Item 1.01
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Entry Into a Material Definitive Agreement.
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Acquisition
and Related Merger Agreement
On December 16,
2020, Ultra Clean Holdings, Inc., a Delaware corporation (“Ultra Clean”), Sir Daibus Ltd., a company organized under
the laws of the State of Israel and an indirect, wholly-owned subsidiary of Ultra Clean (“Parent Merger Sub”), Bealish
Ltd., a company organized under the laws of the State of Israel and an indirect wholly-owned subsidiary of Ultra Clean (“Merger
Sub”), and Ham-Let (Israel-Canada) Ltd., a public company organized under the laws of the State of Israel whose shares are
traded on the Tel Aviv Stock Exchange (the “Company”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”), with the Company
surviving as an indirect, wholly-owned subsidiary of Ultra Clean.
Subject to the
terms and conditions set forth in the Merger Agreement, at the effective time of the Merger, each ordinary share, par value one
Israeli Shekel (NIS 1) per share, of the Company (each, an “Ordinary Share”) issued and outstanding immediately prior
to the effective time of the Merger, other than shares held by the Company or any of its subsidiaries, shall automatically be converted
into and represent the right to receive from Ultra Clean NIS 64.0 in cash, without interest (such per share amount, the “Merger
Consideration”).
Subject to the
terms and conditions of the Merger Agreement, at the effective time of the Merger, (i) each option to purchase Ordinary Shares
of the Company that is outstanding and unexercised immediately prior to the effective time of the Merger, whether or not vested,
shall be canceled in exchange for the right to receive a lump sum cash payment (without interest) equal to the product of (i) the
excess, if any, of (A) the Merger Consideration over (B) the exercise price per Ordinary Share for such option multiplied by (ii)
the total number of shares underlying such option.
As of the date
hereof, Ultra Clean expects the aggregate purchase price for the Company’s entire share capital to be approximately NIS
934 million (or approximately $287 million based on the exchange rate in effect at the close of business on December 10, 2020),
which assumes gross value of shares covered by employee options. In addition, the Company had NIS 198 million of net debt
as of December 10, 2020 (or approximately $61 million based on the exchange rate in effect at the close of business on December
10, 2020).
The boards of
directors of Ultra Clean, Parent Merger Sub, Merger Sub and the Company have unanimously approved the Merger Agreement. The Merger
Agreement requires that the Merger be approved by the holders of at least a majority of the Ordinary Shares voted at a meeting
of the Company’s shareholders, excluding any Ordinary Shares held by Merger Sub, Ultra Clean or any person or entity holding
at least 25% of the means of control of either Merger Sub or Ultra Clean, or any person or entity acting on behalf of either Merger
Sub or Ultra Clean or any family member of, or entity controlled by, any of the foregoing.
In addition, consummation
of the Merger is subject to other customary closing conditions, including (i) the expiration or termination of any waiting period
under, or the receipt of approvals under, applicable foreign competition laws, (ii) the expiration of a period of at least fifty
days after the filing of a merger proposal executed in accordance with Section 316 of the of the Companies Law 5759-1999 of the
State of Israel with the Registrar of Companies of the State of Israel and (iii) the expiration of a period of at least thirty
days after the approval of the Merger by the shareholders of the Company. The Merger Agreement also contains customary representations
and warranties of Ultra Clean and the Company. Simultaneously with the execution and delivery of the Merger Agreement, the Company’s
largest shareholder, holding 30.5% of the voting power of the Company’s Ordinary Shares, entered into a written undertaking
pursuant to which such shareholder agreed, subject to certain terms and conditions, among other things, to vote their Company shares
in favor of the approval of the Merger.
The Merger Agreement
requires the Company to abide by customary “no-shop” restrictions on its ability to solicit alternative acquisition
proposals from third parties and to provide non-public information to and enter into discussions or negotiations with third parties
regarding alternative acquisition proposals.
The Merger Agreement
contains certain termination rights for Ultra Clean and the Company. Upon termination of the Merger Agreement under specified circumstances,
the Company will be required to pay to Ultra Clean a termination fee of approximately NIS 38.5 million (or approximately $12 million
based on the exchange rate in effect at the close of business on December 10, 2020).
In connection
with the Merger Agreement, Ultra Clean entered into a commitment letter (the “Commitment Letter”) with Barclays Bank
PLC (“Barclays”) pursuant to which Barclays has committed to provide to Ultra Clean, as the borrower, a $355 million
senior secured incremental term loan B facility (the “Incremental Term Loan”) which shall constitute an increase to
the amount of term loan indebtedness outstanding under Ultra Clean’s existing credit agreement, dated as of August 27, 2018
and amended as of October 1, 2018 (the “Existing Credit Facility”). The Incremental Term Loan, together with cash on
hand, is expected to be used to finance the transaction contemplated by the Merger Agreement, to refinance existing debt of the Company,
and to pay fees and expenses incurred in connection with the Incremental Term Loan and the acquisition. Barclays’s commitment
to provide the Incremental Term Loan is subject to a number of conditions including, without limitation, (i) the non-occurrence
of a material adverse effect with respect to the Company, (ii) the completion of definitive amendment documentation to the Existing Credit
Facility mutually acceptable to Ultra Clean and Barclays and (iii) other customary closing conditions.
The foregoing
summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Merger Agreement filed herewith as Exhibit 2.1, which is incorporated herein
by reference. The Merger Agreement has been included as an exhibit hereto solely to provide stockholders with information regarding
its terms. It is not intended to be a source of financial, business, or operational information about Ultra Clean, the Company,
or their respective subsidiaries or affiliates. The representations, warranties, and covenants contained in the Merger Agreement:
are made only for purposes of the Merger Agreement and are made as of specific dates; are solely for the benefit of the parties;
may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Merger
Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the
parties rather than establishing matters as facts; and may be subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors or stockholders. Investors and stockholders should not rely on the representations,
warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of Ultra Clean,
the Company or their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Merger Agreement which subsequent information may or may not be fully
reflected in public disclosures.