Item 1.01
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Entry into a Material Definitive Agreement.
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On March 12, 2017, Intel Corporation
(
Intel
), entered into a Purchase Agreement (the
Purchase Agreement
) with Mobileye N.V. (the
Company
or
Mobileye
) and Cyclops Holdings, Inc., a wholly owned subsidiary of
Intel (
Buyer
).
The Purchase Agreement and the Offer
Pursuant to the terms of the Purchase Agreement, and upon the terms and subject to the conditions thereof, Buyer will commence a tender offer (the
Offer
) to purchase all of the issued and outstanding ordinary shares, par value EUR 0.01 per share, of Mobileye (the
Mobileye Shares
) at a price of $63.54 per Mobileye Share, net to the seller in cash, without
interest, but subject to any applicable withholding taxes (the
Offer Price
). The Offer will initially remain open until the later of (a) 21 business days from the commencement date of the Offer and (b) the date that is
six business days after the date of the extraordinary general meeting of the shareholders of the Company to be held to approve certain matters relating to the Offer (the
EGM
), subject to extension in accordance with the provisions
of the Purchase Agreement (such initial date and time, or the date and time to which the Offer has been so extended, the
Expiration Time
).
Closing Conditions
Buyers obligation to purchase
Mobileye Shares validly tendered and not properly withdrawn pursuant to the Offer is subject to the satisfaction or waiver (except for the Minimum Condition (as defined below), which cannot be waived by Intel or Buyer) of various closing conditions,
including:
(a) Mobileye Shares having been validly tendered and not properly withdrawn (excluding Mobileye Shares tendered pursuant
to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee prior to the expiration of the Offer) that represent, together with the shares then owned by Intel or its affiliates, at least 95% of
the Companys issued capital (
geplaatst kapitaal)
(the
Minimum Condition
); provided that (x) Buyer may, in its sole discretion, amend the Minimum Condition to a percentage not less than 80% and (y) if, prior
to the Expiration Time, (i) the Company receives a favorable ruling (the
Pre-Wired
Asset Sale Ruling
) from the Israeli Tax Authority relating to the proposed Asset Sale and Liquidation
(each as defined below), the Minimum Condition will be automatically reduced to 80% and (ii) the Company receives the
Pre-Wired
Asset Sale Ruling and resolutions are adopted at the EGM (A) to approve
an amendment of the Companys articles of association, including the conversion of the Company into a private limited liability company under Dutch law (the
Conversion Resolutions
) and (B) to approve the Asset Sale and
Liquidation, then the Minimum Condition will be automatically reduced to 67%;
(b) the expiration or termination of any waiting period
(and extensions thereof) applicable to the Offer and the other transactions contemplated by the Purchase Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the Israel Restrictive Trade Practices Law, 5748-1988,
as amended, to the extent applicable, and the receipt of all other clearances or approvals under applicable antitrust laws (collectively, the
Required Antitrust Approvals
);
(c) the absence of any applicable law or order of a governmental authority prohibiting the consummation of the Offer or the other
transactions contemplated by the Purchase Agreement (other than the Call Option (as defined below)) (collectively, the
Legal Restraints
); provided that the condition described in this paragraph (c) shall not apply to Legal
Restraints against the Asset Sale, the Liquidation or the Second Step Distribution (as defined below), or to any other Post-Offer Reorganization (as defined below) (other than (x) a compulsory acquisition of Mobileye Shares from each minority
shareholder in accordance with Section 2:92a or, if applicable, Section 2:201a of the Dutch Civil Code (the
Compulsory Acquisition
) and (y) an election by the Company pursuant to U.S. Treasury Regulations
Section 301.7701-3
to be classified as a partnership or as a disregarded entity, as reasonably determined by Intel or Buyer) to the extent there shall have been validly tendered in accordance with the terms of
the Offer, and not properly withdrawn, a number of Mobileye Shares (excluding Mobileye Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee prior to the
Expiration Time) that, together with the Mobileye Shares then owned by Intel or its affiliates, represents at least 95% of the Companys issued capital (
geplaatst kapitaal)
immediately prior to the Expiration Time;
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(d) the accuracy of the representations and warranties of Mobileye contained in the Purchase
Agreement (subject to certain materiality standards);
(e) Mobileyes performance of or compliance in all material respects with
its covenants contained in the Purchase Agreement;
(f) there not having been a material adverse effect on Mobileye following the
execution of the Purchase Agreement;
(g) the resignations of all existing members of the board of directors of Mobileye (the
Company Board
) (other than any Independent Directors (as defined below) who elect with Buyers consent to continue to serve on the Company Board as described below) and the replacement of such resigning directors by at least
seven directors, (i) at least five of whom may not be independent of Buyer and the Company (the
Buyer Directors
) and who will be designated in writing, in Buyers sole discretion, prior to convening the EGM, and
(ii) at least two of whom will initially be current
non-executive
directors of the Company and who will at all times remain independent from Intel and Buyer (the
Independent
Directors
), with Buyer designating a replacement in the manner described above for any current Independent Director who does not wish to continue to serve on the Company Board after the closing of the Offer (the
Offer
Closing
), as contemplated by Section 2.05(a) of the Purchase Agreement; and
(h) the adoption of one or more resolutions at the
EGM to appoint the Buyer Directors and the Independent Directors (if such Independent Directors are not already members of the Company Board), to replace the resigning members of the Company Board.
The Purchase Agreement provides, among other things, that following the Offer Closing, Intel and Buyer may effectuate a corporate reorganization of Mobileye
and its subsidiaries (a
Post-Offer Reorganization
). If Mobileye has received the
Pre-Wired
Asset Sale Ruling and Buyer or any of its affiliates acquire at least 67% of the Companys
issued capital (
geplaatst kapitaal)
as of the Offer Closing (and the subsequent offering periods provided in the Purchase Agreement), Buyer would be entitled to effectuate the Post-Offer Reorganization by means of a sale of all of the assets
of Mobileye to Buyer (the
Asset Sale
), followed promptly by a liquidation of Mobileye (the
Liquidation
). If Buyer or any of its affiliates acquire 95% or more of the Companys issued capital (
geplaatst
kapitaal)
as of the Offer Closing (and the subsequent offering periods provided in the Purchase Agreement), the parties anticipate that the Post-Offer Reorganization would be undertaken through the Compulsory Acquisition. The Asset Sale and the
Liquidation are subject to approval by Mobileyes shareholders at the EGM. If Buyer commences the Liquidation, Mobileye will be dissolved in accordance with Section 2:19 of the Dutch Civil Code and all holders of Mobileye Shares who did
not tender their Mobileye Shares in the Offer (the
Non-Tendering
Shareholders
) will receive, for each Mobileye Share then held, an amount in cash equal to the Offer Price (without interest,
but subject to any applicable withholding taxes) (the
Second Step Distribution
). If Buyer commences the Compulsory Acquisition, the
Non-Tendering
Shareholders will receive, for each Mobileye
Share then held, an amount in cash determined by the Enterprise Chamber of the Amsterdam Court of Appeals, as determined pursuant to Dutch law. As contemplated by Section 2.08 of the Purchase Agreement, the Company has granted Buyer an
irrevocable option (the
Call Option
) to purchase, after the closing of the Offer, up to such number of newly issued Mobileye Shares as necessary to increase Buyers ownership interest in the Company by 15% of the total
ownership of Mobileye Shares, after giving effect to the exercise in full of the Call Option (in the aggregate, the
Option Shares
), in exchange for an amount per Mobileye Share equal to the Offer Price, payable in the manner
specified in Section 2.08 of the Purchase Agreement.
It is expected that following the completion of the Offer, Mobileye will no longer be a
publicly traded company, the listing of the Mobileye Shares on the New York Stock Exchange will be terminated and the Mobileye Shares will be deregistered under the Securities Exchange Act of 1934 (the
Exchange Act
) resulting in
the cessation of Mobileyes reporting obligations with respect to the Mobileye Shares thereunder.
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Treatment of Equity Awards
The Purchase Agreement provides for the following treatment of the equity awards of Mobileye upon the payment by Buyer for all Mobileye Shares tendered as of
the Offer Closing:
At the Offer Closing, each outstanding award of restricted stock units in respect of Mobileye Shares (each, a
Mobileye
RSU
) that is either (i) held by a person other than an employee continuing employment with the Company, Intel, Buyer or a subsidiary of any of the foregoing, whether vested or unvested, (ii) vested (or that in the absence of the
transactions contemplated by the Purchase Agreement would become vested within two years following the Offer Closing and are held by a continuing employee whose employment with the Company commenced prior to the date of the Purchase Agreement) or
(iii) subject to acceleration solely as a result of the completion of the transactions contemplated by the Purchase Agreement, will be canceled in exchange for an amount in cash (without interest and subject to required withholding) equal to
(x) the Offer Price multiplied by (y) the total number of Mobileye Shares subject to such Mobileye RSU.
At the Offer Closing, each outstanding
award of unvested Mobileye RSUs will be converted into an equity award subject to the same terms and conditions (including vesting, acceleration, and forfeiture provisions) as immediately prior to the Offer Closing, with respect to a number of
shares of common stock, par value $0.001 per share, of Intel (the
Intel Shares
) (rounded down to the nearest whole share) equal to (x) the total number of Mobileye Shares subject to such Mobileye RSU multiplied by
(y) the Equity Award Adjustment Ratio. The
Equity Award Adjustment Ratio
is equal to (1) the Offer Price divided by (2) the average closing price of Intel Shares on the NASDAQ for the five consecutive trading days
ending on the trading day immediately preceding the Offer Closing.
At the Offer Closing, each outstanding option granted by Mobileye to acquire Mobileye
Shares (each, a
Mobileye Option
) that is either (i) held by a person other than an employee continuing employment with the Company, Intel, Buyer or a subsidiary of any of the foregoing, whether vested or unvested,
(ii) vested (or that in the absence of the transactions contemplated by the Purchase Agreement would become vested within two years following the Offer Closing and are held by a continuing employee whose employment with the Company commenced
prior to the date of the Purchase Agreement), (iii) held by certain individuals, whether vested or unvested, or (iv) subject to acceleration solely as a result of the completion of the transactions contemplated by the Purchase Agreement
(each, a
Terminating Option
), will be canceled in exchange for an amount in cash (without interest and subject to required withholding) equal to (x) the excess, if any, of the Offer Price over the applicable per share
exercise price of such Mobileye Option multiplied by (y) the number of Mobileye Shares subject to such Mobileye Option. Each Terminating Option that is outstanding and unexercised immediately prior to the Offer Closing that has an exercise
price equal to or greater than the Offer Price will be cancelled as of the Offer Closing without consideration therefor and the holder of such Terminating Option will cease to have any rights with respect thereto. Any payment with respect to a
Terminating Option will be subject to withholding requirements.
At the Offer Closing, each outstanding unvested Mobileye Option will be converted into an
option to purchase, subject to the same terms and conditions (including vesting, acceleration, and forfeiture provisions) as immediately prior to the Offer Closing, a number of Intel Shares (rounded down to the nearest whole share) equal to
(a) the number of Mobileye Shares subject to such Mobileye Option multiplied by (b) the Equity Award Adjustment Ratio, with an exercise price per share (rounded up to the nearest whole cent) equal to (1) the per share exercise price
of such Mobileye Option divided by (2) the Equity Award Adjustment Ratio.
Representations, Warranties and Covenants
The Purchase Agreement includes customary representations, warranties and covenants of Intel, Buyer and Mobileye. Until the earlier of the termination of
the Purchase Agreement and Offer Closing, Mobileye has agreed to operate its business and the business of its subsidiaries in the ordinary course consistent with past practice and has agreed to certain other operating covenants, as set forth more
fully in the Purchase Agreement. Mobileye has also agreed to cease all existing, and to not solicit or initiate, discussions with third parties regarding other proposals to acquire Mobileye. Subject to certain restrictions, Mobileye may take
certain actions with respect to an unsolicited proposal. In addition, subject to the limitations set forth in the Purchase Agreement, Intel, Buyer and Mobileye have agreed to use their respective reasonable best efforts to obtain the Required
Antitrust Approvals.
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Termination Rights
The Purchase Agreement contains certain termination rights, including (i) the right of either party to terminate the Purchase Agreement if the Offer is
not consummated on or before March 12, 2018 (subject to certain extension rights), (ii) the right of Mobileye to terminate the Purchase Agreement to accept a superior proposal for an alternative acquisition transaction (where the receipt
of such superior proposal was not proximately caused by a breach of Mobileyes
non-solicitation
obligations and provided Mobileye complies with certain notice and other requirements under the Purchase
Agreement and where such superior proposal includes a purchase price per Mobileye Share in cash that is at least $6.354 higher than the Offer Price) and (iii) the right of Intel to terminate due to a change of recommendation by the Company
Board. None of the parties is required to pay any compensation to the other parties in the event the Purchase Agreement is terminated in accordance with its terms.
The foregoing description of the Purchase Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the
Purchase Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Purchase Agreement has been included
to provide investors with information regarding its terms. It is not intended to provide any other factual information about Intel, Buyer and Mobileye. The representations, warranties and covenants contained in the Purchase Agreement were made only
for purposes of the Purchase Agreement as of the specific dates set forth therein, were solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date
of the Purchase Agreement, which subsequent information may or may not be fully reflected in Mobileyes or Intels public disclosures.
Tender and Support Agreements
On March 12, 2017, in
connection with the Offer, each of Mr. Ziv Aviram,
Co-Founder
and Chief Executive Officer of the Company, and Prof. Amnon Shashua,
Co-Founder
and Chief Technology
Officer of the Company (each, a
Shareholder
), in their respective capacities as shareholders of the Company, entered into a Tender and Support Agreement with Intel and Buyer (each, a
Support Agreement
). Under
the terms of the Support Agreements, each Shareholder has agreed, among other things, to tender its Mobileye Shares in the Offer, not to vote in favor of any alternative acquisition proposal, not to sell any of such Shareholders Mobileye
Shares other than in connection with the Offer (or pursuant to Rule
10b5-1
plans in effect as of the date of the Support Agreements) and to certain
non-solicitation
provisions. As of March 12, 2017, Mr. Aviram beneficially owned 5,981,105 Mobileye Shares or approximately 2.7% and Prof. Shashua beneficially owned 7,916,895 Mobileye Shares or approximately 3.6%, in each case, of the total of all shares
of the Companys ordinary shares that are issued and outstanding in accordance with Rule
13d-3(d)(1)(i)
under the Exchange Act. The Shareholders obligations under the Support Agreements terminate in
the event that the Purchase Agreement is terminated in accordance with its terms; provided that each Shareholders obligations not to vote in favor of any alternative acquisition proposal and not to sell any of such Shareholders Mobileye
Shares other than in connection with the Offer, and the
non-solicitation
provisions of the Support Agreements, do not terminate until six months after any termination of the Purchase Agreement.
The foregoing description of the Support Agreements does not purport to be complete, and is qualified in its entirety by reference to the full text of each of
the Support Agreements, which are attached hereto as Exhibit 10.1 and 10.2 and are incorporated herein by reference, respectively.
Non-Competition
Agreement
On March 12, 2017, in connection with the Offer, Prof. Amnon Shashua,
Co-Founder
and Chief Technology Officer of the Company, and Intel entered into a
non-competition
agreement (the
Non-Competition
Agreement
) in favor of Intel.
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Under the terms of the
Non-Competition
Agreement, Prof. Shashua agrees that, in connection with the sale of his ownership interest in the Company, for
the period beginning at and as of the Closing (as defined in the Purchase Agreement) and ending on the date that is
18-months
following his separation from employment with the Company (provided that his
separation from employment with the Company occurs on or before the three (3)-year anniversary of the Closing), he will not compete with the business of the Company, solicit customers or clients of the business of the Company or make disparaging
remarks about the Company, Intel or any of Intels affiliates. In connection with his execution of the
Non-Competition
Agreement, Prof. Shashua entered into an addendum to his employment agreement
with the Companys wholly owned subsidiary, Mobileye Vision Technologies Ltd., pursuant to which Prof. Shashua agreed to a revised vesting schedule for Mobileye Options and Mobileye RSUs held by him that would otherwise accelerate and vest
in connection with the transaction under which no vesting would occur prior to the third (3rd) anniversary of the Closing, 50% of all such unvested equity awards would vest upon the third (3rd) anniversary of the Closing and the remaining 50% of all
such unvested equity awards would vest upon the fourth (4th) anniversary of the Closing.
The foregoing description of the
Non-Competition
Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the
Non-Competition
Agreement, which is
attached hereto as Exhibit 10.3 and incorporated herein by reference.