Incredimail 2013 Annual Report Download - page 76

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:
•
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 are required to file a "shelf" registration statement on Form F-
3, as soon as
practicable following the filing of this annual report and in any event within the earlier of (i) 30 days following the filing of
this annual report and (ii) May 30, 2014, 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 cause the registration statement to become effective as soon as possible and 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. 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 will not
derogate from the Tax Lock
-
up or the Contractual Lock
-
up that applies to the shares issued in the ClientConnect Acquisition.
• Piggyback Registration Rights
. If we effect a registered offering of securities, the holders of registrable securities consisting of
at least 3% of our outstanding share capital at the relevant time (or 2% in the case of W Capital Engage, L.P.) or a holder
whose resale of registrable securities would otherwise be subject to volume limitations set forth in SEC Rule 144 will have the
right to include its shares in the registration effected pursuant to such offering. Each such holder will be afforded this right
regardless of the Contractual Lock-up that may apply to such holder’
s shares. The number of piggyback registrations is
unlimited.
•
All reasonable expenses incurred in connection with any such registrations, other than underwriting discounts and
commissions, will be borne by us. We are subject to customary indemnification undertakings with respect to any registration
effected pursuant to the Registration Rights Undertaking.
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