seeking shareholder approval are necessary to provide incentives to the CEO and COO to forego their respective benefits in the event the shareholders approve the Merger but one or more of the
other conditions is not likely to be satisfied. For more information about the risks related to the Merger, please refer to Orbotechs filings with the Securities and Exchange Commission.
Current compensation arrangements of the CEO
Under existing arrangements between the Company and the CEO, the CEO currently receives a monthly base salary of NIS 162,000, equal to an
annual base salary of NIS 1,944,000 (approximately $45,151 and $541,806, respectively, based on the Current Exchange Rate), plus benefits, an annual cash bonus equal to 1.25% of the Companys net profit for such year and annual grant of
equity-based compensation with a grant-date value equal to the lesser of $500,000 or the value of 42,000 Restricted Shares. Any change to these arrangements is subject to the approval process and other conditions set forth in the Companies Law. With
respect to 2017, the cost to the Company of the CEOs salary and benefits was $776,602 and his cash bonus was $1,650,000. In addition, as of May 14, 2018, the CEO: (i) held options to purchase a total of 20,083 Ordinary Shares,
expiring on various dates between November 5, 2021 and June 28, 2024 and having a weighted average exercise price of $28.63 per share (none of which had vested and 6,863 of which with a weighted average exercise price of $24.57 per share
will vest prior to December 31, 2018); (ii) held 65,950 outstanding (unvested) RSUs (27,837 of which will vest prior to December 31, 2018); and (iii) did not hold any other Company equity-based awards.
Each of the Company and the CEO may terminate the employment of the CEO by providing six months advance notice, other than in connection
with a termination for cause (as such term is defined in the CEOs employment agreement). In addition, upon termination of employment, the CEO will generally be entitled to a severance payment in an amount equal to the product of
150% of the CEOs monthly salary (or 200% if terminated by the Company), multiplied by the number of years of employment less any amounts contributed by the Company and accumulated in his pension or insurance funds on account of severance pay,
and, if terminated by the Company, to an adaptation payment of six monthly salaries. In addition, upon the CEOs resignation within 12 months following the occurrence of a significant event (as such term is defined in the CEOs
employment agreement, which includes shareholder approval of the Proposed Merger), the CEO would be entitled to the adaptation payment as described above and to a severance payment equal to 200% of his salary as described above. Furthermore, in the
event of his death, or termination of his employment, whether by the Company or voluntarily in certain specified circumstances, within 12 months following the occurrence of a significant event or if he is still employed by the Company 24
months following a significant event, his outstanding and unvested equity awards will generally be accelerated and become fully vested.
Current compensation arrangements of the COO
Under existing arrangements between the Company and the COO, the COO currently receives a monthly base salary of NIS 145,800, equal to an
annual base salary of NIS 1,749,600 (approximately $40,635 and $487,625, respectively, based on the Current Exchange Rate), plus benefits, an annual cash bonus equal to 0.92% of the Companys net profit for such year and an annual grant of
equity-based compensation with a grant-date value equal to the lesser of $300,000 or the value of 25,200 Restricted Shares. With respect to 2017, the cost to the Company of the COOs salary and benefits was $687,611 and his cash bonus was
$1,224,300. In addition, as of May 14, 2018, the COO: (i) held an option to purchase a total of 2,221 Ordinary Shares, expiring on November 5, 2021 and having an exercise price of $15.57 per share (which will vest in full prior to
December 31, 2018); (ii) held 29,841 outstanding (unvested) RSUs (of which 11,342 will vest prior to December 31, 2018); and (iii) did not hold any other Company equity-based awards.
Each of the Company and the COO may terminate the employment of the COO by providing six months advance notice, other than in connection
with a termination for cause (as such term is defined in the COOs employment agreement). In addition, upon termination of employment, the COO will generally be entitled to a severance payment in an amount equal to the product of
150% of the COOs monthly salary (or 200% if
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