This summary highlights selected information from this shareholder circular and may not contain all of the information that is important to you. To understand the Continuation (as defined below) and the Merger (as defined below) more fully and for a more complete description of the legal terms of the Continuation and the Merger, you should carefully read this entire shareholder circular, the annexes to this shareholder circular and the documents that we refer to in this shareholder circular. You may obtain the information incorporated by reference in this shareholder circular without charge by following the instructions under the section of this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.” We encourage you to read all annexes to this shareholder circular carefully and in their entirety, including the Business Combination Agreement attached as Annex A, which is the legal document that governs the Continuation and the Merger.
Unless indicated otherwise by the context, all references in this shareholder circular to:
Capitalized terms used but not defined in this shareholder circular have the meaning ascribed to them in the Notice of Cayman Shareholder Meeting enclosed in this shareholder circular.
As of the date of this shareholder circular, the Company Shares are listed on Nasdaq under the symbol “NGMS.” Upon completion of the Continuation all trading of Company Shares on Nasdaq will be suspended and you will not be able to buy, sell or transfer your Company Shares.
Parent is a company organized under the laws of Australia. Parent is a leading global gaming, content and technology company and mobile games publisher. Parent offers a diverse range of products and services including electronic gaming machines, casino management systems and free-to-play mobile game across the globe.
Merger Sub is a Cayman Islands exempted company. Merger Sub is a wholly owned, indirect subsidiary of Parent that was incorporated on May 11, 2023, solely for the purpose of engaging in the Transactions. Merger Sub has not engaged in any business activities other than in connection with the Transactions.
As approved at the Company’s Extraordinary General Meeting of Shareholders held on Tuesday, July 18, 2023 (the “First Luxembourg Shareholder Meeting”), and subject to the terms and conditions of the Business Combination Agreement and in accordance with the applicable provisions of the Luxembourg Company Law and the Cayman Companies Act, the Company will (i) transfer (by way of continuation) the Company’s statutory seat, registered office (siege statutaire) and seat of central administration (siege de l’administration centrale) from Luxembourg to the Cayman Islands and change its legal form as a Luxembourg law governed public limited liability company (société anonyme) to a Cayman Islands exempted company by way of continuation (without the dissolution of the Company or the liquidation of its assets) (the “Continuation”), (ii) de-register in Luxembourg (without the dissolution of the Company or the liquidation of its assets), (iii) change its name to “Neo Group Ltd.”, (iv) adopt the memorandum and articles of association of the Company, which are attached to the enclosed shareholder circular as Annex C (the “Continuation Articles”) and (v) execute all formalities in relation to the Continuation and record the satisfaction of the Continuation Conditions. At the Continuation Effective Time, all trading of Company Shares on Nasdaq will be suspended and you will not be able to buy, sell or transfer your Company Shares.
Following the completion of the Continuation, and subject to approval of the Cayman Meeting Proposals by shareholders of the Company at the Cayman Shareholder Meeting (the “Cayman Shareholder Approval”), the Company and Merger Sub will jointly file a merger application and all other documentation required to complete the Merger under the Cayman Companies Act with the Cayman Registrar, including the Statutory Plan of Merger. Subject to satisfaction of the Merger Conditions, Merger Sub will merge with and into the Company and the Company will continue as the Surviving Company and as a wholly owned indirect subsidiary of Parent. As a result of the Merger, the Company will cease to be a publicly traded company, all outstanding Company Shares (except for (i) any Company Shares owned by the Company, Parent, Merger Sub or any of the shares of direct or indirect subsidiaries or held in the Company’s treasury (which will, by virtue of the Merger, cease to be outstanding and will be cancelled and will cease to exist immediately prior to the consummation of the Merger, and no Merger Consideration (as defined below) or any other consideration will be delivered in exchange therefor) (the “Excluded Shares”) or (ii) any Company Shares held by dissenting shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) their desire to dissent with respect to such Company Shares (the “Dissenting Shares”)) will be deemed to be cancelled in exchange for the right to receive $29.50 per share in cash, without interest and less any applicable withholding taxes (the “Merger Consideration”). Upon the Merger Effective Time, you will no longer own any Company Shares and you will only have the right to receive the Merger Consideration.
For more information regarding the Continuation and the Merger, see the section of this shareholder circular entitled “The Continuation and the Merger.”
At the Merger Effective Time, each option to purchase Company Shares that is unexpired, unexercised and outstanding immediately prior to the Merger Effective Time and that has fully vested in accordance with its terms as of immediately prior to the Merger Effective Time or is scheduled to fully vest within thirty days following the Merger Effective Time in accordance with its terms (each, a “Cashed‑Out Company Option”) will be canceled and converted into the right to receive a cash amount equal to the product of (x) the number of Company Shares subject to such option, multiplied by (y) the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes (as defined in the Business Combination Agreement), provided that any Cashed-Out Company Option with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Cashed-Out Company Option will then have no further rights with respect to such Cashed-Out Company Option, apart from the cash payment described in this paragraph.
At the Merger Effective Time, each option to purchase Company Shares held by an employee who will be an employee of Parent or any of its subsidiaries following the Merger (each, a “Continuing Employee”) that is unexpired, unexercised and outstanding immediately prior to the Merger Effective Time and has neither vested in accordance with its terms and conditions nor is scheduled to fully vest within thirty days following the Merger Effective Time (each, an “Assumed Option”), will be assumed by Parent and converted into a share option, in accordance with the terms of the Company equity plan and/or option agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such assumed Option), covering a number of ordinary shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed Option immediately prior to the Merger Effective Time multiplied by the Exchange Ratio (as defined below), and rounded down to the nearest whole share, with an exercise price per share equal to the exercise price per share of the Assumed Option immediately prior to the Merger Effective Time, divided by the Exchange Ratio, and rounded up to the nearest whole cent provided that any Assumed Option with a per-share exercise price equal to or exceeding $29.50 will not be assumed by Parent, and will be automatically terminated as of the Merger Effective Time. The options issued by Parent in assumption of the Assumed Options which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Israeli Income Tax Ordinance (New Version) 5721-1961, and all the regulations, rules and orders and any other provisions promulgated thereunder (the “Ordinance”) and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance, in accordance with the provisions of the Options Tax Ruling or an Interim Options Tax Ruling, as applicable. The holder of such Assumed Option will then have no further rights with respect to such Assumed Option, apart from any rights described in this paragraph. The “Exchange Ratio” means a fraction, the numerator of which is $29.50 multiplied by the arithmetic mean of the average of the bid and ask spot rates for conversion of U.S. dollars to Australian dollars as reported by Bloomberg L.P. on each of the screen AUD Currency BFIX on each of the five consecutive trading days ending with the trading day that is five business days prior to the Closing Date (as defined in the section of this shareholder circular entitled “The Continuation and the Merger—The Continuation and the Merger Effective Time”) and the denominator of which is equal to the volume weighted average daily ASX closing price for a common share of Parent for the five consecutive trading days ending five business days prior to the Closing Date.
At the Merger Effective Time, each option to purchase Company Shares held by a holder who will not be an employee of Parent or any of its subsidiaries following the Merger, but will continue to provide services to Parent or any of its subsidiaries following the Merger (each, a “Continuing Contractor”), that is unexpired, unexercised and outstanding immediately prior to the Merger Effective Time and is not a Cashed‑Out Company Option (each, a “Contractor Option”), will be canceled and converted into the right to receive, subject to a vesting schedule provided in the Business Combination Agreement and to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company Shares subject to such option, multiplied by (y) the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes, provided that any Contractor Option with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Contractor Option will then have no further rights with respect to such Contractor Option, apart from the cash payment described in this paragraph.
At the Merger Effective Time, each Company RSU held by a Continuing Employee that is outstanding immediately prior to the Merger Effective Time and is not a Cashed‑Out Company RSU (each, an “Assumed RSU”), will be assumed by Parent and converted in accordance with the terms of the Company equity plan and/or restricted stock unit agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such Assumed RSU), into a restricted share unit of Parent, covering a number of ordinary shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed RSU immediately prior to the Merger Effective Time multiplied by the Exchange Ratio (as defined below), and rounded down to the nearest whole share. The restricted share units issued by Parent in assumption of the Assumed RSUs which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Ordinance and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance and shall be subject to the provisions of the Options Tax Ruling or Interim Options Tax Ruling (as applicable). The holder of such Assumed RSU will then have no further rights with respect to such Assumed RSU, apart from any rights described in this paragraph.
At the Merger Effective Time, each Company RSU held by a Continuing Contractor, that is outstanding immediately prior to the Merger Effective Time and is not a Cashed‑Out Company RSU (each, a “Contractor RSU”), will be canceled and converted into the right to receive, at the same time as such Contractor RSU would have vested pursuant to the terms of the applicable Company equity plan and/or award agreement by which it is evidenced (including any vesting acceleration), and subject to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company RSUs subject to such option, multiplied by (y) $29.50, with such amount reduced by any applicable payroll, income or other withholding Taxes. The holder of such Contractor RSU will then have no further rights with respect to such Contractor RSU, apart from the cash payment described in this paragraph.
For a more complete description of the treatment of Company equity awards, see the section of this shareholder circular entitled “The Business Combination Agreement—Treatment of Company Equity Awards.”
The Cayman Shareholder Meeting will be held on or about April 25, 2024 via a video-conferencing service. The Company will provide an additional notice on Form 6-K prior to the Cayman Shareholder Meeting with respect to the final date and time of the Cayman Shareholder Meeting and a weblink to attend the video conference for the Cayman Shareholder Meeting.
You are entitled to notice of and to vote at the Cayman Shareholder Meeting or any adjournment, reconvening, postponement or other delay thereof if you own Company Shares at the close of business on April 1, 2024 (the “Record Date”). You are also entitled to vote at the Cayman Shareholder Meeting if you hold Company Shares through a bank, broker or other nominee which is one of our shareholders of record at the close of business on the Record Date. You will have one vote at the Cayman Shareholder Meeting for each Company Share that you owned at the close of business on the Record Date.
At the Cayman Shareholder Meeting, you will be asked to consider and vote on the following Cayman Meeting Proposals:
The approval of each of the Merger Proposal and the Statutory Plan of Merger Proposal requires the affirmative vote of shareholders holding at least sixty six point seven percent (66.7%) of the Company Shares present or represented at the Cayman Shareholder Meeting (or any adjournment, reconvening or postponement thereof), in person or by proxy, and entitled to vote on the Cayman Meeting Proposals. Approval of the Waiver Proposal requires the affirmative vote of shareholders holding more than fifty percent (50%) of the Company Shares entitled to vote on such proposal. The presence, in person or by proxy, or representation of two Company shareholders entitled to vote at the Cayman Shareholder Meeting constitutes a quorum for purposes of holding the Cayman Shareholder Meeting and voting on the Cayman Meeting Proposals. If within an hour from the time appointed for the Cayman Shareholder Meeting a quorum is not present, the Cayman Shareholder Meeting shall stand adjourned to the next business day, at the same time and place, and if at the adjourned meeting a quorum is not present within an hour from the time appointed for the meeting the shareholder or shareholders present and entitled to vote shall form a quorum.
Approximately 61% of the Company Shares held by the Significant Shareholders (as defined below) committed under the Support Agreement (as further described below) to vote in favor of the Cayman Meeting Proposals.
Concurrently with the execution of the Business Combination Agreement, certain of the Company’s shareholders holding approximately 61% of the Company Shares then outstanding (each a “Significant Shareholder” and together, the “Significant Shareholders”) entered into a support agreement with Parent attached to this shareholder circular as Annex D (the “Support Agreement”) have irrevocably agreed, among other things, to (a) certain restrictions on the transfer of the Company Shares owned by such Significant Shareholders, (b) vote all of the Company Shares owned by such Significant Shareholders at any meeting of the shareholders of the Company in favor of, and otherwise support the Transactions, including (i) the approval and adoption of the Business Combination Agreement, the Continuation Articles, the Statutory Plan of Merger (including the memorandum and articles of association enclosed therewith) and the Transactions, (ii) the approval of waiving any shareholder notice requirements under the Continuation Articles or any law applicable to calling, holding and convening the meeting of the shareholders of the Company to be held in the Cayman Islands following the Continuation (or any adjournment, reconvening or postponement thereof) and (iii) effective upon the Continuation, the change of the Company’s name to “Neo Group Ltd.,” (c) unconditionally and irrevocably grant to Parent and up to two of Parent’s designated representatives as each Significant Shareholder’s proxy and attorney-in-fact (with full power of substitution) for and in the name, place and stead of such Significant Shareholder to vote or cause to be voted (including by proxy or written consent, if applicable) all of the Company Shares owned by such Significant Shareholders in accordance and consistent with the Support Agreement, with respect to the matters specified above and (d) avoid taking certain actions adverse to the Transactions.
As of March 31, 2024, each of Barak Matalon, Aharon Aran and Oded Gottfried beneficially owned approximately 28.5%, 7.1% and 1.8% of the Company Shares, respectively, and no other director or executive officer, individually or in the aggregate, beneficially owned one percent or more of the Company Shares. Our directors and executive officers have informed us that they currently intend to vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
Any shareholder of record entitled to vote may submit a proxy by returning a signed proxy card by mail in the accompanying prepaid reply envelope to be received by the Company’s tabulation agent, Broadridge, by 11:59 p.m. (Eastern time) on April 22, 2024, or by granting a proxy electronically over the Internet or by telephone to be received no later than 11:59 p.m. (Eastern time) on April 22, 2024, or may vote in person by appearing at the Cayman Shareholder Meeting.
If you are a beneficial owner and hold your Company Shares in “street name” through a bank, broker or other nominee on Nasdaq, you should instruct your bank, broker or other nominee of how you wish to vote your Company Shares using the instructions provided by your bank, broker or other nominee. In most instances you will be able to vote over the Internet, by telephone or by mail. You may also vote in person at the Cayman Shareholder Meeting if you obtain a “legal proxy” from your bank, broker or other nominee. Under applicable stock exchange rules, such banks, brokers or other nominees have the discretion to vote on routine matters. The Cayman Meeting Proposals are non‑routine matters, and such banks, brokers and other nominees cannot vote on these proposals without your instructions at the Cayman Shareholder Meeting. Therefore, it is important that you cast your vote or instruct your bank, broker or nominee on how you wish to vote your Company Shares.
You may change your vote or revoke your proxy prior to the Cayman Shareholder Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy before the Cayman Shareholder Meeting by (1) delivering a written notice of revocation to the Company’s corporate secretary; (2) delivering a duly executed proxy card to the Company’s corporate secretary bearing a later date than the proxy being revoked; (3) submitting a proxy electronically or over the Internet or by telephone (only your last telephone or internet proxy will be counted); or (4) attending the Cayman Shareholder Meeting in person and withdrawing your proxy or changing your vote. Only the change of vote and revocations of proxy received before 11:59 pm, Eastern time on April 22, 2024, shall be counted and taken into account in order to ensure that your later proxy is received in time for the Cayman Shareholder Meeting. Attendance alone at the Cayman Shareholder Meeting will not revoke a proxy. The address of the registered office for purposes of revoking your proxy pursuant to clauses (1) and (2) in the second preceding sentence is 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg. If you wish to change your vote by mail, you should contact our Proxy Solicitor, at the address set forth below and request a new proxy card or voting instruction form.
If you hold your Company Shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. In most instances this can be done over the phone or internet. Interests of the Company’s Directors and Executive Officers in the Merger
When considering the recommendation of the Board that you vote to approve each of the Cayman Meeting Proposals, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, your interests as a shareholder. The Board was aware of these interests during its deliberations on the merits of the Merger and in deciding to recommend that the Company’s shareholders vote in favor of each of the Cayman Meeting Proposals. These interests generally include, among others, the rights to accelerated vesting of equity awards, continued employment with the Surviving Company, the indemnification and insurance and certain payments and benefits provisions contained in or permitted by the Business Combination Agreement, as described in more detail under the section of this shareholder circular entitled “The Continuation and the Merger—Interests of the Company’s Directors and Executive Officers in the Merger.”
The Company Shares are listed on Nasdaq under the trading symbol “NGMS.” The closing sale price of the Company Shares on Nasdaq on May 12, 2023, the last trading day prior to the execution of the Business Combination Agreement, was $12.84 per share, compared to which the Merger Consideration represents a premium of approximately 130%. The volume-weighted average sale price on Nasdaq during the 90-day period ended May 12, 2023 was $14.45 per share, representing a premium of approximately 104%. On April 8, 2024, the latest trading day before the date of this shareholder circular, the closing price per share of the Company Shares on Nasdaq was $29.00.
The Board, after considering various factors described under the section of this shareholder circular entitled “The Continuation and the Merger—Reasons for the Merger and Recommendation of the Board,” has unanimously (i) determined that the Company’s entry into the Business Combination Agreement and the consummation of the Transactions, including the Continuation and the Merger, are fair to, and in the best interests of, the Company and its shareholders and (ii) authorized, declared advisable and approved in all respects, the Business Combination Agreement, the delivery and performance of the Business Combination Agreement and the consummation of the Transactions, upon the terms and subject to the conditions set forth in the Business Combination Agreement. The Board unanimously recommends that you vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
On July 18, 2023 at the First Luxembourg Shareholder Meeting, the shareholders of the Company resolved to approve:
Fairness Opinion of Stifel
Pursuant to an engagement letter dated February 6, 2023, the Company retained Stifel, Nicolaus & Company, Incorporated (“Stifel”) as its financial advisor in connection with the proposed Merger.
At a meeting of the Board held on May 14, 2023 to evaluate and approve the Continuation, the Merger and the other Transactions, Stifel rendered its oral opinion to the Board, confirmed by the delivery of a written opinion dated May 14, 2023, addressed to the Board to the effect that, as of the date of such opinion and subject to the qualifications, assumptions, exceptions and limitations set forth therein, the Merger Consideration to be received by holders of Company Shares (excluding Excluded Shares and Dissenting Shares) from Parent in the Merger pursuant to the Business Combination Agreement was fair to such holders, from a financial point of view.
The Board did not impose any limitations on Stifel with respect to the investigations made or procedures followed in rendering Stifel’s opinion. In selecting Stifel, the Board considered, among other things, the fact that Stifel is a reputable investment banking firm with substantial experience advising companies in the gaming sector and in providing strategic advisory services in general, and Stifel’s familiarity with the Company and its business. Stifel, as part of its investment banking services, is regularly engaged in the independent valuation of businesses and securities in connection with mergers, acquisitions, underwritings, sales and distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.
The full text of Stifel’s opinion is attached to this shareholder circular as Annex E and is incorporated herein by reference. The summary of Stifel’s opinion contained in this shareholder circular is qualified in its entirety by reference to the full text of Stifel’s opinion. The Company’s shareholders are encouraged to read Stifel’s opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered, limits of the review undertaken by Stifel, and qualifications contained in Stifel’s opinion.
For more information, see the section of this shareholder circular entitled “The Continuation and the Merger—Fairness Opinion of Stifel.”
Business Combination Agreement
Conditions to the Effectuation of the Continuation and to the Closing of the Merger
There are various conditions that must be satisfied in order for the Merger to be completed. For a detailed summary of such conditions, see the sections of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger.”
Non‑Solicitation
Pursuant to the terms of the Business Combination Agreement, the Company is subject to customary restrictions on its ability to solicit Acquisition Proposals (as defined in the section of this shareholder circular entitled “The Business Combination Agreement—Competing Proposals”) from third parties and to provide information to, and enter into discussions or negotiations with, third parties regarding Acquisition Proposals. As a result of the Company obtaining the First Luxembourg Shareholder Approval, certain exceptions to those non-solicitation restrictions no longer apply.
Financing of the Merger
The Company anticipates that the total amount of funds necessary to complete the Merger and the Transactions will be approximately $1.2 billion. Parent is able to fund the acquisition through cash on hand, and Parent has represented to the Company that it will have sufficient funds to pay all cash amounts required to be paid by Parent under the Business Combination Agreement at the Merger Effective Time. This amount includes funds needed to (i) pay the Company’s shareholders the amounts due under the Business Combination Agreement, (ii) make payments in respect of certain of the Company’s outstanding equity‑based awards pursuant to the Business Combination Agreement in exchange for cancellation of such awards and (iii) pay certain outstanding debt of the Company.
For more information, see the section of this shareholder circular entitled “The Continuation and the Merger—Financing of the Merger.”
Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger
The Continuation may, at the level of Luxembourg resident and non-resident holders of Company Shares, constitute a taxable transaction to holders of Company Shares for Luxembourg tax purposes. Further, the receipt of the Merger Consideration in exchange for Company Shares may constitute a taxable transaction to Luxembourg resident holders of Company Shares for tax purposes. For a discussion of material U.S. federal and Luxembourg income tax consequences and Israeli tax consequences of the Continuation and the Merger, please see the section of this shareholder circular entitled “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger—Material U.S. Federal Income Tax Consequences.”
Holders of Company Shares should consult their own tax advisors concerning the tax consequences relating to the Continuation and the Merger in light of their particular circumstances.
Regulatory Approvals Required for the Merger and Other Regulatory Filings
The Company and Parent have made all regulatory filings and will obtain prior to the time of the Continuation and the Merger all regulatory approvals and other consents that would be necessary to complete the Continuation and the Merger, including receipt of the regulatory approvals, or expiration or termination of waiting periods related thereto, in connection with antitrust regulation, foreign direct investment regulation and lottery and gaming regulation in various jurisdictions. For further details on the status of regulatory approvals, please refer to the section of this shareholder circular entitled “The Continuation and the Merger—Regulatory Approvals.”
Appraisal Rights
Company Shares that are outstanding following the Continuation Effective Time and immediately prior to the Merger Effective Time and which are held by shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) their desire to dissent with respect to such Company Shares shall not be converted into or represent the right to receive the Merger Consideration attributable to such shares. Such shareholders shall be entitled to receive payment of the fair value of such shares held by them in accordance with the Cayman Companies Act. For further details regarding appraisal rights and how you can appoint the Board to timely submit your objection, please refer to the section of this shareholder circular entitled “The Continuation and the Merger—Appraisal Rights.”
The Re-Continuation
Unless otherwise agreed between Parent and the Company, if the Company has completed the Continuation but, together with Merger Sub, has not filed the Statutory Plan of Merger with the Cayman Registrar within three business days from the Continuation Effective Time (the “Continuation Period”) due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, then the Company shall effectuate the transfer of the Company’s statutory seat, registered office and seat of central administration from the Cayman Islands to Luxembourg in accordance with the Cayman Companies Act and Luxembourg Company Law and will take all actions necessary to (i) unwind the effects of the Continuation and transfer by way of continuation back to Luxembourg from the Cayman Islands as contemplated by the Business Combination Agreement and in accordance with the Cayman Companies Act and the Luxembourg Company Law, including convening the Second Luxembourg Shareholder Meeting to obtain shareholder approval and (ii) to resume the trading of the Company Shares on Nasdaq (collectively, the “Re-Continuation”). Following the completion of the Re-Continuation, the Company would remain a public company, the Company Shares would continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company would continue to file periodic reports with the SEC. However, the Company would remain subject to the terms and conditions of the Business Combination Agreement unless terminated in accordance with its terms. For more information regarding the Re-Continuation, see the section of this shareholder circular entitled “The Continuation and the Merger—The Re-Continuation.”
Recommendation of the Board – The Re-Continuation
The Board, after considering various factors described under the section of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger” and “The Business Combination Agreement—The Re-Continuation” has unanimously determined that, if the Merger is not consummated within the Continuation Period due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, the Re-Continuation is in the best interests of the Company and its shareholders and is fair to the Company’ shareholders.
The Board unanimously recommends that you vote (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal.
The following questions and answers address some commonly asked questions regarding the Business Combination Agreement, the Continuation, the Merger, the Re-Continuation (if applicable) and the other transactions contemplated by the Cayman Meeting Proposals. These questions and answers may not address all questions that are important to you. We encourage you to carefully read the more detailed information contained elsewhere in this shareholder circular, the annexes to this shareholder circular and the documents we refer to in this shareholder circular. You may obtain the information incorporated by reference in this shareholder circular without charge by following the instructions under the section in this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.”
Cayman Shareholder Meeting
| Q: | Why am I receiving these materials? |
| A: | You are receiving this shareholder circular from us because you were a shareholder of the Company of record at the close of business on April 1, 2024. You are entitled to attend the Cayman Shareholder Meeting and are entitled to vote on the items of business described in this shareholder circular if you own Company Shares at the close of business on the Record Date. Your vote is very important, and we encourage you to vote by proxy or voting instruction form as soon as possible. |
As of March 31, 2024, there were 33,895,026 Company Shares outstanding. The Company Shares are our only class of voting stock.
| Q: | What am I being asked to vote on at the Cayman Shareholder Meeting? |
A: You are being asked to vote on the following proposals:
| (2) | the Statutory Plan of Merger Proposal; and |
| Q: | What happens if additional matters are presented at the Cayman Shareholder Meeting? |
| A: | The only items of business that the Board intends to present at the Cayman Shareholder Meeting are the Cayman Meeting Proposals set forth in this shareholder circular. No shareholder has advised us of the intent to present any other matter, and we are not aware of any other matters to be presented at the meeting. If any other matter or matters are brought before the meeting in accordance with the provisions of the Continuation Articles and the Cayman Companies Act, the person(s) named as your proxyholder(s), if any, will have the discretion to vote your Company Shares on such matters in accordance with their best judgement and as they deem advisable. |
The chair of the Board shall preside as chair of the Cayman Shareholder Meeting. If at such meeting the chair of the Board shall not be present within 15 minutes of the time fixed for the commencement of the meeting or is unwilling to act as chair, the directors present may, by a majority, elect a chair from amongst them, and if they do not do so, then the shareholders present in person or by proxy shall elect any person present to preside as chair of the Cayman Shareholder Meeting.
| Q: | When and where is the Cayman Shareholder Meeting? |
| A: | The Cayman Shareholder Meeting will take place on or about April 25, 2024 via a video-conferencing service. The Company will provide an additional notice on Form 6-K prior to the Cayman Shareholder Meeting with respect to the final date and time of the Cayman Shareholder Meeting and a weblink to attend the video conference for the Cayman Shareholder Meeting. |
| Q: | Who is entitled to vote at the Cayman Shareholder Meeting? |
| A: | Shareholders as of the Record Date are entitled to notice of and to vote at the Cayman Shareholder Meeting. On a show of hands every shareholder present in person and every person representing a shareholder by proxy shall each have one vote and on a poll every shareholder and every person representing a shareholder by proxy shall have one vote for each Company Share of which they or the person represented by proxy is the holder. |
| Q: | What shares can I vote at the Cayman Shareholder Meeting? |
| A: | You may vote all of the Company Shares you owned as of the Record Date, including Company Shares held directly in your name as the shareholder of record and all Company Shares held for you in “street name” as the beneficial owner through a broker, trustee or other nominee such as a bank. |
| Q: | How many votes do I have? |
| A: | Each Company shareholder of record is entitled to one vote for each Company Share held of record by the shareholder as of the close of business on the Record Date. |
| Q: | If I purchased my Company Shares after the Record Date, may I vote these shares at the Cayman Shareholder Meeting? |
| A: | No. A shareholder is not entitled to vote Company Shares purchased after the Record Date because the shareholder was not the holder of record of those Company Shares on the Record Date. Only the holders as of the Record Date may vote Company Shares. However, such shareholder’s Company Shares will be automatically converted into and represent the right to receive the Merger Consideration upon completion of the Merger, unless the record holder of those Company Shares following the Continuation validly dissent and exercise their appraisal rights. For more information regarding appraisal rights, see the section of this shareholder circular entitled “The Continuation and the Merger—Appraisal Rights”). |
| A: | Shareholders of Record: If you are a shareholder of record, you can vote either in person at the Cayman Shareholder Meeting or by authorizing another person as your proxy, whether or not you attend the Cayman Shareholder Meeting. You may vote by proxy to be received in any case no later than 11:59 p.m. (Eastern time) on April 22, 2024, in any of the manners below: |
| • | By mail—If you are a shareholder of record, you can submit a proxy by completing, dating, signing and returning your proxy card in the postage-paid envelope provided to be received by the Company’s tabulation agent, Broadridge, by 11:59 p.m. (Eastern time) on April 22, 2024. You should sign your name exactly as it appears on the enclosed proxy card. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), please indicate your name and title or capacity. |
| • | By telephone—If you are a shareholder of record, you can submit a proxy by telephone by calling the toll-free number listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and following the prompts. |
| • | By Internet—If you are a shareholder of record, you can submit a proxy over the Internet by logging on to the website listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and submitting a proxy by following the on-screen prompts. |
Beneficial Owners on Nasdaq: If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, please vote in accordance with the instructions on the nominee’s voting instruction form. If you receive a physical voting instruction form, you may complete it and mail it in the self-addressed envelope that is enclosed. If you received an email copy of the voting instruction form, or if you otherwise desire to submit voting instructions by telephone or over the Internet, please follow the directions that you received. The deadline for receipt of your voting instructions will be 11:59 p.m. (Eastern time) on April 22, 2024. Alternatively, if you wish to attend the Cayman Shareholder Meeting and vote in person, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your Company Shares, giving you the right to vote the shares at the Cayman Shareholder Meeting. In that case, you must also bring a statement from your bank, broker or other nominee that shows that you owned Company Shares as of the Record Date.
| Q: | What happens if I do not indicate how to vote on the proxy card or voting instruction form? |
| A: | If you vote by proxy, your Company Shares will be voted at the Cayman Shareholder Meeting in the manner you indicate (by marking a box on your proxy card). If your Company Shares are held in your name (and not in “street name” through a broker) and if you sign your proxy card, but do not specify how you want your Company Shares to be voted, they will be counted as present for the purpose of determining the presence or absence of a quorum for the Cayman Shareholder Meeting, but they will not be counted in tabulating the voting result for any particular proposal. |
Under the rules that govern brokers, banks and other nominees that have record ownership of Company Shares on Nasdaq that are held in street name for their clients, brokers, banks and other nominees typically have the discretion to vote such shares on routine matters even when they have not received instructions from beneficial holders. The Cayman Meeting Proposals are considered non‑routine matters on which brokers do not have discretion to vote. Accordingly, if you are a beneficial owner and hold your Company Shares in “street name” through a bank, broker or other nominee on Nasdaq and return your voting instruction form but do not specify voting instructions for any of the Cayman Meeting Proposals, your bank, broker or other nominee will not be permitted to cast a vote with respect to such proposal (commonly referred to as a “broker non-vote”). We encourage you to provide instructions to your broker regarding the voting of your Company Shares; otherwise, if you do not provide instructions to your broker, bank or other nominee regarding how to vote your Company Shares, then your Company Shares will be included in determining the presence of a quorum at the meeting, but will not be voted on these important proposals.
| Q: | If any broker, bank or other nominee holds my shares in “street name,” will my nominee vote my shares for me? |
| A: | No. Your bank, broker or other nominee is not permitted to vote your Company Shares on any proposal currently scheduled to be considered at the Cayman Shareholder Meeting unless you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your Company Shares. Without instructions, your Company Shares will not be counted as voted at the Cayman Shareholder Meeting. |
| Q: | How are “broker non‑votes” counted? |
| A: | Broker non‑votes will be counted as present for the purpose of determining the presence or absence of a quorum for the Cayman Shareholder Meeting, but they will not be counted in tabulating the voting result for the Cayman Meeting Proposals. |
| Q: | How are abstentions counted? |
| A: | If you return a proxy card that indicates an abstention from voting on all matters, the Company Shares represented by your proxy will be counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business, but they will not be counted in tabulating the voting result for any particular proposal. |
| Q: | May I attend the Cayman Shareholder Meeting and vote in person? |
| A: | Yes. All registered shareholders of record as of the Record Date may attend the Cayman Shareholder Meeting and vote. Such attendance will be via a video-conferencing service. The Company will provide an additional notice on Form 6-K prior to the Cayman Shareholder Meeting with respect to the final date and time of the Cayman Shareholder Meeting and a weblink to attend the video conference for the Cayman Shareholder Meeting. To be admitted to the Cayman Shareholder Meeting via the video conference weblink, you will need to provide the control number assigned to you as a registered holder or, if as a beneficial holder, by your Broker. You will be admitted to the Cayman Shareholder Meeting only if we are able to verify your status as a shareholder, as of the Record Date. |
Even if you plan to attend the Cayman Shareholder Meeting in person via such video-conferencing service, to ensure that your Company Shares will be represented at the Cayman Shareholder Meeting, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone.
If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, you should instruct your bank, broker or other nominee how to vote your Company Shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the Proposals without your instructions. If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, you may not vote your Company Shares in person at the Cayman Shareholder Meeting unless you obtain a “legal proxy” from your bank, broker or other nominee, a statement, letter or certificate from such bank, broker or nominee evidencing your ownership of Company Shares as of the Record Date and provide a form of photo identification.
| Q: | What is the proposed Merger and what effects will it have on the Company? |
| A: | The proposed Merger is the acquisition of the Company by Parent. Following the Continuation, if the Cayman Merger Proposal is approved by shareholders at the Cayman Shareholder Meeting and the Merger Conditions have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company continuing as the Surviving Company. As a result of the Merger, the Company will become a wholly owned, indirect subsidiary of Parent, and the Company Shares will no longer be publicly traded and will be delisted from Nasdaq. In addition, the Company Shares will be deregistered under the Exchange Act, and the Company will no longer file periodic reports with the SEC. |
| Q: | Will I be able to trade, sell or otherwise transfer my shares following the Continuation? |
| A: | No. Following the Continuation, unless a Re-Continuation has occurred, the Company will not permit any transfers on the register of members of the Company and trading of Company Shares on Nasdaq will be suspended. Upon completion of the Merger, the Company will permanently de-list the Company Shares from Nasdaq. |
| Q: | What will I receive if the Merger is completed? |
| A: | Upon completion of the Merger, you will be entitled to receive the Merger Consideration for each Company Share that you owned immediately prior to the Merger Effective Time. For example, if you owned 100 Company Shares immediately prior to the Merger Effective Time, you will receive $2,950.00 in cash in exchange for your Company Shares, less any applicable withholding taxes. |
| Q: | How does the Merger Consideration compare to the unaffected market price of the Company Shares? |
| A: | The $29.50 per share Merger Consideration (before any applicable withholding taxes) constitutes a premium of approximately 130% to the per share closing price of the Company Shares on Nasdaq on May 12, 2023, the last trading day prior to the execution of the Business Combination Agreement. The volume-weighted average sale price on Nasdaq during the 90-day period ended May 12, 2023 was $14.45 per share, representing a premium of approximately 104%. On April 8, 2024, the latest trading day before the date of this shareholder circular, the closing price of the Company Shares on Nasdaq was $29.00. |
| Q: | What do I need to do now? |
| A: | We encourage you to read this shareholder circular, the annexes to this shareholder circular and the documents that we refer to in this shareholder circular carefully and consider how the Continuation and the Merger affect you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone so that your Company Shares can be voted at the Cayman Shareholder Meeting. If you hold your Company Shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your Company Shares. |
| Q: | What happens if I sell or otherwise transfer my Company Shares after the Record Date but before the Cayman Shareholder Meeting? |
| A: | The Record Date for the Cayman Shareholder Meeting is earlier than the date of the Cayman Shareholder Meeting and the date on which the Merger is expected to be completed. |
If you sell or transfer your Company Shares after the Record Date but before the Cayman Shareholder Meeting, you will retain your right to vote those shares at the Cayman Shareholder Meeting, but you will transfer the right to receive the Merger Consideration, if the Merger is completed, to the person to whom you sell or transfer your Company Shares. Even if you sell or otherwise transfer your Company Shares after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone. Following the Continuation, unless a Re-Continuation has occurred, the Company will not permit any transfers on the register of members of the Company and trading of Company Shares on Nasdaq will be suspended.
| Q: | How does the Board recommend that I vote? |
| A: | The Board, after considering the various factors described under the section of this shareholder circular entitled “The Continuation and the Merger—Reasons for the Merger and Recommendation of the Board,” has unanimously (i) determined that the Company’s entry into the Business Combination Agreement and consummation of the Transactions, including the Continuation and the Merger, are fair to, and in the best interests of, the Company and its shareholders; and (ii) authorized, declared advisable and approved in all respects, the Business Combination Agreement, the delivery and performance of the Business Combination Agreement and the consummation of the Transactions, upon the terms and subject to the conditions set forth in the Business Combination Agreement. The Board unanimously recommends that you vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal. |
In considering the recommendation of the Board, you should be aware that certain directors and executive officers of the Company have interests in the Transactions that are in addition to, or different from, any interests they might have as shareholders. See “The Continuation and the Merger—Interests of the Company’s Directors and Executive Officers in the Merger” of this shareholder circular for more information.
| Q: | What happens if the Continuation is not completed? |
| A: | If the Continuation is not completed and the Business Combination Agreement is terminated, shareholders will not receive any Merger Consideration for their Company Shares. Instead, the Company will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company will continue to file periodic reports with the SEC. |
| Q: | What happens if the Continuation is completed but the Merger is not completed? |
| A: | If the Continuation is completed and the Continuation Period begins, trading of Company Shares on Nasdaq will be suspended, and you will not be able to transfer or sell your shares during the Continuation Period. If the Merger is not completed by the end of the Continuation Period, the Company will take all actions to effect the Re-Continuation and unwind the effects of the Continuation, including convening the Second Luxembourg Shareholder Meeting to obtain shareholder approval, and to resume trading of the Company Shares on Nasdaq. In such a scenario, following the completion of the Re-Continuation and subject to the approval by Nasdaq, the Company would remain a public company, the Company Shares would resume their trading on Nasdaq and their registration under the Exchange Act, and the Company would continue to file periodic reports with the SEC. However, Parent, Merger Sub and Company would remain subject to the terms and conditions of the Business Combination Agreement unless it is terminated in accordance with its terms. |
The Company will be required to pay a termination fee to Parent of approximately $40.4 million if the Business Combination Agreement is terminated under certain circumstances specified therein. For more details see the section of this shareholder circular entitled “The Business Combination Agreement—Company Termination Fee.”
| Q: | Will there be a Second Luxembourg Shareholder Meeting if the Continuation and the Merger are completed? |
| A: | If the Company has completed the Continuation and the Merger by the end of the Continuation Period, the convening notice to the Second Luxembourg Shareholder Meeting shall be null and void and the Second Luxembourg Shareholder Meeting will therefore no longer take place. Consequently, any proxies granted by the shareholders for the Second Luxembourg Shareholder Meeting will also be void and no longer valid. |
| Q: | What vote is required to approve the Cayman Meeting Proposals? |
| A: | The approval of each of the Merger Proposal and the Statutory Plan of Merger Proposal requires the affirmative vote of shareholders holding at least sixty six point seven percent (66.7%) of the Company Shares present or represented at the Cayman Shareholder Meeting (or any adjournment, reconvening or postponement thereof), in person or by proxy, and entitled to vote on the Cayman Meeting Proposals. Approval of the Waiver Proposal requires the affirmative vote of shareholders holding more than fifty percent (50%) of the Company Shares entitled to vote on such proposal. |
You may vote either “FOR” or “against” each of the Cayman Meeting Proposals, or you may abstain.
| Q: | How does the Support Agreement impact the vote for the Cayman Meeting Proposals? |
You should be aware that, concurrently with the execution of the Business Combination Agreement, the Significant Shareholders entered into the Support Agreement, pursuant to which the Significant Shareholders have agreed, among other things, to vote in favor of and support the approval and adoption of the Business Combination Agreement, the Continuation Articles, the Statutory Plan of Merger and the Transactions, including the Continuation, the Merger itself and the Re-Continuation (if necessary upon failure of the Merger). The Support Agreement includes a power of attorney in favor of Parent to vote the shares held by the Significant Shareholders in accordance with its terms. Approximately 61% of Company Shares are subject to the Support Agreement.
| Q: | How many shares must be present or represented to conduct business at the Cayman Shareholder Meeting (that is, what constitutes a quorum)? |
| A: | The presence or representation in person or by proxy of two Company shareholders entitled to vote at the Cayman Shareholder Meeting constitutes a quorum for purposes of holding the Cayman Shareholder Meeting and voting on the Cayman Meeting Proposals. |
| Q: | What happens if a quorum is not present? |
| A: | If within an hour from the time appointed for the Cayman Shareholder Meeting a quorum is not present, the Cayman Shareholder Meeting shall stand adjourned to the next business day, at the same time and place, and if at the adjourned meeting a quorum is not present within an hour from the time appointed for the meeting the shareholder or shareholders present and entitled to vote shall form a quorum. |
| Q: | What is the difference between holding Company Shares as a shareholder of record and as a beneficial owner? |
| A: | Most of our shareholders hold their Company Shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
Shareholders of Record. If your Company Shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the shareholder of record, and proxy materials are being sent directly to you by us. As the shareholder of record, you have the right to vote in person at the meeting or direct the proxyholder how to vote your Company Shares on your behalf at the meeting by fully completing, signing and dating the enclosed proxy card and returning it to us in the enclosed postage‑paid return envelope, to be received by the Company’s tabulation agent (Broadridge) by 11:59 p.m. (Eastern time) on April 22, 2024.
Beneficial Owners on Nasdaq. If your Company Shares are held through a broker, bank or other nominee on Nasdaq, you are considered the beneficial owner of shares held in street name, and proxy materials are being forwarded to you together with a voting instruction form. As the beneficial owner, you have the right to direct your broker, trustee or nominee to vote your Company Shares as you instruct in the voting instruction form. If you hold Company Shares through a broker, trustee or nominee, you may also vote in person at the meeting, but only after you obtain a “legal proxy” from the broker, trustee or nominee that holds your Company Shares, giving you the right to vote your Company Shares at the meeting. Your broker, trustee or nominee has enclosed or provided a voting instruction form for you to use in directing the broker, trustee or nominee how to vote your Company Shares.
| Q: | May I change my vote after I have mailed my signed proxy card? |
| A: | Yes. You may change your vote or revoke your proxy prior to the Cayman Shareholder Meeting. |
If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, in order to change your voting instructions, you must follow the relevant directions from your broker, bank, or other nominee, and must do so prior to 11:59 p.m. (Eastern time) on April 22, 2024. You may also vote in person at the Cayman Shareholder Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.
You may change your vote or revoke your proxy prior to the Cayman Shareholder Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy before the Cayman Shareholder Meeting by (1) delivering a written notice of revocation to the Company’s corporate secretary; (2) delivering a duly executed proxy card to the Company’s corporate secretary bearing a later date than the proxy being revoked; or (3) submitting a proxy electronically or over the Internet or by telephone (only your last telephone or internet proxy will be counted). Only the change of vote and revocation of proxy received 11:59 p.m. (Eastern time) on April 22, 2024 shall be counted and taken into account in order to ensure that your later proxy is received in time for the Cayman Shareholder Meeting. Attendance alone at the Cayman Shareholder Meeting will not revoke a proxy. The address of the registered office for purposes of revoking your proxy pursuant to clauses (1) and (2) in the second preceding sentence is 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg. If you wish to change your vote by mail, you should contact the Proxy Solicitor at the address set forth below and request a new proxy card or voting instruction form.
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
| A: | A proxy is a document by which you authorize a person to be your representative at a meeting of the Company and to vote for you at that meeting of shareholders in the way that you have directed. That document is called a “proxy card” or, if your Company Shares are held in street name and you give instructions to the record holder of your Company Shares, is called a “voting instruction form.” |
This shareholder circular and the accompanying proxy card or voting instruction form is furnished in connection with the solicitation by the Board of proxies for use at the Cayman Shareholder Meeting and at any adjournments, reconvening, or postponements of the meeting. We are mailing this shareholder circular and a proxy card to our shareholders on or about April 9, 2024. Any of Moti Malul, our chief executive officer, Motti Gil, our chief financial officer, John E. Taylor, Jr., chair of the Board, or Laurent Teitgen, a member of the Board, with full power of substitution, will be the proxy holders for the Cayman Shareholder Meeting.
| Q: | What should I do if I receive more than one proxy card or voting instruction form? |
| A: | You may receive more than one set of these proxy solicitation materials, including multiple copies of this shareholder circular and multiple proxy cards or voting instruction forms. Please complete, sign date and return all proxy cards and voting instruction forms you receive, or vote each group of Company Shares by mail, telephone or over the Internet to ensure that all your Company Shares are voted. For example, if you hold your Company Shares in more than one brokerage account, you may receive a separate voting instruction form for each brokerage account in which you hold Company Shares. In addition, if you are a shareholder of record and your Company Shares are registered in more than one name, you may receive more than one proxy card. |
| Q: | Who will count the votes? |
| A: | The chair of the Board, acting on behalf of the Company, will determine whether a quorum is present and tabulate the affirmative and negative votes, abstentions and broker non-broker, if any. |
| Q: | Where can I find the voting results of the Cayman Shareholder Meeting? |
| A: | The Company intends to publish final voting results in a Report of Foreign Private Issuer on Form 6‑K to be furnished to the SEC as soon as practicable following the Cayman Shareholder Meeting. All reports that the Company files or furnishes with the SEC are publicly available when filed or furnished. See the section of this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.” |
| Q: | Will the Continuation and the Merger constitute taxable transactions for Luxembourg tax purposes? |
| A: | The Continuation may, at the level of Luxembourg resident and non-resident holders of Company Shares, constitute a taxable transaction to holders of Company Shares for Luxembourg tax purposes. Further, the receipt of the Merger Consideration in exchange for Company Shares may constitute a taxable transaction to Luxembourg resident holders of Company Shares for Luxembourg tax purposes. For more details, please refer to “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger-—Luxembourg Income Tax Consequences of the Continuation” and “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger-—Luxembourg Capital Gains Tax Consequences of the Merger”. |
| Q: | Will U.S. Holders be subject to U.S. federal income tax upon the exchange of Company Shares for cash pursuant to the Merger? |
| A: | The Continuation is not expected to be a taxable transaction to U.S. Holders (as defined in “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger—Material U.S. Federal Income Tax Consequences”) for U.S. federal income tax purposes. The exchange of the Company Shares for cash pursuant to the Merger will be a taxable transaction for U.S. Holders for U.S. federal income tax purposes and for Israeli-resident Holders for Israeli tax purposes. For more details, see “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger”. |
| Q: | What will the holders of Company equity awards receive in the Merger? |
| A: | Cashed-Out Company Options |
At the Merger Effective Time, each Cashed-Out Company Option will be canceled and converted into the right to receive a cash amount equal to the product of the number of Company Shares subject to such option, multiplied by the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes provided that any Cashed-Out Company Option with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Cashed-Out Company Option will then have no further rights with respect to such Cashed-Out Company Option, apart from the cash payment described in this paragraph.
Assumed Company Options
At the Merger Effective Time, each Assumed Option will be assumed by Parent and converted into a share option, in accordance with the terms of the Company equity plan and/or option agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such Assumed Option), covering a number of ordinary shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed Option immediately prior to the Merger Effective Time multiplied by the Exchange Ratio, and rounded down to the nearest whole share, with an exercise price per share equal to the exercise price per share of the Assumed Option immediately prior to the Merger Effective Time divided by the Exchange Ratio, and rounded up to the nearest whole cent provided that any Assumed Option with a per-share exercise price equal to or exceeding $29.50 will not be assumed by Parent, and will be automatically terminated as of the Merger Effective Time. The options issued by Parent in assumption of the Assumed Options which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Ordinance and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance and shall be subject to the provisions of the Options Tax Ruling or Interim Options Tax Ruling (as applicable). The holder of such Assumed Option will then have no further rights with respect to such Assumed Option, apart from any rights described in this paragraph.
Contractor Company Options
At the Merger Effective Time, each Contractor Option will be canceled and converted into the right to receive, subject to a vesting schedule provided in the Business Combination Agreement and to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company Shares subject to such option, multiplied by (y) the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes, provided that any Contractor Option with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Contractor Option will then have no further rights with respect to such Contractor Option, apart from the cash payment described in this paragraph.
Cashed-Out Company RSUs
At the Merger Effective Time each Cashed-Out Company RSU will be canceled and converted into the right to receive a cash amount equal to the product of the number of Company Shares subject to such Company RSU multiplied by $29.50, with such amount reduced by any applicable payroll, income or other withholding Taxes. The holder of such Cashed-Out Company RSU will then have no further rights with respect to such Cashed-Out Company RSU, apart from the cash payment described in this paragraph.
Assumed Company RSUs
At the Merger Effective Time, each Assumed RSU will be assumed by Parent and converted, in accordance with the terms of the Company equity plan and/or restricted stock unit agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such Assumed RSU) into a restricted share unit of Parent covering a number of common shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed RSU immediately prior to the Merger Effective Time multiplied by the Exchange Ratio, and rounding such product down to the nearest whole number. The restricted share units issued by Parent in assumption of the Assumed RSUs which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Ordinance and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance and shall be subject to the provisions of the Options Tax Ruling or Interim Options Tax Ruling (as applicable). The holder of such Assumed RSU will then have no further rights with respect to such Assumed RSU, apart from any rights described in this paragraph.
Contractor Company RSUs
At the Merger Effective Time, each Contractor RSU, will be canceled and converted into the right to receive, at the same time as such Contractor RSU would have vested pursuant to the terms of the applicable Company equity plan and/or award agreement by which it is evidenced (including any vesting acceleration, and subject to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company RSUs subject to such option, multiplied by (y) $29.50, with such amount reduced by any applicable payroll, income or other withholding Taxes. The holder of such Contractor RSU will then have no further rights with respect to such Contractor RSU, apart from the cash payment described in this paragraph.
For more details on the treatment of Company equity awards in the Merger please refer to the section entitled “The Business Combination Agreement—Treatment of Company Equity Awards.”
| Q: | When do you expect the Merger to be completed? |
| A: | The Merger has been approved by the respective boards of directors of Parent, the Company and Merger Sub and by the Company’s shareholders at the First Luxembourg Shareholder Meeting and we are working towards completing the Merger as quickly as reasonably possible. Several conditions must be satisfied or waived before the Merger is completed. See the section of this document titled “The Business Combination Agreement—Conditions to the Effectuation of the Continuation and to the Closing of the Merger” for further information regarding the Continuation Conditions and the Merger Conditions. The Merger is expected to be completed in approximately 16 days from the date of this shareholder circular. However, the exact timing of completion of the Merger cannot be predicted, nor can the parties assume that the Merger will be completed, because completion of the Merger is subject to the Merger Conditions, many of which are outside of our control. |
| Q: | Am I entitled to appraisal rights? |
| A: | Yes. Company Shares that are outstanding following the Continuation Effective Time and immediately prior to the Merger Effective Time and which are held by shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) their desire to dissent with respect to such Company Shares shall not be converted into or represent the right to receive the Merger Consideration attributable to such Company Shares. Such shareholders shall be entitled to receive payment of the fair value of such shares held by them in accordance with the Cayman Companies Act. Shareholders wishing to object to the Cayman Merger Proposal at the Cayman Shareholder Meeting must do so in writing to the Company prior to the Cayman Shareholder Meeting. For further details regarding appraisal rights, please refer to the section of this shareholder circular entitled “The Continuation and the Merger—Appraisal Rights.” |
| Q: | Are there any risks that I should consider as a Company shareholder in deciding how to vote? |
| A: | Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” of this shareholder circular. You also should read and carefully consider other risk factors of the Company contained in the Company’s most recent Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 28, 2023, and incorporated by reference into this shareholder circular. |
| Q: | Do any of the Company’s directors or officers have any interests in the Merger? |
| A: | Yes. Our directors and executive officers may have interests in the Merger that may be different from, or in addition to, your interests as a shareholder. The Board was aware of these interests during its deliberations on the merits of the Merger and in deciding to recommend that shareholders vote in favor of the Cayman Meeting Proposals. These interests are described in more detail under the section of this shareholder circular entitled “The Continuation and the Merger—Interests of the Company’s Directors and Executive Officers in the Merger.” |
| Q: | Who will solicit and pay the cost of soliciting proxies? |
| A: | The Company has engaged Morrow Sodali, LLC, which is referred to as the “Proxy Solicitor,” to assist in the solicitation of proxies for the Cayman Shareholder Meeting (and the Second Luxembourg Shareholder Meeting). The Company estimates that it will pay Morrow Sodali, LLC an aggregate fee of approximately $10,000, plus reimbursement for certain out-of-pocket fees and expenses. The Company has agreed to indemnify Morrow Sodali, LLC against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). The Company also may reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Company Shares. Company and Parent directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies. |
| A: | You should read this shareholder circular carefully and in its entirety, including the annexes, and either make provisions to attend the Cayman Shareholder Meeting in person, return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions by phone or Internet as soon as possible so that your Company Shares will be voted in accordance with your instructions. |
| Q: | Who can help answer my questions? |
| A: | If you have any questions concerning the Cayman Shareholder Meeting, the Cayman Meeting Proposals, the Merger or any other matter related to the accompanying shareholder circular, would like additional copies of the accompanying shareholder circular or need help voting your Company Shares, please contact our Proxy Solicitor: |
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
Second Luxembourg Shareholder Meeting
The following questions and answers apply only in the event that the Re-Continuation Scenario occurs. For the avoidance of doubt, in the event that the Company has filed, together with the Merger Sub, the Statutory Plan of Merger with the Cayman Registrar before the holding of the Second Luxembourg Shareholder Meeting, the Second Luxembourg Shareholder Meeting shall not take place and the following questions and answers shall not be applicable.
Q: Why am I receiving these materials?
| A: | You are receiving this shareholder circular from us because you were a shareholder of the Company of record at the close of business on April 1, 2024. In the event of the Re-Continuation Scenario, you are entitled to attend the Second Luxembourg Shareholder Meeting and are entitled to vote on the items of business described in this shareholder circular if you own Company Shares at the close of business on the Record Date of April 1, 2024, 2024. Your vote is very important and we encourage you to vote by proxy or voting instruction form as soon as possible. |
As of March 31, 2024, there were 33,895,026 Company Shares outstanding. The Company Shares are our only class of voting stock.
| Q: | When and where is the Second Luxembourg Shareholder Meeting? |
| A: | In the event that the Company has completed the Continuation but, together with the Merger Sub, has not filed the Statutory Plan of Merger with the Cayman Registrar within three business days from the Continuation Effective Time due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, the Company is expecting to hold the Second Luxembourg Shareholder Meeting in order to approve the Luxembourg Proposals. |
For the avoidance of doubt, in the event that the Company has filed, together with the Merger Sub, the Statutory Plan of Merger with the Cayman Registrar before the holding of the Second Luxembourg Shareholder Meeting, the Second Luxembourg Shareholder Meeting shall not take place.
Subject to the occurrence of the Re-Continuation Scenario, the Second Luxembourg Shareholder Meeting will be held at 3 p.m. Luxembourg time (9 a.m. Eastern time) on or about May 2, 2024, at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg.
| Q: | What am I being asked to vote on at the Second Luxembourg Shareholder Meeting? |
| A: | You are being asked to vote on the following proposals: |
1. the Re-Continuation Proposal;
2. the Board Election Proposal;
3. the Auditors Approval Proposal; and
4. the Filing Authorization Proposal.
Q: What happens if additional matters are presented at the Second Luxembourg Shareholder Meeting?
| A: | The only items of business that the Board intends to present at the Second Luxembourg Shareholder Meeting are the Luxembourg Proposals set forth in this shareholder circular. No shareholder has advised us of the intent to present any other matter, and we are not aware of any other matters to be presented at the meeting. If any other matter or matters are brought before the meeting in accordance with the provisions of the Continuation Articles and the Luxembourg Company Law, the person(s) named as your proxyholder(s), if any, will have the discretion to vote your Company Shares on such matters in accordance with their best judgment and as they deem advisable. |
The chair of the Board shall preside as chair of the Second Luxembourg Shareholder Meeting. If at such meeting the chair of the Board shall not be present within 15 minutes of the time fixed for the commencement of the meeting, the directors present may, by a majority, elect a chair from amongst them, and if they do not do so, then the shareholders present in person or by proxy shall elect another shareholder to preside as chair of the Second Luxembourg Shareholder Meeting.
Q: Who is entitled to vote at the Second Luxembourg Shareholder Meeting?
| A: | Shareholders as of the Record Date of April 1, 2024 are entitled to notice of the Second Luxembourg Shareholder Meeting and to vote at the Second Luxembourg Shareholder Meeting. Each holder of Company Shares is entitled to cast one vote on each matter properly brought before the Second Luxembourg Shareholder Meeting for each Company Share owned as of the Record Date. |
| Q: | What shares can I vote at the Second Luxembourg Shareholder Meeting? |
| A: | You may vote all of the Company Shares you owned as of the Record Date of April 1, 2024, including Company Shares held directly in your name as the shareholder of record and all Company Shares held for you in “street name” as the beneficial owner through a broker, trustee or other nominee such as a bank. |
| Q: | How many votes do I have at the Second Luxembourg Shareholder Meeting? |
| A: | Each Company shareholder of record is entitled to one vote for each Company Share held of record by the shareholder as of the close of business on the Record Date. |
| Q: | If I purchased my Company Shares after the Record Date of April 1, 2024, may I vote these shares at the Second Luxembourg Shareholder Meeting? |
| A: | No. A shareholder is not entitled to vote Company Shares purchased after the Record Date of April 1, 2024 because the shareholder was not the record holder of those shares on the Record Date of April 1, 2024. Only the holders as of the Record Date of April 1, 2024 may vote Company Shares. |
| A: | Shareholders of Record: If you are a shareholder of record, you can vote either in person at the Second Luxembourg Shareholder Meeting or by authorizing another person as your proxy, whether or not you attend the Second Luxembourg Shareholder Meeting. You may vote by proxy, to be received in any case no later than 11:59 pm (Eastern time) on April 30, 2024, in any of the manners below: |
| • | By mail—If you are a shareholder of record, you can submit a proxy by completing, dating, signing and returning your proxy card or voting instruction form in the postage-paid envelope provided, which Broadridge must receive by 11:59 p.m. (Eastern time) on April 30, 2024. You should sign your name exactly as it appears on the enclosed proxy card or voting instruction form. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), please indicate your name and title or capacity. |
| • | By telephone—If you are a shareholder of record, you can submit a proxy by telephone by calling the toll-free number listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and following the prompts. |
| • | By Internet—If you are a shareholder of record, you can submit a proxy over the Internet by logging on to the website listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and submitting a proxy by following the on-screen prompts. |
Beneficial Owners on Nasdaq: If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, please vote in accordance with the instructions on the nominee’s voting instruction form. If you receive a physical voting instruction form, you may complete it and mail it in the self-addressed envelope that is enclosed. If you received an email copy of the voting instruction form, or if you otherwise desire to submit voting instructions by telephone or over the Internet, please follow the directions that you received. The deadline for receipt of your voting instructions will be 11:59 p.m. (Eastern time) on April 30, 2024. Alternatively, if you wish to attend the Second Luxembourg Shareholder Meeting and vote in person, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your Company Shares, giving you the right to vote the shares at the Second Luxembourg Shareholder Meeting. In that case, you must also bring a statement from your bank, broker or other nominee that shows that you owned Company Shares as of the Record Date of April 1, 2024.
| Q: | What happens if I do not indicate how to vote on the proxy card or voting instruction form? |
| A: | If you vote by proxy, your Company Shares will be voted at the Second Luxembourg Shareholder Meeting in the manner you indicate (by marking a box on your proxy card). If your Company Shares are held in your name (and not in “street name” through a broker) and if you sign your proxy card, but do not specify how you want your Company Shares to be voted, they will be counted as present for the purpose of determining the presence or absence of a quorum for the Second Luxembourg Shareholder Meeting, but they will not be counted in tabulating the voting result for any particular proposal. |
Under the rules that govern brokers, banks and other nominees that have record ownership of Company Shares on Nasdaq that are held in street name for their clients, brokers, banks and other nominees typically have the discretion to vote such shares on routine matters even when they have not received instructions from beneficial holders. The Luxembourg Proposals are considered non‑routine matters on which brokers do not have discretion to vote. Accordingly, if you are a beneficial owner and hold your Company Shares in “street name” through a bank, broker or other nominee on Nasdaq and return your voting instruction form but do not specify voting instructions for the Re-Continuation Proposal, the Board Election Proposal, the Auditors Approval Proposal or the Filing Authorization Proposal, your bank, broker or other nominee will not be permitted to cast a vote with respect to such proposals (commonly referred to as a “broker non-vote”). We encourage you to provide instructions to your broker regarding the voting of your Company Shares; otherwise, if you do not provide instructions to your broker, bank or other nominee regarding how to vote your Company Shares, then your Company Shares will be included in determining the presence of a quorum at the meeting, but will not be voted on these important proposals.
| Q: | If any broker, bank or other nominee holds my shares in “street name,” will my nominee vote my shares for me? |
| A: | No. Your bank, broker or other nominee is not permitted to vote your Company Shares on any proposal currently scheduled to be considered at the Second Luxembourg Shareholder Meeting unless you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your Company Shares. Without instructions, your Company Shares will not be counted as voted at the Second Luxembourg Shareholder Meeting. |
| Q: | How are “broker non‑votes” counted? |
| A: | Broker non‑votes will be counted as present for the purpose of determining the presence or absence of a quorum for the Second Luxembourg Shareholder Meeting, but they will not be counted in tabulating the voting result for any of the Luxembourg Proposals. |
| Q: | How are abstentions counted? |
| A: | If you return a proxy card that indicates an abstention from voting on all matters, the Company Shares represented by your proxy will be counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business, but they will not be counted in tabulating the voting result for any particular proposal. |
| Q: | May I attend the Second Luxembourg Shareholder Meeting and vote in person? |
| A: | Yes. All shareholders of record as of the Record Date may attend the Second Luxembourg Shareholder Meeting and vote in person. To be admitted to the Second Luxembourg Shareholder Meeting, you will need a form of photo identification. You will be admitted to the Second Luxembourg Shareholder Meeting only if we are able to verify your status as a registered shareholder by checking your name against the list of registered shareholders on the Record Date. |
Even if you plan to attend the Second Luxembourg Shareholder Meeting in person, to ensure that your Company Shares will be represented at the Second Luxembourg Shareholder Meeting, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone.
If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, you should instruct your bank, broker or other nominee how to vote your Company Shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the Luxembourg Proposals without your instructions. If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, you may not vote your Company Shares in person at the Second Luxembourg Shareholder Meeting unless you obtain a “legal proxy” from your bank, broker or other nominee, a statement, letter or certificate from such bank, broker or nominee evidencing your ownership of Company Shares as of the Record Date and provide a form of photo identification.
| Q: | What is the proposed Re-Continuation and what effects will it have on the Company? |
| A: | Unless otherwise agreed between Parent and the Company, if the Company has completed the Continuation but, together with Merger Sub, has not filed the Statutory Plan of Merger with the Cayman Registrar within the Continuation Period due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, then, pursuant to the Business Combination Agreement, the Company shall effectuate the transfer of the Company’s statutory seat, registered office (siège statutaire) and seat of central administration (administration centrale) from the Cayman Islands to the Grand Duchy of Luxembourg in accordance with the Cayman Companies Act and Luxembourg Company Law and will take all actions necessary to (i) unwind the effects of the Continuation and transfer by way of continuation back to Luxembourg from the Cayman Islands as contemplated by the Business Combination Agreement and in accordance with the Cayman Companies Act and the Luxembourg Company Law, including convening the Second Luxembourg Shareholder Meeting to obtain shareholder approval and (ii) to resume the trading of the Company Shares on Nasdaq. |
Following the completion of the Re-Continuation, the Company would remain a public company, the Company Shares would continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company would continue to file periodic reports with the SEC. However, the Company would remain subject to the terms and conditions of the Business Combination Agreement unless terminated in accordance with its terms.
| Q: | Will I be able to trade, sell or otherwise transfer my shares following the Re-Continuation? |
| A: | Yes, following the completion of the Re-Continuation, the Company intends for the Company Shares to continue to be listed and traded on Nasdaq and we expect you will be able to trade, sell or otherwise transfer your Company Shares. |
| Q: | What do I need to do now? |
| A: | We encourage you to read this shareholder circular, the annexes to this shareholder circular and the documents that we refer to in this shareholder circular carefully and consider how the Re-Continuation affects you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone so that your Company Shares can be voted at the Second Luxembourg Shareholder Meeting. If you hold your Company Shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your Company Shares. |
| Q: | What happens if I sell or otherwise transfer my Company Shares after the Record Date but before the Second Luxembourg Shareholder Meeting? |
| A: | If you sell or transfer your Company Shares after the Record Date but before the Second Luxembourg Shareholder Meeting, you will retain your right to vote those shares at the Second Luxembourg Shareholder Meeting. Even if you sell or otherwise transfer your Company Shares after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone. |
However, during the Continuation Period, trading of Company Shares on Nasdaq will be suspended and you will not be able to transfer or sell your shares during the Continuation Period except in accordance with the Continuation Articles.
| Q: | How does the Board recommend that I vote at the Second Luxembourg Shareholder Meeting? |
| A: | The Board, after considering the various factors described under the section of this shareholder circular entitled “The Continuation and the Merger—Reasons for the Merger and Recommendation of the Board,” has unanimously (i) determined that the Company’s entry into the Business Combination Agreement and consummation of the Transactions, including the Re-Continuation, are fair to, and in the best interests of, the Company and its shareholders; and (ii) authorized, declared advisable and approved in all respects, the Business Combination Agreement, the delivery and performance of the Business Combination Agreement and the consummation of the Transactions, upon the terms and subject to the conditions set forth in the Business Combination Agreement. The Board unanimously recommends that you vote (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal. |
| Q: | What vote is required to approve the Luxembourg Proposals? |
| A: | Approval of the Re-Continuation Proposal requires the affirmative vote of shareholders holding at least sixty six point seven percent (66.7%) of the Company Shares represented at the Second Luxembourg Shareholder Meeting (or any adjournment, reconvening or postponement thereof), in person, by proxy or by electronic voting, and voting on each such proposal (excluding abstentions and broker non-votes). Approval of each of the Board Election Proposal, the Auditors Approval Proposal and the Filing Authorization Proposal requires the affirmative vote of shareholders holding more than fifty percent (50%) of the Company Shares entitled to vote on such proposal. |
You may vote either “FOR” or “against” each of the Luxembourg Proposals, or you may abstain.
| Q: | How does the Support Agreement impact the vote for the Luxembourg Proposals? |
| A: | You should be aware that, concurrently with the execution of the Business Combination Agreement, the Significant Shareholders entered into the Support Agreement, pursuant to which the Significant Shareholders have agreed, among other things, to vote in favor of and support the approval and adoption of the Business Combination Agreement, the Continuation Articles, the Statutory Plan of Merger and the Transactions, including the Continuation, the Merger itself and the Re-Continuation (if necessary upon failure of the Merger). The Support Agreement includes a power of attorney in favor of Parent to vote the shares held by the Significant Shareholders in accordance with its terms. Approximately 61% of Company Shares are subject to the Support Agreement. |
| Q: | How many shares must be present or represented to conduct business at the Second Luxembourg Shareholder Meeting (that is, what constitutes a quorum)? |
| A: | The presence (in person, by proxy or by electronic voting) of shareholders holding more than fifty percent (50%) of the Company Shares constitutes a quorum for purposes of holding the Second Luxembourg Shareholder Meeting and voting on the Luxembourg Proposals. |
| Q: | What happens if a quorum is not present? |
| A: | In the absence of the requisite quorum of shareholders at the Second Luxembourg Shareholder Meeting, the Second Luxembourg Shareholder Meeting will be reconvened to the fifteenth day following the initial date of the Second Luxembourg Shareholder Meeting and will be held at the same time and place, unless otherwise determined at the Second Luxembourg Shareholder Meeting in accordance with the Continuation Articles. At such reconvened meeting, if a quorum is not present as aforesaid, the shareholders present, in person, by proxy or by electronic voting (regardless of the voting power represented by their shares) will constitute a quorum. |
| Q: | What is the difference between holding Company Shares as a shareholder of record and as a beneficial owner? |
| A: | Most of our shareholders hold their Company Shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
Shareholders of Record. If your Company Shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the shareholder of record, and proxy materials are being sent directly to you by us. As the shareholder of record, you have the right to vote in person at the meeting or direct the proxyholder how to vote your Company Shares on your behalf at the meeting by fully completing, signing and dating the enclosed proxy card and returning it to us in the enclosed postage‑paid return envelope, to be received by the Company’s tabulation agent (Broadridge) by 11:59 p.m. (Eastern time) on April 30, 2024.
Beneficial Owners on Nasdaq. If your Company Shares are held through a broker, bank or other nominee on Nasdaq, you are considered the beneficial owner of shares held in street name, and proxy materials are being forwarded to you together with a voting instruction form. As the beneficial owner, you have the right to direct your broker, trustee or nominee to vote your Company Shares as you instruct in the voting instruction form. If you hold Company Shares through a broker, trustee or nominee, you may also vote in person at the meeting, but only after you obtain a “legal proxy” from the broker, trustee or nominee that holds your Company Shares, giving you the right to vote your Company Shares at the meeting. Your broker, trustee or nominee has enclosed or provided a voting instruction form for you to use in directing the broker, trustee or nominee how to vote your Company Shares.
| Q: | May I change my vote after I have mailed my signed proxy card? |
| A: | Yes. You may change your vote or revoke your proxy prior to the Second Luxembourg Shareholder Meeting. |
If you hold your Company Shares in “street name” through a broker, bank or other nominee on Nasdaq, in order to change your voting instructions, you must follow the relevant directions from your broker, bank, or other nominee, and must do so prior to 11:59 p.m. (Eastern time) April 30, 2024. You may also vote in person at the Second Luxembourg Shareholder Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.
You may change your vote or revoke your proxy prior to the Second Luxembourg Shareholder Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy before the Second Luxembourg Shareholder Meeting by (1) delivering a written notice of revocation to the Company’s corporate secretary; (2) delivering a duly executed proxy card to the Company’s corporate secretary bearing a later date than the proxy being revoked; or (3) submitting a proxy electronically or over the Internet or by telephone (only your last telephone or internet proxy will be counted). Only the change of vote and revocation of proxy received 11:59 p.m. (Eastern time) on April 30, 2024, shall be counted and taken into account in order to ensure that your later proxy is received in time for the Second Luxembourg Shareholder Meeting. Attendance alone at the Second Luxembourg Shareholder Meeting will not revoke a proxy. The address for purposes of revoking your proxy pursuant to clauses (1) and (2) in the second preceding sentence is 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg. If you wish to change your vote by mail, you should contact the Proxy Solicitor at the address set forth below and request a new proxy card or voting instruction form.
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
| A: | A proxy is a document by which you authorize a person to be your representative at a meeting of the Company and to vote for you at that meeting of shareholders in the way that you have directed. That document is called a “proxy card” or, if your Company Shares are held in street name and you give instructions to the record holder of your Company Shares, is called a “voting instruction form.” |
This shareholder circular and the accompanying proxy card or voting instruction form is furnished in connection with the solicitation by the Board of proxies for use at the Second Luxembourg Shareholder Meeting and at any adjournments, reconvening, or postponements of the meeting. We are mailing this shareholder circular and a proxy card to our shareholders on or about April 9, 2024. Any of Moti Malul, our chief executive officer, Motti Gil, our chief financial officer, John E. Taylor, Jr., chair of the Board, or Laurent Teitgen, a member of the Board, with full power of substitution, will be the proxy holders for the Second Luxembourg Shareholder Meeting.
| Q: | What should I do if I receive more than one proxy card or voting instruction form? |
| A: | You may receive more than one set of these proxy solicitation materials, including multiple copies of this shareholder circular and multiple proxy cards or voting instruction forms. Please complete, sign date and return all proxy cards and voting instruction forms you receive, or vote each group of Company Shares by mail, telephone or over the Internet to ensure that all your Company Shares are voted. For example, if you hold your Company Shares in more than one brokerage account, you may receive a separate voting instruction form for each brokerage account in which you hold Company Shares. In addition, if you are a shareholder of record and your Company Shares are registered in more than one name, you may receive more than one proxy card. |
| Q: | Who will count the votes? |
| A: | A scrutineer will be elected at the Second Luxembourg Shareholder Meeting and will determine whether a quorum is present and tabulate the affirmative and negative votes, abstentions and broker non-broker, if any. |
| Q: | Where can I find the voting results of the Second Luxembourg Shareholder Meeting? |
| A: | The Company intends to publish final voting results in a Report of Foreign Private Issuer on Form 6‑K to be furnished to the SEC as soon as practicable following the Second Luxembourg Shareholder Meeting. All reports that the Company files or furnishes with the SEC are publicly available when filed or furnished. See the section of this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.” |
| Q: | Are there any risks that I should consider as a Company shareholder in deciding how to vote? |
| A: | Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” of this shareholder circular. You also should read and carefully consider other risk factors of the Company contained in the Company’s most recent Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 28, 2023, and incorporated by reference into this shareholder circular. |
| Q: | Who will solicit and pay the cost of soliciting proxies? |
| A: | The Company has engaged Morrow Sodali, LLC, which is referred to as the “Proxy Solicitor,” to assist in the solicitation of proxies for the Second Luxembourg Shareholder Meeting (and the Cayman Shareholder Meeting). The Company estimates that it will pay Morrow Sodali, LLC an aggregate fee of approximately $10,000, plus reimbursement for certain out-of-pocket fees and expenses. The Company has agreed to indemnify Morrow Sodali, LLC against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). The Company also may reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Company Shares. Company and Parent directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies. |
| A: | You should read this shareholder circular carefully and in its entirety, including the annexes, and either make provisions to attend the Second Luxembourg Shareholder Meeting in person, return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions by phone or Internet as soon as possible so that your Company Shares will be voted in accordance with your instructions. |
| Q: | Who can help answer my questions? |
| A: | If you have any questions concerning the Second Luxembourg Shareholder Meeting, the Luxembourg Proposals, the Re-Continuation or any other matter related to the accompanying shareholder circular, would like additional copies of the accompanying shareholder circular or need help voting your Company Shares, please contact our Proxy Solicitor: |
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
CAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTS
In addition to historical facts, this shareholder circular (including the information and other documents incorporated by reference into this shareholder circular) contains or incorporates by reference or may contain or may incorporate by reference forward‑looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Exchange Act, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to statements about the expected timing of the Continuation and the Merger, the satisfaction or waiver of any conditions to the proposed Continuation and the Merger, anticipated benefits, growth opportunities and other events relating to the proposed Transactions, and projections about the Company’s business and its future revenues, expenses and profitability. These forward-looking statements are subject to risks and uncertainties and include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible,” or the negative of these terms or similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur
Forward-looking statements involve known and unknown risks and uncertainties, and are based on current expectations, assumptions, estimates and projections about the Company and its industry as of the date of this shareholder circular. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to:
| • | the risk that the Continuation, the Merger and other Transactions may not be completed in a timely manner or at all due to failure to satisfy the Continuation Conditions and/or the Merger Conditions, including the potential that the Company’s shareholders may not approve the Cayman Meeting Proposals; |
| • | the occurrence of any event, change or other circumstance that could give rise to the termination of the Business Combination Agreement; |
| • | the risk that following the Continuation, the Merger Effective Time may not occur and the Company may be required to transfer by way of continuation from the Cayman Islands back to Luxembourg pursuant to the Re-Continuation, which may adversely impact the Company’s business and the price of the Company Shares, especially if the resumption of trading of the Company Shares on Nasdaq is delayed; |
| • | the effect of the announcement or pendency of the Transactions on the Company’s business relationships, operating results and business generally; |
| • | the risk that unanticipated restructuring costs may be incurred or undisclosed liabilities may be assumed while the Transactions are pending, which may adversely impact the Company’s business and the price of Company Shares if the Merger is not completed; |
| • | the risk that attempts to retain key personnel and customers may not succeed while the Transactions are pending, which may adversely impact the financial performance of the Company and the price of the Company Shares if the Merger is not completed; |
| • | the risk that the attention of Company management may be diverted from ongoing business operations and potential inability of Company management to respond effectively to competitive pressures, industry developments and future opportunities, including new strategic transactions, new business deals and/or renewals of certain agreements with third parties, given the restrictions on the conduct of the Company’s business while the Transactions are pending pursuant to its covenants under the Business Combination Agreement, which may adversely impact the financial performance of the Company and the price of the Company Shares if the Merger is not completed; |
| • | ongoing or potential litigation or disputes while the Transactions are pending related to the conduct of the Company’s ongoing business with customers, suppliers, landlords, or other third parties, which may adversely impact the financial performance of the Company and the price of the Company Shares if the Merger is not completed; and |
| • | the other risk factors described in the section of this shareholder circular entitled “—Risk Factors” and described from time to time by the Company in its most recent Annual Report on Form 20-F and in any subsequent reports filed with or furnished to the SEC, available at the SEC’s website at www.sec.gov and in the Investor Relations section of the Company’s website at ir.neogames.com, the realization of which may adversely impact the financial performance of the Company and the price of the Company Shares if the Merger is not completed. |
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in our expectations, except as may be required by law.
In addition to the other information included in this shareholder circular, including the matters addressed under the section of this shareholder circular entitled “Cautionary Statement Regarding Forward-Looking Statements”, you should consider carefully the following risk factors in determining how to vote at the Cayman Shareholder Meeting. The following is not intended to be an exhaustive list of the risks related to the Continuation, the Merger, the Re-Continuation (if applicable) and the other Transactions and you should read and consider the risk factors described under Part I, Item 3.D, “Key Information—Risk Factors” of our Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 28, 2023, and incorporated by reference into this shareholder circular.
Satisfying Merger Conditions may be delayed or may not occur at all
The completion of the Merger is subject to a number of conditions that must be satisfied by July 15, 2024 (the “Termination Date”), subject to extension, as discussed in the section of this shareholder circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement.” These conditions include, among others: obtaining the Cayman Shareholder Approval in connection with the Merger and the absence of governmental restraints or prohibitions preventing the consummation of the Merger. The obligation of each of Parent and the Company to complete the Merger is also conditioned on, among other things, the accuracy of the representations and warranties made by the other party on the date of the Business Combination Agreement and at the Merger Effective Time (subject to certain materiality and material adverse effect qualifiers), and the performance by the other party in all material respects of its obligations under the Business Combination Agreement. No assurance can be given that the required shareholder approvals and governmental and regulatory consents and approvals will be obtained or that the required Merger Conditions will be satisfied. If such approvals are obtained and the Merger Conditions are satisfied but after a delayed and extended process, you may receive the Merger Consideration after a longer period of time than you would otherwise expect. If such approvals are not obtained, the Merger Conditions are not satisfied and the Business Combination Agreement is terminated, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares trade as of the date of this shareholder circular. Such uncertainty may adversely impact our business, financial condition, results of operations or prospects. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger.”
If the Continuation is not completed, our share price, business, financial condition, results of operations or prospects could be negatively impacted.
The completion of the Continuation remains subject to a number of conditions that must be satisfied or waived in order for the Merger to close. If such Continuation Conditions are not satisfied and the Business Combination Agreement is terminated, you will not receive any Merger Consideration in exchange for Company Shares and the Company will remain a public company. If that were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares trade as of the date of this shareholder circular. Such uncertainty may adversely impact our business, financial condition, results of operations or prospects. For more information regarding the Continuation Conditions, the rights of the parties to terminate the Business Combination Agreement, and the effect on the Company if the Continuation is not completed, see the sections of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Effectuation of the Continuation and to the Closing of the Merger,” “The Business Combination Agreement—Termination of the Business Combination Agreement” and “The Continuation and the Merger— Effect on the Company if the Merger is Not Completed.”
We may be required to effect the Re-Continuation, which may negatively impact our share price, business, financial condition, results of operations or prospects
Following the Continuation, if the Merger Conditions are not satisfied by the end of the Continuation Period then we will be obligated under the Business Combination Agreement to effect the Re-Continuation, including all necessary actions to unwind the effects of the Continuation and to resume trading of the Company Shares on Nasdaq. As discussed further in the section of this shareholder circular entitled “The Business Combination Agreement—The Re-Continuation”, a variety of filings and actions must be taken in order for the Company to return to Luxembourg from the Cayman Islands and we cannot predict (a) how long it will take to effect the Re-Continuation, (b) when the Company Shares will resume trading on Nasdaq and (c) whether the Business Combination Agreement will be terminated as a result. Whether the Business Combination Agreement is terminated or not, the price of the Company Shares may decline significantly following a Re-Continuation due to the length of time the Company Shares were not tradeable and general uncertainty around the Transactions. If such a decline were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares trade as of the date of this shareholder circular. Such uncertainty may adversely impact our business, financial condition, results of operations and prospects. For more information regarding the Merger Conditions and the Re-Continuation, see the sections of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger” and “The Business Combination Agreement—The Re-Continuation.”
You are being asked to approve the Waiver Proposal by which you will waive your right to notice of the Cayman Shareholder Meeting to approve the Merger.
Following the Continuation, the Company will be a Cayman Islands exempted company and will be governed by Cayman law and the Continuation Articles. Under the Continuation Articles, you will have the right to receive notice of the Cayman Shareholder Meeting, which will be held to approve the Merger. As soon as practicable following the Continuation we will file an additional convening notice for the Cayman Shareholder Meeting on Form 6-K and, as such, you may receive very little notice thereof, which could limit your ability to object to the Merger and exercise your appraisal rights. For more information, see the section of this shareholder circular entitled “The Continuation and the Merger—Appraisal Rights.”
Some of our directors and officers have interests that may be different from, or in addition to, the interests of our shareholders.
Certain of our officers and directors may have interests in the transactions contemplated by the Business Combination Agreement that may be different from, or in addition to, those of our other shareholders, which interests are described in the section entitled “The Continuation and the Merger—Interests of the Company’s Directors and Executive Officers in the Merger.” These interests include, among other things, the rights to indemnification and insurance, continued employment with the Surviving Company and certain payments and benefits provisions contained in or permitted by the Business Combination Agreement.
The fact that the Transactions are pending could materially harm our business and results of operations.
While the Transactions are pending, we are subject to a number of risks that may harm our business and results of operations and the price of the Company Shares if the Transactions are not completed, including:
| • | the diversion of management and employee attention from implementing our growth strategy in our existing markets or in new markets that we are targeting; |
| • | potential diversion of public attention from our positioning of our independent brand and products in a manner that appeals to customers; |
| • | the fact that we have and will continue to incur significant expenses related to the Transactions without a guarantee that the Transactions will be completed; |
| • | our potential inability to respond effectively to competitive pressures, industry developments and future opportunities, given the restrictions on the conduct of our business pursuant to the Business Combination Agreement; |
| • | we could be subject to costly litigation associated with the Transactions; |
| • | our current and prospective employees may be uncertain about their future roles and relationships with us following completion of the Merger, which may adversely affect our ability to attract and retain key personnel; and |
| • | a number of restrictions on our business activities that could otherwise increase the value of the Company, as further discussed in the section of this shareholder circular entitled “The Business Combination Agreement—Conduct of Business Pending the Merger.” |
The Transactions, and uncertainty regarding the Transactions, may cause customers, partners, or vendors to delay or defer decisions concerning doing business with us, which may adversely affect our ability to effectively manage our business.
Many of the Merger Conditions are beyond our control. Accordingly, there may be uncertainty regarding the completion of the Merger. This uncertainty may cause existing or prospective customers, partners, or vendors to:
| • | delay, defer, or cease purchasing products or services or providing products or services to us; |
| • | delay or defer other decisions concerning our business, including entering into contracts with us or seeking to change or cancel existing business relationships with us; or |
| • | otherwise seek to change the terms on which they do business with us. |
Any such disruptions, such as delays or deferrals of those decisions or changes in existing agreements could adversely affect the respective business, operating results and financial position of the Company, whether or not the Merger is ultimately completed, and following the completion of the Merger, the combined company, including an adverse effect on the combined company’s ability to realize the anticipated synergies and other benefits of the Merger. The risk, and adverse effect, of any such disruptions could be exacerbated by a delay in completion of the Merger or termination of the Business Combination Agreement.
Failure to attract, motivate and retain executives while the Transactions are pending could negatively impact the price of the Company Shares if the Merger is not completed.
Due to uncertainty around which of our employees will be retained by Parent following the Merger, it is possible that these employees may decide not to remain with the Company while the Transactions are pending. If our key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, our business activities may be adversely affected and management’s attention may be diverted from their regular duties. Moreover, there could be disruptions to or distractions for the workforce and management. No assurance can be given that we will be able to attract or retain key employees to the same extent that we have been able to attract or retain such employees in the past. If the Merger does not close and the Business Combination Agreement is terminated, you will not receive the Merger Consideration and the price of the Company Shares may decline as a result of our inability to retain or attract key employees.
We are subject to a variety of restrictions on our business conduct while the Transactions are pending, including the ability to solicit or engage in negotiations with respect to other potential acquisition proposals, which may discourage other potential transactions that may be favorable to our shareholders.
Our conduct of business is subject to a variety of restrictions while the Transactions are pending, as discussed in the section of this shareholder circular entitled “The Business Combination Agreement—Conduct of Business Pending the Merger.” These restrictions on our conduct could prevent us from engaging in activities that could otherwise enhance the value of the Company Shares. For example, we are prohibited from soliciting, encouraging or engaging in negotiations with respect to acquisition proposals or other business combinations that could otherwise enhance the value of the Company Shares. If the Merger is not completed, it is possible that such acquisition proposals or business combinations will no longer be available to us or that counterparties will no longer be willing to engage with us, which could materially harm our business, financial conditions or results of operations.
Our obligation to pay a termination fee could harm our business and results of operations.
Until the Merger is completed, if the Business Combination Agreement is terminated under certain circumstances, we are required to pay to Parent a termination fee of approximately $40.4 million (the “Company Termination Fee”), which could harm our business and results of operations, as well as impact perception of the Company’s ability to complete other transactions in the future. For more information regarding the circumstances under which we will be required to pay the Company Termination Fee, see the section of this shareholder circular entitled “The Business Combination Agreement—Company Termination Fee.”
If the Merger is not consummated by the Termination Date, either we or Parent may, due to certain circumstances that may be beyond our control, choose not to proceed with the Merger.
The Merger is subject to the satisfaction or waiver of certain closing conditions described in the section of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger” and set forth in the Business Combination Agreement. The fulfillment of certain of these conditions is beyond our control, such as the receipt of the Cayman Shareholder Approval and the receipt of approvals and the making or receipt of all notices to, filings with and consents from the relevant authorities required for satisfaction of the required governmental clearances. If the Merger has not been completed by the Termination Date, either we or Parent may generally terminate the Business Combination Agreement, notwithstanding the prior receipt of the First Luxembourg Shareholder Approval or the Cayman Shareholder Approval, except that the right to terminate the Business Combination Agreement would not be available to a party that is in material breach of its obligations under the Business Combination Agreement in any manner that shall have proximately caused or resulted in the failure of the Continuation, the Merger or the other Transactions. For more information on the Termination Date, please see the section of this shareholder circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement.”
Our shareholders could file lawsuits in the future challenging the Continuation and/or the Merger, which may delay or prevent the completion of the Continuation or the Merger, as applicable, cause us to incur substantial defense or settlement costs, or otherwise adversely affect us.
As of the date of this shareholder circular, there are no pending lawsuits challenging the Continuation or the Merger. However, potential plaintiffs may file lawsuits challenging the Continuation or the Merger. The outcome of any future litigation is uncertain. Such litigation, if not resolved, could prevent or delay completion of the Continuation or the Merger and result in substantial costs to us, including any costs associated with the indemnification of directors and officers. One of the conditions to both the Continuation and the Merger is the absence of any provision of applicable law or order by any governmental entity that has the effect of restraining, enjoining or otherwise prohibiting the consummation of the Continuation or the Merger, as applicable. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the Continuation or the Merger on the agreed-upon terms, then such injunction may prevent the Continuation or the Merger from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Continuation or the Merger is completed may adversely affect our business, financial conditions, results of operations and cash flows.
If the Merger is completed, the Merger Consideration may represent a lower premium than presented as of the date of the Business Combination Agreement or the date of this shareholder circular.
If the Merger is completed, you will no longer own any Company Shares and will instead only have the right to receive the Merger Consideration. The Merger Consideration is fixed and will not be adjusted, irrespective of any circumstances that may lead to an increase in the underlying value of the Company between the date of this shareholder circular and the completion of the Merger. As a result, the Merger Consideration’s premium over the historical market price of the Company Shares presented throughout this shareholder circular may be lower when compared to the underlying value of the Company Shares between the date of this shareholder circular and completion of the Merger.
We will not receive another fairness opinion from Stifel prior to completion of the Merger.
As discussed in the section of this shareholder circular entitled “The Continuation and the Merger—Fairness Opinion of Stifel,” Stifel rendered its oral opinion at a meeting of the Board on May 14, 2023, which was confirmed by their delivery of a written opinion, attached as Annex E hereto, on the same day. The Board has not obtained an updated opinion from Stifel as of the date of this shareholder circular, and the Board has not requested, and does not anticipate requesting, an updated opinion from Stifel reflecting changes in circumstances that may have occurred since the signing of the Business Combination Agreement. As a result, the Board will not receive an updated, revised or reaffirmed opinion prior to the completion of the Merger. Changes in our operations and prospects, general market and economic conditions and other factors that may be beyond our control, may significantly alter the value of the Company Shares by the time the Merger is completed. The fairness opinion of Stifel speaks only as of the date it was rendered, and it does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion. The fairness opinion of Stifel does not address the fairness, from a financial point of view, of the Merger Consideration at any time other than the time such opinion was delivered.
If the Merger is completed, subject to appraisal rights under the Cayman Companies Act, you will forfeit all rights with respect to your Company Shares other than the right to receive the Merger Consideration, including the right to participate directly in any earnings or future growth of the Company.
If the Merger is completed, you will cease to have any equity interest in the Company and will not participate in the Company’s earnings or any future growth, except indirectly to the extent you independently own or purchase Parent Common Shares.
The Continuation could be a taxable transaction to U.S. Holders if it does not qualify as a “reorganization” under Section 368(a)(1)(F) of the Code.
The Continuation is intended to qualify as a tax-free reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Code”). Under Section 368(a)(1)(F) of the Code, a reorganization is a “mere change in identity, form, or place of organization of one corporation, however effected” (an “F Reorganization”). Pursuant to the Continuation, the Company will change its jurisdiction of incorporation from Luxembourg to the Cayman Islands by way of continuance. Assuming the Continuation qualifies as an F Reorganization, U.S. Holders generally would not recognize gain or loss as a result of the conversion of their Company Shares in the Continuation.
Neither Parent nor the Company has requested or will request a ruling from the Internal Revenue Service (the “IRS”) or an opinion of counsel regarding the U.S. federal income tax consequences of the Continuation. Consequently, no assurance can be given that the IRS will not challenge the qualification of the Continuation as an F Reorganization or that a court would not sustain such challenge. Furthermore, neither Parent nor the Company, nor any of their respective advisors or affiliates, makes any representation or provides any assurance regarding the U.S. federal income tax consequences of the Continuation, including whether the Continuation qualifies as a “reorganization” under Section 368(a)(1)(F) of the Code.
Thus, if the Continuation is consummated but the IRS or the courts were to determine that the Continuation did not qualify as an F Reorganization or another tax-free reorganization under the Code, and thus was taxable, each U.S. Holder (as defined in “The Continuation and the Merger—Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger—Material U.S. Federal Income Tax Consequences”) would recognize gain or loss equal to the difference between the fair market value of the converted Company Shares and its aggregate adjusted tax basis in the converted Company Shares on the date of the Continuation. Such gain or loss would be recognized regardless of whether the Merger is consummated.
After the Continuation, and for purposes of determining the tax consequences to a U.S. Holder if the Merger is consummated, the U.S. Holder’s adjusted tax basis in the continued Company Shares would be equal to the fair market value of that stock on the date of the Continuation and such U.S. Holder’s holding period for the converted Company Shares would begin on the day following the date of the Continuation.
All Company shareholders are urged to consult their own tax advisor regarding the U.S. federal income tax consequences of the Continuation.
THE CAYMAN SHAREHOLDER MEETING
The enclosed proxy is solicited on behalf of the Board for use at the Cayman Shareholder Meeting.
Date, Time and Place
The Company will hold the Cayman Shareholder Meeting on or about April 25, 2024 via a video-conferencing service. The Company will provide an additional notice on Form 6-K prior to the Cayman Shareholder Meeting with respect to the final date and time of the Cayman Shareholder Meeting and a weblink to attend the video conference for the Cayman Shareholder Meeting.
Purpose of the Cayman Shareholder Meeting
At the Cayman Shareholder Meeting, the Company will ask shareholders to vote on:
| (2) | the Statutory Plan of Merger Proposal; and |
Board Recommendation
The Board, after considering various factors described in the section of this shareholder circular entitled “The Continuation and the Merger—Reasons for the Merger and Recommendation of the Board,” has unanimously (i) determined that the Company’s entry into the Business Combination Agreement and consummation of the Transactions, including the Continuation and the Merger, are fair to, and in the best interests of, the Company and its shareholders; and (ii) authorized, declared advisable and approved in all respects, the Business Combination Agreement, the delivery and performance of the Business Combination Agreement and the consummation of the Transactions, upon the terms and subject to the conditions set forth in the Business Combination Agreement.
The Board unanimously recommends that you vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
Record Date; Shares Entitled to Vote; Vote Required and Quorum
Only shareholders of record as of the Record Date are entitled to receive notice of, and vote at, the Cayman Shareholder Meeting or any adjournment, reconvening, postponement or other delay thereof. You are also entitled to vote at the Cayman Shareholder Meeting if you hold Company Shares through a bank, broker or other nominee which is one of our shareholders of record at the close of business on the Record Date. A list of shareholders entitled to vote at the Cayman Shareholder Meeting will be available at our principal executive offices, located at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg, during regular business hours for a period of no less than ten days before the Cayman Shareholder Meeting and at the place of the Cayman Shareholder Meeting during the meeting.
As of March 31, 2024, there were 33,895,026 Company Shares outstanding.
The approval of each of the Merger Proposal and the Statutory Plan of Merger Proposal requires the affirmative vote of shareholders holding at least sixty six point seven percent (66.7%) of the Company Shares present or represented at the Cayman Shareholder Meeting (or any adjournment, reconvening or postponement thereof), in person or by proxy, and entitled to vote on the Cayman Meeting Proposals. Approval of the Waiver Proposal requires the affirmative vote of shareholders holding more than fifty percent (50%) of the Company Shares entitled to vote on such proposal. The presence, in person or by proxy, or representation of two Company shareholders entitled to vote at the Cayman Shareholder Meeting constitutes a quorum for the purposes of holding the Cayman Shareholder Meeting and voting on the Cayman Meeting Proposals.
Approximately 61% of the Company Shares held by the Significant Shareholders committed under the Support Agreement to vote in favor of the Cayman Meeting Proposals.
You may vote either “FOR” or “against” the Merger Proposal, or you may abstain.
You may vote either “FOR” or “against” the Statutory Plan of Merger Proposal, or you may abstain.
You may vote either “FOR” or “against” the Waiver Proposal, or you may abstain.
Abstentions and Broker Non‑Votes
Abstentions and broker non-votes with regard to the proposals will be treated as neither a vote “FOR” or “against” such proposal, although they will be counted as present in determining whether a quorum is present.
Shares Held by the Company’s Directors and Executive Officers
As of March 31, 2024, each of Barak Matalon, Aharon Aran and Oded Gottfried beneficially owned approximately 28.5%, 7.1% and 1.8% of the Company Shares, respectively, and no other director or executive officer, individually or in the aggregate, beneficially owned one percent or more of the Company Shares. Our directors and executive officers have informed us that they currently intend to vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
Support Agreement
You should be aware that, concurrently with the execution of the Business Combination Agreement, the Significant Shareholders entered into the Support Agreement, pursuant to which the Significant Shareholders have agreed, among other things, to vote in favor of and support the approval and adoption of the Business Combination Agreement, the Continuation Articles, the Statutory Plan of Merger and the Transactions, including the Continuation, the Merger and the Re-Continuation (if necessary upon failure of the Merger). The Support Agreement includes a power of attorney in favor of Parent to vote the shares held by the Significant Shareholders in accordance with its terms. Approximately 61% of Company Shares are subject to the Support Agreement.
Voting of Proxies
You can vote either in person at the Cayman Shareholder Meeting or by authorizing another person as your proxy, whether or not you attend the Cayman Shareholder Meeting. You may vote by proxy to be received in any case no later than 11:59 p.m. (Eastern time) on April 22, 2024, in any of the manners below:
| • | By mail—If you are a shareholder of record, you can submit a proxy by completing, dating, signing and returning your proxy card in the postage-paid envelope provided, to be received by the Company’s tabulation agent (Broadridge) by 11:59 p.m. (Eastern time) on April 22, 2024. You should sign your name exactly as it appears on the enclosed proxy card or voting instruction form. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), please indicate your name and title or capacity. |
| • | By telephone—If you are a shareholder of record, you can submit a proxy by telephone by calling the toll-free number listed on the enclosed proxy card, entering your control number located on the enclosed proxy card or voting instruction form and following the prompts. |
| • | By Internet—If you are a shareholder of record, you can submit a proxy over the Internet by logging on to the website listed on the enclosed proxy card, entering your control number located on the enclosed proxy card or voting instruction form and submitting a proxy by following the on-screen prompts. |
If you vote by proxy, your Company Shares will be voted at the Cayman Shareholder Meeting in the manner you indicate (by marking a box on your proxy card). If your Company Shares are held in your name (and not in “street name” through a broker or other nominee) and if you sign your proxy card or voting instruction form, but do not specify how you want your Company Shares to be voted, they will be counted as present for the purpose of determining the presence or absence of a quorum for the Cayman Shareholder Meeting, but they will not be counted in tabulating the voting result for any particular proposal.
Voting instructions are included on your proxy card. All Company Shares represented by properly signed and dated proxies received by the Company’s tabulation agent (Broadridge) by 11:59 p.m. (Eastern time) on April 22, 2024 will be voted at the Cayman Shareholder Meeting in accordance with the instructions of the shareholder. Properly signed and dated proxies that do not contain voting instructions will be voted (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
Revocability of Proxies
You may change your vote or revoke your proxy prior to the Cayman Shareholder Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy before the Cayman Shareholder Meeting by (1) delivering a written notice of revocation to the Company’s corporate secretary; (2) delivering a duly executed proxy card to the Company’s corporate secretary bearing a later date than the proxy being revoked; or (3) submitting a proxy electronically or over the Internet or by telephone (only your last telephone or internet proxy will be counted). Only the change of vote and revocations of proxy received before 11:59 pm, Eastern time on April 22, 2024 shall be counted and taken into account in order to ensure that your later proxy is received in time for the Cayman Shareholder Meeting. The address of the registered office for purposes of revoking your proxy pursuant to clauses (1) and (2) in the second preceding sentence is 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg. If you wish to change your vote by mail, you should contact our Proxy Solicitor, at the address set forth below and request a new proxy card or voting instruction form.
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
If you hold your Company Shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. In most instances this can be done over the phone or internet. Solicitation of Proxies.
The expense of soliciting proxies will be borne by the Company. The Company has retained Morrow Sodali, LLC as Proxy Solicitor to solicit proxies in connection with the Cayman Shareholder Meeting (and the Second Luxembourg Shareholder Meeting) at an aggregate cost of approximately $10,000, plus reimbursement for certain out-of-pocket fees and expenses. The Company will also indemnify the Proxy Solicitor against losses arising out of its provisions of these services on our behalf. In addition, the Company may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.
Adjournments, Reconvening or Postponements
If within an hour from the time appointed for the Cayman Shareholder Meeting a quorum is not present, the Cayman Shareholder Meeting shall stand adjourned to the next business day, at the same time and place, and if at the adjourned meeting a quorum is not present within an hour from the time appointed for the meeting the shareholder or shareholders present and entitled to vote shall form a quorum.
Assuming the presence of a quorum, if the Cayman Shareholder Meeting is adjourned to another time and place, as shall be decided by the chair of the Board either (a) with the consent the Cayman Shareholder Meeting (and if so directed by the Cayman Shareholder Meeting) or (b) without the consent of the Cayman Shareholder Meeting if, in the sole opinion of the chair of the Board, they consider it necessary to do so to (i) secure the orderly conduct or proceedings of the Cayman Shareholder Meeting; or (ii) give all persons present in person or by proxy and having the right to speak and / or vote at such meeting, the ability to do so, no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. If the Cayman Shareholder Meeting, or adjourned meeting, is adjourned for fourteen days or more, notice of the adjourned meeting shall be given in the manner provided for the original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
Questions and Additional Information
If you have any questions concerning the Cayman Shareholder Meeting, the Merger, the Continuation, the Transactions, the Cayman Shareholder Meeting or any matter related to the accompanying shareholder circular, would like additional copies of the accompanying shareholder circular or need help voting your Company Shares, please contact our Proxy Solicitor:
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
CAYMAN PROPOSAL 1: THE MERGER PROPOSAL
We are asking you to approve (a) the merger of Merger Sub with and into the Company following which Merger Sub will cease to exist as a separate legal entity and the Company will be the surviving company and will become a wholly owned indirect subsidiary of Parent pursuant to the Business Combination Agreement dated May 15, 2023, by and among Parent, Merger Sub and the Company and (b) the Transactions, including taking all actions and making filings required for the Company to permanently de-list the Company Shares from the Nasdaq Global Market upon completion of the Merger;
For a summary of and detailed information regarding this Merger Proposal (Proposal 1), see the information about the Merger Proposal, the Business Combination Agreement, the Statutory Plan of Merger and the Transactions contemplated thereby throughout this shareholder circular, including the information set forth in the sections of this shareholder circular entitled “The Continuation and The Merger” and “The Business Combination Agreement.” Copies of the Business Combination Agreement and Statutory Plan of Merger are attached to the shareholder circular as Annex A and Annex B, respectively. You are urged to read the Business Combination Agreement, the Statutory Plan of Merger and all other annexes to the shareholder circular carefully and in their entirety.
You may vote either “FOR” or “against” this Merger Proposal (Cayman Proposal 1), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” this Merger Proposal (Cayman Proposal 1).
CAYMAN PROPOSAL 2: THE STATUTORY PLAN OF MERGER PROPOSAL
We are asking you to approve the adoption of the Statutory Plan of Merger to be entered into by and between the Company and Merger Sub and filed with the Cayman Registrar following receipt of the Cayman Shareholder Approval.
A copy of the Statutory Plan of Merger is attached to this shareholder circular as Annex B. You are urged to read the Statutory Plan of Merger, the Business Combination Agreement and all other annexes to the shareholder circular carefully and in their entirety.
You may vote either “FOR” or “against” this Statutory Plan of Merger Proposal (Cayman Proposal 2), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” this Statutory Plan of Merger Proposal (Cayman Proposal 2).
CAYMAN PROPOSAL 3: THE WAIVER PROPOSAL
We are asking you to approve the waiver of any notice requirements under the Continuation Articles or applicable law to calling, holding and convening of the Cayman Shareholder Meeting (or any adjournment, reconvening or postponement thereof) to approve the Merger and other Transactions, subject to the satisfaction or waiver of the Merger Conditions.
You may vote either “FOR” or “against” this Waiver Proposal (Cayman Proposal 3), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” this Waiver Proposal (Cayman Proposal 3).
THE SECOND LUXEMBOURG SHAREHOLDER MEETING
The enclosed proxy is solicited on behalf of the Board for use at the Second Luxembourg Shareholder Meeting.
Date, Time and Place
In the event that the Re-Continuation Scenario has occurred, the Company will hold the Second Luxembourg Shareholder Meeting at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg, at 3 p.m. Luxembourg time (9 a.m. Eastern time) on or about May 2, 2024, unless it is postponed, reconvened, or adjourned.
In accordance with Luxembourg law, the matters to be resolved under the Luxembourg Proposals shall be recorded in front of a Luxembourg public notary, which will be present at the Second Luxembourg Shareholder Meeting for this purpose.
Purpose of the Second Luxembourg Shareholder Meeting
At the Second Luxembourg Shareholder Meeting, the Company will ask shareholders to vote on:
the Re-Continuation Proposal;
the Board Election Proposal;
the Auditors Approval Proposal; and
the Filing Authorization Proposal.
Board Recommendation
The Board, after considering the factors described in the enclosed shareholder circular, has unanimously determined that the terms of the Luxembourg Proposals, in particular the Re-Continuation Proposal, are fair to, and in the best interests of, the Company and its shareholders.
The Board unanimously recommends that you vote (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal.
Record Date; Shares Entitled to Vote; Vote Required and Quorum
Only shareholders of record as of the Record Date are entitled to receive notice of, and vote at, the Second Luxembourg Shareholder Meeting or any adjournment, reconvening, postponement or other delay thereof. You are also entitled to vote at the Second Luxembourg Shareholder Meeting if you hold Company Shares through a bank, broker or other nominee which is one of our shareholders of record at the close of business on the Record Date. A list of shareholders entitled to vote at the Second Luxembourg Shareholder Meeting will be available at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg, during regular business hours for a period of no less than ten days before the Second Luxembourg Shareholder Meeting and at the place of the Second Luxembourg Shareholder Meeting during the meeting.
As of March 31, 2024, there were 33,895,026 Company Shares outstanding.
Approval of the Re-Continuation Approval requires the affirmative vote of shareholders holding at least sixty six point seven percent (66.7%) of the Company Shares present or represented at the Second Luxembourg Shareholder Meeting (or any adjournment, reconvening or postponement thereof), in person, by proxy or by electronic voting, and voting on such proposal (excluding abstentions and broker non-votes). Approval of the Board Election Proposal, the Auditors Approval Proposal and the Filing Authorization Proposal require the affirmative vote of shareholders holding more than fifty percent (50%) of the Company Shares entitled to vote.
Approximately 61% of the Company Shares held by the Significant Shareholders committed under the Support Agreement to vote in favor of the Luxembourg Proposals.
The presence (in person, by proxy or by electronic voting) of shareholders holding at least fifty percent (50%) of the Company Shares constitutes a quorum for purposes of the Re-Continuation Proposal.
You may vote either “FOR” or “against” the Re-Continuation Proposal, or you may abstain.
You may vote either “FOR” or “against” the Board Election Proposal, or you may abstain.
You may vote either “FOR” or “against” the Auditors Approval Proposal, or you may abstain.
You may vote either “FOR” or “against” the Filing Authorization Proposal, or you may abstain
Abstentions and Broker Non‑Votes
Abstentions and broker non-votes with regard to the proposals will be treated as neither a vote “FOR” or “against” such proposal, although they will be counted as present in determining whether a quorum is present.
Shares Held by the Company’s Directors and Executive Officers
As of March 31, 2024, each of Barak Matalon, Aharon Aran and Oded Gottfried beneficially owned approximately 28.5%, 7.1% and 1.8% of the Company Shares, respectively, and no other director or executive officer, individually or in the aggregate, beneficially owned one percent or more of the Company Shares. Our directors and executive officers have informed us that they currently intend to vote (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal.
Support Agreement
You should be aware that, concurrently with the execution of the Business Combination Agreement, the Significant Shareholders entered into the Support Agreement, pursuant to which the Significant Shareholders have agreed, among other things, to vote in favor of and support the approval and adoption of the Business Combination Agreement, the Continuation Articles, the Statutory Plan of Merger and the Transactions, including the Continuation, the Re-Continuation (if necessary upon failure of the Merger) and the Merger itself. The Support Agreement includes a power of attorney in favor of Parent to vote the shares held by the Significant Shareholders in accordance with its terms.
Voting of Proxies
You can vote either in person at the Second Luxembourg Shareholder Meeting or by authorizing another person as your proxy, whether or not you attend the Second Luxembourg Shareholder Meeting. You may vote by proxy, to be received in any case no later than 11:59 p.m. (Eastern time) on April 30, 2024, in any of the manners below:
By mail—If you are a shareholder of record, you can submit a proxy by completing, dating, signing and returning your proxy card or voting instruction form in the postage‑paid envelope provided, to be received by the Company’s transfer agent, or at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg, by 11:59 p.m. (Eastern time) on April 30, 2024. You should sign your name exactly as it appears on the enclosed proxy card or voting instruction form. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), please indicate your name and title or capacity. If you are a beneficial owner, you have the right to direct your brokerage firm, bank or other similar organization on how to vote your Company Shares, and the brokerage firm, bank or other similar organization is required to vote your Company Shares in accordance with your instructions. To provide instructions to your brokerage firm, bank or other similar organization by mail, please complete, date, sign and return your proxy card or voting instruction form in the postage‑paid envelope provided by your brokerage firm, bank or other similar organization.
By telephone—If you are a shareholder of record, you can submit a proxy by telephone by calling the toll‑free number listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and following the prompts. If you are a beneficial owner and if the brokerage firm, bank or other similar organization that holds your Company Shares offers telephone voting, you will receive instructions from the brokerage firm, bank or other similar organization that you must follow in order to submit a proxy by telephone.
By Internet—If you are a shareholder of record, you can submit a proxy over the Internet by logging on to the website listed on the enclosed proxy card or voting instruction form, entering your control number located on the enclosed proxy card or voting instruction form and submitting a proxy by following the on‑screen prompts. If you are a beneficial owner, and if the brokerage firm, bank or other similar nominee that holds your Company Shares offers Internet voting, you will receive instructions from the brokerage firm, bank or other similar organization that you must follow in order to submit your proxy over the Internet.
If you vote by proxy, your Company Shares will be voted at the Second Luxembourg Shareholder Meeting in the manner you indicate (by marking a box on your proxy card). If your Company Shares are held in your name (and not in “street name” through a broker or other nominee) and if you sign your proxy card or voting instruction form, but do not specify how you want your Company Shares to be voted, they will be counted as present for the purpose of determining the presence or absence of a quorum for the Second Luxembourg Shareholder Meeting, but they will not be counted in tabulating the voting result for any particular proposal.
Voting instructions are included on your proxy card. All Company Shares represented by properly signed and dated proxies received by the Company’s transfer agent or at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg by 11:59 p.m. (Eastern time) on April 30, 2024, will be voted at the Second Luxembourg Shareholder Meeting in accordance with the instructions of the shareholder. Properly signed and dated proxies that do not contain voting instructions will be voted (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal.
Revocability of Proxies
You may change your vote or revoke your proxy at any time prior to the vote at the Second Luxembourg Shareholder Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Second Luxembourg Shareholder Meeting by (1) signing another proxy card with a later date and returning it to the Company’s transfer agent or at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg by no later than 11:59 p.m. (Eastern time) on April 30, 2024; (2) submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy and prior to the Second Luxembourg Shareholder Meeting; (3) delivering a written notice of revocation to our corporate secretary prior to the Second Luxembourg Shareholder Meeting at 10 Habarzel Street, Tel Aviv, Israel 6971014; or (4) attending the Second Luxembourg Shareholder Meeting and voting in person at the Second Luxembourg Shareholder Meeting. If you wish to change your vote by mail, you should contact our Proxy Solicitor at the address set forth below and request a new proxy card or voting instruction form.
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
If you hold your Company Shares in “street name” through a bank, broker or other nominee on Nasdaq, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the Second Luxembourg Shareholder Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.
Solicitation of Proxies
The Company has engaged Morrow Sodali, LLC, which is referred to as the “Proxy Solicitor,” to assist in the solicitation of proxies for the Second Luxembourg Shareholder Meeting (and the Cayman Shareholder Meeting). The Company estimates that it will pay Morrow Sodali, LLC an aggregate fee of approximately $10,000, plus reimbursement for certain out-of-pocket fees and expenses. The Company has agreed to indemnify Morrow Sodali, LLC against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). In addition, the Company may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.
Adjournments, Reconvening or Postponements
In the absence of the requisite quorum of shareholders at the Second Luxembourg Shareholder Meeting, the Second Luxembourg Shareholder Meeting will be reconvened to the fifteenth (15th) day following the initial date of the Second Luxembourg Shareholder Meeting and will be held at the same time and place, unless otherwise determined at the Second Luxembourg Shareholder Meeting. At such reconvened meeting, if a quorum is not present as aforesaid, the shareholders present, in person, by proxy or by electronic voting (regardless of the voting power represented by their shares) will constitute a quorum.
Assuming the presence of a quorum, if the Second Luxembourg Shareholder Meeting is adjourned to another time and place, as shall be decided by holders of a majority of the voting power represented at the meeting in person or by proxy or written ballot and voting thereon, additional notice will be given regarding the date of the adjourned meeting in accordance with applicable law. At the adjourned meeting, the Company may transact any items of business that might have been transacted at the Second Luxembourg Shareholder Meeting.
Filing of the Statutory Plan of Merger
If the Statutory Plan of Merger is filed with the Cayman Registrar within three business days from the Continuation Effective Time, this convening notice shall be automatically null and void the Second Luxembourg Shareholder Meeting shall not take place. Consequently, any proxies granted by the shareholders for the Second Luxembourg Shareholder Meeting will also be void and no longer valid.
Questions and Additional Information
If you have any questions concerning the Second Luxembourg Shareholder Meeting, the Re-Continuation or any matter related to the accompanying shareholder circular, would like additional copies of the accompanying shareholder circular or need help voting your Company Shares, please contact our Proxy Solicitor:
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
LUXEMBOURG PROPOSAL 1: THE RE-CONTINUATION PROPOSAL
We are asking you to approve (a) the Re-Continuation, and (b) in particular, the following items for the purpose of the Re-Continuation:
| a. | the continuation of the Company in the Grand Duchy of Luxembourg under the name “NeoGames S.A.” or if this name is not available with the Luxembourg trade and companies register, under any name containing the word “NeoGames” as may be available with the Luxembourg trade and companies register; |
| b. | the amendment and full restatement of the Continuation Articles in the form of the Re-Continuation Articles; |
| c. | the setting of the Company’s statutory seat, registered office (siège statutaire) and central administration (administration centrale) at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg; and |
| d. | the acknowledgment of the termination of the mandate of the existing directors of the Company and granting of discharge. |
For a summary of and detailed information regarding this Re-Continuation Proposal (Luxembourg Proposal 1), see the information about the Re-Continuation throughout this shareholder circular, including the information set forth in the sections entitled “The Re-Continuation” and “The Business Combination Agreement” of this shareholder circular. A copy of the Business Combination Agreement is attached to this shareholder circular as Annex A. You are urged to read the Business Combination Agreement and all other annexes to the shareholder circular carefully and in their entirety.
You may vote either “FOR” or “against” this Re-Continuation Proposal (Luxembourg Proposal 1), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” the Re-Continuation Proposal (Luxembourg Proposal 1).
LUXEMBOURG PROPOSAL 2: THE BOARD ELECTION PROPOSAL
We are asking you to approve the election of the following candidates as members of the board of directors (conseil d’administration) of the Company for the period starting at the date of the Second Luxembourg Shareholder Meeting and ending at the annual general meeting of the shareholders of the Company approving the annual accounts for the financial year ending on December 31, 2024:
| a. | Mr. Steve Capp (Director); |
| b. | Mr. Aharon Aran (Director); |
| c. | Mr. Moti Malul (Director); |
| d. | Mr. Barak Matalon (Director); |
| e. | Mr. Laurent Teitgen (Director); and |
| f. | Mr. John E. Taylor, Jr. (Director and Chair). |
You may vote either “FOR” or “against” this Board Election Proposal (Luxembourg Proposal 2), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” the Board Election Proposal (Luxembourg Proposal 2).
LUXEMBOURG PROPOSAL 3: THE AUDITORS APPROVAL PROPOSAL
We are asking you to approve the appointment of Atwell as the Luxembourg statutory auditor (réviseur d’entreprises agréé) and of Ziv Haft, Certified Public Accountants, Isr., BDO Member Firm, as independent registered certified public accounting firm for the period starting at the date of the Second Luxembourg Shareholder Meeting and ending at the general meeting approving the annual accounts for the financial year ending December 31, 2024.
You may vote either “FOR” or “against” this Auditors Approval Proposal (Luxembourg Proposal 3), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” the Auditors Approval Proposal (Luxembourg Proposal 3).
LUXEMBOURG PROPOSAL 4: THE FILING AUTHORIZATION PROPOSAL
We are asking you to approve the authorization and empowerment of Allen & Overy, société en commandite simple, registered on list V of the Luxembourg bar, to execute and deliver, on behalf of the Company and with full power of substitution, any documents necessary or useful in connection with any filings and registrations required by the Luxembourg laws.
You may vote either “FOR” or “against” this Filing Authorization Proposal (Luxembourg Proposal 4), or you may abstain by voting on the enclosed proxy card.
The Board unanimously recommends that you vote “FOR” the Filing Authorization Proposal (Luxembourg Proposal 4).
THE CONTINUATION AND THE MERGER
This discussion of the Continuation and the Merger is qualified in its entirety by reference to the Business Combination Agreement, which is attached to this shareholder circular as Annex A and incorporated into this shareholder circular by reference. You should read the entire Business Combination Agreement carefully, as it is the legal document that governs the Continuation and the Merger, together with all other annexes to this shareholder circular.
Parties Involved in the Merger
Company
NeoGames S.A.
63-65, Rue De Merl
L-2146 Luxembourg
Grand Duchy of Luxembourg
+972-73-372-3107
The Company is a public limited liability company (société anonyme) organized under the laws of the Grand Duchy of Luxembourg. At the time of the Cayman Shareholder Meeting, pursuant to the Continuation approved at the First Luxembourg Shareholder Meeting, the Company will be a Cayman Islands exempted company operating under the name “Neo Group Ltd.”. The Company is a global leader of iLottery and iGaming solutions and services for regulated lotteries and gaming operators, providing a full-service suite of solutions, including proprietary technology platforms, two dedicated game studios with an extensive portfolio of engaging games and a range of value-add services. As a global technology and service provider to state lotteries and other lottery operators, the Company offers a full-service solution that includes all of the elements required for the offering of lottery games via personal computers, smartphones and handheld devices. The Company also offers an innovative sports betting platform, an advanced content aggregation solution and a complete set of business-to-business gaming technology and managed services.
As of the date of this shareholder circular, the Company Shares are listed on Nasdaq under the symbol “NGMS.” Upon completion of the Continuation all trading of Company Shares on Nasdaq will be suspended and you will not be able to buy, sell or transfer your Company Shares.
The Company has retained Morrow Sodali, LLC, a proxy solicitation firm, to solicit proxies in connection with the Cayman Shareholder Meeting.
Morrow Sodali, LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Individuals call toll-free (800) 662-5200
Banks and brokers call (203) 658-9400
Email: NGMS@investor.morrowsodali.com
Parent
Aristocrat Leisure Limited
Building A, Pinnacle Office Park
85 Epping Road
North Ryde, NSW 2113, Australia
+61-2-9013-6000
Parent is a corporation organized under the laws of Australia. Parent is a leading global gaming, content and technology company and mobile games publisher. Parent offers a diverse range of products and services including electronic gaming machines, casino management systems and free-to-play mobile games across the globe.
Parent’s ordinary shares are listed on ASX under the symbol “ALL.”
Merger Sub
Anaxi Investments Limited
Cricket Square, Hutchins Drive
PO Box 2681
Grand Cayman, KY1-1111, Cayman Islands
+61-2-9013-6000
Merger Sub is a Cayman Islands exempted company and a wholly owned, indirect subsidiary of Parent that was incorporated on May 11, 2023 solely for the purpose of engaging in the Transactions. Merger Sub has not engaged in any business activities other than in connection with the Transactions.
Effect of the Continuation and the Merger
Upon the terms and subject to the conditions of the Business Combination Agreement and in accordance with the Luxembourg Company Law and the Cayman Companies Act, if the Continuation and the Merger are completed, Merger Sub will merge with and into the Company, and the Company will continue as the Surviving Company and as a wholly owned indirect subsidiary of Parent. As a result of the Continuation and the Merger, the Company Shares will no longer be publicly traded and will be delisted from Nasdaq. In addition, the Company Shares will be deregistered under the Exchange Act, and the Company will no longer file periodic reports with the SEC. If the Merger is completed, you will no longer own any Company Shares and you will only have the right to receive for each Company Share that you owned immediately prior to the Merger Effective Time, the Merger Consideration of $29.50 per share in cash, without interest and less any applicable withholding taxes.
The Merger Effective Time will occur upon the registration of the Statutory Plan of Merger by the Cayman Registrar or at such other time as may be specified in such Statutory Plan of Merger mutually agreed in writing between Merger Sub and the Company.
Effect on the Company if the Continuation or Merger are Not Completed
If the Business Combination Agreement is terminated prior to the Continuation or following a Re-Continuation and the Merger is not completed, shareholders will not receive any Merger Consideration for their Company Shares. Instead, the Company will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company will continue to file periodic reports with the SEC. In addition, if the Merger is not completed, the Company expects that management will operate the business in a manner similar to that in which it is being operated today and that the shareholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which the Company operates and risks related to adverse economic or industry conditions.
The Company will be required to pay to Parent a termination fee of approximately $40.4 million if the Business Combination Agreement is terminated under certain circumstances specified therein and summarized in the section of this shareholder circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement—Company Termination Fee.”
Furthermore, if the Merger is not completed the price of the Company Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares trade as of the date of this shareholder circular.
Accordingly, if the Merger is not completed, there can be no assurance as to the effect of these risks and opportunities or the future value of your Company Shares. If the Merger is not completed, the Board will continue to evaluate and review the Company’s business operations, strategic direction and capitalization, among other things, and will make such changes as are deemed appropriate. If the Cayman Meeting Proposals are not approved by the shareholders of the Company or the Merger is not completed, there can be no assurance that any other transaction acceptable to the Board will be offered or that the Company’s business, prospects or results of operations will not be adversely impacted.
Merger Consideration
At the Merger Effective Time, each outstanding Company Share (other than Excluded Shares or Company Shares held by dissenting shareholders who have validly indicated by way of written objection their desire to dissent with respect to such Company Shares (pursuant to Section 238(2) of the Cayman Companies Act)) shall be deemed to have been cancelled in exchange for the right to receive the Merger Consideration, without interest and less any applicable withholding taxes. After the Merger is completed, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a shareholder of the Company.
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the Business Combination Agreement, but it does not purport to catalogue every conversation and correspondence among representatives of the Company, Parent and their respective advisors. The Board, together with the Company’s management, regularly reviews and assesses strategic opportunities to maximize value for the shareholders of the Company. Other than as described below, there have been no material contacts between the Company and Parent in the past two years.
During 2021, Mr. Tsachi Maimon, then Chief Executive Officer of Aspire Global plc (“Aspire Global”), which was acquired by the Company in 2022 (as further detailed below), and currently the President of the Company, conducted several meetings and had several correspondences with representatives of Parent, the Chief Executive Officer of Anaxi and Chief Transformation Officer of Parent and the Chief Strategy Officer of Parent, regarding the potential offering by Parent of certain Aspire Global products and services to Parent’s customers in North America (the “Aspire Collaboration”).
On January 17, 2022, the Company announced that it had launched a recommended public offer to the shareholders of Aspire Global to purchase their shares (the “Aspire Tender Offer”) and on April 26, 2022, the Company distributed to shareholders and filed with the Swedish regulators and the SEC a prospectus with respect to the Aspire Tender Offer.
On April 28, 2022, Aspire Global entered into a Confidentiality Agreement with Aristocrat Technologies Inc., a subsidiary of Parent, in connection with discussions between Parent and Aspire Global regarding the Aspire Collaboration.
On May 4, 2022, senior executives of Aspire Global, including Mr. Maimon and Mr. Moti Malul, Chief Executive Officer of the Company, met in Madrid with senior executives of Parent to further discuss the Aspire Collaboration, focusing on the technology and product offerings of Aspire Global.
On June 30, 2022, the Aspire Tender Offer was completed, and the Company obtained control of Aspire Global. Final squeeze-out proceedings occurred in September 2022, and as a result the Company acquired all of the shares of Aspire Global and Aspire Global became a wholly owned subsidiary of the Company.
On July 11, 2022, Mr. Barak Matalon, a member of the Board and a Significant Shareholder of the Company, met in Tel Aviv with a representative of UBS, financial advisor to Parent. In the meeting, the representative of UBS inquired if Mr. Matalon would consider supporting a sale of the Company. Mr. Matalon responded that any offer related to a sale of the Company should be directed to the Board and that although the Board was focused on the Company’s long-term strategic plans and was not looking to sell the Company or initiate a marketing process, he believed that the Board would consider any credible formal offer if it were to receive one.
On October 12, 2022, while participating in the Global Gaming Expo trade show in Las Vegas, Mr. John E. Taylor Jr., Chair of the Board, Mr. Malul and Mr. Maimon attended a dinner with Mr. Trevor Croker, Chief Executive Officer of Parent and certain senior executives of Parent. The meeting did not have a specific agenda and there were no discussions regarding a potential sale of the Company to Parent.
On November 4, 2022, Mr. Croker had dinner in New York with Mr. Matalon and indicated his interest in exploring the potential acquisition of the Company by Parent. No specific offer price or terms were discussed at the dinner. Mr. Matalon responded to Mr. Croker that any offer or indication of interest should be addressed to the Board and that Mr. Matalon would inform Mr. Taylor of Parent’s interest in exploring the acquisition of the Company. Following the meeting, Mr. Matalon informed Mr. Taylor regarding Mr. Croker’s inquiry; Mr. Taylor, in turn, informed the other members of the Board.
On November 15, 2022, Mr. Croker called Mr. Taylor to inform him of his intention to send Mr. Taylor a non-binding indication of interest and to discuss its proposed terms. Following the call, Mr. Croker sent the letter to Mr. Taylor and noted that Parent’s proposal was based on publicly available information and, subject to due diligence and negotiations, contemplated the acquisition of the Company at a price per share of $23.00 to $24.00 in cash (the “Initial Proposal”). The closing price of the Company Shares on Nasdaq on that day was $17.82 per share.
On November 16, 2022, the Board held a virtual meeting, together with certain representatives of the Company’s management and Herzog, Fox & Ne’eman (“Herzog”), the Company’s external legal counsel. Mr. Taylor updated the Board on the receipt of the Initial Proposal and his conversation with Mr. Croker. In line with advice received from Herzog, Mr. Taylor then suggested that the Board form a transaction committee to evaluate the proposed transaction and to oversee any further discussions and negotiations with Parent regarding such transaction and its terms, with any final transaction proposal to be presented to and approved by the Board. The Board resolved to form a transaction committee (the “Committee”) that included Mr. Taylor, Mr. Laurent Teitgen and Ms. Lisbeth McNabb, all independent directors. Mr. Matalon and Mr. Rony Aran, a member of the Board and a Significant Shareholder, left the meeting and the Committee continued to hold a virtual meeting together with certain representatives of the Company’s senior management and Herzog. The Committee then considered a number of potential financial advisors and concluded to engage Stifel as financial advisor for the Company and the Committee because, among other things, the Committee considered Stifel to be a reputable investment banking firm with substantial experience advising companies in the gaming sector and in providing strategic advisory services in general, and because of Stifel’s familiarity with the Company and its business. After discussing the terms of the Initial Proposal, including a determination from Mr. Matalon (relayed in a conversation between Mr. Matalon and Mr. Taylor that took place prior to the Board meeting) that he will not support a sale of the Company at the price proposed by Parent, the Committee concluded that the offer substantially undervalued the Company and that the Committee would reject the offer communicated in the Initial Proposal.
On November 16, 2022, Mr. Taylor sent a letter to Mr. Croker rejecting the offer outlined in the Initial Proposal, noting that the Board concluded that the offer significantly undervalued the Company.
On November 22, 2022, the Committee and certain representatives of the Company’s management, Herzog and Stifel, met virtually to conduct further discussions regarding a potential sale of the Company. Mr. Taylor noted to the Committee that based on discussions between representatives of UBS and Stifel, Parent remained interested in exploring the potential acquisition of the Company despite its rejection of the Initial Proposal. Representatives of Stifel presented an analysis of the Initial Proposal, background information regarding Parent and a preliminary valuation framework for the Company based on estimated financial projections prepared by management of the Company, including a discussion of certain financial metrics of comparable companies, an analysis of precedent transactions, a discounted cash flow analysis, information regarding precedent transaction premiums and research analyst price targets for the Company Shares. The Committee also discussed, with the assistance of representatives of Herzog, certain procedures related to the work of the Committee and its advisors and authorized Stifel to conduct further discussions with UBS regarding the potential sale of the Company to Parent.
On November 23, 2022, representatives of Stifel and UBS held additional discussions regarding the potential acquisition of the Company by Parent, including regarding precedent transactions, premiums paid and comparable companies. The discussions did not include any specific references to the price that may be paid by Parent in an acquisition.
On December 7, 2022, Mr. Croker called Mr. Taylor to inform him of his intention to send the Board a revised indication of interest and to discuss the details of the proposal. Following the call, Mr. Croker sent a non-binding indication of interest to the Board, with a revised offer of $26.50 to $27.50 per share in cash (the “Revised Proposal”), subject to due diligence and negotiations. Representatives of UBS contacted representatives of Stifel to confirm receipt of the letter and to discuss certain terms and conditions that were included in the Revised Proposal. The closing price of the Company Shares on Nasdaq on that day was $13.83 per share.
On December 8, 2022, the Committee met virtually with representatives of management, Stifel and Herzog to discuss the Revised Proposal and a proposed response. Representatives of Stifel presented a summary of discussions held to date with Parent and its advisors, an analysis of the Revised Proposal and an updated version of the preliminary valuation framework previously presented to the Committee on November 22, 2022. The Committee discussed with representatives of management and Stifel the potential range of prices at which the Committee would support a sale of the Company. Mr. Taylor raised the possibility of inviting Parent’s senior management to a meeting with the Company’s senior management that would assist Parent in improving its offer. Following a discussion, the Committee instructed management and Stifel to prepare a response letter rejecting the Revised Proposal, but inviting Parent to conduct limited due diligence in which the Company would provide to Parent certain non-public information, which the Committee believed would support the Committee’s view that the offer provided in the Revised Proposal undervalued the Company and would assist Parent in improving its offer.
On December 12, 2022, the Committee held a virtual meeting with representatives of management, Stifel and Herzog to review and discuss the draft response letter, which was approved by the Committee following further discussions related to the Company’s valuation presented by representatives of Stifel. Certain business developments and their potential effect on the Company’s valuation were presented by representatives of management and discussed by the Committee. On the same day, Mr. Taylor called Mr. Croker and informed him of his intention to send Mr. Croker a response letter reflecting the Committee’s decision to reject the Revised Proposal and to propose to hold a limited due diligence session.
On December 13 2022, Mr. Taylor sent a letter to Mr. Croker on behalf of the Committee rejecting the Revised Proposal. In his letter, Mr. Taylor offered to provide Parent with the option to conduct a limited due diligence session with the Company and to receive access to certain non-public materials that could assist Parent in improving its offer. Over the ensuing three weeks the Company, Parent and representatives of Stifel and UBS continued discussions regarding the possibility of conducting such a session.
On January 5, 2023, the Committee met with representatives of senior management, Stifel and Herzog, to discuss recent communications with Parent and representatives of UBS, with respect to the proposed limited due diligence process. Mr. Taylor provided an overview of the discussions that were held with Parent and its representatives. The Committee discussed potential timelines and procedural considerations in connection with the proposed sale of the Company to Parent. Representatives of Stifel then presented an updated version of the preliminary valuation framework previously discussed in prior meetings with the Committee. Following a discussion, the Committee requested that Stifel continue discussions with UBS to try to facilitate the proposed limited diligence session. Over the ensuing three weeks, representatives of Stifel and UBS held various discussions regarding the possibility of Parent conducting a limited diligence session in order to assist Parent in improving its proposal, which concluded with Parent indicating its willingness to conduct the proposed session.
On January 18, 2023, Mr. Croker and Mr. Taylor held a discussion over the phone regarding Parent’s potential participation in the limited due diligence session proposed by the Company, in which Mr. Taylor confirmed to Mr. Croker, in response to a question from Mr. Croker, that the Company would not require Parent to increase its offer price in order to conduct the proposed session. On January 19, 2023, Mr. Croker informed Mr. Taylor in a phone call of Parent’s interest in conducting the proposed session and both Mr. Croker and Mr. Taylor agreed that the parties would enter into a non-disclosure agreement in order to facilitate the session.
On January 25, 2023, the Company and Aristocrat Technologies, Inc. entered into a Confidentiality Agreement in connection with the potential acquisition of the Company by Parent to allow Parent to gain access to certain limited non-public information of the Company.
On February 2, 2023 and February 3, 2023, senior executives of Parent and representatives of UBS and Stifel met in Israel with Mr. Malul, Mr. Maimon and other senior executives of the Company, to discuss certain non-public aspects of the Company’s business, including its business plan with respect to iLottery activities and the integration and further growth of the Aspire Core, Pariplay and BtoBet business lines. In these meetings, the Company presented Parent with certain management projections (for more information on the Company’s management projections, see the section of this shareholder circular entitled “—Company Management Projections”). Mr. Matalon attended the discussions on the evening of February 2 and morning of February 3.
On February 6, 2023, the Company entered into an engagement letter with Stifel.
On February 18, 2023, Mr. Croker and Mr. Taylor had a phone call to discuss Mr. Croker’s intention to send the Board a revised offer and the details of the offer. Following the call. Mr. Croker sent a non-binding letter to the Board with a revised offer price of $29.00 - $29.50 per share in cash (the “Final Proposal”), subject to further due diligence and negotiations. On February 17, 2023, the last trading day prior to receipt of the Final Proposal, the closing price of Company Shares on Nasdaq was $14.88 per share. Mr. Croker indicated in the Final Proposal that the offer included in the letter was the final one to be proposed by Parent. Parent included a number of conditions to its Final Proposal, including an exclusivity period of up to eight weeks, a support agreement signed by shareholders of the Company holding no less than 60% of the Company Shares, a “force the vote” structure that would allow Parent to bring the proposed sale of the Company to the vote of the Company’s shareholders even if an acquisition by Parent was no longer supported by the Board and a transaction structure that would allow Parent to acquire all of the Company Shares.
On February 22, 2023, the Committee held a meeting with representatives of management, Stifel, Latham & Watkins LLP, external legal counsel to the Company (“Latham”) and Herzog, to discuss the Final Proposal and for Stifel to present to the Committee an updated preliminary valuation analysis. Mr. Taylor updated the Committee that Mr. Matalon had indicated to him that Mr. Matalon and the other significant shareholders requested to enter into the Support Agreement by Parent would be willing to enter into such support agreement based on the high end of the price range offered by Parent in the Final Proposal. The Committee then discussed, with the assistance of representatives of Stifel, the range of prices per share. Representatives of Stifel presented an analysis of the Final Proposal and an updated preliminary valuation framework for the Company. The Committee concluded that it would be willing to support a price of $29.50 per share. The committee also discussed the implications of a “force the vote” structure, combined with the Support Agreement, which could prevent the Company from accepting a potential superior proposal. As part of the discussion, Mr. Taylor and representatives of Stifel advised the Committee that based on their conversations with Parent’s management and advisors, the combination of a “force the vote” and Support Agreement were non-negotiable conditions and that Parent would not proceed with exploring a potential acquisition without such protections nor would it agree to a “go shop” or other form of market check process by the Company. Representatives of Stifel and members of the Committee also discussed the low likelihood of a superior proposal given the attractive proposed offer price per share. Finally, representatives of Latham and Herzog discussed with the Committee, based on advice provided by Allen & Overy, the Company’s external Luxembourg legal counsel (“A&O”), the Board’s fiduciary duties under Luxembourg law. The Committee also considered Parent’s request for up to eight weeks of exclusivity and following a discussion with representatives of Stifel, Herzog and Latham, instructed the Company to propose a six-week exclusivity period to Parent, in order to allow sufficient time for Parent to complete a confirmatory diligence process and for the parties to finalize transaction documentation.
On February 22, 2023, Mr. Taylor called Mr. Croker to inform him of Mr. Taylor’s intention to send Mr. Croker a response letter and to explain certain of the terms that were expected to be included in the letter.
On February 23, 2023, Mr. Taylor sent a letter to Mr. Croker on behalf of the Committee indicating that the Committee would be willing to support an offer of $29.50 per share in cash and a six-week exclusivity arrangement. During the following weeks Parent, the Company and their respective advisors engaged in multiple discussions regarding a potential exclusivity agreement with Parent.
On March 5, 2023, the Board held a virtual meeting to discuss various matters regarding the Company. In the meeting, Mr. Taylor provided an update to the members of the Board on the status of the negotiations between the Company and Parent with respect to the sale of the Company and highlighted a number of key issues that were being discussed between the parties, including the transaction structure and due diligence process. In addition, Mr. Taylor informed the members of the Board of the discussions between the Company and Parent regarding an exclusivity period of six to eight weeks and, following a discussion, the members of the Board indicated they were supportive of the potential exclusivity arrangement. Accordingly, the Board authorized the Company to enter into an exclusivity arrangement with Parent on the terms that Mr. Taylor had presented.
On March 8, 2023, the Company engaged BDO to provide certain tax advice in connection with the proposed transaction.
On March 9, 2023, the Company and Aristocrat Technologies, Inc. entered into an exclusivity agreement related to the proposed Transaction, with a seven-week exclusivity period with an automatic extension of fifteen days that could be terminated by either party (the “Exclusivity Agreement”).
On March 19, 2023, the Company provided access to Parent and its advisors, including Freshfields Bruckhaus Deringer, Parent’s U.S. external legal counsel (“Freshfields”), H-F & Co, Parent’s Israeli external legal counsel, Arendt & Medernach SA, Parent’s external Luxembourg legal counsel, Conyers Dill & Pearman LLP, Parent’s external Cayman legal counsel (“Conyers”) and Duane Morris LLP and Mishcon de Reya LLP, Parent’s external regulatory legal counsels in connection with the transaction, to an online data room containing due diligence materials regarding the Company. Thereafter, and through May 14, 2023, senior executives and representatives of Parent, and its advisors conducted due diligence sessions with the Company’s management and its advisors and held discussions related to the transaction structure and required regulatory approvals. In addition, representatives of Latham, Herzog and Freshfields held ongoing discussions regarding potential structures for the transaction.
On March 23, 2023 and March 24, 2023, as part of a business visit to Australia, Mr. Malul visited Parent’s office in Sydney, participated in a number of diligence sessions with other members of the Company’s management and advisors participating virtually, and met with members of Parent’s senior management.
On March 29, 2023, the Company engaged Walkers (Europe) as its outside Cayman legal advisor.
On April 14, 2023, Ms. McNabb informed the Board of her resignation from the Board effective as of April 21, 2023. Ms. McNabb’s resignation was not a result of any disagreement with the Company’s policies or practices. Following Ms. McNabb’s resignation, Mr. Taylor and Mr. Teitgen remained the sole members of the Committee.
On April 14, 2023 and April 15, 2023, Mr. Malul, Mr. Maimon and an additional member of the Company’s senior management held meetings in London with Mr. Croker, Mr. Neil Chatfield, Chairman of the board of Parent and other members of Parent’s management. The purpose of the meetings was for Parent’s management to become more familiar with the Company’s management and business and no discussions were held related to price or other terms of the Business Combination Agreement or the Transactions.
During the ensuing weeks, representatives of Freshfields and Latham, on behalf of Parent and the Company, respectively, exchanged drafts and negotiated the terms and conditions of the Business Combination Agreement, Support Agreement and related documentation. Latham consulted with the Committee and members of the Company’s senior management on a regular basis in connection with the negotiations. These negotiations continued through May 14, 2023. During this process, the material open points for negotiation in the Business Combination Agreement included, among other things: the transaction structure; termination rights and the circumstances under which a termination fee would be payable by the Company to Parent; obligations and risk allocation with respect to regulatory approvals; treatment of equity awards of Company employees; the conditions to the closing of the Merger and the Continuation and the restrictions imposed on the Company by the interim operating covenants.
On April 26, 2023 and April 28, 2023, Mr. Taylor and Mr. Croker discussed over the phone a high-level approach to management retention incentives followed by additional communications on the same topic.
On May 1, 2023, the Committee held a meeting together with representatives of management and representatives of Herzog. The Committee discussed, among other matters, proposed transaction structures, the progress made with respect to the Business Combination Agreement and the transaction timeline.
On the same day, Parent initiated, after receiving the Board’s permission, discussions between Parent and Mr. Malul regarding potential future employment of Mr. Malul by Parent or its Affiliates following the consummation of the Merger. On May 3, 2023, Parent initiated, after receiving the Board’s permission, discussions between Parent and thirteen other employees of the Company regarding potential future employment of such employees of the Company by Parent or its Affiliates following the consummation of the Merger. The discussions between Parent and Mr. Malul and such other employees resulted in the entry of Parent, Mr. Malul and certain of such employees into non-binding letters with Parent and its affiliates indicating Parent’s intention to provide each such employee with long-form employment agreements prior to the completion of the Merger for continued employment with Parent or the Surviving Company (the “Commitment Letters”) as further described in the section of this shareholder circular entitled “—Interests of the Company’s Directors and Executive Officers in the Merger—Arrangements with Parent”. The Commitment Letters provide for: (i) base salary at least equal to base salary as of May 13, 2023 (with any potential increases to be discussed closer to completion of the Merger), (ii) recommendation to receive equity awards in Parent and (iii) participation in Parent’s employee benefit plans and programs, with terms substantially similar to those provided to the recipients of the Commitment Letters by the Company as of May 13, 2023.
Between May 3, 2023 and May 5, 2023, representatives of UBS and Stifel discussed the results of Parent’s due diligence process and whether any adjustments to the offer price were appropriate. On May 5, 2023, Mr. Croker confirmed to Mr. Taylor on a phone call Parent’s final offer of $29.50 per share in cash.
On May 9, 2023, the Board held a virtual meeting to discuss various matters of the Company. In the meeting, Mr. Taylor and Mr. Malul provided an update to the members of the Board on the status of the negotiations between the Company and Parent with respect to the sale of the Company, including with respect to the status of the Business Combination Agreement and the status of Parent’s diligence review process. On the same day, senior executives of Parent, other legal principals of the Company and Parent and representatives of Stifel, Latham, Herzog, UBS and Freshfields participated in a call to discuss and resolve open issues in the Business Combination Agreement, which included the timing of bring-down of certain closing conditions, the Company’s liability in the case of a terminated transaction and certain structural and procedural aspects of the Re-Continuation.
On May 9, 2023, the Company and Aristocrat Technologies, Inc. entered into an agreement to extend the exclusivity period provided in the Exclusivity Agreement to May 15, 2023 at 11:59 p.m. Eastern Time, to allow the Company and Parent to conclude the discussions and to complete preparation of final documentation required for entering into the Business Combination Agreement.
On May 10, 2023, the Company issued its earnings release for the three months ended March 31, 2023. The closing price of the Company Shares on Nasdaq on that day was $13.20 per share.
On May 11, 2023, the Committee conducted a call with representatives of Stifel, in which such representatives of Stifel discussed with the Committee Stifel’s preliminary fairness analysis.
On May 14, 2023, the Committee held a meeting with representatives of the Company’s management, Stifel, Latham and Herzog, in which representatives of Latham reviewed the main terms of the Business Combination Agreement and representatives of Herzog reviewed certain regulatory terms of the Business Combination Agreement. Representatives of Stifel then presented an overview of Stifel’s final Fairness Opinion. The Committee members discussed certain aspects of the proposed transaction including the Continuation, the required shareholder votes, termination and termination fee provisions, transaction protections and “fiduciary out” provisions. In addition, representatives of Herzog presented to the Committee certain terms of the Support Agreement. Finally, representatives of Latham reviewed the proposed board resolutions and the Board’s fiduciary duties in approving the proposed sale of the Company under Luxembourg law, based on advice provided by A&O. The Committee then concluded to recommend to the Board that is approve the Business Combination Agreement and the Transaction and other resolutions proposed to be adopted by the Board.
Immediately following the Committee meeting, on May 14, 2023, the Board held a meeting, together with certain representatives of the Company’s senior management, Stifel, BDO, Latham and Herzog. Representatives of the Company’s senior management provided an update to the Board on their discussions with representatives of Parent regarding the transaction. Representatives of Latham and Herzog provided an overview to the Board members of the Business Combination Agreement and Support Agreement and of their fiduciary duties under Luxembourg law, based on advice provided by A&O, in the context of a potential sale transaction and an overview of the proposed board resolutions for approving the Business Combination Agreement, the Merger and the Transactions. Representatives of Stifel reviewed with the Board Stifel’s valuation analyses of the Company, and rendered Stifel’s oral opinion, which was subsequently confirmed by delivery of its written opinion, dated May 14, 2023, to the Board that, as of such date, and based upon and subject to the factors and assumptions set forth in their respective opinions, the merger consideration to be paid to the holders of the Company Shares in the proposed Merger was fair, from a financial point of view, to such holders. For a detailed discussion of Stifel’s opinion, please see below under the section of this shareholder circular entitled “—Fairness Opinion of Stifel.” After further discussions with its financial and legal advisors and members of Company’s senior management, including discussing the advantages and risks of the proposed transaction (which are more fully described below under the sections of this shareholder circular entitled “—Reasons for the Merger and Recommendation of the Board and —Possible Uncertainties, Risks and Negative Factors Associated with Merger”), including the “force the vote” and Support Agreement structure that could prevent the Company from accepting a superior proposal (recognizing such a structure was a non-negotiable condition required by Parent) and the attractive offer price, the Board unanimously adopted resolutions approving the Merger, the execution of the Business Combination Agreement and the consummation of the Transactions and recommending that Company shareholders approve the Merger, the Business Combination Agreement and the consummation of the Transactions.
Following the Board meeting on May 14, 2023, the Company and Parent and their respective advisors proceeded to finalize the Business Combination Agreement.
On May 15, 2023, each of the Company, Parent and Merger Sub executed and delivered the Business Combination Agreement and each of the Company and Parent issued a press release announcing the execution of the Business Combination Agreement.
Reasons for the Merger and Recommendation of the Board
At its meeting on May 14, 2023 held to evaluate the proposed Transactions, the Board unanimously (i) determined that the Company’s entry into the Business Combination Agreement and consummation of the Transactions, including the Continuation and the Merger, are fair to, and in the best interests of, the Company and its shareholders; and (ii) authorized, declared advisable and approved in all respects, the Business Combination Agreement, the delivery and performance of the Business Combination Agreement and the consummation of the Transactions, upon the terms and subject to the conditions set forth in the Business Combination Agreement. The Board unanimously recommends that the Company’s shareholders vote:
| (1) | “FOR” the Merger Proposal; |
| (2) | “FOR” the Statutory Plan of Merger Proposal; and |
| (3) | “FOR” the Waiver Proposal. |
In evaluating the Business Combination Agreement and the Transactions, including the Continuation, the Merger and the Re-Continuation (if applicable), the Board consulted with the Company’s senior management, the Company’s financial advisor, Stifel, and the Company’s outside legal counsel, Latham & Watkins LLP and Herzog Fox & Ne’eman, and, in the course of reaching its determination to approve the terms of the Business Combination Agreement and the Transactions and to recommend, upon the terms and subject to the conditions set forth in the Business Combination Agreement, that the Company’s shareholders vote in favor of the approval of the Business Combination Agreement and the Transactions, the Board carefully considered a wide and complex range of factors, including the following non-exhaustive list of material factors and benefits of the Transactions, each of which the Board believed supported its determination and recommendation:
| • | Attractive Value. The belief of the Board that the Merger Consideration of $29.50 in cash per share represents a full and fair value for the Company Shares, taking into account the Board’s familiarity with the Company’s current and historical financial condition and results of operations and the Company’s business strategy, financial requirements, assets and business prospects. |
| • | Negotiations with Parent. The Board considered the course of negotiations between the Company and Parent, which resulted in an increase in the price that Parent was willing to pay to acquire the Company of $5.50 per share (from the $23.0 - $24.0 price range per share, initially offered by Parent to $29.50 per share) and the Board’s belief that, based on those negotiations, the Merger Consideration of $29.50 in cash per share represented the highest price per share that Parent was willing to pay and that the Business Combination Agreement contained the most favorable terms to the Company in the aggregate to which Parent was then willing to agree. |
| • | Premium to Current and Historical Trading Prices. The Board considered the fact that the Merger Consideration to be paid by Parent would provide the Company’s shareholders with the opportunity to receive an attractive premium over the market price of the Company Shares. The Board reviewed the current and historical market prices and trading information with respect to the Company Shares, including the fact that the Merger Consideration of $29.50 in cash per share represents a meaningful premium to those historical prices, including: |
| • | a premium of approximately 130% over $12.84 per share, the closing sale price on Nasdaq as of May 12, 2023, the last full trading day prior to the meeting of the Board; |
| • | a premium of approximately 121% over $13.33 per share, the volume-weighted average sale price on Nasdaq (the “VWAP”) during the 30-day trading period ended May 12, 2023; |
| • | a premium of approximately 104% over $14.45 per share, the VWAP during the 90-day trading period ended May 12, 2023; and |
| • | a premium of approximately 61% over $18.35 per share, the 52-week high closing sale price on Nasdaq as of May 12, 2023. |
| • | Cash Merger Consideration; Certainty of Value. The Board considered the fact that the Merger Consideration consists entirely of cash, which provides liquidity and certainty of value to the shareholders of the Company. The Board weighed the certainty of realizing a compelling value for the Company Shares by virtue of the Merger against the uncertain prospect that the trading value for the Company Shares would approach the Merger Consideration in the foreseeable future. Based upon its knowledge of, and familiarity with, the Company’s historical and current business, operations, prospects, business strategy, competitive position and the online lottery and gaming industry generally, the Board believed this certainty of value was compelling compared to the long-term value creation potential of the Company’s business, taking into account the risks of remaining independent and pursuing the Company’s current business and financial plans, including the risks and uncertainties associated with our business described in this shareholder circular and the other risks and uncertainties discussed in the Company’s public filings filed with or furnished to the SEC. |
| • | Stifel Opinion. The Board considered the financial analyses reviewed and discussed with the Board by representatives of Stifel, the Company’s financial advisor, as well as the oral opinion, which was subsequently confirmed by delivery of its written opinion, to the Board on May 14, 2023, that, as of such date, and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of the Company Shares (excluding Excluded Shares and Dissenting Shares (as defined in the Business Combination Agreement)) in the proposed Merger was fair, from a financial point of view, to such holders, which opinion was based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as further described under the heading “—Fairness Opinion of Stifel.” |
| • | Potential Strategic Alternatives. The Board considered possible alternatives to the acquisition by Parent reasonably available to the Company, including continuing to operate as a stand-alone company, and the potential benefits and risks to the Company’s shareholders of these alternatives, as well as the Board’s assessment that none of these alternatives was reasonably likely to create greater value for the Company’s shareholders within a reasonable period of time, taking into account the Company’s risks of execution as well as market, industry, business and competitive risks. |
| • | Risks Relating to Remaining a Stand-Alone Company. The Board considered the Company’s prospects and risks if the Company were to remain an independent company. The Board considered the Company’s current business and financial plans, including the risks and uncertainties associated with achieving and executing on the Company’s business and financial plans in the short and long-term, as well as the general risks of market conditions that could reduce the price of the Company Shares. Among the potential risks and uncertainties identified by the Board were: |
| • | we have concentrated customer base, and our failure to retain certain existing contracts with our customers could have a significant adverse effect on our business; |
| • | our inability to successfully integrate Aspire Global plc, or complete or integrate other future acquisitions, could limit our future growth or otherwise be disruptive to our ongoing business; |
| • | a reduction in discretionary consumer spending could have a material adverse impact on our business; |
| • | the growth of our business largely depends on our continued ability to procure new contracts; |
| • | we incur significant costs related to the procurement of new iLottery and iGaming contracts, which we may be unable to recover in a timely manner, or at all; and |
| • | intense competition exists in the iLottery and iGaming industries, and we expect competition to continue to intensify. |
| • | Other Potential Acquirers. The Board considered, in consultation with management and its financial and legal advisors, the potential risks and benefits of negotiating on an exclusive basis with Parent or commencing a process in which certain other third parties (potential strategic and financial acquirers) that could be potentially interested in pursuing a business combination with the Company (in addition to Parent) would be invited to submit indications of interest. The Board determined, in consultation with management and its financial and legal advisors, to proceed on an exclusive basis with Parent for the following primary reasons: |
| • | no third party was perceived to have the financial ability or willingness (including, in view of the potential synergies) to pay a purchase price for the Company in excess of Parent’s offer or to consummate a transaction on financial terms more favorable to the Company’s shareholders than Parent’s offer and that, as of the date of the Business Combination Agreement, the Company had not received any written proposals or indications of interest from any other potentially interested parties; |
| • | the solicitation of other third party interests would raise confidentiality concerns and potentially heighten the risk that the process would become known to the broader market, including customers, suppliers and/or employees; and |
| • | the commencement of a broader process may deter Parent and cause it to withdraw its offer, and the potential synergies with the Company and Parent’s financial ability, would likely result in a higher price per share premium than those that may be offered by potential acquirers. |
| • | Terms of the Business Combination Agreement. The Board considered all of the terms and conditions of the Business Combination Agreement, including the structure of the transaction, the all-cash form of the Merger Consideration, the Company’s right to specific performance to cause Parent to consummate the Merger, and other remedies available under the Business Combination Agreement, subject to certain conditions, and the customary nature of the representations, warranties, and the covenants and agreements of the parties. The Board further considered the course and nature of negotiations with Parent, which were conducted at arm’s length and during which the Board was advised by independent legal and financial advisors. These negotiations ultimately resulted in terms that (1) provide for an attractive premium over the then current trading price of the Company Shares; and (2) provide robust provisions designed to ensure, absent certain circumstances that would cause a closing condition not to be satisfied or allow termination of the Business Combination Agreement, that the transaction is completed. |
| • | Regulatory Approvals. The Board considered the relative likelihood of antitrust, gaming or other regulatory impediments to closing and the provisions of the Business Combination Agreement related to regulatory approvals, including the obligation of Parent and the Company to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws to consummate and make effective the Merger and to obtain as promptly as reasonably practicable all waiting period expirations or terminations, approvals, consents, clearances, registrations, permits and authorizations from any governmental authority or third party that are or may become necessary, proper or advisable to consummate the transactions contemplated by the Business Combination Agreement, including by supplying any information that may be required or reasonably requested by the applicable governmental authorities and agreeing to take all lawful actions necessary to obtain all approvals and clearances of the Merger or the transactions contemplated by the Business Combination Agreement (provided that Parent and its subsidiaries will not be required to take any actions that would, or would reasonably be expected to, individually or in the aggregate, have a material adverse impact on Parent, the Company, and their respective Subsidiaries (as defined in the Business Combination Agreement), taken as a whole). |
| • | Likelihood of Completion. The likelihood that the Merger will be completed, based on, among other things the absence of a financing condition or related contingencies with respect to the Merger Consideration, the relative likelihood of obtaining required regulatory approvals, the remedies available under the Business Combination Agreement to the Company in the event of various breaches by Parent, and Parent’s reputation in the gaming industry and its financial capacity to complete an acquisition of this size which the Board believed supported the conclusion that a transaction with Parent could be completed on a reasonable timetable for such a transaction and in an orderly manner. |
| • | Shareholder Approval. The Board considered that the Merger would be subject to the approval of the shareholders of the Company both prior to the Continuation and following the Continuation and that shareholders would be free to vote against the approval of the Business Combination Agreement and reject the Merger. However, the Board also considered that shareholders who hold Company Shares representing approximately 61% of the Company’s outstanding shares, executed the Support Agreement with Parent pursuant to which such shareholders irrevocably agreed to vote in favor of the Merger. |
Possible Uncertainties, Risks and Negative Factors Associated with Merger
The Board also considered a variety of uncertainties, risks and other potentially negative factors relating to the Continuation and the Merger and the other transactions contemplated by the Business Combination Agreement, including the following:
| • | No Shareholder Participation in Future Earnings or Growth. The Board considered the fact that if the Merger is consummated, holders of the Company Shares will receive the Merger Consideration in cash, the Company will no longer exist as an independent company, and accordingly, the shareholders of the Company will no longer participate in any future earnings or growth the Company may experience or any potential future appreciation in the value of the Company Shares, and will not participate in any potential future sale of the Company’s business to a third party. |
| • | Inability to Solicit Other Takeover Proposals and Force the Vote. The Business Combination Agreement includes a covenant prohibiting the Company from directly or indirectly soliciting, seeking, initiating, encouraging, facilitating or taking actions that would lead to other potential acquisition proposals. Moreover, under the Business Combination Agreement, even if the Company received an unsolicited Superior Proposal, at the election of Parent, the Company would be required to either (i) submit the Transactions to the vote of its shareholders, which, given the Support Agreement, would result in an approval by the shareholders or (ii) pay a termination fee to Parent of approximately $40.4 million. The Board also considered the termination fee of approximately $40.4 million to be paid by the Company to Parent under certain circumstances, the potential that such termination fee and the Support Agreement may deter other potential acquirers from making a competing offer for the Company, the impact of the termination fee on the Company’s ability to engage in certain transactions for 12 months from the date the Business Combination Agreement is terminated under certain circumstances, and the fact that the right afforded to Parent under the Business Combination Agreement to force a shareholder vote to approve the Business Combination Agreement together with the Support Agreement that provides Parent with substantial voting power at the meeting, may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, the Company. The Board recognized that the provisions in the Business Combination Agreement relating to these restrictions on takeover proposals, the payment of these fees and the ability to force a shareholder meeting were insisted upon by Parent as a condition to entering into the Business Combination Agreement. |
| • | Effect of Public Announcement. The effect of the public announcement of the Business Combination Agreement, including effects on the Company’s operations, the Company’s relationships with customers and suppliers, the trading price of the Company Shares, and the Company’s ability to attract and retain management and other key employees, including sales, operations, research and development, procurement, finance and other support function personnel, during the pendency of the transactions contemplated by the Business Combination Agreement, as well as the potential of litigation in connection with the Merger and other potential adverse effects on the financial results of the Company as a result of any related disruption in the Company’s business during the pendency of the transactions contemplated by the Business Combination Agreement, which is anticipated to be approximately 12 months following the execution of the Business Combination Agreement. |
| • | Timing and Regulatory Risks. The Board considered the amount of time it could take to complete the Merger, which is anticipated to be approximately 12 months following the execution of the Business Combination Agreement, including the possibility that the Merger may not be completed or that completion may be unduly delayed for reasons beyond the control of the Company or Parent, and including the risk that Parent might not receive the necessary regulatory approvals or clearances to complete the Merger or that governmental authorities could attempt to condition their approvals or clearances of the Merger on one or more of the parties’ compliance with certain terms or conditions which may cause one or more of the Merger Conditions not to be satisfied. |
| • | Opportunity Costs and Interim Operating Covenants. The Board considered restrictions on the conduct of the Company’s business during the interim period between signing and closing, which is anticipated to be approximately 12 months following the execution of the Business Combination Agreement, due to the pre-closing covenants in the Business Combination Agreement whereby the Company agreed that it will conduct its business, in all material respects, in the ordinary course of business consistent with past practice and, subject to specified exceptions, will not take a number of actions related to the conduct of its business without the prior written consent of Parent (in each case subject to specified exceptions), which may have an adverse effect on the Company, including a potential loss of customers or business, or reduction in business with current customers, and the Company’s ability to respond to changing market and business conditions in a timely manner or at all. |
| • | Risk Associated with Failure to Consummate the Merger. While the Board expects that the Merger will be consummated, there can be no assurance that all of the conditions to the consummation of the Merger will be satisfied, that the Merger will receive required regulatory approvals, that the Merger will be consummated in a timely manner or at all, even if the shareholders of the Company approve the Cayman Merger Proposal. The Board considered potential negative effects if the Merger is not consummated, including: |
| • | the Company’s senior management and other employees will have expended extensive time and effort to negotiate, implement and consummate the Merger, and their time may have been diverted from other important business opportunities and operational matters while working to implement the Merger; |
| • | the Company will have incurred significant transaction and opportunity costs during the pendency of the transactions, without compensation; |
| • | the Company’s continuing business relationships with customers, suppliers, and other business partners and employees, including key personnel, may be adversely affected; |
| • | the trading price of the Company Shares could be adversely affected; |
| • | the market’s perceptions of the Company and the Company’s prospects could be adversely affected; and |
| • | the Company’s business may be subject to significant disruption and decline. |
| • | Transaction Costs. The Board considered the fact that the Company has incurred and will continue to incur significant transaction costs and expenses in connection with the Merger, regardless of whether the Merger is consummated, including resulting from seeking governmental consents and regulatory approvals necessary for completion of the Merger. |
| • | Interests of Directors and Executive Officers. The Board considered the interests that the Company’s directors and executive officers may have in the transactions contemplated by the Business Combination Agreement as individuals that are in addition to, or that may be different from, the interests of our other shareholders, as described in more detail under the section of this shareholder circular entitled “—Interests of the Company’s Directors and Executive Officers in the Merger.” The Board also considered the recommendation made to the Board by the transaction committee formed by the Board, which included only independent directors, to approve the Merger, the Business Combination Agreement and the Transactions. |
| • | Taxable Nature of the Transaction. The Board considered the fact that the receipt of cash in connection with the Merger will be a taxable transaction to the shareholders of the Company for U.S. federal income tax purposes and to Israeli-resident shareholders for Israeli tax purposes. |
The Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the benefits that the Board expects the Company and its shareholders would achieve as a result of the Merger.
This discussion of the information and factors considered by the Board includes the principal positive and negative factors considered by the Board but is not intended to be exhaustive and may not include all of the factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger, and the complexity of these matters, the Board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the Merger and to make its recommendations to the Company’s shareholders. Rather, the Board viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Board may have given differing weights to different factors. The explanation of the Board’s reasons for the Transactions and all other information in this section may be forward-looking in nature and therefore should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” elsewhere in this shareholder circular.
The Board unanimously recommends that you vote (1) “FOR” the Merger Proposal; (2) “FOR” the Statutory Plan of Merger Proposal; and (3) “FOR” the Waiver Proposal.
The Re-Continuation
Unless otherwise agreed between Parent and the Company, if the Company has completed the Continuation but, together with Merger Sub, has not filed the Statutory Plan of Merger with the Cayman Registrar within the Continuation Period due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, then the Company shall effectuate the transfer of the Company’s statutory seat, registered office and seat of central administration from the Cayman Islands to Luxembourg in accordance with the Cayman Companies Act and Luxembourg Company Law and will take all actions necessary to (i) unwind the effects of the Continuation and transfer by way of continuation back to Luxembourg from the Cayman Islands as contemplated by the Business Combination Agreement and in accordance with the Cayman Companies Act and the Luxembourg Company Law, including convening the Second Luxembourg Shareholder Meeting to obtain shareholder approval and (ii) to resume the trading of the Company Shares on Nasdaq. For more information regarding the Re-Continuation, see the section of this shareholder circular entitled “The Business Combination Agreement—The Re-Continuation.” Following the completion of the Re-Continuation, the Company would remain a public company, the Company Shares would continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company would continue to file periodic reports with the SEC. However, the Company would remain subject to the terms and conditions of the Business Combination Agreement unless terminated in accordance with its terms.
After careful consideration of all the information and factors described above and in this shareholder circular, the Board unanimously determined that, if the Merger is not consummated within the Continuation Period due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, the Re-Continuation is in the best interests of the Company and its shareholders and is fair to the Company's shareholders.
The Board unanimously recommends that you vote (1) “FOR” the Re-Continuation Proposal; (2) “FOR” the Board Election Proposal; (3) “FOR” the Auditors Approval Proposal; and (4) “FOR” the Filing Authorization Proposal.
Company Management Projections
The Company has historically prepared and provided public guidance as to certain projected financial results for the upcoming quarter and the full fiscal year in its press releases announcing its financial results for the immediately preceding quarter. However, the Company does not, as a matter of course, make public long-term projections as to future revenues, earnings or other results given, among other reasons, the uncertainty of the underlying assumptions and estimates. In order to provide forward-looking business, operational and financial information in connection with the evaluation of the Merger by Parent, during the fourth quarter of 2022 and the first quarter of 2023, the Company developed certain unaudited prospective financial information including six-year financial forecasts, which are summarized in the table below (the “Company Management Projections”). The Company provided the Company Management Projections (a) to the Board, in connection with its evaluation of the Merger, (b) to Stifel for use in its financial analyses described in the section of this shareholder circular “—Fairness Opinion of Stifel”, and (c) to Parent, except for unlevered free cash flow information, in connection with Parent’s evaluation of the Merger. The inclusion of the Company Management Projections should not be regarded as an indication that any of the Company, Stifel, Parent or any other recipient of this information considered, or now considers, the Company Management Projections to be necessarily predictive of actual future results.
The Company Management Projections are unaudited and were developed solely in connection with the evaluation of the Merger and should be read together with the historical financial statements of the Company, which have been filed with or furnished to the SEC and incorporated in this shareholder circular, and the other information regarding the Company contained elsewhere or incorporated in this shareholder circular. See the section of this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.” Although presented with numerical specificity, the Company Management Projections were prepared in the context of numerous variables, estimates, and assumptions, including, among other variables, estimates, and assumptions, with respect to the future growth rate of revenue from existing customers, the amount of future revenue from new customers, royalty rates, margin expansion rate and expansion of international markets. Such variables, estimates, and assumptions are inherently uncertain and in many respects are beyond the control of the Company, and such assumptions may prove not to have been, or to no longer be, accurate. Although considered reasonable by the Company’s management and the Board as of the date of their preparation and approval prior to the date of the Business Combination Agreement, the Company Management Projections are subject to many risks and uncertainties. The Company Management Projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with the published guidelines of the SEC for preparation and presentation of prospective financial information.
The Company Management Projections do not purport to present financial information in accordance with IFRS. Moreover, certain of the financial measures included in the Company Management Projections are “non-IFRS financial measures.” These are financial performance measures that are not calculated in accordance with IFRS. These non-IFRS financial measures should not be viewed as a substitute for IFRS financial measures and may be different from non-IFRS financial measures used by other companies. Financial measures provided to a financial advisor are excluded from the definition of non-IFRS financial measures and therefore, are not subject to SEC rules regarding disclosures of non-IFRS financial measures, which would otherwise require a reconciliation of a non-IFRS financial measure to an IFRS financial measure. Accordingly, the Company has not provided a reconciliation of the financial measures included in the financial projections which have been provided to Stifel for purposes of use in financial analyses. Ziv Haft, Certified Public Accountants, Isr., BDO Member Firm, the Company’s independent registered public accounting firm, has not examined, compiled or otherwise applied or performed any procedures with respect to the Company Management Projections, nor has it expressed any opinion or given any form of assurance with respect to such information or their reasonableness, achievability or accuracy, and accordingly, such independent registered public accounting firm assumes no responsibility for them.
The Company Management Projections are based solely upon information available to the Company’s management as of the date they were prepared and approved by the Board prior to the date of the Business Combination Agreement and estimates and assumptions made by the Company’s management as of such date prepared. The Company Management Projections do not give effect to the Merger, including the impact of negotiating or executing the Business Combination Agreement, the expenses that have been and may be incurred in connection with consummating the Merger, any potential synergies that may be achieved by the combined company as a result of the Merger, the effect on the Company of any business or strategic decision or action that has been or will be taken as a result of the Business Combination Agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the Business Combination Agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the Merger. Further, the Company Management Projections do not take into account the effect on the Company of any possible failure of the Merger to occur.
For the foregoing reasons and considering that the Cayman Shareholder Meeting will be held a number of months after the Company Management Projections were prepared, as well as the uncertainties inherent in the forecasting of financial information, readers of this shareholder circular are cautioned not to place unwarranted reliance on the Company Management Projections set forth above. No one has made or makes any representation to any of the Company’s shareholders regarding the information included in the Company Management Projections, and the Company urges all shareholders of the Company to review its most recent SEC filings for a description of its reported financial results. See the section of this shareholder circular entitled “Where You Can Find More Information; Information Incorporated By Reference.”
NONE OF THE COMPANY, PARENT OR THEIR AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAVE MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR TO ANY OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE COMPANY MANAGEMENT PROJECTIONS, OR THAT FORECASTED RESULTS WILL BE ACHIEVED, AND, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, NONE OF THEM INTEND TO UPDATE OR OTHERWISE REVISE OR RECONCILE THE COMPANY MANAGEMENT PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE SUCH PROJECTIONS WERE GENERATED OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FORECASTS ARE SHOWN TO BE IN ERROR.
The below table is a summary of the Company Management Projections developed during the fourth quarter of 2022 and the first quarter of 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenue (1) | | $ | 242 | | | $ | 286 | | | $ | 363 | | | $ | 428 | | | $ | 508 | | | $ | 585 | |
| Adjusted EBITDA(2) | | $ | 81 | | | $ | 99 | | | $ | 127 | | | $ | 153 | | | $ | 186 | | | $ | 218 | |
| Unlevered Free Cash Flow(3) | | $ | 27 | | | $ | 56 | | | $ | 80 | | | $ | 89 | | | $ | 113 | | | $ | 141 | |
| (1) | Revenues of Aspire Global were accounted, for the purpose of the Company Management Projections, on a net basis based on management estimates, although prior to 2023, Aspire Global’s revenues were accounted on a gross basis due to the structure of Aspire Global’s customer contracts. The Company is currently in the process of modifying Aspire’s customer contracts to a form that would requires Aspire Global’s revenues to be accounted for on a net basis and as of January 1, 2023, contracts representing approximately 87% of Aspire Global’s 2022 revenues had been successfully modified. |
| (2) | “Adjusted EBITDA” is defined as net income adjusted for interest, taxes, depreciation and amortization and non-recurring acquisition cost related to the acquisition of Aspire Global. Adjusted EBITDA is a non-IFRS financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity. |
| (3) | “Unlevered Free Cash Flow” is defined as the Company’s after tax Non-IFRS net income, adding depreciation and amortization, subtracting capital expenditures and adjusting for expected cash flows from payments related to the promissory notes issued as part of the sale of Aspire’s B2C business to Esports Technologies, Inc. on November 30, 2021. Unlevered Free Cash Flow is a non-IFRS financial measure and should not be considered as an alternative to cash flow or as a measure of liquidity. |
Fairness Opinion of Stifel
Pursuant to an engagement letter dated February 6, 2023, the Company retained Stifel as its financial advisor in connection with the proposed Merger.
At a meeting of the Board held on May 14, 2023 to evaluate and approve the Continuation, the Merger and the other Transactions, Stifel rendered its oral opinion to the Board, confirmed by the delivery of a written opinion dated May 14, 2023, addressed to the Board to the effect that, as of the date of such opinion and subject to the qualifications, assumptions, exceptions and limitations set forth therein, the Merger Consideration to be received by holders of Company Shares (excluding Excluded Shares and Dissenting Shares (as defined in the Business Combination Agreement)) from Parent in the Merger pursuant to the Business Combination Agreement was fair to such holders, from a financial point of view.
The Board did not impose any limitations on Stifel with respect to the investigations made or procedures followed in rendering Stifel’s opinion. In selecting Stifel, the Board considered, among other things, the fact that Stifel is a reputable investment banking firm with substantial experience advising companies in the gaming sector and in providing strategic advisory services in general, and Stifel’s familiarity with the Company and its business. Stifel, as part of its investment banking services, is regularly engaged in the independent valuation of businesses and securities in connection with mergers, acquisitions, underwritings, sales and distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.
The full text of Stifel’s opinion is attached to this shareholder circular as Annex E and is incorporated herein by reference. The summary of Stifel’s opinion contained in this shareholder circular is qualified in its entirety by reference to the full text of Stifel’s opinion. The Company’s shareholders are encouraged to read Stifel’s opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered, limits of the review undertaken by Stifel, and qualifications contained in Stifel’s opinion.
In rendering its opinion, Stifel, among other things:
| (i) | discussed the Merger and related matters with the Company’s counsel and reviewed a draft copy of the Business Combination Agreement, dated May 13, 2023, such draft being the latest draft of the Business Combination Agreement provided to Stifel; |
| (ii) | reviewed the audited consolidated financial statements of the Company contained in its Annual Report on Form 20-F for the fiscal years ended December 31, 2022, December 31, 2021 and December 31, 2020 and the unaudited consolidated financial statements of the Company for the fiscal quarter ended March 31, 2023; |
| (iii) | reviewed and discussed with the Company’s management certain other publicly available information concerning the Company; |
| (iv) | reviewed certain non-publicly available information concerning the Company, including internal financial analysis and forecasts prepared by its management and held discussions with the Company’s senior management regarding recent developments; |
| (v) | reviewed and analyzed certain publicly available financial and stock market data relating to selected public companies that Stifel deemed relevant to its analysis; |
| (vi) | reviewed and analyzed certain publicly available information concerning the terms of selected merger and acquisition transactions that Stifel considered relevant to its analysis; |
| (vii) | reviewed the reported prices and trading activity of the equity securities of the Company; |
| (viii) | performed a discounted cash flow analysis; |
| (ix) | participated in certain discussions and negotiations between representatives of the Company and Parent; |
| (x) | conducted such other financial studies, analysis and investigations and considered such other information as Stifel deemed necessary or appropriate for purposes of its opinion; and |
| (xi) | took into account Stifel’s assessment of general economic, market and financial conditions and Stifel’s experience in other transactions, as well as Stifel’s experience in securities valuations and its knowledge of the Company’s industry generally. |
In rendering its opinion, Stifel relied upon and assumed, without independent investigation or verification, the accuracy and completeness of all of the financial and other information that was provided to Stifel by or on behalf of the Company, or that was otherwise reviewed by Stifel, and did not assume any responsibility for independently verifying any of such information. With respect to the financial forecasts and projections supplied to or discussed with Stifel by the Company, Stifel assumed, at the direction of the Company, that they were reasonably prepared on the basis reflecting the best currently available estimates and judgments of the management of the Company and the other matters covered thereby as to the future operating and financial performance of the Company and that they provided a reasonable basis upon which Stifel could form its opinion. All such forecasted or projected financial information is based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions and, in particular, assumptions regarding regulatory matters affecting the iLottery, digital sports betting and casino offerings of the Company. Accordingly, actual results could vary significantly from those set forth in such forecasted or projected financial information. Stifel relied on this forecasted or projected information without independent verification or analysis and does not in any respect assume any responsibility for the accuracy or completeness thereof. Stifel expresses no opinion as to such forecasts or projections or the assumptions on which they were made.
Stifel also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of the Company since the date of the last financial information of the Company made available to Stifel, except as disclosed to Stifel by or on behalf of the Company or its advisors in connection with the Transactions. Stifel did not make or obtain any independent evaluation, appraisal or physical inspection of the Company’s assets or liabilities, nor was Stifel furnished with any such evaluation or appraisal. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates are inherently subject to uncertainty, Stifel assumes no responsibility for their accuracy.
Stifel assumed, with the consent of the Board, that there are no factors that would materially delay or subject to any material adverse conditions any necessary regulatory or governmental approval and that all conditions to the Transactions will be satisfied or waived. In addition, Stifel assumed that the definitive Business Combination Agreement will not differ materially from the draft Stifel reviewed. Stifel also assumed that the Transactions will be consummated substantially on the terms and conditions described in the Business Combination Agreement, without any waiver of material terms or conditions by the Company or any other party and without any adjustment to the Merger Consideration, and that obtaining any necessary regulatory approvals or satisfying any other conditions for consummation of the Transactions will not have an adverse effect on the Company, Parent, the Continuation or the Merger. Furthermore, Stifel assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the Business Combination Agreement are true and correct and that each such party will perform all of the covenants and agreements required to be performed by it under the Business Combination Agreement without being waived. Stifel assumed that the Transactions will be consummated in a manner that complies with the applicable provisions of the Securities Act, the Exchange Act, and all other applicable federal, state and foreign statutes, rules and regulations. Stifel further assumed that the Company has relied upon the advice of its counsel, independent accountants and other advisors (other than Stifel) as to all legal, financial reporting, tax, accounting and regulatory matters with respect to the Company, the Business Combination Agreement, the Continuation, the Merger and the other Transactions.
Stifel’s opinion is limited to the fairness of the Merger Consideration to the holders of Company Shares (excluding Excluded Shares and Dissenting Shares), from a financial point of view, and does not address any other terms, aspects or implications of the Transactions, including, without limitation, the form or structure of the Continuation or the Merger, any consequences of the Transactions on the Company, its shareholders, creditors or any other constituency or otherwise, or any terms, aspects or implications of any voting, support, shareholder or other agreements, arrangements or understandings contemplated or entered into in connection with the Transactions or otherwise. Stifel’s opinion also does not consider, address or include: (i) any other strategic alternatives currently (or which have been or may be) contemplated by the Board or the Company; (ii) the legal, tax or accounting consequences of the Transactions on the Company or the holders of the Company Shares (excluding Excluded Shares and Dissenting Shares); (iii) the fairness of the amount or nature of any compensation to any of the Company’s officers, directors or employees, or class of such persons, relative to the compensation to the holders of the Company’s securities; (iv) the treatment of, or effect of the Transactions on, or the fairness of the consideration to be received by, holders of any class of securities of the Company other than the Company Shares (excluding Excluded Shares and Dissenting Shares), or any class of securities of any other party to any Transaction contemplated by the Business Combination Agreement; or (v) whether Parent has sufficient cash, available lines of credit or other sources of funds to enable it to pay the Merger Consideration. Furthermore, Stifel did not express any opinion as to the prices, trading range or volume at which the Company’s or Parent’s securities will trade following public announcement or consummation of the Continuation or the Merger.
Stifel’s opinion is necessarily based on economic, market, financial and other conditions as they existed on, and on the information made available to Stifel by or on behalf of the Company or its advisors, or information otherwise reviewed by Stifel, as of the date of its opinion. It is understood that subsequent developments may affect the conclusion reached in Stifel’s opinion and that Stifel does not have any obligation to update, revise or reaffirm its opinion, except in accordance with the terms and conditions of Stifel’s engagement letter agreement with the Company. Stifel’s opinion is for the information of, and directed to, the Board (solely in its capacity as such) for its information and assistance in connection with its consideration of the financial terms of the Merger. Stifel’s opinion does not constitute a recommendation to the Board as to how the Board should vote on the Merger or any other matter or to any shareholder of the Company as to how any such shareholder should vote at any shareholders’ meeting at which the Continuation or the Merger is considered, or whether or not any shareholder of the Company should enter into a voting, support, shareholders’ or affiliates’ agreement with respect to the Continuation or the Merger, or exercise any dissenters’ or appraisal rights that may be available to such shareholder. In addition, the opinion does not compare the relative merits of the Transactions with any other alternative transactions or business strategies which may have been available to the Company and does not address the underlying business decision of the Board or the Company to proceed with or effect the Transactions.
Stifel does not advise on legal, tax, regulatory or bankruptcy matters. Stifel did not consider any potential legislative or regulatory changes currently being considered or recently enacted by the United States Congress, the SEC, or any other regulatory bodies, or any changes in accounting methods or generally accepted accounting principles that may be adopted by the SEC or the Financial Accounting Standards Board. Stifel’s opinion is not a solvency opinion and does not in any way address the solvency or financial condition of the Company, Parent, Merger Sub or any other party.
Stifel’s fairness opinion committee approved the issuance of Stifel’s opinion. Stifel’s opinion may not be published or otherwise used, summarized or referred to, nor shall any public reference to Stifel be made, without Stifel’s prior written consent, except in accordance with the terms and conditions of Stifel’s engagement letter agreement with the Company and except that Stifel’s opinion may be quoted in full in this shareholder circular.
The following represents a summary of the material financial analyses performed by Stifel in connection with its opinion. Some of the summaries of financial analyses performed by Stifel include information presented in tabular format. In order to fully understand the financial analyses performed by Stifel, you should read the tables together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the information set forth in the tables without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by Stifel.
Except as otherwise noted, the information utilized by Stifel in its analyses, to the extent that it was based on market data, is based on market data as it existed on or before May 14, 2023 and is not necessarily indicative of current market conditions. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which any securities may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions and other factors that influence the price of securities.
Selected Comparable Companies Analysis
Stifel compared the Company, from a financial point of view, to 11 selected publicly traded companies in the gaming industry, which Stifel deemed to be relevant based on their business profiles and financial metrics, including product portfolios, end-markets, customers, size, growth and profitability. Stifel compared the Company’s estimated calendar year 2023 and estimated calendar year 2024 financial metrics, as provided by the Company’s management, to estimated calendar year 2023 and estimated calendar year 2024 financial metrics of these 11 selected companies, obtained from available public sources. Stifel believes that the group of companies listed below has business models similar to those of the Company, but noted that none of these companies is identical to the Company and none has the same management, composition, size, operations, financial profile or combination of businesses as the Company:
| • | Gaming Innovation Group Inc. |
| • | Jumbo Interactive Limited |
| • | La Française des Jeux Société anonyme |
| • | Organization of Football Prognostics S.A. |
| • | Pollard Banknote Limited |
| • | The Lottery Corporation Limited |
Based on this information, Stifel calculated and compared multiples of enterprise value (“EV”), which Stifel defined as fully-diluted equity value using the treasury stock method, plus debt, preferred stock and minority interests, less cash and cash equivalents, to estimated calendar years 2023 and 2024 adjusted earnings before one-time charges, interest, taxes, depreciation and amortization (“EV / EBITDA”) for the Company and the selected companies.
The following table sets forth the multiples indicated by this analysis, including the range of selected multiples relative to the selected companies, which reflects the first quartile, median, mean and third quartile metrics of such companies, and the multiples implied by the Merger:
| | | | |
| | | | | | | |
| 1st Quartile | | | 8.0 | x | | | 7.7 | x |
| Mean | | | 12.6 | x | | | 10.7 | x |
| Median | | | 11.3 | x | | | 10.7 | x |
| 3rd Quartile | | | 17.9 | x | | | 13.9 | x |
This analysis resulted in the following ranges of implied equity values per Company Share:
| | | | |
| | | | | | | |
| 1st Quartile | | $ | 13.36 | | | $ | 16.51 | |
| 3rd Quartile | | $ | 36.81 | | | $ | 34.53 | |
Stifel noted that the Merger Consideration falls within the range of implied equity values per share implied by this analysis.
No company utilized in the selected company analysis is identical to the Company. In evaluating the selected companies, Stifel made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the Company’s control, such as the impact of competition on its business and the industry generally, industry growth and the absence of any adverse material change in the Company’s financial condition and prospects or the industry or in the financial markets in general. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using peer group data.
Selected Comparable Transaction Analysis
Based on public information available to Stifel, Stifel calculated and compared the multiples of EV to last 12 months (“LTM”) EBITDA for the Company implied in the Merger to the corresponding multiples implied in the following 16 precedent transactions involving Global B2B Sports Betting / Gaming and Lottery companies that Stifel deemed to be reasonably analogous to the business of the Company or aspects thereof:
| | | | | | | | Enterprise Value / EBITDA | |
| Oct-22 | | KickerTech | | Betsson AB | | $ | 18 | | | 13.5 | x |
| Sep-22 | | Shape Games | | Kambi Group plc | | | 39 | | | 6.9 | x |
| Jun-22 | | Nolimit City | | Evolution AB (publ) | | | 212 | | | 8.7 | x |
| Apr-22 | | iSoftbet | | International Game Technology plc | | | 174 | | | 20.0 | x |
| Jan-22 | | Aspire Global Ltd | | NeoGames S.A. | | | 480 | | | 13.9 | x |
| Dec-21 | | Sportnco Gaming SAS | | Gaming Innovation Group Inc. | | | 79 | | | 14.0 | x |
| Oct-21 | | Scientific Games Lottery | | Brookfield Business Partners | | | 5,825 | | | 12.5 | x |
| Jul-21 | | Relax Gaming | | Kindred Group plc | | | 178 | | | 14.3 | x |
| Apr-21 | | Big Time Gaming | | Evolution AB (publ) | | | 262 | | | 7.6 | x |
| Sep-20 | | BtoBet | | Aspire Global Ltd | | | 24 | | | 9.6 | x |
| Jun-20 | | NetEnt | | Evolution AB (publ) | | | 2,349 | | | 25.6 | x |
| Sep-19 | | Red Tiger | | NetEnt | | | 247 | | | 11.1 | x |
| Jun-19 | | Pariplay | | Aspire Global Ltd | | | 15 | | | 7.7 | x |
| Oct-17 | | NYX Gaming Group | | Scientific Games | | | 631 | | | 12.6 | x |
| Mar-17 | | INNOVA Gaming Group | | Pollard Banknote Limited | | | 37 | | | 5.9 | x |
| Oct-16 | | Tatts Group Ltd. | | Tabcorp Holdings Ltd. | | | | | | | |
| 1stQuartile | | | | | | | | | | 8.4 | x |
| Mean | | | | | | | | | | 12.4 | x |
| Median | | | | | | | | | | 12.5 | x |
| 3rdQuartile | | | | | | | | | | | |
The following table sets forth the multiples indicated by this analysis and the multiples implied by the Merger. The range of multiples reflects the first quartile, median, mean and third quartile metrics of the precedent transactions:
| | | | |
| 1st Quartile | | | 8.4 | x |
| Mean | | | 12.4 | x |
| Median | | | 12.5 | x |
| 3rd Quartile | | | 14.1 | x |
Based on its review of the precedent transactions, Stifel applied selected multiples to the Company’s estimated calendar year 2023 EBITDA, as provided by the Company’s management. This analysis resulted in the following ranges of implied equity values per Company Share:
| | | | |
| 1st Quartile | | $ | 14.30 | |
| 3rd Quartile | | $ | 27.64 | |
Stifel noted that the Merger Consideration is greater than the high end of the range of implied equity values per share implied by this analysis.
No transaction used in the precedent transactions analysis is identical to the Merger. Accordingly, an analysis of the results of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved in the precedent transactions, as well as the disparate general business, economic, market and financial conditions that existed at the time the precedent transactions were consummated and other factors that could affect the public trading values of the companies involved in the precedent transactions, which, in turn, affect the enterprise value and equity value of the companies involved in the transactions to which the Merger is being compared.
Discounted Cash Flow Analysis
A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset or set of assets by calculating the “present value” of estimated future cash flows of the asset or set of assets. Stifel used the terminal multiple method and the perpetuity growth method to conduct discounted cash flow analyses of the Company’s projected cash flows. In conducting these analyses, Stifel assumed that the Company would perform in accordance with the projections that were supplied by management and utilized by Stifel.
Terminal Multiple Method
Stifel first estimated the terminal value of the Company’s projected cash flows by applying a range of terminal multiples Stifel deemed relevant to the Company’s estimated calendar year 2028 EBITDA, which multiples ranged from 8.0x to 11.0x based on an analysis of the range determined in the section of this shareholder circular entitled “—Selected Comparable Companies Analysis.” Stifel calculated projected unlevered free cash flow, defined as net operating profit after taxes adjusted for depreciation and amortization, capital expenditures and investment in net working capital, from calendar year 2024 through calendar year 2028 using management’s forecasts and discounted these cash flows and the terminal value to present values using discount rates of 11.0% to 15.0%, based on Stifel’s estimation of the Company’s weighted average cost of capital, which was calculated inclusive of certain Company-specific inputs, including cost of debt, cost of equity and a market capitalization size risk premium. This analysis indicated a range of enterprise values which Stifel then decreased by the Company’s net debt, defined as interest-bearing debt and other financial obligations less cash and equivalents, to calculate a range of equity values. Stifel then divided these equity values by fully-diluted shares outstanding using the treasury stock method and calculated implied equity values per share ranging from $29.19 to $46.42, the high-end of which range was the equity value per share derived using the high-end terminal multiple and applying the low-end discount rate, and the low-end of which range was the equity value per share derived using the low-end terminal multiple and applying the high-end discount rate. Stifel noted that the Merger Consideration falls within the range of implied equity values per share implied by this analysis.
Perpetuity Growth Method
Stifel first estimated the terminal value of the Company’s projected cash flows by applying a range of perpetuity growth rates Stifel deemed relevant to the Company’s estimated calendar year 2028 free cash flow, which growth rates ranged from 2.0% to 3.5%. Stifel calculated projected unlevered free cash flow, defined as net operating profit after taxes adjusted for depreciation and amortization, capital expenditures and investment in net working capital, from calendar year 2024 through calendar year 2028 using Company management’s forecasts and discounted these cash flows and the terminal value to present values using discount rates of 11.0% to 15.0%, based on Stifel’s estimation of the Company’s weighted average cost of capital. This analysis indicated a range of enterprise values which Stifel then decreased by the Company’s net debt, defined as interest-bearing debt and other financial obligations less cash and equivalents, to calculate a range of equity values. These equity values were then divided by fully-diluted shares outstanding using the treasury stock method to calculate implied equity values per share ranging from $19.93 to $38.70, the high-end of which range was the equity value per share derived using the high-end growth rate and applying the low-end discount rate, and the low-end of which range was the equity value per share derived using the low-end growth rate and applying the high-end discount rate. Stifel noted that the Merger Consideration falls within the range of implied equity values per share implied by this analysis.
The foregoing description is a summary of the material financial analyses performed by Stifel in arriving at its opinion. The summary alone does not constitute a complete description of the financial analyses Stifel employed in reaching its conclusions. None of the analyses performed by Stifel were assigned a greater significance by Stifel than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Stifel. No methodology employed by Stifel can be viewed individually, and viewing any methodology employed by Stifel in isolation could create a misleading or incomplete view of the financial analyses performed by Stifel. Additionally, no company or transaction used in any analysis as a comparison is identical to the Company or the Merger, and they all differ in material ways. Accordingly, an analysis of the results described above is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values of the selected companies or transactions to which they are being compared. Stifel used these analyses to determine the impact of various operating metrics on the implied enterprise values and implied per share equity value of the Company. Each of these analyses yielded a range of implied enterprise values and implied per share equity values, and therefore, such implied enterprise value ranges and implied per share equity values developed from these analyses were viewed by Stifel collectively and not individually. Stifel made its determination as to the fairness, from a financial point of view, to the holders of the Shares of the Merger Consideration to be received by such holders of the Company Shares (excluding Excluded Shares and Dissenting Shares) from Parent in the Merger pursuant to the Business Combination Agreement, as of the date of Stifel’s opinion, on the basis of its experience and professional judgment after considering the results of all of the analyses performed.
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Stifel considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Stifel believes that the summary provided and the analyses described above must be considered as a whole and that selecting portions of these analyses, without considering all of them, would create an incomplete view of the process underlying Stifel’s analyses and Stifel’s opinion; therefore, the range of valuations resulting from any particular analysis described above should not be taken to be Stifel’s view of the actual value of the Company.
Miscellaneous
The Company paid Stifel a fee, which is referred to in this shareholder circular as the opinion fee, of $1,000,000 for providing the Stifel opinion to the Board (not contingent upon the consummation of the Merger), which is fully creditable against the transaction fee described below. The Company has also agreed to pay Stifel a fee, which is referred to in this shareholder circular as the transaction fee, for its services as financial advisor to the Company in connection with the Merger based upon the aggregate consideration payable in the Merger (which as of the day prior to the date of this shareholder circular, and net of the opinion fee described above, is estimated to be approximately $9.8 million), which transaction fee is contingent upon the completion of the Merger. Stifel will not receive any other significant payment or compensation contingent upon the successful consummation of the Merger. In addition, the Company agreed to reimburse Stifel for certain expenses in connection with its engagement, subject to certain limitations, and to indemnify Stifel for certain liabilities arising out of its engagement.
As the Board was aware, Stifel acted as an underwriter in connection with the Company’s secondary offering of ordinary shares in September 2021 and as a financial advisor to the Company in connection with the Company’s acquisition of Aspire Global plc in 2022, for which the Company paid Stifel a total fee of approximately $6,800,000. Other than such services, there were no material relationships that existed during the two years prior to the date of Stifel’s opinion or that were mutually understood to be contemplated in which any compensation was received or was intended to be received as a result of the relationship between Stifel and any party to the Merger.
As the Board was also aware, Stifel may seek to provide investment banking services to the Company, Parent or their respective affiliates in the future, for which Stifel would seek customary compensation. In the ordinary course of its business, Stifel, its affiliates and their respective clients may transact in the securities of each of the Company or Parent and may at any time hold a long or short position in such securities.
Interests of the Company’s Directors and Executive Officers in the Merger
When considering the recommendation of the Board that you vote to approve the Cayman Meeting Proposals, you should be aware that the Company’s directors and executive officers may have interests in the Merger that are different from, or in addition to, those of the Company’s shareholders more generally, as described below. The Board was aware of these interests during its deliberations on the merits of the Merger and in deciding to recommend that Company shareholders vote to approve the Cayman Meeting Proposals.
The Company’s executive officers are the same individuals who are disclosed as “senior management” in the Company’s most recent Annual Report on Form 20‑F for the year ended December 31, 2022, which was filed with the SEC on April 28, 2023, except for Mr. Raviv Adler who was replaced as Chief Financial Officer by Mr. Motti Gil, effective August 1, 2023 (for more information see the Company’s Form 6-K, dated June 27, 2023).
Treatment of Company Equity Awards
The Company equity awards held by the Company’s non‑employee directors and executive officers will be treated as described below in the section of this shareholder circular entitled “The Business Combination Agreement—Interests of the Company’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards.” As described in that section, Company RSUs that have vested as of immediately prior to the Merger Effective Time or would vest within 30 days thereafter (which will include all Company RSUs held by the Company’s non‑employee directors and certain Company RSUs held by the Company’s executive officers) will be cancelled in exchange for cash at the Merger Effective Time. Company Options (as defined in the Business Combination Agreement) that are unexpired, unexercised and outstanding, and have vested as of immediately prior to the Merger Effective Time, or would vest within 30 days thereafter (which will include all Company Options held by the Company’s non-employee directors and certain Company Options held by the Company’s executive officers) will be cancelled in exchange for cash at the Merger Effective Time. The estimated aggregate amount that would be payable to the Company’s non-employee directors in settlement of their outstanding approximately 66,291 unvested Company RSUs and Company Options (as defined in the Business Combination Agreement) is approximately $1,955,585. The estimated aggregate amount that would be payable to the Company’s executive officers in settlement of their outstanding approximately 30,000 Company RSUs otherwise scheduled to vest within 30 days following the Merger Effective Time is approximately $885,000. The estimated aggregate amount that would be payable to the Company’s executive officers in settlement of their outstanding approximately 454,941 Company Options (as defined in the Business Combination Agreement) that will have vested or are otherwise scheduled to vest within 30 days following the Merger Effective Time is approximately $13,420,759. The amounts in this paragraph are determined using the number of outstanding and unvested Company equity awards held by the non-employee directors and executive officers as of Mach 31, 2024, using a value of $29.50 per Company Share, and assuming that the Merger Effective Time occurs on April 25, 2024.
Severance Benefits
The Company’s executive officers working in Israel are generally entitled to pay in lieu of notice in the event that the Company terminates their employment without the full notice period under their respective employment agreements (generally 30-90 days). However, no pay in lieu of notice is paid in the event of certain terminations by the Company for cause. With respect to several executives, the Company is making ongoing contributions to the employees’ severance fund on account of any severance obligation and upon the termination of their employment by the Company (save for in case of termination for cause) they may receive severance shortfall. For several executives, the Company’s severance contributions to the employees’ severance fund are instead of any severance payment (fully or partly).
Indemnification and Insurance
From and after the Merger Effective Time, the Surviving Company will, and Parent will cause the Surviving Company, to (i) indemnify and hold harmless each individual who at the Merger Effective Time is, or at any time prior to the Merger Effective Time was, a director or officer of the Company or of a subsidiary of the Company (each, an “Indemnitee” and, collectively, the “Indemnitees”) with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with any action (whether civil, criminal, administrative or investigative), whenever asserted, based on or arising out of, in whole or in part, (A) the fact that an Indemnitee was a director or officer of the Company or such subsidiary or (B) acts or omissions by an Indemnitee in the Indemnitee’s capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary (including in connection with serving at the request of the Company or such subsidiary as a director, officer, employee, agent, trustee or fiduciary of another person (including any employee benefit plan)), in each case under clause (A) or (B), at, or at any time prior to, the Merger Effective Time (including any action relating in whole or in part to the Business Combination Agreement and the Transactions or relating to the enforcement of any indemnification or advancement right of any Indemnitee), to the fullest extent permitted under applicable Law, pursuant to the Company’s Existing Articles and, following the Continuation Effective Time, in the Continuation Articles and in any written agreement in existence as of the date of the Business Combination Agreement and previously made available to Parent providing for indemnification between the Company and any Indemnitee and (ii) assume all obligations of the Company and such subsidiaries to the Indemnitees in respect of indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Merger Effective Time as provided in the Company’s Existing Articles and, following the Continuation Effective Time, in the Continuation Articles, and in any written agreement in existence as of the date of the Business Combination Agreement providing for indemnification between the Company and any Indemnitee and previously made available to Parent.
Without limiting the foregoing, Parent, from and after the Merger Effective Time, will cause, unless otherwise required by Law, the Continuation Articles to contain provisions no less favorable to the Indemnitees with respect to indemnification, advancement of expenses and exculpation of the Indemnitees than are set forth as of the date of the Business Combination Agreement in the Existing Articles, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees.
Further, the Business Combination Agreement provides that prior to the Merger Effective Time, the Company shall obtain and fully pay for “tail” insurance policies with a claims period of at least six (6) years from and after the Merger Effective Time from an insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance (collectively, “D&O Insurance”) with benefits and levels of coverage at least as favorable as the Company’s existing policies with respect to matters existing or occurring at or prior to the Merger Effective Time (including in connection with the Business Combination Agreement or the transactions or actions contemplated thereby) (the “D&O Tail Policy”); provided, however that the Company shall not be required to pay an annual premium for the D&O Tail Policy in excess of three-hundred percent (300%) of the annual premiums paid by the Company prior to the date of the Business Combination Agreement in respect of the D&O Insurance. If the Company for any reason fails to obtain such “tail” insurance policies as of the Merger Effective Time, the Surviving Company shall, and Parent shall cause the Surviving Company to, continue to maintain in effect for a period of at least six (6) years from and after the Merger Effective Time the D&O Insurance in place as of the date of the Business Combination Agreement with benefits and levels of coverage at least as favorable as provided in the Company’s existing policies as of the date of the Business Combination Agreement, or the Surviving Company shall, and Parent shall cause the Surviving Company to, purchase comparable D&O Insurance for such six-year period with benefits and levels of coverage at least as favorable as provided in the Company’s existing policies as of the date of the Business Combination Agreement; provided, however that none of the Company, Parent or the Surviving Company shall be required to expend for such policies, an annual premium amount in excess of three-hundred percent (300%) of the annual premiums paid by the Company prior to the date of the Business Combination Agreement in respect of the D&O Insurance; and, in the event that the premium for such insurance coverage exceeds such amount, the Surviving Company shall obtain a policy with the greatest coverage available for a cost not exceeding such amount.
Employee Benefits Following the Merger Effective Time
The Business Combination Agreement provides that Parent will, or will cause the Surviving Company to, provide each employee of the Company or its subsidiaries who continues to be employed by Parent or the Surviving Company or any of their respective subsidiaries following the Merger Effective Time with certain compensation and benefits during the period commencing at the Merger Effective Time and ending on the first anniversary of the Merger Effective Time, as described below in the section of this shareholder circular entitled “The Business Combination Agreement—Employee Benefits Following the Merger Effective Time.”
Arrangements with Parent
As of the date of this shareholder circular, several of the Company’s officers have entered into the Commitment Letters. The Commitment Letters provide for: (i) base salary at least equal to base salary as of May 13, 2023 (with any potential increases to be discussed closer to the Closing), (ii) recommendation to receive equity awards in Parent and (iii) participation in Parent’s employee benefit plans and programs, with terms substantially similar to those provided to the recipients of the Commitment Letters by the Company as of May 13, 2023. Prior to or following the Merger Effective Time, certain of our officers and directors may have discussions, or may enter into further agreements with, Parent or its affiliates regarding individualized compensation arrangements with, or the right to purchase or participate in the equity of, Parent or one or more of its affiliates.
Financing of the Merger
The Merger is not conditioned on Parent obtaining the proceeds of any financing. The Company anticipates that the total funds necessary to complete the Transactions, including the Merger, will be approximately $1.2 billion. Parent is able to fund the acquisition through cash on hand, and Parent and Merger Sub have represented to the Company that they will have all of the funds available as and when needed that are necessary to consummate the Merger and to perform their respective obligations under the Business Combination Agreement. These funds include the funds needed to:
| • | pay the Company’s shareholders the amounts due under the Business Combination Agreement; |
| • | make payments in respect of certain of the Company’s outstanding equity‑based awards pursuant to the Business Combination Agreement in exchange for cancellation of such awards; and |
| • | make payments in respect of certain outstanding debt of the Company. |
The Continuation and the Merger Effective Time
The Company will effectuate the Continuation as promptly as practicable on the fifth business day following the satisfaction or waiver, in accordance with the Business Combination Agreement, of all of the Continuation Conditions (as described in the section of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Effectuation of the Continuation”), unless otherwise mutually agreed in writing by the parties or the Business Combination Agreement has been terminated (as described in the section of this shareholder circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement). Following the completion of the Continuation, the Company will be registered as a Cayman Islands exempted company under the name Neo Group Ltd. and will subsequently cease to be a Luxembourg company. In addition, the Company will be governed by the Continuation Articles and its shares will not be tradable or transferable, other than in connection with the completion of the Merger at the Merger Effective Time.
The closing date will be on the date on which the satisfaction or waiver in accordance with the Business Combination Agreement of all of the Merger Conditions (as described in the section of this shareholder circular entitled “The Business Combination Agreement—Conditions to the Closing of the Merger”) occurs, but subject to the satisfaction or waiver of such conditions, or such other date agreed upon in writing by the Company and Parent (the “Closing Date”). As soon as practicable after the determination of the Closing Date, the Company will deliver to the Cayman Registrar a merger application in accordance with Part XVI of the Cayman Companies Act, accompanied by the documents required by Section 233 of the Cayman Companies Act, including the Statutory Plan of Merger. The Merger Effective Time will occur at the time of the registration of the Statutory Plan of Merger by the Cayman Registrar.
Appraisal Rights
Following the Continuation, shareholders will have a right under the law of the Cayman Islands to object to the Merger Proposal and the Statutory Plan of Merger Proposal prior to the Cayman Shareholder Meeting and to demand payment of fair value for their Company Shares if the Merger is authorized by vote at the Cayman Shareholder Meeting.
Company Shares that are outstanding following the Continuation Effective Time and immediately prior to the Merger Effective Time and which are held by shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) their desire to dissent with respect to such Company Shares shall not be converted into or represent the right to receive the Merger Consideration attributable to such Company Shares. Such shareholders shall be entitled to receive payment of the fair value of such Company Shares held by them in accordance with the Cayman Companies Act.
Shareholders wishing to object to the Merger Proposal and the Statutory Plan of Merger Proposal at the Cayman Shareholder Meeting must do so in writing to the Company prior to the Cayman Shareholder Meeting (“Written Notice of Objection”). For convenience, shareholders wishing to object to the Cayman Merger Proposal may appoint the Board (and each member thereof) for the time being as their agent for the purposes of giving Written Notice of Objection with the Company prior to the vote by completing and returning the form attached to this shareholder circular as Annex F. A shareholder wishing to withdraw its Written Notice of Objection may do so by written notice to the Company at any time prior to the Cayman Shareholder Meeting.
A shareholder giving its Written Notice of Objection to the Company is the first step of the dissent process pursuant to section 238 of the Cayman Companies Act. Following Written Notice of Objection being provided to the Company, a shareholder wishing to dissent is required to take further steps in accordance with the procedures set out in section 238 of the Cayman Companies Act.
The valid exercise of dissenters’ rights results in a dissenting shareholder ceasing to have any of the rights as a member, other than the right to be paid fair value for that person’s shares, the right to participate fully in proceedings to determine the fair value of Company Shares held by such persons and the right to seek relief on the grounds that the Merger is void or unlawful. To exercise dissenters’ rights, the following procedures must be followed:
| (1) | A shareholder must give the Written Notice of Objection to the Company prior to the vote to authorize and approve the Merger. The Written Notice of Objection must include a statement that the shareholder proposes to demand payment for its Company Shares if the Merger is authorized by the vote at the Cayman Shareholder Meeting. As noted above, for convenience, any shareholder wishing to dissent to the Merger may appoint the Board (and each member thereof) for the time being as that person’s agent for the purposes of registering written notice of their objection with the Company prior to the vote by completing and returning the Written Notice of Objection in the form attached to this shareholder circular as Annex F. Any such Written Notice of Objection must be served either at the Company’s Luxembourg office address at 63-65, rue de Merl, L-2146 Luxembourg, Grand Duchy of Luxembourg or at the Company’s registered office service provider at Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands, which will be the Company’s registered address upon the Continuation Effective Time. |
| (2) | Within twenty days immediately following the date on which the vote authorizing the Merger is made, the Company must give written notice of the authorization (“Authorization Notice”) to all dissenting shareholders who have made a Written Notice of Objection. |
| (3) | Within twenty days immediately following the date on which the Authorization Notice is given (the “Dissent Period”), any dissenting shareholder who elects to dissent must give a written notice of that person’s decision to dissent (a “Dissent Notice”) to the Company stating that person’s name and address and the number and class of the Company Shares in respect of which that person dissents and demanding payment of the fair value of that person’s Company Shares. A dissenting shareholder who dissents must do so in respect of all of the Company Shares which that person holds. Upon giving of the Dissent Notice, the dissenting shareholder shall cease to have any of the rights of a shareholder except the right to be paid the fair value of that person’s Company Shares, the right to participate fully in proceedings to determine the fair value of such Company Shares and the right to seek relief on the grounds that the Merger is void or unlawful. |
| (4) | Within seven days immediately following (a) the date of expiry of the Dissent Period or (b) the date on which the Statutory Plan of Merger is filed with the Cayman Registrar, whichever is later, the Company must make a written offer (a “Fair Value Offer”) to each dissenting shareholder to purchase that person’s Company Shares at a price determined by the Company to be the fair value of such Company Shares. |
| (5) | If, within thirty days immediately following the date of the Fair Value Offer, the Company and the dissenting shareholder agree upon the price to be paid for that person’s Company Shares, the Company shall pay the dissenting shareholder the amount in money forthwith. |
| (6) | If, within thirty days immediately following the date of the Fair Value Offer, the Company and the dissenting shareholder fail to agree upon the price to be paid for that person’s Company Shares, then, within twenty days immediately following the date of the expiry of such thirty-day period, the Company must, and any dissenting shareholder may, file a petition with the Grand Court of the Cayman Islands (the “Court”) for a determination of the fair value of the Company Shares held by all dissenting shareholders who have served a Dissent Notice. The petition presented by the Company must be accompanied by a verified list containing the names and addresses of all shareholders who have filed a Dissent Notice and with whom agreements as to the fair value of their Company Shares have not been reached with the Company. Where a dissenting shareholder files a petition, the Company must file a verified list within ten days after service of such petition on the Company. |
| (7) | At the hearing of a petition, the Court will determine in respect of shareholders entitled to participate (a) the fair value of such Company Shares held by those shareholders as the Court finds are involved, together with a fair rate of interest, if any, to be paid by the Company upon the amount determined to be the fair value and (b) the costs of the proceeding and the taxation of such costs upon the parties as the Court deems equitable in the circumstances. |
A shareholder wishing to dissent should be aware that the value of the Company Shares as determined by the Court pursuant to section 238 of the Cayman Companies Act could be more than, the same as, or less than the Merger Consideration (which is $29.50 per share in cash, without interest and less any applicable withholding taxes, if applicable) for each Company Share that the shareholder would otherwise receive as consideration pursuant to the Business Combination Agreement if the shareholder does not exercise dissenting rights with respect to that person’s Company Shares. A dissenting shareholder may also be responsible for the cost of any appraisal proceedings.
If shareholders wishing to dissent fail to comply with the strict provisions set out in section 238 of the Cayman Companies Act, they may lose their dissenters’ rights. Shareholders wishing to dissent are recommended to consult with their Cayman Islands legal counsel on the application and procedure to be followed in respect of the appraisal rights under the Cayman Companies Act.
Material U.S. Federal and Luxembourg Income Tax Consequences and Israeli Tax Consequences of the Continuation and the Merger
Tax matters are very complicated, and the tax consequences of the Continuation and the Merger to you will depend on your particular situation. This discussion is not intended to be a complete analysis or description of all potential tax consequences of the Continuation and the Merger, including the receipt of the Merger Consideration. You are encouraged to consult your own tax advisor regarding the specific tax consequences of the Continuation and the Merger to you, including tax return reporting requirements, the applicability of U.S. federal, state, local and non‑U.S. tax laws, including Luxembourg tax laws and the effect of any proposed change in such tax laws.
Material U.S. Federal Income Tax Consequences
The following discussion is a summary of material U.S. federal income tax consequences of the Continuation and the Merger to U.S. Holders (as defined below).
This discussion is based on and subject to the Code, the Treasury Regulations promulgated thereunder (“Treasury Regulations”), published guidance of the IRS and court decisions, in each case, all as currently in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect, and to differing interpretations.
The following discussion assumes that the Continuation and the Merger will be consummated as described in this shareholder circular and applies only to U.S. Holders that hold their Company Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment).
This discussion does not constitute tax advice and does not address all aspects of U.S. federal income taxation that may be relevant to any particular U.S. Holder in light of such U.S. Holder’s personal circumstances, including any tax consequences relating to the Medicare contribution tax on net investment income, the alternative minimum tax or the Foreign Account Tax Compliance Act of 2010 (including the Treasury Regulations promulgated thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith), or to any U.S. Holders subject to special treatment under the Code, including, without limitation:
| • | banks, thrifts, mutual funds, insurance companies and other financial institutions; |
| • | real estate investment trusts and regulated investment companies; |
| • | traders in securities who elect to apply a mark‑to‑market method of accounting; |
| • | brokers, dealers or traders in securities or foreign currency; |
| • | tax‑exempt organizations or governmental organizations (including agencies and instrumentalities thereof); |
| • | tax-qualified retirement plans, individual retirement accounts or other tax-deferred accounts; |
| • | corporations that accumulate earnings to avoid U.S. federal income tax (and investors therein); |
| • | persons whose “functional currency” is not the U.S. dollar; |
| • | U.S. expatriates and former citizens or long‑term residents of the United States; |
| • | persons who hold their Company Shares as part of a straddle, hedging, appreciated financial position, conversion, constructive sale or other risk reduction transaction or integrated investment; |
| • | persons who purchase or sell their Company Shares as part of a wash sale for tax purposes; |
| • | “S corporations,” partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes, or other pass‑through entities (and investors therein); |
| • | persons who hold their Company Shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside of the United States; |
| • | persons that exercise appraisal rights; |
| • | persons who own or have owned (directly, indirectly or through attribution) more than 5% of the voting power or value of Company Shares; and |
| • | persons who received their Company Shares pursuant to the exercise of employee stock options or other compensation arrangements or through a tax-qualified retirement plan. |
This discussion of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Continuation and the Merger. Except as specifically set forth below, this discussion does not address U.S. federal income tax consequences of the Re-Continuation in the event the Merger does not occur. This discussion also does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any considerations under the U.S. federal tax laws other than those pertaining to the income tax, nor does it address any U.S. state, local or non‑U.S. tax considerations. We do not intend to seek any rulings from the IRS with respect to the Continuation and the Merger, and there can be no assurance that the IRS will not take a position contrary to the tax consequences described herein or that such a contrary position would not be sustained by a court.
If a partnership, including for this purpose any arrangement or entity that is treated as a partnership for U.S. federal income tax purposes, holds Company Shares, the tax treatment of a partner (including for this purpose an investor treated as a partner) in the partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. A holder that is a partnership for U.S. federal income tax purposes and the partners in such partnership are urged to consult their own tax advisors about the U.S. federal income tax consequences of the Continuation and the Merger and of the ownership and disposition of Company Shares.
For purposes of this discussion, a “U.S. Holder” means a beneficial owner of Company Shares that for U.S. federal income tax purposes is or is treated as any of the following:
| • | an individual who is a citizen or resident of the United States; |
| • | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; |
| • | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
| • | a trust that (1) is subject to the primary supervision of a court within the United States and all substantial decisions of which are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect under applicable Treasury regulations to be treated as a United States person for U.S. federal income tax purposes. |
THIS DISCUSSION IS NOT TAX ADVICE. HOLDERS OF COMPANY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE CONTINUATION AND THE MERGER, AS WELL AS ANY SUCH TAX CONSEQUENCES OF THE RE-CONTINUATION IN THE EVENT THE MERGER DOES NOT OCCUR, IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER U.S. FEDERAL TAX LAWS OTHER THAN THOSE PERTAINING TO INCOME TAX, INCLUDING ESTATE OR GIFT TAX LAWS, OR UNDER ANY STATE, LOCAL OR NON‑U.S. TAX LAWS OR ANY APPLICABLE TAX TREATY.
HOLDERS OF COMPANY SHARES WHO ARE NOT U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME AND WITHHOLDING TAX CONSEQUENCES AND ANY APPLICABLE STATE, LOCAL OR NON‑U.S. TAX CONSEQUENCES OF THE CONTINUATION AND THE MERGER, AS WELL AS ANY SUCH TAX CONSEQUENCES OF THE RE-CONTINUATION IN THE EVENT THE MERGER DOES NOT OCCUR.
General U.S. Federal Income Tax Treatment of the Continuation
The Continuation is expected to qualify as a tax-free reorganization under Section 368(a) of the Code. Under Section 368(a)(1)(F) of the Code, a reorganization is a “mere change in identity, form, or place of organization of one corporation, however effected” (an “F Reorganization”). Pursuant to the Continuation, the Company will change its jurisdiction of incorporation from Luxembourg to the Cayman Islands by way of continuance. Assuming the Continuation qualifies as an F Reorganization, U.S. Holders generally would not recognize gain or loss as a result of the conversion of their Company Shares in the Continuation.
Neither Parent nor the Company has requested or will request a ruling from the IRS or an opinion of counsel regarding the U.S. federal income tax consequences of the Continuation. Consequently, no assurance can be given that the IRS will not challenge the qualification of the Continuation as an F Reorganization or that a court would not sustain such challenge. Furthermore, neither Parent nor the Company, nor any of their respective advisors or affiliates, makes any representation or provides any assurance regarding the U.S. federal income tax consequences of the Continuation, including whether the Continuation qualifies as a “reorganization” under Section 368(a)(1)(F) of the Code.
Thus, if the Continuation were consummated but the IRS or the courts were to determine that the Continuation did not qualify as an F Reorganization or another tax-free reorganization under the Code, and thus was taxable, each U.S. Holder would recognize gain or loss equal to the difference between the fair market value of the converted Company Shares and its aggregate adjusted tax basis in the converted Company Shares on the date of the Continuation. Such gain or loss would be recognized regardless of whether the Merger is consummated.
Subject to the discussion of the PFIC (as defined below) rules below under “—Passive Foreign Investment Company Status,” any gain or loss recognized by a U.S. Holder generally would be long‑term capital gain or loss if the U.S. Holder held their Company Shares for more than one year as of the effective date of the Continuation and would be short‑term capital gain or loss if such Company Shares were held for one year or less as of the effective date of the Continuation. A reduced tax rate generally applies to long‑term capital gain of a non‑corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Company Shares at different times or at different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Company Shares (generally, shares acquired at the same cost in a single transaction).
After the Continuation, and for purposes of determining the tax consequences to a U.S. Holder if the Merger is consummated, the U.S. Holder’s adjusted tax basis in the continued Company Shares would be equal to the fair market value of that stock on the date of the Continuation and such U.S. Holder’s holding period for the converted Company Shares would begin on the day following the date of the Continuation. Any embedded gain or loss recognized by the U.S. Holder in the Continuation if, contrary to expectations, the Continuation does not qualify as an F Reorganization, would not be recognized again by the U.S. Holder upon consummation of the Merger.
All U.S. Holders should carefully read below under “—U.S. Federal Income Tax Characterization of the Re-Continuation” for U.S. federal income tax considerations which may be applicable to the Continuation in the event there is a Re-Continuation and the Merger is not completed.
General U.S. Federal Income Tax Treatment of the Merger
The receipt by a U.S. Holder of cash in exchange for Company Shares as a result of the Merger will be a taxable transaction for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, a U.S. Holder will recognize gain or loss equal to the difference between the amount of cash it receives as a result of the Merger and its aggregate adjusted tax basis in the Company Shares that it exchanges for such cash.
Subject to the discussion of the PFIC rules below under “—Passive Foreign Investment Company Status,” any gain or loss recognized by a U.S. Holder generally would be long‑term capital gain or loss if the Company Shares surrendered were held for more than one year as of the effective date of the Merger and would be short‑term capital gain or loss if the Company Shares surrendered were held for one year or less as of the effective date of the Merger. A reduced tax rate generally applies to long‑term capital gain of a non‑corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Company Shares at different times or at different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Company Shares (generally, shares acquired at the same cost in a single transaction).
Passive Foreign Investment Company Status
The foregoing discussion regarding gain recognized by a U.S. Holder as a result of the Continuation and/or the Merger assumes that the Company is not currently, and has not been, a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes during such U.S. Holder’s holding period for the Company Shares held at the Continuation Effective Time and/or exchanged in the Merger.
A non‑U.S. corporation is treated as a PFIC for any taxable year if either: (a) at least 75% of its gross income for such year is passive income or (b) at least 50% of the value of its assets (based on a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from commodities and securities transactions. In determining whether a non‑U.S. corporation is a PFIC, a proportionate share of the assets and income of each corporation in which it owns, directly or indirectly, at least 25% interest (by value of the stock) is taken into account. Under the PFIC rules, if a non‑U.S. corporation were considered a PFIC at any time during which a holder held shares in such non‑U.S. corporation, then the non‑U.S. corporation would (absent certain elections) generally continue to be treated as a PFIC for all subsequent years with respect to such holder’s shares regardless of whether such non‑U.S. corporation continues to meet the tests noted above in any subsequent taxable year.
Based on our market capitalization and the composition of our income, assets and operations, the Company believes it was not a PFIC for the year ending December 31, 2023 and does not expect to be a PFIC for U.S. federal income tax purposes for the current taxable year. However, this is a factual determination that must be made annually after the close of each taxable year. Moreover, the aggregate value of the Company’s assets for purposes of the PFIC determination may be determined by reference to the trading value of the Company Shares, which could fluctuate significantly. In addition, it is possible that the IRS may take a contrary position with respect to the Company’s determination in any particular year, and, therefore, there can be no assurance that the Company was not a PFIC for the year ending December 31, 2023 or will not be classified as a PFIC for the current taxable year.
If the Company were a PFIC in the current taxable year or in any prior taxable year in which a U.S. Holder has held Company Shares, then such U.S. Holder generally would be subject to adverse U.S. federal income tax consequences with respect to gain recognized on any sale or exchange of such Company Shares, including an exchange of such Company Shares pursuant to the Merger, unless such U.S. Holder has in effect certain elections, such as the “mark‑to‑market election.”
The U.S. federal income tax rules relating to PFICs are complex. U.S. Holders should consult their own tax advisors concerning whether the Company is or has been a PFIC for any taxable year during which such U.S. Holder has owned Company Shares, the availability of any applicable elections to such U.S. Holder and the tax consequences of the Continuation and/or the Merger to such U.S. Holder in light of any applicable PFIC rules.
U.S. Federal Income Tax Characterization of the Re-Continuation
The characterization of the Re-Continuation in the event the Merger is not completed for U.S. federal income tax purposes is not entirely clear. The Re-Continuation could be treated in the same manner as the Continuation, with the same tax consequences described above under “—General U.S. Federal Income Tax Treatment of the Continuation.” It is also possible that the Continuation and Re-Continuation would be integrated, with the effect that neither the Continuation nor the Re-Continuation would constitute a realization event for U.S. federal income tax purposes. All U.S. Holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to them in the event the Re-Continuation occurs because the Merger is not completed.
Information Reporting and Backup Withholding
A U.S. Holder may be subject to information reporting and U.S. federal backup withholding in respect of the payment of cash in exchange for Company Shares in the Merger. U.S. federal backup withholding will not apply if such U.S. Holder furnishes a properly completed and executed IRS Form W‑9, or otherwise establishes an exemption from such backup withholding.
Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which a non-U.S. Holder resides or is established.
Generally, U.S. federal backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. The IRS may impose a penalty upon any taxpayer that fails to provide the correct taxpayer identification number. Each holder should consult such holder’s own tax advisor regarding the information reporting and backup withholding tax rules.
Luxembourg Income Tax Consequences of the Continuation
The Continuation may be treated as a deemed disposal of the Company Shares by the holders of Company Shares, regardless of whether they receive any consideration or not as a result thereof. Consequently, the holders of Company Shares may realize a taxable capital gain or loss equal to the difference between the fair market value of the Company Shares at the time of the Continuation and their acquisition price.
Luxembourg resident holders of Company Shares
Individual holders of Company Shares
Under current Luxembourg tax laws, capital gains realized by a Luxembourg resident individual holder of Company Shares (acting in the course of the management of his/her private wealth) upon the disposal of his/her Company Shares are not subject to Luxembourg income tax, provided this disposal takes place more than six months after the Company Shares were acquired and he/she does not hold a substantial participation. The participation is considered as substantial (a “Substantial Participation”) if the holder of Company Shares (i) holds or has held (either solely or together with his/her spouse or partner and minor children) directly or indirectly more than 10% of the Company Shares at any time during a period of five years before the realization of the capital gain or (ii) acquired his/her Company Shares for free during the five years preceding the disposal of his/her Company Shares and the previous holder of the shares or, in the case of subsequent gratuitous transfers, one of the previous holders has held (either solely or together with his/her spouse or partner and minor children) directly or indirectly more than 10% of the Company Shares at any time during a period of five years before the realization of the capital gain.
Corporate holders of Company Shares
Capital gains realized upon the disposal of shares by a Luxembourg resident corporate holder of Company Shares (fully subject to Luxembourg corporation taxes) are in principle fully taxable. However, an exemption from Luxembourg corporation taxes applies under the following conditions:
| • | the holder of Company Shares realizing the capital gains is either (i) a fully taxable Luxembourg resident collective entity, (ii) a Luxembourg permanent establishment of an EU resident collective entity falling within the scope of article 2 of the EU Parent-Subsidiary Directive, (iii) a Luxembourg permanent establishment of a joint-stock company that is resident in a State with which Luxembourg has concluded a double tax treaty, or (iv) a Luxembourg permanent establishment of a joint-stock company or of a cooperative company which is a resident of a EEA Member State (other than a EU Member State); and |
| • | on the date on which the disposal takes place, the holder of Company Shares has held for an uninterrupted period of at least twelve months, a participation of at least 10% in the share capital of the Company (or with an acquisition price of at least EUR 6,000,000). |
The holder of Company Shares which is a Luxembourg resident entity governed by the law of 17 December 2010 on undertakings for collective investment, as amended, by the law of 13 February 2007 on specialized investment funds, as amended, by the law of 11 May 2007 on the family estate management company, as amended, or by the law of 23 July 2016 on reserved alternative investment funds, as amended, and which does not fall under the special tax regime set out in article 48 thereof, is not subject to any Luxembourg corporation taxes in respect of capital gains realized upon disposal of its shares.
Non-resident holders of Company Shares
Under Luxembourg tax laws currently in force (subject to the provisions of double taxation treaties), capital gains realized by a Luxembourg non-resident holder of Company Shares (not acting via a permanent establishment or a permanent representative in Luxembourg through which/whom the shares are held) are not taxable in Luxembourg unless (a) the holder of Company Shares holds a Substantial Participation in the Company (as defined above) and the disposal of the Company Shares takes place less than six months after the Company Shares were acquired or (b) the holder of Company Shares holds a Substantial Participation in the Company for more than six months after the acquisition and the holder has been a former Luxembourg tax resident for more than fifteen years and became a non-resident less than five years prior to sale.
Luxembourg Capital Gains Tax Consequences of the Merger
Any capital gain realized upon receipt of the Merger Consideration in exchange for Company Shares may constitute a taxable transaction in the hands of a Luxembourg resident holder of Company Shares, in which case such gain would be subject to tax under the same conditions as those explained under section of this shareholder circular entitled “—Luxembourg Income Tax Consequences of the Continuation”.
General Israel Tax Implications of the Continuation and the Merger
In general, under the Israeli Income Tax Ordinance (New Version) 1961, as amended (the “Ordinance”), a capital gains tax is imposed on the disposition of capital assets by an Israeli tax resident (including the Continuation and the Merger). Under the Ordinance and regulations promulgated thereunder, the tax rate applicable to real capital gains (after adjustment for inflation surplus) derived from the disposition of Company Shares in the Merger is 25% for individuals, unless such shareholder claims a deduction for certain financing expenses in connection with such shares, in which case such gain will generally be taxed at a rate of 30%. Additionally, if such individual is considered a “significant shareholder” at any time during the 12-month period preceding such disposition, i.e., such shareholder holds directly or indirectly, alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, at least 10% of any means of control (including, among other things, the right to receive profits of the Company, voting rights, the right to receive the Company’s liquidation proceeds and the right to appoint a director) in the Company, the tax rate will be 30%. Certain attribution rules apply in determining a status of a “significant shareholder” including with respect to holders of Company Shares who are relatives, or holders who are not relatives but who have an agreement regarding regular direct or indirect cooperation on substantive matters relating to the Company. Israeli law distinguishes between real capital gain and inflationary surplus. Please consult with your own tax advisor as to the method you should use to determine the inflationary surplus. The real capital gain is the excess of the total capital gain over the inflationary surplus. Real capital gains derived by Israeli companies are generally taxed at the ordinary corporate tax rate (the ordinary corporate tax rate in Israel in 2023 and thereafter is 23%). Israeli resident individual and corporate shareholders dealing in securities in Israel are subject to tax rates applicable to ordinary business income, currently, 23% for companies and a marginal tax rate of up to 47% for individuals, plus an additional surtax of 3% is imposed on individuals whose annual taxable income from all sources, regardless of classification, exceeds a certain threshold (NIS 698,280 for 2023).
The payment of the Merger Consideration may be subject to the withholding of Israeli tax at source at a rate of 25% if the seller is an Israeli tax resident individual and at the corporate tax rate (23% in 2023) if the seller is an Israeli tax resident company. Certain Israeli resident shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding of Israeli tax at source from the applicable portion of the Merger Consideration.
Regulatory Approvals
Parent and the Company will obtain prior to the completion of the Continuation and the Merger all regulatory approvals and consents required in order to complete the Merger.
The completion of the Continuation and the Merger are subject to approvals from Gaming Regulatory Authorities (as defined below), and as of the date hereof, not all approvals have been obtained:
| • | the receipt of determinations by the gaming regulatory authorities that the gambling licenses in the following jurisdictions will continue in effect following the Merger Effective Time (or that new gambling licenses have been issued in such jurisdictions that will be in effect following the Merger Effective Time), without imposition of material limitations or conditions on the ability of Parent to operate the business of both the Company and Parent following the Merger Effective Time: Arizona, Colorado, Connecticut, Washington DC, Illinois, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, New York, Nova Scotia, Ohio, Ontario, Pennsylvania, Puerto Rico, Tennessee, Virginia, Washington State, West Virginia, Wyoming, Alberta, British Columbia, Quebec, Malta, the United Kingdom, Germany, Gibraltar and (at the discretion of Parent) such additional jurisdiction(s) in which the Company or any Subsidiary obtains a gambling license at any time following the date of the Business Combination Agreement (collectively, the “Gaming Regulatory Authorities”); |
| • | the finding of suitability or the grant of personal or entity licenses by the Gaming Regulatory Authorities to any person or corporate entity who was not already found by them suitable, or does not already hold a personal license issued by the Gaming Regulatory Authorities, as needed to ensure compliance with such gambling licenses with respect to the continued operation of the business of the Surviving Company, Parent and their respective subsidiaries; |
| • | obtaining any approvals (or waivers) of the transfer of ownership and any necessary findings of suitability by the Gaming Regulatory Authorities; and |
| • | obtaining any other written confirmations or such other approvals and consents (including from customers which are state, provincial or national lotteries) as may be necessary to permit the Company to continue to provide its services following the Merger Effective Time to existing and new customers. |
As of the date hereof, the parties have obtained or intend to waive all approvals required for the completion of the Merger and the Continuation (or received verbal confirmation that no such approval is required), except for the approvals of the Louisiana Gaming Control Board and the Nevada Gaming Commission, which the Company expects to obtain shortly following the date hereof. The Company will inform its shareholders of receipt of the approvals of the Louisiana Gaming Control Board and the Nevada Gaming Commission by furnishing a Current Report on Form 6-K to the SEC as soon practicable after the receipt thereof.
Nevada Gaming Regulation
The Company is registered by the Nevada Gaming Commission (the “NGC”) as a publicly-traded corporation. Pursuant to the applicable laws in Nevada and other jurisdictions where the Company and its subsidiaries hold licenses, permits or registrations, the NGC or other gaming regulatory authorities may require the holder of any debt or equity security to file applications, be investigated and be found suitable to own such security if they have reason to believe that such ownership would be contrary to the public policy of the jurisdiction.
Gaming regulatory authorities have broad powers to request detailed information about the background and finances of owners of securities and to determine the suitability of such owners to hold such securities. While they typically only exercise such powers with regard to those owning more than 5% or 10% of the outstanding securities (depending upon the jurisdiction), the NGC, in particular, and other gaming authorities, in general, have significant discretion in determining who is required to file an application.
Nevada law requires any person who acquires a beneficial ownership of more than 5% of a registered corporation’s voting securities to report the acquisition to the NGC. Nevada law also requires that beneficial owners of more than 10% of any class of a registered corporation’s voting securities apply to the NGC for a finding of suitability within thirty days after the Chair of the Nevada Gaming Control Board (the “Nevada Board”) mails a written notice requiring such filing. However, as noted above, the NGC and some other gaming regulatory authorities have discretion to require other owners of the Company’s securities to file applications for findings of suitability. While it is rare for anyone owning less than 5% of the outstanding shares to be required to file, it is possible. The applicant is required to pay the costs of the investigation.
Under certain circumstances, an “institutional investor”, as defined in Nevada law, which acquires the beneficial ownership of more than 10%, but not more than 25% of a Registered Corporation’s voting securities may apply to the NGC for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only.
The NGC has requested that the following be brought to the attention of shareholders.
Summary of the Nevada Gaming Regulations
The manufacture, sale and distribution of gaming devices, internet and mobile gaming, and cashless wagering systems for use or play in Nevada are subject to:
| (i) | the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, the “Nevada Act”); and |
| (ii) | various local ordinances and regulations. |
Gaming and manufacturing and distribution operations in Nevada are subject to the licensing and regulatory control of the NGC, the Nevada Board and various other county and city regulatory agencies, collectively referred to as the “Nevada Gaming Authorities”.
Nevada Regulatory Disclosure
The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things:
| (i) | the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming, manufacturing or distributing activities at any time or in any capacity; |
| (ii) | the establishment and maintenance of responsible accounting practices and procedures; |
| (iii) | the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; |
| (iv) | the prevention of cheating and fraudulent practices; and |
| (v) | providing a source of state and local revenues through taxation and licensing fees. |
A manufacturer’s and distributor’s license permits the manufacturing, sale and distribution of gaming devices and cashless wagering systems for use or play in Nevada. If it were determined that the Nevada Act was violated by the Company or any of its operating subsidiaries, the registration of the Company and the licenses of the operating subsidiaries could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, the operating subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the NGC.
The Nevada Act also requires that each person who, individually or in association with others, acquires or holds, directly or indirectly, the beneficial ownership of any amount of any class of voting securities of a publicly traded corporation registered with the NGC or each plan sponsor of a pension or employee benefit plan that acquires or holds any amount of any class of voting securities in such a publicly traded corporation, and who has the intent to engage in any proscribed activity shall:
| (i) | Within 2 days after possession of such intent, notify the Chair of the Nevada Board in the manner prescribed by the Chair; |
| (ii) | Apply to the Commission for a finding of suitability within 30 days after notifying the Chair pursuant to paragraph (a); and |
| (iii) | Deposit with the Nevada Board the sum of money required by the Nevada Board to pay the costs of investigation. |
Except as otherwise provided by the NGC, a person who has beneficial ownership of less than 10 percent of each class of voting securities of a publicly traded corporation registered with the NGC, acquired or held by the person through a pension or employee benefit plan, or the plan sponsor of a pension or employee benefit plan that has ownership of less than 10 percent of each class of voting securities of such a publicly traded corporation, need not notify the Commission, apply for a finding of suitability with the Commission or deposit the required sum of money with the Nevada Board before engaging in any proscribed activity.
Any person required by the NGC to be found suitable shall apply for a finding of suitability within 30 days after the Commission requests that the person do so; and together with the application, deposit with the Nevada Board a sum of money which, in the opinion of the Nevada Board, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of the application, and deposit such additional sums as are required by the Board to pay final costs and charges.
“Proscribed activity” is defined as:
| (i) | An activity that necessitates a change or amendment to the corporate charter, bylaws, management, policies or operation of a publicly traded corporation that is registered with the NGC; |
| (ii) | An activity that materially influences or affects the affairs of a publicly traded corporation that is registered with the NGC; or |
| (iii) | Any other activity determined by the NGC to be inconsistent with holding voting securities for investment purposes only. |
The Nevada Act provides that any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the NGC or the Chair of the Nevada Board, may be found unsuitable. The same restrictions apply to a record holder (in the case of the Company a registered holder) if the record owner, after request, fails to identify the beneficial owner.
Any person found unsuitable and who holds, directly or indirectly, any of the securities of a registered corporation beyond such period of time as may be prescribed by the NGC may be guilty of a criminal offence under Nevada law. A registered corporation can be sanctioned, including the loss of its approvals if, after it receives notice that a person is unsuitable to be the holder of the voting securities of the registered corporation or to have any other relationship with the registered corporation, it:
| (i) | pays that person any dividend or interest upon its voting securities, |
| (ii) | allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, |
| (iii) | pays remuneration in any form to that person for services rendered or otherwise, or |
| (iv) | fails to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities including, if necessary, the immediate purchase of said voting securities for cash at fair market value. |
A registered corporation may not make a public offering of its securities without the prior approval of the NGC if the securities or proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On May 18, 2023, the NGC granted the Company prior approval to make public offerings for a period of three years subject to certain conditions (the “Current Shelf Approval”). This approval remains in place today. In addition, the Company anticipates being granted by the NGC on April 18, 2024, a new, superseding, three-year shelf approval that will not expire until April 2027 (the “Superseding Shelf Approval”). The Current Shelf Approval or the Superseding Shelf Approval, if granted as expected, may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chair of the Nevada Board.
The Shelf Approval and the Superseding Shelf Approval, if granted as expected, do not constitute a finding, recommendation or approval by the NGC or the Nevada Board as to the accuracy or adequacy of the prospectus or the investment merits of the securities offered. Any representation to the contrary is unlawful. An application to renew the Current Shelf Approval or the Superseding Shelf Approval, if granted as expected (which, in each case can only be issued for a maximum term of three years), will be lodged with the Nevada Board and the NGC when required.
THE BUSINESS COMBINATION AGREEMENT
Explanatory Note Regarding the Business Combination Agreement
The following summary describes the material provisions of the Business Combination Agreement. The descriptions of the Business Combination Agreement in this summary and elsewhere in this shareholder circular are not complete and are qualified in their entirety by reference to the Business Combination Agreement, a copy of which is attached to this shareholder circular as Annex A and incorporated into this shareholder circular by reference. We encourage you to read the Business Combination Agreement carefully and in its entirety because this summary may not contain all the information about the Business Combination Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Business Combination Agreement and not by this summary or any other information contained in this shareholder circular. Capitalized terms used in this section but not defined in this shareholder circular have the meaning ascribed to them in the Business Combination Agreement.
The representations, warranties, covenants and agreements described below and included in the Business Combination Agreement (1) were made only for purposes of the Business Combination Agreement and as of specific dates (2) have been qualified by certain documents filed with, or furnished to the SEC by the Company and made publicly available on or after January 1, 2021 and before the date of the Business Combination; (3) were made solely for the benefit of the parties to the Business Combination Agreement; and (4) may be subject to important qualifications, limitations and supplemental information agreed to by the parties in connection with negotiating the terms of the Business Combination Agreement. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to reports and documents filed with the SEC (or furnished by the Company to the SEC) and in some cases were qualified by confidential matters disclosed to Parent and Merger Sub by the Company in connection with the Business Combination Agreement. In addition, the representations and warranties may have been included in the Business Combination Agreement for the purpose of allocating contractual risk between the Company, Parent and Merger Sub rather than to establish matters as facts, and may be subject to standards of materiality applicable to such parties that differ from what may be viewed as material by investors. Shareholders should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent or Merger Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this shareholder circular, may have changed since the date of the Business Combination Agreement. In addition, you should not rely on the covenants in the Business Combination Agreement as actual limitations on the respective businesses of the Company, Parent and Merger Sub because the parties may take certain actions that are either expressly permitted in the confidential Company Disclosure Schedule to the Business Combination Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The Business Combination Agreement is described below, and included as Annex A, only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding the Company, Parent and Merger Sub or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the Business Combination Agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding the Company and our business which are available without charge through the SEC’s website at www.sec.gov, including but not limited to the Company’s Annual Report on Form 20‑F for the year ended December 31, 2022, which is incorporated herein by reference.
Effects of the Continuation and the Merger; Directors and Officers; Memorandum and Articles of Association
The Business Combination Agreement provides that, subject to the terms and satisfaction or waiver of the conditions set forth therein, and in accordance with the provisions of the Luxembourg Company Law and the Cayman Companies Act, prior to the Merger Effective Time the Company will (i) transfer its statutory seat, registered office and seat of central administration from Luxembourg to the Cayman Islands by way of the Continuation, (ii) effective upon the Continuation, de-register in Luxembourg (without the dissolution of the Company or the liquidation of its assets), (iii) change its name to “Neo Group Ltd.”, (iv) approve and adopt the Continuation Articles, (v) execute all formalities in relation to the Continuation, including making and procuring all filings, certifications, consents, approvals, clearances and other authorizations that are required to be made with, or obtained from, any applicable Governmental Authorities, including the Luxembourg Trade and Companies Register (Registre de commerce et des sociétés) and all publications that are required to be made with the Luxembourg Electronic Compendium of Companies and Associations (Recueil électronique des sociétés et associations) and the Cayman Registrar, (vi) record the satisfaction of the Continuation Conditions and (vii) deliver a certificate signed on behalf of the Company by a senior executive of the Company to the effect that, subject to certain assumptions and conditions, the Company has no knowledge of any change, event, development, circumstance or effects that would cause the Merger Conditions not being satisfied on the Closing Date. Upon receipt of a Continuation Certificate from the Cayman Registrar, the Continuation Effective Time will occur. At the Continuation Effective Time, the Company Shares will no longer trade on Nasdaq and shareholders will not be able to buy, sell or transfer their Company Shares.
Subject to the terms and conditions of the Business Combination Agreement, the Statutory Plan of Merger and satisfaction or waiver of the Merger Conditions, at the Merger Effective Time, in accordance with Part XVI of the Cayman Companies Act (1) Merger Sub will merge with and into the Company, with the Company being the Surviving Company and becoming a wholly owned, indirect subsidiary of Parent; and (2) the separate corporate existence of Merger Sub will thereupon cease. From and after the Merger Effective Time, the Surviving Company will possess all assets, rights, privileges, immunities, powers and franchises of the Company and Merger Sub, and all of the debts, liabilities and obligations of the Company and Merger Sub will become the debts, liabilities and obligations of the Surviving Company.
Parent, Merger Sub and Company will take all necessary action to ensure that, effective as of, and immediately following, the Merger Effective Time, the directors and officers of the Surviving Company will consist of the individuals serving as the directors and officers of the Merger Sub immediately prior to the Merger Effective Time, to hold office in accordance with the Continuation Articles until their respective successors are duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Continuation Articles.
At the Merger Effective Time, the memorandum and articles of association appended to the Statutory Plan of Merger shall be the memorandum and articles of association of the Surviving Company.
The Continuation and the Merger Effective Time
The Company will effectuate the Continuation as promptly as practicable on the fifth business day following the satisfaction or waiver, in accordance with the Business Combination Agreement, of all of the Continuation Conditions (as described in the section of this shareholder circular entitled “—Conditions to the Effectuation of the Continuation”), unless otherwise mutually agreed in writing by the parties or the Business Combination Agreement has been terminated (as described in the section of this shareholder circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement). Following the completion of the Continuation, the Company will be registered as a Cayman Islands exempted company under the name Neo Group Ltd. and will subsequently cease to be a Luxembourg company. In addition, the Company will be governed by the Continuation Articles and its shares will not be tradable or transferable, other than in connection with the completion of the Merger at the Merger Effective Time.
The Closing Date will be on the date on which the satisfaction or waiver in accordance with the Business Combination Agreement of all of the Merger Conditions (as described in the section of this shareholder circular entitled “—Conditions to the Closing of the Merger”) occurs, but subject to the satisfaction or waiver of such conditions, or such other date agreed upon in writing by the Company and Parent. As soon as practicable after the determination of the Closing Date, the Company will, on such Closing Date, deliver to the Cayman Registrar a merger application in accordance with Part XVI of the Cayman Companies Act, accompanied by the documents required by Section 233 of the Cayman Companies Act, including the Statutory Plan of Merger. The Merger Effective Time will occur at the time of the registration of the Statutory Plan of Merger by the Cayman Registrar or at such other time specified in the Statutory Plan of Merger and mutually agreed in writing between Parent and the Company.
Merger Consideration
At the Merger Effective Time, without any action on the part of any holder of any Company Share, each Company Share issued and outstanding immediately prior to the Merger Effective Time (except for Excluded Shares or Company Shares held by dissenting shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) their desire to dissent with respect to such Company Shares) shall be deemed to have been cancelled in exchange for the right to receive the Merger Consideration (which is $29.50 per share in cash, without interest and less any applicable withholding taxes). From and after the Merger Effective Time, (a) except as provided for in the Business Combination Agreement, the holders of all Company Shares issued and outstanding immediately prior to the Merger Effective Time (including all uncertificated Company Shares represented by book‑entry form and each certificate that, immediately prior to the Merger Effective Time, represented any such Company Shares) will cease to have any rights except the right to receive the Merger Consideration applicable to such Company Shares upon the surrender thereof and (b) the share transfer books of the Company will be closed with respect to all Company Shares outstanding and no further transfer of any such Company Shares will be made on such share transfer books after the Merger Effective Time, and Parent shall be registered as the sole owner of all Company Shares in the Company’s share register, as shall be reflected in an updated share register and share certificate to be delivered to Parent by the Company at the Merger Effective Time.
The Re-Continuation
Unless otherwise agreed between Parent and the Company, if the Company has completed the Continuation but, together with Merger Sub, has not filed the Statutory Plan of Merger with the Cayman Registrar within the Continuation Period due to the failure of certain closing conditions contained in the Business Combination Agreement to be satisfied or waived, then the Company shall effectuate the transfer of the Company’s statutory seat, registered office and seat of central administration from the Cayman Islands to Luxembourg in accordance with the Cayman Companies Act and Luxembourg Company Law and will take all actions necessary to (i) unwind the effects of the Continuation and transfer by way of continuation back to Luxembourg from the Cayman Islands as contemplated by the Business Combination Agreement and in accordance with the Cayman Companies Act and the Luxembourg Company Law, including convening the Second Luxembourg Shareholder Meeting to obtain shareholder approval and (ii) to resume the trading of the Company Shares on Nasdaq. Following the completion of the Re-Continuation, the Company would remain a public company, the Company Shares would continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company would continue to file periodic reports with the SEC. However, the Company would remain subject to the terms and conditions of the Business Combination Agreement unless terminated in accordance with its terms.
Treatment of Company Equity Awards
Cashed‑Out Company Options
At the Merger Effective Time, each Cashed-Out Company Option will be canceled and converted into the right to receive a cash amount equal to the product of (x) the number of Company Shares subject to such option, multiplied by (y) the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes, provided that any Cashed-Out Company Option, with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Cashed-Out Company Option will then have no further rights with respect to such Cashed-Out Company Option, apart from the cash payment described in this paragraph.
Assumed Company Options
At the Merger Effective Time, each Assumed Option will be assumed by Parent and converted into a share option, in accordance with the terms of the Company equity plan and/or option agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such Assumed Option), covering a number of ordinary shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed Option immediately prior to the Merger Effective Time multiplied by the Exchange Ratio, and rounded down to the nearest whole share, with an exercise price per share equal to the exercise price per share of the Assumed Option immediately prior to the Merger Effective Time, divided by the Exchange Ratio, and rounded up to the nearest whole cent provided that any Assumed Option with a per-share exercise price equal to or exceeding $29.50 will not be assumed by Parent, and will be automatically terminated as of the Merger Effective Time. The Options issued by Parent in assumption of the Assumed Options which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Ordinance and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance and shall be subject to the provisions of the Options Tax Ruling or Interim Options Tax Ruling (as applicable). The holder of such Assumed Option will then have no further rights with respect to such Assumed Option, apart from any rights described in this paragraph.
Contractor Company Options
At the Merger Effective Time, each Contractor Option will be canceled and converted into the right to receive, subject to a vesting schedule provided in the Business Combination Agreement and to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company Shares subject to such option, multiplied by (y) the excess, if any, of $29.50 over the applicable per share exercise price for such option, with such amount reduced by any applicable payroll, income or other withholding Taxes, provided that any Contractor Option with a per-share exercise price equal to or exceeding $29.50 will be automatically terminated as of the Merger Effective Time. The holder of such Contractor Option will then have no further rights with respect to such Contractor Option, apart from the cash payment described in this paragraph.
Cashed‑Out Company RSUs
At the Merger Effective Time each Cashed-Out Company RSU will be canceled and converted into the right to receive a cash amount equal to the product of (x) the number of Company Shares subject to such Company RSU multiplied by (y) $29.50, with such amount reduced by any applicable payroll, income or other withholding Taxes. The holder of such Cashed-Out Company RSU will then have no further rights with respect to such Cashed-Out Company RSU, apart from the cash payment described in this paragraph.
Assumed Company RSUs
At the Merger Effective Time, each Assumed RSU will be assumed by Parent and converted in accordance with the terms of the Company equity plan and/or restricted stock unit agreement by which it is evidenced (including the vesting schedule and any vesting acceleration for each such Assumed RSU), into a restricted share unit of Parent, covering a number of ordinary shares of Parent equal to the product of the number of Company Shares that were issuable with respect to the Assumed RSU immediately prior to the Merger Effective Time multiplied by the Exchange Ratio (as defined below), and rounded down to the nearest whole share. The restricted shared units issued by Parent in assumption of the Assumed RSUs which were originally granted under the trustee capital gains route of Section 102 of the Ordinance, shall be issued under an equity compensation plan of Parent which was filed for approval under the trustee capital gains route of Section 102 of the Ordinance and shall be issued to or controlled by the trustee nominated by Parent pursuant to Section 102 of the Ordinance and shall be subject to the provisions of the Options Tax Ruling or Interim Options Tax Ruling (as applicable). The holder of such Assumed RSU will then have no further rights with respect to such Assumed RSU, apart from any rights described in this paragraph.
Contractor Company RSUs
At the Merger Effective Time, each Contractor RSU will be canceled and converted into the right to receive, at the same time as such Contractor RSU would have vested pursuant to the terms of the applicable Company equity plan and/or award agreement by which it is evidenced (including any vesting acceleration, and subject to the Continuing Contractor’s continued service with Parent or any of its subsidiaries through the applicable vesting dates, a cash amount equal to the product of (x) the number of Company RSUs subject to such option, multiplied by (y) $29.50, with such amount reduced by any applicable payroll, income or other withholding Taxes. The holder of such Contractor RSU will then have no further rights with respect to such Contractor RSU, apart from the cash payment described in this paragraph.
Exchange and Payment Procedures
On or prior to the Merger Effective Time, Parent will designate one or more banks or trust companies reasonably acceptable to the Company (collectively, the “Paying Agent”) to make payments of the Merger Consideration to shareholders (other than payments with respect to cashed out Company Equity Awards which will be paid through Parent’s or any of its subsidiaries’ (including the Surviving Company’s) payroll system or, with respect to cashed-out Company Equity Awards or Company Shares subject to tax pursuant to Section 102(b) of the Ordinance which will be paid through the trustee nominated by the Company pursuant to Section 102 of the Ordinance. At the Merger Effective Time, Parent shall cause Merger sub to initiate, or cause to be initiated, a wire transfer to deposit with the Paying Agent cash in immediately available funds in an amount sufficient to pay the aggregate amount of Merger Consideration to shareholders of the Company (the “Exchange Fund”), for the sole benefit of the holders of Company Shares.
Promptly after the Merger Effective Time (and in any event within three Business Days thereafter), Parent will cause the Paying Agent to mail to each holder of record of a share certificate or book‑entry share as of the Merger Effective Time and whose Company Shares were exchanged into the right to receive the Merger Consideration (i) a letter of transmittal advising such holder of the effectiveness of the Merger and (ii) instructions advising shareholders how to surrender share certificates and book‑entry shares in exchange for their portion of the aggregate amount of Merger Consideration. Upon receipt of (1) surrendered certificates (or affidavits of loss in lieu thereof) or book‑entry shares representing the Company Shares, as applicable and (2) a signed letter of transmittal and such other documents as may be required pursuant to such instructions, the holder of such shares will be entitled to receive the Merger Consideration in exchange therefor. The amount of any Merger Consideration paid to the Company’s shareholders may be reduced by any applicable withholding taxes. Holders of Cashed-Out Company Options and Cashed-Out Company RSUs will not be required to sign any document in order to receive the consideration payable for their equity awards.
Unless otherwise determined pursuant to applicable withholding taxes, if any cash deposited with the Paying Agent is not disbursed within 12 months following the Merger Effective Time, such cash will be returned to Parent, upon demand, and any holders of Company Shares who have not complied with the exchange procedures in the Business Combination Agreement will thereafter look only to the Surviving Company as general creditors for payment of the Merger Consideration without any interest thereon.
The letter of transmittal will include instructions if a shareholder has lost a share certificate or if such certificate has been stolen or destroyed. In the event any certificates have been lost, stolen or destroyed, then before such shareholder will be entitled to receive the Merger Consideration, such shareholder will have to provide an affidavit of the loss, theft or destruction, and if required by Parent or the Paying Agent, deliver a bond in such amount as the Paying Agent may direct as indemnity against any claim that may be made against Parent, the Surviving Company, or the Paying Agent with respect to such certificate.
Representations and Warranties
The Business Combination Agreement contains representations and warranties of the Company, Parent and Merger Sub.
Some of the representations and warranties in the Business Combination Agreement made by the Company are qualified as to “materiality” or “Company Material Adverse Effect.” For purposes of the Business Combination Agreement, “Material Adverse Effect” means any change, event, development, circumstance or effect that individually or taken together with any other change, event, development, or circumstance (each an “Effect,” and collectively, “Effects”) (a) has had or would reasonably be expected to have, a materially adverse effect on the business, assets, financial condition, operations or results of operations of the Company and its subsidiaries, taken as a whole, or (b) would reasonably be expected to prevent or materially delay, materially impair or materially interfere with, or materially adversely affect the ability of the Company or its subsidiaries to consummate the Merger and the Transactions by the Termination Date; provided, however, that in the case of clause (a) above, none of the following will be deemed, either alone or in combination, to constitute, and there shall not be taken into account in determining whether there has been a “Material Adverse Effect” any adverse effect to the extent arising from or attributable or relating to:
| (i) | changes in, or events generally affecting, the U.S. or global financial, securities or capital markets or the financial, securities or capital markets in any other jurisdictions in which the Company or its subsidiaries operate; |
| (ii) | general economic or political conditions in the United States or any foreign jurisdiction in which the Company or any of its subsidiaries operate, including any changes in currency exchange rates, interest rates, monetary policy, inflation, or any instability in the banking sector, including the failure or placement into receivership of any financial institution; |
| (iii) | changes in, or events generally affecting, the industries in which the Company or any of its subsidiaries operate; |
| (iv) | any natural or man-made disaster or acts of God, including earthquakes, floods, hurricanes, tornados, volcanic eruption, epidemics, pandemics or disease outbreak (including COVID-19) or any COVID-19 Measures (as defined in the Business Combination Agreement) or any change in such COVID-19 Measures or official interpretations thereof following the date of the Business Combination Agreement or any acts of terrorism, sabotage, riots, demonstrations, public disorders, military action or war or any escalation or worsening thereof; |
| (v) | any failure by the Company or any of its subsidiaries to meet any internal or published budgets, projections, estimates, forecasts or predictions in respect of financial performance; |
| (vi) | a decline in the price of the Company Shares, or a change in the trading volume of the Company Shares, on Nasdaq; |
| (vii) | changes in applicable Law; |
| (viii) | changes in IFRS (or authoritative interpretation thereof); and |
| (ix) | the taking of any specific action expressly required by the Business Combination Agreement, or the announcement or pendency of the Business Combination Agreement, the Continuation and the Merger, including the impact thereof on the relationships with customers, suppliers, distributors, partners, other third parties with whom the Company has a relationship or employees, but, in each case, excluding the Company’s compliance with its obligations pursuant to the terms and conditions of the Business Combination Agreement. |
Notwithstanding the foregoing, (1) the exceptions in items (v) and (vi) above shall not prevent or otherwise affect a determination that any change, effect, circumstance or development underlying such failure or decline or change (if not otherwise falling within any of the exclusions pursuant to the other clauses of this definition) has resulted in, or contributed to, a Material Adverse Effect; (2) item (ix) shall not apply with respect to any representation or warranty that is expressly intended to address the consequences of the execution, delivery or performance of the Business Combination Agreement or the consummation of the Transactions; and (3) the changes, effects, circumstances or developments set forth in the foregoing items (i), (ii), (iii), (iv), (vii) and (viii) shall be taken into account in determining whether a “Material Adverse Effect” has occurred to the extent such changes, effects, circumstances or developments have a disproportionately adverse effect on the Company and its subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its subsidiaries operate, but, in such event, only the incremental disproportionate impact of such changes, effects, circumstances or developments shall be taken into account in determining whether a “Material Adverse Effect” has occurred.
In the Business Combination Agreement, the Company has made customary representations and warranties to Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the Business Combination Agreement. These representations and warranties relate to, among other things:
| • | due organization, valid existence, good standing (to the extent applicable) and authority and qualification to conduct business with respect to the Company and its subsidiaries; |
| • | the capital structure of the Company and its subsidiaries; |
| • | the Company’s corporate power and authority to enter into and perform its obligations under the Business Combination Agreement, and the enforceability of the Business Combination Agreement; |
| • | the Company Board’s recommendation in favor of the Transactions; |
| • | shareholder voting requirements; |
| • | required consents, approvals and regulatory filings in connection with the Business Combination Agreement and performance thereof; |
| • | the accuracy and timeliness of all documents required to be filed or furnished by the Company with the SEC; |
| • | compliance with Nasdaq listing criteria; |
| • | the accuracy and completeness of the Company’s consolidated financial statements; |
| • | the Company’s internal accounting controls and procedures; |
| • | the Company’s disclosure controls and procedures; |
| • | the absence of Material Adverse Effects on the Company and its subsidiaries; |
| • | the absence of any litigation or legal proceedings against the Company or its subsidiaries; |
| • | the Company’s and its subsidiaries’ compliance with laws, including applicable anti-bribery and anti-corruption laws, applicable customs and trade laws, and applicable laws relating to government contracts; |
| • | the Company’s and its subsidiaries’ possession of necessary permits and internal controls, policies and procedures; |
| • | labor and employment matters; |
| • | trademarks, patents, copyrights and other intellectual property matters; |
| • | real property owned or leased by the Company and its subsidiaries; |
| • | the existence and enforceability of specified categories of the Company’s and its subsidiaries’ material contracts and the violation or breach of or default thereunder; |
| • | gaming matters, including regulatory compliance and authority to conduct business; |
| • | the identities of and status of relationships with the Company’s and its subsidiaries’ top customers and suppliers; |
| • | the rendering of Stifel’s fairness opinions to the Board; |
| • | payment of fees to brokers in connection with the Business Combination Agreement; and |
| • | absence of any transactions, relations or understandings between the Company or any of its subsidiaries and any affiliate or related person. |
Each of Parent and Merger Sub has made customary representations and warranties to the Company that are subject, in some cases, to specified exceptions and qualifications contained in the Business Combination Agreement. These representations and warranties relate to, among other things:
| • | due organization, good standing and authority and qualification to conduct business with respect to Parent and Merger Sub; |
| • | Parent’s ownership of Merger Sub, which was formed solely for the purposes of engaging in the Transactions; |
| • | power and authority to execute and deliver and perform their respective obligations under the Business Combination Agreement; |
| • | required consents and regulatory filings in connection with the Business Combination Agreement; |
| • | the absence of litigation and legal proceedings against Parent or Merger Sub; and |
| • | matters with respect to Parent’s and Merger Sub’s sufficiency of funds, including solvency. |
Some of the representations and warranties in the Business Combination Agreement made by Parent and Merger Sub are qualified as to “materiality” or “Parent Material Adverse Effect.” For purposes of the Business Combination Agreement, “Parent Material Adverse Effect” means any change, event, development, circumstance or effect that, individually or in the aggregate, would reasonably be expected to prevent or materially delay, materially impair or materially interfere with, or materially adversely affect the ability of Parent or Merger Sub to consummate the Merger and the other Transactions by the Termination Date.
The representations and warranties contained in the Business Combination Agreement will not survive the completion of the Merger.
Conduct of Business Pending the Merger
The Business Combination Agreement provides that during the period of time between May 15, 2023 (which is the date of the signing of the Business Combination Agreement) and the earlier to occur of the termination of the Business Combination Agreement or the Merger Effective Time, except as (1) required by applicable Law, (2) as Parent may approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), (3) as expressly disclosed in the Company Disclosure Schedule, or (4) as expressly contemplated by the Business Combination Agreement, the Company shall conduct its business and the business of its Subsidiaries in the ordinary course of business and, to the extent consistent therewith:
| (a) | will, and will cause each of its subsidiaries, to use its and their commercially reasonable efforts to (A) preserve substantially intact the Company’s and its subsidiaries’ business organizations, goodwill, assets, properties, Gaming Licenses and Contracts, (B) maintain its existence in good standing under the Laws of its organization, incorporation or formation, as applicable, (C) keep available the services of its current officers, employees and independent contractors, (D) preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and other persons with which the Company and its subsidiaries have business relations and (E) maintain in effect all of its foreign, federal, state and local licenses; |
| (b) | will not, and will not permit any of its subsidiaries to, among other things (subject to certain exceptions set forth in the Business Combination Agreement and Company Disclosure Schedule to the Business Combination Agreement): |
| (i) | (A) amend, supplement or otherwise modify its Organizational Documents, (B) adjust, split, combine, subdivide or reclassify its Company Securities, (C) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise (or any combination thereof) in respect of, or enter into any Contract with respect to the voting of, any shares of its Company Securities, or (D) purchase, repurchase, redeem or otherwise acquire any Company Securities (other than pursuant to the exercise of Company Options or the forfeiture of, or withholding of Taxes with respect to, Company Options or Company RSUs outstanding on the date of the Business Combination Agreement, or permitted to be granted pursuant to the Business Combination Agreement in accordance with the existing terms of such awards and the Company Equity Plans; |
| (ii) | merge or consolidate with any other person, or restructure, recapitalize, dissolve, reorganize or completely or partially liquidate, or adopt or effect a plan of complete or partial liquidation or dissolution, except with respect to any wholly owned Subsidiary of the Company; |
| (iii) | except as required by applicable Law or by any Company Plan in effect as of May 15, 2023, (A) increase the compensation or benefits payable to any Participant, except for (i) increases in cash compensation in the ordinary course of business and consistent with past practice for current employees of no greater than 5% in the aggregate relative to what was scheduled in the Company’s budget included in the Company Disclosure Schedule (the “2023 Budget”) or, (ii) with respect to employees who, as of the date of the Business Combination Agreement, hold Company Equity Awards, grants of equity awards permitted under the Business Combination Agreement, (B) grant any bonus, severance, change of control, retention, termination or similar compensation or benefits to any Participant other than (x) one-off cash bonuses that do not exceed the aggregate amount budgeted in the 2023 Budget or (y) severance entitlements in offer letters for new hires, in each case in the ordinary course of business consistent with past practice, (C) amend, adopt, establish, agree to establish, enter into, terminate or make any change to any Company Plan, including any new annual bonus or incentive plan, or any collective bargaining agreement or other labor union Contract, (D) take any action to accelerate the vesting of, or payment of, any compensation or benefit under any Company Plan, (E) take any action to fund or in any other way secure the payment of compensation or benefits under any Company Plan other than in the ordinary course of business, (F) hire, engage, promote, temporarily layoff, furlough or terminate the employment or service of (other than termination for cause, including terminations resulting as a result of an employee’s failure to meet reasonable performance expectations) any Participant who, in the case of promotions, layoffs, terminations and furloughs, holds Company Equity Awards as of the date of the Business Combination Agreement and, in the case of hirings and engagements, (x) will be granted Company Equity Awards by the Company or (y) will have an annual base salary or fees of $200,000 or more (G) waive or release any noncompetition, non-solicitation, non-disclosure, non-interference, non-disparagement, or other restrictive covenant obligation of any Participant, (H) grant or forgive any loan to any Participant or (I) effectuate any employee layoff or restructuring event affecting in whole or in material part any site of employment, facility, or operating unit; |
| (iv) | incur any Indebtedness or issue any rights to acquire any Indebtedness, or assume, guarantee, grant any Lien in respect of or otherwise become liable for any Indebtedness for any Person, except (A) pursuant to agreements set forth in the Company Disclosure Schedule, in the ordinary course of business consistent with past practice, (B) inter-company Indebtedness among the Company and its wholly owned Subsidiaries, or (C) as otherwise do not exceed $10,000,000 in the aggregate; |
| (v) | make or commit to make any capital expenditures, or any obligations or liabilities in connection therewith, greater than as scheduled in the 2023 Budget, except as otherwise do not exceed $2,000,000 individually or $10,000,000 in the aggregate; |
| (vi) | transfer, lease, license, sell, assign, mortgage, pledge, place a Lien upon, surrender, divest, cancel, abandon, allow to lapse or otherwise dispose of any tangible properties or assets (including capital stock of any of its Subsidiaries), with a fair market value in excess of $1,000,000 individually and $5,000,000 in the aggregate (other than (1) transactions among the Company and its wholly owned Subsidiaries, (2) sales or purchases of inventory or obsolete or worthless equipment, in each case, in the ordinary course of business); |
| (vii) | issue, deliver, sell, grant, transfer, or encumber, or authorize the issuance, delivery, sale, grant, transfer or encumbrance of Company Securities, except as contemplated by the Continuation in Section 1.03 of the Business Combination Agreement and any Company Shares issued pursuant to Company Options, or Company RSUs outstanding on May 15, 2023 in accordance with the existing terms of such awards and the Company Equity Plans; |
| (viii) | (A) acquire or commit to acquire any business, whether by merger, purchase of property or assets, consolidation or otherwise or (B) subject to the foregoing clause (A), spend or commit to spend in excess of $1,000,000 individually and $5,000,000 in the aggregate to acquire assets or other property (valuing any non-cash consideration at its fair market value as of the date of the agreement for such acquisition); |
| (ix) | make any material change with respect to its financial accounting policies or procedures, in each case, except as required by changes in IFRS or by applicable Law; |
| (x) | (A) enter into any new line of business, (B) conduct business in breach of any applicable Gaming Laws or (C) amend or vary the manner or scope of any existing line of business, if, for purposes of this paragraph (C), such amendment or variation may give rise to a requirement for the Company or any of its subsidiaries to apply for and/or obtain any new Gaming License or to vary any existing Gaming License in a manner that would reasonably be expected to cause the Closing Date to be materially delayed or the Closing to be materially impaired or prevented; |
| (xi) | make any loans, advances or capital contributions to, or investments in, any person in excess of $250,000 individually and $1,000,000 in the aggregate (other than extensions of credit to customers in the ordinary course of business, advances to directors, officers and other employees or independent contractors for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with the Company’s policies related thereto, or loans, advances or capital contributions to the Company or any direct or indirect wholly owned Subsidiary of the Company); |
| (xii) | (A) amend or modify in any material respect or terminate (excluding terminations upon expiration of the term thereof in accordance with the terms thereof) any Material Contract or waive, release or assign any material rights, claims or benefits under any Material Contract or take (or fail to take) any action that would reasonably be expected to cause or result in a material breach of, or material default under, any Material Contract or (B) other than in the ordinary course of business and after consultation with Parent, enter into any Contract that would have been a Material Contract had it been entered into prior to the date of the Business Combination Agreement; |
| (xiii) | settle, waive, release compromise or otherwise resolve any Proceeding in a manner resulting in liability for, or restrictions on the conduct of the business by, the Company or any of its subsidiaries, other than settlements, waivers or releases of, or compromises for or resolutions of any Proceeding (A) if the amount of any such settlement is not in excess of $1,000,000 individually or $5,000,000 in the aggregate; provided, that such settlements do not involve any non-de minimis injunctive or equitable relief or impose non-de minimis restrictions on the business activities of the Company and its Subsidiaries or Parent and its Subsidiaries or (B) waive any material right with respect to any material claim held by the Company or any of its Subsidiaries; |
| (xiv) | fail to maintain, cancel, terminate or allow to lapse without a commercially reasonable substitute therefor, any material License; |
| (xv) | terminate, fail to renew, abandon, cancel, let lapse, encumber, license, sell, transfer or otherwise dispose of any material Company IP, or disclose (other than to agents, service providers, employees and contractors under confidentiality agreements) any material, confidential Company IP, in each case, other than (A) non-exclusive licenses granted in the ordinary course of business or (B) failing to renew, abandoning, cancelling, letting lapse immaterial Registered Company IP in the Company’s reasonable business judgement; |
| (xvi) | (A) settle, consent to or compromise any material Tax claim, audit, or assessment (B) make, revoke or change any material Tax election, change any Tax accounting period, or adopt or change any material method of Tax accounting, (C) make any material amendment to any Tax Returns, (D) surrender or waive any right to claim a material Tax refund or (E) consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment; |
| (xvii) | terminate, cancel or make any material changes to the structure, limits or terms and conditions of any of the material insurance policies of the Company or its subsidiaries, including allowing the policies to expire without renewing such policies or obtaining comparable replacement coverage, or prejudicing rights to insurance payments or coverage; |
| (xviii) | fail to use its reasonable best efforts not to allow or suffer any Gaming License to lapse, expire or be cancelled, suspended, limited, revoked, materially modified, become subject to a condition, other than a Customary Condition, or not be renewed; |
| (xix) | surrender or rescind any Gaming License, or otherwise withdraw any pending application for a Gaming License; or |
| (xx) | agree, resolve or commit to do any of the foregoing. |
Notwithstanding the foregoing, nothing contained in the Business Combination Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or any of its Subsidiaries’ operations prior to Closing. Prior to Closing, the Company shall exercise, consistent with the terms and conditions of the Business Combination Agreement, complete control and supervision over its and each of its Subsidiaries’ respective operations.
Competing Proposals
From the date of the Business Combination Agreement until the earlier to occur of the termination of the Business Combination Agreement and the Merger Effective Time, and subject to certain exceptions set forth in the Business Combination Agreement, the Company has agreed not to, and to cause its subsidiaries and its and their respective representatives not to, directly or indirectly:
| (i) | solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any offer inquiry, indication of interest or proposal that constitutes or would reasonably be expected to lead to, an Acquisition Proposal; |
| (ii) | furnish to any Person or Group (other than Parent or any of its Representatives in their capacity as such) any non-public information relating to the Company or any of its Subsidiaries or to afford any Person or Group (other than Parent or any of its Representatives in their capacity as such) access to the business, properties, assets, books, records or other non-public information relating to the Company or any of its Subsidiaries, or to any personnel, of the Company or any of its Subsidiaries, in any such case in connection with an Acquisition Proposal or with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an Acquisition Proposal or the making of any offer, inquiry, indication of interest or proposal that constitutes, or would reasonably be expected to lead to an Acquisition Proposal; |
| (iii) | participate or engage in discussions or negotiations with any Person or Group with respect to an Acquisition Proposal or with respect to any inquiries from third Persons relating to the making of an Acquisition Proposal; |
| (iv) | approve, endorse or recommend any offer, inquiry, indication of interest or proposal that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal; |
| (v) | enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other Contract (whether written or oral, binding or non-binding) relating to an Acquisition Transaction; |
| (vi) | authorize or commit to do any of the foregoing. |
| (vii) | withhold, withdraw, amend, qualify or modify or publicly propose to withhold, withdraw, amend qualify or modify, the Company Board Recommendation in a manner adverse to Parent; |
| (viii) | adopt, approve or recommend an Acquisition Proposal; |
| (ix) | fail to publicly reaffirm the Company Board Recommendation within three business days of the occurrence of a material event or development and after Parent so requests in writing (or if the Cayman Shareholder Meeting is scheduled to be held within ten business days, then within one business day after Parent so requests in writing); |
| (x) | if any Acquisition Proposal structured as a tender or exchange offer is commenced, fail to recommend against acceptance of such tender or exchange offer by the Company’s stockholders within ten business days of commencement thereof or fail to maintain such recommendation against acceptance at any time; or |
| (xi) | fail to include the Company Board Recommendation in the shareholder circular for the Cayman Shareholder Meeting. |
The Business Combination Agreement also contained customary exceptions to the non-solicitation provisions, discussed in the section entitled “The Business Combination Agreement—Competing Proposals” of the Convening Notice and Shareholder Circular for the First Luxembourg Shareholder Meeting (the “First Luxembourg Shareholder Circular”), filed as Exhibit 99.1 to the Company’s Form 6-K filed with the SEC on June 21, 2023. Those exceptions to the non-solicitation provisions no longer apply. The Company will notify Parent within twenty-four hours after the receipt of any Acquisition Proposal or any inquiry related to the making of an Acquisition Proposal, together with the identity of the person making any such proposal, inquiry or request, or any inquiry, indication, request or offer that would be reasonably expected to lead to an Acquisition Proposal, and provide Parent with a summary of the terms and conditions of such proposal, inquiry or request and, if in writing, a copy thereof. The Company will keep Parent reasonably informed on a substantially current basis of the status of discussions relating to any such proposal, inquiry or request (and, in any event, within twenty-four hours of any change to the form or amount consideration or any other material terms specified in such proposal, inquiry or request).
For purposes of the Business Combination Agreement:
“Acquisition Proposal” means any offer, inquiry, indication of interest or proposal (other than by Parent or Merger Sub) relating to an Acquisition Transaction;
“Acquisition Transaction” means any transaction or series of related transactions involving (i) any merger, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination, joint venture, partnership, dissolution, liquidation, spin-off, extraordinary dividend or similar transaction involving the Company or any of its Subsidiaries which is structured to permit any Person or Group of Persons to, directly or indirectly, hold securities representing fifteen percent (15%) or more of the outstanding Shares after giving effect to the consummation of such transaction or series of transactions, (ii) any direct or indirect purchase, license or other acquisition by any Person or Group of Persons of assets constituting or accounting for fifteen percent (15%) or more of the consolidated net revenues, net income or total assets (measured by the fair market value thereof as of the date of such purchase, license or other acquisition) of the Company and its Subsidiaries, taken as a whole and (iii) any direct or indirect acquisition by any Person or group of Persons, whether from the Company or any other Persons, of securities representing fifteen percent (15%) or more of the outstanding Shares after giving effect to the consummation of such acquisition, including pursuant to a tender offer or exchange offer by such Person or group of Persons, in each case, other than the Transactions; and
“Superior Proposal” means any bona fide written Acquisition Proposal made by a third party that did not result from any breach of Section 5.02 of the Business Combination Agreement (except that for purposes of this definition the references to “fifteen percent (15%) or more” in the definition of Acquisition Transaction shall be deemed to be references to “more than seventy five percent (75%)” in each place it appears), after the date of the Business Combination Agreement that the Company Board determines in good faith (after consultation with its outside legal counsel and financial advisors) (i) is more favorable to the holders of Shares from a financial point of view than the Transactions (taking into account (a) all financial considerations; (b) the identity of the third party making such Acquisition Proposal; (c) the anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Acquisition Proposal; (d) the other terms and conditions of such Acquisition Proposal and the implications thereof on the Company, including relevant legal, regulatory, and other aspects of such Acquisition Proposal deemed relevant by the Company Board and (e) any revisions to the terms of the Business Combination Agreement and the Merger proposed by Parent during any notice period set forth in Section 5.02(e) of the Business Combination Agreement); (ii) is reasonably likely to be completed on a timely basis, taking into account all financial, legal, regulatory and other aspects of such Acquisition Proposal, and does not contain any conditionality of the third party’s obligation to consummate the Superior Proposal that is related to the third party’s completion of due diligence (for the avoidance of doubt, a right of the third party to access to or notification of information or documents shall not be deemed a due diligence closing condition) or the third party’s having obtained financing or disbursement of financing for the Superior Proposal and (iii) the financing of which is fully committed or reasonably determined in good faith by the Company Board to be available.
The Board’s Recommendation; Company Board Recommendation Change
As described above, the Board has made the recommendation that the holders of Company Shares vote “FOR” the Cayman Meeting Proposals. Exceptions to the Business Combination Agreement’s prohibition on the Board effecting a Company Board Recommendation Change as described in the section of the First Luxembourg Shareholder Circular entitled “The Business Combination Agreement—The Board’s Recommendation; Company Board Recommendation Change,” no longer apply following the First Luxembourg Shareholder Approval.
Employee Benefits Following the Merger Effective Time
As described in further detail in the Business Combination Agreement, Parent has agreed that for the period commencing at the Merger Effective Time and ending 12 months thereafter (such period, the “Transition Period”), Parent will, or will cause the Surviving Company or applicable subsidiary or affiliate of Parent to provide each employee of the Company or its subsidiaries who continues to be employed by Parent, the Surviving Company or any subsidiary or affiliate of Parent as of the Merger Effective Time, while they remain employed during the Transition Period (each, a “Continuing Employee”) with compensation (including incentive compensation opportunities) and employee benefits that are substantially comparable in the aggregate to the compensation (including incentive compensation opportunities) and employee benefits provided to the Company employees immediately prior to the Merger Effective Time, provided, however, that each Company Employee’s base salary and hourly wages will be no less than the base salary or hourly wages provided to such Company employee immediately prior to the Merger Effective Time, provided further that no equity-based, retention, change-in-control or other special or non-recurring compensation or benefits provided prior to the Closing Date shall be taken into account for purposes of this paragraph.
With respect to all employee benefit plans of the Surviving Company and its subsidiaries, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), each Company employee’s service with the Company or any of its subsidiaries (as well as service with any predecessor employer of the Company or any such subsidiary, to the extent service with the predecessor employer was recognized by the Company or such Subsidiary) shall be treated as service with the Surviving Company or any of its subsidiaries (or in the case of a transfer of all or substantially all the assets and business of the Surviving Company, its successors and assigns); provided, however, that such service need not be recognized (i) to the extent that such recognition would result in any duplication of benefits for the same period of service or (ii) for purposes of benefit accrual under any defined benefit pension plan.
In addition, Parent will or will cause the Surviving Company to, waive, or cause to be waived, any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any welfare benefit plan maintained by the Surviving Company or any of its subsidiaries in which Company employees (and their eligible dependents) will be eligible to participate from and after the Merger Effective Time, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable Company Plan immediately prior to the Merger Effective Time. Parent shall, or shall cause the Surviving Company to, recognize the dollar amount of all co-payments, deductibles and similar expenses incurred by each Company Employee (and his or her eligible dependents) during the calendar year in which the Merger Effective Time occurs for purposes of satisfying such year’s deductible and co-payment limitations under the relevant welfare benefit plans in which they may be eligible to participate from and after the Merger Effective Time.
Efforts to Close the Merger
Under the Business Combination Agreement, each of the Company, Parent and Merger Sub has agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws to cause the conditions to closing of the Transactions to be satisfied as promptly as reasonably practicable (and in any event no later than the Termination Date (as the same may be extended)) and to consummate and make effective the Merger and the other Transactions as expeditiously as possible after the date of the Business Combination Agreement, including the obtainment of all Required Clearances; provided, however, that, Parent and its subsidiaries will not be required to take any actions which would result in a Regulatory Detriment.
Indemnification and Insurance
From and after the Merger Effective Time, the Surviving Company will and Parent will cause the Surviving Company to (i) indemnify and hold harmless each individual who at the Merger Effective Time is, or at any time prior to the Merger Effective Time was, an Indemnitee with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with any action (whether civil, criminal, administrative or investigative), whenever asserted, based on or arising out of, in whole or in part, (A) the fact that an Indemnitee was a director or officer of the Company or such subsidiary or (B) acts or omissions by an Indemnitee in the Indemnitee’s capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary (including in connection with serving at the request of the Company or such subsidiary as a director, officer, employee, agent, trustee or fiduciary of another person (including any employee benefit plan)), in each case under clause (A) or (B), at, or at any time prior to, the Merger Effective Time (including any action relating in whole or in part to the Business Combination Agreement and the Transactions or relating to the enforcement of any indemnification or advancement right of any Indemnitee), to the fullest extent permitted under applicable Law, pursuant to the Existing Articles and, following the Continuation Effective Time, in the Continuation Articles and in any written agreement in existence as of the date of the Business Combination Agreement and previously made available to Parent providing for indemnification between the Company and any Indemnitee and (ii) assume all obligations of the Company and such subsidiaries to the Indemnitees in respect of indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Merger Effective Time as provided in the Existing Articles and, following the Continuation Effective Time, in the Continuation Articles, and in any written agreement in existence as of the date of the Business Combination Agreement providing for indemnification between the Company and any Indemnitee and previously made available to Parent.
Without limiting the foregoing, Parent, from and after the Merger Effective Time, will cause, unless otherwise required by Law, the Continuation Articles to contain provisions no less favorable to the Indemnitees with respect to indemnification, advancement of expenses and exculpation of the Indemnitees than are set forth as of the date of the Business Combination Agreement in the Existing Articles, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees.
Further, the Business Combination Agreement provides that prior to the Merger Effective Time, the Company shall obtain and fully pay for “tail” insurance policies with a claims period of at least six (6) years from and after the Merger Effective Time from an insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance (collectively, “D&O Insurance”) with benefits and levels of coverage at least as favorable as the Company’s existing policies with respect to matters existing or occurring at or prior to the Merger Effective Time (including in connection with the Business Combination Agreement or the transactions or actions contemplated thereby) (the “D&O Tail Policy”); provided, however that the Company shall not be required to pay an annual premium for the D&O Tail Policy in excess of three-hundred percent (300%) of the annual premiums paid by the Company prior to the date of the Business Combination Agreement in respect of the D&O Insurance. If the Company for any reason fails to obtain such “tail” insurance policies as of the Merger Effective Time, the Surviving Company shall, and Parent shall cause the Surviving Company to, continue to maintain in effect for a period of at least six (6) years from and after the Merger Effective Time the D&O Insurance in place as of the date of the Business Combination Agreement with benefits and levels of coverage at least as favorable as provided in the Company’s existing policies as of the date of the Business Combination Agreement, or the Surviving Company shall, and Parent shall cause the Surviving Company to, purchase comparable D&O Insurance for such six-year period with benefits and levels of coverage at least as favorable as provided in the Company’s existing policies as of the date of the Business Combination Agreement; provided, however that none of the Company, Parent or the Surviving Company shall be required to expend for such policies, an annual premium amount in excess of three-hundred percent (300%) of the annual premiums paid by the Company prior to the date of the Business Combination Agreement in respect of the D&O Insurance; and, in the event that the premium for such insurance coverage exceeds such amount, the Surviving Company shall obtain a policy with the greatest coverage available for a cost not exceeding such amount.
Other Covenants
Cayman Shareholder Meeting
The Company agreed (in accordance with applicable Law, the Existing Articles, and Nasdaq rules) to (i) as promptly as reasonably practicable after the date of the Business Combination Agreement, take all necessary actions to duly call, give notice of, establish a record date, convene and hold a meeting of its shareholders (including any adjournment, recess, reconvening or postponement thereof) for the purpose of obtaining shareholder approval for the Cayman Meeting Proposals, (ii) unless otherwise agreed by Parent in writing, convene and hold the Cayman Shareholder Meeting to obtain shareholder approval for the Cayman Meeting Proposals as promptly as practicable following the occurrence of the Continuation, (iii) unless otherwise agreed by Parent in writing, mail to the shareholders of the Company this circular relating to the Cayman Shareholder Meeting no later than five business days prior to the completion of the Continuation and (iv) immediately following the completion of the Continuation, furnish a convening notice for the Cayman Shareholder Meeting, in form and substance reasonably acceptable to Parent, specifying the date, time and location of the Cayman Shareholder Meeting and any other information required under applicable Law and Nasdaq rules, on a Form 6-K or otherwise, and disseminate and otherwise make available such notice through the Company’s website.
Shareholder Litigation
The Company agreed (i) to promptly notify Parent of any shareholder litigation brought prior to the Merger Effective Time or valid termination of the Business Combination Agreement, (ii) to keep Parent reasonably informed with respect to the status thereof, (iii) to give Parent the right to review and comment on all material filings or responses to be made by the Company in connection with any such litigation, and (iv) to give Parent the right to consult on the settlement, release, waiver or compromise of any such litigation. The Company will in good faith take such comments into account, and no such settlement, release, waiver or compromise of such litigation will be agreed to without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
Obligations to Seek Tax Rulings
The Company agreed that prior to the Closing the Company and its Israeli subsidiaries would file with the ITA, in a form reasonably acceptable to Parent, an application for a ruling that provides that (A) the treatment of all Vested 102 Trustee Continuation Equity Awards as contemplated by the Business Combination Agreement, and the delivery to the 102 Trustee of all amounts due to the holders of Vested 102 Trustee Continuation Equity Awards and Company 102 Shares, in each case prior to the lapse of the 102 Trust Period, will not be treated as a breach of the provisions of Section 102(b)(2) of the ITO, provided, that the applicable consideration paid to the holders of Vested 102 Trustee Continuation Equity Awards and to the holders of Company 102 Shares is deposited for the duration of the 102 Trust Period with the 102 Trustee and that such consideration will be considered under Section 102(b)(2) of the ITO to be income subject to the “capital gains route”; (B) that Parent and anyone acting on its behalf, including the Paying Agent, will be exempt from withholding Tax in relation to any payments or consideration transferred to the 102 Trustee in relation to Vested 102 Trustee Continuation Equity Awards and Company 102 Shares; (C) that (w) unvested Company Options that are Company 102 Options or Company 3(i) Options becoming and being deemed Unvested Continuation Options, (x) the exchange of Unvested Continuation Options that were originally granted as Company 102 Options or Company 3(i) Options for options with respect to Parent Ordinary Shares, (y) unvested Company RSUs that are Company 102 RSUs becoming and being deemed Unvested Continuation RSUs and (z) the exchange of Unvested Continuation RSUs that were originally granted as Company 102 RSUs for restricted share units with respect to Parent ordinary Shares not result in a Taxable event pursuant to Section 3(i) or Section 102 of the ITO, and a Tax continuity will apply, including for the purposes of Section 102 of the ITO, with regard to the requisite holding period, which will be deemed to have begun at the time of the original issuance of the Company Option or Company RSU, as applicable, and the classification of any gain thereunder will remain classified as capital gains; and (D) any other instructions or determinations as may be provided by the ITA (the “Options Tax Ruling”).
If the Options Tax Ruling is not granted prior to the Closing Date, the Company will use reasonable best efforts to seek to receive prior to the Closing Date an interim Tax ruling confirming that Parent and anyone acting on its behalf (including the Paying Agent) will be exempt from the requirement to withhold Taxes in Israel on any payments made with respect to Vested 102 Trustee Continuation Equity Awards or Company 102 Shares (which ruling may be subject to customary conditions regularly associated with such a ruling) (the “Interim Options Tax Ruling”).
The Company and Parent agree to cooperate with each other and use, and will cause their respective subsidiaries and affiliates to use, their respective reasonable best efforts to take (or cause to be taken) all actions, and do (or cause to be done) all things necessary, proper or advisable under the Business Combination Agreement and applicable Laws to obtain the Interim Options Tax Ruling and the Options Tax Ruling as promptly as practicable; provided, however, that if neither ruling is obtained for any reason whatsoever by the Closing Date, the Closing will not be delayed or postponed, or give rise to any right of termination of the Business Combination Agreement.
Conditions to the Effectuation of the Continuation
The obligations of the Company to effect the Continuation are subject to the satisfaction (or waiver by the parties, to the extent permissible under applicable Law) of the following Continuation Conditions:
| • | obtainment of the First Luxembourg Shareholder Approval; |
| • | the expiration or earlier termination of the waiting period applicable to the consummation of the Transactions under the HSR Act; |
| • | the receipt of all Required Clearances and the expiration or earlier termination of all related applicable waiting periods; |
| • | no governmental authority in any jurisdiction has by any law or order restrained, enjoined or otherwise prohibited the consummation of the Transactions; |
| • | the receipt by each of Parent and the Company of a certificate from the other party dated as of the Continuation Date and signed on behalf of Parent or the Company, as applicable, by its executive officer, to the effect that as of the Continuation Date, it has no knowledge of any Effect, or the magnitude or consequences of such Effect that has caused or that would cause any of the Merger Conditions not to be satisfied on the Closing Date (assuming the Closing Date will be within three business days from the Continuation Date; and |
| • | the satisfaction or waiver of the other Merger Conditions except for any Merger Conditions that are not able by their terms or nature to be satisfied prior to the Continuation Effective Time. |
Conditions to the Closing of the Merger
The respective obligations of the Company, Parent and Merger Sub to effect the Merger are subject to the satisfaction (or waiver by the parties, to the extent such waiver is permissible under applicable Law) of the following conditions:
| • | the completion of the Continuation; |
| • | obtainment of the Cayman Shareholder Approval; and |
| • | the continued satisfaction or waiver (to the extent permitted under applicable Law) of the first four Continuation Conditions listed in the section of this shareholder circular entitled “—Conditions to the Effectuation of the Continuation.” |
The obligations of Parent and Merger Sub to effect the Merger are further subject to the satisfaction (or waiver by Parent, if permissible under applicable Law) of the following conditions:
| • | with specified qualifications and exceptions, the truth and correctness of the Company’s representations and warranties contained in the Business Combination Agreement as of immediately prior to the Merger Effective Time; |
| • | the Company having complied with or performed, in all material respects, the obligations required to be complied with or performed by it under the Business Combination Agreement on or prior to the Merger Effective Time; |
| • | no Company Material Adverse Effect shall have occurred since May 15, 2023 that is continuing; |
| • | the receipt by Parent of a certificate dated as of the Closing Date and signed on behalf of the Company by a senior executive officer, to the effect that the conditions described in the preceding three items have been satisfied; |
| • | no Remedy Actions have been imposed, or are expected to be imposed on or following the Merger Effective Time, that would, individually or in the aggregate, result in a Regulatory Detriment; and |
| • | the receipt of confirmation from the CMA that (i) the CMA does not intend to request further information or open a Phase I investigation in relation to the Transactions or any matters arising therefrom, after submission by Parent of a briefing paper to the CMA’s merger intelligence committee (provided, that the CMA has not subsequently decided to open an investigation in relation to the Transactions or any matters arising therefrom or related thereto); (ii) the CMA does not intend to refer the Transactions or any matters arising therefrom for a CMA Phase II Reference (which includes a decision accepting a Remedy Action in lieu of such a reference to the extent such Remedy Action would not have a Regulatory Detriment individually or in the aggregate); or (iii) following a CMA Phase II Reference of the Transactions or any matters arising therefrom or related thereto, the Transactions may proceed without any Remedy Action or with a Remedy Action that individually or in the aggregate would not have a Regulatory Detriment. |
The obligations of the Company to effect the Merger are further subject to the satisfaction (or waiver by the Company, if permissible under applicable Law) of the following conditions:
| • | with specified qualifications and exceptions, the truth and correctness of Parent’s and Merger Sub’s representations and warranties contained in the Business Combination Agreement as of immediately prior to the Merger Effective Time; |
| • | Parent and Merger Sub having complied with or performed, in all material respects, their respective obligations required to be performed or complied with by them under the Business Combination Agreement on or prior to the Merger Effective Time; and |
| • | the receipt by the Company of a certificate dated as of the Closing Date and signed on behalf of Parent by a senior executive officer, to the effect that the conditions described in the preceding two items have been satisfied. |
For purposes of the Business Combination Agreement:
“Remedy Action” means (1) by consent decree, hold separate order or otherwise, (I) the sale, divestiture, license, other disposition of, or imposition of any Lien or impediment upon, any and all of the capital stock or other equity or voting interests, assets (whether tangible or intangible), rights, products or businesses of Parent, Merger Sub, their respective affiliates, the Company or any of its controlled affiliates or (II) any other restrictions on the activities of Parent, Merger Sub, their respective affiliates, the Company or any of its controlled affiliates, including any limitation on the ability of Parent, Merger Sub, their respective affiliates, the Company or its controlled affiliates to conduct their respective businesses or own any capital stock or assets or to acquire, hold or exercise full rights of ownership of their respective businesses or assets and, in the case of Parent, the businesses or assets of the Company and its Subsidiaries, or (2) any concession, release, admission of liability, compromise, settlement or loss of rights in connection with any actual or threatened Proceeding;
“Regulatory Detriment” means a material adverse impact of one or more Remedy Actions on Parent, the Company, and their respective subsidiaries, taken as a whole, with materiality, for the purposes of this definition, being measured on a scale relative to the size of the Company and its subsidiaries, taken as a whole (and the aggregate financial and operating metrics of the Company and its subsidiaries, taken as a whole).
Termination of the Business Combination Agreement
The Business Combination Agreement may be terminated and the Continuation, the Merger and the other Transactions may be abandoned at any time prior to the Merger Effective Time, whether after the obtainment of the First Luxembourg Shareholder Approval or before the Cayman Shareholder Approval in the following ways:
| • | by mutual written consent of the Company and Parent; |
| • | by either the Company or Parent, if there shall be any applicable Law that makes consummation of the Transactions illegal or otherwise prohibited or if at any time, consummation of the Transactions would violate any Law or Order of any Governmental Authority having competent jurisdiction and such applicable Law or Order shall have become final and non-appealable; |
| • | by either Parent or the Company, if the Merger Effective Time has not occurred by the Termination Date, provided that (i) if on the Termination Date all of the Merger Conditions have been satisfied or waived, other than the conditions that related to Required Clearances, each of Parent and the Company may, at its sole discretion, extend the Termination Date by two months (the “Outside Date Termination”); |
| • | by either the Company or Parent upon failure to obtain the First Luxembourg Shareholder Approval or the Cayman Shareholder Approval at the First Luxembourg Shareholder Meeting or Cayman Shareholder Meeting, respectively, or any adjournment, reconvening, or postponement thereof, in each case at which a vote on such approval was taken (the “Voting Failure Termination”); |
| • | by Parent, if there has been a breach by the Company of its representations, warranties or covenants contained in the Business Combination Agreement such that any of the conditions precedent in Article VI of the Business Combination Agreement is not reasonably capable of being satisfied in a way that is incapable of being cured prior to the Termination Date or is not cured by the Company within thirty days after receipt by the Company of written notice of such breach from Parent; provided that the right to terminate the Business Combination Agreement will not be available to Parent if either Parent or Merger Sub are then in breach of their respective obligations under the Business Combination Agreement, such that the Merger Conditions shall not be satisfied prior to the Termination Date (the “Company Breach Termination”); |
| • | by the Company if there has been a breach by either Parent or Merger Sub of their respective representations, warranties or covenants contained in the Business Combination Agreement such that any of the conditions precedent in Article VI of the Business Combination Agreement is not reasonably capable of being satisfied in a way that is incapable of being cured prior to the Termination Date or is not cured by Parent or Merger Sub, as applicable, within thirty days after receipt by Parent of written notice of such breach from the Company; provided that the right to terminate the Business Combination Agreement will not be available to the Company if the Company is then in breach of its obligations under the Business Combination Agreement, such that the Merger Conditions shall not be satisfied prior to the Termination Date; and |
| • | by Parent, if, prior to obtaining the First Luxembourg Shareholder Approval or the Cayman Shareholder Approval, (i) the Company materially and willfully breaches its obligations described in the sections of this shareholder circular entitled “—Competing Proposals” and “—The Board’s Recommendation; Company Board Recommendation Change” (provided that the right to terminate the Business Combination Agreement will not be available to Parent following the obtainment of the First Luxembourg Shareholder Approval) or (ii) the Board has effected a Company Board Recommendation Change in respect of the First Luxembourg Shareholder Approval or the Cayman Shareholder Approval (provided that the right to terminate the Business Combination Agreement will not be available to Parent following the respective First Luxembourg Shareholder Approval or Cayman Shareholder Approval (the “Competing Proposal Termination”)). |
Additional termination rights discussed in the section of the First Luxembourg Shareholder Circular entitled “The Business Combination Agreement—Termination of the Business Combination Agreement” that were limited to exercise prior to obtainment of the First Luxembourg Shareholder Approval no longer apply.
In the event that the Business Combination Agreement is terminated pursuant to the termination rights above, the Business Combination Agreement will become null and void and, except as set forth below under “─Company Termination Fee,” and in certain instances for any liability for damages resulting from any Willful Breach prior to such termination fee, there will be no liability on the part of Parent, Merger Sub, the Company, the Parent Related Parties or the Company Related Parties, except that certain sections of the Business Combination Agreement will survive the termination of the Business Combination Agreement in accordance with their respective terms. In addition, no termination of the Business Combination Agreement will affect the rights or obligations of any party pursuant to the confidentiality agreement between Parent and the Company, which rights, obligations and agreements will survive the termination of the Business Combination Agreement in accordance with their respective terms. Company Termination Fee.
If the Business Combination Agreement is terminated in certain circumstances specified therein, the Company has agreed to pay the Company Termination Fee of approximately $40.4 million to Parent.
Parent will be entitled to receive the Company Termination Fee from the Company in the following circumstances:
| • | (A) the Business Combination Agreement was validly terminated pursuant to the Outside Date Termination, Voting Failure Termination or Company Breach Termination, (B) prior to such termination of the Business Combination Agreement or, in the case of a Vote Failure Termination, before whichever shareholder meeting that failed to approve the Transactions, an Acquisition Proposal has been publicly announced or publicly disclosed or delivered to the Company Board and (C) within one year of such termination, either an Acquisition Transaction (which need not be the Acquisition Transaction referenced under clause (B)) is consummated or the Company enters into a definitive agreement providing for the consummation of an Acquisition Transaction (which need not be the Acquisition Transaction referenced under clause (B)) and such Acquisition Transaction is subsequently consummated (or is subsequently terminated before consummation but a subsequent Acquisition Transaction is entered into in connection with the termination of such Acquisition Transaction and such subsequent Acquisition Transaction is subsequently consummated); and |
| • | the Business Combination Agreement is validly terminated pursuant to a Competing Proposal Termination. |
Solely for purposes of the immediately preceding bullet point, all references to “15 percent” in the definition of “Acquisition Transaction” are deemed to be references to “50 percent.”
Other Material Provisions of the Business Combination Agreement
Amendment
The Business Combination Agreement may be amended, at any time prior to the Merger Effective Time, in writing by the Company, Parent and Merger Sub, by action of the boards of directors of the respective parties.
Expenses
Except as otherwise expressly provided in the Business Combination Agreement, all Expenses incurred in connection with the Business Combination Agreement and the Transactions will be paid by the party incurring such Expenses, whether or not the Transactions are consummated.
Governing Law and Jurisdiction
The Business Combination Agreement is governed by the laws of the State of New York without regard to any conflicts of law rules that would require the application of any other law, except that the fiduciary duties of the Company Board, any exercise of appraisal or dissenters’ rights by the Company’s shareholders, the Continuation, the Statutory Plan of Merger and the Merger, shall in each case be governed by the laws of Luxembourg and the laws of the Cayman Islands to the extent applicable.
Except as provided for in the Statutory Plan of Merger, all disputes arising out of or in connection with the Business Combination Agreement (or the existence, breach, termination or validity thereof) shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce with the legal seat of such arbitration being New York, New York, United States, except that for purposes of applying for a temporary restraining order, preliminary injunction, specific performance, or other interim or conservatory relief, as necessary in connection with the Business Combination Agreement and the Transactions, will be irrevocably submitted to the exclusive jurisdiction and venue of the United States federal court located in the Borough of Manhattan (or if jurisdiction in such United States federal court is not available, in a New York State court located in the Borough of Manhattan).
Specific Performance
In the event of a breach or threatened breach of any covenant or obligation in the Business Combination Agreement the non‑breaching party will be entitled to an injunction, specific performance or other equitable relief to enforce specifically the terms and provisions of the Business Combination Agreement.
DESCRIPTION OF COMPANY’S SHARE CAPITAL AS A CAYMAN ISLANDS EXEMPTED COMPANY
Upon completion of the Continuation, the authorized share capital of the Company (as set out in the Continuation Articles) will comprise $174,388.19 (divided into the number of ordinary shares of the Company then outstanding).
During the Continuation Period, the Company Shares will no longer trade on Nasdaq, and you will not be able to buy, sell or transfer Company Shares except in accordance with the Continuation Articles. The sole purpose of the Company Shares during the Continuation Period will be to represent the right of Company shareholders to receive the Merger Consideration subject to completion of the Merger.
In the event of the Re-Continuation Scenario, and following the completion of the Re-Continuation, the authorized share capital of the Company will be the authorized share capital of the Company as of immediately prior to the Continuation (divided into the number of ordinary shares of the Company then outstanding).
Following the completion of the Re-Continuation, the Company would remain a public company, the Company Shares would continue to be listed and traded on Nasdaq and registered under the Exchange Act, and the Company would continue to file periodic reports with the SEC.
Comparison of Luxembourg Shareholder Rights and Cayman Shareholder Rights
Up until the Continuation Effective Time the Company is incorporated under the laws of Luxembourg. From and after the Continuation Effective Time and until the occurrence of a Re-Continuation (if applicable) the Company will be incorporated under the laws of the Cayman Islands. In the case of a Re-Continuation occurring following the Continuation Effective Time (if applicable), the Company will be incorporated under the law of Luxembourg. The following table summarizes certain material differences between the rights of holders of ordinary shares in the Company as a Luxembourg law governed public limited liability company (société anonyme) and the rights of holders of the Company Shares in the Company as a Cayman Islands exempted company, which result from differences in the governing documents and the laws of Luxembourg and the Cayman Islands. This comparison applies with respect to (1) the Continuation of the Company to the Cayman Islands and (2) if applicable, the Re-Continuation of the Company to Luxembourg.
| Luxembourg: | Cayman Islands: |
Transferability of Company Shares |
| Under Luxembourg law, the shares of the Company are freely transferrable subject to any restrictions set out in our articles of association. | | The Company Shares are non-transferrable and the directors of the Company shall decline to register any transfer of the legal title to any Company Shares without a requirement to assign any reason therefor. |
| Limited Liability of Shareholders |
| The liability of the shareholders of the Company is limited to the amount contributed on the shares of the Company and, if any, unpaid on the shares of the Company respectively held by them. | | The liability of the shareholders of the Company is limited to the amount, if any, unpaid on the Company Shares respectively held by them. |
| Amendment of Governing Documents |
Under Luxembourg law, amendments to our articles of association require a general meeting of shareholders held in Luxembourg and in front of a public notary at which at least one half of the share capital is represented. The notice of the general meeting of shareholders shall set out the proposed amendments to the articles of association.
If the aforementioned quorum is not reached, a second meeting may be convened by means of a notice published in the Luxembourg official gazette (Recueil Electronique des Sociétés et Associations) and in a Luxembourg newspaper 15 days before the meeting. The second meeting shall be validly constituted regardless of the proportion of the share capital represented. | | Subject to the Cayman Companies Act and the rights attaching to the various classes of shares that may be issued from time to time by the Company, the Company may at any time and from time to time by Special Resolution alter or amend the Continuation Articles in whole or in part.
For the purposes of this table:
“Ordinary Resolution” means a resolution:
(a) passed by a simple majority of such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each shareholder is entitled; or
(b) approved in writing by all of the shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed.
“Special Resolution” means a special resolution of the Company passed in accordance with the Cayman Companies Act, being a resolution:
(a) passed by a majority of not less than two-thirds of such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each shareholder is entitled; or
(b) approved in writing by all of the shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed. |
| At both meetings, resolutions will be adopted if approved by at least two-thirds of the votes cast (unless otherwise required by Luxembourg law or the articles of association). Where classes of shares exist and the resolution to be adopted by the general meeting of shareholders changes the respective rights attaching to such shares, the resolution will be adopted only if the conditions as to quorum and majority set out above are fulfilled with respect to each class of shares. | | |
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| An increase of the commitments of its shareholders requires, however, the unanimous consent of the shareholders. | | |
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| In very limited circumstances, the board of directors may be authorized by the shareholders to amend the articles of association, albeit always within the limits set forth by the shareholders at a duly convened shareholders’ meeting. This is the case in the context of our authorized share capital within which the board of directors is authorized to issue further ordinary shares or in the context of a share capital reduction and cancellation of ordinary shares. The board of directors is then authorized to appear in front of a public notary to record the capital increase or decrease and to amend the share capital set forth in the articles of association. The above also applies in case of the transfer of our registered office outside the current municipality. | | |
| Pursuant to Luxembourg law, at least one general meeting of shareholders must be held each year within six months as from the close of the financial year. The purpose of such ordinary general meeting is to approve the annual accounts, allocate the results, proceed to statutory appointments, and grant discharge to the directors. The ordinary general meeting must be held within six months of the end of each financial year. | | The directors of the Company may, whenever they think fit, convene a general meeting of the Company by notice in writing to the shareholders. Such notice shall be in any usual or common form or such other form as the directors of the Company may determine.
General meetings of the Company shall also be convened on the requisition in writing of any shareholder or shareholders entitled to attend and vote at general meetings of the Company holding at least fifty percent (50%) of the paid up voting share capital of the Company deposited at the registered office of the Company specifying the objects of the meeting by notice in writing, and if the directors do not convene such meeting, the requisitionists themselves may convene the general meeting in the same manner, as nearly as possible, as that in which general meetings may be convened by the directors, and all reasonable expenses incurred by the requisitionists as a result of the failure of the directors to convene the general meeting shall be reimbursed to them by the Company.
Notice of a general meeting shall be given in writing and shall be given no later than the day immediately prior to the date of the general meeting.
Notice of a general meeting shall specify the place, the day and the hour of the meeting and the general nature of the business.
Notice of a general meeting shall be given in the manner provided in the Continuation Articles or in such other manner (if any) as may be prescribed by the Company by a resolution of directors to such persons as are, under the Continuation Articles, entitled to receive such notices from the Company.
With the consent of shareholders holding at least a majority of the paid-up voting share capital entitled to receive notice of a particular general meeting and to attend and vote thereat, such meeting may be convened by such shorter notice or without notice and in such manner as those shareholders may think fit. |
Other meetings of shareholders may be convened.
Pursuant to Luxembourg law, the board of directors is obliged to convene a general meeting so that it is held within a period of one month of the receipt of a written request of shareholders representing one-tenth of the issued capital. Such request must be in writing and indicate the agenda of the meeting.
Quorum Requirements:
Luxembourg law distinguishes ordinary resolutions and extraordinary resolutions. Extraordinary resolutions relate to proposed amendments to the articles of association and certain other limited matters. All other resolutions are ordinary resolutions. | | |
| | | |
Ordinary Resolutions: Pursuant to Luxembourg law, there is no requirement of a quorum for any ordinary resolutions to be considered at a general meeting, and such ordinary resolutions shall be adopted by a simple majority of votes validly cast on such resolution. Abstentions are not considered “votes.”
Extraordinary Resolutions: Extraordinary resolutions are required for any of the following matters, among others: (i) an increase or decrease of the authorized or issued capital, (ii) a limitation or exclusion of preemptive rights, (iii) approval of a statutory merger or de-merger (scission), (iv) dissolution, and (v) an amendment of the articles of association.
Pursuant to Luxembourg law for any extraordinary resolutions to be considered at a general meeting, the quorum shall generally be at least one half (50%) of the issued share capital. If the said quorum is not present, a second meeting may be convened at which Luxembourg law does not prescribe a quorum. Any extraordinary resolution shall be adopted at a quorate general meeting (save as otherwise provided by mandatory law) by a two-thirds majority of the votes validly cast on such resolution. Abstentions are not considered “votes. | | Quorum Requirements:
No business shall be transacted at any general meeting unless a quorum of shareholders is present at the time when the meeting proceeds to business. Save as otherwise provided by the Continuation Articles, two shareholders present in person or by proxy and entitled to vote at that meeting shall form a quorum.
If within an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved. In any other case it shall stand adjourned to the next business day, at the same time and place, and if at the adjourned meeting a quorum is not present within an hour from the time appointed for the meeting the shareholder or shareholders present and entitled to vote shall form a quorum. |
| Shareholder Approval of Business Combinations |
Under Luxembourg law and our articles of association, the board of directors has the broadest power to take any action necessary or useful to achieve the corporate objective. The board of directors’ powers are limited only by law and our articles of association.
Any type of transaction that would require an amendment to the articles of association, such as a merger, de-merger, consolidation, dissolution, or voluntary liquidation, requires an extraordinary resolution of a general meeting of shareholders.
Transactions such as a sale, lease, or exchange of substantial company assets require only the approval of the board of directors. Neither Luxembourg law nor our articles of association contain any provision specifically requiring the board of directors to obtain shareholder approval of the sale, lease, or exchange of substantial assets of ours. | | The Company may merge or consolidate in accordance with the Cayman Companies Act.
To the extent required by the Cayman Companies Act, the Company may by Special Resolution resolve to merge or consolidate the Company. |
| Shareholder Action Without a Meeting |
A shareholder meeting must always be called if the matter to be considered requires a shareholder resolution under Luxembourg law or our articles of association.
Pursuant to Luxembourg law, shareholders of a public limited liability company may not take actions by written consent. All shareholder actions must be approved at an actual meeting of shareholders held before a notary public or under private seal, depending on the nature of the matter. Shareholders may vote by proxy. | | A resolution in writing signed by all the shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorized representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. |
Under Luxembourg law, the amount and payment of dividends or other distributions is determined by a simple majority vote at a general meeting of shareholders based on the recommendation of our board of directors, except in certain limited circumstances. Pursuant to our articles of association, our board of directors has the power to pay interim dividends or make other distributions in accordance with applicable Luxembourg law.
Distributions (in the form of either dividends, share premium reimbursements or capital surplus reimbursements) may be lawfully declared and paid if our net profits and/or distributable reserves are sufficient under Luxembourg law.
Under Luxembourg law, the amount of a distribution paid to shareholders (including in the form of dividends or share premium reimbursements) may not exceed the amount of the profits at the end of the last financial year plus any profits carried forward and any amounts drawn from reserves that are available for that purpose, less any losses carried forward and sums to be placed in reserve in accordance with Luxembourg law or our articles of association.
Furthermore, no distributions (including in the form of dividends or share premium reimbursements) may be made if net assets were, at the end of the last financial year (or would become, following such a distribution), less than the amount of the subscribed share capital plus the non-distributable reserves. Distributions in the form of dividends may only be made out of net profits and profits carried forward, whereas distributions in the form of share premium reimbursements may only be made out of available share premium and distributions in the form of capital surplus reimbursements may only be made out of capital surplus.
Under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. The allocation to the legal reserve becomes compulsory again when the legal reserve no longer represents 10% of our issued share capital. The legal reserve is not available for distribution. | | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company’s assets may be declared or paid in respect of the Company Shares. |
| Repurchases and Redemptions |
Pursuant to Luxembourg law, we (or any party acting on our behalf) may repurchase our own shares and hold them in treasury, provided that:
• the shareholders at a general meeting have previously authorized our board of directors to acquire our ordinary shares. The general meeting shall determine the terms and conditions of the proposed repurchase and in particular the maximum number of ordinary shares to be acquired, the period for which the authorization is given (which may not exceed five years), and, in the case of repurchase for consideration, the maximum and minimum consideration, provided that the prior authorization shall not apply in the case of ordinary shares acquired by either us or by a person acting in its own name but on our behalf for the distribution thereof to our staff or to the staff of a company with which we are in a control relationship;
• the acquisitions, including ordinary shares previously acquired by us and held by us and shares acquired by a person acting in his or her own name but on our behalf, may not have the effect of reducing the net assets below the amount of the issued share capital plus the reserves (which may not be distributed by law or under the articles of association);
• the ordinary shares repurchased are fully paid-up; and
• the acquisition offer must be made on the same terms and conditions to all the shareholders who are in the same position, except for acquisitions which were unanimously decided by a general meeting at which all the shareholders were present or represented (and except for acquisitions made on Nasdaq).
No prior authorization by shareholders is required (i) if the acquisition is made to prevent serious and imminent harm to us, provided that the board of directors informs the next general meeting of the reasons for and the purpose of the acquisitions made, the number and nominal values or the accounting value of the ordinary shares acquired, the proportion of the subscribed capital which they represent, and the consideration paid for them, and (ii) in the case of ordinary shares acquired by either us or by a person acting on our behalf with a view to redistributing the ordinary shares to our staff or its controlled subsidiaries, provided that the distribution of such shares is made within twelve months from their acquisition.
Luxembourg law provides for further situations in which the above conditions do not apply, including the acquisition of shares pursuant to a decision to reduce our capital or the acquisition of shares issued as redeemable shares. Such acquisitions may not have the effect of reducing net assets below the aggregate of subscribed capital and reserves (which may not be distributed by law and are subject to specific provisions on reductions in capital and redeemable shares under Luxembourg law).
Any shares acquired in contravention of the above provisions must be resold within a period of one year after the acquisition or be cancelled at the expiration of the one-year period.
As long as shares are held in treasury, the voting rights attached thereto are suspended. Further, to the extent the treasury shares are reflected as assets on our balance sheet a non- distributable reserve of the same amount must be reflected as a liability. Our articles of association provide that shares may be acquired in accordance with the law. | | Subject to the Cayman Companies Act, the Company may:
(a) issue shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the shareholder on such terms and in such manner as the directors of the Company may determine;
(b) purchase its own shares (including any redeemable shares) on such terms and in such manner as the directors of the Company may determine and agree with the shareholder;
(c) make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of its capital; and
(d) accept the surrender for no consideration of any paid-up share (including any redeemable share) on such terms and in such manner as the directors of the Company may determine.
Any share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption.
The redemption, purchase or surrender of any share shall not be deemed to give rise to the redemption, purchase or surrender of any other share.
The directors of the Company may when making payments in respect of redemption or purchase of shares, if authorized by the terms of issue of the shares being redeemed or purchased or with the agreement of the holder of such shares, make such payment either in cash or in specie including, without limitation, interests in a special purpose vehicle holding assets of the Company or holding entitlement to the proceeds of assets held by the Company or in a liquidating structure. |
| Neither Luxembourg law nor our articles of association provide for appraisal rights. | | Company Shares that are outstanding immediately prior to the Merger Effective Time and which are held by shareholders who have validly indicated by way of written objection (pursuant to Section 238(2) of the Cayman Companies Act) the desire to dissent with respect to such Company Shares shall not be converted into or represent the right to receive the Merger Consideration attributable to such shares. Such shareholders shall be entitled to receive payment of the fair value of such shares held by them in accordance with the Cayman Companies Act.
If shareholders wishing to dissent fail to comply with the strict provisions set out in Section 238 of the Cayman Companies Act, they may lose their dissenters’ rights. |
Under Luxembourg law, the board of directors has sole authority to decide whether to initiate legal action to enforce a company’s rights (other than, in certain circumstances, an action against board members).
Shareholders do not have the authority to initiate legal action on a company’s behalf. Shareholders holding at least 10% of the securities of a company having a right to vote at the general meeting may bring an action against the directors on behalf of the company.
Luxembourg law does not provide for class action lawsuits. | | As a matter of Cayman Islands law, the decision whether to initiate proceedings for and on behalf of the company rests with the board of directors. However, there are certain circumstances in which a shareholder of a Cayman Islands company can seek leave of the Court to commence proceedings for and on behalf of a company (for example, where the wrongdoers are in control of the company and unreasonably fail to institute proceedings on the company’s behalf).
An aggrieved shareholder’s remedy against a Cayman Islands company must be sought by way of a petition to winding the company up on just and equitable grounds. However, the Court has the discretion to order an alternative remedy where the shareholder is able to establish that it is, in principle, just and equitable that the company should be wound up. The alternative remedies include orders for purchase of the plaintiff’s shares, orders regulating the conduct of the company’s affairs and injunctive relief.
Cayman Islands law does not provide for class action law suits. However, in certain circumstances, parties with the same interest in proceedings may be able to bring representative proceedings where one plaintiff acts on behalf of the group, though this is very rare in practice. |
| Subject to any rights and restrictions attached to any Company Share or as set out in our articles of association, every shareholder has one vote and every person representing a shareholder by proxy shall have one vote for each Company Share of which they or the person represented by proxy is the holder. | | Subject to any rights and restrictions for the time being attached to any Company Share, on a show of hands every shareholder present in person and every person representing a shareholder by proxy shall, at a general meeting of the Company, each have one vote and on a poll every shareholder and every person representing a shareholder by proxy shall have one vote for each Company Share of which they or the person represented by proxy is the holder. |
