Full Press Release Details
AGREEMENT AND PLAN OF MERGER
an Israeli limited company;
an Israeli limited company; and
an Israeli limited company
Dated as of April 10, 2024
| 1. | DESCRIPTION OF TRANSACTION | 2 | |
| 1.1 | The Merger | 2 | |
| 1.2 | Effects of the Merger | 2 | |
| 1.3 | Closing; Effective Time | 2 | |
| 1.4 | Articles of Association; Directors and Officers | 3 | |
| 1.5 | Conversion of Shares | 3 | |
| 1.6 | Calculation of Parent Net Cash | 5 | |
| 1.7 | Closing of the Company's Transfer Books | 6 | |
| 1.8 | Payment of Aggregate Merger Consideration | 7 | |
| 1.9 | Further Action | 8 | |
| 1.10 | Withholding; Tax Rulings | 8 | |
| 2. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 10 | |
| 2.1 | Due Organization; Subsidiaries | 11 | |
| 2.2 | Organizational Documents | 12 | |
| 2.3 | Authority; Binding Nature of Agreement | 12 | |
| 2.4 | Vote Required | 12 | |
| 2.5 | Non-Contravention; Consents | 12 | |
| 2.6 | Capitalization | 13 | |
| 2.7 | TASE Filings, Financial Statements | 15 | |
| 2.8 | Absence of Changes | 16 | |
| 2.9 | Absence of Undisclosed Liabilities | 17 | |
| 2.10 | Title to Assets | 17 | |
| 2.11 | Real Property; Leasehold | 17 | |
| 2.12 | Intellectual Property | 17 | |
| 2.13 | Agreements, Contracts and Commitments | 18 | |
| 2.14 | Compliance; Permits | 19 | |
| 2.15 | Legal Proceedings; Orders | 20 | |
| 2.16 | Tax Matters | 20 | |
| 2.17 | Employee and Labor Matters; Benefit Plan | 24 | |
| 2.18 | Environmental Matters | 27 | |
| 2.19 | Insurance | 28 | |
| 2.20 | No Financial Advisors | 28 | |
| 2.21 | Transactions with Affiliates | 28 | |
| 2.22 | Anti-Bribery | 29 | |
| 2.23 | Disclaimer of Other Representations or Warranties | 29 | |
| 3. | REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | 29 | |
| 3.1 | Due Organization; Subsidiaries | 29 | |
| 3.2 | Organizational Documents | 30 | |
| 3.3 | Authority; Binding Nature of Agreement | 30 | |
| 3.4 | Vote Required | 31 | |
| 3.5 | Non-Contravention; Consents | 31 | |
| 3.6 | Capitalization | 32 | |
| 3.7 | SEC Filings; Financial Statements | 34 | |
| 3.8 | Absence of Changes | 36 | |
| 3.9 | Absence of Undisclosed Liabilities | 36 |
| 3.10 | Real Property; Leasehold | 36 | |
| 3.11 | Intellectual Property | 36 | |
| 3.12 | Agreements, Contracts and Commitments | 37 | |
| 3.13 | Compliance; Permits | 38 | |
| 3.14 | Legal Proceedings; Orders | 39 | |
| 3.15 | Tax Matters | 39 | |
| 3.16 | Transactions with Affiliates | 43 | |
| 3.17 | Insurance | 47 | |
| 3.18 | No Financial Advisors | 47 | |
| 3.19 | Anti-Bribery | 47 | |
| 3.20 | Valid Issuance | 47 | |
| 3.21 | Opinion of Financial Advisor | 47 | |
| 3.22 | Disclaimer of Other Representations or Warranties | 48 | |
| 4. | CERTAIN COVENANTS OF THE PARTIES | 48 | |
| 4.1 | Operation of Parent's Business | 48 | |
| 4.2 | Operation of the Company's Business | 50 | |
| 4.3 | Access and Investigation | 53 | |
| 4.4 | Parent Non-Solicitation | 53 | |
| 4.5 | Company Non-Solicitation | 54 | |
| 4.6 | Notification of Certain Matters | 55 | |
| 4.7 | Post-Closing Financing | 56 | |
| 5. | ADDITIONAL AGREEMENTS OF THE PARTIES | 56 | |
| 5.1 | Court Approval, Registration Statement and Transaction Report | 56 | |
| 5.2 | Company Meetings | 58 | |
| 5.3 | Parent Shareholders' Meeting; Merger Sub Approval | 58 | |
| 5.4 | Regulatory Approvals | 60 | |
| 5.5 | Certificate of Merger | 60 | |
| 5.6 | Company Options | 60 | |
| 5.7 | Company Warrants | 60 | |
| 5.8 | TASE De-Listing of Company Ordinary Shares | 61 | |
| 5.9 | Additional Agreements | 61 | |
| 5.10 | Disclosure | 61 | |
| 5.11 | Listing | 62 | |
| 5.12 | Tax Matters | 62 | |
| 5.13 | Directors and Officers | 62 | |
| 5.14 | Termination of Certain Agreements and Rights | 62 | |
| 5.15 | Cooperation | 63 | |
| 5.16 | Allocation Certificates; Ownership Certificate | 63 | |
| 5.17 | Company Financial Statements | 63 | |
| 5.18 | Shareholder Litigation | 64 | |
| 5.19 | Certain Adjustments | 64 | |
| 6. | CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY | 64 | |
| 6.1 | No Restraints | 64 | |
| 6.2 | Shareholder Approval | 64 | |
| 6.3 | Court Approval | 64 | |
| 6.4 | Tax Rulings | 65 | |
| 6.5 | Certificate of Merger | 65 | |
| 6.6 | No Legal Prohibition | 65 | |
| 6.7 | Bonds Trustee | 65 |
| 7. | ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB | 66 | |
| 7.1 | Accuracy of Representations | 66 | |
| 7.2 | Performance of Covenants | 66 | |
| 7.3 | Documents | 66 | |
| 7.4 | No Company Material Adverse Effect | 67 | |
| 7.5 | Termination of Investor Agreements | 67 | |
| 8. | ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY | 67 | |
| 8.1 | Accuracy of Representations | 67 | |
| 8.2 | Performance of Covenants | 67 | |
| 8.3 | Documents | 68 | |
| 8.4 | No Parent Material Adverse Effect | 68 | |
| 8.5 | Parent Net Cash | 68 | |
| 8.6 | Listing | 68 | |
| 8.7 | Directors and Officers | 68 | |
| 9. | TERMINATION | 68 | |
| 9.1 | Termination | 68 | |
| 9.2 | Notice of Termination; Effect of Termination | 70 | |
| 9.3 | Expenses | 71 | |
| 10. | MISCELLANEOUS PROVISIONS | 71 | |
| 10.1 | Non-Survival of Representations and Warranties | 71 | |
| 10.2 | Amendment | 71 | |
| 10.3 | Waiver | 71 | |
| 10.4 | Entire Agreement; Counterparts; Exchanges by Electronic Transmission | 72 | |
| 10.5 | Applicable Law; Jurisdiction | 72 | |
| 10.6 | Attorneys' Fee . | 72 | |
| 10.7 | Assignability | 72 | |
| 10.8 | Notices | 73 | |
| 10.9 | Cooperation | 74 | |
| 10.10 | Severability | 74 | |
| 10.11 | Other Remedies; Specific Performance | 74 | |
| 10.12 | No Third Party Beneficiaries | 75 | |
| 10.13 | Construction | 75 |
| Exhibit A | Definitions |
| Exhibit B | Company Shareholder Support Agreements |
| Exhibit C | Form of Restated Company Articles |
| Exhibit D | Form of Pre-Funded Warrant (to be agreed prior to the Closing) |
| Exhibit E | Company Allocation Schedule (to be agreed prior to the Closing) |
| Exhibit F | Form of Indemnification Agreement |
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN
OF MERGER (together with its exhibits and schedules, this "Agreement") is made and entered into as of April
10, 2024, by and among SciSparc Ltd., an Israeli limited company ("Parent"), SciSparc Merger Sub Ltd., an Israeli
limited company and wholly-owned subsidiary of Parent ("Merger Sub"), and AutoMax Motors Ltd., an Israeli limited
company (the "Company"). Certain capitalized terms used in this Agreement are defined in Exhibit A.
A. Parent and the Company
intend to effect a merger of Merger Sub with and into the Company (the "Merger") in accordance with this Agreement
and by way of a court approved arrangement between the Company and its shareholders and, if applicable, its Bondholders and creditors,
in accordance with the provisions of Sections 350 and 351 of the Companies Law. Upon consummation of the Merger, Merger Sub will cease
to exist, and the Company will become a wholly-owned subsidiary of Parent, on the terms and subject to the conditions set forth in this
has: (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of Parent and its shareholders,
(ii) approved and declared advisable this Agreement and the Contemplated Transactions, including the authorization and issuance of ordinary
shares, with no par value, of Parent ("Parent Ordinary Shares"), listed and traded on Nasdaq, to the shareholders
of the Company pursuant to the terms of this Agreement and (iii) determined to recommend, upon the terms and subject to the conditions
set forth in this Agreement, that the shareholders of Parent vote to approve the Parent Shareholder Matters.
C. The Merger Sub Board
has: (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of Merger Sub and its sole shareholder,
(ii) approved and declared advisable this Agreement and the Contemplated Transactions and (iii) determined to recommend, upon the terms
and subject to the conditions set forth in this Agreement, that the sole shareholder of Merger Sub votes to adopt this Agreement and
thereby approve the Contemplated Transactions.
D. The Company Board
has: (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of the Company and its shareholders,
(ii) approved and declared advisable this Agreement and the Contemplated Transactions and (iii) determined to recommend, upon the terms
and subject to the conditions set forth in this Agreement, that the shareholders and, if applicable, the creditors of the Company, vote
to approve the Company Approval Matters and if required, pursuant to the Companies Law or the Applicable Court, that the Bondholders
of the Company vote to approve the Company Approval Matters.
E. Concurrently with
the execution and delivery of this Agreement and as a condition and inducement to Parent's willingness to enter into this Agreement,
(a) the shareholders of the Company listed in Section A-1 of the Company Disclosure Schedule (the "Company Signatories")
(solely in their capacity as shareholders of the Company) are executing support agreements in favor of Parent in substantially the form
attached hereto as Exhibit B pursuant to which such Company Signatories are agreeing to take specified actions in furtherance
of the Merger, including actions relating to the approval of the Merger and adoption of this Agreement by the Company's shareholders
(the "Company Shareholder Support Agreements").
The Parties, intending to
be legally bound, agree as follows:
DESCRIPTION OF TRANSACTION
Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate
existence of Merger Sub shall cease. The Company will continue as the surviving company in the Merger (the "Surviving Company")
and shall (a) become a private debenture company (Chevrat Igrot Hov) within the meaning of the Companies Law and a wholly-owned,
direct subsidiary of Parent, (b) continue to be governed by the Laws of the State of Israel, (c) maintain a registered office in the
State of Israel, and (d) succeed to and assume all of the rights, properties and obligation of Merger Sub in accordance with the Companies
The Merger shall have the
effects set forth in this Agreement. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time (as
defined below), by virtue of, and simultaneously with, the Merger and without any further action on the part of Parent, Merger Sub, the
Company or any Company Shareholder, (a) Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the Surviving Company; (b) all the properties, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Company; (c) all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Company; and (d) all the rights, privileges, immunities, powers and franchises
of the Company (as the Surviving Company) shall continue unaffected by the Merger.
1.3 Closing; Effective
Unless this Agreement is earlier
terminated pursuant to the provisions of Section 9.1 , and subject to the satisfaction or, to the extent permitted by
Law, waiver by such party entitled to waive such condition of the conditions set forth in Sections 6 , 7
and 8, the consummation of the Merger (the "Closing") shall take place remotely as promptly
as practicable (but in no event later than the second Business Day following the satisfaction or waiver by such party entitled to waive
such condition of the last to be satisfied or waived of the conditions set forth in in Sections 6 , 7 and
8, other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of each of such conditions), or at such other time, date and place as Parent and the Company may mutually agree in writing.
The date on which the Closing actually takes place is referred to as the "Closing Date." As soon as practicable
after the determination of the Closing Date in accordance with this Section 1.3, each of the Company and Merger Sub
shall (and Parent shall cause Merger Sub to), in coordination with each other, deliver to the Registrar of Companies of the State of
Israel (the "Companies Registrar"), a notice of the proposed date of the Closing, in which notice the parties
shall request that the Companies Registrar issue a certificate evidencing the Merger (the "Certificate of Merger")
on the date that the Parties shall provide further notice to the Companies Registrar that the Closing has occurred, and the Parties shall
deliver such further notice to the Companies Registrar on the Closing Date. The Merger shall become effective upon the issuance by the
Companies Registrar of the Certificate of Merger (the time at which the Merger becomes effective is referred to herein as the "Effective
Time"). For the avoidance of doubt, and notwithstanding any provision of this Agreement to the contrary, it is the intention
of the Parties that the Merger being declared effective and that the issuance by the Companies Registrar of the Certificate of Merger
shall both occur on the Closing Date.
Association; Directors and Officers.
(a) the articles of association
of the Surviving Company shall be amended and restated, as reflected in the form of amended and restated articles of association attached
hereto as Exhibit C (the "Restated Company Articles"), until thereafter amended as provided by
the Companies Law and such articles of association;
(b) unless otherwise
agreed upon by the Parent and the Company, the articles of association of Parent shall be amended in order to change the name of Parent
to such name as to be reasonably agreed upon by the Parties, and as may be approved by the Company and the Israeli Companies Registrar
(the "Restated Parent Articles");
(c) the directors and
officers of Parent, each to hold office in accordance with the amended and restated articles of association of Parent, shall be as designated
by the Parent and the Company prior to Closing after giving effect to the provisions of Section 5.13, or such other
persons as shall be mutually agreed upon by Parent and the Company, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified, as the case may be; and
(d) the directors and
officers of the Surviving Company, each to hold office in accordance with the articles of association of the Surviving Company, shall
be the directors and officers of the Company as in office immediately prior to the Effective Time, until the earlier of their resignation
or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.
(a) At the Effective Time,
by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any shareholder of the Company