Nexentis Technologies Inc PRE 14A, filed Feb 27, 2025
Nexentis Technologies Inc. (NXTS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrant ☒ | |
| Filed by a Party other than the Registrant ☐ | |
| Check the appropriate box: | |
| ☒ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
N2OFF, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of Filing Fee (Check the appropriate box): | |
| ☒ | No fee required. |
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| ☐ | Fee paid previously with preliminary materials. |
N2OFF, INC.
HaPardes 134 (Meshek Sander))
Neve Yarak, Israel
February ____, 2025
Dear Stockholder:
You are cordially invited to attend the special meeting of stockholders of N2OFF, Inc. (the “Company”) to be held at 4:00 p.m., Israel time (9:00 a.m. EDT), on April ___, 2025 (the “Special Meeting”), at the offices of the Company’s U. S. legal counsel, The Crone Law Group, P.C., located at HaArba’a Street 28, South Tower, 19th floor, Tel Aviv 6473925, Israel for the following purposes:
(1) To approve a proposed acquisition by the Company of all of the share capital of MitoCareX Bio Ltd. (“MitoCareX”) pursuant to a securities purchase and exchange agreement (the “Purchase Agreement”), dated as of February 25, 2025, by and among the Company, MitoCareX, SciSparc Ltd., Dr. Alon Silberman and Professor. Ciro Leonardo Pierri, including the issuance of shares of the Company’s common stock that is equal to or in excess of 20% of the Company’s outstanding common stock before the issuance, in accordance with applicable Nasdaq Listing Rules, and the execution, delivery and performance of the Purchase Agreement and the transactions contemplated thereby (the “Acquisition Proposal”);
(2) To approve a proposal authorizing the Company’s board of directors (the “Board”), in its sole discretion, to amend the Company’s Articles of Incorporation, as amended (the “Amendment”) at any time within one year after stockholder approval is obtained, to effect a reverse stock split of the Company’s common stock, at a ratio of not less than 1-for-2 and not more than 1-for-150 (the “Split Range”), with the exact ratio of the reverse stock split to be determined by the Board in its sole discretion without further approval or authorization of our stockholders (the “Reverse Stock Split Proposal”);
(3) To approve the issuance of 1,850,000 shares of the Company’s common stock and any additional shares of common stock, as applicable (the “Warrant Shares”) upon exercise of a warrant issued to L.I.A. Pure Capital Ltd. (the “Warrant Shares Proposal”); and
(4) To authorize an adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and proxy votes if there are insufficient votes in favor of the foregoing Proposals.
In order to facilitate your attendance at the Special Meeting, we strongly encourage you to advise David Palach, our Chief Executive Officer, by email at david@n2off.com or telephone at +972-54-721-5315 if you plan to attend the Special Meeting prior to 11:59 p.m., Israel time (4:59 p.m. EDT), on April ___, 2025, so that we can timely provide your name to building security. If you do not advise us ahead of time that you will be attending the Special Meeting, we encourage you to arrive at the meeting no later than 4:00 p.m., Israel time (9:00 a.m. EDT), to ensure that you are able to pass through security prior to the start of the Special Meeting.
Your vote is very important regardless of the number of shares of our voting securities that you own. I encourage you to vote by telephone, over the Internet, or by marking, signing, dating and returning your proxy card so that your shares will be represented and voted at the Special Meeting, whether or not you plan to attend. If you attend the Special Meeting in person, you will, of course, have the right to revoke the proxy and vote your shares in person.
If your shares are held in the name of a broker, trust, bank or other intermediary, and you receive notice of the Special Meeting through your broker or another intermediary, please vote or return the materials in accordance with the instructions provided to you by such broker or other intermediary, or contact your broker directly in order to obtain a proxy issued to you by your intermediary to attend the Special Meeting and vote in person. Failure to do so may result in your shares not being eligible to be voted by proxy at the Special Meeting.
On behalf of our Board, I urge you to submit your proxy as soon as possible, even if you currently plan to attend the Special Meeting in person. Thank you for your support of our Company.
| Sincerely, | |
| /s/ Amitay Weiss | |
Amitay Weiss Chairman |
N2OFF, Inc.
HaPardes 134 (Meshek Sander)
Neve Yarak, 4994500 Israel
(347) 468 9583
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on April ___, 2025
February ___, 2025
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the “Special Meeting”) of N2OFF, Inc., a Nevada corporation (“we,” “us,” “our,” or the “Company”). The Special Meeting will be held at 4:00 p.m., Israel time (9:00 a.m. EDT), on April ___, 2025, at the offices of the Company’s U.S. legal counsel, The Crone Law Group, P.C., located at HaArba’a Street 28, South Tower, 19th floor, Tel Aviv 6473925, Israel for the following purposes:
(1) To approve a proposed acquisition by the Company of all of the share capital of MitoCareX Bio Ltd. (“MitoCareX”) pursuant to a securities purchase and exchange agreement (the “Purchase Agreement”), dated as of February 25, 2025, by and among the Company, MitoCareX, SciSparc Ltd., Dr. Alon Silberman and Professor. Ciro Leonardo Pierri, including the issuance of shares of the Company’s common stock that is equal to or in excess of 20% of the Company’s outstanding common stock before the issuance, in accordance with applicable Nasdaq Listing Rules, and the execution, delivery and performance of the Purchase Agreement and the transactions contemplated thereby (the “Acquisition Proposal”);
(2) To approve a proposal authorizing the Company’s board of directors (the “Board”), in its sole discretion, to amend the Company’s Articles of Incorporation, as amended (the “Amendment”) at any time within one year after stockholder approval is obtained, to effect a reverse stock split of the Company’s common Stock, at a ratio of not less than 1-for-2 and not more than 1-for-150 (the “Split Range”), with the exact ratio of the reverse stock split to be determined by the Board in its sole discretion without further approval or authorization of our stockholders (the “Reverse Stock Split Proposal”);
(3) To approve the issuance of 1,850,000 shares of the Company’s common stock and any additional shares of common stock, as applicable (the “Warrant Shares”) upon exercise of a warrant issued to L.I.A. Pure Capital Ltd. (the “Warrant Shares Proposal”); and
(4) To authorize an adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes to approve any of the foregoing Proposals.
Stockholders are referred to the Proxy Statement accompanying this Notice for more detailed information with respect to the matters to be considered at the Special Meeting. After careful consideration, THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR the Acquisition Proposal (Proposal 1); FOR the Reverse Stock Split Proposal (Proposal 2), FOR the Warrant Shares Proposal (Proposal 3) and FOR the Adjournment Proposal (Proposal 4).
The Board has fixed the close of business on February 24, 2025, as the record date (the “Record Date”). Only holders of record of shares of our common stock as of the Record Date are entitled to receive notice of, and to vote at, the Special Meeting or at any postponement(s) or adjournment(s) of the Special Meeting. A complete list of registered stockholders entitled to vote at the Special Meeting will be available for inspection at the office of the Company during regular business hours for the 10 calendar days prior to and during the Special Meeting.
YOUR VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.
If your shares are registered in your name, even if you plan to attend the Special Meeting or any postponement or adjournment of the Special Meeting in person, we request that you vote by telephone, over the Internet, or by completing, signing and mailing your proxy card to ensure that your shares will be represented at the Special Meeting.
If your shares are held in the name of a broker, trust, bank or other intermediary, and you receive notice of the Special Meeting through your broker or through another intermediary, please vote online, by telephone or by completing and returning the voting instruction form in accordance with the instructions provided to you by such broker or other intermediary, or contact your broker directly in order to obtain a proxy issued to you by your intermediary holder to attend the Special Meeting and vote in person. Failure to do any of the foregoing may result in your shares not being eligible to be voted at the Special Meeting.
| By Order of the Board | |
| /s/ Amitay Weiss | |
| Amitay Weiss | |
| Chairman |
N2OFF, INC.
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
To Be Held On April __, 2025
Unless the context otherwise requires, references in this Proxy Statement to “we,” “us,” “our,” the “Company,” or “N2OFF” refer to N2OFF, Inc., a Nevada corporation, and its subsidiaries. In addition, unless the context otherwise requires, references to “stockholders” are to the holders of our voting securities, which consist of our common stock, par value $0.0001 per share (the “Common Stock”).
The accompanying proxy is solicited by the board of directors of the Company (the “Board”) on behalf of N2OFF, Inc., a Nevada corporation, to be voted at the special meeting of stockholders of the Company (the “Special Meeting”) to be held on April ___, 2025, at the time and place and for the purposes set forth in the accompanying Notice of Special Meeting of Stockholders (the “Notice”) and at any postponement(s) or adjournment(s) of the Special Meeting. This Proxy Statement and accompanying form of proxy are expected to be first sent or given to stockholders on or about March ___, 2025.
The executive offices of the Company are located at, and the mailing address of the Company is, HaPardes 134 (Meshek Sander), Neve Yarak, 4994500 Israel.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR
THE SPECIAL STOCKHOLDER MEETING TO BE HELD ON APRIL ___, 2025:
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be Held on April ___, 2025: Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), with respect to the Special Meeting, we have elected to utilize the “full set delivery” option of providing paper copies of all of our proxy materials by mail. The Notice of Special Meeting of Stockholders and Proxy Statement are also available at www.proxyvote.com.
ABOUT THE SPECIAL MEETING
What is a proxy?
A proxy is another person whom you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.” If you are a street name holder, you must obtain a proxy from your broker or intermediary in order to vote your shares in person at the Special Meeting.
What is a proxy statement?
A proxy statement is a document that regulations of the SEC require that we give to you when we ask you to sign a proxy card to vote your stock at the Special Meeting.
What are the proposals that will be voted on by stockholders at the Special Meeting?
At our Special Meeting, stockholders will act upon the matters outlined in the Notice, including the following:
| (1) | To approve a proposed acquisition by the Company of all of the share capital of MitoCareX Bio Ltd. (“MitoCareX”) pursuant to a securities purchase and exchange agreement (the “Purchase Agreement”), dated as of February 25, 2025, by and among the Company, MitoCareX, SciSparc Ltd., Dr. Alon Silberman and Professor. Ciro Leonardo Pierri, including the issuance of shares of the Company’s Common Stock that is equal to or in excess of 20% of the Company’s outstanding Common Stock before the issuance, in accordance with applicable Nasdaq Listing Rules, and the execution, delivery and performance of the Purchase Agreement and the transactions contemplated thereby (the “Acquisition Proposal”); | |
| (2) | To approve a proposal authorizing the Board, in its sole discretion, to amend the Company’s Articles of Incorporation, as amended (the “Amendment”) at any time within one year after stockholders approval is obtained, to effect a reverse stock split of the Company’s Common Stock at a ratio of not less than 1-for-2 and not mor than 1-for-150 (the “Split Range”), with the exact ratio of the reverse stock split to be determined by the Company’s Board in its sole discretion without further approval or authorization of our stockholders (the “Reverse Stock Split Proposal”); | |
| (3) | To approve the issuance of 1,850,000 shares of the Company’s Common Stock and any additional shares of Common Stock, as applicable (the “Warrant Shares”) upon exercise of a warrant (the “Warrant”) issued to L.I.A. Pure Capital Ltd. (the “Warrant Exercise Proposal”); and | |
| (4) | To authorize an adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes to approve any of the foregoing Proposals.
Other than these proposals, no other proposals will be presented for a vote at the Special Meeting. |
What is “householding” and how does it affect me?
With respect to eligible stockholders who share a single address, we may send only one Proxy Statement to that address unless we receive instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate notice or proxy statement in the future, he or she may contact N2OFF, Inc., HaPardes 134 (Meshek Sander), Neve Yarak, 4994500 Israel, Attn: David Palach, Chief Executive Officer, or via email to david@n2off.com or telephone at +972-54-721-5315. Eligible stockholders of record receiving multiple copies of our Notice and Proxy Statement can request householding by contacting us in the same manner. stockholders who own shares through a bank, broker or other intermediary can request householding by contacting the intermediary.
We hereby undertake to deliver promptly, upon written or oral request, a copy of the Notice or Proxy Statement to a stockholder at a shared address to which a single copy of the document was delivered. Requests should be directed to David Palach, Chief Executive Officer, at the address or telephone number set forth above.
What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction form for each brokerage account in which you hold shares. Similarly, if you are a stockholder of record and also hold shares in a brokerage account, you will receive a proxy card for shares held in your name and a voting instruction form for shares held in street name. Please follow the directions provided in the Notice and in each proxy card or voting instruction form you receive to ensure that all your shares are voted.
What is the record date and what does it mean?
The record date to determine the stockholders entitled to notice of and to vote at the Special Meeting is the close of business on February 24, 2025 (the “Record Date”). The Record Date is established by the Board as required by Nevada law. On the Record Date, 15,335,618 shares of Common Stock were issued and outstanding.
Who is entitled to vote at the Special Meeting?
Holders of Common Stock at the close of business on the Record Date may vote at the Special Meeting.
What are the voting rights of stockholders?
On each Proposal to be voted upon at the Special Meeting, you have one vote for each share of Common Stock you own as of the Record Date.
What is the quorum requirement?
In accordance with the Company’s Bylaws, as amended (the “Bylaws”), the holders of not less than 33.33% of the voting power of all of the shares of the capital stock entitled to vote at the Special Meeting, present in person or represented by proxy, is necessary to constitute a quorum to transact business. If a quorum is not present or represented at the Special Meeting, the holders of voting stock representing a majority of the voting power present at the Special Meeting or the presiding officer may adjourn the Special Meeting from time to time without notice or other announcement until a quorum is present or represented.
What is the difference between a stockholder of record and a “street name” holder?
If your shares are registered directly in your name with Securities Transfer Corporation, our stock transfer agent, you are considered the stockholder of record with respect to those shares. The Notice has been sent directly to you by us.
If your shares are held in a stock brokerage account or by a bank or other intermediary, the intermediary is considered the record holder of those shares. You are considered the beneficial owner of those shares, and your shares are held in “street name.” A notice, and Proxy Statement, along with a voting instruction form, have been forwarded to you by your intermediary. As the beneficial owner, you have the right to direct your intermediary concerning how to vote your shares by using the voting instruction form they included in the mailing or by following their instructions for voting.
How are the abstentions and broker non-votes counted?
Abstentions and broker non-votes will be counted as present for purposes of determining a quorum. An abstention occurs when a stockholder chooses to “abstain” from voting on a matter. A broker non-vote occurs when a broker, bank, or other stockholder of record, in nominee name or otherwise, exercising fiduciary powers submits a proxy for this Special Meeting, but does not vote on a particular proposal because that holder does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Brokers, banks and other securities intermediaries may use their discretion to vote your “uninstructed” shares on matters considered to be “routine” but not with respect to “non-routine” matters. A broker non-vote occurs when a broker, bank or other agent has not received voting instructions from the beneficial owner of the shares and the broker, bank or other agent cannot vote the shares because the matter is considered “non-routine” under the applicable exchange rules. Proposals 1 and 3 are considered “non-routine” such that your broker, bank or other agent and nominees do not have discretionary voting power over these non-routine proposals and, therefore, broker non-votes may exist with respect to these proposals. The broker’s inability to vote with respect to the non-routine matters for which the broker has not received voting instructions from the beneficial owner is referred to as a “broker non-vote.” Conversely, Proposals 2 and 4 are considered “routine” and thus, if you do not return voting instructions to your broker, your shares may be voted by your broker in its discretion on Proposals 2 and 4.
How do I vote my shares?
Your vote is very important to us. Whether or not you plan to attend the Special Meeting, please vote by proxy in accordance with the instructions on your proxy card or voting instruction form (from your broker or other intermediary). There are three convenient ways of submitting your vote:
| ● | By Telephone or Internet – All record holders can vote by touchtone telephone from the United States using the toll-free telephone number on the proxy card, or over the Internet (at www.proxyvote.com), using the procedures and instructions described on the proxy card. “Street name” holders may vote by telephone or Internet if their bank, broker or other intermediary makes those methods available, in which case the bank, broker or other intermediary will enclose the instructions with the proxy materials. The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares, and to confirm that their instructions have been recorded properly. |
| ● | In Person – All record holders may vote in person at the Special Meeting. “Street name” holders may vote in person at the Special Meeting if their bank, broker or other intermediary has furnished a legal proxy. If you are a “street name” holder and would like to vote your shares by proxy, you will need to ask your bank, broker or other intermediary to furnish you with an intermediary issued proxy. You will need to bring the intermediary issued proxy with you to the Special Meeting and hand it in with a signed ballot that will be provided to you at the Special Meeting. You will not be able to vote your shares without an intermediary issued proxy. Note that a broker letter that identifies you as a stockholder is not the same as an intermediary issued proxy. |
| ● | By Written Proxy or Voting Instruction Form – All record holders can vote by written proxy card, if they have requested to receive printed proxy materials. If you are a “street name” holder and you request to receive printed proxy materials, you will receive a voting instruction form from your bank, broker or other intermediary. |
The Board has appointed David Palach, our Chief Executive Officer, to serve as proxy for the Special Meeting.
If you complete and sign the proxy card but do not provide instructions for one or more of the Proposals, then the designated proxies will or will not vote your shares as to those Proposals, as described under “What if I do not specify how I want my shares voted?” below. We do not anticipate that any other matters will come before the Special Meeting, but if any other matters properly come before the Special Meeting, then the designated proxy will vote your shares in accordance with applicable law and his judgment.
If you hold your shares in “street name,” and complete the voting instruction form provided by your broker or other intermediary except with respect to one or more of the Proposals, then, your broker has discretionary authority to vote your shares with respect to the Reverse Stock Split Proposal (Proposal 2) and the Adjournment Proposal (Proposal 4) even if you do not provide your broker with specific instructions on that proposal. See “How the abstentions and broker non-votes will be counted?” above.
Even if you currently plan to attend the Special Meeting, we recommend that you vote by telephone or Internet or return your proxy card or voting instructions as described above so that your votes will be counted if you later decide not to attend the Special Meeting or are unable to attend.
Who counts the votes?
A representative of Broadridge Financial Solutions, Inc., our inspector of election, will tabulate and certify the votes.
What are my choices when voting?
With respect to each of the Proposals in this Proxy Statement, stockholders may vote for the Proposal, against the Proposal, or abstain from voting on the Proposal.
What are the Board’s recommendations on how I should vote my shares?
The Board recommends that you vote your shares FOR each Proposal, including the Acquisition Proposal; the Reverse Stock Split Proposal, the Warrant Shares Proposal and the Adjournment Proposal.
What if I do not specify how I want my shares voted?
If you are a record holder who returns a completed, executed proxy card that does not specify how you want to vote your shares on one or more Proposals, the proxy will vote your shares for each Proposal as to which you provide no voting instructions, and such shares will be voted FOR the Acquisition Proposal; FOR the Reverse Stock Split Proposal, FOR the Warrant Shares Proposal and FOR the Adjournment Proposal.
If you are a street name holder and do not provide voting instructions on one or more proposals, your bank, broker or other intermediary may be unable to vote those shares. See “How the abstentions and broker non-votes will be counted?” above.
Can I change my vote?
Yes. If you are a record holder, you may revoke your proxy at any time by any of the following means:
| ● | Attending the Special Meeting in person. Your attendance at the Special Meeting will not by itself revoke a proxy. You must vote your shares by ballot at the Special Meeting to revoke your proxy. | |
| ● | Voting again by telephone or over the Internet (only your latest telephone or Internet vote submitted prior to the Special Meeting will be counted). | |
| ● | If you requested and received written proxy materials, completing and submitting a new valid proxy bearing a later date. | |
| ● | Giving written notice of revocation to the Company addressed to David Palach, Chief Executive Officer, at the Company’s address above, which notice must be received before noon, Eastern Time on April ___, 2025. |
If you are a street name holder, your bank, broker or other intermediary should provide instructions explaining how you may change or revoke your voting instructions.
What percentage of the vote is required to approve each proposal?
Assuming the presence of a quorum:
| Proposal | Vote Required | Voting Options |
Impact of “Abstain” Vote |
Impact of Broker Non-Votes | ||||
Proposal 1: Acquisition Proposal |
The affirmative vote of a majority of the votes cast by the holders of all shares of stock present or represented and voting on this proposal is required. | “FOR” “AGAINST” “ABSTAIN | No effect | No effect | ||||
Proposal 2: Reverse Stock Split Proposal. |
Amendments to Section 78.2055 of the Nevada Revised Statutes provide that a reverse stock split of publicly traded Nevada corporations, such as the Company, require approval of the voting standard established in the governing documents of the corporation for “routine” matters, which according to the Company’s Bylaws, requires the affirmative vote of a majority of the votes cast by the holders of all shares of stock present or represented and voting on this proposal. | “FOR” “AGAINST” “ABSTAIN” | No effect | Not applicable | ||||
Proposal 3: Warrant Shares Proposal. |
The affirmative vote of a majority of the votes cast by the holders of all shares of stock present or represented and voting on this proposal is required. | “FOR” “AGAINST” “ABSTAIN” | No effect. | No effect | ||||
Proposal 4: Adjournment Proposal. |
The affirmative vote of a majority of the votes cast by the holders of all shares of stock present or represented and voting on this proposal is required. | “FOR” “AGAINST” “ABSTAIN” | No effect | Not applicable |
Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Special Meeting?
No. Under Nevada Revised Statutes, our stockholders are not entitled to any appraisal rights or similar rights of dissenters with respect to the matters to be voted on at the Special Meeting.
What are the solicitation expenses and who pays the cost of this proxy solicitation?
Our Board is asking for your proxy and we will pay all of the costs of asking for stockholder proxies. We will reimburse brokerage houses and other custodians, intermediaries and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of our Common Stock and collecting voting instructions. We may use officers and employees of the Company to ask for proxies.
Are there any other matters to be acted upon at the Special Meeting?
Management does not intend to present any business at the Special Meeting for a vote other than the matters set forth in the Notice and has no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Special Meeting, it is the intention of the person named in the accompanying form of proxy to vote the shares represented by the proxies held by him in accordance with applicable law and his judgment on such matters.
Where can I find voting results?
Voting results will be tabulated and certified by the inspector of elections appointed for the Special Meeting, who will separately tabulate affirmative and negative votes, abstentions, and broker non-votes. The Company expects to publish the voting results in a Current Report on Form 8-K, which it expects to file with the SEC within four business days following the Special Meeting.
Who can help answer my questions?
The information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the information contained in this Proxy Statement. We urge you to carefully read this entire Proxy Statement, including the documents we refer to in this Proxy Statement. If you have any questions, or need additional material, please contact David Palach, our Chief Executive Officer, by email at david@n2off.com or telephone at +972-54-721-5315.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below provides information regarding the beneficial ownership of our Common Stock as of February 24, 2025 of (i) each of our current directors, (ii) our Chief Executive Officer and our other executive officers, (iii) all of our current directors and executive officers as a group, and (iv) each person (or group of affiliated persons) known to us to own more than 5% of our outstanding Common Stock.
The beneficial ownership of our Common Stock is determined in accordance with the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest.
The percentage of shares of Common Stock beneficially owned is based on 15,335,618 shares of Common Stock outstanding as of February 24, 2025.
Unless otherwise indicated below, each person has sole voting and investment power with respect to the shares beneficially owned and the address for each beneficial owner listed in the table below is c/o N2OFF, Inc., HaPardes 134 (Meshek Sander), Neve Yarak, 4994500 Israel.
| Number of Shares Beneficially Owned | Percentage Beneficially Owned | |||||||
| 5% or more stockholders: | ||||||||
| L.I.A. Pure Capital Ltd.(1) | 1,520,256 | (2) | 9.90 | % | ||||
| Uziel Economic Consultant Ltd.(3) | 1,565,357 | (4) | 9.90 | % | ||||
| Capitalink Ltd.(5) | 1,408,979 | (6) | 8.83 | % | ||||
| David Massasa | 1,626,667 | (7) | 9.94 | % | ||||
| Directors: | ||||||||
| Amitay Weiss | 450,000 | 2.93 | % | |||||
| Eliahou Arbib | 64,500 | * | ||||||
| Udi Kalifi | 68,456 | * | ||||||
| Israel Berenstein | 64,500 | * | ||||||
| Ronen Rosenbloom | 64,500 | * | ||||||
| Liat Sidi | 50,000 | * | ||||||
| Asaf Itzhaik | 50,000 | * | ||||||
| Executive Officers: | ||||||||
| David Palach | 420,000 | 2.74 | % | |||||
| Lital Barda | 202,857 | 1.32 | % | |||||
| All directors and executive officers as a group (9 persons) | 1,434,813 | 9.36 | % | |||||
*Less than 1%
| (1) | Kfir Silberman, Chief Executive Officer, sole director and control shareholder of L.I.A Pure Capital Ltd. (“Pure Capital”), has sole voting and dispositive power over the shares held by Pure Capital. The address of Pure Capital is 20 Raoul Wallenberg, Tel Aviv Israel, 6971916. | |
| (2) | Includes 14,286 shares held directly by Mr. Silberman and 20,256 shares issuable upon currently exercisable warrants subject to a 9.99% beneficial ownership limitation. Excludes 1,850,000 Warrant Shares for which we are seeking stockholder approval under the Warrant Exercise Proposal. | |
| (3) | Amir Uziel, the sole director, officer, and control shareholder of Amir Uziel Economic Consultant Ltd. (“Uziel Economic”), has sole voting and dispositive power over the shares held by Uziel Economic. The address of Uziel Economic is 20 Raoul Wallenberg, Tel Aviv, Israel, 6971916. | |
| (4) | Includes 14,286 shares held directly by Mr. Uziel, and 476,071 shares issuable upon currently exercisable warrants, subject to a 9.99% beneficial ownership limitation. | |
| (5) | Lavi Krasney, the sole director, officer, and control shareholder of Capitalink Ltd. (“Capitalink”), has sole voting and dispositive power over the shares held by Capitalink. The address of Capitalink is 20 Raoul Wallenberg, Tel Aviv, Israel, 6971916. | |
(6) | Includes 14,286 shares held directly by Mr. Krasney and 625,000 shares issuable upon currently exercisable warrants, subject to a 9.99% beneficial ownership limitation. | |
(7) | Includes 1,026,667 shares issuable upon currently exercisable warrants, subject to a 9.99% beneficial ownership limitation. |
PROPOSAL 1: ACQUISITION PROPOSAL
Purchase Agreement - General
On February 25, 2025, the Company entered into a Securities Purchase and Exchange Agreement (the “Purchase Agreement”) with MitoCareX Bio Ltd., a private company incorporated under the laws of the State of Israel (“MitoCareX”), SciSparc Ltd., a public company incorporated under the laws of the State of Israel (“SciSparc”), Dr. Alon Silberman (“Alon”) and Prof. Ciro Leonardo Pierri (“Ciro”, together with SciSparc and Alon, the “Sellers”). Pursuant to the terms and subject to the conditions contained in the Purchase Agreement, including approval of the Company’s stockholders by the requisite majority, upon the closing of the transactions contemplated by the Purchase Agreement (the “Closing,” and the date on which the Closing occurs, the “Closing Date”), the Company will acquire from each of the Sellers their respective ordinary shares, nominal (par) value NIS 0.01 each, of MitoCareX, which will collectively represent 100% of the ordinary shares of MitoCareX (the “Exchange Ordinary Shares”), thereby resulting in MitoCareX becoming a wholly-owned subsidiary of the Company. Such Exchange Ordinary Shares will include transfers to the Company of (1) 11,166 ordinary shares by Alon, which will represent 100% of Alon’s ownership in MitoCareX as of the Closing Date; (2) 5,584 ordinary shares by Ciro, which will represent 100% of Ciro’s ownership in MitoCareX by Ciro as of the Closing Date; and (3) 12,066 ordinary shares by SciSparc. Contingent upon these transfers, on the Closing Date, the Company will acquire from SciSparc additional 6,622 ordinary shares of MitoCareX held by SciSparc (the “Purchased Shares”), in consideration for a cash payment of $700,000, such that, together with the Purchased Shares, the Company will receive 100% of SciSparc’s ownership in MitoCareX.
In consideration for the transfers and delivery of the Exchange Ordinary Shares by Sellers, at the Closing, the Company will issue to Sellers a number of shares of its Common Stock on a fully-diluted basis, calculated in each case as of immediately following the Closing as follows: (i) 15.50% of Common Stock to be issued to Alon; (ii) 7.75% to be issued to Ciro; (iii) 16.75% to SciSparc (collectively, the “Exchanged Common Stock”), which will represent approximately 40% of the outstanding shares of Common Stock on a fully-diluted basis. As additional consideration for the Exchanged Ordinary Shares, SciSparc, Alon and Ciro will receive, collectively, 30% of the gross proceeds of each financing transaction closed by the Company within five years of the Closing Date, provided that the maximum amount payable to the foregoing parties will be $1,600,000.
In addition, pursuant to the terms of the Purchase Agreement, following the Closing, the Sellers will receive such number of additional shares of Common Stock, for no additional consideration, that reflects an aggregate amount of up to 25% of the issued and outstanding capital stock of the Company on a fully-diluted basis calculated as of immediately following the Closing (the “Additional Shares”), which Additional Shares, if the respective Milestones are achieved as set forth in the Purchase Agreement, shall be duly issued in installments based on the achievement of each Milestone, as set forth in the Purchase Agreement, and shall be allocated amongst the Sellers as follows: 50% to SciSparc, 33.33% to Alon and 16.67% to Ciro. Each respective portion of the Additional Shares will be deemed earned and issuable upon the fulfilment of the respective milestones set forth in the Purchase Agreement (each a “Milestone”), and will be issued to the Sellers within five business days after the achievement of the respective Milestone. The Sellers’ eligibility to receive Additional Shares will terminate on December 31, 2028, such that if a specific Milestone is not achieved and therefore the right to receive the respective number of shares of Additional Shares issuable upon the achievement of such Milestone is not earned by December 31, 2028, the right to receive the number of shares of Additional Shares attributable to any such non-achieved Milestone pursuant to the Purchase Agreement will terminate.
The Company has committed that, upon the Closing, it will have an initial investment of $1,000,000 in MitoCareX less any such amounts paid to MitoCareX pursuant to the loan agreement, dated December 22, 2024, among the Company, MitoCareX and L.I.A. Pure Capital Ltd. (“Pure Capital”). Furthermore, at all times after the foregoing initial investment, the Company will make available to MitoCareX such amount of funding necessary to finance MitoCareX’s ongoing research and development and other costs, provided that (i) the board of directors of the Company has approved in advance thereof an operating plan for MitoCareX and (ii) the Company possesses the financial resources necessary to provide such funding.
The Purchase Agreement further provides, among other things, that immediately prior to the Closing Date, Alon shall enter into an amended employment agreement (the “Amended CEO Agreement”) with the Company and MitoCareX in connection with his employment as the Chief Executive Officer of MitoCareX, pursuant to which, among other things, the Company will grant to Alon restricted stock units (the “Restricted Stock Units”) representing 5% of the capital stock of the Company on a fully diluted basis (calculated as of immediately following the Closing), pursuant to the Company’s 2022 Share Incentive Plan. Such shares of Common Stock granted under the Amended CEO Agreement and the Company’s 2022 Share Incentive Plan will vest quarterly, in equal installments, over a period of three years beginning as of the Closing Date, subject to Alon’s continued employment with MitoCareX.
The issuance of the Company’s securities contemplated by the Purchase Agreement, including the Exchange Common Stock, the Additional Shares, and the Restricted Stock Unit will not be registered under the Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an applicable exemption from the registration requirements.
Reasons for the Stockholder Approval of the Acquisition Proposal
The Company’s Common Stock is listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “NITO” and is subject to Nasdaq continued listing requirements, including obtaining stockholder approval for certain transactions, including, but not limited, acquisitions, change of control transaction, and/or issuance of shares of common stock or common stock equivalents in excess of 19.99% of the number of outstanding shares of Common Stock of the Company in compliance with Nasdaq Listing Rule 5635.
You are being asked to consider and vote upon the Acquisition Proposal (Proposal 1) that would permit the Company to complete the acquisition of all of the share capital of MitoCareX, pursuant to the Purchase Agreement, requiring the Company to issue the Exchange Common Stock, the Restricted Stock Units, and, if applicable, the Additional Shares, in excess of 19.99% of the number of outstanding shares of the Company’s Common Stock.
Nasdaq Listing Rule 5635(a) requires to obtain stockholder approval prior to any potential issuances of our Common Stock that would be made in connection with the acquisition of another company’s stock or assets if (i) the common stock that we would be issuing in such transaction would (1) have voting power equal to or in excess of 20% of the voting power outstanding before such issuance or (2) would be in excess of 20% of the number of shares of common stock outstanding before such issuance or (ii) if any of our directors, officers or substantial stockholders have more than a 4.99% interest, directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more.
We are also requesting stockholder approval under Nasdaq Listing Rule 5635(b). This Rule generally requires stockholder approval prior to the issuance of securities when the issuance or potential issuance will result in a change of control. Pursuant to applicable Nasdaq guidance, a change of control may generally be deemed to occur when an investor would own or have the right to acquire 20% or more of the outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position of the issuer. However, in determining if a change of control has occurred (and stockholder approval is required), Nasdaq will consider all circumstances concerning the transaction and may determine that a change of control has occurred even if the number of shares of common stock or voting power that an investor has a right to acquire is less than 20%.
Nasdaq Listing Rule 5635(d) requires us to obtain stockholder approval in connection with the issuance of the Exchange Common Stock, the Restricted Stock Units, and the potential issuance of Additional Shares. It is needed because these securities will be issued in connection with a transaction, other than a public offering, involving the sale, issuance or potential issuance by a company of 20% or more of our outstanding shares of our common stock (or securities convertible into or exercisable for shares of our Common Stock) at a price less than the lower of (i) the closing price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement.
In addition, we are seeking stockholder approval pursuant to the terms of the Purchase Agreement, which states that stockholders of the Company require to approve the execution, delivery and performance of the Purchase Agreement and the transactions contemplated thereby.
Accordingly, we are seeking stockholder approval pursuant to the terms of the Purchase Agreement, and in accordance with Nasdaq Rules 5635(a), 5635(b) and 5635(d), as applicable, prior to the issuance of the Exchange Common Stock, the Restricted Stock Units, and the Additional Shares, if applicable. This proposal is referred to in this Proxy Statement as the “Acquisition Proposal” or “Proposal 1. A copy of the Purchase Agreement and exhibits thereto is attached hereto as Annex A. Stockholder approval of this Acquisition Proposal would allow us to complete the acquisition of all of the share capital of MitoCareX, resulting in MitoCareX becoming our wholly owned subsidiary.
Potential Consequences if the Acquisition Proposal is Not Approved
The failure of our stockholders to approve the Acquisition Proposal will mean that we cannot complete the acquisition of MitoCareX.
Potential Adverse Effects
If this Acquisition Proposal is approved by the stockholders, and the transactions contemplated by the Purchase Agreement are closed, the current stockholders of the Company will incur immediate and extensive dilution. Pursuant to the Purchase Agreement, at the Closing, the Company will issue to Sellers approximately 40% of its outstanding shares of Common Stock on a fully-diluted basis, as Exchanged Common Stock. For illustration purposes (and excluding shares of Common Stock issuable upon conversion or exercise of warrants and stock options), if at the Closing, the Company had 15,335,618 shares of Common Stock issued and outstanding, 6,134,247 shares of Common Stock will be issued to Sellers as Exchanged Common Stock. Accordingly, if you beneficially own 250,000 shares of Common Stock prior to the Closing, or 1.63% of the Company, after the Closing you will still beneficially own 250,000 shares of Common Stock, but said shares will represent 1.16% of the Company. The issuance of the Restricted Stock Units to Alon equal to 5% of the capital stock of the Company on a fully diluted basis, calculated as of immediately following the Closing, will further reduce your beneficial ownership in the Company. In addition, if the Milestones are achieved and the Company is required, for no additional consideration, to issue up to 25% of its issued and outstanding shares on a fully diluted basis, your beneficial ownership in the Company will be further reduced.
Required Vote
Approval of this Acquisition Proposal (Proposal 1) requires the affirmative vote of the holders of a majority of the shares of common stock casting votes in person or by proxy on this proposal at the Special Meeting. Abstentions and broker non-votes will have no effect on the vote on this proposal.
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ACQUISITION PROPOSAL.
PROPOSAL 2: REVERSE STOCK SPLIT PROPOSAL
Introduction
The Board has unanimously approved an amendment to the Company’s Articles of Incorporation, as amended (the “Amendment”), to effect a reverse split of the Company’s Common Stock at any time within one year after stockholders approval is obtained, at a ratio of not less than 1-for-2 and not more than 1-for-150 (the “Split Range”), with the exact ratio of the reverse stock split, within the Split Range, to be determined by the Company’s Board in its sole discretion without further approval or authorization of our stockholders. A form of the Amendment is attached hereto as Annex B. The following discussion is qualified in its entirety by the full text of the Amendment, which is incorporated herein by reference.
As of the Record Date, the Company had 15,335,618 shares of Common Stock outstanding. The Board believes that stockholder approval of the range of reverse stock split ratio (as opposed to approval of a single reverse stock split ratio) provides the Board with maximum flexibility to achieve the purpose of a reverse stock split, as discussed below, and therefore is in the best interests of the Company and its stockholders.
The Board may, in its discretion, determine not to effect the reverse stock split if it determines, subsequent to obtaining stockholder approval, that such action is not in the best interests of the Company. By voting in favor of the Reverse Stock Split Proposal, you are expressly authorizing the Board to determine not to proceed with, and abandon, the reverse stock split if it should so decide.
If the reverse stock split is effected, the issued shares of Common Stock outstanding immediately prior to the effective time of the reverse stock split (the “Split Effective Time”) will be reclassified into a smaller number of shares. The ultimate ratio of the reverse stock split will be based on a number of factors, including market conditions, existing and expected trading prices for our Common Stock, and to ensure compliance with Nasdaq continued listing requirements and policies. Some of the factors the Board considered in determining the reverse stock split ratio, include, but are not limited to, the following: the historical trading price and trading volume of our Common Stock; the expected impact of the reverse stock split on the trading market for the Common Stock in the short-term and long-term, and general market, economic conditions, and other related conditions prevailing in our industry.
The reverse stock split, if effected, will not change the number of authorized shares of Common stock or preferred Stock, or the par value of our Common Stock or preferred stock of the Company; however, effecting the reverse stock split will provide the Company with the ability to issue additional shares of authorized but unissued shares of Common Stock.
Purpose and Background of the Reverse Stock Split
We are required to maintain a minimum bid price per share of our Common Stock of at least $1.00 per share (the “Minimum Bid Price Requirement”) in accordance with Nasdaq Listing Rule 5550(a). The Board’s primary objective in asking stockholders to grant it authority to effect a reverse stock split is to increase the per-share trading price of our Common Stock and to ensure compliance with Nasdaq listing requirements and policies.
As previously reported, on July 8, 2024, we received a deficiency letter from Nasdaq indicating that the Company is not in compliance with the Listing Rule 5550(a)(2) for the Minimum Bid Price Requirement. In accordance with Listing Rule 5810(c)(3)(A), Nasdaq provided us with a period of 180 calendar days, until January 6, 2025, to regain compliance with the Minimum Bid Price Requirement. Our Common Stock needed to be at least $1.00 per share for a minimum of ten consecutive business days during this initial 180-day period. Prior to the expiration of this initial 180-day period, we requested Nasdaq to grant us additional time for up to 180 calendar days to regain compliance with the Minimum Bid Price Requirement. Nasdaq listing rules provide that to qualify, we are required to meet the continued listing requirement for market value of publicly held shares and all other Nasdaq listing standards, except for the Minimum Bid Price Requirement.
On January 7, 2025, Nasdaq notified us that although the Company has not regained compliance with the Minimum Bid Price Requirement by January 6, 2025 as required, Nasdaq granted the Company an additional 180 calendar day period or until July 7, 2025, to regain compliance with the Minimum Bid Price Requirement, pursuant to Nasdaq Listing Rule 5810(a)(3)(A). Between January 23, 2025 and February 5, 2025, our Common Stock had the closing bid price of over $1.00 per share. On February 6, 2025, Nasdaq notified us that the Company regained compliance with the Minimum Bid Price Requirement, and this matter is now closed.
However, the risk exists that we may not be able to continue maintaining the Minimum Bid Price Requirement in the future. The Board has determined that stockholder approval of the reverse stock split within the Split Range and granting the Board the ultimate authority to determine the exact split ratio within the Split Range and the time, if any, would prevent potential non-compliance with Nasdaq Listing Rule 5550(a)(2). Therefore, the Board unanimously recommends that the stockholders approve the Reverse Stock Split Proposal for the following reasons:
| ● | the Board believes that the reverse stock split may be the only option available to the Company to increase its stock price as required for continued listing on Nasdaq; | |
| ● | the Board believes a higher stock price may help generate investor interest in the Company and help the Company attract and retain employees; | |
| ● | if the reverse stock split successfully increases the per share price of the Common Stock, the Board believes this increase may facilitate future financings by the Company. |
On June 28, 2024, at the special meeting of stockholders, the Company’s stockholders approved a reverse stock split in a range between 1-for 2 and 1-for 35 and granted the Board the ultimate authority to determine the exact reverse stock split ratio within this split range and to determine the time, if at all, when to implement the reverse stock split. However, because the Board has not yet utilized its discretionary authority granted to it by the stockholders, and because the Board has determined that it will be in the best interests of the Company and our stockholders to increase the Split Range of the reverse stock split, and to allow the Board additional time to implement the reverse stock split, if any, we are requesting our stockholders to approve the Reverse Stock Split Proposal at the Special Meeting.
In addition, the Board believes that if reverse stock split becomes effective, it could make our Common Stock more attractive to a broader range of institutional and other investors, as we have been advised that the current per share trading price of our Common Stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in stocks priced below $1.00 or tend to discourage individual brokers from recommending such stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.
If we are unable to maintain compliance with the Minimum Bid Price Requirement and our Common Stock were delisted from Nasdaq, trading of our Common Stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQX, the OTCQB or the OTC Pink Tier maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy or sell, our Common Stock on an over-the-counter market and many investors would likely not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, or their own policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our Common Stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our Common Stock. In addition, if our Common Stock were no longer to be listed on Nasdaq, we believe the Company’s ability to pursue and consummate future financings necessary to enable it to continue its business and operations would be materially and adversely impaired. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.
The Board’s Discretionary Authority with respect to the Determination of the Reverse Stock Split Ratio and the Time of the Effectiveness of the Reverse Stock Split.
The Reverse Stock Split Proposal, if approved by stockholders at this Special Meeting, would permit, but not require, the Board to effect a reverse stock split of our Common Stock within the Split Range at any time within one year from the date this proposal is approved by the stockholders, with the specific split ratio to be fixed within the Split Range by the Board in its sole discretion without further approval or authorization of our stockholders. The Board believes that granting this discretion enables the Board to fix the exact ratio within the Split Range and will provide us with the flexibility to implement it in a manner designed to maximize the anticipated benefits for our stockholders. In fixing the exact split ratio of the Reverse Stock Split, the Board may consider, among other things, factors such as:
| ● | the total number of shares of Common Stock outstanding; | |
| ● | Nasdaq requirements for the continued listing of Common Stock; | |
| ● | the historical trading price and trading volume of Common Stock; | |
| ● | the then prevailing trading price and trading volume for Common Stock; | |
| ● | the anticipated impact of the Reverse Stock Split on the trading price of and market for our Common Stock; | |
| ● | the administrative and transaction costs associated with potential exchange ratios; | |
| ● | potential financing opportunities; and | |
| ● | prevailing general market and economic conditions. |
Effectiveness of the Reverse Stock Split
If approved by our stockholders and, upon determination of the Board to effect the exact ratio of the reverse stock split within the Split Range, the reverse stock split would become effective upon the filing of the Amendment with the Secretary of State of the State of Nevada, or at the later time set forth in the Amendment, which will constitute the Split Effective Time. The exact timing of the Amendment will be determined by the Board based on its evaluation as to when such action will be the most advantageous to the Company and its stockholders. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to abandon the Amendment and the reverse stock split if, at any time prior to the effectiveness of the filing of the Amendment with the Secretary of State of the State of Nevada, the Board, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed.
Potential Market Effects of the Reverse Stock Split
The Reverse Stock Split Proposal is intended primarily to increase the Company’s per share bid price and satisfy the Minimum Bid Price Requirement under Nasdaq listing rules. Reducing the number of outstanding shares of Common Stock should, absent other factors, increase the per share market price of the Common Stock, although the Company cannot provide any assurance that it will be able to meet or maintain a bid price over the Minimum Bid Price Requirement for continued listing on Nasdaq or any other exchange.
There can be no assurance that the reverse stock split, if completed, will result in the intended benefits described above, that the market price of our Common Stock will increase following the reverse stock split or that the market price of the Common Stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of Common Stock after a reverse stock split will increase in proportion to the reduction in the number of shares of Common Stock outstanding before the reverse stock split. In addition, the reverse stock split may not result in a market price per share that will attract certain segments of the institutional investor community and the investing public that previously refrained from investing in us because of the low market price of our Common Stock. If the Reverse Stock Split is effected and the market price of our Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a Reverse Stock Split. Furthermore, the liquidity of Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the Reverse Stock Split.
In evaluating the Reverse Stock Split Proposal, in addition to the considerations described above, the Board also took into account various negative factors associated with reverse stock split generally. These factors include: the negative perception of reverse stock splits held by some investors, analysts and other stock market participants; the fact that the stock price of some companies that have effected reverse stock splits has subsequently declined in share price and corresponding market capitalization; the adverse effect on liquidity that might be caused by a reduced number of shares outstanding; and the costs associated with implementing a reverse stock split.
The Board also evaluated the potential impact of the Company’s compliance with other Nasdaq continued listing requirements, particularly in connection with the amendment to Nasdaq Listing Rule 5810(c)(3), which became effective as of October 7, 2024. This Listing Rule provides that if a company effectuates a reverse stock split in an effort to regain compliance with the Minimum Bid Price Requirement but it would cause noncompliance with other Nasdaq continued listing requirements, including maintaining at least (i) 500,000 publicly held shares, (ii) 300 public stockholders and (iii) a value of publicly held shares of at least $1 million, such company would not be considered to have regained compliance with the Minimum Bid Price Requirement. Under the amended Listing Rule 2810(c)(3), in such event, the company will continue to be considered noncompliant until it (i) cures the additional deficiency and (ii) thereafter meets the Minimum Bid Price Requirement for a minimum of 10 consecutive business days (unless Nasdaq staff, at their discretion and within the framework of the new requirements, extends this period). Furthermore, companies can no longer utilize additional compliance periods otherwise available for secondary deficiencies. If such a company does not regain compliance with the Minimum Bid Price Requirement and the additional deficiency during the initial compliance period applicable to the Minimum Bid Price Requirement noncompliance, Nasdaq will issue a Staff Delisting Determination Letter.
Potential Increased Investor Interest if the Reverse Stock Split is Implemented
An investment in the Common Stock at the current market price may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. Also, the Board believes that most investment funds are reluctant to invest in lower priced stocks. The Board believes that the anticipated higher market price expected to result from a reverse stock split will reduce, to some extent, the negative effects of the practices of brokerage houses and investors described above on the liquidity and marketability of the Common Stock.
If the Reverse Stock Split is effected and the market price of the Common Stock declines, the percentage decline as an absolute number and as a percentage of the overall market capitalization of the Company may be greater than would occur in the absence of a reverse stock split. Furthermore, the liquidity of the Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse stock split.
Potential Effects of the Proposed Reverse Stock Split and the Amendment
If our stockholders approve the Reverse Stock Split Proposal and the Board effects the reverse stock split of the Company’s Common Stock, the number of shares of Common Stock issued and outstanding will be reduced, depending upon the Split Ratio determined by the Board. The reverse stock split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that, as described below in “Fractional Shares,” holders of our Common Stock otherwise entitled to a fractional share as a result of the Reverse Stock Split because they hold a number of shares not evenly divisible by the Split Ratio will, in lieu of a fractional share, receive one whole share of Common Stock. In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split alone would have no effect on our authorized capital stock, and the total number of authorized shares of Common Stock would remain the same as before the Reverse Stock Split. This would have the effect of increasing the number of shares of our Common Stock available for issuance. The additional available shares would be available for issuance from time to time at the discretion of the Board when opportunities arise, without further stockholder action or the related delays and expenses, except as may be required for a particular transaction by law, the rules of any exchange on which our securities may then be listed, or other agreements or restrictions. Any issuance of additional shares of our Common Stock would increase the number of outstanding shares of our Common Stock and (unless such issuance was pro-rata among existing stockholders) the percentage ownership of existing stockholders would be diluted accordingly. In addition, any such issuance of additional shares of our Common Stock could have the effect of diluting the earnings per share and book value per share of outstanding shares of our Common Stock.
In addition to sales of our Common Stock, if our stockholders approve the reverse stock split and the Board effects it, the additional available shares of our Common Stock would also be available for conversions of convertible securities that we may issue, acquisition transactions, strategic relationships with corporate and other partners, stock splits, stock dividends and other transactions that may contribute to the growth of our business. Any decision to issue equity will depend on, among other things, our evaluation of funding needs, developments in business and technologies, current and expected future market conditions and other factors. There can be no assurance, however, even if the reverse stock split is approved and implemented, that any financing transaction or other transaction would be undertaken or completed.
After the Split Effective Time, the Company will continue to be subject to the periodic reporting and other requirements of the Exchange Act. Subject to compliance with applicable continued listing requirements, our Common Stock will continue to be listed on Nasdaq and traded under the symbol “NITO,” although the exchange will add the letter “D” to the end of the trading symbol for a period of 20 trading days after the Split Effective Time to indicate that a Reverse Stock Split has occurred. After the Split Effective Time, it is expected that our Common Stock will have a new CUSIP number. The Reverse Stock Split is not intended as, and will not have the effect of, a “going private transaction” as described by Rule 13e-3 under the Exchange Act. After the Split Effective Time, the post-split market price of our Common Stock may be less than the pre-split price multiplied by the Reverse Stock Split Ratio. In addition, a reduction in the number of shares outstanding may impair the liquidity for our Common Stock, which may reduce the value of the Common Stock.
Risks Associated with the Reverse Stock Split
The Reverse Stock Split May Not Increase the Price of our Common Stock over the Long-Term. As noted above, the principal purpose of the Reverse Stock Split is to increase the trading price of our Common Stock to meet the minimum stock price standards of Nasdaq. However, the effect of the Reverse Stock Split on the market price of our Common Stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all. While we expect that the reduction in the number of outstanding shares of Common Stock will proportionally increase the market price of our Common Stock, we cannot assure you that the reverse stock split will increase the market price of our Common Stock by a multiple of the split ratio, or result in any permanent or sustained increase in the market price of our Common Stock. The market price of our Common Stock may be affected by other factors which may be unrelated to the number of shares outstanding, including the Company’s business and financial performance, general market conditions, and prospects for future success.
The Reverse Stock Split May Decrease the Liquidity of our Common Stock. The Board believes that the reverse stock split may result in an increase in the market price of our Common Stock, which could lead to increased interest in our Common Stock and possibly promote greater liquidity for our stockholders. However, the reverse stock split will also reduce the total number of outstanding shares of Common Stock, which may lead to reduced trading and a smaller number of market makers for our Common Stock, particularly if the price per share of our Common Stock does not increase as a result of the reverse stock split.
We May Not Be Eligible To Implement Additional Reverse Stock Splits, if required, under Nasdaq Excessive Rule Related to Reverse Stock Splits Within a Prior One Year Period or Not More than 1-for-250 Cumulative Ratio Within a Two-Year Period.
In determining the exact ratio of the reverse stock split within the Split Range, the Board would also need to evaluate first, if the Company is eligible to implement a reverse stock split and the best time for implementing the reverse stock, considering the restrictions set forth in amended Nasdaq Listing Rule 5810(c)(3)(A)(iv). This Listing Rule provides that if a company’s security fails to meet the continued listing requirement for Minimum Bid Price Requirement and the company has effected one or more reverse stock splits over either the prior two-year period with a cumulative ratio of 250 shares or more to one (the “Maximum Cumulative Ratio”) or if a company’s security fails to meet the minimum bid price requirement and the company has effected a reverse stock split of any ratio over the prior one-year period, then the company will not be eligible for any compliance period specified in Nasdaq Rule 5810(c)(3)(A), and the listing qualifications department will issue a delisting determination under Rule 5810 with respect to that security. The amendment applies to a company even if such a company was in compliance with the bid price requirement at the time of its prior reverse stock split. The Nasdaq amendments also limit extensions that let companies continue to trade while they appeal the delisting decision. Accordingly, if a company effects a reverse stock split but its security subsequently falls out of compliance with the minimum bid requirement within a one-year period, it will be issued a delisting determination rather than being granted a compliance period. The Company has not effected any reverse stock split within the prior one-year period. We effected a reverse stock split of our Common Stock on October 5, 2023 at the ratio of 1-for-7. Based on this amended Listing Rule, the Board needs to evaluate the ratio that would not result in the Maximum Cumulative Ratio, and also to ensure that the reverse stock split would not cause non-compliance with other Nasdaq Listing Rules. This could significantly reduce the Company’s ability to effect a reverse stock split, if needed, before October 5, 2025. However, after October 5, 2025, if no additional reverse stock split is effected, the Board will have more flexibility to determine the exact split ratio within the Split Range, if needed, to achieve the maximum result corresponding to the Company’s purposes described above.
Potential Consequences if the Reverse Stock Split Proposal is Not Approved
If the Reverse Stock Split Proposal is not approved by our stockholders, our Board will not have the authority to effect to file the Amendment and to effect the reverse stock split, if and when it is needed, to regain compliance by the with the Minimum Bid Requirement, and that inability may result in delisting of our Common Stock from trading on Nasdaq.
Beneficial Holders of Common Stock
Upon implementation of the reverse stock split, we intend to treat shares held by stockholders through a stockbroker, bank or other nominee in the same manner as registered stockholders whose shares are registered in their names. Stockbrokers, banks or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding Common Stock in street name. However, these stockbrokers, banks or other nominees may have different procedures than registered stockholders for processing the reverse stock split. Stockholders who hold shares of Common Stock with a stockbroker, bank or other nominee and who have any questions in this regard are encouraged to contact their stockbrokers, banks or other nominees.
Registered “Book-Entry” Holders of Common Stock
Certain registered holders of Common Stock may hold some or all of their shares electronically in book-entry form with our transfer agent. These stockholders do not have stock certificates evidencing their ownership of the Common Stock. They are, however, provided with statements reflecting the number of shares registered in their accounts. Stockholders who hold shares electronically in book-entry form with our transfer agent will not need to take action to receive evidence of their shares of post-reverse stock split Common Stock.
Fractional Shares
We will not issue fractional shares in connection with the reverse stock split. Instead, stockholders who would otherwise be entitled to receive a fractional share as a result of the reverse stock split will receive one whole share of our Common Stock in lieu of such fractional share.
Effect of the Reverse Stock Split on Stock Option Awards and Equity Incentive Plans
Based upon the reverse stock splits, proportionate adjustments are generally required to be made to the per share exercise price or the per share base price and the number of shares issuable upon the exercise of all outstanding options and to the per share exercise price of all outstanding options. This would result in approximately the same aggregate price being required to be paid under such options upon exercise, and approximately the same value of shares of our Common Stock being delivered upon such exercise immediately following the reverse stock split as was the case immediately preceding the reverse stock split.
Effect of the Reverse Stock Split on Warrants
In addition to adjusting the number of shares of our Common Stock, we would adjust all shares underlying any of our outstanding warrants as a result of the Reverse Stock Split, as required by the terms of these securities. In particular, we would reduce the conversion ratio for each instrument and would increase the applicable exercise price or conversion price in accordance with the terms of each instrument and based on the Reverse Stock Split Ratio.
Accounting Matters
The proposed Reverse Stock Split Proposal, if approved, will not affect the par value of $0.0001 of our Common Stock. As a result, at the Split Effective Time, the stated capital on our balance sheet attributable to the Common Stock will be reduced in the same proportion as the Split Ratio, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The per share net income or loss and net book value of the Common Stock will be reclassified for prior periods to conform to the post-Reverse Stock Split presentation.
Pro Forma Capitalization of Common Stock
The table below summarizes the Company’s pro forma capitalization of Common Stock, as of February 24, 2025, before and after giving effect to a hypothetical reverse stock split of one-for-two (1-for-2); one-for-twenty-one (1-for-21), if the Board determined that the Company is required to effect a reverse stock split prior to October 5, 2025 to remain in compliance with the Minimum Bid Rule Requirement, and one-for-one hundred fifty (1-for-150), assuming that the reverse stock split will be effected after October 5, 2025. The table below does not include 5,000,000 shares of preferred stock authorized under our Articles of Incorporation, as amended, none of which is currently outstanding.
| Current | After Reverse Split if 1:2 Ratio is Selected | After Reverse Split if 1:21 Ratio is Selected | After Reverse Split if 1:150 Ratio is Selected | |||||||||||||
| Shares of Common Stock Issued and Outstanding(1)(2) | 15,335,618 | 7,667,809 | 730,268 | 102,237 | ||||||||||||
(1) These estimates do not reflect the potential effects of rounding up of fractional shares that may result from the reverse stock split.
(2) Excludes, as of February 24, 2025 (i) 12,366,841 shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of $0.19 and (ii) 19,217 shares issuable upon the exercise of outstanding stock options, at a weighted average exercise price of $23.27. Does not include any shares of Common Stock issuable upon the exercise or conversion of securities that may have been issued after February 24, 2025.
Vote Required
Reverse Stock Split Proposal (Proposal 2) will require an affirmative vote of a majority of the total votes cast at the Special Meeting. Abstentions will have no effect on the outcome of Proposal 2. Because this proposal is a routine matter, brokers will have discretionary voting on this matter if they do not receive instructions.
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL 2.
PROPOSAL 3:
Background
As reported by the Company in its Current Report on Form 8-K, on October 1, 2024, the Company entered into a facility agreement (the “Facility Agreement”) with L.I.A. Pure Capital Ltd. (the “Lender”) for financing of up to EUR 6,000,000, EUR 2,000,000 of which may be used to finance one project in Germany, and the remaining EUR 4,000,000 for any other projects subject to pre-approval by the Lender.
Pursuant to the terms of the Facility Agreement, the Company issued to the Lender a five-year warrant (the “Warrant”) to purchase 1,850,000 shares of our Common Stock, with an exercise price of $1.00 per share. The terms of the Warrant provide that the exercise price and number of shares of the Company’s Common Stock are subject to adjustments upon the issuance of Common Stock, issuance of options, issuance of convertible securities and stock combination events, as detailed in the Warrant, which may result in decrease of the exercise price of the Warrant and the issuance of additional shares of Common Stock. Additionally, the terms of the Warrant provide that the shares of Common Stock issuable upon exercise of the Warrant (the “Warrant Shares”) have a cashless exercise mechanism in the event a registration statement covering the resale of the Warrant Shares is not available, based on a specified formula as detailed in the Warrant.
While the terms of the Warrant state that it is exercisable immediately upon the issuance, the exercise of the Warrant and the issuance of the Warrant Shares are subject to certain limitations and conditions, including that the Lender cannot exercise the Warrant is such exercise would result in the Lender beneficially owning in excess of 4.99% of the Company’s outstanding shares of Common Stock (the “Beneficial Ownership Limitation”), and if required for the issuance of the Warrant, the Company will obtain stockholder approval within six months from the date of the Facility Agreement.
On December 5, 2024, the Lender and the Company executed a waiver agreement (“Waiver Agreement”), pursuant to which, among other things, the Lender agreed not to exercise the Warrant until the Company has obtained stockholder approval for the issuance of the Warrant Shares. Additionally, pursuant to the Waiver Agreement, the Lender agreed that the resale registration statement that the Company was required to file with the SEC within 75 days of the date of the Facility Agreement, needs to be filed by the Company within 30 days from the date of the stockholder approval.
Reasons for the Stockholder Approval of the Warrant Shares Proposal
The Company is seeking stockholder approval in connection with the issuance of the Warrant Shares to the Lender under Nasdaq Listing Rule 5635(d). This Listing Rule requires stockholder approval of transactions other than public offerings of 20% or more of the outstanding common stock of the issuer at a price that is less than the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement (the “Minimum Price”).
On October 1, 2024, prior to the signing of the Facility Agreement, the closing price of the Company’s Common Stock on Nasdaq was $0.2470. The terms of the Warrant provide for its exercise to purchase 1,850,000 shares of Common Stock of the Company at the exercise price is $1.00 per share; however the terms of the Warrant also include the rachet anti-dilution protection provision, which may trigger adjustments resulting in the reduction of the Warrant’s exercise price to the price per share of the Company’s securities sold subsequent to the date of the Facility Agreement which potentially could be below the Minimum Price and also in additional Warrant Shares exceeding 20% of the currently outstanding number of shares of Common Stock. In this case, the number of Warrant Shares in this transaction that will exceed 20% of the outstanding shares of Common Stock and the reduced exercise price of the Warrant below the Minimum Price may trigger the stockholder approval requirements under Nasdaq Listing Rule 5635(d).
We also seek stockholder approval based on the provisions of the Waiver Agreement dated December 5, 2024 and because the Chief Executive Officer of the Lender, the holder of the Warrant, is the brother of the Chief Executive Officer of MitoCareX, a target company that is a party to the Purchase Agreement described in the Acquisition Proposal above for which the Company seeks stockholder approval at this Special Meeting. It should be noted that a sibling relationship in this case does not trigger requirement for stockholder approval under Listing Rule 5635 because (i) the Warrant features the Beneficial Ownership Limitation, preventing the Warrant holder of becoming a Substantial Shareholder (as defined under Nasdaq Listing rules) and (ii) because a sibling relationship does not, by itself, make the Warrant holder and his brother members sharing the voting power under the SEC beneficial ownership rules.
If stockholders do not approve this Proposal, and the Warrant Shares will not be issued, it will result in the following negative consequences for the Company under the terms of the Facility Agreement:
| 1) | In the event the Company fails to deliver the Warrant Shares in a timely manner and the Lender is required to purchase shares of Common Stock in the open market to cover a sale of the Warrant Shares, the Company will be required to compensate the Lender for any additional costs incurred. The Warrant Shares additionally have a cashless exercise mechanism in the event a registration statement covering the resale of the Warrant Shares is not available, based on a specified formula as detailed in the Warrant. |
| 2) | If the Company does not have sufficient authorized and unreserved shares of Common Stock to cover the exercise of the Warrant, it will be required to take immediate action to increase its authorized shares. If the Company cannot deliver the required Common Stock upon exercise, the Lender will be entitled to demand cash compensation based on the Black Scholes Value of the Warrant. |
| 3) | In the event of a fundamental transaction, as detailed in the Warrant, the successor entity will be entitled to assume the Company’s obligations under the Warrant. The Lender may also request the Company to buy back the Warrant for its Black Scholes Value in cash. |
Required Vote
The Warrant Shares Proposal (Proposal 3) requires affirmative vote of a majority of the votes cast at the Special Meeting and entitled to vote on this proposal. Broker non-votes, if any, and abstentions will have no effect on the outcome of Proposal 3.
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS STOCKHOLDERS TO VOTE “FOR” PROPOSAL 3.
PROPOSAL 4
AUTHORIZATION TO ADJOURN THE SPECIAL MEETING
General
In this Adjournment Proposal, we are asking our stockholders to authorize the holders of any proxy solicited by our Board, and each of them individually, to vote to adjourn the Special Meeting to another time and place, if necessary, to enable our Board to solicit additional proxies in favor of the Acquisition Proposal, the Reverse Stock Split Proposal, the 2024 Warrant Proposal, in the event there are not sufficient votes to approve such proposals. If our stockholders approve this Proposal 4, we could adjourn, postpone or continue the Special Meeting and any adjourned session of the Special Meeting to use the additional time to solicit additional proxies, including the solicitation of proxies from our stockholders that have previously voted against any proposals for this Special Meeting. The approval of this Proposal 4 could mean that, even if we had received proxies representing a sufficient number of votes to defeat the Acquisition Proposal, the Reverse Stock Split Proposal and the Warrant Exercise Proposal, we could adjourn the Special Meeting without a vote on such proposals and seek to convince our stockholders to change their votes in favor of such proposals.
If it is necessary or appropriate to adjourn the Special Meeting, no notice of the adjourned meeting is required to be given to our stockholders, other than an announcement at the Special Meeting of the time and place to which the Special Meeting is adjourned, so long as the meeting is adjourned for 30 days or less and no new record date is fixed for the adjourned meeting. At the adjourned meeting, we may transact any business which might have been transacted at the original meeting.
Required Vote
The affirmative vote of a majority of the votes cast at the Special Meeting and entitled to vote on this proposal is required to approve the Adjournment Proposal. Broker non-votes, if any, and abstentions will have no effect on the outcome of Proposal 4.
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING TO APPROVE PROPOSAL 1, PROPOSAL 2, OR PROPOSAL 3.
OTHER BUSINESS
The Board does not intend to bring any other matters before the Special Meeting and knows of no other matters to be brought before the Special Meeting. If, however, any other business should properly come before the Special Meeting, the person named in the accompanying proxy will vote the proxy in accordance with applicable law and as he may deem appropriate in their discretion, unless directed by the proxy to do otherwise.
Interest of Certain Persons in or Opposition to Matters to Be Acted Upon:
(a) No officer or director of the Company has any substantial interest in the matters to be acted upon, other than his or her role as an officer or director of, or as a stockholder of, the Company.
(b) No director of the Company has informed us that he or she intends to oppose the action taken by the Company set forth in this Proxy Statement.
ANNEX A
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
This SECURITIES PURCHASE AND EXCHANGE AGREEMENT (the “Agreement”) is entered into as of February 25, 2025 by and among N2OFF, Inc., a Nevada corporation, with an office address of HaPardes 134 (Meshek Sander), Neve Yarak, Israel (“N2OFF” or the “Purchaser”), MitoCareX Bio Ltd., a private company incorporated under the laws of the State of Israel, whose principal address is at 40 Gordon Street, Givatayim, Israel (“MitoCareX”), SciSparc Ltd., a public company incorporated under the laws of the State of Israel, whose principal address is at 20 Raul Wallenberg St., Tel Aviv, Israel (“SciSparc”), Dr. Alon Silberman, Israeli ID Number 033264292 , residing at 40 Gordon Street, Givatayim, Israel (“Alon”), Prof. Ciro Leonardo Pierri, bearer of Italian passport No. YA7291658, residing at Via dello stadio 19, 74021 Carosino (TA), Italy (“Ciro”, together with SciSparc and Alon, the “Sellers”). Each of N2OFF, MitoCareX, SciSparc, Alon and Ciro shall be referred to as a “Party” and collectively, the “Parties”.
WHEREAS, MitoCareX is a drug discovery company utilizing its generated knowledge and know-how in the field for potentially targeting each of the 53 human mitochondrial carriers;
WHEREAS, the Sellers are the holders and/or beneficial owners of 100% of the issued and outstanding share capital of MitoCareX on a fully diluted basis; and
WHEREAS, the Purchaser desires to acquire from each of the Sellers their respective ordinary shares, nominal (par) value NIS 0.01 each, of MitoCareX (the “Ordinary Shares”), thereby resulting in MitoCareX becoming a wholly-owned subsidiary of the Purchaser, in accordance with the terms provided herein.
NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
SECURITIES PURCHASE AND EXCHANGE
Section 1.01 Securities Purchase. On the terms and subject to the conditions set forth in this Agreement, at the Closing, SciSparc shall transfer and sell to the Purchaser 6,622 Ordinary Shares (“SciSparc’s Purchased Shares”), in consideration for a cash payment equal to $700,000 (the “Cash Payment”); notwithstanding the foregoing, the sale of SciSparc’s Purchased Shares to the Purchaser shall be subject to and contingent upon the transfer of Alon’s Shares, Ciro’s Shares and SciSparc’s Exchanged Shares (each as defined below) to the Purchaser.
Section 1.02 Securities Exchange. On the terms and subject to the conditions set forth in this Agreement, at the Closing:
(a) the Purchaser shall issue and deliver:
| (1) | shares of common stock, par value $0.0001 per share (the “Common Stock”) to Alon representing 15.50% of the capital stock of the Purchaser on a Fully-Diluted Basis, calculated as of immediately following the Closing; | |
| (2) | shares of Common Stock to Ciro representing 7.75% of the capital stock of the Purchaser on a Fully-Diluted Basis, calculated as of immediately following the Closing; and | |
| (3) | shares of Common Stock to SciSparc representing 16.75% of the capital stock of the Purchaser on a Fully-Diluted Basis, calculated as of immediately following the Closing; |
(collectively, the “Exchanged Common Stock”); and
(b) in consideration for the Exchanged Common Stock, each of the Sellers shall transfer to the Purchaser the number of Ordinary Shares as listed below with respect to such Seller, calculated based on the Valuations, such that:
| (1) | Alon shall transfer to the Purchaser 11,166 Ordinary Shares, which shall represent 100% of the Ordinary Shares owned by Alon as of immediately prior to the Closing (“Alon’s Shares”); | |
| (2) | Ciro shall transfer to the Purchaser 5,584 Ordinary Shares, which shall represent 100% of the Ordinary Shares owned by Ciro as of immediately prior to the Closing (“Ciro’s Shares”); and | |
| (3) | SciSparc shall transfer to the Purchaser 12,066 Ordinary Shares, which together with SciSparc’s Purchased Shares shall represent 100% of the Ordinary Shares owned by SciSparc as of immediately prior to the Closing (“SciSparc’s Exchanged Shares” together with SciSparc’s Purchased Shares, the “SciSparc Shares”, and the SciSparc Exchanged Shares together with Alon’s Shares and Ciro’s Shares, the “Exchanged Ordinary Shares”). |
(c) As additional consideration for the Exchanged Ordinary Shares, Alon, Ciro and SciSparc shall receive, collectively, 30% of the gross proceeds of each financing transaction of the Purchaser consummated within five (5) years of the Closing Date, to be divided among them as follows: SciSparc- 15% of such gross proceeds; Alon- 10% of such gross proceeds; and Ciro- 5% of such gross proceeds; to be paid to them within twenty (20) days of the receipt by Purchaser of any gross proceeds as aforesaid, provided, however, that the maximum aggregate amount payable to SciSparc, Alon and Ciro pursuant to this Section 1.02(c) shall be US$1,600,000 (US$800,000 to SciSparc; US$533,333 to Alon; and US$266,667 to Ciro).
The issuance of the Exchanged Common Stock and any Additional Purchaser Stock (as defined below) (collectively the “Purchaser Consideration Stock”), in consideration for the Exchanged Ordinary Shares shall be referred to herein as the “Share Exchange”.
Section 1.03 Milestone Issuances of Common Stock. Following the Closing, the Sellers will receive such number of additional shares of Common Stock, for no additional consideration, that reflects an aggregate amount of up to 25% of the issued and outstanding capital stock of the Purchaser on a Fully-Diluted Basis calculated as of immediately following the Closing (the “Additional Purchaser Stock”), which Additional Purchaser Stock, if the respective Milestones are achieved as set forth below, shall be duly issued in installments based on the achievement of each Milestone, as set forth in Schedule 1.03 attached hereto, and shall be allocated amongst the Sellers as follows: 50% of any Additional Purchaser Stock to SciSparc; 33.33% to Alon; and 16.67% to Ciro. Each respective portion of the Additional Purchaser Stock shall be deemed earned and issuable upon the fulfilment of the respective milestones set forth in Schedule 1.03 (each a “Milestone”), and shall be issued to the Sellers within five (5) business days after the achievement of the respective Milestone. The Sellers’ eligibility to receive Additional Purchaser Stock shall terminate on December 31, 2028, such that if a specific Milestone is not achieved and therefore the right to receive the respective number of Additional Purchaser Stock issuable upon the achievement of such Milestone is not earned by December 31, 2028, the right to receive the number of Additional Purchaser Stock attributable to any such non-achieved Milestone pursuant to this Section 1.03 shall terminate. If there is a dispute between the Parties as to whether or not a Milestone was achieved, and they are unable to reach agreement within ten (10) days, the Parties shall in good faith mutually agree on an independent third party that shall be delegated absolute discretion to determine whether or not a Milestone was achieved, and such determination shall be final and binding upon all Parties absent manifest error.
Section 1.04 Board Composition. Effective as of the Closing, the board of directors of MitoCareX shall be reconstituted so as to consist of three (3) directors, all of whom shall be appointed by N2OFF.
Section 1.05 Signatory Rights. Effective as of the Closing, MitoCareX shall adopt amended signatory rights in such form and substance as shall be approved by N2OFF prior to the date thereof (the “Signatory Rights”).
Section 1.06 Amended and Restated Articles. MitoCareX shall adopt effective as of the Closing the Amended and Restated Articles of Association in the form attached hereto as Annex A (the “Restated Articles”). The Exchanged Ordinary Shares shall have and confer upon N2OFF the rights, preferences, privileges and restrictions set forth in the Restated Articles, as may be amended from time to time in accordance with their terms.
Section 1.07 Employment and Compensatory Arrangement for Alon. Simultaneously with the Closing, Alon shall enter into an amended employment agreement (the “Amended CEO Agreement”) with N2OFF and MitoCareX in connection with his employment as the Chief Executive Officer of MitoCareX, in the form attached hereto as Schedule 1.07(a), and N2OFF and Alon shall enter into a restricted stock unit agreement in the form attached hereto as Schedule 1.07(b) (the “Restricted Stock Unit Agreement”), which Restricted Stock Unit Agreement shall grant Alon restricted stock units of N2OFF (“RSUs”) representing 5% of the capital stock of N2OFF on a Fully-Diluted Basis (calculated as of immediately following the Closing), pursuant to N2OFF’s 2022 Share Incentive Plan without any requirement for Alon to pay an exercise price or provide other consideration. Such RSUs shall vest quarterly, in equal installments, over a period of three years beginning as of the Closing Date and until the third anniversary of the Closing Date, subject to Alon’s continued employment with MitoCareX.
Section 1.08 Closing. The closing (the “Closing”) of the transactions contemplated by this Agreement (the “Transactions”) shall take place on such date (the “Closing Date”) that all conditions precedent and obligations of the Parties to consummate such Transactions contemplated hereby, including as set forth in Section 1.11 below, are satisfied or waived by the respective Party, at such location to be determined by the Parties. Either Party may terminate this Agreement in the event that the Closing Date shall not have occurred within ninety (90) days of the date hereof; provided, however, that the right to terminate this Agreement pursuant to this Section 1.08 shall not be available to any party hereto (i) whose actions or omissions have been a principal cause of, or primarily resulted in, the failure of the Closing to occur on or before such date and such action or failure to act constitutes a breach of this Agreement or (ii) that is in material breach of this Agreement.
Section 1.09 Closing Deliverables.
(a) Delivery by N2OFF. At Closing, N2OFF shall deliver:
to each of the Sellers:
| (1) | letter of good standing as of the Closing Date | |
| (2) | share transfer deeds, to each of the Sellers, with respect to the Exchanged Ordinary Shares duly executed by the Purchaser | |
| (3) | evidence of the instructions to the transfer agent of the Purchaser for the issuance of the Exchanged Common Stock in the name of each Seller | |
| (4) | true and correct copies of written resolutions, or minutes of a meeting, of the board of directors of N2OFF, approving and adopting in all respects the execution, delivery and performance of this Agreement and the Transactions contemplated hereby, including the Amended CEO Agreement and the Restricted Share Unit Agreement. |
to SciSparc:
| (1) | evidence of payment of the Cash Payment to SciSparc |
to each of Alon and MitoCareX:
| (1) | the Amended CEO Agreement signed by N2OFF |
to Alon:
| (1) | the Restricted Share Unit Agreement signed by N2OFF |
(b) Delivery by each of Alon and Ciro. At Closing, each of Alon and Ciro shall deliver to N2OFF:
| (1) | a duly completed and executed Regulation S Questionnaire, in the form attached hereto as Annex B |
(c) Delivery by Alon: At Closing, Alon shall deliver:
to each of N2OFF and MitoCareX:
| (1) | the Amended CEO Agreement signed by Alon |
to N2OFF:
| (1) | the Restricted Share Unit Agreement signed by Alon |
(d) Delivery by SciSparc. At Closing, SciSparc shall deliver:
to N2OFF, Alon and Ciro:
| (1) | true and correct copies of written resolutions, or minutes of a meeting, of the audit committee, board of directors and shareholders (if applicable) of SciSparc, approving and adopting in all respects the execution, delivery and performance of this Agreement and the Transactions contemplated hereby. |
| (2) | letter of good standing (or the jurisdictional equivalent) as of the Closing Date |
to N2OFF:
| (1) | a duly completed and executed Regulation S Questionnaire, in the form attached hereto as Annex B |
| (2) | confirmation of receipt of the Cash Payment |
(e) Delivery by MitoCareX. At Closing, MitoCareX shall deliver:
to N2OFF and Alon:
| (1) | the Amended CEO Agreement signed by MitocareX |
to N2OFF:
| (1) | the Disclosure Schedule, duly certified by an office holder of MitoCareX | |
| (2) | true and correct copies of written resolutions, or minutes of a meeting, of the board of directors and shareholders of MitoCareX, approving and adopting in all respects the execution, delivery and performance of this Agreement and the Transactions contemplated hereby, including the Restated Articles and Signatory Rights | |
| (3) | letter of good standing (or the jurisdictional equivalent) as of the Closing Date | |
| (4) | copy of the register of shareholders of MitoCareX, certified by an office holder of MitoCareX, in which the Exchanged Ordinary Shares are registered in the name of N2OFF | |
| (5) | audited financial statements of MitoCareX as of December 31, 2024 prepared in accordance with International Financial Reporting Standards (“IFRS”) applied on a consistent basis throughout the periods indicated and such other interim financial statements as shall be required upon Closing for purposes of complying with the Purchaser’s reporting obligations under the Exchange Act and other applicable laws and regulations as may be required, as shall be notified by Purchaser to MitoCareX as soon as practicable after becoming aware of the need for such interim financial statements | |
| (6) | the Restated Articles of MitoCareX |
Section 1.10 Conditions to Closing. The respective obligations of each of the Parties to effect the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions:
(a) Delivery of the items set forth in Section 1.09 of this Agreement.
(b) Approval by the stockholders of N2OFF of the execution, delivery and performance of this Agreement and the Transactions contemplated hereby.
(c) No Injunctions. In connection with each of N2OFF, SciSparc and MitoCareX, no statute, rule, regulation, order, decree, ruling or injunction shall have been enacted, entered, promulgated, endorsed or threatened or is pending by or before any governmental authority of competent jurisdiction which in any material respect restricts, prohibits or threatens to restrict or prohibit the consummation of any of the transactions contemplated herein.
(d) Israel Tax Authority. The Parties shall have obtained a ruling issued by the Israel Tax Authority, in form and substance reasonably acceptable to the Parties
(e) Representations and Warranties. The representations and warranties made by each of the Parties herein shall be true and correct in all material respects as of the date hereof and as of the Closing with the same effect as if the representations and warranties were made as of the date hereof and as of the Closing.
(f) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by either Party on or prior to the Closing shall have been performed or complied with in all material respects.
Section 1.10 Taxes. Each of the Parties shall separately bear the tax consequences arising from the issuances, transfers and deliveries of the Ordinary Shares and Common Stock, as applicable.
Section 1.11 Certain Terms. The following terms shall have the following meanings unless otherwise provided herein:
(a) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.
(b) “Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, co-sale, tag along or drag along right, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).
(c) “Fully-Diluted Basis” means 27,734,248 shares of Common Stock in accordance with the table set forth in Schedule 1.11(c) and any additional shares of Common Stock, Options or Convertible Securities issued or granted after the date hereof and on or before Closing.
(d) “Material Adverse Effect” or “Material Adverse Change” shall mean any change or effect that either individually or in the aggregate with all other such changes or effects is materially adverse to the business, assets, properties, condition (financial or otherwise) or results of operations of each of the Parties taken as a whole.
(e) “Options” means any rights, warrants or options to subscribe for or purchase (i) Common Stock or any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification, reorganization or reclassification of such Common Stock or (ii) Convertible Securities.
(f) “Person” means any individual, partnership, corporation, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof) or other entity.
(g) “subsidiary” means, with respect to any Person (as defined below), any entity controlled by such Person and “control” shall mean with respect to any entity, the direct or indirect ownership of (i) more than 50% of the voting rights or the issued and outstanding share capital, or the equivalent, of such entity, or (ii) the right to appoint a majority of the board of directors or of an equivalent governing body of such entity, whether by agreement or otherwise. The words “controls” and “controlled” shall have correlative meanings.
(h) “Transaction Documents” means this Agreement and the other agreements, instruments or documents entered into in connection with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF N2OFF
N2OFF represents and warrants to, and covenants with, each of the Sellers that, as of the date hereof, and as of the Closing (as if made on the Closing Date), except for those representations and warranties and covenants that speak of a different date:
Section 2.01 Exchanged Common Stock. The Exchanged Common Stock shall represent 40.0% of the capital stock of N2OFF on a Fully-Diluted Basis (calculated immediately following the Closing).
The Purchaser Consideration Stock, including the Exchanged Common Stock, any Additional Purchaser Stock, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, shall be duly and validly issued, fully paid and non-assessable, issued in compliance with all applicable laws, and free and clear of Encumbrances. All preemptive, participation and other similar rights with respect to the issuance of the Purchaser Consideration Stock as contemplated hereunder have been fully waived or have lapsed prior to the date hereof. The offer, sale and issuance of the shares of the Purchaser Consideration Stock to be issued pursuant to this Agreement constitute transactions exempted from the registration requirements of Section 15 of the Securities Act and the Israeli Securities Law, 1968, as amended. The rights, privileges and preferences of the shares of the Purchaser Consideration Stock are as stated in the Articles of Incorporation and Bylaws, as may be amended from time to time in accordance with their terms (the “Charter Documents”).
Section 2.02 Organization, Standing and Corporate Power.
(a) N2OFF is duly incorporated, validly existing and in good standing under the laws of the State of Nevada and each of its Subsidiaries (as defined below) is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each of N2OFF and its Subsidiaries has the requisite corporate power and authority to own, lease and operate its properties and other assets and to carry on its business as now being conducted. N2OFF is not in violation of its Charter Documents and no Subsidiary is in violation of its respective charter documents or the equivalent thereof in its jurisdiction of incorporation
(b) A complete list of all of the material subsidiaries of N2OFF, including their jurisdiction of incorporation, is set forth in Schedule 2.02 attached hereto (each a “Subsidiary” and together the “Subsidiaries”).
Section 2.03 Capital Structure. The authorized capital stock of N2OFF consists of (i) 495,000,000 shares of common stock, $0.0001 par value, of which (a) 15,335,618 shares are issued and outstanding as of the date hereof, (b) 12,396,058 shares are subject to Options or warrants or other Convertible Securities, which are outstanding as of the date hereof, and (c) 2,572 shares are the subject of commitments that N2OFF has committed to issue to certain recipients, other than the Sellers, following the date hereof, and (ii) 5,000,000 shares of preferred stock, $0.0001 par value, of which none are issued and outstanding. Immediately following the Closing, the authorized capital stock of N2OFF will consist of (i) 495,000,000 shares of common stock, $0.0001 par value, of which (a) 52,314,615 shares will be issued and outstanding, (b) 40,130,306 shares will be subject to Options or warrants or other Convertible Securities, and (c) 2,572 shares which will be the subject of commitments that N2OFF has committed to issue to certain recipients, other than the Sellers, following the Closing, and (ii) 5,000,000 shares of preferred stock, $0.0001 par value, none of which none will be issued and outstanding. Except as disclosed in the N2OFF Reports (as defined below) and as set forth herein, there are no outstanding bonds, debentures, notes, Convertible Securities, Options, or other indebtedness or other securities of N2OFF having the right to vote or the right to participate in or receive dividends (or convertible into, or exchangeable for, securities having the right to vote or the right to participate in or receive dividends) on any matters of which stockholders of N2OFF are entitled to vote on. Except as disclosed in N2OFF Reports and as set forth herein, there are no outstanding securities, Convertible Securities, Options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which N2OFF is a party or by which it is bound obligating N2OFF to issue, deliver or sell, or cause to be issued, delivered or sold, additional Common Stock of N2OFF or other equity or voting securities of N2OFF or obligating N2OFF to issue, grant, extend or enter into any such Convertible Securities, Option, warrant, call, right, commitment, agreement, arrangement or undertaking. There are no outstanding contractual obligations, commitments, understandings or arrangements of N2OFF to repurchase, redeem or otherwise acquire or make any payment in respect of any Common Stock of N2OFF or any other securities of N2OFF. Except for registration rights granted to L.I.A. Pure Capital Ltd. with respect to warrants to purchase 1,850,000 shares of Common Stock and corresponding anti-dilution rights as disclosed in the N2OFF Reports, there are no agreements or arrangements pursuant to which N2OFF is or could be required to register its Common Stock or other securities under the Securities Act of 1933, as amended (the “Securities Act”) or other agreements or arrangements with or among any holders of N2OFF or with respect to any securities of N2OFF.
Section 2.04 Authority; Non-Contravention.
(a) N2OFF has all requisite authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by N2OFF and the consummation by N2OFF of the transactions contemplated by this Agreement and the other Transaction Documents have been (or at Closing will have been) duly authorized by all necessary corporate action on the part of N2OFF.
(b) This Agreement and the other Transaction Documents have been duly executed and delivered by and constitute valid and binding obligations of N2OFF, enforceable in accordance with their terms. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of N2OFF or its Subsidiaries under, (i) the Charter Documents of N2OFF or the equivalent documents of any of its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to N2OFF or any of its Subsidiaries or their respective properties or assets, or (iii), any judgment, order, decree, statute, law, ordinance, rule, regulation or arbitration award applicable to N2OFF, any of its Subsidiaries or their respective properties or assets, other than, in the case of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults, rights, losses or liens that individually or in the aggregate could not have a Material Adverse Effect with respect to N2OFF or could not prevent, hinder or materially delay the ability of N2OFF to consummate the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any governmental entity is required by or with respect to N2OFF or any of its Subsidiaries in connection with the execution and delivery of this Agreement by N2OFF or the consummation by N2OFF of any of the transactions contemplated by this Agreement.
(c) At meetings duly called and held prior to the execution of this Agreement, the board of directors of N2OFF unanimously (among those present and voting at a duly convened meeting at which a quorum was present throughout) (i) determined that this Agreement and the transactions contemplated hereby, including the Amended CEO Agreement, the Restricted Share Unit Agreement and the issuance of the Purchaser Consideration Stock, are advisable; (ii) approved this Agreement, the Transaction Documents and the transactions contemplated hereby, including the Amended CEO Agreement, the Restricted Share Unit Agreement and the issuance, as and when issuable pursuant to the terms hereof, of the Purchaser Consideration Stock.
Section 2.05 Company Reports.
(a) Since January 1, 2023, N2OFF has filed all forms, reports and documents with the U.S. Securities and Exchange Commission (“SEC”) that have been required to be filed by it under applicable laws prior to the date hereof (all such forms, reports and documents, together with all documents filed or furnished on a voluntary basis and all exhibits and schedules thereto, the “N2OFF Reports”). As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), (i) each N2OFF Report complied as to form in all material respects with the applicable requirements of the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and/or the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, each as in effect on the date such N2OFF Report was filed, and (ii) each N2OFF Report did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. To the knowledge of N2OFF, none of the N2OFF Reports is the subject of any pending SEC review or investigation or to the knowledge of N2OFF any threatened investigation or review.
(b) As of the date hereof, there are no outstanding unresolved comments with respect to any of the N2OFF Reports noted in any written comment letter from the SEC.
(c) None of the Subsidiaries is required to file any forms, reports, schedules, statements or other documents with the SEC.
(d) No principal executive officer of N2OFF has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any N2OFF Report, except as disclosed in certifications filed with the N2OFF Reports. Since January 1, 2023, neither N2OFF nor any of its principal executive officers has received notice from any governmental entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications. For purposes of this Section 2.05(d), “principal executive officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.
(e) The financial statements included in the N2OFF Reports comply in all material respects with the applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. The financial statements included in the N2OFF Reports have been prepared in accordance with generally accepted accounting principles in the United States applied on a consistent basis (“GAAP”), and fairly represent the financial position of N2OFF and as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments and the omission of certain footnotes. Except as set forth in the N2OFF Reports, N2OFF has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a balance sheet of N2OFF or in the notes thereto.
(f) N2OFF maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) designed to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP; (ii) that receipts and expenditures are executed in accordance with the authorization of management; and (iii) that any unauthorized use, acquisition or disposition of N2OFF’s assets that would materially affect N2OFF’s financial statements would be detected or prevented in a timely manner.
(g) Since January 1, 2023, neither N2OFF nor any of its Subsidiaries (nor, to the knowledge of N2OFF, any employee thereof) nor N2OFF’s independent auditors has identified or been made aware of any (i) significant deficiency or material weakness in the system of internal accounting controls utilized by N2OFF and its Subsidiaries, other than as disclosed in the N2OFF Reports; (ii) fraud, whether or not material, that involves N2OFF’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by N2OFF and its Subsidiaries; or (iii) claim or allegation regarding any of the foregoing.
(h) Neither N2OFF nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, partnership agreement or any similar contract (including any contract relating to any transaction, arrangement or relationship between or among N2OFF or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand (such as any arrangement described in Section 303(a)(4) of Regulation S-K of the SEC)) where the purpose of such arrangement is to avoid disclosure of any material transaction involving N2OFF or any its Subsidiaries in N2OFF’s consolidated financial statements.
(i) Since January 1, 2023, (i) neither N2OFF nor any of its Subsidiaries nor, to the knowledge of N2OFF, no director, officer, employee, auditor, accountant, consultant or representative of N2OFF or any of its Subsidiaries has received or otherwise had or obtained knowledge of any substantive complaint, allegation, assertion or claim, whether written or oral, that N2OFF or any of its Subsidiaries has engaged in accounting or auditing practices in violation of applicable law or applicable requirements of GAAP.
(j) Since January 1, 2023, (i) to the knowledge of N2OFF, no employee of N2OFF or any of its Subsidiaries has provided information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable law of the type described in Section 806 of the Sarbanes-Oxley Act by N2OFF or any of its Subsidiaries and (ii) neither N2OFF nor any of its Subsidiaries nor, to the knowledge of N2OFF, any director, officer, employee, contractor, subcontractor or agent of N2OFF or any such Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of N2OFF or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.
(k) Neither N2OFF nor any of its Subsidiaries has any liabilities required to be disclosed by GAAP other than (i) liabilities reflected or otherwise reserved against in the N2OFF balance sheet; (ii) liabilities under this Agreement; (iii) incurred in connection with the preparation and negotiation of this Agreement or the consummation of the transactions contemplated by this Agreement, including fees and expenses payable to any accountant, outside legal counsel or financial advisor in connection therewith; (iv) executory obligations under any contract to which N2OFF is a party or is bound and that are not in the nature of breaches that are required by GAAP to be disclosed in a balance sheet; and (v) liabilities incurred in the ordinary course of business since the date of the N2OFF balance sheet that would not have a Material Adverse Effect on N2OFF.
Section 2.06 Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or, to the knowledge of N2OFF, threatened against N2OFF or any of its Subsidiaries. Neither N2OFF nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree or award of any court or any governmental authority.
Section 2.07 Compliance.
(a) N2OFF has not been advised, nor does N2OFF have reason to believe, that it, and each of its Subsidiaries, is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting its business and neither N2OFF nor any of its Subsidiaries is in conflict with, or in default, breach or violation of, in any material respect, any applicable law, rule or regulation or order applicable to N2OFF or its Subsidiaries or by which any property or asset of N2OFF or its Subsidiaries is bound or affected, where such conflict, default, breach or violation would reasonably be expected to have a Material Adverse Effect on N2OFF.
(b) Neither N2OFF nor any of its Subsidiaries has received any written notice of or been charged with the violation of any law and there is no threatened action or proceeding against N2OFF under any of such laws. N2OFF and each of its Subsidiaries is not in violation of or default under (i) N2OFF’s currently effective Charter Documents, or (ii) any order, writ, injunction, decree or judgment of any court or any governmental department, commission or agency, domestic or foreign, to which it is subject or by which it is bound. N2OFF and each of its Subsidiaries has obtained all franchises, permits, licenses, consents and any similar authorizations that are material to its business, under applicable law, and are in compliance with such franchises, permits, licenses, consents and similar authorizations. N2OFF and each of its Subsidiaries’ assets are not subject to any restriction or limitation or require a license or registration under applicable laws relating to marketing, export or import controls. Without limiting the generality of the foregoing, neither N2OFF nor any of its Subsidiaries is using or developing, or otherwise engaged in, encryption technology or other technology whose development, commercialization or export is restricted.
Section 2.08 Absence of Certain Changes. Except for actions expressly contemplated by this Agreement, since January 1, 2023 through the date of this Agreement there has not been any Material Adverse Effect on N2OFF.
Section 2.09 Material Agreements. All material agreements to which N2OFF or any of its Subsidiaries is a party are included as part of or specifically identified in the N2OFF Reports to the extent required by the rules and regulations of the SEC as in effect at the time of filing (“N2OFF Material Agreements”). Except for the N2OFF Material Agreements, N2OFF and its Subsidiaries have no material contracts. Neither N2OFF nor, any of its Subsidiaries or to N2OFF’s Knowledge any other party to any of the N2OFF Material Agreements, is in breach of or default under any of such contracts.
Section 2.10 Taxes.
(a) Except as disclosed in the N2OFF Reports, N2OFF and each of its Subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns and all such tax returns were true, correct and complete in all respects and has paid or accrued all taxes shown as due thereon, and N2OFF has no knowledge of a tax deficiency which has been or might be asserted or threatened against it or against any of its Subsidiaries.
(b) N2OFF has not constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code in the last two years; and neither N2OFF nor any of its Subsidiaries does or has ever engaged in a reportable transaction under Treas. Reg. § 1.6011-4(b).
Section 2.11 Conformity of Descriptions. The Purchaser Consideration Stock, as and when issued, will conform in all material respects to the descriptions of the Common Stock contained in the N2OFF Reports and other filings with the SEC.
Section 2.12 Disclosure Controls. N2OFF has in place disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act) that are designed to ensure that (i) all material information that is required to be disclosed by N2OFF in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported to N2OFF’s principal executive officer and N2OFF’s principal financial officer or Persons performing similar functions for preparing such reports within the time periods specified in the rules and forms of the SEC; and (ii) all such information is accumulated and communicated to N2OFF’s management as appropriate to allow timely decisions regarding required disclosure.
Section 2.13 Export Control and Import Laws.
(a) To the knowledge of N2OFF, N2OFF and each of its Subsidiaries has conducted their import and export transactions in accordance, in all material respects, with applicable provisions of Israeli, U.S. and other trade laws of the countries where it conducts business.
(b) To the knowledge of N2OFF, N2OFF and each of its Subsidiaries have obtained all export licenses and other approvals required for their exports of products, software and technologies from Israel, the U.S. or any other country from which N2OFF or any of its Subsidiaries exports products, software or technologies, in each case except as would not, individually or in the aggregate, result in a Material Adverse Effect on N2OFF. To the knowledge of N2OFF, N2OFF and each of its Subsidiaries are in compliance in all material respects with the terms of such applicable export licenses or other approvals
Section 2.14 Anti-Bribery Laws. Neither N2OFF, any of its Subsidiaries, any of their respective officers, directors, employees, nor, to the knowledge of N2OFF, any of their respective agents or other Persons acting on their behalf has (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, or (ii) made, promised, offered, or authorized any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign in violation of any provision of the FCPA or any other anti-bribery laws (but, in each case, only to the extent such anti-bribery law is applicable to N2OFF or such Subsidiary), (iii) taken any act or omission in violation of such applicable anti-bribery laws, or (iv) received any allegation regarding potential or actual violations of such applicable anti-bribery laws. N2OFF and its Subsidiaries have maintained accurate books and records and adopted and implemented internal controls, policies and procedures designed to ensure compliance with applicable anti-bribery laws.
Section 2.15 Related Party Transactions. Except as set forth in the N2OFF Reports or compensation or other employment arrangements in the ordinary course of business and except to the extent not required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act, there are no transactions, agreements, arrangements or understandings between N2OFF or any of its Subsidiaries, on the one hand, and any affiliate (including any officer or director, but not including any wholly owned subsidiary of N2OFF) thereof or any stockholder that beneficially owns 5% or more of the outstanding shares of Common Stock, on the other hand.
Section 2.16 Brokers; Fees and Expenses. There is no investment banker, broker, finder or similar agent or other Person that has been retained by or is authorized to act on behalf of N2OFF or any of its Subsidiaries who is entitled to any financial advisor’s, brokerage, finder’s or other similar fee or commission in connection with the transactions contemplated hereby.
Section 2.17
(a) Purchase Entirely for Own Account. The Exchanged Ordinary Shares proposed to be acquired by N2OFF hereunder will be acquired for investment for N2OFF’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and N2OFF has no present intention of selling, granting any participation in or otherwise distributing the Exchanged Ordinary Shares, except in compliance with applicable securities laws. N2OFF further represents that it does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participation to such Person with respect to the Exchanged Ordinary Shares.
(b) N2OFF (i) can bear the economic risk of its investment and (ii) possesses such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in MitoCareX and its securities and the purchase of the Exchanged Ordinary Shares from the Sellers.
Section 2.18 Disclosure. All disclosure provided to the Sellers regarding N2OFF, its Subsidiaries and their business and the transactions contemplated hereby, including the exhibits to this Agreement, furnished by N2OFF with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers, severally, as to itself, and not jointly, represents and warrants to N2OFF that, as of the date hereof, and as of the Closing (as if made on the Closing Date), except for those representations and warranties that speak of a different date:
Section 3.01 Exchanged Ordinary Shares. The Exchanged Ordinary Shares of such Seller shall represent 100% of such Seller’s ownership of Ordinary Shares as of immediately prior to the Closing.
Section 3.02 SciSparc Authorization; Validity. SciSparc is duly incorporated and validly existing under the laws of the State of Israel and is not a “breaching company” (within the meaning of Section 362.A of the Israeli Companies Law, 5759-1999 (the “Israeli Companies Law”)). SciSparc has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. All corporate action required to be taken by SciSparc’s board of directors in order to authorize SciSparc to enter into this Agreement and all exhibits, schedules and ancillary documents thereto, and to transfer the SciSparc Shares at the Closing. All action on the part of the officers of SciSparc necessary for the execution and delivery of the Agreement, the performance of all obligations of SciSparc under the Agreement to be performed as of the Closing, and the issuance and delivery of the SciSparc Shares has been taken. This Agreement having been duly executed and delivered and, assuming due execution and delivery by the other party, constitutes the valid and binding obligation of the parties, enforceable in accordance with its terms and conditions except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium laws, and other laws of general application affecting the enforcement of creditors’ rights and remedies generally.
Section 3.03 Consents. Each Seller has obtained each consent, approval, permit, declaration, registration, and authorization of, and made each filing with, any person, including any applicable court, governmental or regulatory authority, commission, administrative agency, and non-governmental third party, if any, necessary for such Seller to consummate the Transactions contemplated hereunder.
Section 3.04 Non-Contravention. The execution and delivery of this Agreement by such Seller does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the Exchanged Ordinary Shares of such Seller under, (i) the charter documents of such Seller (as applicable), (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to such Seller or its respective properties or assets, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule, regulation or arbitration award applicable to such Seller or its respective properties or assets, other than, in the case of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults, rights, losses or liens that individually or in the aggregate would not reasonably be expected to prevent, hinder or materially delay the ability of such Seller to consummate the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any governmental entity is required by or with respect to such Seller in connection with the execution and delivery of this Agreement by such Seller or the consummation by such Seller, as the case may be, of any of the transactions contemplated by this Agreement.
Section 3.05 Title to Seller Shares. Each of the Sellers represents and warrants as to itself that it has good, marketable and valid title to and unrestricted power to vote and sell the Exchanged Ordinary Shares owned by it, free and clear of any Encumbrances and, upon purchase and payment therefor and delivery to N2OFF in accordance with the terms of this Agreement, the Purchaser will obtain good, marketable and valid title to and unrestricted power to vote the Exchanged Ordinary Shares of such Seller. To such Seller’s knowledge, the Exchanged Ordinary Shares held by such Seller have been duly authorized and validly issued to it and are fully paid and non-assessable. The transfer of the Exchanged Ordinary Shares held by such Seller to N2OFF is not subject to any right of first refusal, preemptive, co-sale, tag-along or drag-along right or other comparable obligations or restrictions that have not been validly waived.
Section 3.06 Acquisition of Exchanged Common Stock for Investment.
(a) Purchase Entirely for Own Account. The Exchanged Common Stock proposed to be acquired by such Seller hereunder will be acquired for investment for its own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Seller has no present intention of selling, granting any participation in or otherwise distributing the Exchanged Common Stock issued to it, except in compliance with applicable securities laws. The Seller further represents that it does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participation to such Person with respect to the Exchanged Common Stock being issued to it.
(b) The Seller (i) can bear the economic risk of its investment and (ii) possesses such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in N2OFF and its securities.
(c) The Seller understands that the sale of the Exchanged Common Stock is not registered under the Securities Act and that the issuance hereof to the Seller is intended to be exempt from registration under the Securities Act pursuant to Regulation S promulgated thereunder (“Regulation S”). The Seller is, and on each date on which it exercises any warrants issued to it pursuant to the terms hereof to purchase shares of Common Stock, it will be either (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9) or (a)(12) under the Securities Act or, if not an accredited investor, otherwise meets the suitability requirements of Regulation D and Section 4(a)(2) of the Securities Act; (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act; or (iii) a “non-US person,” as such term is defined in Regulation S and as set forth in Annex B hereto. The certificates representing the Exchanged Common Stock issued to the Seller shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable securities laws:
“[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE] HAS [NOT] BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES [OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
(d) The Seller acknowledges that neither the SEC, nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.
(e) The Seller acknowledges that it has carefully reviewed such information as it has deemed necessary to evaluate an investment in N2OFF and its securities. To the full satisfaction of the Seller, it has been furnished all materials that it has requested relating to N2OFF and the issuance of the Exchanged Common Stock hereunder.
(f) The Seller understands that the Exchanged Common Stock may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchanged Common Stock or any available exemption from registration under the Securities Act, the Exchanged Common Stock may have to be held indefinitely and the Seller further acknowledges that the Exchanged Common Stock issued to it may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied, including, without limitation, the Purchaser’s compliance with the reporting requirements under the Exchange Act.
(g) The Seller has conducted its own investigation with respect to N2OFF, its business and the Exchanged Common Stock; has received or otherwise had access to all information regarding N2OFF that it believes is necessary or appropriate in connection with its receipt of the Exchanged Common Stock, including financial and other information which has been publicly filed by N2OFF with the SEC through EDGAR; (c) has made its own assessment and has satisfied itself concerning the relevant tax, legal, currency and other considerations relevant to its receipt of the Exchanged Common Stock; and (d) has such knowledge and experience in financial and business matters in order to evaluate the merits and risks of its prospective receipt of the Exchanged Common Stock.
(h) The Seller hereby represents and warrants that as of the Closing Date:
| (1) | is a “non-US person” as defined in Regulation S as promulgated under the Securities Act and is not purchasing the Exchanged Common Stock for the account of or benefit of a U.S. Person or a person within the United States; | |
| (2) | was not offered the Exchanged Common Stock in the United States; | |
| (3) | did not execute or deliver this Agreement, in the United States; | |
| (4) | did not cause any buy order for the Exchanged Common Stock to originate in the United States; | |
| (5) | has no intention to distribute either directly or indirectly any of the Exchanged Common Stock in the United States, and each Seller will not offer, sell or otherwise transfer, directly or indirectly, any of the Exchanged Common Stock in the United States or to, or for the account or benefit of, a U.S. Person or person in the United States except pursuant to registration under the 1933 Act and the securities laws of all applicable states, or pursuant to available exemptions therefrom; and | |
| (6) | did not receive the offer to purchase the Exchanged Common Stock as a result of, nor will it engage in, any directed selling efforts (as defined in Regulation S). |
Section 3.07 Additional Legend; Consent. Additionally, the Exchanged Common Stock will bear any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended and the Seller consents to N2OFF making a notation on its records or giving instructions to any transfer agent of the Exchanged Common Stock in order to implement the restrictions on transfer of the Exchanged Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MITOCAREX
MitoCareX hereby represents and warrants to N2OFF that, except as set forth on the Disclosure Schedule delivered to N2OFF on the date hereof and attached hereto as Schedule 4 (the “Disclosure Schedule”), which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following representations are true, correct and complete as of the date hereof and as of the Closing (as if made on the Closing Date); except, in each case, as to such representations and warranties that address matters as of a particular date, which are true, correct and complete only as of such date. The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article IV, and the information set forth in any section or subsection of the Disclosure Schedule shall apply to and qualify (a) the representation and warranty set forth in this Agreement to which it corresponds, and (b) whether or not an explicit reference or cross-reference is made, each other representation and warranty set forth in this Agreement for which it is reasonably apparent that such information is relevant to such other section.
“Knowledge” or “knowledge” within this Article IV, with respect to any fact or matter, means the actual knowledge of MitoCareX’s officers and directors of such fact or matter.
Section 4.01 Organization. MitoCareX is a company duly organized and validly existing under the laws of the State of Israel and in good standing (to the extent the jurisdiction of its incorporation recognizes the concept of good standing), and is not a “breaching company” (within the meaning of Section 362.A of the Israeli Companies Law), and has all requisite corporate power and authority to carry on its business as currently conducted.
Section 4.02 Capitalization.
(a) The authorized share capital of MitoCareX is or will be on or immediately prior to the Closing (but following the adoption of the Restated Articles), as set forth in the Restated Articles.
(b) The issued and outstanding shares of MitoCareX are owned of record and beneficially by shareholders set forth in Section 4.02(b) of the Disclosure Schedule.
(c) The issued and outstanding shares of MitoCareX were duly and validly authorized and issued, fully paid and non-assessable, and offered and issued in compliance with the provisions of its articles of association as in effect at the time of each such issuance and in compliance with all applicable corporate and securities laws. None of the issued and outstanding shares of MitoCareX was offered or sold in such a manner as to make the offer, issuance or sale of such shares not exempted from registration requirements under applicable securities law.
(d) There are no outstanding share capital, options, warrants, rights (including conversion, preemptive rights, rights of first refusal or similar rights) or agreements for the purchase from MitoCareX of any of its share capital, or any securities convertible into or exchangeable for shares of MitoCareX (whether now or hereinafter authorized or issued) or that could require MitoCareX to issue, sell or otherwise cause to be outstanding any additional shares of MitoCareX’s share capital or securities convertible or exercisable into shares thereof.
(e) MitoCareX has not granted or agreed to grant registration rights and is not under any contractual obligation to register any of its currently outstanding securities, securities that may hereafter be issued upon conversion thereof, or shares or other securities it may hereafter issue or grant.
(f) MitoCareX has not declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its share capital.
(g) Upon the Closing, the Exchanged Ordinary Shares shall represent 100% of MitoCareX’s issued and outstanding share capital on a fully diluted basis.
Section 4.03 Authorization. All corporate action on the part of MitoCareX, its directors and shareholders, necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents and for the performance of all obligations of MitoCareX under the Transaction Documents in accordance with their terms has been taken or will be taken prior to the Closing. The Transaction Documents, when executed and delivered by MitoCareX and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute valid and binding obligations of MitoCareX, enforceable against MitoCareX, in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
Section 4.04 Valid Title. To the knowledge of MitoCareX, the Exchanged Ordinary Shares will be transferred with valid title, free and clear of any liens or encumbrances, charges, judgments, security interests, encumbrances, debt, limitations or restrictions (including, but not limited to, any restriction on the right to sell or otherwise dispose of the Exchanged Ordinary Shares, any mortgage, pledge, charge, title retention, right to acquire, hypothecation, option, right of first offer, tag along or right of first refusal), rights, claims, options to purchase, proxies, voting trusts and other voting agreements, calls and commitments of any kind, or third party rights of any kind.
Section 4.05 No Conflict; Consents. The execution, delivery and performance of the Transaction Documents and the consummation of the Transactions do not and will not (a) result in any conflict with, or a material breach or violation, with or without the passage of time and giving of notice, of any of the terms, conditions or provisions of, or give rise to rights to others (including rights of termination, cancellation or acceleration) under: (i) MitoCareX’s currently effective articles of association; (ii) any judgment, injunction, order, writ, decree or ruling of any court or governmental authority, domestic or foreign, to which MitoCareX is subject; (iii) any Material Contract (as defined below) to which MitoCareX is a party or by which it is bound; or (iv) any applicable law; (b) result in the creation of any Encumbrance upon any asset of MitoCareX or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to MitoCareX; or (c) require the consent, approval or authorization of, registration, qualification or filing with, or notice to any Person or any federal, state, local or foreign governmental authority or regulatory authority or agency, in each case which would reasonably be expected to have a Material Adverse Effect or to materially adversely affect the ability of MitoCareX to perform its obligations hereunder or thereunder and which has not heretofore been obtained or made or will be obtained or made prior to Closing, except the filing of the Restated Articles and the other required notices with the Israeli Registrar of Companies, each of which shall be made as soon as practicable following the Closing.
Section 4.06 Compliance with Laws and Other Instruments. MitoCareX has not been advised, nor does MitoCareX have reason to believe, that it has not been in compliance, in all material respects, with all applicable laws. MitoCareX has not received any written notice of or been charged with the violation of any law and to its knowledge there is no threatened action or proceeding against MitoCareX under any of such laws. MitoCareX is not in violation of or default under (i) MitoCareX’s currently effective articles of association or (ii) any order, writ, injunction, decree or judgment of any court or any governmental department, commission or agency, domestic or foreign, to which it is subject or by which it is bound. To the knowledge of MitocareX, MitoCareX has obtained all franchises, permits, licenses, consents and any similar authorizations that are material to its business, under applicable law, and is in all material respects in compliance with such franchises, permits, licenses, consents and similar authorizations. MitoCareX’s assets are not subject to any restriction or limitation or requires a license or registration under applicable laws relating to marketing, export or import controls. Without limiting the generality of the foregoing, MitoCareX is not using or developing, or otherwise engaged in, encryption technology or other technology whose development, commercialization or export is restricted under applicable law.
Section 4.07 Directors; Officers. The current directors and officers of MitoCareX are listed on Section 4.07 of the Disclosure Schedule (the “Current MitoCareX Board”). MitoCareX does not have any agreement, obligation or commitment with respect to the election of any member of the Current MitoCareX Board or to the right to nominate an observer to the Current MitoCareX Board or MitoCareX board of directors to be constituted upon the Closing, other than as set forth in the articles of association of MitoCareX, and any such rights shall be waived or lapse upon the Closing. There are no agreements, commitments or understandings of MitoCareX, whether written or oral, with respect to any compensation to be provided to any of their directors or officers.
Section 4.08 Subsidiaries. MitoCareX does not have any direct or indirect subsidiaries.
Section 4.09 Financial Information; Liabilities.
(a) The (i) audited financial statements of MitoCareX as of December 31, 2022, and (ii) audited financial statements of MitoCareX as of December 31, 2023 (the “Financial Statements”) have been provided to N2OFF prior to the date hereof. The Financial Statements have been prepared in accordance with IFRS applied on a consistent basis throughout the periods indicated. The Financial Statements fairly present the financial condition and operating results of MitoCareX as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments. MitoCareX maintains a standard system of accounting established and administered in accordance with IFRS. MitoCareX has no liabilities required to be disclosed by IFRS that are due and not duly paid, monetary obligations, or debts, whether accrued, absolute or contingent, other than (i) liabilities reflected or otherwise reserved against in the Financial Statements; (ii) liabilities under this Agreement; (iii) liabilities incurred in connection with the preparation and negotiation of this Agreement or the consummation of the transactions contemplated by this Agreement, including fees and expenses payable to any accountant, outside legal counsel or financial advisor in connection therewith; (iv) executory obligations under any contract to which MitoCareX is a party or is bound and that are not in the nature of breaches that are required by IFRS to be disclosed in the Financial Statements; and (v) liabilities, obligations and debts incurred in the ordinary course of business that do not exceed US$10,000 individually and do not exceed US$50,000 in the aggregate (for clarity, excluding any salary obligations pursuant to employment agreements or offer letters with employees). Without derogating from the generality of the foregoing, (i) MitoCareX is not a guarantor of any debt or obligation of another, nor has MitoCareX given any indemnification, loan, security or otherwise agreed to become directly or contingently liable for any obligation of any Person, other than in the ordinary course of business, and no Person has given any guarantee of, indemnity for, or security for, any obligation of MitoCareX; and (ii) MitoCareX has no debt for borrowed funds or pursuant to credit arrangement.
(b) MitoCareX has not maintained any off-the-book accounts or entered into any transactions for any off balance sheet activity.
(c) To the knowledge of MitoCareX none of MitoCareX’s directors or officers has, directly or indirectly, (i) circumvented the internal accounting controls of MitoCareX, (ii) intentionally falsified any of the books, records or accounts of MitoCareX, or (iii) made false or misleading statements to, or attempted to coerce or fraudulently influence, an accountant in connection with any audit, review or examination of the Financial Statements.
Section 4.10 Assets and Properties. MitoCareX has good and marketable title to all of the tangible or personal properties and assets (“Assets”) owned by MitoCareX, which are material to the business of MitoCareX as currently conducted, and such properties and assets are free and clear of all Encumbrances. With respect to the Assets it leases, MitoCareX is in compliance in all material respects with such leases and holds a valid leasehold or license interest free of any Encumbrances, other than those of the lessors of such property or assets securing obligations under such leases. MitoCareX does not own any real property.
Section 4.11 Labor Matters
(a) Employee List. Section 4.11 of the Disclosure Schedule contains a list of all employees of MitoCareX (each, an “Employee”), and correctly reflects as of the date hereof: (i) their name and dates of hire; (ii) their position, full-time or part-time status, including each Employee’s classification as either exempt or non-exempt from the overtime requirements under any applicable law; (iii) their monthly base salary or hourly wage rate, as applicable; (iv) any other compensation payable to them including, compensation payable pursuant to bonus (for the current fiscal year and the most recently completed fiscal year), deferred compensation or commission arrangements, overtime payment, vacation entitlement and accrued vacation or paid time-off balance, travel pay or car maintenance or car entitlement, sick leave entitlement and accrual, recuperation pay entitlement and accrual, entitlement to pension arrangement and/or any other provident fund (including manager’s insurance and education fund), and their respective contribution rates and the salary basis for such contributions, whether such employee, is subject to a Section 14 Arrangement under the Israeli Severance Pay Law - 1963 (“Section 14 Arrangement”) (and, to the extent such employee is subject to the Section 14 Arrangement, an indication of whether such arrangement has been applied to such person from the commencement date of their employment and on the basis of their entire salary) and notice period entitlement; (v) for each Israeli employee, the country of employment, citizenship, date of hire, manager’s name and work location and any material special circumstances (such as leave of absence) and (vi) any promises or commitments made to any of the Employees, whether in writing or not, with respect to any future changes or additions to their compensation or benefits. Other than their salary, no Employee is entitled to any payment or benefit that may be reclassified as part of their determining salary for all intent and purposes, including for the social contributions.
(b) Contractors.
(1) Section 4.11(b) of the Disclosure Schedule contains a list of all material consultants, advisory board member and independent contractors, including services providers, manpower companies and their employees, and freelancers engaged by MitoCareX (each, a “Contractor”) and, for each, as of the date hereof, such Person’s compensation and benefits, the initial date of such Person’s engagement, the term of the engagement, prior notice entitlement and whether such engagement has been terminated by written notice by either party thereto. All current and former Contractors were rightly classified as contactors and all such Person’s agreements do not create employer-employee relations between such Persons and MitoCareX. MitoCareX has never had any liability with respect to any misclassification of any Contractor as an independent contractor. To the knowledge of MitocareX, no Contractor has a basis for a claim or any other allegation that such Person was not rightly classified as an independent contractor.
(2) MitoCareX has paid in full to all of its respective Contractors all compensation due and payable to such Contractors on or prior to the date of this Agreement.
(3) To the knowledge of MitoCareX, no Contractor is in material violation of any term of any engagement with such Contractor. MitoCareX has not received any written notice alleging that any such violation has occurred.
(c) MitoCareX has complied, in all material respects, with all applicable employment laws, policies, procedures and agreements relating to employment, and terms and conditions of employment of its respective Employees. MitoCareX has paid in full to all of its respective Employees all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to such employees on or prior to the date of this Agreement. MitoCareX has complied in all material respects with the applicable laws relating to the proper withholding and remittance to the proper tax and other authorities of all sums required to be withheld from employees under applicable laws with respect to its respective Employees or Contractors.
The liability of MitoCareX for any obligations to pay any amount of severance payment, pension, and other social benefits and contributions, under applicable law or contract, or any other payment of substantially the same nature, is fully funded by deposit of funds in severance funds, pension funds, and, as applicable, managers insurance policies or provident funds.
(d) To the knowledge of MitoCareX, no Employee is in material violation of any term of any employment contract. MitoCareX has not received any written notice alleging that any such violation has occurred.
(e) MitoCareX is not a party to, bound by or subject to, and no Employees benefits from, any collective bargaining agreement, extension orders (tzavei harchava) (other than extension orders that apply to all employees in Israel generally), or other contract or arrangement with a labor union, trade union or other organization or body, to provide benefits or working conditions beyond the minimum benefits and working conditions required by applicable law. No labor union has requested to represent any of the Employees, nor does MitoCareX have Knowledge of any labor organization activity involving the Employees. There is no strike or other labor dispute involving MitoCareX and the Employees pending or, to the knowledge of MitoCareX, threatened.
(f) No Conflict. Neither the execution, delivery or performance of this Agreement, nor the consummation of the Transactions, will or may (either alone or upon the occurrence of any additional or subsequent events): (i) constitute an event under any MitoCareX employee agreement, trust or loan that will or may result (either alone or in connection with any other circumstance or event) in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any of the Employees; or (ii) result in any obligation to pay any directors, officers, employees, consultants, independent contractors, former directors, officers, employees, consultants or independent contractors of any MitoCareX severance pay or termination, retention or other benefits.
(g) Labor-Related Claims. To the knowledge of MitoCareX, there is no Legal Proceeding (as defined below), claim, labor dispute or grievance pending or threatened or reasonably anticipated relating to any employment contract, compensation, wages and hours, leave of absence, plant closing notification, employment statute or regulation, privacy right, labor dispute, workers’ compensation policy, long-term disability policy, safety, retaliation, immigration or discrimination matter involving any Employee, including charges of unfair labor practices or harassment complaints. There is no Legal Proceeding pending with any Contractor.
Section 4.12 Intellectual Property.
(a) As used herein, the following terms have the meanings indicated below:
(1) “MitoCareX Intellectual Property” means any and all MitoCareX Owned Intellectual Property and any and all Third-Party Intellectual Property that is licensed to MitoCareX.
(2) “MitoCareX Intellectual Property Agreements” means any contract governing any MitoCareX Intellectual Property to which MitoCareX is a party, except for contracts for Third-Party Intellectual Property that is generally, commercially available software.
(3) “MitoCareX Owned Intellectual Property” means any and all Intellectual Property that is owned by or purported to be owned by MitoCareX.
(4) “MitoCareX Personal Data” means any Personal Data that is in the possession of MitoCareX.
(5) “MitoCareX Privacy Policies” means, collectively, any and all (i) of MitoCareX data privacy and security policies, whether applicable internally, or otherwise made available by MitoCareX to any Person as obligations towards such Person, (ii) obligations and commitments and contracts with third parties relating to the Processing of data of such third parties.
(6) “MitoCareX Products” means all products currently under development by MitoCareX.
(7) “MitoCareX Registered Intellectual Property” means the Israeli, United States, international and foreign: (A) patents and patent applications (including provisional applications); (B) registered trademarks, applications to register trademarks, intent-to-use applications, or other registrations or applications related to trademarks; (C) registered Internet domain names; and (D) registered copyrights and applications for copyright registration, in each case registered or filed in the name of, or owned by MitoCareX.
(8) “MitoCareX Trade Secrets” means all Trade Secrets owned (or co-owned) by MitoCareX.
(9) “Governmental Grant” means any grant, loan or reimbursement arrangement provided by any governmental entity.
(10) “Intellectual Property” means (A) Intellectual Property Rights; and (B) Proprietary Information and Technology.
(11) “Intellectual Property Rights” means any and all of the following and all rights (including database rights) in, arising out of, or associated therewith, throughout the world: patents, utility models, and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof and equivalent or similar rights in inventions and discoveries anywhere in the world, including invention disclosures, common law and statutory rights associated with trade secrets, confidential and proprietary information and know-how, industrial designs and any registrations and applications therefor, trade names, logos, trade dress, trademarks and service marks, trademark and service mark registrations, trademark and service mark applications and any and all goodwill associated with and symbolized by the foregoing items, Internet domain name applications and registrations, Internet and World Wide Web URLs or addresses, data, copyrights, copyright registrations and applications therefor and all other rights corresponding thereto, moral and economic rights of authors and inventors, however denominated and any similar or equivalent rights to any of the foregoing, and all tangible embodiments of the foregoing.
(12) “Personal Data” means any data or information relating to a natural person in any media or format where the person can be identified directly or indirectly either from such data or information or from the combination of such data or information with other data or information that is in the possession of a Party, including a natural person’s name, street address, telephone number, e-mail address, photograph, factors specific to his/her physical, physiological, mental, economic, cultural or social identity, social security number, driver’s license number, passport number or customer, account number, geo-location data, voice recording, video recording, Internet Protocol address, device identifier, or other persistent identifier, “information” as defined by the Israeli Privacy Protection Law, 1981 (whether or not such “information” constitutes “sensitive information” as defined thereunder), or any other piece of information that allows the identification of a natural person or is otherwise considered personally identifiable information or personal data under any Privacy Laws.
(13) “Privacy Laws” means (i) each applicable law applicable to the protection or Processing or both of Personal Data, and direct marketing, emails, text messages or telemarketing; and (ii) guidance issued by a governmental entity that pertains to one of the laws, rules, or standards outlined in part (i) of this definition.
(14) “Process” or “Processing” means, with respect to data, the use, collection, processing, storage, recording, organization, adaption, alteration, transfer, retrieval, disclosure, dissemination or combination of MitoCareX Personal Data.
(15) “Proprietary Information and Technology” means any and all of the following: works of authorship, computer programs, source code and executable code, whether embodied in software, firmware or otherwise, assemblers, applets, compilers, user interfaces, application programming interfaces, protocols, architectures, documentation, annotations, comments, designs, files, records, schematics, test methodologies, test vectors, emulation and simulation tools and reports, hardware development tools, models, tooling, prototypes, breadboards and other devices, data, data structures, databases, data compilations and collections, inventions (whether or not patentable), invention disclosures, discoveries, improvements, technology, proprietary and confidential ideas and information, know-how and information maintained as trade secrets, tools, concepts, techniques, methods, processes, formulae, patterns, algorithms and specifications, customer lists and supplier lists and any and all instantiations or embodiments of the foregoing or any Intellectual Property Rights in any form and embodied in any media.
(16) “Third-Party Intellectual Property” means any and all Intellectual Property owned by any Person other than MitoCareX.
(17) “Trade Secrets” means all inventions (whether or not patentable) and improvements thereto, know-how, research and development information, business plans, specifications, designs, processes, process libraries, technical data, customer data, financial information, pricing and cost information, bills of material, or other confidential information exclusively owned by a Person, including any formula, pattern, compilation, program, device, method, technique, or process, that (i) provides an actual or potential independent economic value from not being generally known to and not being readily ascertainable by, other Persons, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
(b) As of the date hereof, MitoCareX Intellectual Property constitutes all of the Intellectual Property necessary for MitoCareX’s conduct of the business of MitoCareX as currently conducted, without: (i) the need for MitoCareX to acquire or license any other Third Party Intellectual Property Right, and (ii) the breach or violation of any contract. MitoCareX has not transferred ownership of, or agreed to transfer ownership of, or granted any exclusive licenses to, or agreed to grant any exclusive licenses to any MitoCareX Owned Intellectual Property to any third party. No third party has any ownership right, title, interest, claim in or lien on any of the MitoCareX Owned Intellectual Property (excluding for the avoidance of doubt non-exclusive licenses granted by MitoCareX to its distributors, users and customers in the ordinary course of business). Section 4.12(b) of the Disclosure Schedule lists all MitoCareX Registered Intellectual Property, and the jurisdictions in which it has been issued or registered or in which any application for such issuance and registration has been filed, or in which any other filing or recordation has been made as well as a complete and correct list of all material unregistered trademarks, trade names, and service marks used by MitoCareX; and all actions that are required to be taken by MitoCareX vis-à-vis the applicable authorities with which such MitoCareX Registered Intellectual Property was registered or filed within 90 days of the date hereof with respect to such MitoCareX Registered Intellectual Property in order to avoid prejudice to, impairment or abandonment of such MitoCareX Registered Intellectual Property (including without limitation all office actions, provisional conversions, annuity or maintenance fees or re-issuances). Each item of MitoCareX Registered Intellectual Property that has been issued by a governmental authority is valid and all registration, maintenance and renewal fees currently due in connection with such MitoCareX Registered Intellectual Property or any pending applications therefor have been paid and all documents, recordations and certificates in connection with such MitoCareX Registered Intellectual Property that were required to be filed have been filed with the relevant patent, copyright, trademark or other authorities in which such MitoCareX Registered Intellectual Property has been filed, for the purposes of prosecuting, maintaining and perfecting such MitoCareX Registered Intellectual Property and recording MitoCareX’s ownership interests therein. All such applications have been pursued in a diligent and commercially reasonable manner. For the avoidance of doubt, no assurance is provided that any patent applications will be allowed registration as patents or that once issued will not be held to be invalid, and any failure to be so allowed, or so held, shall not be considered a breach of a representation or warranty herein.
(c) Governmental Grants.
(i) Section 4.12(c) of the Disclosure Schedule identifies each Governmental Grant that has been or is provided to MitoCareX or for which MitoCareX has applied and a decision is pending. Except for Section4.12(c) of the Disclosure Schedule, MitoCareX has never received any Governmental Grant. MitoCareX has provided to N2OFF accurate and complete copies of: (i) all applications and related documents and correspondence submitted by MitoCareX to any governmental entity in connection with Governmental Grants and (ii) all certificates of approval and letters of approval (and supplements thereto) granted to MitoCareX by any governmental entity in connection with Governmental Grants. In each such application submitted by or on behalf of MitoCareX, all information required by such application has been disclosed accurately and completely in all material respects, MitoCareX has not made any material misstatements of fact and any non-material disclosures that are not accurate or complete would not cause the loss of the Government Grant obtained by such application. There are no undertakings of MitoCareX given in connection with any Governmental Grant. MitoCareX is in compliance in all material respects with the terms, conditions, requirements and criteria of all Governmental Grants, including all reporting requirements as per applicable law, except for any noncompliance with such Governmental Grants that would not cause MitoCareX to lose a material benefit or incur any material liability and has duly fulfilled all conditions, undertakings and other obligations relating thereto. Except as set forth in Section 4.12(c) of the Disclosure Schedule, no governmental entity: (i) has awarded any participation or provided any support to MitoCareX; or (ii) to the knowledge of MitoCareX, is or may become entitled to receive any royalties or other payments from MitoCareX on account of a Governmental Grant provided to MitoCareX prior to the Effective Date.
(ii) No items of MitoCareX Owned Intellectual Property were developed or derived from, in whole or in part, funding or resources provided by any Governmental Entity or regulatory authority.
(d) Company Products. Section 4.12(d) of the Disclosure Schedule lists all MitoCareX Products that have been made available for use or purchase by MitoCareX, including any product or service currently under development and scheduled for commercial release within 90 days of the date hereof, for each such MitoCareX Product (and each version thereof) identifying its release date.
(e) Private Grants. At no time during the conception of or reduction to practice of any of the MitoCareX Owned Intellectual Property was MitoCareX, or any developer, inventor or other contributor to such MitoCareX Owned Intellectual Property operating under any grants from any private source, performing research sponsored by any private source or subject to any employment agreement or invention assignment or nondisclosure agreement or other obligation with any third party that would reasonably be expected to adversely affect, restrict or in any manner encumber MitoCareX’s rights in such MitoCareX Owned Intellectual Property. No facilities of a university, college, other educational institution or research center was used in the development of the MitoCareX Owned Intellectual Property.
(f) Invention Assignment and Confidentiality Agreement. MitoCareX has secured from all (i) current and former employees and contractors of MitoCareX who independently or jointly contributed to or participated in the conception, reduction to practice, creation or development of any Intellectual Property for MitoCareX, and (ii) named inventors of patents and patent applications owned or purported to be owned by MitoCareX (any Person described in clauses (i) or (ii), an “Author”), written undertakings assigning to MitoCareX all of the Authors’ Intellectual Property in such contribution. No Author has affirmatively retained any rights, licenses, claims or interest whatsoever with respect to any Intellectual Property developed by the Author for MitoCareX. Without limiting the foregoing, MitoCareX has obtained written and enforceable proprietary information and invention disclosure and Intellectual Property assignments from all current and former Authors and, in the case of patents and patent applications, such assignments have been recorded with the relevant authorities in the applicable jurisdiction or jurisdictions. MitoCareX has provided to N2OFF copies of all such forms currently and historically used by MitoCareX, and each proprietary information and invention disclosure and Intellectual Property assignment executed by each Author is substantially similar to the forms MitoCareX has made available to N2OFF.
(g) No Violation. To the knowledge of MitocareX, no current or former employee or contractor of MitoCareX: (i) is in violation of any term or covenant of any contract relating to invention disclosure, invention assignment, non-disclosure, data privacy, non-competition or any other contract with any other party by virtue of such employee’s or contractor’s being employed by, or performing services for, MitoCareX, or using trade secrets or proprietary information of others without permission; or (ii) has developed any technology, software or other copyrightable, patentable or otherwise proprietary work for MitoCareX that is subject to any agreement under which such employee or contractor has assigned or otherwise granted to any third party any rights (including Intellectual Property Rights) in or to such technology, software or other copyrightable, patentable or otherwise proprietary work.
(h) Confidential Information. MitoCareX has taken commercially reasonable steps to protect and preserve the confidentiality of all material confidential or non-public information of MitoCareX (including MitoCareX Trade Secrets) as well as confidential or non-public information provided by any third party (including MitoCareX Personal Data) to MitoCareX under a written obligation of confidentiality (“MitoCareX Confidential Information”). All current and former employees and contractors of MitoCareX and any third party having access to MitoCareX Confidential Information have either executed and delivered to MitoCareX a written legally binding agreement regarding the protection of such MitoCareX Confidential Information or are otherwise legally bound to maintain confidentiality. MitoCareX has implemented and maintains reasonable security, disaster recovery and business continuity plans consistent with industry practices of companies offering similar services, of similar size and having similar resources as MitoCareX. To the knowledge of MitoCareX, MitoCareX has not experienced any material breach of security or other unauthorized access by third parties to MitoCareX Confidential Information, including MitoCareX Personal Data in MitoCareX’s possession, custody or control. There has not been any material failure with respect to any of the computer systems, including software, used by MitoCareX in the conduct of its business that has had a Material Adverse Effect. To the knowledge of MitoCareX, there has been no breach of confidentiality.
(i) Non-Infringement. To the knowledge of MitoCareX, there is no unauthorized use, unauthorized disclosure, infringement, violation or misappropriation of any MitoCareX Owned Intellectual Property by any third party. Since MitocareX’s incorporation, there has not been any legal proceeding before any court or arbitrator for infringement, violation or misappropriation of any MitoCareX Owned Intellectual Property. MitoCareX has not received any written communication regarding any liability for infringement, violation or misappropriation of any Intellectual Property Rights of any third party. To MitoCareX’s knowledge and without conducting any search or investigation, the operation of the business of MitoCareX, including the design, development, manufacturing, reproduction, marketing, licensing, sale, offer for sale, importation, distribution, provision and/or use of any MitoCareX Product and MitoCareX Owned Intellectual Property as previously conducted and as currently conducted by MitoCareX, has not and does not misappropriate or violate any Intellectual Property Rights of any third party. MitoCareX has not been sued in any Legal Proceeding or received any written communications (including any third party reports by users) alleging that MitoCareX has infringed, misappropriated, or violated or, by conducting the business of MitoCareX, would infringe, misappropriate, or violate any Intellectual Property of any other Person or entity. No MitoCareX Owned Intellectual Property or MitoCareX Product is subject to any Legal Proceeding, judgment, writ, decree, stipulation, determination, decision, award, rule, preliminary or permanent injunction, temporary restraining order or other order of any governmental entity or arbitrator (“Order”), settlement agreement or right that restricts in any manner the use, transfer, or licensing thereof or that adversely affects the validity, use or enforceability of any such MitoCareX Owned Intellectual Property.
(j) Licenses; Agreements. MitoCareX has not granted any options, licenses or agreements of any kind relating to any MitoCareX Owned Intellectual Property outside of normal nonexclusive end use terms of service entered into by users of MitoCareX Products in the ordinary course (if any), and MitoCareX is not bound by or a party to any option, license or agreement of any kind with respect to any of MitoCareX Owned Intellectual Property. MitoCareX is not obligated to pay any royalties, fees or other payments to any Person (other than salaries payable to employees and contractors, not contingent on or related to use of their work product and commissions on sales payable to employees) or third parties in their role as inventor, owner or licensor of, or other claimant to, any Intellectual Property with respect to the marketing, sale, distribution, manufacture, license or use of any MitoCareX Products or MitoCareX Owned Intellectual Property.
(k) Other Intellectual Property Agreements. With respect to the MitoCareX Intellectual Property Agreements:
(i) Each such agreement is valid and subsisting and has, where required of MitoCareX, been duly recorded or registered;
(ii) MitoCareX is not (or will not be as a result of the execution and delivery or effectiveness of this Agreement or the performance of MitoCareX’s obligations under this Agreement), in breach of any MitoCareX Intellectual Property Agreement and the consummation of the Transactions will not result in the modification, cancellation, termination, suspension of, or acceleration of any payments, rights, obligations, or remedies with respect to any MitoCareX Intellectual Property Agreements, or give any non-MitoCareX party to any MitoCareX Intellectual Property Agreement the right to do any of the foregoing;
(iii) To the knowledge of MitoCareX, no counterparty to any MitoCareX Intellectual Property Agreement is in material breach thereof;
(iv) At and immediately following the Closing, MitoCareX will be permitted to continue to exercise all of its rights under the MitoCareX Intellectual Property Agreements to the same extent MitoCareX would have been able to had the transactions under this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments that MitoCareX would otherwise be required to pay;
(v) There are no material disputes or private or governmental action, inquiry, claim, proceeding, suit, hearing, litigation, audit or investigation, in each case whether civil, criminal, administrative, judicial or investigative, or any appeal therefrom, in each case by or before any governmental entity or arbitrator (“Legal Proceeding”) pending or threatened in writing, regarding any MitoCareX Intellectual Property Agreements, or performance under any such agreements including with respect to any payments to be made or received by MitoCareX thereunder;
(vi) No MitoCareX Intellectual Property Agreement requires MitoCareX to include any Third-Party Intellectual Property in any MitoCareX Product or obtain any Person’s approval of any MitoCareX Product at any stage of development, licensing, distribution or sale of that MitoCareX Product;
(vii) None of the MitoCareX Intellectual Property Agreements grants any third party exclusive rights to or under any MitoCareX Intellectual Property;
(viii) None of the MitoCareX Intellectual Property Agreements grants any third party the right to sublicense any MitoCareX Intellectual Property;
(ix) MitoCareX has obtained valid, written, perpetual, non-terminable (other than for cause) licenses (sufficient for the conduct of the business of MitoCareX) to all Third-Party Intellectual Property that is incorporated into, integrated or bundled by MitoCareX with any of the MitoCareX Products;
(x) No third party that has licensed Intellectual Property Rights to MitoCareX has ownership or license rights to improvements or derivative works made by MitoCareX in the Third-Party Intellectual Property that has been licensed to MitoCareX; and
(xi) Non-contravention. None of the execution and performance of this Agreement, and the consummation of the transactions under this Agreement, will, by virtue of any agreement to which MitoCareX is currently a party, result in: (i) MitoCareX granting to any third party any right to or with respect to any Intellectual Property Rights or data owned by, or licensed to MitoCareX, (ii) MitoCareX being bound by or subject to, any exclusivity obligations, non-compete or other restriction on the operation or scope of its businesses, (iii) MitoCareX being obligated to pay any royalties or other material amounts to any third party in excess of those payable by it in the absence of this Agreement or the transactions under the Agreement or (iv) any termination of, or other material adverse impact to, any MitoCareX Intellectual Property.
(l) Privacy.
(i) MitoCareX is in compliance in all material respects with applicable Privacy Laws except as would not result in a material liability to MitoCareX.
(ii) MitoCareX has established, and maintains, technical, physical and organizational measures, and security systems and technologies which it reasonably believes to be adequate to protect MitoCareX’s Personal Data against unauthorized Processing.
(iii) To the knowledge of MitoCareX, no breach, security incident, or violation of any unwritten data security policy in relation to MitoCareX’s Personal Data has occurred, and to the knowledge of MitoCareX, there has been no unauthorized Processing of any MitoCareX Personal Data. No circumstance has arisen in which Privacy Laws would require MitoCareX to notify a governmental entity of a data security breach or security incident.
(iv) MitoCareX has not received any notice regarding or nor is it a party to any Legal Proceeding, notice, communication, court order, warrant, complaint, demand, regulatory opinion, audit result, or allegation, from a governmental entity or any other Person (including a data subject): (A) alleging or confirming non-compliance with a relevant requirement of Privacy Laws, (B) requiring or requesting MitoCareX to amend, rectify, cease Processing, de-combine, permanently anonymize, block, or delete MitoCareX Personal Data, (C) permitting or mandating relevant governmental entities to investigate, requisition information from, or enter the premises of, MitoCareX or (D) claiming compensation from MitoCareX in connection with the above. MitoCareX has not been involved in any Legal Proceedings involving a breach or alleged breach of Privacy Laws.
(v) MitoCareX does not knowingly Process, nor has it ever obtained actual knowledge that it is Processing, the Personal Data of any natural Person under the age of 13.
Section 4.13 Material Contracts.
(a) Section 4.13 of the Disclosure Schedule sets forth a complete and accurate list of each of the following Contracts to which the MitoCareX is a party or otherwise bound and that are in effect on the date hereof (any Contract of the nature described below, set forth in Section 4.13 of the Disclosure Schedule, is herein referred to as a “MitoCareX Material Contract”). “Contract” means any written or oral legally binding contract, agreement, instrument, commitment or undertaking of any nature (including leases, subleases, licenses, mortgages, notes, guarantees, sublicenses, subcontracts, binding letters of intent and purchase orders), including all amendments, supplements, exhibits and schedules thereto.
(i) any Contract providing for payments by or to MitoCareX in any of the years ended December 31, 2023 or 2024 in an aggregate amount of $50,000 or more that is not terminable by MitoCareX on ninety (90) calendar days’ notice or less without premium or penalty;
(ii) (A) any dealer, distributor, joint marketing, strategic alliance, affiliate agreement or similar Contract, or any Contract providing for the grant of rights to reproduce, license, market or sell its products or services to any other Person or relating to the advertising or promotion of the business of MitoCareX or pursuant to which any third parties advertise on any websites operated by MitoCareX or (B) any sales representative, original equipment manufacturer, manufacturing, value added, remarketer, independent software vendor, or other Contract for use or distribution of MitoCareX Products or MitoCareX Owned Intellectual Property;
(iii) any Contract terminable by the counterparty thereto upon a change in control of MitoCareX or requiring notification to counterparties in the event of a change in control of MitoCareX;
(iv) (A) any joint venture Contract, (B) any Contract that involves a sharing of revenues, profits, cash flows, expenses or losses with other Persons and (C) any Contract that involves the payment of royalties to any other Person;any Contract (A) with any of its officers, directors, employees or stockholders or any Person who, to MitoCareX’s Knowledge, is a member of their immediate families, other than employment arrangements which are terminable at will with no more than 90 days advance notice, employee invention assignment and confidentiality agreements on MitoCareX’s standard form and option grant and exercise agreements on MitoCareX’s standard form or (B) with any Person with whom MitoCareX does not deal at arm’s length;
(v) any Contract (A) pursuant to which any other party is granted exclusive rights or “most favored party” rights of any type or scope with respect to any of the MitoCareX Products or MitoCareX Owned Intellectual Property, (B) containing any non-competition covenants or other restrictions relating to the MitoCareX Products or MitoCareX Owned Intellectual Property (save for employment and/or consulting agreements and/or any Contracts pertaining to open-source licenses) or (C) that materially limits the freedom of MitoCareX to (I) engage or participate, or compete with any other Person, in any line of business, market or geographic area with respect to the MitoCareX Products or the MitoCareX Owned Intellectual Property, or to make use of any MitoCareX Owned Intellectual Property or MitoCareX Personal Data including any grants by MitoCareX of exclusive rights or licenses or (II) sell, distribute or manufacture any products or services or to purchase or otherwise obtain any software, components, parts or services;
(vi) any standstill or similar agreement containing provisions prohibiting a third party from purchasing equity interests of MitoCareX or assets of MitoCareX or otherwise seeking to influence or exercise control over MitoCareX;
(vii) other than “shrink wrap” and similar generally available commercial end-user licenses to software that have an individual acquisition cost of $5,000 per annum or less, all licenses, sublicenses and other Contracts to which MitoCareX is a party and pursuant to which MitoCareX acquired or is authorized to use any Third-Party Intellectual Property used in the development, marketing or licensing of the MitoCareX Products;
(viii) any license, sublicense, or other Contract to which MitoCareX is a party and pursuant to which any Person is authorized to use any MitoCareX Owned Intellectual Property or MitoCareX Personal Data;
(ix) any license, sublicense, or other Contract pursuant to which MitoCareX has agreed to any restriction on the right of MitoCareX to use or enforce any MitoCareX Owned Intellectual Property or pursuant to which MitoCareX agrees to encumber, transfer or sell rights in or with respect to any MitoCareX Owned Intellectual Property or MitoCareX Personal Data Information;
(x) any Contracts relating to the membership of, or participation by, MitoCareX in, or the affiliation of MitoCareX with, any industry standards group or association;
(xi) any Contract providing for the development of any Intellectual Property, independently or jointly, either by or for MitoCareX (other than employee invention assignment agreements and consulting agreements with Contractors on MitoCareX’s standard form of agreement);
(xii) any confidentiality, secrecy or non-disclosure Contract other than any such Contract entered into by MitoCareX in the ordinary course of business;
(xiii) any Contract to license or authorize any third party to manufacture or reproduce any of the MitoCareX Products, or MitoCareX Owned Intellectual Property;
(xiv) any Contract pursuant to which any exclusive licenses or rights, or any covenants not to sue or non-assertion provisions, in or to the MitoCareX Owned Intellectual Property are granted by MitoCareX;
(xv) any Contract containing any guarantee, indemnification or, warranty on the part of MitoCareX other than in the ordinary course of business;
(xvi) any settlement or litigation “standstill” agreement;
(xvii) any Contract or plan (including any share option, merger and/or share bonus plan) relating to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any shares of MitoCareX share capital or any other securities of MitoCareX or any options, warrants, convertible notes or other rights to purchase or otherwise acquire any such shares, other securities or options, warrants or other rights therefor;
(xviii) any trust indenture, mortgage, promissory note, loan or credit agreement or other Contract for the borrowing of money, any currency exchange, commodities or other hedging arrangement or any leasing transaction of the type required to be capitalized in accordance with GAAP;
(xix) any Contract for capital expenditures in excess of $50,000 in the aggregate;
(xx) any Contract pursuant to which MitoCareX has acquired a business or entity, or assets of a business or entity, whether by way of merger, consolidation, purchase of stock, purchase of assets, license or otherwise, or any Contract pursuant to which it has any material ownership interest in any other Person; and
(xxi) any Contract with any governmental entity, including any agreement which requires consents, licenses, permits, grants, and other authorizations of a governmental entity (each, a “Government Contract”).
(b) All MitoCareX Material Contracts are in written form. MitoCareX has performed in all material respects all of the obligations required to be performed by it and is entitled to all benefits thereunder, and to the knowledge of MitoCareX, is not alleged to be in default in respect of any MitoCareX Material Contract to which it is a party. Each of MitoCareX Material Contracts is in full force and effect, subject only to the effect, if any, of applicable bankruptcy and other similar applicable laws affecting the rights of creditors generally and rules of law governing specific performance, injunctive relief and other equitable remedies. MitoCareX has not received any written notice or other written communication regarding any actual or possible violation or breach of, default under, or intention to cancel or modify any MitoCareX Material Contract. MitoCareX has provided N2OFF with true, correct and complete copies of all MitoCareX Material Contracts.
Section 4.14 Brokers and Finders. MitoCareX does not have any contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement. No commission or compensation in the nature of a finders’ fee shall be payable by MitoCareX or any of their respective officers, employees or representatives, in their capacities as such, in connection with the transactions contemplated by this Agreement.
Section 4.15 Tax Matters. All taxes, duties and assessments payable or incurred by MitoCareX prior to the Closing Date that are reasonably expected to result in an Encumbrance upon any of the assets of MitoCareX have been or will timely be paid by MitoCareX other than those being contested in good faith by MitoCareX. There is no Encumbrance for taxes upon any of the assets of MitoCareX nor, to the Knowledge of MitoCareX, is any taxing authority in the process of imposing any Encumbrance for taxes on any of such Assets.
Section 4.16 Litigation.
(a) As of the date hereof, there is no Legal Proceeding to which MitoCareX or any of its assets or to the Knowledge of MitoCareX, any of its respective directors or officers (in their capacities as such or relating to their employment, services or relationship with MitoCareX), is party pending before any governmental entity, or to the Knowledge of MitoCareX is threatened in writing against MitoCareX. As of the date hereof, there is no Order served against MitoCareX or any of its assets and there is no other Legal Proceeding pending or to the Knowledge of MitoCareX threatened in writing against MitoCareX or any of its assets. MitoCareX does not have any Legal Proceeding pending against any other Person. As of the date hereof, no governmental entity has at any time challenged or questioned the legal right of MitoCareX to conduct its respective operations as presently conducted.
(b) There is no Order served against MitoCareX or to its Knowledge any of their respective directors, officers or employees (in their capacities as such or relating to their employment, services or relationship with MitoCareX).
ARTICLE V
COVENANTS
Section 5.01 Securities Law Compliance. Each of the Parties hereto understands and agrees that the consummation of this Agreement, including the issuance of the Exchanged Common Stock upon Closing as contemplated hereby, may constitute an offer and sale of securities under the Securities Act, applicable state statutes. Each of N2OFF and the Sellers agree that such transactions shall be consummated in reliance on exemptions from the registration requirements of such laws, which depend, among other items, on the circumstances under which such securities are acquired. Furthermore, in connection with the Transactions, N2OFF and the Sellers shall each file, with the assistance of the other and their respective legal counsel, such notices, applications, reports or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on, as applicable, registration and prospectus exemptions, all to the extent and in the manner as may be deemed by the Parties to be appropriate.
Section 5.02 Commercially Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, each of the Parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable the Transactions. The Parties hereto will use their commercially reasonable efforts and cooperate with one another (i) in promptly determining whether any filings are required to be made or consents, approvals, waivers, permits or authorizations are required to be obtained (or, which if not obtained, would result in an event of default, termination or acceleration of any agreement or any put right under any agreement) under any applicable law or regulation or from any governmental authorities or third parties in connection with the Transactions contemplated by this Agreement; and (ii) in promptly making any such filings, in furnishing information required in connection therewith and in timely seeking to obtain any such consents, approvals, permits or authorizations. The Parties hereto shall mutually cooperate in order to facilitate the achievement of the benefits reasonably anticipated from the Transactions.
Section 5.03 Valid Issuances. N2OFF covenants and agrees that upon issuance, the Purchaser Consideration Stock as and when issued pursuant to this Agreement shall be duly authorized, validly issued, fully paid and nonassessable.
Section 5.04 Further Assurances. Subject to the terms and conditions herein provided, each Party shall 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 and regulations to consummate and make effective this Agreement and the transactions contemplated herein.
Section 5.05 Future Financing of MitoCareX. Upon Closing, Purchaser shall invest in MitoCareX an amount of US$1,000,000, for the purpose of funding MitoCareX’s ongoing research and development and other costs (the “Initial Investment”). The Loan Amount (as defined in the Loan Agreement (as defined below)) provided to MitoCareX pursuant to that certain Loan Agreement dated December 22, 2024, and executed by and among the Purchaser, MitoCareX and MitoCareX’s Guarantor (as are defined therein) (the “Loan Agreement”), shall be deducted from the Initial Investment. Furthermore, at all times after the Initial Investment, and provided that (i) the board of directors of the Purchaser has approved in advance of any Future Financing (as defined below) an operating plan for MitoCareX and (ii) the Purchaser possesses the financial resources necessary to fund the Future Financing, the Purchaser will make available to MitoCareX such amount of funding necessary to finance MitoCareX’s ongoing research and development and other costs (“Future Financing”).
Section 5.06 Directors’ and Officers’ Indemnity Agreements and Insurance.
(a) MitoCareX shall, and the Purchaser shall cause MitoCareX to, indemnify and hold harmless the board members and office holders of MitoCareX as of immediately prior to Closing (each an “Indemnified MitoCareX Party”) as required under any indemnification agreement between such party and MitoCareX in effect as of the date of this Agreement or, with the agreement of the Purchaser, which may be entered into subsequent to the date of this Agreement (each, an “Indemnity Agreement”), all to the extent permissible under the organizational documents of MitoCareX and for the periods specified in such Indemnity Agreement or seven (7) years after Closing, the longer, whether asserted or claimed prior to, at or after the Closing; and MitoCareX hereby waives and releases all claims against any Indemnified MitoCareX Party with respect to matters existing or occurring at or prior to the Closing in their capacities as directors or officer holders. From and after the Closing, and subject to this Section 5.06, MitoCareX shall honor and fulfill, and the Purchaser shall cause MitoCareX to honor and fulfill, in all respects the obligations of MitoCareX under its organizational documents with respect to indemnification, insurance and exculpation of Indemnified MitoCareX Parties and all Indemnity Agreements. For a period of seven (7) years after the Closing, in the event that MitoCareX or any of its successors or assigns (i) consolidates with or merges into any other entity and is not the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all of or substantially all of its properties and other assets to any entity, then, and in each such case, the Purchaser shall either (A) guarantee, expressly assume, or shall cause proper provision to be made so that the successors and assigns of MitoCareX shall expressly assume, the obligations set forth in this Section 5.06; or (B) take any other action to ensure that the ability of MitoCareX to satisfy such obligations will not be diminished in any material respect. In furtherance of the foregoing and subject to this Section 5.06, for a period of seven (7) years after the Closing, the Purchaser shall (and shall cause MitoCareX to) cause the articles of association of MitoCareX to contain provisions with respect to indemnification, advancement of expenses and exculpation that are at least as favorable to the Indemnified MitoCareX Parties as the indemnification, advancement of expenses and exculpation provisions contained in the articles of association of MitoCareX immediately prior to the Closing, and such provisions shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of the Indemnified MitoCareX Parties, except as required by applicable law. The obligations set forth in this Section 5.06 shall survive the Closing. This Section 5.06 will be for the irrevocable benefit of, and will be enforceable by, each Indemnified MitoCareX Party and his or her respective heirs, executors, administrators, estates, successors and assigns (collectively the “Indemnified Parties”) and each Indemnified Party will be an express intended third party beneficiary of this Agreement for such purposes.
(b) The provisions of this Section 5.06 shall be in addition to, and shall not impair, any other rights an Indemnified Party may have under MitoCareX’s organization documents, under applicable law or otherwise.
(c) In the event that any actual or threatened claim, action, suit, proceeding or investigation is brought or asserted against any Indemnified MitoCareX Party or Indemnified Party with respect to matters existing or occurring prior to the Closing in their capacities as such which are subject to indemnification pursuant to an Indemnity Agreement (including acts or omissions occurring in connection with the approval of this Agreement and the transactions contemplated hereby and thereby and the consummation thereof) (a “D&O Claim”), then MitoCareX and the Purchaser shall each afford, the Indemnified MitoCareX Party and Indemnified Party and its counsel and other representatives, reasonable access, during normal business hours, upon reasonable notice, to information and documents relating to such D&O Claim and the defense thereof, subject to such Indemnified MitoCareX Party or Indemnified Party signing a confidentiality undertaking in form and substance reasonably satisfactory to the Purchaser, with respect to confidential information and documents being so disclosed. MitoCareX and the Purchaser shall reasonably cooperate with the Indemnified MitoCareX Party and the Indemnified Party in connection with the defense of such D&O Claim.
(d) From and after the Closing, the Purchaser shall include any director or officer of MitoCareX and any Seller serving as a director or officer of the Purchaser, in any directors’ and officers’ liability insurance maintained by Purchaser.
Section 5.07 Reporting under the Exchange Act. With a view to making available to the Sellers the benefits of Rule 144 promulgated under the Securities Act (“SEC Rule 144”) and any other rule or regulation of the SEC that may at any time permit a Seller to sell securities of the Purchaser to the public without registration, the Purchaser shall for a period of not less than five (5) years following the Closing:
(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the Closing;
(b) use reasonable best efforts to file with the SEC in a timely manner all reports, statements and other documents required of the Purchaser under the Securities Act and the Exchange Act;
(c) furnish to each Seller, so long as the Seller owns any Exchanged Common Stock (including any shares of Common Stock issuable upon the exercise of any Pre-Funded Warrants), any Additional Purchaser Stock or any shares of Common Stock issued to the Sellers pursuant to adjustments as set forth in this Agreement, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with and is in compliance with the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange Act; (ii) a copy of the most recent annual or quarterly report of the Purchaser and such other reports and documents so filed by the Purchaser; and (ii) such other information as may be reasonably requested in availing any Seller of any rule or regulation of the SEC that permits the selling of any such securities without registration; and
(d) reasonably assist the Sellers in connection with their reliance on Rule 144 and the sale of any securities of the Purchaser in reliance thereon (such as, but not limited to, removal of restrictive legends from share certificates, issuance of a letter to the transfer agent, provision of opinion of counsel that the sale qualifies under Rule 144).
ARTICLE VI
MISCELLANEOUS
Section 6.01 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Israel, without reference to its conflict of laws provisions. The parties hereto agree to exclusively submit to the jurisdiction of the competent courts of Tel Aviv - Jaffa with respect to the breach or interpretation of this Agreement or the enforcement of any and all rights, duties, liabilities, obligations, powers, and other relations between the parties arising under this Agreement.
Section 6.02 Notices. All notices or other communications required or permitted by this Agreement shall be in writing and addressed as follows:
| If to N2OFF: | Attn: David Palach | ||
Address: HaPardes 134 (Meshek Sander) Neve Yarak 4994500 Israel | |||
| Tel: (347) 468 9583 | |||
| Email: david@savefoods.co | |||
| If to SciSparc: | Attn: Oz Adler | ||
Address: 20 Raul Wallenberg St. Tower A, 2nd Floor Tel Aviv 6971916, Israel | |||
| Tel: +972-3-7175777 | |||
| Email: oz@scisparc.com | |||
| If to MitoCareX: | Attn: Dr. Alon Silverman | ||
| Address: 40 Gordon Street, Givatayim, Israel | |||
| Tel: +972-52-435-2233 | |||
| Email: alon.silberman@mitocarexbio.com | |||
| If to Alon Silberman: | Attn: Dr. Alon Silverman | ||
Address: 40 Gordon Street, Givatayim, Israel | |||
| Tel: +972-52-435-2233 | |||
| Email: alon.silberman@mitocarexbio.com | |||
| If to Ciro Leonardo Pierri: | Attn: Prof. Ciro Leonardo Pierri | ||
| Address: Via dello stadio 19, 74021 Carosino (TA), Italy | |||
| Tel: +39 328 818 6379 | |||
| Email: Ciroleo.Pierri@mitocarexbio.com |
or such other addresses as shall be furnished in writing by any Party in the manner for giving notices hereunder.
Notice shall be deemed to have been duly received: (a) if given by email, when transmitted and the appropriate confirmation received, as applicable, if transmitted on a business day and during normal business hours of the recipient, and otherwise on the next business day following transmission; (b) if given by certified or registered mail, return receipt requested, postage prepaid, three business days after being deposited in the mail and, if sent internationally, ten business days after being deposited in the mail; and (c) if given by courier, messenger or other means, when received or personally delivered and, in any such case, addressed as indicated herein, or to such other addresses as may be specified by any Party to the other Parties pursuant to notice given by such Party in accordance with the provisions of this Section 6.02.
Section 6.03 Third Party Beneficiaries. This contract is strictly between the Parties and, except as specifically provided herein, no other Person shall be deemed to be a third party beneficiary of this Agreement.
Section 6.04 Expenses. The Purchaser and MitoCareX shall bear the costs and expenses, including legal, accounting and professional fees, incurred in connection with this Agreement, the Transaction Documents and any other agreements in connection therewith, the Exchange or any of the other transactions contemplated hereby.
Section 6.05 Entire Agreement. This Agreement and the related documents referenced herein represent the entire agreement between the Parties relating to the subject matter hereof, and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.
Section 6.06 Survival; Termination. The representations, warranties and covenants of the respective Parties shall survive the consummation of the transactions herein contemplated for a period of two years from Closing, unless a different period is specified with respect to any representation, warranty or covenant. It is the intention of the Parties that the survival period agreed on herein shall supersede any statute of limitations applicable to the representations, warranties and covenants and it is therefore agreed that the provisions of this Section 6.06 constitute a separate written legally binding agreement among the Parties in accordance with the provisions of Section 19 of the Israeli Limitation Law (5718-1958).
Section 6.07 Liability; No Consequential Damages. For the avoidance of doubt, in no event shall any Seller have any liability for a breach of any representation, warranty or covenant of MitoCareX and in no event shall one Seller be liable for any breach of any representation, warranty or covenant of any other Seller. In no event will the Parties be liable for any punitive, consequential, indirect or incidental damages under this Agreement or applicable law, whether in contracts, torts, restitution or otherwise and all indemnification will be limited to direct damage actually incurred. The aggregate liability of each Seller under this Agreement shall not exceed the value of the Exchanged Common Stock as determined below (and with respect to SciSparc shall also include the Cash Payment) and any damages sought against a Seller shall be made only against the Exchanged Common Stock (and with respect to SciSparc may be made against the amount of the Cash Payment), unless the Seller elects at its sole discretion that such indemnification shall be paid in cash and not in the Exchanged Common Stock. Where recourse is against Exchanged Common Stock, the number of shares to be returned shall be determined based on the valuation underlying the number of shares of Common Stock issued at Closing. The provisions of this Section 6.08 are and constitute the sole and exclusive remedy following the Closing as to all money damages based on or arising out of the representations, warranties and covenants of the Sellers hereunder.
Section 6.08 Severability If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.
Section 6.09 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall be but a single instrument. Signatures delivered by email shall be deemed original signatures.
Section 6.10 Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law or in equity, and may be enforced concurrently therewith, and no waiver by any Party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore or thereafter occurring or existing. This Agreement may by amended by a writing signed by all Parties, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may only be extended by a writing signed by the Party or Parties for whose benefit the provision is intended.
[Signature pages follow]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.
| N2OFF, INC. | ||
| By | /s/ David Palach | |
| Name: | David Palach | |
| Title: | Chief Executive Officer | |
| SciSpARC LTD. | ||
| By: | /s/ Oz Adler | |
| Name: | Oz Adler | |
| Title: | CEO, CFO | |
| By: | /s/ Amitai Weiss | |
| Name: | Amitai Weiss | |
| Title: | Chairman | |
|
MITOCAREX BIO LTD. | ||
| By: | /s/ Alon Silberman | |
| Name: | Alon Silberman | |
| Title: | Director | |
| By: | /s/ Adi Zuloff-Shani | |
| Name: | Adi Zuloff-Shani | |
| Title: | Director | |
|
Alon Silberman | ||
| By: | /s/ Alon Silberman | |
| Name: | Alon Silberman | |
| Ciro Leonardo Pierri | ||
| By: | /s/ Ciro Leonardo Pierri | |
| Name: | Ciro Leonardo Pierri | |
[Signature page to Securities Purchase and Exchange Agreement]
ANNEX A
Amended and Restated Articles of Association of MitoCareX Bio. Ltd.
ANNEX B
Regulation S Questionnaire
The information contained herein is being furnished to the Company in order for the N2OFF, Inc. (the “Company”) to determine whether the undersigned’s receipt of the Company’s common stock (the “Securities”) in connection with an exchange of common stock with the Company may be accepted pursuant to Rule 903 of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The undersigned understands that (i) the Company will rely upon the following information for purposes of complying with Federal and applicable state securities laws, (ii) the Securities will not be registered under the Securities Act in reliance upon the exemption from registration provided by Rule 903 of Regulation S of the Securities Act, and (iii) this representation letter is not an offer to sell nor the solicitation of an offer to buy any Securities, or any other securities, to the undersigned. Capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in that certain Securities Purchase and Exchange Agreement dated February 25, 2025, by and among the undersigned and the Company (the “Agreement”).
| 1. | At the time of (a) the offer by the Company and (b) the acceptance of the offer by such person or entity, of the Securities, such person or entity was outside the United States. | |
| 2. | Such person or entity is acquiring the Securities for such Purchaser’s own account, for investment and not for distribution or resale to others and is not purchasing the Securities for the account or benefit of any U.S. person, or with a view towards distribution to any U.S. person, in violation of the registration requirements of the Securities Act. | |
| 3. | Such person or entity will make all subsequent offers and sales of the Securities either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such person or entity will not resell the Securities to any U.S. person or within the United States prior to the expiration of a period commencing on the Closing Date and ending on the date that is one year thereafter (the “Distribution Compliance Period”), except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act. | |
| 4. | Such person or entity has no present plan or intention to sell the Securities in the United States or to a U.S. person at any predetermined time, has made no predetermined arrangements to sell the Securities and is not acting as a distributor of such securities. | |
| 5. | Neither such person or entity, its affiliates nor any person acting on behalf of such person or entity, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Securities at any time after the Closing Date through the Distribution Compliance Period except in compliance with the Securities Act. | |
| 6. | Such person or entity consents to the placement of a restrictive legend on any certificate or other document evidencing the Securities, relating to the fact that the Securities are not registered under the Securities Act. | |
| 7. | Such person or entity is not acquiring the Securities in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act. | |
| 8. | Such person or entity has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person’s or entity’s interests in connection with the transactions contemplated by the Agreement. | |
| 9. | Such person or entity has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Securities. | |
| 10. | Such person or entity understands the various risks of an investment in the Securities and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Securities. |
| 11. | Such person or entity has had access to the Company’s publicly filed reports with the Securities and Exchange Commission and has been furnished with all other public information regarding the Company that such person or entity has requested and all such public information is sufficient for such person or entity to evaluate the risks of investing in the Securities. | |
| 12. | Such person or entity has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Securities. | |
| 13. | Such person or entity is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in the Agreement. | |
| 14. | Such person or entity will not sell or otherwise transfer the Securities unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available. | |
| 15. | Such person or entity understands and acknowledges that the Securities have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such person or entity and that any representation to the contrary is a criminal offense. |
Date: ______________, 2025
| (Signature of Authorized Signatory) | |
|
|
| (Name of Authorized Signatory) | |
|
|
| (Title) |
ANNEX B
FORM OF CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
N2OFF, INC.
(to be attached to the Nevada Form of Articles of Amendment pursuant to NRS 78.385/78.390)
Section 2B(iv) shall be added after the end of Section 2B(iii) of Article IV of the Articles of Incorporation, as amended, to read as follows:
“Upon the effectiveness of the filing of this Certificate of Amendment (the “Effective Time”), each [______] (___) shares of the Corporation’s common stock, par value $0.0001 per share (the “Old Common Stock”), either issued or outstanding or held by the Corporation as treasury stock, immediately prior to the Effective Time, will be automatically reclassified and combined (without any further act) into one (1) share of Common Stock, par value $0.0001 per share, of the Corporation (the “New Common Stock”), without increasing or decreasing the amount of stated capital or paid-in surplus of the Corporation or the par value which shall remain $0.0001 per share (the “Reverse Stock Split”). No fractional shares of Common Stock will be issued as a result of the Reverse Stock Split; instead of issuing such fractional shares, any fractional shares resulting from the Reverse Stock Split shall be rounded up to the next whole number of shares of New Common Stock, and all shares of Common Stock eliminated as a result of the Reverse Stock Split will be cancelled. Any stock certificate that, immediately prior to the Effective Time, represented shares of the Old Common Stock will, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the number of shares of the New Common Stock into which such shares of Old Common Stock shall have been reclassified plus the fraction, if any, of a share of New Common Stock issued as aforesaid.”
N2OFF, INC.
HAPARDES 134 (MESHEK SANDER),
NEVE YARAK, 4994500 ISRAEL
(347) 468-9583
PROXY FOR SPECIALMEETING OF STOCKHOLDERS
TO BE HELD ON APRIL ___, 2025
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
The undersigned hereby constitutes and appoints David Palach as the true and lawful attorney, agent and proxy of the undersigned, with full power of substitution to represent and to vote, on behalf of the undersigned, all shares of Common Stock of N2OFF, Inc. (the “Company”) held of record in the name of the undersigned at the close of business on ______, 2025, at the Special Meeting of Stockholders to be held at 4:00 p.m., Israel time (9:00 a.m. EDT) on April ___, 2025 at the offices of the Company’s U.S. legal counsel, The Crone Law Group, P.C. located at HaArba’a Street 28, South Tower, 19th floor, Tel Aviv 6473925, Israel, and at any and all adjournments or postponements thereof, on the matters listed on the reverse side, which are more fully described in the Notice of Special Meeting of Stockholders of the Company and Proxy Statement relating to the Meeting.
The undersigned hereby revokes any and all proxies heretofore given with respect to the vote at the Special Meeting.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned. If no direction is made with respect to any proposal, this proxy will be voted FOR each proposal, in accordance with the recommendations of the Company’s Board.
(Continued and to be signed on the reverse side)
SPECIAL MEETING OF STOCKHOLDERS OF
N2OFF, INC.
APRIL___, 2025
VOTE BY MAIL (Mark, sign, date and mail your proxy card in the postage-paid, return-addressed envelope we have provided)
THE BOARD RECOMMENDS A VOTE “FOR” EACH PROPOSAL LISTED BELOW.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
FOR |
AGAINST |
ABSTAIN |
|||||||
| 1. | To approve a proposed acquisition by the Company of all of the share capital of MitoCareX Bio Ltd. (“MitoCareX”) pursuant to a securities purchase and exchange agreement (the “Purchase Agreement”), dated as of February 25, 2025, by and among the Company, MitoCareX, SciSparc Ltd., Dr. Alon Silberman and Professor. Ciro Leonardo Pierri, including the issuance of shares of the Company’s Common Stock that is equal to or in excess of 20% of the Company’s outstanding Common Stock before the issuance, in accordance with applicable Nasdaq Listing Rules, and the execution, delivery and performance of the Purchase Agreement and the transactions contemplated thereby (the “Acquisition Proposal”). | ☐ | ☐ | ☐ | |||||
| 2. | To approve a proposal, authorizing the Board, in its sole discretion, to amend the Company’s Articles of Incorporation, as amended, at any time within one year after stockholder approval is obtained, to effect a reverse stock split of the Company’s Common Stock, at a ratio of not less than 1-for-2 and not more than 1-for-150 (the “Split Range”), with the exact ratio of the reverse stock split to be determined by the Board in its sole discretion without further approval or authorization of our stockholders (the “Reverse Stock Split Proposal”); | ☐ | ☐ | ☐ | |||||
| 3. | To approve the issuance of 1,850,000 shares of the Company’s Common Stock and any additional shares of Common Stock, as applicable (the “Warrant Shares”) upon exercise of a warrant issued to L.I.A. Pure Capital Ltd. (the “Warrant Shares Proposal”); and | ☐ | ☐ | ☐ | |||||
| 4. | To authorize an adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of the Acquisition Proposal, the Reverse Stock Proposal and the Warrant Shares Proposal (the “Adjournment Proposal”). | ☐ | ☐ | ☐ | |||||
| Signature of stockholder | Date | Signature of stockholder | Date |
| Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each owner should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such. If the signer is a partnership, please sign in partnership name by authorized person. |