Generally, receipt of the Cash Merger Consideration by the 102 Trustee (as described below)
is considered a tax event. However, the receipt of the Cash Merger Consideration by the 102 Trustee prior to the Period Expiration Date shall not be deemed to violate the conditions of Section 102 of the Ordinance, provided that the Cash Merger
Consideration is deposited with the 102 Trustee and that the 102 Trustee withholds the tax from the Cash Merger Consideration following its receipt, in accordance with Section 102(b)(3) of the Ordinance and the Income Tax Rules (Tax Reliefs in
the Allotment of Shares to Employees), 5763-2003 (the Reliefs Rules), and subject to such additional terms detailed in the Options Tax Ruling.
With respect to the Stock Merger Consideration payable for such Company 102 Shares and Company 102 Compensatory Awards, generally, the receipt
of such Stock Merger Consideration shall not be considered as a tax event at the time of its receipt by the 102 Trustee and the tax event shall be deferred in accordance with the provisions of Section 104H(e) of the Ordinance and the provisions
of the Income Tax Rules (Adjustments in respect of Section 102 in Mergers or Splits), 5763-2003 (the Merger-Split Rules), and in accordance with the Withholding Tax Ruling, to the extent issued by the ITA.
Merger Consideration Payable with respect to Company 102 Shares and Company 102 Compensatory Awards vested as of the Closing Date, for which the Period
Expiration Date has elapsed by the Closing Date
Upon receipt of the Cash Merger Consideration by the 102 Trustee, the holder shall be
liable for tax in respect of the Cash Merger Consideration only, in accordance with the provisions of Section 102(b)(3) of the Ordinance and the Reliefs Rules.
With respect to the Stock Merger Consideration payable for such Company 102 Shares and Company 102 Compensatory Awards, generally, the receipt
of such Stock Merger Consideration shall not be considered as a tax event at the time of its receipt and the tax event shall be deferred in accordance with the provisions of Section 104H(e) of the Ordinance and the provisions of the
Merger-Split Rules, and in accordance with the Withholding Tax Ruling, to the extent issued by the ITA.
Merger Consideration payable with respect to
Company 102 Options and Company 102 Restricted Shares Units issued after December 18, 2017 (New 102 Options), which have vested as of the Closing Date
The Cash Merger Consideration payable with respect to New 102 Options shall be deemed as income from employment pursuant to Section 2(2)
of the Ordinance. With respect to the Stock Merger Consideration payable for such vested New 102 Options, generally, the receipt of such Stock Merger Consideration shall not be considered as a tax event at the time of its receipt, and the tax event
shall be deferred in accordance with the provisions of Section 104H(e) of the Ordinance and the Merger-Split Rules, and in accordance with the Withholding Tax Ruling, to the extent issued by the ITA.
Assumption by
KLA-Tencor
of Company 102 Compensatory Awards which have not vested as of the Closing Date
The issuance of options and RSUs of
KLA-Tencor
in connection with the assumption by
KLA-Tencor
of Company 102 Compensatory Awards, shall not constitute a tax event and/or a new issuance for purposes of Section 102 of the Ordinance, and tax continuity shall apply in respect thereof, such that
the Period Expiration Date shall be calculated from the issuance date of the original rights.
However, with respect to Company 102
Compensatory Awards which were issued following December 18, 2017, the allotment of options and RSUs of
KLA-Tencor
in lieu of a portion of such Company 102 Compensatory Awards which is attributed to the
conversion of the Cash Merger Consideration, based on a formula set forth in the Merger Agreement, shall be deemed as income from