Incredimail 2014 Annual Report Download - page 77

Nevertheless, the following transactions will not be deemed prohibited changes in ownership, provided that each of the shareholders of
Conduit, with respect to their respective interests in Conduit, each of our restricted 5% shareholders, with respect to their respective interests in
the Company, and we, with respect to our interest in ClientConnect, retain ownership of at least 51% of the applicable interests:
In the event of a violation of the foregoing restrictions by any person that is subject to the above restrictions, including by Conduit, by
ClientConnect or by the Company, Conduit, its shareholders and ClientConnect could be subject to tax on any gains derived from the Conduit
Split and the ClientConnect Acquisition, which would otherwise be deferred under the tax ruling. If the Tax Lock-
up is breached by any Conduit
shareholders, they will be required to indemnify the injured parties for the damages caused by such breach. Each of Conduit, ClientConnect and
the Company has undertaken to indemnify the other parties and their respective affiliates for any damages caused to them by its actions that
breach the foregoing restrictions.
Registration Rights Undertaking
Pursuant to the Registration Rights Undertaking, dated January 2, 2014, which we entered into with certain former shareholders of
ClientConnect with respect to our ordinary shares issued to them in the ClientConnect Acquisition, we have the following general obligations:
•
there may be no transfers of cash or other consideration, granting of guaranties or any other activities between Conduit and
ClientConnect outside the ordinary course of business;
•
the shareholders of Conduit are required to retain their same respective interests in Conduit as they had in Conduit prior to the
Conduit Split, and the 5% shareholders of Conduit are required to maintain their same respective interests in the Company as they
held immediately following the closing of the ClientConnect Acquisition (the "Tax Lock-up"). Accordingly, the Tax Lock-
up with
respect to our ordinary shares applies to Ronen Shilo, Dror Erez, and Zack and Orli Rinat. If any of the funds that became 5%
shareholders of the Company as a result of the ClientConnect Acquisition fail to comply with certain conditions set by the Israeli
Tax Authorities, the Tax Lock
-
up with respect to our ordinary shares will apply to such funds, as well; and
• subject to certain exceptions detailed below, we are required to maintain our interests in ClientConnect.
•
the sale of up to 10% of the restricted interests in Conduit, ClientConnect or the Company to a person who was not a security
holder of the relevant company prior to the Conduit Split and the ClientConnect Acquisition;
•
the issuance of shares of Conduit, ClientConnect or the Company in a private placement to any single person (or a group of related
persons) of up to 25% of the relevant company’
s outstanding shares, measured prior to the issuance, provided such person (or
persons) was not a security holder of the relevant company prior to the Conduit Split and the ClientConnect Acquisition;
•
a public offering of Conduit, ClientConnect or the Company pursuant to which the offered shares will be listed on a stock market;
or
• an involuntary sale, such as by inheritance or in liquidation.
• Form F-3 Shelf Registration Rights . We were required to file a "shelf" registration statement on Form F-
3, as soon as
practicable following the filing of our 2013 annual report, to register the resale from time to time by the holders thereof whose
resale of shares would otherwise be subject to volume limitations set forth in SEC Rule 144. The holders of an aggregate of
approximately 46.2 million ordinary shares have requested to include such shares in such registration statement, including
Ronen Shilo, Dror Erez, Benchmark Israel, Zack and Orli Rinat, Project Condor and Roy Gen. We undertook to use our
commercially reasonable efforts to maintain the effectiveness of the registration statement until the earliest of (i) five years
following effectiveness, (ii) the resale of all the shares covered thereby and (iii) with respect to any shareholder, the ability of
such shareholder to sell all of its shares under SEC Rule 144 without any volume limitations. Accordingly, we filed a shelf
registration statement on May 8, 2014, and it was declared effective on August 7, 2014. For a period of three years following
the expiration of such registration statement, at the request of holders whose resale of shares would otherwise be subject to
volume limitations under SEC Rule 144, we would be required to file additional shelf registration statements and maintain the
effectiveness thereof until the disposition of all the shares covered thereby. Such shelf registration rights are limited to four
requests during such three-year period. Such registration does not derogate from the Tax Lock-up or the Contractual Lock-
up
that applies to the shares issued in the ClientConnect Acquisition.
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