Incredimail 2012 Annual Report Download - page 223

(c) Withholding; Certain Tax Matters .
(i) Each of Purchaser, the Paying Agent, the 102 Trustee, the Company and the Israeli Subsidiary shall be
entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any Company
Shareholder and Company Optionholder such amounts that are required to be deducted or withheld therefrom or in connection therewith under
any provision of state, local or foreign Tax law or under any other applicable Legal Requirement, including, without limitation, the Israeli
Income Tax Ordinance [New Version] 1961 (the “ Israeli Income Tax Ordinance ”)
at the applicable rate for such withholding. To the extent
such amounts were so deducted or withheld, such amounts shall be (i) treated for all purposes under this Agreement as having been paid to the
Person to whom such amounts would otherwise have been paid and (ii) remitted in accordance with the applicable Legal Requirements by
Purchaser, the Paying Agent, the 102 Trustee, the Company or the Israeli Subsidiary, to the applicable Governmental Entity. In the case of any
amounts withheld pursuant to or in accordance with this Agreement, the withholding party shall promptly provide to the Company Shareholders
and Company Optionholders from which such amounts were withheld written confirmation of the amount so withheld. To the extent that such
amounts are required to be deducted or withheld, such amounts will be withheld first from the cash amount payable to a Company Shareholder
or Company Optionholder subject to withholding rather than the Purchaser Ordinary Shares payable to a Company Shareholder or Company
Optionholder. In the event such amounts required to be deducted or withheld by Purchaser, the Paying Agent, the 102 Trustee, the Company or
the Israeli Subsidiary exceed the cash amount payable to a Company Shareholder or Company Optionholder subject to withholding, Purchaser
shall be entitled to repurchase (and Purchaser, the Paying Agent, the 102 Trustee, the Company or the Israeli Subsidiary, as the case may be, is
authorized to sell to Purchaser, on behalf of a Company Shareholder or Company Optionholder), the portion of the Purchaser Ordinary Shares
otherwise deliverable to a Company Shareholder or Company Optionholder, to enable the withholding party to comply with such deduction or
withholding requirement. The repurchase of any Purchaser Ordinary Shares will be based on the Market Value of the Purchaser Ordinary
Shares. In the event that Purchaser, in its sole discretion, elects to sell, or cause the sale of, any of such Purchaser Ordinary Shares, Purchaser,
the 102 Trustee, the Company or the Israeli Subsidiary shall notify the relevant Company Shareholder or Company Optionholder that such sale
and withholding or deduction was made and remit to such Company Shareholder or Company Optionholder any balance of the proceeds of such
sale not applied to the payment of Taxes less any costs or expenses incurred by Purchaser, the Paying Agent, the 102 Trustee, the Company or
the Israeli Subsidiary in connection with such sale. It is clarified that the transfer to a Company Shareholder or Company Optionholder of its
entire portion of the Closing Payment Cash Consideration and its entire portion of its Aggregate Share Consideration shall be made at the same
time, and a Company Shareholder or Company Optionholder shall not be entitled to receive its portion of the Closing Payment Cash
Consideration prior to receipt of its portion of the Aggregate Share Consideration.
(ii) Notwithstanding the provisions of Section 1.1(c)(i) above, with respect to Israeli Tax, the Aggregate
Consideration payable hereunder to each of the Company Shareholders and non-Israeli Company Optionholders
, shall be paid to and retained
by the Paying Agent for the benefit of each such Company Shareholder and non-
Israeli Company Optionholder, if any, for a period of 180 days
from the Closing Date, the Deferred Payment Date or the Contingent Payment Date, as applicable, or an earlier date required in writing by a
Company Shareholder or non-Israeli Company Optionholder (the “ Withholding Drop Date ”) (
during which time neither Purchaser nor the
Paying Agent shall withhold any Israeli Tax on such consideration, except as provided below), and during which time each Company
Shareholder and non-Israeli Company Optionholder may obtain a certification or ruling (the “ Qualified Withholding Certificate ”)
issued by
the Israeli Tax Authority (“ ITA ”),
in form and substance reasonably acceptable to Purchaser, (x) exempting Purchaser from the duty to
withhold Israeli Taxes with respect to such Company Shareholder and non-
Israeli Company Optionholder or (y) determining the applicable rate
of Israeli Tax to be withheld from such Company Shareholder and non-
Israeli Company Optionholder. In the event that no later than five (5)
Business Days before the Withholding Drop Date, a Company Shareholder and/or non-
Israeli Company Optionholder submits a Qualified
Withholding Certificate, in form and substance reasonably acceptable to Purchaser, the Paying Agent shall withhold and transfer to the ITA such
amount of withholding due from such Company Shareholder and/or non-
Israeli Company Optionholder as specified in such Qualified
Withholding Certificate, and shall pay to such Company Shareholder and/or non-
Israeli Company Optionholder only the balance of the payment
due to such Company Shareholder and/or non-Israeli Company Optionholder that is not so withheld. If any Company Shareholder and/or non-
Israeli Company Optionholder (A) does not provide the Paying Agent with a Qualified Withholding Certificate, in form and substance
reasonably acceptable to Purchaser, no later than five (5) Business Days before the Withholding Drop Date, or (B) submits a written request with
the Paying Agent to release his portion of the Aggregate Consideration prior to the Withholding Drop Date and fails to submit a Qualified
Withholding Certificate at or before such time, in form and substance reasonably acceptable to Purchaser, then the amount to be withheld from
such Company Shareholder’s and/or non-Israeli Company Optionholder’
s portion of the Aggregate Consideration shall be calculated according
to the applicable withholding rate as reasonably determined by Purchaser (plus applicable linkage differences and interest as defined in Section
159A of the Israeli Income Tax Ordinance for the time period between the 15th calendar day of the month following the month during which the
Closing Date, the Deferred Payment Date or the Contingent Payment Date, as applicable, occurs and the time the relevant payment is made, and
calculated in NIS based on the US$:NIS exchange rate not lower than the rate at the Closing Date, the Deferred Payment Date or the Contingent
Payment Date, as applicable) which amount (the “ Tax Amount ”)
shall be delivered to the ITA by the Paying Agent and Purchaser shall pay to
such Company Shareholder and/or non-Israeli Company Optionholder the balance of the payment due to such Company Shareholder and/or non-
Israeli Company Optionholder that is not so withheld.
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