inquiry is in written form, in which case the Company shall give Parent a copy thereof), and the identity of the Person or group making any such Acquisition Proposal, request or inquiry. The Company shall keep Parent reasonably informed of the status and terms of any such Acquisition Proposal, request or inquiry on a prompt basis, and in any event no later than twenty-four (24) hours after the occurrence of any material changes to any such Acquisition Proposal (including the terms and conditions thereof and of any modification thereto), and any material developments, discussions and negotiations concerning any such Acquisition Proposal, including furnishing copies of any material written inquiries, correspondence and draft documentation, and written summaries of any material oral inquiries or discussions.

 

(e)          The Company shall not, and shall cause its Subsidiaries not to, enter into any agreement with any Person subsequent to the date of this Agreement that would restrict the Company’s ability to provide to Parent the information described in this Section 5.2. The Company, except to the extent a termination, waiver, amendment, modification or grant of permission would reasonably be expected to be inconsistent with the fiduciary duties of directors under Israeli Law, shall not, and shall cause its Subsidiaries not to, terminate, waive, amend or modify, or grant permission under, any standstill provision to which it or any of its Subsidiaries is or becomes a party (other than as occurs in accordance with the terms of any such standstill provision in effect as of the date hereof).

 

 

(f)          The Company shall promptly (but in no event later than two (2) Business Days after the date of this Agreement) revoke or withdraw access of any Person (other than Parent, Merger Sub and their Representatives) to any data room (virtual or actual) containing any non-public information with respect to the Company or its Subsidiaries in connection with an Acquisition Proposal.

 

Section 5.3         Company Board Recommendation.

 

(a)          Neither the Company Board nor any committee thereof shall (i) withdraw, amend or modify in a manner adverse to Parent in any material respect, or publicly propose to withdraw, amend or modify in a manner adverse to Parent in any material respect, the Company Board Recommendation, (ii) approve or recommend or propose to approve or recommend, any Acquisition Proposal, (iii) resolve, agree or propose to take any such actions (any action referred to in the foregoing clauses (i), (ii) and (iii) being referred to as a “Company Board Recommendation Change”) or (iv) enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other Contract providing for the consummation of a transaction contemplated by any Acquisition Proposal or otherwise constituting or related to, or which is intended to or is reasonably likely to lead to, any Acquisition Proposal (other than a confidentiality agreement referred to in Section 5.2(c) entered into in the circumstances referred to in Section 5.2(c)) (an “Alternative Acquisition Agreement”). The Company shall, within twenty four (24) hours following a determination by the Company Board (after consultation with its outside legal counsel and financial advisors) that an Acquisition Proposal constitutes a Superior Proposal, notify Parent in writing of such determination.

 

(b)          Notwithstanding the foregoing or anything to the contrary set forth in this Agreement, at any time prior to the receipt of the Company Shareholder Approval, the Company Board (or any committee thereof) may, subject to Section 5.3(c)-(d), (x) effect a Company Board Recommendation Change and/or (y) subject to the terms of this Agreement, terminate this Agreement pursuant to Section 9.1(e) in order to enter into a written definitive agreement with respect to a Superior Proposal, in each case, if (i) the Company receives a written, bona fide Acquisition Proposal from a third party that did not result from a breach of Section 5.2; and (ii) the Company Board (or any committee thereof) determines, taking into account any modifications to the terms and conditions of this Agreement offered by Parent pursuant to this Section 5.3, in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to effect a Company Board Recommendation Change and/or terminate this Agreement pursuant to Section 9.1(e) would reasonably be expected to be inconsistent with the fiduciary duties of directors under Israeli Law.

 

 

(c)          Notwithstanding anything in Section 5.3(b) to the contrary, the Company Board (or any committee thereof) may not make a Company Board Recommendation Change in connection with, or terminate this Agreement pursuant to Section 9.1(e) to enter into a written definitive agreement with respect to, a Superior Proposal unless (i) the Company has notified Parent in writing that it intends to effect a Company Board Recommendation Change and/or terminate this Agreement in respect of such Superior Proposal, describing in reasonable detail the reasons for such Company Board Recommendation Change and/or termination (a “Recommendation Change Notice”), and shall have contemporaneously provided a copy of the proposed Alternative Acquisition Agreement with respect to such Superior Proposal (it being agreed that the Recommendation Change Notice and any amendment or update to such notice and the determination to so deliver such notice, or update or amend public disclosures with respect thereto shall not constitute a Company Board Recommendation Change for purposes of this Agreement); (ii) if requested by Parent and so long as Parent and its Representatives continue to engage in good faith discussions with the Company and its Representatives, the Company shall have made its Representatives available to discuss with Parent’s Representatives any proposed modifications to the terms and conditions of this Agreement during the three (3)-Business Day period immediately following the delivery by the Company to Parent of such Recommendation Change Notice; and (iii) if Parent shall have delivered to the Company an offer to alter the terms or conditions of this Agreement during such three (3)-Business Day period, the Company Board (or any committee thereof) shall have determined in good faith (after consultation with its outside legal counsel and financial advisors) that the Acquisition Proposal would continue to constitute a Superior Proposal if such alterations to this Agreement were to be given effect and that failure to make a Company Board Recommendation Change and/or terminate this Agreement pursuant to Section 9.1(e) would continue to be inconsistent with the fiduciary duties of directors under Israeli Law; provided, however, that the Company shall not terminate this Agreement pursuant to clause (y) of Section 5.3(b), and any purported termination pursuant to such clause shall be void and of no force or effect, unless in advance of or substantially concurrently with such termination the Company (A) pays Parent the Termination Fee required by and pursuant to the terms of Section 9.3(b)(ii), and (B) immediately following such termination enters into a binding definitive contract for such Superior Proposal. In the event of any material revisions to the terms of the Superior Proposal, the Company shall be required to deliver a new Recommendation Change Notice to Parent and to comply with the requirements of this Section 5.3 with respect to such new Recommendation Change Notice, and the notice period referred to in sub-clause (ii) shall be deemed to have re-commenced on the date of such new notice (except that the three (3)-Business Day notice period referred to in sub-clause (ii) shall instead be equal to two (2) Business Days).

 

(d)          Notwithstanding anything in Section 5.3(b) to the contrary, at any time prior to the receipt of the Company Shareholder Approval, the Company Board (or any committee thereof) may not make a Company Board Recommendation Change with respect to an Intervening Event unless (i) the Company has notified Parent in writing that it intends to effect a Company Board Recommendation Change in respect of such Intervening Event, describing in reasonable detail the reasons for such Company Board Recommendation Change (an “Intervening Event Recommendation Change Notice”) (it being agreed that the Intervening Event Recommendation Change Notice and any amendment or update to such notice and the determination to so deliver such notice shall not in and of itself constitute a Company Board Recommendation Change for purposes of this Agreement); (ii) if requested by Parent and so long as Parent and its Representatives continue to engage in good faith discussions with the Company and its Representatives, the Company shall have made its Representatives available to discuss with Parent’s Representatives any proposed modifications to the terms and conditions of this Agreement during the three (3)-Business Day period immediately following the delivery by the Company to Parent of such Intervening Event Recommendation Change Notice; and (iii) if Parent shall have delivered to the Company an offer to alter the terms or conditions of this Agreement during such three (3)-Business Day period, the Company Board (or any committee thereof) shall have determined, taking into account any modifications to the terms and conditions of this Agreement that may be proposed by Parent pursuant to this Section 5.3, in good faith (after consultation with its outside legal counsel and financial advisors) that failure to make a Company Board Recommendation Change would continue to be inconsistent with the fiduciary duties of directors under Israeli Law. In the event of any material changes to the facts and circumstances of such Intervening Event, the Company shall be required to deliver a new Intervening Event Recommendation Change Notice to Parent and to comply with the requirements of this Section 5.3 with respect to such new Intervening Event Recommendation Change Notice, and the notice period referred to in clause (ii) above shall be deemed to have re-commenced on the date of such new notice (except that the three (3)-Business Day notice period referred to in sub-clause (ii) shall instead by equal to two (2) Business Days).

 

 

(e)          Nothing in this Agreement shall prohibit the Company Board from (i) taking and disclosing to the Company Shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act (or any communication under Israeli law with substantially similar content) or a position contemplated by Section 329 of the ICL, or complying with the provisions of Rule 14d-9 promulgated under the Exchange Act, (ii) making any “stop, look and listen” communication to the Company Shareholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any similar communication to the Company Shareholders) or take a neutral or no position with respect to any Acquisition Proposal, or any communication under Israeli Law with substantially similar content, or (iii) making any disclosure to the Company Shareholders that the Company Board determines in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to make such disclosure would reasonably be expected to be inconsistent with the fiduciary duties of directors under Israeli Law; provided that, in either such case, any such statement(s) or disclosures made by the Company Board will be subject to the terms and conditions of this Agreement, including the provisions of Article X (it being understood that any disclosures permitted under this Section 5.3(e) shall not, in and of themselves, constitute a Company Board Recommendation Change or form a basis for Parent to terminate this Agreement pursuant to Section 9.1(g)).

 

 

Section 5.4           Access. At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, afford Parent and its Representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books and records and personnel of the Company and, during such period, the Company shall, and shall cause each of its Subsidiaries to, furnish as promptly as reasonably practicable to Parent and its Representatives any information concerning its business, Taxes, properties or personnel as Parent may reasonably request, including (a) any report, schedule and other document filed or furnished by it with the ISA or the SEC and any material communication (including “comment letters”) received by the Company from the ISA or the SEC in respect of such filings, and (b) internal monthly consolidated financial statements of the Company and its Subsidiaries, to the extent prepared in the ordinary course of business consistent with past practice; provided, however, that (i) any request by Parent or its Representatives for any such access pursuant to this Section 5.4 with respect to the Company’s Subsidiaries shall be made solely to the Company and (ii) the Company may restrict or otherwise prohibit access to any documents or information to the extent that (A) any applicable Law requires the Company to restrict or otherwise prohibit access to such documents or information, (B) access to such documents or information would give rise to a material risk of waiving any attorney-client privilege, work product doctrine or other applicable privilege applicable to such documents or information, or (C) access to a Contract to which the Company or any of its Subsidiaries is a party or otherwise bound would violate or cause a default under, or give a third party the right to terminate or accelerate the rights under, such Contract; and provided, further, that no information or knowledge obtained by Parent in any investigation conducted pursuant to the access contemplated by this Section 5.4 shall affect or be deemed to modify any representation or warranty of the Company set forth in this Agreement or otherwise impair the rights and remedies available to Parent and Merger Sub hereunder. In the event that the Company does not provide access or information in reliance on the first proviso in the preceding sentence, it shall use its commercially reasonable efforts to communicate the applicable information to Parent in a way that would not violate the applicable Law, Contract or obligation or to waive such a privilege. Subject to compliance with applicable Law, from the date hereof until the earlier of the termination of this Agreement and the Effective Time, the Company shall confer from time to time as reasonably requested by Parent with Parent or its Representatives to discuss any material changes or developments in the operational matters of the Company and the general status of the ongoing operations of the Company. Any investigation conducted pursuant to the access contemplated by this Section 5.4 shall be conducted in a manner that does not unreasonably interfere with the conduct of the business of the Company and its Subsidiaries or create a risk of damage or destruction to any property or assets of the Company or any of its Subsidiaries. Any access to the Company’s properties shall be subject to the Company’s reasonable security measures and insurance requirements and shall not include the right to perform any invasive testing or soil, air or groundwater sampling, including, without limitation, any Phase I or Phase II environmental assessments. The terms and conditions of the Confidentiality Agreement shall apply to any information obtained by Parent or any of its Representatives or employees in connection with any investigation conducted pursuant to the access contemplated by this Section 5.4.

 

 

Section 5.5          Certain Litigation. Each party hereto shall as promptly as reasonably practicable advise the other parties hereto of any Legal Proceedings commenced after the date hereof or threatened against such party or any of its directors, officers (in their capacity as such) or controlled Affiliates by any Company Shareholders (on their own behalf or on behalf of the Company), before any court or other Governmental Authority, relating to this Agreement or the transactions contemplated hereby, and shall keep the other parties hereto reasonably informed regarding any such litigation. Each party hereto shall give the other parties hereto the opportunity to participate in the defense or settlement of any such shareholder litigation, shall afford the other parties hereto a reasonable opportunity to review and comment on filings and responses related thereto, which comments each such party shall consider in good faith, and shall keep such other parties hereto apprised of, and consult with such other parties hereto with respect to, any proposed strategy and any significant decisions related thereto; provided that neither the Company nor any of its Subsidiaries or Representatives shall compromise, settle, come to an arrangement regarding, or agree to compromise, settle or come to an arrangement regarding any such litigation or consent to the same unless Parent shall have consented in writing (not to be unreasonably withheld, delayed or conditioned), unless any such compromise, settlement or arrangement does not include a payment of monetary damages by Parent or the Company or any of its Subsidiaries, includes a release of Parent and its directors, officers and agents (in their capacity as such), as applicable, from all liability arising out of such action or claim and does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of Parent or any of its directors, officers or agents (in their capacity as such); provided, further, that, in any event subject to Parent’s and its Affiliates’ obligations pursuant to Section 6.1, prior to Closing, under no circumstances shall Parent, Merger Sub or any of their respective Representatives be entitled to control the defense of any such litigation.

 

Section 5.6          Director Resignations. Prior to the Closing, except as otherwise may be agreed by Parent, the Company shall use reasonable best efforts to obtain resignation letters from each of the members of the board of directors of the Company, in each case with the resignation to be effective as of the Effective Time, other than the Company Designated Directors.

 

Article VI

COVENANTS OF PARENT AND MERGER SUB

 

Section 6.1          Directors’ and Officers’ Indemnification and Insurance.

 

(a)          The Surviving Company and its Subsidiaries shall (and Parent shall cause the Surviving Company and its Subsidiaries to) honor and fulfill in all respects the obligations of the Company and its Subsidiaries under any and all indemnification agreements between the Company or any of its Subsidiaries and any of their respective current or former directors and officers, any director, officer or trustee of another entity (but only to the extent that such person is or was serving in such capacity at the request of the Company) and any employee or agent of the Company or any of its Subsidiaries, and any person who becomes such a director, officer, trustee, employee or agent prior to the Effective Time (subject to the Company’s compliance with Section 5.1(b)(v) hereof) (each such Person regardless of whether such Person has entered into an indemnification agreement with the Company or any of its Subsidiaries, the “Indemnified Persons”), including the indemnification agreements listed in Section 6.1(a) of the Company Disclosure Letter. In addition, during the period commencing at the Effective Time and ending on the seventh (7^th) anniversary of the Effective Time, the Surviving Company and its Subsidiaries shall (and Parent shall cause the Surviving Company and its Subsidiaries to) cause the articles of association (and other similar organizational documents) of the Surviving Company and its Subsidiaries to contain provisions with respect to indemnification, insurance, exculpation and the advancement of expenses that are at least as favorable as the indemnification, insurance, exculpation and advancement of expenses provisions contained in the articles of incorporation and bylaws (or other similar organizational documents) of the Company and its Subsidiaries as of the date hereof, and during such seven (7)-year period, such provisions shall not be repealed, amended or otherwise modified in any manner except as required by applicable Law.

 

 

(b)          Without limiting the provisions of Section 6.1(a), during the period commencing at the Effective Time and ending on the seventh (7th) anniversary of the Effective Time, to the fullest extent permitted by applicable Law applicable to Parent, and subject to the limitations set forth in Section 263 of the ICL, to the extent applicable, Parent shall indemnify and hold harmless each Indemnified Person from and against any costs, fees and expenses (including reasonable attorneys’ fees and investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any claim, proceeding, investigation or inquiry, whether civil, criminal, administrative or investigative, to the extent such claim, proceeding, investigation or inquiry arises directly or indirectly out of or pertains directly or indirectly to (i) any action or omission or alleged action or omission in such Indemnified Person’s capacity as a director, officer, trustee, employee or agent of the Company or any of its Subsidiaries or other Affiliates prior to or at the Effective Time, or (ii) any of the transactions contemplated by this Agreement; provided, however, that if, at any time prior to the seventh (7th) anniversary of the Effective Time, any Indemnified Person delivers to Parent a written notice asserting a claim for indemnification under this Section 6.1(b), then the claim asserted in such notice shall survive the seventh (7th) anniversary of the Effective Time until such time as such claim is fully and finally resolved. In addition, during the period commencing at the Effective Time and ending on the seventh (7th) anniversary of the Effective Time, to the fullest extent permitted by applicable Law applicable to Parent, and subject to the limitations set forth in Section 263 of the ICL, to the extent applicable, Parent shall advance, prior to the final disposition of any claim, proceeding, investigation or inquiry for which indemnification may be sought under this Agreement, promptly following request by an Indemnified Person therefor, all costs, fees and expenses (including reasonable attorneys’ fees and investigation expenses) incurred by such Indemnified Person in connection with any such claim, proceeding, investigation or inquiry upon receipt of an undertaking by such Indemnified Person to repay such advances if it is ultimately decided in a final, non-appealable judgment by a court of competent jurisdiction that such Indemnified Person is not entitled to indemnification. Notwithstanding anything to the contrary set forth in this Section 6.1(b) or elsewhere in this Agreement, neither Parent nor any of its Affiliates (including the Surviving Company and its Subsidiaries) shall settle or otherwise compromise or consent to the entry of any judgment or otherwise seek termination with respect to any claim, proceeding, investigation or inquiry for which indemnification may be sought by an Indemnified Person under this Agreement unless such settlement, compromise, consent or termination includes an unconditional release of all Indemnified Persons from all liability arising out of such claim, proceeding, investigation or inquiry and does not include an admission of fault or wrongdoing by any Indemnified Person.

 

 

(c)          During the period commencing at the Effective Time and ending on the seventh (7^th) anniversary of the Effective Time, the Surviving Company shall (and Parent shall cause the Surviving Company to) (i) maintain in effect the Company’s current directors’ and officers’ liability insurance (“D&O Insurance”), or obtain D&O Insurance comparable to the current D&O Insurance, in each case in respect of acts or omissions occurring at or prior to the Effective Time, covering each person covered by the current D&O Insurance, on terms with respect to the coverage and amounts that are equivalent to those of the current D&O Insurance; provided, however, that in satisfying its obligations under this Section 6.1(c), Parent and the Surviving Company shall not be obligated to pay annual premiums in excess of three hundred percent (300%) of the aggregate amount of premiums paid by the Company for coverage for its current fiscal year (which premiums the Company represents and warrants to be as set forth in Section 6.1(c)(i) of the Company Disclosure Letter) (such three hundred percent (300%) amount, the “Maximum Annual Premium”); provided that, if the annual premiums of such insurance coverage exceed such amount, Parent and the Surviving Company shall be obligated to obtain a policy with the greatest coverage reasonably and commercially available for a cost not exceeding the Maximum Annual Premium, or (ii) purchase a seven (7)-year extended reporting period endorsement with respect to D&O Insurance (a “Reporting Tail Endorsement”) and maintain such Reporting Tail Endorsement in full force and effect for its full term, provided, however, that prior to the Surviving Company taking any actions set forth in clauses (i) or (ii) above, Parent shall be provided the opportunity to purchase, in lieu thereof, a substitute policy with the same coverage limits and substantially similar terms as in the Reporting Tail Endorsement proposed to be purchased by the Surviving Company. Notwithstanding the foregoing, prior to the Effective Time, the Company shall purchase a Reporting Tail Endorsement in amount and scope no less favorable than those of the current D&O Insurance in consultation with Parent and, if requested by Parent, shall work with Parent’s insurance brokers in connection with the purchase of such Reporting Tail Endorsement; provided, that the annual premiums paid by the Company for such Reporting Tail Endorsement shall not exceed the amount set forth in Section 6.1(c)(ii) of the Company Disclosure Letter. In the event the Company purchases such Reporting Tail Endorsement prior to the Effective Time, the Surviving Company shall (and Parent shall cause the Surviving Company to) maintain such Reporting Tail Endorsement in full force and effect and continue to honor their respective obligations thereunder, in lieu of all other obligations of Parent and the Surviving Company under the first sentence of this Section 6.1(c) for so long as such Reporting Tail Endorsement shall be maintained in full force and effect.

 

(d)          If Parent or the Surviving Company or any of its successors or assigns shall (i) consolidate with or merge into any other Person and shall not be the continuing or Surviving Company or entity of such consolidation or merger, or (ii) transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Company shall assume all of the obligations of Parent and the Surviving Company set forth in this Section 6.1.

 

(e)          The obligations set forth in this Section 6.1 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 Reporting Tail Endorsement (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 Reporting Tail Endorsement (and their heirs and representatives). Each of the Indemnified Persons or other persons who are beneficiaries under the D&O Insurance or the Reporting Tail Endorsement referred to in Section 6.1(c) (and their heirs and representatives) are intended to be third party beneficiaries of this Section 6.1, with full rights of enforcement as if a party thereto. Parent shall cause the Surviving Company to pay all reasonable expenses, including attorneys’ fees, that may be incurred by any Indemnified Person in enforcing the indemnity and other obligations provided in Section 6.1. Subject to applicable Law, the rights of the Indemnified Persons (and other persons who are beneficiaries under the D&O Insurance or the Reporting Tail Endorsement (and their heirs and representatives)) under this Section 6.1 shall be in addition to, and not in substitution for, any other rights that such persons may have under the memorandum and articles of association, certificates of incorporation, bylaws or other equivalent organizational documents, 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 Parent, the Surviving Company and their respective Subsidiaries under this Section 6.1 shall be joint and several.

 

(g)          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 6.1 is not prior to or in substitution for any such claims under such policies.

 

Section 6.2          Employee Matters.

 

(a)          Parent hereby acknowledges that the consummation of the transactions contemplated by this Agreement will be a “change of control” (or similar phrase) for purposes of all Employee Plans, as applicable.

 

(b)          From and after the Effective Time, the Surviving Company shall (and Parent shall cause the Surviving Company to) honor all Employee Plans and compensation arrangements in accordance with their terms as in effect immediately prior to the Effective Time, provided that nothing in this sentence shall prohibit the Surviving Company from amending or terminating, or from causing the Surviving Company to amend or terminate, any such Employee Plans, arrangements or agreements in accordance with their terms or if otherwise required by applicable Law.

 

(c)          For a period of one (1) year following the Effective Time, the Surviving Company shall (and Parent shall cause the Surviving Company to) either (i) continue Employee Plans (excluding equity plans, equity based benefits and non-statutory defined benefit plans) sponsored or maintained by the Surviving Company or any of its Subsidiaries as of the Effective Time (“Company Plans”), (ii) permit Continuing Employees while they remain employed by the Surviving Company or any of its Subsidiaries after the Effective Time and as applicable, their eligible dependents, to participate in the Employee Plans of Parent, its Subsidiaries or their respective Affiliates (“Parent Plans”), or (iii) implement a combination of clauses (i) and (ii); provided, however, the Surviving Company shall (and Parent shall cause the Surviving Company to) provide each Continuing Employee with (A)  a base salary or base wage that is no less than that in effect with respect to such Continuing Employee immediately before the Effective Time and the same aggregate base salary or base wage and cash incentive compensation opportunities (excluding equity based awards) in effect with respect to such Continuing Employee immediately before the Effective Time, (B) severance benefits that are no less favorable than those in effect with respect to such Continuing Employee immediately before the Effective Time and (C) other employee benefits (excluding equity based awards, equity based benefits and non-statutory defined benefit plans) that are substantially comparable in the aggregate to the other employee benefits provided to such Continuing Employee immediately prior to the Effective Time. Nothing in the foregoing shall prevent the Surviving Company or any of its Subsidiaries from terminating the employment of any Continuing Employee at any time following the Effective Time. To the extent not previously paid, Parent shall pay, or shall cause the Company or any Subsidiary of the Company to pay each Continuing Employee eligible under the Company’s annual incentive plan and the milestone bonus plans set forth on Section 6.2(c) of the Company Disclosure Letter, a bonus for the 2018 calendar year in accordance with the terms of such plans as in effect prior to the Effective Time, determined in accordance with the parameters set forth under such plans prior to the Effective Time.

 

 

(d)          To the extent that a Company Plan or Parent Plan is made available to any Continuing Employee on or following the Effective Time, the Surviving Company shall (and Parent shall cause the Surviving Company to) cause to be granted to such Continuing Employee credit for all service with the Company and its Subsidiaries prior to the Effective Time for purposes of eligibility to participate, vesting and entitlement to benefits (but not for purposes of benefit accruals under any defined benefit pension plan) where length of service is relevant (including for purposes of vacation and sick leave accrual and severance pay entitlement); provided, however, that such service need not be credited to the extent that it would result in duplication of coverage or employee benefits. In addition, and without limiting the generality of the foregoing: (i) each Continuing Employee shall be immediately eligible to participate, without any waiting time, in any and all Parent Plans to the extent coverage under any such Parent Plan replaces coverage under a comparable Company Plan in which such Continuing Employee participates immediately before the Effective Time; and (ii) for purposes of each Parent Plan providing medical, dental, pharmaceutical, vision and/or disability benefits to any Continuing Employee, the Surviving Company shall use commercially reasonable efforts to cause all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such Parent Plan to be waived for such Continuing Employee and his or her covered dependents, and the Surviving Company shall use commercially reasonable efforts to cause any eligible expenses incurred by such Continuing Employee and his or her covered dependents during the portion of the plan year of the Company Plan ending on the date such employee’s participation in the corresponding Parent Plan begins to be given full credit under such Parent Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Parent Plan, and (iii) credit the accounts of such Continuing Employees under any Parent Plan which is a flexible spending plan with any unused balance in the account of such Continuing Employee under the applicable Company Plan. Any vacation, sick leave or paid time off accrued but unused by a Continuing Employee as of immediately prior to the Effective Time shall be credited to such Continuing Employee following the Effective Time, and shall not be subject to accrual limits or other forfeiture and shall not limit future accruals.

 

 

(e)          Prior to the Effective Time, the Company and Parent shall, and shall cause their respective Affiliates to, take all actions reasonably necessary or desirable to implement the retention program and milestone bonus program, each as set forth on Section 6.2(e) of the Company Disclosure Letter. Parent hereby represents that all necessary corporate approvals and actions required to effectuate the retention program and milestone bonus program have been completed prior to the date of this Agreement.

 

(f)          Notwithstanding anything to the contrary set forth in this Agreement, no provision of this Agreement shall be deemed to (i) guarantee employment for any period of time for, or preclude the ability of Parent or the Surviving Company to terminate, any Continuing Employee for any reason, or (ii) require Parent or the Surviving Company to continue any Company Plan or prevent the amendment, modification or termination thereof after the Effective Time.

 

(g)          No provision of this Agreement shall create any third party beneficiary rights in any employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to any employee by the Company, Parent, or its Affiliates or the Surviving Company or under any benefit plan which the Company, Parent or its Affiliates or the Surviving Company may maintain.

 

Section 6.3           Obligations of Merger Sub and Buyer. Parent shall take all action necessary to (a) form Buyer and cause Buyer to execute and deliver a Joinder Agreement; (b) cause Merger Sub, Buyer and the Surviving Company to perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby upon the terms and subject to the conditions set forth in this Agreement; and (c) ensure that, prior to the Effective Time, Merger Sub shall not conduct any business or make any investments, or incur or guarantee any Indebtedness or Liabilities, in each case, other than as specifically contemplated by this Agreement.

 

Section 6.4           Manufacturing Facility. Parent hereby acknowledges and agrees that, for a period of at least fifteen (15) years from the Effective Time, (a) the manufacturing facility of the Company currently located in Lehavim shall continue to be located in the State of Israel with, subject to any adjustments necessary, substantially similar scope of operations as immediately prior to the Effective Time and as contemplated by the Company’s capacity expansion plan and (b) the aggregate number of employees or contractors employed or engaged by the Surviving Company and its Subsidiaries at such manufacturing facility shall, at all times, remain sufficient for the operations conducted at such manufacturing facility.

 

Section 6.5           Board Representation. Parent shall (a) cause each of the individuals set forth in Section 6.5 of the Company Disclosure Letter (the “Company Designated Directors”) to be designated as members of the Board of Directors of the Surviving Company effective as of the Effective Time, (b) cause each of the Company Designated Directors (or their respective designees) to be appointed to the Board of Directors of the Surviving Company at each meeting of the shareholder(s) of the Surviving Company at which directors are elected, and (c) not remove, or otherwise cause the removal of, any of the Company Designated Directors from the Board of Directors of the Surviving Company for so long as such Company Designated Directors continue to be employed in good standing in substantially the same capacity by the Company.

 

 

Article VII

ADDITIONAL COVENANTS OF ALL PARTIES

 

Section 7.1           Reasonable Best Efforts to Complete. Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and their respective Affiliates, on the one hand, and the Company and its Affiliates, on the other hand, shall 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 party or parties hereto in doing, all things reasonably necessary, proper or advisable under applicable Law or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including using reasonable best efforts to: (a) cause the conditions set forth in Article VIII to be satisfied; (b) obtain all necessary actions or non-actions, waivers, consents, approvals, orders and authorizations from Governmental Authorities and make all necessary registrations, declarations and filings with Governmental Authorities, that are necessary to consummate the Merger and the transactions contemplated hereby; (c) obtain all necessary or appropriate consents, waivers and approvals under any Material Contracts to which the Company or any of its Subsidiaries is a party in connection with this Agreement and the consummation of the transactions contemplated hereby so as to maintain and preserve the benefits under such Material Contracts following the consummation of the transactions contemplated by this Agreement; and (d) execute and deliver any additional instruments necessary to consummate the transactions contemplated hereby and to fully carry out the purposes of this Agreement. In addition to the foregoing, neither Parent, Merger Sub or their respective Affiliates, on the one hand, nor the Company or their respective Affiliates, on the other hand, shall take any action, or fail to take any action, that is intended to, or has (or would reasonably be expected to have) the effect of, preventing, impairing, delaying or otherwise adversely affecting the consummation of the Merger or the ability of such party to fully perform its obligations under this Agreement. Notwithstanding anything to the contrary herein, the Company shall not be required prior to the Effective Time to pay any consent or other similar fee, “profit sharing” or other similar payment or other consideration (including increased rent or other similar payments or any amendments, supplements or other modifications to (or waivers of) the existing terms of any Contract), or the provision of additional security (including a guaranty) to obtain the consent, waiver or approval of any Person under any Contract.

 

 

Section 7.2         Regulatory Filings.

 

(a)          Each of Parent and Merger Sub shall, and shall cause their respective Affiliates to, if applicable, on the one hand, and the Company, on the other hand, shall (i) file with (A) the FTC and the Antitrust Division of the DOJ a Notification and Report Form relating to this Agreement and the transactions contemplated hereby as required by the HSR Act, and (B) any other applicable Governmental Authority (including in the European Union), the notifications as required by their respective Antitrust Laws (including, without limitation, with respect to the European Commission, a draft Form CO relating to this Agreement and the transactions contemplated hereby as required by the EU Merger Regulation), in each case as promptly as reasonably practicable after the date of this Agreement but (with respect to the Notification and Report Form referred to in clause (A) above) in no event later than ten (10) Business Days following the execution and delivery of this Agreement, (ii) submit to the Israeli Anti-Trust Authority (“IAA”) merger notifications under the Israeli Restrictive Trade Practices Law-1988 in connection with the Merger, as soon as practicable after the date of this Agreement but in no event later than ten (10) Business Days following the execution and delivery of this Agreement, and (iii) file comparable pre-merger or post-merger notification filings, forms and submissions with any other Governmental Authority that is required by any other Antitrust Laws as soon as practicable after the date of this Agreement and in any event before the expiration of any applicable legal deadline. Each of Parent and the Company shall (i) cooperate and coordinate with the other in the making of such filings, (ii) supply the other with any information that may be required in order to make such filings, (iii) supply any additional information that reasonably may be required or requested by the FTC, the DOJ, the European Commission, the IAA or the Governmental Authorities of any other applicable jurisdiction in which any such filing is made under any other Antitrust Laws, and (iv) use reasonable best efforts to take all action necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act, the EU Merger Regulation or any other Antitrust Laws as soon as practicable, and to obtain any required consents under any other Antitrust Laws applicable to the Merger as soon as practicable, and to avoid any impediment to the consummation of the Merger under any Antitrust Laws, including using reasonable best efforts to take all such action as reasonably may be necessary to resolve such objections, if any, as the FTC, the DOJ, the European Commission, the IAA or any other Governmental Authority or Person may assert under any applicable Antitrust Laws with respect to the Merger.

 

(b)          As soon as practicable after the date of this Agreement, and no later than ten (10) Business Days after the date hereof, the Company shall instruct its Israeli counsel, advisors and/or accountants to prepare and file with the Investment Center an application to obtain the Investment Center Approval and the ▇▇▇ Approval. Without limiting the generality of Section 7.2, 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 Investment Center Approval, following the receipt of which the parties shall instruct their Israeli counsel and advisors to file an application to obtain the ▇▇▇ Approval. The final text of such application shall be subject to the prior written approval of Parent or its counsel (which shall not be unreasonably withheld or delayed). The Company and its Representatives shall not make any application to, or, to the extent practicable, conduct any negotiation with, the Investment Center and ▇▇▇ with respect to matters relating to the Investment Center Approval and the ▇▇▇ Approval without prior coordination with Parent or its Representatives, and, to the extent practicable, will enable Parent’s Representatives to participate in all discussions and meetings with the Investment Center or the ▇▇▇ relating thereto. To the extent that Parent’s Representatives elect not to participate in any such meeting or discussion, the Company’s Representatives shall provide Parent’s Representatives a report of the discussions and/or meetings held with the Investment Center or the ▇▇▇. 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 Investment Center Approval and the ▇▇▇ Approval, as promptly as practicable.

 

 

(c)          Each of Parent, Merger Sub and the Company shall, and shall cause their respective Affiliates to, use commercially reasonable efforts to (i) in connection with obtaining the Investment Center Approval, provide all information reasonably required by the Investment Center, execute all customary forms and undertakings required by the Investment Center and execute and deliver any other undertakings, which are in form and substance reasonably acceptable to Parent, in favor of the Investment Center, and (ii) in connection with obtaining the ▇▇▇ Approval, provide all information reasonably required by the ▇▇▇ and execute and deliver any undertakings, in form and substance reasonably acceptable to Parent, in favor of the ▇▇▇.

 

(d)          Each of Parent and Merger Sub shall, and shall cause their respective Affiliates to, if applicable, on the one hand, and the Company, on the other hand, shall promptly inform the other of any material communication from any Governmental Authority regarding any of the transactions contemplated by this Agreement in connection with any filings or investigations with, by or before any Governmental Authority relating to this Agreement or the transactions contemplated hereby, including any proceedings initiated by a private party. If any party hereto or Affiliate thereof shall receive a request for additional information or documentary material from any Governmental Authority with respect to the transactions contemplated by this Agreement or with respect to any filings that have been made, then such party shall use its reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. In connection with and without limiting the foregoing, to the extent reasonably practicable and unless prohibited by applicable Law or by the applicable Governmental Authority, the parties hereto agree to (i) give each other reasonable advance notice of all meetings with any Governmental Authority relating to the Merger, (ii) give each other an opportunity to participate in each of such meetings, (iii) keep the other party reasonably apprised with respect to any oral communications with any Governmental Authority regarding the Merger, (iv) cooperate in the filing of any analyses, presentations, memoranda, briefs, arguments, opinions or other written communications explaining or defending the Merger, articulating any regulatory or competitive argument and/or responding to requests or objections made by any Governmental Authority, (v) provide each other with a reasonable advance opportunity to review and comment upon, and consider in good faith the views of the other with respect to, all written communications (including any analyses, presentations, memoranda, briefs, arguments and opinions) with a Governmental Authority regarding the Merger, (vi) provide each other (or counsel of each party, as appropriate) with copies of all written communications to or from any Governmental Authority relating to the Merger, and (vii) cooperate and provide each other with a reasonable opportunity to participate in, and consider in good faith the views of the other with respect to, all material deliberations with respect to all efforts to satisfy the conditions set forth in Section 8.1(b). Any such disclosures, rights to participate or provisions of information by one party to the other may be made on a counsel-only basis to the extent required under applicable Law or as appropriate to protect confidential information.

 

 

(e)          Each of Parent, Merger Sub and the Company shall cooperate with one another in good faith to (i) promptly determine whether any filings not contemplated by Section 7.2(a) are required to be or should be made, and whether any other consents, approvals, permits or authorizations not contemplated by Section 7.2(a) are required to be or should be obtained, from any Governmental Authority under any other applicable Law in connection with the transactions contemplated hereby, and (ii) promptly make any filings, furnish information required in connection therewith and seek to obtain timely any such consents, permits, authorizations, approvals or waivers that the parties determine are required to be or should be made or obtained in connection with the transactions contemplated hereby.

 

(f)          Notwithstanding anything in this Agreement to the contrary, each of Parent and the Company agrees, and shall cause each of its Affiliates, to take any and all reasonable actions necessary to obtain any consents, clearances or approvals required under or in connection with any applicable Law (including Antitrust Laws), and to enable all waiting periods under any applicable Law (including Antitrust Laws) to expire, and to avoid or eliminate each and every impediment under any applicable Law (including Antitrust Laws) asserted by any Governmental Authority, in each case, to cause the Merger and the other transactions contemplated hereby to occur as soon as practicable and in any event prior to the Outside Date, including but not limited to (i) promptly complying with or modifying any requests for additional information (including any second request) by any Governmental Authority, (ii) contesting, defending and appealing any threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of any party hereto to consummate the transactions contemplated hereby and (iii) taking any and all other actions to prevent the entry, enactment or promulgation thereof. From and after the date hereof and until all Approvals by Governmental Authorities required in connection with the Merger and the other transactions contemplated hereby have been obtained, each of the Company and Parent shall not, and shall cause its Affiliates not to, operate their respective businesses in such manner or take any action, that would reasonably be expected to increase in any material respect the risk of not obtaining any such governmental Approval.

 

 

Section 7.3         Company Shareholders Meeting.

 

(a)          As soon as reasonably practicable following the date of this Agreement, but in no event later than the fifth (5th) Business Day after the date hereof, the Company shall (i) establish a record date for, duly call, give notice of and convene a special meeting of its shareholders (the “Company Shareholders Meeting”) for the purpose of obtaining the Company Shareholder Approval, and (ii) publish the notice of the Company Shareholders Meeting (the “Notice Date”). As soon as reasonably practicable following the date of this Agreement, but in no event later than the fifteenth (15th) day after the date of the notice of the Company Shareholders Meeting, the Company shall prepare and file with the ISA and furnish to the SEC on Form 6-K a proxy statement for the Company Shareholders Meeting (the “Proxy Statement”). The Company shall otherwise comply with the notice requirements applicable to the Company in respect of the Company Shareholders Meeting pursuant to the ICL and the regulations promulgated thereunder and the Charter Documents. Unless this Agreement is terminated pursuant to Article IX or as Parent and the Company may otherwise agree, the Company Shareholders Meeting shall be held no later than the first Business Day following the fortieth (40^th) day after the Notice Date. Unless the Company Board (or a committee thereof) has effected a Company Board Recommendation Change, the Company shall include the Company Board’s recommendation that the holders of Company Shares approve this Agreement and the Merger (the “Company Board Recommendation”) and use its reasonable best efforts to cause the Proxy Statement to be mailed to the shareholders of the Company as promptly as practicable following its filing date. The Company shall not include in the Proxy Statement any information with respect to Parent or its Affiliates, unless the form and content thereof shall have been consented to in writing by Parent prior to such inclusion and Parent agrees to provide any such information required to be so included under applicable Law (not to be unreasonably withheld, conditioned or delayed). Prior to the mailing of the Proxy Statement, unless the Company Board (or a committee thereof) has effected a Company Board Recommendation Change, the Company (x) shall provide Parent with a reasonable opportunity to review and comment on any drafts of the Proxy Statement and related correspondence and filings, (y) shall include in such drafts, correspondence and filings all comments reasonably proposed by Parent, provided that the Company shall have no obligation to include any such comments to the extent that the Company determines in good faith, in consultation with its counsel, that including such comments would result in the Proxy Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, and (z) to the extent practicable and not prohibited under applicable Law, the Company and its outside counsel shall permit Parent and its outside counsel to participate in all communications, if any, with the SEC, ISA, Nasdaq or TASE, or their respective staff, as applicable (including all meetings and telephone conferences) relating to this Agreement or any of the transactions contemplated hereby. If at any time prior to the Effective Time any event shall occur, or fact or information shall be discovered, by either the Company, Parent or Merger Sub that should be set forth in an amendment of or a supplement to the Proxy Statement, such party shall inform the others thereof and the Company shall, in accordance with the procedures set forth in this Section 7.3(a), prepare such amendment or supplement as soon thereafter as is reasonably practicable and to the extent required by applicable Law, cause such amendment or supplement to be promptly distributed to the shareholders of the Company. 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 Shares so voted. At the Company Shareholders Meeting, Parent and Merger Sub shall cause any Company Shares owned by them and their Affiliates (if any) to be voted in favor of the approval of the Merger and the other transactions contemplated by this Agreement.

 

(b)          Unless the Company Board (or a committee thereof) has effected a Company Board Recommendation Change, the Company shall, through the Company Board, use commercially reasonable efforts to solicit from the Company shareholders proxies in favor of the approval of this Agreement.

 

 

(c)          Notwithstanding the foregoing or anything else herein to the contrary, and subject to compliance with the terms of Section 5.3, in connection with any disclosure regarding a Company Board Recommendation Change relating to a Superior Proposal or an Acquisition Proposal, the Company shall not be required to provide to Parent or Merger Sub the opportunity to review or comment on (or include comments proposed by Parent or Merger Sub in) or permit Parent or Merger Sub to participate in any discussions with the SEC, the ISA or any other Governmental Authority regarding the Proxy Statement, or any amendment or supplement thereto, or any comments thereon or any other filing by the Company with the SEC, the ISA or any other Governmental Authority, with respect to such disclosure.

 

(d)          Notwithstanding the foregoing, the Company may adjourn or postpone the Company Shareholders Meeting as and to the extent required by applicable Law or to allow for additional solicitation of votes if necessary in order to obtain the Company Shareholder Approval.

 

Section 7.4           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 7.4(a) accordingly): (i) cause a merger proposal (in the Hebrew language) (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 meeting, (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 (A) and (B) of this ‎Section 7.4(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: (A) 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 (x) two (2) daily Hebrew newspapers, on the day that the Merger Proposal is submitted to the Companies Registrar, (y) in a popular newspaper in New York as may be required by applicable Law; (B) 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 (A); and (C) 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 (A)(x) of this Section 7.4(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 Shareholder Approval is received, the Company shall (in accordance with Section 317(b) of 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 7.4(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 (3) 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 7.5           Anti-Takeover Statute. In the event that any anti-takeover or other similar statute is or becomes applicable to this Agreement or any of the transactions contemplated by this Agreement, the Company, Parent and Merger Sub shall use their respective commercially reasonable efforts to ensure that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms and subject to the conditions set forth in this Agreement and otherwise to minimize the effect of such statute on this Agreement and the transactions contemplated hereby.

 

Section 7.6           Notification of Certain Matters.  Each of the parties shall keep the other reasonably apprised of, to the extent then known, the status of matters relating to completion of the transactions contemplated hereby, including (a) as promptly as reasonably practicable, and to the extent then known, notifying the other party of any breach of any representation or warranty or covenant if and only to the extent that such breach could reasonably be expected to cause any of the conditions to the obligations of the other party to consummate the transactions contemplated hereby, to fail to be satisfied at the Closing, and (b) as promptly as reasonably practicable notifying the other party of any written notice from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated hereby; provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of the parties set forth in this Agreement or the conditions to the obligations of the parties to consummate the transactions contemplated by this Agreement or the remedies available to the parties hereunder. In furtherance and not in limitation of the foregoing, the Company shall promptly advise, to the extent then known, Parent orally and in writing of any change or event that has had or could reasonably be expected to have a Company Material Adverse Effect.

 

 

Section 7.7          Public Statements and Disclosure. The initial press release announcing the execution and delivery of this Agreement shall be a joint release of, and shall not be issued without the prior approval of, each of the Company and Parent. Thereafter, none of the Company, on the one hand, or Parent and Merger Sub, on the other hand, shall issue any public release or make any public announcement concerning this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any applicable Israeli or United States securities exchange or regulatory or Governmental Authority to which the relevant party is subject or submits, wherever situated, in which case the party required to make the release or announcement shall use commercially reasonable efforts to allow the other party or parties hereto reasonable time to comment on such release or announcement in advance of such issuance (it being understood that the final form and content of any such release or announcement, as well as the timing of any such release or announcement, shall be at the final discretion of the disclosing party); provided, however, that the restrictions set forth in this Section 7.7 shall not apply to any release or announcement made or proposed to be made by the Company pursuant to Section 5.3 or following a Company Board Recommendation Change. Notwithstanding the foregoing, without prior consent of the other party, (x) Parent may make ordinary course communications to its investors and (y) the Company may disseminate (including by press release and media interviews) to Israeli media outlets, material substantially similar to material included in a press release or other document previously approved for public distribution by the other party or other general information on the operations and activities of the Company; provided, further, that the Company shall coordinate with Parent with respect to the dissemination of any such material (including by press release and media interviews) to non-Israeli media outlets. Each party agrees to promptly make available to the other parties copies of any written public communications made without prior consultation with the other parties.

 

Section 7.8          Confidentiality. Parent, Merger Sub and the Company hereby acknowledge that Parent and the Company have previously executed a Confidentiality Agreement, made as of July 26, 2018 (as amended, the “Confidentiality Agreement”), which will continue in full force and effect in accordance with its terms.

 

 

Section 7.9         Tax Rulings.

 

(a)          As soon as practicable after the date of this Agreement, and no later than five (5) Business Days after the date hereof, 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 approved by Parent prior to its submission and which approval shall not be unreasonably withheld, conditioned or delayed) confirming that (i) the cancellation and exchange of the Company 102 Options in accordance with Section 2.7(c), the Company ▇▇▇ ▇▇▇▇ and the Company 102 PSUs in accordance with Section 2.7(d) and conversion of the Company 102 Shares in accordance Section 2.7(a)(i) 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, PSUs 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, PSUs 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. If the Option 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, Company Shares, Company PSUs or Company RSUs (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 Option Tax Ruling”). To the extent that prior to the Closing an Interim Option Tax Ruling shall have been obtained, then all references herein to the Option Tax Ruling shall be deemed to refer to such Interim Option Tax Ruling, until such time that a final definitive Option 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 approved by Parent prior to its submission and which approval shall not be unreasonably withheld, conditioned or delayed) that (i) with respect to holders of Company Shares 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 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; (ii) with respect to holders of Company Shares that are Israeli residents (as defined in the Ordinance or as will be determined by the ITA) (other than the Company’s ordinary shares subject to Section 102 of the Ordinance) (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 Shares from which Tax is to be withheld (if any), the rate or rates of withholding to be applied; and (iii) and with respect to holders of Company Options, Company RSUs and Company PSUs which are not Company 102 Options, Company 102 RSUs and Company 102 PSUs, 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) instructing Parent, the Paying Agent, the Surviving Company and their respective agents on how such withholding at the source is to be executed, the rate or rates of withholding to be applied and how to identify any such non−Israeli residents (the “Withholding Tax Ruling”).

 

 

(c)          Without limiting the generality of Section 7.2, 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 Option Tax Ruling (including the Interim Option 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 approval of Parent or its counsel, which consent shall not 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 matters relating to the Interim Option Tax Ruling, the Options Tax Ruling and the Withholding Tax Ruling without prior approval by Parent or its Representatives (which approval shall not be unreasonably withheld, conditioned or delayed), and will enable Parent’s Representatives to participate in all discussions and meetings with the ITA relating thereto. To the extent that Parent’s Representatives elect not to participate in any such meeting or discussion, the Company’s Representatives shall provide Parent’s Representatives a report of the discussions and/or meetings held with the ITA. 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 Interim Options Tax Ruling, the Options Tax Ruling and the Withholding Tax Ruling, as promptly as practicable.

 

Section 7.10       Nasdaq and TASE De-Listing of Company Shares; Transition Period SEC Reports. (a) Prior to the Closing Date, the Company shall cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Law and rules and policies of Nasdaq and the TASE to enable the de-listing by the Surviving Company of the Company Shares from Nasdaq and the TASE and the deregistration of the Company Shares under the Exchange Act and Israel Securities Law effective as of the Closing Date.

 

(b)          If the Company is required or reasonably expected to be required to file with or furnish to the SEC any reports pursuant to the Exchange Act or to the ISA any reports pursuant to Israeli Securities Laws following the date hereof and prior to the Effective Time (other than any report relating to or following any Company Board Recommendation Change), then the Company will use commercially reasonable efforts to provide to Parent, at least ten (10) Business Days (with respect to the Company’s annual report on Form 20-F) or two (2) Business Days (with respect to the Company’s immediate reports on Form 6-K, unless a shorter period is required under applicable Law) prior to the filing or furnishing date of such reports, a substantially final draft of each such report (each, a “Transition Period SEC Report”). The Company will give due consideration to all reasonable comments provided by Parent with respect to each Transition Period SEC Report to be filed with or furnished to the SEC prior to the Effective Time.

 

 

Article VIII

CONDITIONS TO THE MERGER

 

Section 8.1        Conditions. The respective obligations of Parent, Buyer, Merger Sub and the Company to consummate the Merger and the other transactions contemplated by this Agreement shall be subject to the satisfaction or waiver (except with respect to the condition set forth in Section 8.1(a), which cannot be waived) by mutual written agreement of Parent and the Company, prior to the Effective Time, of each of the following conditions:

 

(a)          Company Shareholder Approval. The Company Shareholder Approval shall have been obtained.

 

(b)          Regulatory. Any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired, and any waiting period shall have expired or been terminated and any other Approvals required to be obtained or filings required to be made as set forth on Section 8.1(b) of the Company Disclosure Letter shall have been obtained or filed, as applicable.

 

(c)          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.

 

(d)          No Legal Prohibition. No Governmental Authority 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 prohibiting or otherwise preventing the consummation of the Merger.

 

Section 8.2         Conditions to the Obligations of Parent, Buyer and Merger Sub. The obligations of Parent, Buyer and Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement shall be subject to the satisfaction or waiver prior to the Effective Time of each of the following conditions, any of which may be waived exclusively by Parent:

 

 

(a)          Representations and Warranties. Each representation and warranty of the Company set forth in Section 3.2 (Corporate Power; Enforceability) and Section 3.24 (Brokers) shall be true and correct in all respects, and each representation and warranty of the Company set forth in Section 3.6(a) (Company Capitalization) and each of the representations and warranties of the Company concerning the number of Company Options, Company RSU and Company PSUs outstanding set forth in Section 3.6(b) (Company Capitalization) shall be true and correct in all respects subject to de minimis inaccuracies, in each case on and as of the date hereof and the Closing Date with the same force and effect as if made on and as of such date, except (i) for changes contemplated by this Agreement, and (ii) for those representations and warranties that address matters only as of a particular date, which representations and warranties shall have been true and correct in accordance with the applicable standard set forth above as of such particular date. The other representations and warranties of the Company set forth in this Agreement shall be true and correct on and as of the date hereof and the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date) with the same force and effect as if made on and as of such date, except for any failures to be so true and correct as have not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; provided, however, that, solely for purposes of determining the accuracy of the representations and warranties of the Company set forth in this Agreement for purposes of this clause (ii) of Section 8.2(a), all “Company Material Adverse Effect” or similar qualifications set forth in such representations and warranties (other than Section 3.11(c)) shall be disregarded.

 

(b)          Performance of Obligations of the Company. The Company shall have performed in all material respects the obligations that are to be performed by it under this Agreement at or prior to the Effective Time.

 

(c)          Officer’s Certificate of the Company. Parent and Merger Sub shall have received 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 8.2(a), Section 8.2(b) and Section 8.2(d) have been satisfied.

 

(d)          Company Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

 

Section 8.3         Conditions to the Company’s Obligations to Effect the Merger. The obligations of the Company to consummate the Merger and the other transactions contemplated by this Agreement shall be subject to the satisfaction or waiver prior to the Effective Time of each of the following conditions, any of which may be waived exclusively by the Company:

 

 

(a)          Representations and Warranties. The representations and warranties of Parent and Merger Sub set forth in Section 4.2 (Corporate Power; Enforceability) and Section 4.8 (Brokers) shall be true and correct in all respects on and as of the date hereof and the Closing Date with the same force and effect as if made on and as of such date, except (i) for changes contemplated by this Agreement, and (ii) for those representations and warranties that address matters only as of a particular date, which representations and warranties shall have been true and correct in all material respects as of such particular date. The other representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct on and as of the date hereof and the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date) with the same force and effect as if made on and as of such date, except for any failure to be so true and correct as of such particular date that would not, individually or in the aggregate, prevent or materially delay or impair the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated herein or perform their respective obligations under this Agreement.

 

(b)          Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger Sub shall have performed in all material respects the obligations that are to be performed by Parent and Merger Sub under this Agreement at or prior to the Effective Time.

 

(c)          Officer’s Certificate of Parent and Merger Sub. The Company shall have received 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 8.3(a) and Section 8.3(b) have been satisfied.

 

Section 8.4         Frustration of Closing Conditions. None of the Company, Parent, Buyer or Merger Sub may rely on the failure of any condition set forth in Section 8.1, Section 8.2 or Section 8.3, as the case may be, to be satisfied if such failure was caused by such party’s failure to act in good faith or to use the standard of efforts required from such party to consummate the Merger and the other transactions contemplated hereby, including as required by and subject to Section 7.1 and Section 7.2.

 

Article IX

TERMINATION, AMENDMENT AND WAIVER

 

Section 9.1         Termination. This Agreement may be validly terminated as follows:

 

(a)          at any time prior to the Effective Time (notwithstanding the prior receipt of the Company Shareholder Approval), by mutual written agreement of Parent and the Company; or

 

(b)          by either the Company or Parent, at any time prior to the Effective Time (notwithstanding the prior receipt of the Company Shareholder Approval), in the event that any Governmental Authority of competent jurisdiction shall have formally issued an Order, or any other action by any Governmental Authority shall have been taken, permanently enjoining, restraining or otherwise prohibiting the Merger and such Order or other action shall have become final and non-appealable; provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to a party if the issuance of such Order or other action was primarily due to the failure of such party to perform any of its obligations under this Agreement; or

 

 

(c)          by either the Company or Parent, at any time prior to the Effective Time (notwithstanding the prior receipt of the Company Shareholder Approval), in the event that the Effective Time shall not have occurred on or before March 31, 2019 (such date referred to herein as the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available to any party hereto (i) whose actions or omissions have been a principal cause of, or primarily resulted in, the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement or (ii) that is in material breach of this Agreement; provided, further, that the parties agree that no party shall have any right to terminate this Agreement pursuant to this Section 9.1(c) during the pendency of any Legal Proceeding by any party for specific performance pursuant to Section 10.7; or

 

(d)          by either the Company or Parent, at any time prior to the Effective Time, in the event that the Company shall have failed to obtain the Company Shareholder Approval after the final adjournment of the Company Shareholders Meeting at which a vote is taken on the Merger; or

 

(e)          by the Company, at any time prior to the receipt of the Company Shareholder Approval, in order to immediately enter into a written definitive agreement with respect to a Superior Proposal pursuant to Section 5.3(b) and concurrently with the termination of this Agreement the Company pays Parent the Termination Fee pursuant to Section 9.3(b)(ii); or

 

(f)          by Parent, at any time prior to the Effective Time (notwithstanding the prior receipt of the Company Shareholder Approval), in the event that (i) Parent and Merger Sub have not breached any of their respective representations, warranties or covenants under this Agreement in any material respect, and (ii) the Company shall have breached any of its representations, warranties or covenants under this Agreement such that the conditions set forth in Section 8.2(a) or Section 8.2(b) would not be satisfied and shall have failed to cure, or cannot cure, such breach within thirty (30) Business Days after the Company has received written notice of such breach from Parent (it being understood that Parent shall not be permitted to terminate this Agreement pursuant to this Section 9.1(f) in respect of the breach set forth in any such written notice (A) at any time during such thirty (30)-Business Day period, or (B) at any time after such thirty (30)-Business Day period if the Company shall have cured such breach during such thirty (30)-Business Day period); or

 

(g)          by Parent, at any time prior to the receipt of the Company Shareholder Approval, in the event that (i) the Company Board (or a committee thereof) shall have effected a Company Board Recommendation Change, (ii) a tender or exchange offer for Company Shares that constitutes an Acquisition Proposal (whether or not a Superior Proposal) is commenced by a Person unaffiliated with Parent and, within ten (10) Business Days after the public announcement of the commencement of such Acquisition Proposal, the Company shall not have filed a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act or Section 329 of the ICL recommending that the Company Shareholders not tender any Company Shares into such tender or exchange offer, or (iii) an Acquisition Proposal other than an Acquisition Proposal described in the foregoing sub-clause (ii) shall have been publicly disclosed and the Company Board (or a committee thereof) shall have failed to reaffirm publicly its recommendation to the Company’s shareholders to approve the Merger within ten (10) Business Days after Parent so requests in writing (provided that Parent may not make more than two such requests in the aggregate following the disclosure of any such Acquisition Proposal); or

 

 

(h)          by the Company, at any time prior to the Effective Time (notwithstanding the prior receipt of the Company Shareholder Approval), in the event that (i) the Company has not breached any of its representations, warranties or covenants under this Agreement in any material respect and (ii) Parent or Merger Sub shall have breached any of its representations, warranties or covenants under this Agreement such that the conditions set forth in Section 8.3(a) or Section 8.3(b) would not be satisfied and shall have failed to cure, or cannot cure, such breach within thirty (30) Business Days after Parent has received written notice of such breach from the Company (it being understood that the Company shall not be permitted to terminate this Agreement pursuant to this Section 9.1(h) in respect of the breach set forth in any such written notice (A) at any time during such thirty (30)-Business Day period, or (B) at any time after such thirty (30)-Business Day period if Parent and Merger Sub shall have cured such breach during such thirty (30)-Business Day period).

 

Section 9.2           Notice of Termination; Effect of Termination. Any proper and valid termination of this Agreement pursuant to Section 9.1 shall be effective immediately upon the delivery of written notice of the terminating party to the other party or parties hereto, as applicable. In the event of the termination of this Agreement pursuant to Section 9.1, this Agreement shall be of no further force or effect without liability of any party or parties hereto, as applicable (or any director, officer, employee, affiliate, agent or other representative of such party or parties) to the other party or parties hereto, as applicable, except (a) for the terms of Section 7.8, this Section 9.2, Section 9.3 and Article X, each of which shall survive the termination of this Agreement, and (b) nothing in this Agreement shall relieve any party or parties hereto, as applicable, from liability for any fraud or willful breach of any representation, warranty, covenant, obligation or other provision of this Agreement. For purposes of this Agreement, “willful breach” shall mean any act or failure to act by any person with the actual knowledge that the taking of such act or the failure to take such act would, or would reasonably be expected to, cause a breach of this Agreement. In addition to the foregoing, no termination of this Agreement shall affect the obligations of the parties hereto set forth in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.

 

Section 9.3         Fees and Expenses.

 

(a)          General. Except as set forth in this Section 9.3, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party or parties, as applicable, incurring such expenses whether or not the Merger is consummated.

 

 

(b)         Company Payments.

 

(i)          The Company shall pay to Parent One Hundred Nineteen Million Dollars (US$119,000,000) (the “Termination Fee”), by wire transfer of immediately available funds to an account or accounts designated in writing by Parent, within two (2) Business Days after demand by Parent, in the event that: (A) this Agreement is terminated by Parent or the Company pursuant to Section 9.1(d) or by Parent pursuant to Section 9.1(f), (B) after the date of this Agreement and prior to the date of (x) the Company Shareholders Meeting with respect to a termination pursuant to Section 9.1(d) or (y) the termination of this Agreement pursuant to Section 9.1(f), an Acquisition Proposal shall have been publicly announced with respect to a termination pursuant to Section 9.1(d) or publicly announced or otherwise communicated to the Company Board or senior management with respect to a termination pursuant to Section 9.1(f) and (C) within twelve (12) months following such termination of this Agreement the Company enters into an agreement in respect of any Acquisition Proposal, or a transaction in respect of any Acquisition Proposal is consummated, which, in each case, need not be the same Acquisition Proposal that was made, disclosed or communicated prior to termination hereof (provided, that for purposes of this clause (C), each reference to “20%” in the definition of “Acquisition Transaction” shall be deemed to be a reference to “50%”).

 

(ii)         In the event that this Agreement is terminated by the Company pursuant to Section 9.1(e), the Company shall pay to Parent the Termination Fee, by wire transfer of immediately available funds to an account or accounts designated in writing by Parent, as a condition to the effectiveness of such termination.

 

(iii)        In the event that this Agreement is terminated by Parent pursuant to Section 9.1(g), the Company shall pay to Parent the Termination Fee, by wire transfer of immediately available funds to an account or accounts designated in writing by Parent, within two (2) Business Days after demand by Parent.

 

(iv)        In the event that the Company fails to pay any amount required pursuant to this Section 9.3(b) when due, such amount shall accrue interest for the period commencing on the date such amount became past due, at a rate equal to the rate of interest publicly announced by Citibank N.A. from time to time during such period, as such bank’s prime lending rate. In addition, if the Company fails to pay such amount when due, the Company shall reimburse Parent for all of Parent’s reasonable costs and expenses (including reasonable attorneys’ fees) in connection with successful efforts to collect such amounts; provided, that if Parent or Merger Sub pursues an action for payment of such amount against the Company and does not prevail in such action, Parent shall reimburse the Company for all of the Company’s reasonable costs and expenses (including reasonable attorneys’ fees) in connection with such action. The Company, Parent and Merger Sub each acknowledges that the provisions of Section 9.3(b) are an integral part of the transactions contemplated hereby and that, without these agreements, the Company, Parent and Merger Sub would not have entered into this Agreement.

 

 

(v)         Single Payment Only. The parties hereto acknowledge and hereby agree that in no event shall the Company be required to pay the Termination Fee on more than one occasion, whether or not the 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.

 

(c)         Cooperation.

 

(i)          The parties agree to use commercially reasonable efforts to cooperate with each other in good faith in order to minimize and/or eliminate any Taxes that may be applicable or imposed in connection with the payment of the Termination Fee.

 

(ii)         In the event that the Company reasonably determines it is required to withhold amounts on account of Israeli Taxes from or in connection with the Termination Fee, the Company shall notify Parent of such determination, if requested by Parent in writing, as promptly as reasonably practicable after making such determination and provide it with reasonable time (but in any event no less than twenty (20) days) to obtain a Valid Tax Certificate allowing the Company to make the payment of the Termination Fee with no withholding, or a reduced rate of withholding, on account of Israeli Taxes. In the event that Parent requests such time extension as set forth above, then all references in this Agreement to payment of the Termination Fee shall be deemed to provide for a deferral of the time upon which payment of the Termination Fee is due without such deferral limiting any rights of the Company to terminate this Agreement or in connection with such termination. The Company agrees to use commercially reasonable efforts to cooperate with Parent and to provide assistance, as reasonably requested by Parent, in order to obtain such Valid Tax Certificate, including, but not limited to, the provision of information reasonably requested by the ITA and/or Parent, and executing any relevant tax form, as promptly as reasonably practicable after receipt of such request or form from Parent (but in no event later than three (3) days following such request).

 

Section 9.4         Effect of Termination Fee. Notwithstanding anything to the contrary in this Agreement, if the Termination Fee is payable to Parent pursuant to Section 9.3(b), Parent’s right to receive payment of the Termination Fee shall be the sole and exclusive remedy of Parent and its Affiliates and its and their respective Representatives against the Company and its Affiliates and its and their respective Representatives under this Agreement or arising out of or related to this Agreement or the transactions contemplated hereby, and upon payment of such amount, none of the Company or any of its Affiliates or its or their respective Representatives shall have any liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby, in each case whether based on contract, tort or strict liability, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law or otherwise; provided, however, that nothing in this Agreement shall preclude or limit Parent from seeking and obtaining a remedy with respect to, or relieve the Company from liability for, any fraud or willful breach of any representation, warranty, covenant, obligation or other provision of this Agreement.

 

Section 9.5         Amendment. Subject to applicable Law and subject to the other provisions of this Agreement, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company; provided, however, that in the event that the Company has received the Company Shareholder Approval, no amendment shall be made to this Agreement that requires the approval of the Company Shareholders under applicable Law without obtaining the Company Shareholder Approval of such amendment.

 

 

Section 9.6         Extension; Waiver. At any time and from time to time prior to the Effective Time, any party or parties hereto may, to the extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (b) waive any inaccuracies in the representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.

 

Article X

GENERAL PROVISIONS

 

Section 10.1       Survival of Representations, Warranties and Covenants. The representations and warranties of the Company, Parent and Merger Sub contained in this Agreement or in any instrument delivered pursuant to this Agreement shall terminate at the Effective Time, and all rights, claim, action or cause of action (whether in contract or in tort or otherwise, or whether at law (including at common law or by statute) or in equity) with respect thereto shall terminate at, the Effective Time, and only the covenants that by their terms survive the Effective Time shall so survive the Effective Time in accordance with their respective terms.

 

Section 10.2       Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (i) seven (7) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) two (2) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable international overnight courier service, or (iii) immediately upon delivery by email or by hand, in each case to the intended recipient as set forth below:

 

(a)          if to Parent, Buyer, Merger Sub or the Surviving Company to:

 

PepsiCo, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Tarkan Gurkan
E-mail: ▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

 

 

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

 

PepsiCo. Inc.

▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: General Counsel

E-mail: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

 

and

▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇

E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇;

▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

and

 

▇▇▇▇▇▇, Fox & ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Israel
Attention: ▇▇▇▇ ▇▇▇▇ and Aviram Hazak
E-mail: ▇▇▇▇▇@▇▇▇.▇▇.▇▇; ▇▇▇▇▇▇@▇▇▇.▇▇.▇▇

 

(b)          if to the Company, to:

 

SodaStream International Ltd.
Gilboa Street, Airport City

▇▇▇ ▇▇▇▇▇▇ Airport 7019900, Israel

Attention:

▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

▇▇▇▇ ▇▇▇▇▇▇

E-mail:

▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇

▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

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

Meitar Liquornik ▇▇▇▇ ▇▇▇▇▇▇ Tal
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇

Israel
Attention: ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

 

White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇  ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇

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

 

 

Section 10.3       Assignment. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties, except that each of Merger Sub, Buyer and Parent may assign, in its sole discretion, upon notice to the Company, any or all of its rights, interests and obligations hereunder to any Affiliate thereof (each, an “Assignee”). Any such Assignee may thereafter assign, in its sole discretion and, upon notice to the Company, any or all of its rights, interests and obligations hereunder to one or more additional Assignees; provided, however, that in connection with the Joinder Agreement (including the subsequent contribution of the issued and outstanding shares of capital stock of Merger Sub to Buyer), the transfer of shares of the Surviving Company to Frito-Lay Trading Company (Europe) GmbH and any assignment to an Assignee, (a) Parent and Merger Sub shall remain liable for the performance by Parent and Merger Sub of their obligations hereunder, and (b) under no circumstances shall such Joinder Agreement, transfer of shares of the Surviving Company or assignment in any way prevent, impair or materially delay the consummation of the transactions contemplated hereby. Subject to the preceding sentence, this Agreement shall (i) be binding upon the parties hereto and their respective successors and permitted assigns and (ii) shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any purported assignment in violation of the terms of this Section 10.3 shall be null and void ab initio.

 

Section 10.4       Entire Agreement. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Letter and the Annexes hereto, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; provided, however, the Confidentiality Agreement shall not be superseded, shall survive any termination of this Agreement and shall continue in full force and effect until the earlier to occur of (a) the Effective Time and (b) the date on which the Confidentiality Agreement expires in accordance with its terms or is validly terminated by the parties thereto. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT, MERGER SUB OR ANY OF THEIR AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES OR REPRESENTATIVES, ON THE ONE HAND, NOR THE COMPANY OR ANY OF ITS AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES OR REPRESENTATIVES, ON THE OTHER HAND, MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, AND EACH PARTY HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), OR AS TO THE ACCURACY OR COMPLETENESS OF ANY OTHER INFORMATION, MADE (OR MADE AVAILABLE) BY ITSELF OR ANY OF ITS REPRESENTATIVES, WITH RESPECT TO, OR IN CONNECTION WITH, THE NEGOTIATION, EXECUTION OR DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.

 

Section 10.5       Third Party Beneficiaries. This Agreement is not intended to, and shall not, confer upon any other Person any rights or remedies hereunder, except (a) as set forth in or contemplated by the terms and provisions of Section 6.1, and (b) from and after the Effective Time, the rights of holders of Company Shares and other Company Securities to receive the amounts to which they are entitled pursuant to Article II.

 

 

Section 10.6       Severability. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

Section 10.7       Remedies.  

 

(a)          Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

 

(b)         The parties hereto hereby agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached or the Merger was not consummated, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties hereto acknowledge and hereby agree that in the event of any breach or threatened breach by the Company, on the one hand, or Parent and/or Merger Sub, on the other hand, of any of their respective covenants or obligations set forth in this Agreement, the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall be entitled to an injunction or injunctions, or any other appropriate form of specific performance or equitable relief, to prevent or restrain breaches or threatened breaches of this Agreement by the other party (as applicable), and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this Agreement (including the parties’ obligation to consummate the Merger and Parent’s obligation to pay, the Merger Consideration, the Option Consideration, the RSUs Consideration and the PSUs Consideration, as applicable, in accordance with Article II). Each party hereto hereby agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity. Each party hereby irrevocably and unconditionally waives any requirement for the securing or posting of any bond in connection with any such remedy.

 

Section 10.8       Governing Law. This Agreement and any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, the negotiation, execution, existence, validity, enforceability or performance of this Agreement, or for the breach or alleged breach hereof (whether in contract, in tort or otherwise) shall be governed by and construed and enforced in accordance with the Laws of the State of Israel, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Israel or otherwise) that would cause the application of the Laws of any other jurisdiction.

 

 

Section 10.9        Consent to Jurisdiction.

 

(a)          Each of the parties hereto (i) agrees that any actions or Legal Proceedings arising in connection with any dispute, controversy or claim arising under, relating to or in connection with this Agreement or the transactions contemplated hereby (including any dispute or controversy regarding the existence, validity, enforceability or breach of this Agreement), whether in contract, in tort or otherwise, shall be brought, tried and determined only in any court of competent jurisdiction located in Tel Aviv-Jaffa, Israel; (ii) irrevocably and unconditionally consents and submits itself and its properties and assets to the jurisdiction of any court located in Tel Aviv-Jaffa, Israel in the event of any such action or Legal Proceeding; (iii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (iv) waives any objection that it may now or hereafter have to the venue of any such action or Legal Proceeding in any such court or that such action or Legal Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (v) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby in any court other than the aforesaid courts. Each of Parent, Merger Sub and the Company agrees that a final judgment in any action or Legal Proceeding in such courts as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

 

(b)          Each of the parties hereto irrevocably consents to the service of the summons and complaint and any other process in any action or Legal Proceeding relating to the transactions contemplated by this Agreement, for and on behalf of itself or any of its properties or assets, in accordance with Section 10.2 or in such other manner as may be permitted by applicable Law, and nothing in this Section 10.9 shall affect the right of any party to serve legal process in any other manner permitted by applicable Law.

 

Section 10.10    Company Disclosure Letter References. The parties hereto agree that the disclosure set forth in any particular section or subsection of the Company Disclosure Letter shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties of the Company that are set forth in the corresponding section or subsection of this Agreement, and (b) any other representations and warranties of the Company that are set forth in this Agreement, but in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such other representations and warranties is reasonably apparent on the face of such disclosure.

 

Section 10.11     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 party, it being understood that all parties need not sign the same counterpart. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery (including, without limitation, in pdf or other scan format) shall be sufficient to bind the parties to the terms and conditions of this Agreement.

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective duly authorized officers to be effective as of the date first above written.

 

	PEPSICO, INC.
	By:	/s/ Tarkan Gurkan
		Name: Tarkan Gurkan
		Title: Senior Vice President Corporate Mergers & Acquisitions
	SATURN MERGER SUB LTD.
	By:	/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
		Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
		Title: Director
	SODASTREAM INTERNATIONAL LTD.
	By:	/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇	/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
		Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇	▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
		Title: Chief Executive Officer	Chief Financial Officer

 

[Signature page to Agreement and Plan of Merger]