SatixFy(SATX) - 2024 Q4 - Annual Report

Agreement and Plan of Merger This section introduces the parties and the core terms of the merger agreement, outlining the two-step acquisition process and the total equity value Preamble and Recitals This section identifies the parties involved in the merger agreement dated April 1, 2025, and outlines the intent for Parent to acquire the Company through a two-step merger process for a total equity value of $193 million - The agreement is between MDA Space Ltd. (Parent), MANTISRAEL OPERATIONS 1 Ltd. (Merger Sub 1), MANTISRAEL OPERATIONS 2 Ltd. (Merger Sub 2), and SatixFy Communications Ltd. (Company)[9] - The transaction is structured as a two-step merger: first, Merger Sub 2 will merge into the Company, and immediately following, Merger Sub 1 will merge into the surviving entity, resulting in the Company becoming an indirect wholly-owned subsidiary of the Parent[10] Total Equity Value | Metric | Value | | :--- | :--- | | Total Equity Value | $193 million | - The boards of directors of Parent, both Merger Subs, and the Company (including its Special Committee and Audit Committee) have all approved the merger agreement and the contemplated transactions[10] ARTICLE I: The Merger This article details the procedural mechanics, legal effects, and governance structure of the two-step merger process Section 1.01 The Mergers This section details the mechanics of the two-step merger process, where Merger Sub 2 merges into the Company, followed by Merger Sub 1 merging into the interim surviving entity, ultimately making the Company an indirect wholly-owned subsidiary of the Parent - First Merger: Merger Sub 2 will merge with and into the Company, with the Company surviving as the "Interim Surviving Entity" and becoming a wholly-owned subsidiary of Merger Sub 1[12] - Second Merger: Immediately following the first, Merger Sub 1 will merge with and into the Interim Surviving Entity, with the Company continuing as the final "Surviving Entity" and an indirect wholly-owned subsidiary of Parent[13] Section 1.02 Closing and Effective Time This section defines the closing procedure and the timing for the mergers to become effective, occurring within three business days after all conditions are satisfied and upon issuance of Certificates of Merger by the Israeli Companies Registrar - The closing will take place within three business days after all conditions in Article VII are satisfied or waived[14] - The mergers become legally effective upon the issuance of Certificates of Merger by the Israeli Companies Registrar[15] - The effective time is subject to statutory waiting periods under Israeli law: it cannot be earlier than 30 days after shareholder approval and 50 days after the merger proposal is filed with the Companies Registrar[15] Section 1.03 Effects of the Mergers This section outlines the legal consequences of the mergers as dictated by Israeli Companies Law, resulting in the Company becoming an indirect wholly-owned subsidiary of the Parent and inheriting all properties, rights, debts, and liabilities - The Company will become an indirect wholly-owned subsidiary of Parent and will continue to be governed by the laws of Israel[17] - All property, rights, debts, and liabilities of the Company and the Merger Subs will vest in the Surviving Entity[17] Section 1.04 Organizational Documents This section specifies that the governing documents of the final Surviving Entity will be the Articles of Association of Merger Sub 1 as they exist just before the merger, with the name updated accordingly - The Articles of Association of the Surviving Entity will be those of Merger Sub 1 (as set forth in Exhibit A), with the name changed accordingly[18] Section 1.05 Directors and Officers This section dictates the composition of the board of directors post-merger, where the directors of Merger Sub 1 will become the directors of the Surviving Entity, and all existing Company directors will vacate their positions unless designated as "Remaining Directors" - The directors of Merger Sub 1 immediately prior to the Second Merger will become the directors of the final Surviving Entity[19] - All directors of the Company, except for any designated "Remaining Directors," will vacate their office at the Effective Time[19] ARTICLE II: Effect of the Mergers on Capital Stock; Exchange of Certificates This article outlines how the Company's capital stock, including equity awards, will be treated and exchanged for merger consideration, along with tax and procedural aspects Section 2.01 Effect of the First Merger on Capital Stock This section details the treatment of the Company's common stock in the First Merger, where each outstanding share (excluding those held by Parent or the Company) will be converted into the right to receive the specified Merger Consideration, while other shares will be cancelled without payment - Each share of Company Common Stock (other than Cancelled Shares) will be converted into the right to receive the Merger Consideration[22] - Shares owned by Parent or held by the Company as treasury stock ("Cancelled Shares") will be automatically cancelled and will not receive any consideration[21] - The capital stock of Merger Sub 2 will cease to exist without any payment[24] Section 2.02 Exchange Procedures This section outlines the process for shareholders to exchange their stock for the merger consideration, involving the appointment of exchange agents, the establishment of an Exchange Fund, and the requirement for shareholders to surrender their shares with a letter of transmittal - Parent will appoint a U.S. Exchange Agent and an Israeli Paying Agent to handle the payment process[25] - Parent will deposit sufficient cash into an "Exchange Fund" to pay the Merger Consideration to all eligible holders[25] - To receive payment, shareholders must surrender their certificates (or transfer book-entry shares) along with a duly executed letter of transmittal and any required tax forms (e.g., W-8/W-9)[27] - Any portion of the Exchange Fund unclaimed after two years will be returned to the Surviving Entity[32] Section 2.03 No Appraisal Rights This section explicitly states that, in accordance with Israeli Law, shareholders will not have any statutory dissenters' or appraisal rights in connection with the mergers or the merger consideration - Under Israeli Law, no statutory dissenters' or appraisal rights are available to shareholders for this transaction[34] Section 2.04 Adjustments This section provides a mechanism to adjust the merger consideration and other payable amounts if there are changes to the Company's outstanding common stock between the agreement date and the effective time, ensuring the economic terms of the deal remain consistent - The Merger Consideration will be appropriately adjusted to reflect any reclassification, stock split, reverse stock split, or stock dividend that occurs before the Effective Time[35] Section 2.05 Withholding Rights This section details the procedures for tax withholding on payments to shareholders and equity award holders, granting paying agents the right to deduct taxes and establishing a 180-day "Withholding Drop Date" for providing a Valid Tax Certificate to potentially reduce or eliminate withholding - The Exchange Agent and other payors are entitled to withhold taxes from merger payments as required by applicable law, with Israeli tax rates not exceeding 30% unless legally mandated otherwise[36] - A 180-day period (the "Withholding Drop Date") is established, allowing holders to provide a "Valid Tax Certificate" from the Israeli Tax Authority (ITA) to avoid or reduce withholding[37] - Specific withholding rules apply to payments for Company Equity Awards, with different procedures for Section 102 securities, non-Israeli holders, and others[38] - Certain non-Israeli public holders who acquired stock after October 28, 2022, and hold less than 5% may be exempt from Israeli withholding upon providing a specific declaration[39] Section 2.06 Lost Certificates This section outlines the procedure for shareholders with lost, stolen, or destroyed stock certificates, requiring an affidavit and potentially a bond to indemnify against future claims before receiving the merger consideration - Shareholders with lost, stolen, or destroyed certificates must provide an affidavit to the Exchange Agent[42] - Parent may require the shareholder to post a reasonable bond as indemnity before the Merger Consideration is paid for the lost certificate[42] Section 2.07 Treatment of Convertible, Exchangeable and Exercisable Securities This section specifies the treatment of the Company's various equity-linked securities, including the cancellation and cash-out of in-the-money stock options and all RSUs, the cancellation of out-of-the-money options for no payment, and the conversion of Company Warrants to be exercisable for cash merger consideration - Company Stock Options: In-the-money options will be cancelled and converted into a cash payment equal to the spread between the Merger Consideration and the exercise price, while options with an exercise price equal to or greater than the Merger Consideration will be cancelled without payment[43] - Company RSUs: All RSUs, whether vested or not, will fully vest and be converted into the right to receive the Merger Consideration for each share subject to the RSU[44] - Company Warrants: Warrants will remain outstanding and, upon exercise, will entitle the holder to receive the cash Merger Consideration they would have received if they had exercised immediately prior to the merger[45] Section 2.08 Tax Treatment This section mandates that the Company apply to the Israeli Tax Authority (ITA) for a ruling concerning the tax treatment of employee equity awards, aiming to ensure the transaction does not trigger an adverse tax event for holders and to exempt the Parent and paying agents from withholding tax on payments made to the Section 102 Trustee - The Company is required to apply to the Israeli Tax Authority (ITA) for an "Options Tax Ruling" to confirm the tax treatment of Section 102 and Section 3(i) equity awards[47] - The ruling aims to confirm that the transaction does not breach Section 102 trust provisions and to exempt Parent and its agents from withholding tax on payments made to the Section 102 Trustee[47] - If the final ruling is not granted before closing, the Company will seek an "Interim Options Ruling" to provide the same withholding tax exemption[47] Section 2.09 Effect of the Second Merger on Capital Stock This section describes the final step in the capital structure transformation, where the parent entity of Merger Sub 1 will become the sole owner of all outstanding stock of the Surviving Entity, and the capital stock of Merger Sub 1 itself will be cancelled without any consideration - Following the Second Merger, the parent of Merger Sub 1 will be the sole owner of all common stock of the Surviving Entity[49] - The capital stock of Merger Sub 1 will be cancelled and cease to exist without any payment[50] ARTICLE III: Representations and Warranties This article contains the comprehensive assurances and disclosures made by both the Company and the Parent regarding their legal, financial, and operational status Section 3.01 Company Representations and Warranties The Company makes extensive representations and warranties to the Parent and Merger Subs, covering corporate organization, capitalization, financial statements, compliance, intellectual property, contracts, and taxes, all subject to exceptions in the Company Disclosure Letter - The Company provides a comprehensive set of representations and warranties to Parent and the Merger Subs, which are detailed in Schedule A[52] - These representations are qualified by disclosures made in the confidential "Company Disclosure Letter" delivered concurrently with the agreement[52] Organization, Authority, and Capital Structure The Company represents that it and its subsidiaries are legally organized and in good standing, confirming its corporate power and authority to enter the agreement, with the transaction approved by its Board, Special Committee, and Audit Committee, and detailing its authorized and outstanding capital stock - The Company and its subsidiaries are duly organized and in good standing under the laws of their respective jurisdictions[336] - The Company Board, Special Committee, and Audit Committee have all approved the merger and recommend stockholder approval[366][367] Amount Outstanding (as of March 28, 2025) | Security Type | Amount Outstanding (as of March 28, 2025) | | :--- | :--- | | Common Stock | 86,849,556 shares | | Stock Options | 5,040,314 shares issuable | | RSUs | 4,326,366 shares issuable | | Warrants | 14,329,792 shares issuable | SEC Filings, Financials, and Internal Controls The Company warrants that all its SEC filings since October 27, 2022, are accurate and compliant, its financial statements are prepared in accordance with IFRS and fairly present its condition, and it maintains effective internal controls over financial reporting and disclosure controls with no undisclosed liabilities - All Company SEC Documents filed since October 27, 2022, complied with applicable laws and did not contain any untrue statement of a material fact[370] - The audited and interim financial statements were prepared in accordance with IFRS and present fairly the company's financial condition[371] - The Company maintains a system of internal controls over financial reporting and has not identified any "material weakness" or fraud[377] - The Company represents it has no liabilities other than those reflected in its financial statements, incurred in the ordinary course, or related to this transaction[379] Business Operations and Compliance This section contains representations that the Company has conducted its business in the ordinary course since December 31, 2023, affirming compliance with all applicable laws, including anti-corruption, sanctions, and export controls, and confirming it holds all necessary permits to operate - Since December 31, 2023, the business has been conducted in the Ordinary Course[386] - The Company and its subsidiaries are in compliance with all applicable laws, including anti-money laundering, anti-corruption, and sanctions laws[395][501] - The Company holds all necessary permits and Authorizations to conduct its business and is in compliance with them[398] Assets, Contracts, and Liabilities The Company represents that it has good title to its assets, free of liens, confirms a complete list of all Material Contracts has been provided and are valid and binding with no defaults, and states no material issues exist regarding real and personal property, inventory, or customer/supplier relationships - The Company has good and valid title or leasehold interest to all properties and assets necessary to operate its business, free from Liens other than Permitted Liens[392] - A complete list of all Material Contracts has been provided, and each is a valid, binding agreement in full force and effect, with no material defaults[512][516] - The execution of the merger agreement will not result in a breach or termination of any Material Contract[523] Intellectual Property and IT Systems The Company warrants it owns or has valid rights to use all necessary intellectual property (IP) free of liens, that its operations do not infringe third-party IP, and that its IT systems are sufficient and secure, complying with privacy laws and open-source software usage - The Company or a subsidiary is the sole and exclusive owner of all Company-Owned IP, free of Liens (other than Permitted Liens)[470] - The Company's business operations do not infringe, misappropriate, or violate any Intellectual Property of any other person[473] - Except as disclosed, no source code for Company-Owned IP has been placed in escrow or is obligated to be delivered to any third party[482] - The Company's use of Open Source Software does not impose requirements to disclose or distribute its proprietary source code[486] - Company IT Systems are sufficient for business operations and have appropriate security measures in place[488][489] Employee and Tax Matters The Company represents it is in compliance with all employment laws and has provided accurate information on its employees and benefit plans, further stating that all material tax returns have been timely filed and are accurate, all taxes due have been paid, and proper withholding has been performed - The Company is in compliance with all applicable employment laws and is not a party to any collective bargaining agreements[415][419] - All Company Benefit Plans have been administered in accordance with their terms and applicable laws[424] - All material Tax Returns have been timely filed and are correct, and all material Taxes have been paid or adequately reserved for[440] - The Company has complied with all tax withholding requirements and is not subject to any undisclosed tax audits or claims[444][446] Litigation and Financial Advisors The Company represents that there is no pending or threatened material litigation against it or its subsidiaries, confirms its financial advisor, TD Securities (USA) LLC, has delivered a fairness opinion, and discloses that no other brokers are entitled to a fee in connection with the transaction - There are no pending or threatened material legal actions against the Company or its subsidiaries[405] - The Company Board has received a fairness opinion from its financial advisor, TD Securities (USA) LLC[411] - Except for TD Securities (USA) LLC, no broker or finder is entitled to a fee from the Company in connection with the merger[410] Section 3.02 Parent and Merger Subs Representations and Warranties Parent and its Merger Subs provide their own set of representations and warranties to the Company, focusing on their legal authority to enter into the agreement, the proper formation and status of the Merger Subs, and their financial capability to fund the transaction - Parent and Merger Subs have the requisite corporate power and authority to execute the agreement and consummate the transaction[546] - The Merger Subs were formed solely for the purpose of this transaction and have not engaged in any other business activities[549] - Parent has, or will have at the Effective Time, sufficient funds to pay the aggregate Merger Consideration[550] ARTICLE IV: Covenants This article details the ongoing obligations and restrictions on both parties from the agreement signing until the merger's completion, covering business conduct, information access, and regulatory efforts Section 4.01 Conduct of Business of the Company This section imposes restrictions on the Company's operations between the signing of the agreement and the closing, requiring it to conduct business in the ordinary course and prohibiting significant actions without the Parent's prior written consent - From signing until closing, the Company must conduct its business in the Ordinary Course in all material respects[55] - The Company is prohibited from taking specific actions without Parent's consent, including: - Amending its charter documents - Issuing, selling, or pledging any company securities - Declaring dividends - Acquiring other businesses - Incurring indebtedness for borrowed money - Making capital expenditures above specified thresholds ($200k individual, $1M aggregate) - Settling litigation above $100,000[55][56][57] Section 4.02 Access to Information; Confidentiality This section grants the Parent and its representatives reasonable access to the Company's officers, employees, properties, and records until the closing, subject to applicable laws and confidentiality obligations, with all exchanged information governed by the pre-existing Confidentiality Agreement - The Company must provide Parent with reasonable access to its officers, employees, properties, books, and records[58] - Access may be restricted to protect attorney-client privilege or if it would violate law or confidentiality obligations[58] - All information exchanged is subject to the terms of the Confidentiality Agreement dated December 5, 2024[59] Section 4.03 Notices of Certain Events This section establishes a mutual obligation for the parties to promptly notify each other of significant developments, including any required third-party consents, material breaches of representations or covenants, or events that could prevent a closing condition from being met - Parties must promptly notify each other of any communication from a person alleging their consent is required for the merger[61] - Parties must promptly notify each other if any of their representations become untrue or if they breach a covenant in any material respect[62] Section 4.04 Directors' and Officers' Indemnification and Insurance This section ensures the continued protection of the Company's past and present directors and officers, with Parent agreeing that the Surviving Entity will honor existing indemnification rights for seven years post-merger and purchase a seven-year "tail" insurance policy capped at 300% of the current annual premium - All existing rights to indemnification and advancement of expenses for the Company's directors and officers will survive the merger and remain in effect for seven years[64] - The Surviving Entity must obtain a seven-year "tail" insurance policy for directors and officers with coverage at least as favorable as the existing policy[65] - The annual premium for this tail policy is capped at 300% of the Company's last annual premium[65] Section 4.05 Reasonable Best Efforts This section obligates all parties to use their "reasonable best efforts" to complete the merger, including cooperating to obtain all necessary governmental and third-party approvals, while clarifying that no party is required to agree to divestitures or other significant business restrictions - All parties must use their reasonable best efforts to take all actions necessary to consummate the merger, including obtaining governmental approvals and third-party consents[67] - Antitrust filings, including under the HSR Act, must be made within ten business days of the agreement date[69] - No party is required to sell, divest, or hold separate any assets or businesses to obtain regulatory approval[72] Section 4.06 Public Announcements This section governs public communications about the merger, requiring mutual agreement for the initial press release and prior written consent for subsequent public statements, unless legally required, in which case the disclosing party must allow the other party to comment in advance - The initial press release regarding the merger must be mutually agreed upon[73] - Subsequent public announcements require prior written consent from the other party, unless required by law, court process, or stock exchange regulations[73] Section 4.07 Anti-Takeover Statutes This section requires both the Company and Parent to take necessary actions to neutralize the effects of any state or federal anti-takeover laws that might otherwise apply to and impede the merger, ensuring the transaction can be completed as planned - If any anti-takeover law becomes applicable, the parties must use commercially reasonable efforts to grant approvals and take actions to render such law inapplicable to the merger[74] Section 4.08 Stock Exchange Matters This section outlines the Company's obligation to cooperate with the Parent to delist the Company's common stock from the NYSE American and to deregister the shares under the Securities Exchange Act of 1934 as promptly as practicable after the merger's effective time - The Company must cooperate with Parent to take all necessary actions to delist the Company Common Stock from the NYSE American after the Effective Time[75] - The Company will also cooperate to deregister its shares under the Exchange Act as promptly as practicable post-merger[75] Section 4.09 Certain Tax Matters This section requires the Company to keep the Parent informed about any tax-related proceedings that arise before the closing, promptly notifying Parent of any tax audit, claim, or litigation and consulting with Parent regarding strategy and material submissions to tax authorities - The Company must promptly notify Parent of any new or pending tax audit, exam, or litigation (a "Pre-Closing Tax Matter")[76] - The Company must keep Parent informed and consult in good faith regarding the strategy for any such tax matter, allowing Parent to review material submissions[76] Section 4.10 Stockholder Litigation This section establishes a mutual obligation for the parties to manage any stockholder litigation arising from the merger agreement, requiring prompt notification, opportunity for Parent to participate in defense, and prohibiting settlement without Parent's prior written consent - The Company must promptly advise Parent of any stockholder litigation related to the merger[77] - The Company must give Parent the opportunity to participate in the defense and settlement of such litigation[77] - The Company cannot settle any stockholder litigation without Parent's prior written consent (not to be unreasonably withheld)[77] Section 4.11 Obligations of Merger Subs This is a straightforward provision where the Parent explicitly guarantees the performance of its subsidiaries, Merger Sub 1 and Merger Sub 2, ensuring that the Parent will take all necessary action to cause the Merger Subs to fulfill their obligations under the merger agreement - Parent guarantees that it will cause the Merger Subs to perform their respective obligations under the agreement[78] Section 4.12 Resignations This section requires the Company to secure the resignations of its directors and certain subsidiary officers, effective at the closing time, with an exception for any directors that the Parent specifically identifies it wishes to retain as "Remaining Directors" - At Parent's request, the Company must cause each director of the Company and its subsidiaries to resign, effective at the Effective Time[79] - An exception is made for directors whom Parent wishes to keep, designated as "Remaining Directors"[79] Section 4.13 Indebtedness; Permitted Indebtedness This section addresses financing matters, with Parent covenanting not to incur debt that would jeopardize its ability to repay the Company's outstanding debt after closing, and providing a mechanism for the Company to obtain additional financing up to a specified "Financing Cap" after offering Parent the right of first refusal - If the Company requires additional financing (up to a confidential "Financing Cap"), it must first provide Parent with a "Financing Notice" detailing the proposed terms[81] - Parent has a five-business-day "Response Period" to elect to provide the financing itself on terms at least as favorable to the Company[81] - If Parent declines, the Company may proceed with the third-party financing on the noticed terms within a ten-day period[81] Section 4.14 Further Assurances This standard legal provision authorizes the officers and directors of the Surviving Entity, after the merger is complete, to execute any additional documents and take any further actions necessary to formally vest all rights, titles, and assets of the pre-merger companies into the Surviving Entity - After the merger, the officers and directors of the Surviving Entity are authorized to execute any documents needed to perfect the transfer of all rights and assets to the Surviving Entity[82] ARTICLE V: Go-Shop / No Solicitation This article defines the Company's ability to seek alternative acquisition proposals, including a "Go-Shop" period and subsequent "No-Solicit" restrictions, along with Parent's matching rights Section 5.01 Go-Shop This section grants the Company a specific 45-calendar-day "Go-Shop" period, starting from the agreement date, to actively seek out and negotiate with alternative acquisition proposals - The Company is granted a "Go-Shop" period to actively solicit alternative acquisition proposals[84] - The Go-Shop period lasts for 45 calendar days from the date of the agreement[84] Section 5.02 No-Solicit This section dictates the Company's obligations after the Go-Shop period expires, requiring it to immediately cease all solicitation activities, terminate ongoing discussions, discontinue data room access, and enforce existing standstill agreements - Following the Go-Shop End Date, the Company must immediately cease all solicitation, encouragement, and negotiation with any other potential acquirers[85] - The Company must discontinue data room access and request the return or destruction of confidential information from other parties[85] - The Company is prohibited from making a "Change in Recommendation" unless expressly permitted elsewhere in Article V[87] Section 5.03 Permitted Discussions This section outlines the conditions under which the Company may engage with an unsolicited acquisition proposal after the Go-Shop period, permitting information sharing and discussions if the Board determines the proposal could reasonably lead to a "Superior Proposal," provided Parent is notified and non-public information is shared - The Company must promptly (within 24 hours) notify Parent of any Acquisition Proposal it receives[89] - If the Board determines a written Acquisition Proposal constitutes or could lead to a "Superior Proposal," the Company may furnish information and engage in discussions with that party[90] - Before entering into a definitive agreement for a Superior Proposal, the Company must comply with the matching rights procedures outlined in the agreement[91] Section 5.04 Match Rights This section grants the Parent a "right to match," allowing it a five-business-day "Matching Period" to amend its offer if the Company's Board intends to accept a Superior Proposal, with any material modification to the competing offer triggering a new, shorter matching period - If the Company intends to accept a Superior Proposal, it must provide Parent with a five-business-day "Matching Period"[92][94] - During this period, Parent has the right to offer to amend the terms of the current agreement to make its proposal more favorable[94] - Each successive material modification to a competing Acquisition Proposal restarts the process, but with a shorter two-business-day matching period[95] Section 5.05 Compliance with Tender Offer Rules This section clarifies that no-solicitation and recommendation covenants do not prevent the Company's Board from making legally required disclosures under SEC tender offer rules or Israeli law, but any such disclosure (other than a "stop, look and listen" communication) will be deemed a "Change in Recommendation" unless the Board reaffirms its support for the merger - The agreement does not prevent the Company Board from making legally required disclosures to shareholders under SEC tender offer rules (e.g., Rule 14d-9) or similar Israeli laws[97] - Any public disclosure regarding an Acquisition Proposal (other than a "stop, look and listen" statement) will be considered a "Change in Recommendation" unless the Board simultaneously and publicly reaffirms its recommendation for the Parent's offer[97] ARTICLE VI: Company Meeting and Proxy Statement This article outlines the Company's responsibilities for preparing the proxy statement, convening the shareholder meeting, and fulfilling Israeli legal requirements for merger approval Section 6.01 Proxy Statement / Company Meeting This section details the Company's obligations regarding the shareholder meeting to approve the merger, including preparing and submitting a Proxy Statement to the SEC within five business days, convening the meeting no later than 45 days after submission, and soliciting proxies in favor of the merger - The Company must prepare and submit the Proxy Statement to the SEC within five business days of the agreement date[99] - The Company must hold the shareholder meeting no later than 45 days after the Proxy Statement submission date, subject to certain exceptions[102] - The Company must use reasonable best efforts to obtain the Requisite Stockholder Approval and include the Board Recommendation in the Proxy Statement (unless a Change in Recommendation has occurred)[102] - The Company cannot postpone or adjourn the meeting without Parent's consent, except for specific reasons like lacking a quorum or needing to distribute supplemental proxy materials[102] Section 6.02 Additional Agreements This section outlines the cooperative obligations of the parties related to the Proxy Statement, requiring mutual information exchange, accuracy assurance, and prompt correction of misleading statements, with the Company providing Parent a reasonable opportunity to review and comment on filings - Each party must furnish the other with all information required for the Proxy Statement and ensure its accuracy[104] - The Company must provide Parent a reasonable opportunity to review and comment on the Proxy Statement and any communications with the SEC before filing[105] Section 6.03 Merger Proposal; Registration This section specifies the procedural requirements under Israeli Companies Law to effectuate the merger, mandating the preparation and delivery of a formal Merger Proposal to the Israeli Companies Registrar, creditor notifications, and informing the Registrar once shareholder approvals are obtained - The parties must prepare and execute a Merger Proposal in Hebrew as required by the Israeli Companies Law[106] - The Merger Proposal must be delivered to the Israeli Companies Registrar within three days of calling the shareholder meetings[106] - The parties must publish notices to their creditors in Israeli and New York newspapers and send notices to "Substantial Creditors" by registered mail[106] - Following shareholder approval, the parties must inform the Companies Registrar, which is a condition to the closing and issuance of the Certificate of Merger[106][107] ARTICLE VII: Conditions This article specifies the prerequisites that must be met or waived by both parties for the merger to close, including regulatory approvals and the accuracy of representations Section 7.01 Conditions to Each Party's Obligation to Effect the Mergers This section lists the fundamental conditions that must be satisfied or waived for both the Parent and the Company to be obligated to close the merger, including obtaining required stockholder approval, ensuring no prohibitive laws or court orders, and securing necessary regulatory approvals - Mutual closing conditions include: - Stockholder Approval: The merger must be adopted by the Requisite Stockholder Approval - No Injunctions: No law or order can be in effect that makes the merger illegal or prohibits it - Regulatory Approvals: The Required Regulatory Approval (under the UK's NSI Act) and, if applicable, the Bulgaria FDI Approval must be obtained[110][111][112][113] Section 7.02 Conditions to Obligations of Parent and Merger Subs This section outlines the conditions that must be met specifically for the Parent and Merger Subs to be obligated to close, including the accuracy of the Company's representations and warranties, the Company's performance of its covenants, the absence of any Company Material Adverse Effect, and the delivery of a confirming certificate - The Company's representations and warranties must be true and correct as of the closing date (subject to certain materiality standards)[114][115] - The Company must have performed all its covenants and obligations in all material respects[116] - No Company Material Adverse Effect must have occurred since the date of the agreement[116] - Parent must receive a certificate from a Company officer certifying the satisfaction of these conditions[117] Section 7.03 Conditions to Obligation of the Company This section lists the conditions that must be satisfied for the Company to be obligated to close the merger, including the accuracy of the Parent's and Merger Subs' representations and warranties, their performance of all covenants, and the delivery of a confirming certificate from a Parent officer - Parent's and Merger Subs' representations and warranties must be true and correct as of the closing date (subject to certain materiality standards)[118][119] - Parent and Merger Subs must have performed all their covenants and obligations in all material respects[120] - The Company must receive a certificate from a Parent officer certifying the satisfaction of these conditions[120] Section 7.04 Satisfaction of Conditions This section clarifies that a party cannot refuse to close by citing the failure of a condition if that party's own breach of the agreement caused the failure, and establishes that once the Certificate of Merger is issued, all conditions are conclusively deemed to have been satisfied or waived - A party may not rely on the failure of a condition to close if that party's own breach of the agreement caused the failure[121] - The issuance of the Certificate of Merger for the First Merger will be conclusive proof that all closing conditions have been satisfied or waived[121] ARTICLE VIII: Termination This article details the conditions under which the merger agreement can be terminated, the legal consequences of termination, and the associated fees and expenses Termination Rights (Sections 8.01-8.04) These sections outline the specific circumstances under which the merger agreement can be terminated, including by mutual consent, if the merger is not completed by the End Date, if it becomes illegal, or if shareholder approval is not obtained, with specific termination rights for Parent (e.g., change in recommendation, breach) and Company (e.g., superior proposal, Parent breach) - Mutual Termination: The agreement can be terminated by mutual written consent of Parent and the Company[124] - Termination by Either Party: - If the merger isn't consummated by the End Date (December 31, 2025) - If a final, non-appealable order permanently prohibits the merger - If the Requisite Stockholder Approval is not obtained[125] - Termination by Parent: - If the Company Board makes a Change in Recommendation or breaches the non-solicitation covenants - If the Company breaches its representations or covenants and fails to cure - If a Company Material Adverse Effect occurs[126] - Termination by Company: - To enter into a definitive agreement for a Superior Proposal (subject to compliance with Article V) - If Parent breaches its representations or covenants and fails to cure[128] Section 8.05 Notice of Termination; Effect of Termination This section specifies the process and consequences of termination, requiring written notice and rendering the agreement void upon valid termination, with certain provisions surviving and no party relieved from liability for fraud or intentional breach prior to termination - Termination is effective upon delivery of a written notice specifying the reason[129] - Upon termination, the agreement becomes void, but certain sections, including confidentiality (4.02(b)), termination effects (8.05), fees (8.06), and miscellaneous provisions (Article IX), survive[129] - Termination does not relieve any party from liability for fraud, intentional misconduct, or intentional breach of the agreement prior to termination[129] Section 8.06 Fees and Expenses Following Termination This section details the financial penalties associated with terminating the agreement, including a "Termination Fee" payable by the Company for a superior proposal or change in recommendation, and breakup fees for breaches by either party, which are generally considered liquidated damages and the sole remedy Termination Fees and Breakup Fees | Fee Type | Amount | Payable By | Triggering Condition | | :--- | :--- | :--- | :--- | | Termination Fee | $5,000,000 | Company | Termination for a Superior Proposal that emerged during the Go-Shop period | | Termination Fee | $10,000,000 | Company | Termination for a Superior Proposal after the Go-Shop period, or due to a Change in Recommendation | | Parent Breakup Fee | $10,000,000 | Company | Termination by Parent due to a non-willful breach by the Company | | Company Breakup Fee | $10,000,000 | Parent | Termination by Company due to a non-willful breach by Parent | - The break fees are considered liquidated damages and are the sole and exclusive remedy in the circumstances in which they are paid, not a penalty[136] - Each party pays its own expenses, except for HSR Act and other antitrust filing fees, which are shared equally[137] ARTICLE IX: Miscellaneous This article contains standard contractual provisions, including definitions of key terms, governing law, dispute resolution, and the survival of certain obligations post-closing Section 9.01 Definitions This section provides an extensive list of definitions for capitalized terms used throughout the merger agreement, which are crucial for interpreting the specific rights, obligations, and conditions of the transaction - Acquisition Proposal: Defined as an offer for 15% or more of the Company's assets or equity, a tender offer for 15% or more of its stock, or a merger where the other party would own 15% or more of the combined entity[141] - Material Adverse Effect (MAE): A material adverse change to the business or financial condition, with standard carve-outs for industry-wide issues, general economic conditions, changes in law, and impacts from the deal announcement itself, unless they disproportionately affect the company[235][236][237] - Superior Proposal: A bona fide written Acquisition Proposal for at least 80% of the company that the Board determines is more favorable financially to stockholders than the current deal, and is not subject to financing or due diligence contingencies[296] - Merger Consideration: Defined as $2.10 in cash payable for each share of Company Common Stock[241] General Legal Provisions (Sections 9.02-9.17) This collection of sections contains standard but critical legal clauses that govern the agreement's interpretation and enforcement, including governing law, exclusive jurisdiction, waiver of jury trial, the entire agreement clause, survival of covenants, and the right to seek specific performance - Governing Law: The agreement is governed by the laws of the State of Delaware, except for matters required to be governed by the laws of Israel (e.g., merger procedures, fiduciary duties of Israeli directors)[316] - Jurisdiction: Legal actions are to be brought exclusively in the Court of Chancery of the State of Delaware, or the courts of Tel-Aviv, Israel for Israeli law matters[317] - Waiver of Jury Trial: All parties irrevocably waive any right to a trial by jury for any legal action arising from the agreement[318] - Entire Agreement: This agreement, along with the Company Disclosure Letter and Confidentiality Agreement, constitutes the entire agreement between the parties, superseding all prior discussions and agreements[321] - Survival: Representations and warranties do not survive the Effective Time, while covenants that require performance after the closing do survive[315] - Specific Performance: The parties agree that irreparable damage would occur from a breach and that they are entitled to seek specific performance to enforce the agreement's terms[327]