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Undertaking Agreement

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Date:
2007
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28K
ID:
#2980256

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UNDERTAKING AGREEMENT This UNDERTAKING AGREEMENT (the "AGREEMENT"), dated as of July 1, 2007 is entered into by and between Epsilon 1 Ltd., an Israeli company ("PURCHASER") and the shareholder set forth on the signature page hereto (the "SHAREHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, ECI Telecom Ltd., an Israeli company (the "COMPANY"), Purchaser and Epsilon 3 Ltd., an Israeli company and an indirect wholly owned subsidiary of Purchaser ("MERGER SUB"), are entering into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of the date hereof pursuant to which Merger Sub will be merged with and into the Company, and the Company will become a wholly owned subsidiary of Purchaser, upon the terms and subject to the conditions set forth the Merger Agreement; WHEREAS, as of the date hereof, the Shareholder is the record and/or beneficial owner of, and has the sole right to vote and dispose of or cause to be voted or disposed of, 98,565 ordinary shares, par value NIS 0.12 per share, of the Company (the "COMPANY SHARES"); and WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Purchaser and Merger Sub have required that the Shareholder agree, and the Shareholder is willing to agree, to the matters set forth herein. NOW, THEREFORE, in consideration of the foregoing and the agreements set forth below, the parties hereto agree as follows: 1. VOTING AGREEMENT; GRANT OF IRREVOCABLE PROXY. 1.1 The Shareholder hereby undertakes to vote or cause to be voted all Company Shares at any general, special or other meeting of the shareholders of the Company, and at any adjournment(s) or postponement(s) thereof, however called or convened, or pursuant to any consent in lieu of a meeting or otherwise, which the undersigned has the right to so vote: (i) provided a Change of Recommendation (as defined in the Merger Agreement) has not occurred and remains in effect, in favor of the Merger (as defined in the Merger Agreement) and the approval and adoption of the Merger Agreement and the Transactions contemplated thereby, and any actions required in furtherance thereof; and (ii) except as otherwise agreed to in writing in advance by Purchaser, to the extent any of the following actions require a vote of the Company's shareholders under applicable Law or the Company's articles of association, against the following actions or proposals (other than the transactions contemplated by the Merger Agreement): (A) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or any of its material Subsidiaries (as defined in the Merger Agreement); (B) any sale, lease or transfer of a material amount of the assets of Company or any of its material Subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of Company or any of its material Subsidiaries; (C) any change in the persons who constitute the board of directors of Company that is not approved in advance by at least a majority of the persons who were directors of Company as of the date of this Agreement (or their successors who were so approved); or (D) any other action or proposal involving Company or any of its material Subsidiaries that is intended, or would reasonably be expected, to prevent, impede, interfere with, delay, postpone, or adversely affect the transactions contemplated by the Merger Agreement. 1.2 The Shareholder, on the date hereof, has validly executed and delivered an irrevocable proxy, in the form attached hereto as EXHIBIT A (the "PROXY"). The Proxy shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke all prior proxies granted by the Shareholder. The Shareholder shall not enter into any contract or other agreement with any person that violates or conflicts with or could reasonably be expected to violate or conflict with the provisions and agreements contained in this Agreement, the Proxy or the Merger Agreement. Notwithstanding anything to the contrary contained in this Agreement, Purchaser understands and acknowledges that the Shareholder will have no obligation as a result of this Agreement or the Proxy to exercise stock options or other derivative securities exercisable for, or exchangeable or convertible into, Company Shares.
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