Item 1.01 Entry into a Material Definitive Agreement.
On November 9, 2017, magicJack VocalTec Ltd., a company organized under the laws of the State of Israel (“magicJack” or the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, B. Riley Financial, Inc., a Delaware corporation (“B. Riley” or “Parent”) and B. R. Acquisition Ltd., an Israeli corporation and wholly owned subsidiary of Parent (“Merger Sub”).
The following description of the Merger Agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Upon the terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved by the boards of directors of the Company and Parent, Merger Sub will merge with and into the Company (the “Merger”), whereupon the separate existence of Merger Sub will cease and the Company will be the surviving corporation and a wholly owned subsidiary of Parent. Upon the completion of the Merger (the “Effective Time”), each outstanding ordinary share of the Company, will be converted into the right to receive $8.71 in cash, without interest (the “Per Share Merger Consideration”).
Subject to certain exceptions, at the Effective Time,
each outstanding stock option award will become fully vested, to the extent not previously vested, and will be cancelled and converted into the right to receive the Per Share Merger Consideration with respect to each share subject to the award (less the applicable exercise price per share immediately prior to the Effective Time). At the Effective Time, each outstanding restricted stock award, will either become vested if and to the extent provided by the terms of the award or applicable Company equity plan or will otherwise be forfeited and the vested restricted shares will be cancelled and converted into the right to receive the Per Share Merger Consideration with respect to each share subject to the award.
Each party’s obligation to complete the Merger is subject to various conditions, including, among others, (a) approval of the Merger Agreement and the terms of the Merger by a majority of the total number of shares of Company stock voted at the Company’s shareholder meeting, (b) the expiration or termination of all applicable waiting periods under U.S. antitrust laws, (c) no U.S., Israeli or other governmental authority shall have enacted, entered or enforced any order or law which restrains or prohibits the consummation of the Merger or other transactions contemplated by the Merger Agreement, (d) at least 50 days shall have passed after the filing with respect to the Merger with the
Registrar of Companies of the State of Israel and at least 30 days shall have elapsed after the approval of the Merger by the shareholders of each of the Company and the Merger Sub
and (e) all specified approvals from and/or filings with the
U.S. Federal Communications Commission and similar state regulatory bodies shall have been obtained or made, as applicable.
Parent’s obligation to complete the Merger is additionally subject to certain additional customary conditions, including (a) the accuracy of the Company’s representations and warranties made in the Merger Agreement, (b) the compliance by the Company, in all material respects, with its obligations required to be performed by or complied with by it under the Merger Agreement, and (c) the receipt of the required approval of the
Israeli Innovation Authority
. Consummation of the Merger is not subject to any financing condition.
The Company and Parent have each made customary representations, warranties and covenants in the Merger Agreement. The Company has agreed, among other things, (a) subject to certain exceptions, to conduct its business in the ordinary course of business in all material respects between the execution of the Merger Agreement and the Effective Time and not to take specified actions during such period and (b) not to solicit competing acquisition proposals or, subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, any alternative transaction. The Merger Agreement contains certain termination rights for both the Company and Parent, and further provides that, upon termination of the Merger Agreement under certain circumstances, including in relation to the receipt of an unsolicited, competing acquisition proposal that the Company board of directors determines is superior, the Company may be required to pay Parent a termination fee equal to approximately $5.7 million.
The Merger Agreement has been included as an exhibit to this Form 8-K to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement, which were made only for purposes of that agreement and as of specific dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and in reviewing the representations, warranties and covenants contained in the Merger Agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions were not intended by the parties to the Merger Agreement to be characterizations of the actual state of facts or condition of the Company, Parent or Merger Sub, or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and filings that the Company and Parent publicly file with the Securities and Exchange Commission.
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