Incredimail 2013 Annual Report Download - page 75

Upon the occurrence of any person (excluding any former ClientConnect shareholder or any person who is subject to transfer
restrictions identical to those of the Contractual Lock-
up) becoming the beneficial owner of 24.9% or more of our outstanding ordinary shares or
at such time as the total number of shares issued to the former shareholders of ClientConnect and still held by them constitutes less than 20% of
our outstanding ordinary shares, the Contractual Lock-up will be released.
Finally, upon the occurrence of any issuance of our ordinary shares or securities convertible into our ordinary shares in connection with
(x) an acquisition by us of any business, company or assets or (y) a private placement of ordinary shares, that are not subject to more strict or
identical transfer restrictions as provided under the Contractual Lock-
up, in which the aggregate number of ordinary shares issued (after giving
effect to the conversion of all convertible securities issued or issuable thereunder and assuming that all milestones and conditions for issuance
thereunder are fulfilled) constitutes 10% or more of our outstanding ordinary shares as of immediately prior to such issuance, the transfer
restrictions under the Contractual Lock-
up will be further relaxed to be no more restrictive (both in volume and period) than the transfer
restrictions imposed on the ordinary shares issued in such transaction.
In order to monitor the transfer restrictions under the Contractual Lock-up and the Tax Lock-
up described below, the applicable shares
have been deposited with brokerage firms who have undertaken to ensure compliance with such transfer restrictions. UBS Securities LLC has
been appointed by us and the holders of a majority of the shares subject to the Contractual Lock-
up as an advisor with respect to the Contractual
Lock-up. The advisor may determine to relax transfer restrictions under the Contractual Lock-
up, for the benefit of all of the shareholders on an
equal basis.
The Contractual Lock-
up does not apply to shares issued upon exercise of the Perion options issued in exchange for ClientConnect
options in the ClientConnect Acquisition. However, each of our CEO, Mr. Mandelbaum and our President, Mr. Wine, have entered into certain
lock-up arrangements with respect to our ordinary shares issuable pursuant to his equity grants.
Tax-related Restrictions
Pursuant to a tax ruling issued by the Israeli Tax Authorities, the tax events with respect to Conduit and its shareholders arising from the
Conduit Split and the ClientConnect Acquisition will be deferred until the sale of our ordinary shares issued at the closing of the acquisition by
any holder thereof or the sale of the assets or shares of ClientConnect shares by us. As a result, under Israeli tax law, each of Conduit,
ClientConnect, the former shareholders of ClientConnect and we will be required to comply with various restrictions until December 31, 2015,
including the following:
•
each of Conduit and ClientConnect may not sell a majority of its assets and such assets must be put to reasonable use under the
circumstances in the course of its business;
•
each of Conduit and ClientConnect must continue the principal business activities in which Conduit was engaged during the two
years preceding the Conduit Split;
•
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.
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