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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-266418
JOINT PROXY STATEMENT/PROSPECTUS


JOINT LETTER TO STOCKHOLDERS OF UNITY SOFTWARE INC.
AND SHAREHOLDERS OF IRONSOURCE LTD.
Dear Unity Stockholders and ironSource Shareholders:
On July 13, 2022, Unity Software Inc., which is referred to as “Unity,” Ursa Aroma Merger Subsidiary Ltd., a direct wholly owned subsidiary of Unity, which is referred to as “Merger Sub,” and ironSource Ltd., which is referred to as “ironSource,” entered into an Agreement and Plan of Merger, which, as it may be amended from time to time, is referred to as the “merger agreement.” Upon the terms and subject to the conditions set forth in the merger agreement, Merger Sub will merge with and into ironSource, which is referred to as the “merger,” with ironSource continuing in existence as the surviving corporation and as a direct wholly owned subsidiary of Unity.
Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each outstanding Class A ordinary share, no par value, of ironSource, which are referred to as “ironSource Class A ordinary shares” and each outstanding Class B ordinary share, no par value, of ironSource, which are referred to as “ironSource Class B ordinary shares” and, together with the ironSource Class A ordinary shares, are referred to as “ironSource ordinary shares” (subject to certain exceptions set forth in the merger agreement) will be converted into the right to receive 0.1089, which number is referred to as the “exchange ratio,” of a share of common stock, par value $0.000005 per share, of Unity, which is referred to as “Unity common stock,” rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation. Unity stockholders will continue to own their existing shares of Unity common stock.
The exchange ratio is fixed and will not be adjusted for changes in the market price of either Unity common stock or ironSource ordinary shares prior to the effective time of the merger. As a result, the number of shares of Unity common stock that ironSource shareholders will receive as consideration in the merger is fixed and will not change. However, the market value of the consideration payable to ironSource shareholders in the merger will fluctuate with the market price of Unity common stock Unity common stock is traded on the New York Stock Exchange, which is referred to as “NYSE,” under the symbol “U.” ironSource Class A ordinary shares are traded on the New York Stock Exchange under the symbol “IS.”
Based on the closing price of Unity common stock on NYSE of $39.11 on September 7, 2022, the latest practicable trading day prior to the date of the accompanying joint proxy statement/prospectus, the implied value of the consideration payable to ironSource shareholders in the merger was approximately $4.26 per ironSource ordinary share.
Based on the number of shares of Unity common stock and ironSource ordinary shares outstanding as of September 2, 2022, the latest practicable date prior to the date of the accompanying joint proxy statement/prospectus, it is expected that Unity will issue approximately 111.8 million shares of Unity common stock in the merger, after which current Unity stockholders would own approximately 72.9% of the outstanding shares of Unity common stock and former ironSource shareholders would own approximately 27.1% of the outstanding shares of Unity common stock. At closing of the merger, on a fully diluted basis, current Unity stockholders are expected to own approximately 73.5% of the outstanding shares of Unity common stock and former ironSource shareholders are expected to own approximately 26.5% of the outstanding shares of Unity common stock.
The Unity board of directors (which we refer to as the “Unity board”) has determined that the merger agreement and the transactions contemplated thereby, including the merger and the issuance of shares of Unity common stock in connection with the merger, are fair to, and in the best interests of, Unity and the Unity stockholders, adopted and approved the merger agreement and the transactions contemplated thereby, including the issuance of shares of Unity common stock in connection with the merger, and recommended that the Unity stockholders approve the issuance of shares of Unity common stock in connection with the merger. The Unity board unanimously recommends that Unity stockholders vote “FOR” the Unity issuance proposal and “FOR” the Unity adjournment proposal, each as described in the accompanying joint proxy statement/prospectus.
The ironSource board of directors (which we refer to as the “ironSource board”) has determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, ironSource and the ironSource shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that Unity will be unable to fulfill the obligations of ironSource to its creditors, adopted and approved the merger agreement and the transactions contemplated thereby, including the merger, directed that the merger agreement be submitted to the ironSource shareholders for approval and recommended that the ironSource shareholders approve the merger agreement and the transactions contemplated thereby, including the merger. The ironSource board (excluding directors who may be deemed to have a personal interest, as defined under the Companies Law concerning the merger) unanimously recommends that ironSource shareholders vote “FOR” the ironSource merger proposal, as described in the accompanying joint proxy statement/prospectus.
Unity will hold a special meeting of its stockholders and ironSource will hold a special general meeting of its shareholders (at which class meetings of the ironSource Class A ordinary shares and the ironSource Class B ordinary shares, as well as a combined meeting of those two classes, will all take place) to consider certain matters relating to the merger. Unity and ironSource cannot complete the merger unless, among other things, Unity stockholders approve the issuance of shares of Unity common stock in connection with the merger and ironSource shareholders approve the merger agreement.
Your vote is very important. To ensure your representation at Unity’s special meeting or ironSource’s special general meeting (including the ironSource class and combined meetings to be held as part of that special general meeting), as applicable, please complete and return the applicable enclosed proxy card or submit your proxy by phone or the Internet. Please vote promptly whether or not you expect to virtually attend Unity’s special meeting or ironSource’s special general meeting. Submitting a proxy now will not prevent you from being able to vote at the Unity special meeting or the ironSource special general meeting.
The accompanying joint proxy statement/prospectus is also being delivered to ironSource shareholders as Unity’s prospectus for its offering of shares of Unity common stock to ironSource shareholders in connection with the merger.
The obligations of Unity and ironSource to complete the merger are subject to the satisfaction or waiver of the conditions set forth in the merger agreement, a copy of which is included as part of the accompanying joint proxy statement/prospectus. The accompanying joint proxy statement/prospectus provides you with detailed information about the merger. It also contains or incorporates by reference information about Unity and ironSource and certain related matters. You are encouraged to read the accompanying joint proxy statement/prospectus carefully and in its entirety. In particular, you should carefully read the section titled “Risk Factors” beginning on page 44 of the accompanying joint proxy statement/prospectus for a discussion of risks you should consider in evaluating the merger and the issuance of shares of Unity common stock in connection with the merger and how they will affect you.
Sincerely,
Sincerely,
 
/s/ John Riccitiello

John Riccitiello
Tomer Bar-Zeev
President and Chief Executive Officer
Chief Executive Officer
Unity Software Inc.
ironSource Ltd.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying joint proxy statement/prospectus or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
The accompanying joint proxy statement/prospectus is dated September 8, 2022 and is first being mailed to Unity stockholders and ironSource shareholders on or about September 8, 2022.

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NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA THE INTERNET ON OCTOBER 7, 2022
Notice is hereby given that a special meeting of stockholders of Unity Software Inc. (which we refer to as “Unity”) will be held on October 7, 2022 at 10:00 a.m., Pacific Time, virtually via a live interactive audio webcast on the Internet (which we refer to as the “Unity special meeting”). You will be able to vote and submit your questions at http://www.virtualshareholdermeeting.com/U2022SM  during the meeting. We are holding the Unity special meeting for the following purposes, which are more fully described in the accompanying joint proxy statement/prospectus:
to approve the issuance of shares of Unity common stock (which we refer to as the “Unity issuance proposal”) in connection with the merger contemplated by the Agreement and Plan of Merger, dated July 13, 2022 (which, as it may be amended from time to time, we refer to as the “merger agreement”), by and among Unity, ironSource Ltd. (which we refer to as “ironSource”) and Ursa Aroma Merger Subsidiary Ltd. (which we refer to as “Merger Sub”), a direct wholly owned subsidiary of Unity; and
to approve the adjournment of the Unity special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Unity issuance proposal at the time of the Unity special meeting (which we refer to as the “Unity adjournment proposal”).
Unity stockholder approval of the Unity issuance proposal is required to complete the merger as contemplated by the merger agreement. Unity stockholders will also be asked to approve the Unity adjournment proposal. Unity will transact no other business at the Unity special meeting. The record date for the Unity special meeting has been set as September 2, 2022. Only Unity stockholders of record as of the close of business on such record date are entitled to notice of, and to vote at, the Unity special meeting or any adjournments and postponements of the Unity special meeting. For additional information regarding the Unity special meeting, see the section titled “The Unity Special Meeting” in the accompanying joint proxy statement/prospectus.
The Unity board unanimously recommends that you vote “FOR” the Unity issuance proposal and “FOR” the Unity adjournment proposal.
The Unity proposals are described in more detail in the accompanying joint proxy statement/prospectus, which you should read carefully and in its entirety before you vote. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.
PLEASE VOTE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO VIRTUALLY ATTEND THE UNITY SPECIAL MEETING. IF YOU LATER DESIRE TO REVOKE OR CHANGE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS. FOR FURTHER INFORMATION CONCERNING THE PROPOSALS BEING VOTED UPON, USE OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.
Your vote is very important. Approval of the Unity issuance proposal by the Unity stockholders is a condition to the merger and requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Unity stockholders are requested to complete, date, sign and return the enclosed proxy in the envelope provided, which requires no postage if mailed in the United States, or to submit their votes by phone or the Internet. Simply follow the instructions provided on the enclosed proxy card.
 
BY ORDER OF THE BOARD OF DIRECTORS,
 
 

 
Nora Go
 
Assistant Corporate Secretary
 
Unity Software Inc.
 
San Francisco, California

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IRONSOURCE LTD.
121 Menachem Begin Street, Tel Aviv 6701203, Israel

September 8, 2022
NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS
(AT WHICH THE CLASS AND COMBINED MEETINGS DESCRIBED BELOW WILL TAKE PLACE)
TO BE HELD ON OCTOBER 7, 2022
To the shareholders of ironSource Ltd.:
NOTICE IS HEREBY GIVEN that a special general meeting of shareholders, (which we refer to as the “ironSource special general meeting”, or the “ironSource meeting”) of ironSource Ltd. (referred to as “ironSource” or the “Company”), will be held on October 7, 2022 at 4:00 p.m. (Israel time), at the Company’s executive offices at 121 Menachem Begin Street, Tel Aviv, Israel.
At the ironSource meeting, separate class meetings of holders of Class A ordinary shares, no par value, of the Company and holders of Class B ordinary shares, no par value, of the Company (which we refer to as “ironSource Class A ordinary shares” and “ironSource Class B ordinary shares,” respectively, and, collectively, as “ironSource ordinary shares”), respectively, as well as a combined meeting of holders of ironSource ordinary shares, will take place, at which shareholders will be asked to consider and vote on the following proposal, which is more fully described in the accompanying joint proxy statement/prospectus:
to approve, pursuant to Section 320 of the Israeli Companies Law, 5759-1999 (which, together with the regulations promulgated thereunder, we refer to as the “Companies Law”), the merger contemplated by the Agreement and Plan of Merger, dated July 13, 2022 (which, as it may be amended from time to time, we refer to as the “merger agreement”), by and among ironSource, Unity Software Inc., a Delaware corporation (which we refer to as “Unity”) and Ursa Aroma Merger Subsidiary Ltd. (which we refer to as “Merger Sub”), a company formed under the laws of the State of Israel and a wholly owned subsidiary of Unity, including approval of: (i) the merger transaction pursuant to Sections 314 through 327 of the Companies Law, whereby Merger Sub will merge with and into ironSource, with ironSource surviving and becoming a direct wholly owned subsidiary of Unity (which we refer to as the “merger”); (ii) the merger agreement; (iii) the consideration to be received by ironSource’s shareholders in the merger, other than holders of “Cancelled Shares”(as defined in the merger agreement), consisting of 0.1089 of a share of Unity common stock, par value $0.000005 per share (which we refer to as “Unity common stock”) subject to the withholding of any applicable taxes, each ironSource Class A ordinary share and each ironSource Class B ordinary share, held as of immediately prior to the effective time of the merger; and (iv) all other transactions and arrangements contemplated by the merger agreement, a copy of which is attached to the accompanying joint proxy statement/prospectus as Annex A. We refer to this proposal as the “ironSource merger proposal.”
Under ironSource’s articles of association, as amended, and the Companies Law, the approval of the ironSource merger proposal requires the affirmative vote of the holders of a majority of the voting power represented at a special general meeting in person or by proxy and voting thereon (excluding abstentions and broker non-votes) of each of (x) the ironSource Class A ordinary shares, voting as a separate class, (y) the ironSource Class B ordinary shares, voting as a separate class, and (z) the ironSource Class A ordinary shares and ironSource Class B ordinary shares, voting together as a single class. In the foregoing combined class meeting (referred to in sub-section (z)), the participating ironSource Class A ordinary shares and ironSource Class B ordinary shares will be entitled to one vote and five votes, respectively, per share.
Unless explicitly described otherwise, when used in this notice, the accompanying cover letter or joint proxy statement/prospectus, each of the terms “ironSource general meeting”, “ironSource Meeting” or “ironSource special general meeting” shall be deemed a reference to all of the class and combined meetings taking place on the same occasion as described above, collectively.

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At each of the foregoing three meetings that are required for approval of the ironSource merger proposal, the fulfillment of the following conditions as part of the vote that is held will be required:
(i)
The majority vote must include a majority of shares voted in favor of the merger proposal that are not held by (a) Unity, Merger Sub or any person or entity holding, directly or indirectly, 25% or more of the voting power or the right to appoint the chief executive officer or 25% or more of the directors of Unity or Merger Sub, (b) a person or entity acting on behalf of Unity, Merger Sub or a person or entity described in clause (a) above, or (c) a family member of, or an entity controlled by, Unity, Merger Sub or any of the foregoing; and
(ii)
As required under Sections 270(4) and 275(a) of the Companies Law (due to a potential personal interest of certain shareholders of ironSource in the approval of the proposal by the respective class or combined classes of shares), the fulfillment of either of the following conditions as part of the vote that is held will be required:
the majority vote obtained in favor of the ironSource merger proposal also includes a majority of the shares held by shareholders who are not deemed to have a personal interest (as defined under the Companies Law) in the approval of the proposal that are voted at the applicable ironSource meeting, excluding abstentions and broker non-votes; or
the total number of shares held by such non-conflicted shareholders (as described in the immediately preceding bullet-point) voted against the ironSource merger proposal does not exceed 2% of the aggregate voting power in ironSource (on a per class or combined class basis).
For purposes of the foregoing conditions, a “personal interest” (i) includes an interest of any member of a shareholder’s immediate family (i.e., spouse, sibling, parent, parent’s parent, descendant, the spouse’s descendant, sibling or parent, and the spouse of each of these) or an interest of an entity with respect to which the shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or its voting power or has the right to appoint a director or the chief executive officer; and (ii) excludes an interest arising solely from the ownership of shares of ironSource. In determining whether a vote cast by proxy is disinterested, the conflict of interest/“personal interest” of the proxy holder is also considered and will cause that vote to be treated as the vote of an interested shareholder, even if the shareholder granting the proxy does not have a conflict of interest/personal interest in the matter being voted upon.
The foregoing additional special voting conditions will be sought for each of the votes at the ironSource Meeting pursuant to Sections 270(4) and 275(a) of the Companies Law, which requires that either of those conditions be met in the case of an extraordinary transaction to which a company is a party and in which a controlling shareholder has a personal interest.
Under Section 268 of the Companies Law, a “controlling shareholder” is any shareholder that has the ability to direct a company’s activities (other than by means of being a director or office holder of the company) including, with respect to the ironSource merger proposal, a person who holds 25% or more of the voting rights at the general meeting of ironSource if there is no other person who holds more than 50% of the voting rights of ironSource. For these purposes, two or more persons holding voting rights in a company, each of whom has a personal interest in the approval of the transaction being brought for approval of a company’s shareholders are considered to be joint holders. A person is presumed to be a controlling shareholder if he, she or it holds or controls, by himself, herself or itself, or together with others, one-half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer.
In connection with the merger, (i) certain members of the ironSource board, as of the time of approval of the merger (namely, Tomer Bar-Zeev, Arnon Harish and Eyal Milrad) who serve as executive officers of ironSource, as well as certain other employees who are also shareholders of ironSource, disclosed to the ironSource board prior to execution of the merger agreement their potential personal interest in the merger (in their capacity as employees of ironSource), and advised that they expect to enter into new employment terms with Unity, which are expected to be discussed between them and Unity after the execution of the merger agreement, (ii) ironSource’s Chief Executive Officer disclosed to the ironSource board prior to the execution of the merger agreement that he is expected to serve as a director on the Unity board after the merger and that such service may give rise to a personal interest, and (iii) shortly before the date of this notice, the ironSource board

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resolved in accordance with the merger agreement to designate Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger, and such service may give rise to a personal interest of such directors and of Viola Ventures III, LP. The aggregate voting rights of the ironSource shareholders who are deemed to have a personal interest in the merger by virtue of the foregoing are expected to exceed 25% of the total voting rights in the combined meeting of the ironSource Class A ordinary shares and ironSource Class B ordinary shares, and the total voting rights in the separate class meetings of the ironSource Class A ordinary shares and ironSource Class B ordinary shares. In light of those personal interests (as described above in sub-sections (i) and (ii)), the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board, and further, the designation of Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger (as described in sub-section (iii)) was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board.
Only holders of record of ironSource Class A ordinary shares and/or ironSource Class B ordinary shares at the close of business on September 2, 2022 (including shares held through a bank, broker or other nominee that is a shareholder of record of ironSource) are entitled to attend and vote at the ironSource special general meeting or any adjournment or postponement thereof.
Whether or not you plan to attend the ironSource special general meeting, it is important that your ironSource ordinary shares be represented and voted at the meeting. Accordingly, after reading this notice of special general meeting of shareholders and the accompanying joint proxy statement/prospectus, please complete and submit each proxy or voting instruction form that you receive as follows:
(i)
If you hold your shares in “street name” through a broker, bank or other nominee on the New York Stock Exchange, please vote in accordance with the instructions on the nominee’s voting instruction form(s), which may include instructions about voting by telephone or over the Internet (at www.proxyvote.com). If you hold your shares in “street name,” you may also vote your shares in person at the ironSource meeting, but you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares directly, giving you the right to vote the shares at the meeting, including a proof of ownership form as of the record date.
(ii)
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those shares, the shareholder of record. In such case, these proxy materials are being sent directly to you. As the shareholder of record, you have the right to use the proxy card, once it becomes available, to grant your voting proxy or proxies directly to Ms. Dalia Litay, the General Counsel of ironSource, or to vote in person at the ironSource meeting. If you mail your proxy card in the self-addressed, stamped envelope to be enclosed with the proxy statement, it or they must be received by ironSource’s transfer agent not later than 11:59 p.m., Eastern Standard Time, on October 6, 2022, to be validly included in the applicable tallies of ironSource ordinary shares voted at the meeting. Alternatively, if you are delivering or mailing your proxy or proxies to ironSource’s offices in Israel (to the address given above), it or they must be received by 10:00 a.m. (Israel time), on October 7, 2022.
In connection with the ironSource meeting, ironSource is sending to its shareholders of record as of the record date the accompanying joint proxy statement/prospectus, which describes, among other matters, the proposal to be voted upon at the ironSource meeting, the merger, the merger agreement, Unity and its business, and the Unity common stock to be received in the merger. ironSource is also sending proxy card, and banks, brokers and nominees are sending voting instruction forms, enabling shareholders to submit their votes on the ironSource merger proposal. Each ironSource shareholder will receive one proxy card which will allow voting at each class of ironSource ordinary shares held—whether ironSource Class A ordinary shares and/or ironSource Class B ordinary shares. Please complete and submit such proxy card to ensure that all of your ironSource ordinary shares are counted towards the applicable vote tallies needed for the separate class meetings’ and combined meeting’s approvals of the ironSource merger proposal.
ironSource will also furnish to the SEC copies of this notice, and the accompanying cover letter, joint proxy statement/prospectus and form of proxy card, as exhibits to a Report of Foreign Private Issuer on Form 6-K, and Unity will be filing each of the foregoing documents with the SEC under cover of a registration statement on Form S-4.

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You may also direct any questions about the merger to, and request additional copies of this document, and the accompanying cover letter, joint proxy statement/prospectus and form of proxy card, from ironSource’s proxy solicitor at:
Morrow Sodali
509 Madison Avenue
New York, New York 10022
Telephone:
(800) 662-5200 (in North America)
(203) 658-9400 (outside of North America)
Email: IS@investor.morrowsodali.com
This communication is not a substitution for the joint proxy statement/prospectus or for any other documents that ironSource may furnish to, or Unity may file with, the SEC, or that ironSource may send to its shareholders in connection with, the proposed merger. SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FURNISHED TO OR FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders will be able to obtain free copies of the joint proxy statement/prospectus, and any other documents furnished by ironSource to, or filed by Unity with, the SEC (when available), at the SEC’s website at www.sec.gov. Copies of documents furnished by ironSource may also be obtained for free at ironSource’s investor relations website, www.is.com/investors/, or by submitting a request to ironSource’s investor relations department, at ir@is.com, or by calling +972-74-799-0001. The contents of ironSource’s website are not deemed to be incorporated by reference into this notice or the joint proxy statement/prospectus.
In accordance with, and subject to, the provisions of the Companies Law and the regulations promulgated thereunder, any ironSource shareholder possessing at least 1% of the outstanding voting rights of ironSource for any of the (x) ironSource Class A ordinary shares, as a separate class, (y) ironSource Class B ordinary shares, as a separate class, or (z) combined ironSource share capital (with ironSource Class A ordinary shares and ironSource Class B ordinary shares entitled to one vote and five votes, respectively, per share), as applicable, may submit to the Company a proposed additional agenda item for consideration at the applicable ironSource meeting no later than September 5, 2022, provided that such proposal is appropriate for consideration by ironSource’s shareholders at the meeting. Such proposal should be submitted in writing to the Company at the following address: ironSource Ltd., 121 Menachem Begin Street, Tel Aviv 6701203, Israel, Attn: Dalia Litay, General Counsel. If the ironSource board determines that a shareholder proposal has been duly and timely received and is appropriate for inclusion in the agenda of the meeting, ironSource will publish a revised agenda for the relevant general meeting in accordance with the provisions of the Companies Law and the regulations promulgated thereunder by way of furnishing a Report of Foreign Private Issuer on Form 6-K to the SEC; however, the record date for the meeting will not change as a result.
We currently know of no other business to be transacted at the ironSource special general meeting, other than as set forth above; but, if any other matter is properly presented at the meeting, the persons named in the proxy card will vote upon such matters in accordance with their best judgment.
OUR BOARD OF DIRECTORS (EXCLUDING DIRECTORS WHO MAY BE DEEMED TO HAVE A PERSONAL INTEREST IN THE MERGER, AS DEFINED UNDER THE COMPANIES LAW) UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE IRONSOURCE MERGER PROPOSAL.
Sincerely,

Tomer Bar-Zeev
Chairman of the Board of Directors and Chief Executive Officer

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REFERENCES TO ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates by reference important business and financial information about Unity Software Inc. (which we refer to as “Unity”) and ironSource Ltd. (which we refer to as “ironSource”) from other documents that are not included in or delivered with this joint proxy statement/prospectus, including documents that Unity and ironSource have filed with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). For a listing of documents incorporated by reference herein, see the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively. This information is available for you to review free of charge through the SEC’s website at www.sec.gov.
You may request copies of this joint proxy statement/prospectus and any of the documents incorporated by reference herein or other information concerning Unity or ironSource, without charge, upon written or oral request to the Unity’s or ironSource’s principal executive offices. The respective addresses and phone numbers of such principal offices are listed below.
For Unity Stockholders:
Unity Software Inc.
30 3rd Street
San Francisco, California 94103
Attention: Corporate Secretary
Telephone: (415) 539-3162
For ironSource Shareholders:
ironSource Ltd.
121 Menachem Begin Street
Tel Aviv 6701203, Israel
Attention: Investor Relations
Telephone: +972-74-799-0001
To obtain timely delivery of these documents before the Unity special meeting, Unity stockholders must request the information no later than September 30, 2022 (which is five business days before the date of the Unity special meeting).
To obtain timely delivery of these documents before the ironSource special general meeting, ironSource shareholders must request the information no later than September 29, 2022 (which is five business days before the date of the ironSource special general meeting).
In addition, if you have questions about the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, contact MacKenzie Partners, Inc., the proxy solicitor for Unity, or Morrow Sodali, the proxy solicitor for ironSource. You will not be charged for any of these documents that you request.

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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form S-4 filed with the SEC by Unity (File No. 333-266418), constitutes a prospectus of Unity under Section 5 of the U.S. Securities Act of 1933, as amended (which we refer to as the “Securities Act”) with respect to the shares of common stock of Unity, par value $0.000005 per share (which we refer to as “Unity common stock”), to be issued to ironSource shareholders pursuant to the Agreement and Plan of Merger, dated July 13, 2022 (which, as it may be amended from time to time, we refer to as the “merger agreement”), by and among Unity, ironSource and Ursa Aroma Merger Subsidiary Ltd. (which we refer to as “Merger Sub”), a direct wholly owned subsidiary of Unity.
This document also constitutes a notice of meeting and proxy statement of Unity under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”).
Unity has supplied all information contained or incorporated by reference herein relating to Unity, and ironSource has supplied all information contained or incorporated by reference herein relating to ironSource. Unity and ironSource have both contributed to the information relating to the merger and the merger agreement contained in this joint proxy statement/prospectus.
You should rely only on the information contained or incorporated by reference herein in connection with any vote, the giving or withholding of any proxy or any investment decision in connection with the merger. Unity and ironSource have not authorized anyone to provide you with information that is different from that contained or incorporated by reference herein. This joint proxy statement/prospectus is dated September 8, 2022, and you should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Further, you should not assume that the information incorporated by reference herein is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Unity stockholders and ironSource shareholders, nor the issuance by Unity of Unity common stock pursuant to the merger agreement, will create any implication to the contrary.
All currency amounts referenced in this joint proxy statement/prospectus are in U.S. dollars.

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE UNITY SPECIAL MEETING
The following are answers to certain questions that you may have regarding the merger, the merger agreement, the transactions contemplated thereby and the Unity special meeting. Unity urges you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this document.
Q:
Why am I receiving this joint proxy statement/prospectus?
A:
You are receiving this joint proxy statement/prospectus because Unity and ironSource have entered into the merger agreement, pursuant to which, on the terms and subject to the conditions included in the merger agreement, Merger Sub, a direct wholly owned subsidiary of Unity, will merge with and into ironSource with ironSource continuing in existence as the surviving company and a direct wholly owned subsidiary of Unity (the “merger”). Your vote is required in connection with the merger and Unity and ironSource are sending these materials to their respective security holders to help them decide how to vote their shares with respect to the issuance of shares of Unity common stock in connection with the merger, in the case of Unity, the approval of the merger and merger agreement, in the case of ironSource, and other important matters. The merger agreement, which governs the terms of the merger, is attached to this joint proxy statement/prospectus as Annex A.
The issuance of shares of Unity common stock in connection with the merger (which we refer to as the “Unity issuance proposal”) must be approved by the Unity stockholders in accordance with the rules of the New York Stock Exchange (which we refer to as the “NYSE”), in order for the merger to be consummated. Unity is holding a special meeting of its stockholders (which we refer to as the “Unity special meeting”) to obtain this approval. Unity stockholders will also be asked to vote on a proposal to approve the adjournment of the Unity special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Unity issuance proposal at the time of the Unity special meeting. Your vote is very important. We encourage you to submit a proxy to have your shares of Unity common stock voted as soon as possible.
Q:
When and where will the Unity special meeting take place?
A:
The Unity special meeting will be held virtually at 10:00 a.m., Pacific Time, on October 7, 2022, via a live interactive audio webcast on the Internet. You will be able to vote and submit your questions at http://www.virtualshareholdermeeting.com/U2022SM during the Unity special meeting. There will not be a physical location for the Unity special meeting. The virtual nature of the Unity special meeting is generally designed to enable participation of and access by more of Unity stockholders while decreasing the cost of conducting the Unity special meeting. Unity stockholders will be able to virtually attend and vote at the Unity special meeting by visiting http://www.virtualshareholdermeeting.com/U2022SM, which is referred to as the “Unity special meeting website.” To attend the Unity special meeting, you must register at http://www.virtualshareholdermeeting.com/U2022SM  starting at 9:45 a.m., Pacific Time, on October 7, 2022. For additional information on how to register for the Unity special meeting, see the section titled “The Unity Special Meeting—Registering for the Unity Special Meeting.”
Even if you plan to virtually attend the Unity special meeting, Unity recommends that you vote by proxy in advance as described below so that your vote will be counted if you later decide not to or become unable to virtually attend the Unity special meeting.
Q:
What matters will be considered at the Unity special meeting?
A:
The Unity stockholders are being asked to consider and vote on:
a proposal to approve the issuance of shares of Unity common stock in connection with the merger (which we refer to as the “Unity issuance proposal”); and
a proposal to approve the adjournment of the Unity special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Unity issuance proposal at the time of the Unity special meeting (which we refer to as the “Unity adjournment proposal”).
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Q:
Is my vote important?
A:
Yes. Your vote is very important. The merger cannot be completed unless the Unity issuance proposal is approved by the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Only Unity stockholders as of the close of business on the Unity record date (as defined below) are entitled to vote at the Unity special meeting. Unity stockholders will also be asked to approve the Unity adjournment proposal, which is not a condition to the merger. The Unity board unanimously recommends that Unity stockholders vote “FOR” the approval of the Unity issuance proposal and the Unity adjournment proposal.
Q:
What is a “broker non-vote”?
A:
Under NYSE rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. All of the proposals currently expected to be voted on at the Unity special meeting are “non-routine” matters.
A “broker non-vote” occurs on a proposal when (i) a bank, broker or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares, and (ii) the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Because all of the proposals currently expected to be voted on at the Unity special meeting are “non-routine” matters for which brokers do not have discretionary authority to vote, Unity does not expect there to be any broker non-votes at the Unity special meeting.
Q:
If my shares of Unity common stock are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote those shares for me?
A:
If your shares are held through a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not considered the “record holder” of those shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. If you hold your shares in “street name,” you must provide your broker, bank or other nominee with instructions on how to vote your shares. Otherwise, your broker, bank or other nominee cannot vote your shares on any of the proposals to be considered at the Unity special meeting.
Brokers, banks or other nominees do not have discretionary authority to vote on the proposals to be considered at the Unity special meeting.
Q:
What Unity stockholder vote is required for the approval of the Unity issuance proposal and the Unity adjournment proposal?
A:
The Unity issuance proposal. Approval of the Unity issuance proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Abstentions will have the same effect as votes “AGAINST” the proposal.
The Unity adjournment proposal. Approval of the Unity adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Abstentions will have the same effect as votes “AGAINST” the proposal. Approval of this proposal is not a condition to completion of the merger.
Q:
Who will count the votes?
A:
Unity will appoint an inspector of election for the Unity special meeting to determine whether a quorum is present and tabulate the affirmative and negative votes, abstentions and non-broker votes, if any.
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Q:
What will ironSource shareholders receive if the merger is completed?
A:
As a result of the merger, each ironSource ordinary share issued and outstanding immediately prior to the effective time of the merger (subject to certain exceptions set forth in the merger agreement) will be converted into the right to receive 0.1089 of a share of Unity common stock (which we refer to as the “exchange ratio”), rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes (which we refer to as the “merger consideration”). ironSource shareholders will not receive any cash in the merger. For information regarding the treatment of ironSource equity awards, please see the “Questions and Answers About the Merger and the ironSource Special General Meeting” section below.
For additional information regarding the merger consideration, see the sections titled “The Merger— Consideration to ironSource Shareholders” and “The Merger Agreement—Effect of the Merger on ironSource Ordinary Shares; Merger Consideration” beginning on pages 83 and 138, respectively.
Q:
What equity stake will ironSource shareholders hold in Unity immediately following the merger?
A:
Based on the number of shares of Unity common stock and ironSource ordinary shares outstanding as of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, it is expected that Unity will issue approximately 111.8 million shares of Unity common stock in the merger, after which current Unity stockholders would own approximately 72.9% of the outstanding shares of Unity common stock and former ironSource shareholders would own approximately 27.1% of the outstanding shares of Unity common stock. At closing of the merger, on a fully diluted basis, current Unity stockholders are expected to own approximately 73.5% of the outstanding shares of Unity common stock and former ironSource shareholders are expected to own approximately 26.5% of the outstanding shares of Unity common stock. The exact equity stake of ironSource shareholders in Unity immediately following the effective time of the merger will depend on the number of shares of Unity common stock, ironSource ordinary shares and eligible ironSource equity awards issued and outstanding immediately prior to the effective time of the merger, as provided in the section titled “The Merger Agreement—Effect of the Merger on ironSource Ordinary Shares; Merger Consideration” beginning on page 138.
Q:
Will there be any changes to the Unity board and management following the merger?
A:
In connection with the merger, prior to the closing of the merger, (a) Unity will take all necessary corporate action so that, upon and after the closing of the merger, the size of the Unity board will be increased by three members (to a total of thirteen members), (b) Unity will designate three individuals, one of whom will be the Chief Executive Officer of ironSource and the other two of whom will be members of the ironSource board as of the date of the merger agreement and selected by ironSource upon prior consultation with Unity, (c) Unity will designate such three individuals to be appointed to the Unity board to fill the vacancies created by such increase (which we refer to as the “ironSource Nominees”) and (d) Unity will appoint the ironSource Nominees to the Unity board, in different classes, with such appointments effective upon the closing of the merger. Immediately following the effective time of the merger, all ten current Unity directors, Roelof Botha, Egon Durban, David Helgason, Alyssa Henry, Michelle K. Lee, John Riccitiello, Barry Schuler, Robynne Sisco, Mary Schmidt Campbell, Ph.D and Keisha Smith-Jeremie, are expected to continue as directors of Unity.
Following the closing of the merger, Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer, along with other members of ironSource’s senior management team, will take on key roles in Unity's executive management team. John Riccitiello will continue to serve as Unity’s Chief Executive Officer and Unity will continue to be headquartered in San Francisco, California.
Q:
What is the PIPE?
A:
On July 13, 2022, Unity entered into an investment agreement (the “Investment Agreement”) with Silver Lake Alpine II, L.P. and Silver Lake Partners VI, L.P. (collectively, the “Silver Lake Purchasers”) and Sequoia Capital Fund, L.P. (the “Sequoia Purchaser” and, together with the Silver Lake Purchasers, the “PIPE Investors”) relating to the issuance and sale to the PIPE Investors of $1,000,000,000 in aggregate principal amount of Unity’s 2.0% Convertible Senior Notes due 2027 (the “Notes”), with $940 million of the Notes to be issued to the Silver Lake Purchasers and $60 million of the Notes to be issued to the
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Sequoia Purchaser. The closing of the issuance and sale of the Notes (the “PIPE Closing”) is expected to occur promptly following the closing of the merger, subject to the closing of the merger and certain customary closing conditions. The Notes will be convertible at the option of the holders into cash, shares of Unity common stock or a combination thereof at any time until the trading day prior to the maturity date of the Notes at an initial conversion rate of 20.4526 shares of Unity common stock per $1,000 principal amount of the Notes (which is equal to an initial conversion price of approximately $48.89 per share), subject to customary anti-dilution and other adjustments. For more information regarding the PIPE, please see “The Merger—Interests of Unity’s Directors and Executive Officers in the Merger—PIPE.”
Q:
Why did Unity enter into the PIPE and what are the potential impacts of the PIPE on Unity stockholders?
A:
Unity expects to use the net proceeds from the issuance and sale of the Notes to partially fund the repurchase of up to $2,500,000,000 of shares of Unity common stock in open market transactions following the closing of the merger. Unity’s primary objective in entering into the PIPE and the subsequent share repurchases is to offset potential dilution to Unity’s stockholders as a result of the issuance of the merger consideration assuming that the Unity common stock is repurchased at a price below the conversion price of the Notes. Although the Notes were priced at a premium to the market price of Unity common stock at the time of signing, Unity can provide no assurance that the stock price will not fluctuate significantly prior to any share repurchases. As a result, if Unity is unable to repurchase shares of Unity common stock at a price that is lower than the conversion price of the Notes, any anti-dilutive effect of such repurchases may be less than expected and dilution resulting from the issuance of merger consideration may be more than expected. In addition, to the extent any repurchases are made on or after January 1, 2023, such repurchases will be subject to the Stock Buyback Tax (the “Repurchase Tax”), a 1% excise tax on repurchases as imposed by the Inflation Reduction Act of 2022 and effective as of January 1, 2023, which may be offset by shares newly issued during that fiscal year. The Repurchase Tax has been and will be taken into account by Unity with respect to its decisions to repurchase shares, but there can be no assurance that the Repurchase Tax will not reduce the number of shares Unity is able to or ultimately decides to repurchase.
Unity believes that entering into the Investment Agreement with affiliates of Silver Lake and Sequoia (each, as defined below), Unity’s two largest stockholders, will allow Unity to raise capital more efficiently than accessing the public debt or equity markets. Further, by entering into the Investment Agreement concurrently with the merger agreement, and structuring the PIPE Closing so that it is contingent on the closing of the merger, Unity believes that the execution of the Investment Agreement provided strong support for the merger to Unity stockholders from Silver Lake and Sequoia, both sophisticated investors with strong track records of value creation. As of September 2, 2022, affiliates of the Silver Lake Purchasers and affiliates of the Sequoia Purchaser beneficially owned approximately 12% and 13%, respectively (excluding any shares issuable upon conversion of the Notes), of the issued and outstanding shares of Unity common stock. In addition, certain affiliates of the Silver Lake Purchasers and the Sequoia Purchaser are members of the Unity board and its committees. As a result, a committee consisting of only members of the Unity board who were disinterested in the Investment Agreement and related documents unanimously approved, and recommended that the Audit Committee of the Unity board (the “Unity Audit Committee”) and the Unity board approve, the Investment Agreement and related transactions. The Unity Audit Committee approved the Investment Agreement and related transactions with Mr. Botha recusing himself and the Unity board approved the Investment Agreement and related transactions.
For more information regarding the potential effects of the PIPE and the proposed share repurchase, please see “Risk Factors—Risks Relating to the Combined Company—The Unity share issuance and potential future Unity share issuances may cause the market price of Unity common stock to decline”; “Risk Factors—Risks Relating to the Combined Company—The Notes to be issued pursuant to the PIPE Closing and to be outstanding after consummation of the merger, and the issuance of shares of Unity common stock upon conversion of the Notes, if any, may impact Unity’s financial results, result in dilution to Unity stockholders, create downward pressure on the price of Unity common stock, and restrict the combined company’s ability to raise additional capital”; “Risk Factors-Risks Relating to the Combined Company-The potential share repurchase, while intended to help offset dilution from the merger, may not achieve such goal and the amount of such repurchases may be impacted by new legislation”; “The Merger—Interests of Unity’s Directors and Executive Officers in the Merger—PIPE”; and “The Merger—Unity Share Repurchases.”
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Q:
How does the Unity board recommend that I vote?
A:
The Unity board unanimously recommends that Unity stockholders vote “FOR” the Unity issuance proposal and “FOR” the Unity adjournment proposal. For additional information regarding how the Unity board recommends that Unity stockholders vote, see the section titled “The Merger—Recommendation of the Unity Board of Directors and Unity’s Reasons for the Merger” beginning on page 97.
Q:
Why are the Unity stockholders being asked to vote on the Unity adjournment proposal?
A:
In the event that there are not sufficient votes to approve the Unity issuance proposal at the Unity special meeting, Unity will seek the Unity stockholders’ approval of an adjournment of the Unity special meeting to solicit additional proxies to approve the Unity issuance proposal at a later Unity special meeting.
Q:
If the Unity special meeting is adjourned or postponed, do I need to send new proxies?
A:
At any subsequent reconvening of the Unity special meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the Unity special meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent reconvening of the Unity special meeting.
Q:
Who is entitled to vote at the Unity special meeting?
A:
The Unity board has fixed September 2, 2022 as the record date for the Unity special meeting (which we refer to as the “Unity record date”). All stockholders of record of Unity common stock as of the close of business on the Unity record date are entitled to receive notice of, and to vote at, the Unity special meeting, provided that those shares remain outstanding on the date of the Unity special meeting. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, there were 300,469,115 shares of Unity common stock outstanding. Attendance at the virtual Unity special meeting is not required to vote. Instructions on how to vote your shares without attending the virtual Unity special meeting are provided below.
Q:
How many votes do I have?
A:
Each Unity stockholder of record is entitled to one vote for each share of Unity common stock held of record by the stockholder as of the close of business on the Unity record date.
Q:
Are there any voting agreements in relation to the merger?
A:
ironSource Voting Agreements
Concurrently with the execution of the merger agreement, certain ironSource shareholders entered into Voting Agreements with Unity (the “ironSource Voting Agreements”). Pursuant to the ironSource Voting Agreements, each ironSource shareholder who executed such agreement has agreed, among other things, to vote or cause to be voted certain issued and outstanding ironSource ordinary shares beneficially owned thereby which are specified in such agreement at the respective meeting of ironSource shareholders holding such shares during the term of the ironSource Voting Agreements: (i) in favor of (A) the consummation of the transactions contemplated by the merger agreement, including the merger, (B) all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, and (C) any other transaction contemplated by the merger agreement or other matters that would reasonably be expected to facilitate the merger, including any proposal to adjourn or postpone any meeting of the ironSource shareholders to a later date if there are not sufficient votes to approve the adoption of the merger agreement; and (ii) against (A) certain alternative business combination transactions described in the merger agreement; (B) any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of ironSource as set forth in the merger agreement or of the ironSource shareholders as set forth in the ironSource Voting Agreements; or (C) any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the ironSource Voting Agreements or the merger agreement. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy
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statement/prospectus, the ironSource ordinary shares that are subject to the ironSource Voting Agreements consist of approximately 37.5% of the issued and outstanding ironSource Class A ordinary shares, approximately 36.5% of the issued and outstanding ironSource Class B ordinary shares and approximately 37% of the issued and outstanding voting right of the combined ironSource Class A ordinary shares and Class B ordinary shares. For more information, see the section titled “Voting Agreements—ironSource Voting Agreements” and Annex D to this joint proxy statement/prospectus.
Unity Voting Agreement
In addition, concurrently with the execution of the merger agreement, certain Unity stockholders entered into a Voting Agreement with ironSource (the “Unity Voting Agreement”). Pursuant to the Unity Voting Agreement, such Unity stockholders have agreed, among other things, to vote or cause to be voted any issued and outstanding shares of Unity common stock beneficially owned by such stockholders, or that may otherwise become beneficially owned by them at every meeting of Unity stockholders during the term of the Unity Voting Agreement (i) in favor of (A) the consummation of the transactions contemplated by the merger agreement, including the issuance of shares of Unity common stock, (B) all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, (C) any other transaction contemplated by the merger agreement, and (D) any proposal to adjourn or postpone any meeting of the Unity stockholders to a later date if there are not sufficient votes to approve the proposals necessary to consummate the transactions contemplated by the merger agreement; and (ii) against (A) certain alternative business combination transactions described in the merger agreement; (B) any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of Unity as set forth in the merger agreement or of the Unity stockholders as set forth in the Unity Voting Agreement; or (C) any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the Unity Voting Agreement or the merger agreement. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the Unity stockholders subject to the Unity Voting Agreement beneficially owned approximately 28.5% of the issued and outstanding shares of Unity common stock.
Q:
What constitutes a quorum for the Unity special meeting?
A:
A quorum is the minimum number of stockholders necessary to hold a valid meeting.
The presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the voting power of the outstanding shares of Unity common stock entitled to vote shall constitute a quorum for the transaction of business at the Unity special meeting. If you submit a properly executed proxy card, even if you do not vote for either proposal or vote to “abstain” in respect of one or both proposals, your shares of Unity common stock will be counted for purposes of determining whether a quorum is present for the transaction of business at the Unity special meeting.
Q:
What will happen to ironSource as a result of the merger?
A:
If the merger is completed, Merger Sub, a wholly owned subsidiary of Unity, will merge with and into ironSource, with ironSource continuing in existence as the surviving company and a direct wholly owned subsidiary of Unity. Following the completion of the proposed merger, the registration of ironSource Class A ordinary shares and ironSource’s reporting obligations under the Exchange Act will be terminated. ironSource Class A ordinary shares will no longer be publicly traded and will be delisted from the NYSE. ironSource shareholders are expected to be able to continue to trade their ironSource Class A ordinary shares on the NYSE until the closing date of the merger.
Q:
Where will the Unity common stock that ironSource shareholders receive in the merger be publicly traded?
A:
Assuming the merger is completed, the shares of Unity common stock that ironSource shareholders receive in the merger will be listed and traded on the NYSE.
Q:
What happens if the merger is not completed?
A:
If the ironSource merger proposal is not approved by ironSource shareholders or if the Unity issuance proposal is not approved by Unity stockholders or if the merger is not completed for any other reason,
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ironSource shareholders will not receive any merger consideration in connection with the merger, and their ironSource ordinary shares will remain outstanding. ironSource will remain an independent public company and ironSource Class A ordinary shares will continue to be listed and traded on the NYSE. Additionally, if the ironSource merger proposal is not approved by ironSource shareholders or if the merger is not completed for any other reason, Unity will not issue shares of Unity common stock to ironSource shareholders, regardless of whether the Unity issuance proposal is approved. If the merger agreement is terminated under specified circumstances, either ironSource or Unity (depending on the circumstances) may be required to pay the other party a termination fee or other termination-related payment. For a more detailed discussion of the termination fees, see “The Merger Agreement—Termination” beginning on page 166.
Q:
What is a proxy and how can I vote my shares via the Unity special meeting website?
A:
A proxy is a legal designation of another person to vote the stock you own.
Shares of Unity common stock held directly in your name as the stockholder of record as of the close of business on the Unity record date may be voted at the Unity special meeting via the Unity special meeting website. To vote your shares at the Unity special meeting, you must register for the Unity special meeting at http://www.virtualshareholdermeeting.com/U2022SM starting at 9:45 a.m., Pacific Time, on October 7, 2022. For additional information on how to preregister for the Unity special meeting, see the section titled “The Unity Special Meeting—Registering for the Unity Special Meeting.” If you choose to virtually attend the Unity special meeting and vote your shares via the Unity special meeting website, you will need the 16-digit control number included on your proxy card. If you are a beneficial owner of Unity common stock but not the stockholder of record of such shares of Unity common stock, you have the right to direct your broker, bank, or other nominee as to how to vote your shares if you follow the instructions you receive from your broker, bank, or nominee. You can also choose to vote your shares before the Unity special meeting via the Unity special meeting website, in each case by using the 16-digit control number, which is in the instructions accompanying your proxy materials, if your broker, bank, or nominee makes those instructions available.
Q:
How can I vote my shares without attending the Unity special meeting?
A:
If you are a stockholder of record of Unity common stock as of the close of business on the Unity record date, you can vote by proxy by phone, the Internet or mail by following the instructions provided in the enclosed proxy card. Please note that if you are a beneficial owner who holds shares in “street name”, you must vote by submitting voting instructions to your broker, bank or other nominee, or otherwise by following instructions provided by your broker, bank or other nominee. Phone and Internet voting may be available to beneficial owners. Please refer to the vote instruction form provided by your broker, bank or other nominee.
Q:
What is the difference between holding shares as a holder of record and as a beneficial owner who holds shares in “street name”?
A:
If your shares of Unity common stock are registered directly in your name with Unity’s transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a stock brokerage account or by a broker, bank or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in “street name” and access to proxy materials is being provided to you by your broker, bank or other nominee.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials relating to the Unity special meeting if you hold shares of Unity common stock in “street name” or if you hold shares of Unity common stock directly in your name as a stockholder of record or shareholder of record, as applicable, or otherwise or if you hold shares of Unity common stock in more than one brokerage account.
Holders of record. For shares of Unity common stock held directly, complete, sign, date and return each proxy card (or cast your vote by phone or the Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus in order to ensure that all of your shares of Unity common stock are voted.
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Shares in “street name”. For shares of Unity common stock held in “street name” through a broker, bank or other nominee, follow the instructions provided by your broker, bank or other nominee to vote your shares.
Q:
I hold shares of both Unity common stock and ironSource ordinary shares. Do I need to vote separately for each company?
A:
Yes. You will need to separately follow the applicable procedures described in this joint proxy statement/prospectus both with respect to the voting of shares of Unity common stock and with respect to the voting of ironSource ordinary shares in order to effectively vote the shares you hold in each company.
Q:
If a holder of shares gives a proxy, how will the shares of Unity common stock covered by the proxy be voted?
A:
If you provide a proxy, regardless of whether you provide that proxy by phone, the Internet or by completing and returning the applicable enclosed proxy card, the individuals named on the enclosed proxy card will vote your shares of Unity common stock in the way that you indicate when providing your proxy in respect of the shares you hold. When completing the phone or Internet processes or the proxy card, you may specify whether your shares of Unity common stock should be voted for or against, or abstain from voting on, all, some or none of the specific items of business to come before the Unity special meeting.
Q:
How will my shares be voted if I return a blank proxy?
A:
If you sign, date and return your proxy and do not indicate how you want your shares of Unity common stock to be voted, then your shares of Unity common stock will be voted “FOR” the Unity issuance proposal and “FOR” the approval of the Unity adjournment proposal, in accordance with the recommendation of the Unity board.
Q:
Can I change my vote after I have submitted my proxy?
A:
Yes. If you are a stockholder of record of Unity common stock as of the close of business on the Unity record date, whether you vote by phone, the Internet or mail, you can change or revoke your proxy before it is voted at the Unity special meeting in one of the following ways:
submit a new proxy card bearing a later date;
vote again by phone or the Internet at a later time;
give written notice of your revocation to Unity’s corporate secretary at 30 3rd Street, San Francisco, California 94103 stating that you are revoking your proxy; or
vote at the virtual Unity special meeting. Please note that your attendance at the virtual Unity special meeting will not alone serve to revoke your proxy.
If you are a beneficial owner of Unity common stock holding shares in “street name” as of the close of business on the Unity record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
Q:
Where can I find the voting results of the Unity special meeting?
A:
Within four business days following certification of the final voting results, Unity intends to file the final voting results (or, if the final voting results have not yet been certified, the preliminary results) of the Unity special meeting with the SEC in a Current Report on Form 8-K.
Q:
If I do not favor the merger as a Unity stockholder what are my rights?
A:
Under Delaware law, Unity stockholders are not entitled to appraisal rights in connection with the issuance of shares of Unity common stock as contemplated by the merger agreement.
Q:
Are there any risks that I should consider as a Unity stockholder in deciding how to vote?
A:
Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” beginning on page 44. You also should read and carefully consider the risk factors of Unity contained in the documents that are incorporated by reference in this joint proxy statement/prospectus.
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Q:
What happens if I sell my shares before the special meetings?
A:
The record date for Unity stockholders entitled to vote at the Unity special meeting is earlier than the date of the Unity special meeting. If you transfer your shares of Unity common stock after the Unity record date but before the Unity special meeting, you will, unless special arrangements are made, retain your right to vote at the Unity special meeting.
Q:
When is the merger expected to be completed?
A:
Unity and ironSource are working to complete the merger as quickly as possible. Subject to the satisfaction or waiver of the conditions described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 163, including the approval of the ironSource merger proposal by ironSource shareholders at the ironSource special general meeting and the approval of the Unity issuance proposal by Unity stockholders at the Unity special meeting, the transaction is expected to be completed in the fourth quarter of 2022. However, neither Unity nor ironSource can predict the actual date on which the merger will be completed, nor can the parties assure that the merger will be completed, because completion is subject to conditions beyond either Unity’s or ironSource’s control.
Q:
What is “householding”?
A:
Unity has adopted a procedure called “householding,” which the SEC has approved. Under this procedure, Unity delivers a single copy of the notice and proxy materials to multiple Unity stockholders who share the same address, unless Unity has received contrary instructions from one or more of such stockholders. This procedure reduces printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, Unity will deliver promptly a separate copy of the notice and proxy materials to any Unity stockholder at a shared address to which Unity delivered a single copy of any of these materials. “Street name” Unity stockholders may contact their broker, bank, or other nominee to request information about householding.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
Unity has engaged MacKenzie Partners, Inc., which is referred to as “MacKenzie,” to assist in the solicitation of proxies for the Unity special meeting. Unity estimates that it will pay MacKenzie a fee of approximately $30,000, plus reimbursement for certain out-of-pocket fees and expenses. Unity has agreed to indemnify MacKenzie against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Unity also may reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Unity common stock. Unity directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies.
Q:
What should I do now?
A:
You should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, and return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions by phone or Internet as soon as possible so that your shares of Unity common stock will be voted in accordance with your instructions.
Q:
Who can answer my questions about the Unity special meeting or the transactions contemplated by the merger agreement?
A:
If you have questions about the Unity special meeting or the information contained in this joint proxy statement/prospectus, or desire additional copies of this joint proxy statement/prospectus or additional proxies, you should contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Stockholders Call Toll-Free: (800) 322-2885
International Callers: +1 (212) 929-5500
Email: proxy@mackenziepartners.com
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Q:
Where can I find more information about Unity, ironSource and the merger?
A:
You can find out more information about Unity, ironSource and the merger by reading this joint proxy statement/prospectus and, with respect to Unity and ironSource, from various sources described in the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively.
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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE
IRONSOURCE SPECIAL GENERAL MEETING
The following are answers to certain questions that you may have regarding the merger, the merger agreement, the transactions contemplated thereby and the ironSource special general meeting. ironSource urges you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this document.
Q:
Why am I receiving this joint proxy statement/prospectus?
A:
ironSource and Unity have entered into a merger agreement pursuant to which Merger Sub will merge with and into ironSource, subject to certain conditions. Upon the completion of the merger, ironSource will become a direct wholly owned subsidiary of Unity. ironSource is holding a special general meeting of its shareholders, or the ironSource special general meeting, in order to obtain shareholder approval (including separate class approvals at meetings of each of the ironSource Class A ordinary shares and ironSource Class B ordinary shares, and the approval of a combined meeting of those classes, all to be held at the ironSource special general meeting) of the merger agreement, the transactions contemplated under the merger agreement, including the merger, and the merger consideration payable to ironSource’s shareholders.
Unless explicitly described otherwise, when we refer to the “ironSource special general meeting,” we are referring collectively to all of the class and combined meetings of ironSource’s shareholders required for approval of the merger, which will all take place on the same occasion.
We cannot complete the merger unless ironSource shareholders approve the ironSource merger proposal at the ironSource special general meeting. We have included in this joint proxy statement/prospectus important information about the merger, the merger agreement and the ironSource special general meeting. You should read this information carefully and in its entirety. We have attached a copy of the merger agreement as Annex A to this joint proxy statement/prospectus. The enclosed voting materials allow you to vote your shares without personally attending the ironSource special general meeting. Your vote is very important and we encourage you to vote by proxy or voting instruction form as soon as possible.
Q:
When and where will the ironSource special general meeting be held?
A:
The ironSource special general meeting is scheduled to be held at the principal executive offices of ironSource, located at 121 Menachem Begin Street, Tel Aviv 6701203, Israel, at 4:00 p.m. (Israel time), on October 7, 2022.
Q:
Who is entitled to vote at the ironSource special general meeting?
A:
ironSource has fixed September 2, 2022 as the record date for the ironSource special general meeting (referred to as the “ironSource record date”). If you were an IronSource shareholder at the close of business on the ironSource record date, you are entitled to vote on matters that come before the ironSource special general meeting.
Q:
What matters will be considered at the ironSource special general meeting?
A:
You will be asked to consider and vote on a proposal to approve the merger of ironSource with a wholly owned subsidiary of Unity, including approval of the merger agreement, the merger, the merger consideration (as described below), and all other transactions and arrangements contemplated under the merger agreement. We refer to this proposal as the ironSource merger proposal.
We do not currently expect there to be any other matters on the agenda at the ironSource special general meeting; however, if any other matter is properly presented at that meeting, including the adjournment or postponement thereof, the persons named in the enclosed proxy card will vote upon such matters in accordance with their discretion.
Q:
What will I receive in the merger?
A:
Upon the completion of the merger, you will be entitled to receive the merger consideration, consisting of 0.1089 of a share of Unity common stock, rounded up or down to the nearest whole share for any
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fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes, for each ironSource Class A ordinary share, and for each ironSource Class B ordinary share held immediately prior to the effective time of the merger. We refer to that ratio of 0.1089 to 1 as the exchange ratio. You will not receive any cash.
Q:
How will I receive the merger consideration to which I am entitled?
A:
If you are a holder of certificates that represent eligible ironSource ordinary shares (which we refer to as “ironSource ordinary share certificates”), a notice advising you of the effectiveness of the merger and a letter of transmittal and instructions for the surrender of your ironSource ordinary share certificates will be mailed to you as soon as practicable after the effective time of the merger. After receiving proper documentation from you, an exchange agent will send to you (i) a statement reflecting the aggregate whole number of shares of Unity common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (ii) a check in the amount equal to the cash payable in lieu of any dividends or other distributions on the shares of Unity common stock issuable to you as merger consideration.
If you are a holder of book-entry shares representing eligible ironSource ordinary shares (which we refer to as “ironSource book-entry shares”) held through a broker, bank or other nominee that is a member institution of the Depository Trust Company (which we refer to as “DTC”), an exchange agent will transmit to DTC or its nominees as soon as reasonably practicable on or after the closing date the merger consideration, which will comprise of cash in lieu of any dividends or other distributions on the shares of Unity common stock issuable as merger consideration, in each case, that DTC has the right to receive, and DTC or its nominees will credit to your account at your broker, bank or other nominee, your applicable portions of that merger consideration and dividends or other distributions.
If you are a shareholder of record of ironSource book-entry shares which are not held through DTC, the exchange agent will deliver to you, as soon as practicable after the effective time of the merger, (i) a notice advising you of the effectiveness of the merger, (ii) a statement reflecting the aggregate whole number of shares of Unity common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (iii) a check in the amount equal to the cash payable in lieu of any dividends or other distributions on the shares of Unity common stock issuable to you as merger consideration.
No interest will be paid or accrued on any amount payable for ironSource ordinary shares eligible to receive the merger consideration pursuant to the merger agreement.
For additional information on the exchange of ironSource ordinary shares for the merger consideration, see the section titled “The Merger Agreement—Payment for Securities; Exchange” beginning on page 140.
In general all ironSource shareholders will be subject to, Israeli withholding tax at the rate of 25% and 23% (for corporations) on the merger consideration payable under the merger agreement, unless the ironSource shareholder requests and obtains an individual certificate of exemption or a reduced tax rate from the Israel Tax Authority (the “ITA”) at least three business days prior to the date that is 365 days following the date of the closing of the merger. However, ironSource, with the assistance of Unity, has submitted an application for a ruling from the ITA confirming that (i) the exchange of ironSource ordinary shares for the merger consideration as a tax free reorganization pursuant to Section 103K of the of the Israeli Income Tax Ordinance [New Version], 5721-1961, as amended (the “ITO”), and (ii) as such, no withholding is required, all subject to the conditions to be detailed in such ruling. No assurance can be given that the tax ruling will be obtained before the closing or at all, or that, if obtained, such tax ruling will be granted under the conditions requested by ironSource and fully exempt holders of ironSource ordinary shares from Israeli tax withholding on the receipt of merger consideration.
For additional information on withholding of taxes in Israel, including certain procedures that would be applicable with respect to any such Israeli tax withholding, see the section titled “Material Israeli Tax Consequences of the Merger” beginning on page 135.
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Q:
What is the recommendation of the ironSource board?
A:
The ironSource board (excluding directors who may be deemed to have a personal interest, as defined under the Companies Law, concerning the merger) unanimously recommends that you vote “FOR” the ironSource merger proposal.
Q:
What votes of ironSource shareholders are required to complete the merger?
A:
The approval of the ironSource merger proposal requires three different class-related or combined at special general meetings under ironSource’s articles of association, as amended, and the Companies Law. Each of those votes will take place and each of those meetings will be held at the ironSource special general meeting. The affirmative vote of the holders of a majority of the voting power represented at the ironSource special general meeting in person or by proxy and voting thereon, excluding abstentions and broker non-votes, of each of the following constitute the foregoing required class-related or combined approvals:
(1)
the ironSource Class A ordinary shares, voting as a separate class at a separate meeting;
(2)
the ironSource Class B ordinary shares, voting as a separate class at a separate meeting, and
(3)
the ironSource Class A ordinary shares and ironSource Class B ordinary shares, voting together as a single class at a combined meeting.
In the foregoing combined vote of the ironSource Class A ordinary shares and ironSource Class B ordinary shares (i.e., approval (3) above), each ironSource Class A ordinary share is entitled to one vote, whereas each ironSource Class B ordinary share is entitled to five votes.
As described further below, each shareholder of record of ironSource will receive a proxy card in which he, she or it can vote with respect of each of (i) all ironSource Class A ordinary shares, and (ii) all ironSource Class B ordinary shares, held by such shareholder. The vote that you submit in respect of your ironSource Class A ordinary shares or ironSource Class B ordinary shares will be counted, as well, towards the tally for the combined class meeting. Therefore, in order to ensure that your ironSource ordinary shares (Class A and Class B) are voted in the relevant class meeting(s) and in the combined meeting at the ironSource special general meeting, please complete, execute and return the proxy card that you receive. Because voting instruction forms relate only to shares held in “street name”, and all ironSource Class B ordinary shares convert automatically into ironSource Class A ordinary shares upon transfer to “street name”, any voting instruction form that you receive from your bank, broker or other nominee relates only to your ironSource Class A ordinary shares.
At each of the foregoing three meetings that are required for approval of the ironSource merger proposal, the fulfillment of the following conditions as part of the vote that is held will be required: (i) the majority vote must include a majority of shares voted in favor of the merger proposal that are not held by (a) Unity, Merger Sub or any person or entity holding, directly or indirectly, 25% or more of the voting power or the right to appoint the chief executive officer or 25% or more of the directors of Unity or Merger Sub, (b) a person or entity acting on behalf of Unity, Merger Sub or a person or entity described in clause (a) above, or (c) a family member of, or an entity controlled by Unity, Merger Sub or any of the foregoing (each of (a), (b) and (c) above are referred to as a “Unity Affiliate”), and (ii) as required under Sections 270(4) and 275(a) of the Companies Law (due to a potential personal interest of certain shareholders of ironSource in the approval of the proposal by the respective class or combined classes of shares), the fulfillment of either of the following conditions as part of the vote that is held will be required – (x) the majority vote obtained in favor of the ironSource merger proposal also includes a majority of the shares held by shareholders who are not deemed to have a personal interest (as defined under the Companies Law) in the approval of the proposal that are voted at the applicable ironSource meeting, excluding abstentions and broker non-votes, or (y) the total number of shares held by such non-conflicted shareholders (as described in the immediately preceding bullet-point) voted against the ironSource merger proposal does not exceed 2% of the aggregate voting power in ironSource (on a per class or combined class basis).
For purposes of the foregoing conditions, a “personal interest” (i) includes an interest of any member of a shareholder’s immediate family (i.e., spouse, sibling, parent, parent’s parent, descendant, the spouse’s descendant, sibling or parent, and the spouse of each of these) or an interest of an entity with respect to which the shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or its voting power or has the right to appoint a director or the chief
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executive officer; and (ii) excludes an interest arising solely from the ownership of shares of ironSource. In determining whether a vote cast by proxy is disinterested, the conflict of interest/“personal interest” of the proxy holder is also considered and will cause that vote to be treated as the vote of an interested shareholder, even if the shareholder granting the proxy does not have a conflict of interest/personal interest in the matter being voted upon.
Under Section 268 of the Companies Law, a “controlling shareholder” is any shareholder that has the ability to direct a company’s activities (other than by means of being a director or office holder of the company) including, with respect to the ironSource merger proposal, a person who holds 25% or more of the voting rights at the general meeting of ironSource if there is no other person who holds more than 50% of the voting rights of ironSource. For these purposes, two or more persons holding voting rights in a company, each of whom has a personal interest in the approval of the transaction being brought for approval of a company’s shareholders are considered to be joint holders. A person is presumed to be a controlling shareholder if he, she or it holds or controls, by himself, herself or itself, or together with others, one-half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer. In order for your vote to be counted in respect of the ironSource merger proposal, you must affirm on the proxy card and voting instruction form that you receive that you are not a Unity Affiliate nor you have a personal interest in the vote (as described above) (by indicating “FOR” in Item 1A of the proxy card or voting instruction form). If you do not so affirm, your vote will not count towards the relevant tallies in respect of the votes on the ironSource merger proposal.
In connection with the merger, (i) certain members of the ironSource board as of the time of approval of the merger (namely, Tomer Bar-Zeev, Arnon Harish and Eyal Milrad) who serve as executive officers of ironSource, as well as certain other employees who are also shareholders of ironSource, disclosed to the ironSource board prior to the approval of the merger agreement by the board their potential personal interest in the merger (in their capacity as employees of ironSource), and advised that they expect to enter into new employment terms with Unity, which are expected to be discussed between them and Unity after the execution of the merger agreement, (ii) ironSource’s Chief Executive Officer disclosed to the ironSource board prior to the approval of the merger agreement by the board that he is expected to serve as a director on the Unity board after the merger and that such service may give rise to a personal interest, and (iii) shortly before the date of this notice, the ironSource board resolved in accordance with the merger agreement to designate Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger, and such service may give rise to a personal interest of such directors and of Viola Ventures III, LP. The aggregate voting rights of the ironSource shareholders who are deemed to have a personal interest in the merger by virtue of the foregoing are expected to exceed 25% of the total voting rights in the combined meeting of the ironSource Class A ordinary shares and ironSource Class B ordinary shares, and the total voting rights in the separate class meetings of the ironSource Class A ordinary shares and ironSource Class B ordinary shares. In light of those personal interests (as described above in sub-sections (i) and (ii)), the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board, and further, the designation of Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger (as described in sub-section (iii)) was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board.
Q:
What is the quorum required for holding the ironSource special general meeting?
A:
Pursuant to ironSource’s articles of association, the quorum required for the ironSource special general meeting—in order to hold each of the two separate class meetings and the combined meetings required for approval of the merger at the ironSource special general meeting—is two or more shareholders, present in person or by proxy and holding shares conferring in the aggregate at least 25% of the voting power of the relevant class of ironSource ordinary shares (Class A or Class B), or, in the case of the combined Class A and Class B meeting, the combined voting power of the ironSource ordinary shares (Class A and Class B), after taking into account the relative voting power of each class (one vote, and five votes, per share, respectively).
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Q:
Am I entitled to appraisal rights?
A:
No. Under Israeli law, holders of ironSource ordinary shares are not entitled to statutory appraisal rights in connection with the merger.
Q:
Will I be able to continue to trade my ironSource Class A ordinary shares on the NYSE following the ironSource special general meeting?
A:
ironSource shareholders are expected to be able to continue to trade their ironSource Class A ordinary shares on the NYSE until the closing date of the merger. ironSource Class A ordinary shares will no longer be publicly traded and will be delisted from the NYSE upon the closing of the merger.
Q:
Will the shares of Unity common stock issued in the merger receive a dividend?
A:
After the completion of the merger, the shares of Unity common stock issued in connection with the merger will carry with them the right to receive the same dividends (if any) on shares of Unity common stock as the shares of Unity common stock held by all other holders of such shares for any dividend the record date for which occurs after the merger is completed.
Q:
What effects will the proposed merger have on ironSource?
A:
As a result of the proposed merger, ironSource will cease to be a publicly-traded company and will become a direct wholly owned subsidiary of Unity. Following the completion of the proposed merger, the registration of ironSource Class A ordinary shares and ironSource’s reporting obligations under the Exchange Act will be terminated upon notification to the SEC. In addition, upon completion of the proposed merger, ironSource Class A ordinary shares will no longer be listed on any stock exchange, including the NYSE.
However, Unity common stock will remain registered under the Exchange Act and will (including shares of Unity common stock issued to ironSource shareholders as merger consideration) be listed for trading on the NYSE and (except for shares of Unity common stock held by deemed “affiliates” of Unity under the Securities Act) will be freely tradable on the NYSE.
Q:
What happens if the merger is not completed?
A:
If the merger agreement is not approved by ironSource’s shareholders or if the merger is not completed for any other reason, ironSource shareholders will not receive any merger consideration for their ironSource ordinary shares. Instead, ironSource will remain a public company and ironSource Class A ordinary shares will continue to be listed and traded on the NYSE. Under certain circumstances related to the termination of the merger agreement, as specified therein, either ironSource or Unity (depending on the circumstances) may be required to pay to the other party a termination fee or other termination-related fees. Please see “The Merger Agreement—Termination—Termination Fees” for a summary description of these circumstances.
Q:
What are the material Israeli income tax consequences of the merger to ironSource shareholders?
A:
Generally, the exchange of ironSource ordinary shares for the merger consideration would be treated as a sale and subject to Israeli tax both for Israeli and non-Israeli resident shareholders of ironSource. However, certain relief and/or exemptions may be available under Israeli law or under applicable tax treaties. In addition, ironSource, with the assistance of Unity, has submitted an application for a ruling from the ITA confirming that (i) the exchange of ironSource ordinary shares for the merger consideration as a tax free reorganization pursuant to Section 103K of the ITO, and (ii) as such, no withholding is required, all subject to the conditions to be detailed in such ruling. Obtaining the 103K tax ruling is ironSource’s closing condition to the consummation of the merger.
This joint proxy statement/prospectus contains a discussion of the material Israeli income tax consequences of the merger and the ownership and disposition of Unity common stock received in the merger. This discussion does not address any non-Israel tax consequences. You should consult your own tax advisors regarding the particular Israeli income tax consequences to you of the merger and of the ownership and disposition of Unity common stock received in the merger in light of your particular circumstances, as well as the particular tax consequences to you under any other tax laws.
For a more detailed discussion, see the section titled “Material Israeli Tax Consequences of the Merger.”
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Q:
What will happen to outstanding ironSource options and restricted share units (“RSUs”)?
A:
It depends on the status of the service provider and the option or RSU, as applicable.
ironSource Options
At the effective time, each option to purchase ironSource ordinary shares (referred to as an “ironSource option”) that is outstanding and unexercised immediately prior to the effective time and held by any person who is and continues to be an officer, director, employee or contractor of ironSource or any of its subsidiaries immediately prior to and immediately following the effective time (referred to as a “Continuing Service Provider”), whether vested or unvested, will, without any action on the part of Unity, ironSource or the holder thereof, cease to represent a right to acquire ironSource ordinary shares and will be assumed by Unity and converted into an option to purchase a number of shares of Unity common stock (referred to as a “Converted Option”), which will be subject to, the same terms and conditions (including status of vesting and vesting schedule) as applied to the respective ironSource option immediately prior to the effective time, except that such Converted Option will (a) represents an option to acquire a number of shares of Unity common stock, rounded down to the nearest whole number of shares, equal to the product obtained by multiplying (i) the number of ironSource ordinary shares subject to such ironSource option immediately prior to the effective time, by (ii) the exchange ratio, and (b) have an exercise price per share of Unity common stock equal to the quotient obtained by dividing (i) the per share exercise price for ironSource ordinary shares subject to the corresponding ironSource option immediately prior to the effective time by (ii) the exchange ratio, rounded up to the nearest whole cent; provided, that such exercise price and number of shares of Unity common stock subject to such Converted Option that is intended to qualify as incentive stock options under Section 422 of the Code will be determined consistent with the applicable requirements of the Code.
At the effective time, each ironSource option that is outstanding and held by any individual who is not a Continuing Service Provider of ironSource will, (a) if such ironSource option is vested (taking into account any acceleration of vesting as a result of the consummation of the merger) and unexercised immediately prior to the effective time, in each case, without any action on the part of Unity, ironSource or any other person, be cancelled, with the holder of such ironSource option becoming entitled to receive at the effective time, in full satisfaction of the rights of such holder with respect thereto, the merger consideration in respect of a number of ironSource ordinary shares equal to the quotient obtained by dividing (a) the product of (i) the excess, if any, of the per share cash equivalent consideration over the per share exercise price of such ironSource option, multiplied by (ii) the number of ironSource ordinary shares subject to such ironSource option, by (b) the per share cash equivalent consideration, less a number of shares of Unity common stock having a value equal to any applicable tax withholding obligations, or (b) if such ironSource option (i) is unvested (taking into account any acceleration of vesting as a result of the consummation of the merger) immediately prior to the effective time or (ii) has an exercise per share equal to or greater than the per share cash equivalent consideration, be cancelled immediately prior to the effective time for no consideration.
Notwithstanding the foregoing, certain ironSource options may be settled in cash or ironSource ordinary shares by ironSource immediately prior to the closing of the merger.
ironSource RSUs
At the effective time, each restricted stock unit award relating to ironSource ordinary shares (referred to as an “ironSource RSU”) that is outstanding and unvested immediately prior to the effective time and each ironSource RSU that is outstanding and vested immediately prior to the effective time (taking into account any acceleration of vesting as a result of the consummation of the merger) but has not been settled prior to the effective time, and, in each case, held by any person who is a Continuing Service Provider of ironSource will, without any action on the part of Unity, ironSource or the holder thereof, be assumed and converted automatically into an award of restricted stock units with respect to a number of shares of Unity common stock (referred to as a “Converted RSU Award”), with such Converted RSU Award subject to substantially the same terms and conditions applicable to the respective ironSource RSUs, except that the number of shares of Unity common stock subject to such Converted RSU Award will equal to the product obtained by multiplying (i) the total number of ironSource ordinary shares subject to such ironSource RSU immediately prior to the effective time by (ii) the exchange ratio, with any fractional shares rounded up to the nearest whole share.
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At the effective time, each ironSource RSU that is outstanding and held by any individual who is not a Continuing Service Provider of ironSource will (a) if such ironSource RSU is vested immediately prior to the effective time (taking into account any acceleration of vesting as a result of the consummation of the merger) but has not been settled prior to the effective time, without any action on the part of Unity, ironSource or the holder thereof, be cancelled, with the holder of such ironSource RSU becoming entitled to receive at the effective time (or such later date required by Section 409A of the Code), in full satisfaction of the rights of such holder with respect thereto, the merger consideration in respect of each ironSource ordinary share subject to such ironSource RSU immediately prior to the effective time, less a number of shares of Unity common stock having a value equal to any applicable tax withholding obligations, and (b) if such ironSource RSU is unvested (taking into account any acceleration of vesting as a result of the consummation of the merger) as of immediately prior to the effective time, be cancelled immediately prior to the effective time for no consideration.
With respect to options and RSUs granted under Section 102 of the ITO, Unity shall deposit with the trustee appointed by ironSource the Converted Options and Converted RSU Awards or any other merger consideration, in accordance with the terms and conditions of Section 102 of the ITO and an applicable tax ruling, if obtained.
For additional information regarding the treatment of ironSource equity awards, see the section titled “The Merger Agreement—Treatment of ironSource Equity Awards in the Merger” beginning on page 139.
Q:
What will happen to the ironSource 2021 Employee Share Purchase Plan?
A:
The ironSource 2021 Employee Share Purchase Plan (the “ironSource ESPP”) will be terminated prior to the effective time of the merger.
For additional information regarding the treatment of the ironSource ESPP, see the section titled “The Merger—Treatment of the ironSource ESPP” on page 135.
Q:
How can I vote?
A:
Beneficial Owners: If you hold your ironSource shares in “street name” through a broker, bank or other nominee on the NYSE, please vote in accordance with the instructions on the nominee’s voting instruction form. If you receive a physical voting instruction form, you may complete it and mail it in the self-addressed envelope that is enclosed. If you received an email copy of the voting instruction form, or if you otherwise desire to submit voting instructions by telephone or over the Internet (at www.proxyvote.com), please follow the directions that you received. The deadline for receipt of your voting instructions will be 11:59 p.m. Eastern Standard Time on October 6, 2022.
You will be receiving separate voting instruction forms for each account in which you hold your ironSource Class A ordinary shares. Please complete and submit voting instructions with respect to each such account in order to ensure that all of your shares are voted at the ironSource special general meeting.
Alternatively, if you wish to attend the ironSource special general meeting and vote in person, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares, giving you the right to vote the shares at the ironSource special general meeting. In that case, you must also bring a statement from your bank, broker or other nominee that shows that you owned ironSource Class A ordinary shares as of the ironSource record date. If you hold ironSource Class A ordinary shares in multiple “street name” accounts, you will need to obtain a legal proxy with respect to the shares in each such separate account in order to vote all such shares in person at the meeting.
Shareholders of Record: If you (including through a trustee) are a shareholder of record, that is, if your shares are registered directly in your name (or in the name of a trustee on your behalf) with ironSource’s transfer agent, American Stock Transfer & Trust Company (the “ironSource transfer agent”), these proxy materials are being sent directly to you (or to such trustee) by the ironSource transfer agent. You can vote your shares by attending the ironSource special general meeting or by completing and signing one or more proxy cards.
If you hold both ironSource Class A ordinary shares and ironSource Class B ordinary shares that are registered in your name, you will be receiving one proxy card for both classes of shares, and you will need
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to complete, sign and submit such proxy card in order to ensure that your shares are voted in each of the three separate votes that are being held with respect to the ironSource merger proposal at the ironSource special general meeting—i.e., the votes of: (i) the ironSource Class A ordinary shares as a separate class; (ii) the ironSource Class B ordinary shares as a separate class; and (iii) the ironSource Class A and Class B ordinary shares, voting together as a single class, at a ratio of 1:5 votes per share, respectively.
The proxy card that has been mailed to you, and that can be completed, signed and returned in the envelope(s) that were enclosed with them, provide the primary means for authorizing the voting of your ironSource ordinary shares. If you have lost or misplaced the proxy card mailed to you, you may print a copy of the proxy card from the Investor Relations page on ironSource’s website at https://investors.is.com/, and may complete and sign the proxy card (indicating the name of the registered shareholder) and return it or them, to our Investor Relations team via e-mail to ir@is.com We reserve the right to require further identifying information from you if you submit your proxy card(s) in that manner.
All votes from shareholders of record should be received by ironSource’s transfer agent by 11:59 p.m., Eastern Standard Time, on October 6, 2022 (or such earlier deadline as may be indicated on the proxy card), or received at ironSource’s Israeli offices by 10:00 a.m. (Israel time), on October 7, 2022, in order to be counted towards the tallies of ironSource Class A ordinary shares, ironSource Class B ordinary shares, and the combined tally of ironSource Class A ordinary shares and ironSource Class B ordinary shares, being voted at the ironSource special general meeting.
Q:
What happens if I do not indicate how to vote on the proxy card or voting instruction form?
A:
If you are a shareholder of record and provide specific instructions (by marking a box on your proxy card) with regard to the ironSource merger proposal, your shares will be voted as you instruct. If you sign and return your proxy card without giving specific instructions, your shares will not be voted on the ironSource merger proposal, unless you provide the required confirmation under Item 1A of the proxy card that you are not a Unity Affiliate and that you lack a personal interest in the approval of the ironSource merger proposal (in which case your proxy card will be voted “FOR” the ironSource merger proposal, as recommended by the ironSource board).
If you are a beneficial owner and return your voting instruction form but do not specify voting instructions for the ironSource merger proposal, your bank, broker or other nominee will not be permitted to cast a vote with respect to the ironSource merger proposal (commonly referred to as a “broker non-vote”). Banks, brokers or other nominees that hold shares in “street name” for clients typically have authority to vote on “routine” proposals even when they have not received instructions from beneficial owners. The ironSource merger proposal for the ironSource special general meeting will not be treated as a routine proposal, because, among other things, a merger is not a routine matter, and, furthermore, our proxy statement is prepared in compliance with the Companies Law rather than the rules applicable to domestic U.S. reporting companies. Therefore, in that circumstance, the shares held by you will be included in determining the presence of a quorum at the meeting, but will not be considered “present” for the purpose of voting on the ironSource merger proposal. Such shares therefore have no impact on the outcome of the votes on the ironSource merger proposal. If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how your shares should be voted so that you thereby participate in the voting on this important matter.
Q:
If my ironSource shares are held in “street name” by my bank, broker or other nominee, will my broker vote my shares for me?
A:
Your bank, broker or other nominee will not be able to vote your ironSource shares without instructions from you. You should instruct your bank, broker or other nominee to vote your shares by following the directions provided by your bank, broker or other nominee. Without instructions and without returning your voting instruction form, your shares will not be counted as present or voted at the ironSource special general meeting.
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Q:
Do ironSource’s executive officers and directors have any interest in the merger?
A:
Yes. When considering the recommendation of the ironSource board that ironSource’s shareholders vote in favor of the approval of the ironSource merger proposal, ironSource shareholders should be aware that certain ironSource directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of ironSource shareholders generally. These interests include:
each of Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer, Arnon Harish, ironSource’s President, and Eyal Milrad ironSource’s Chief Strategy Officer, who were directors of ironSource at the time that the merger was considered by the ironSource board, as well as the other executive officers of ironSource, are anticipated to agree with Unity on new employment terms for his employment, post-merger;
in accordance with the merger agreement, Tomer Bar-Zeev, ironSource’s Chief Executive Officer is expected to be appointed to the Unity board upon consummation of the merger, and further, in accordance with the merger agreement shortly prior to the date of this proxy statement, the ironSource board resolved to designate Messrs. Shlomo Dovrat and David Kostman, as nominees to be appointed to the Unity board upon consummation of the merger and in this respect may be eligible to compensation as generally provided by Unity to its non-executive board members; and
the former and current directors and officers of ironSource will be entitled to continued indemnification and the continuation of directors’ and officers’ liability insurance for a period of seven years after the merger.
In addition, it is noted that outstanding ironSource options and ironSource RSUs that are held by ironSource’s executive officers and directors—just like ironSource options and ironSource RSUs held by other employees or service providers—will be entitled to receive the merger consideration to the extent described under “What will happen to outstanding ironSource options and restricted share units (RSUs)?” above.
Further, directors and officers of ironSource who are Continuing Service Providers (like all other Continuing Service Providers) will be entitled, for the initial 12-month period after the closing of the merger, to at least as favorable employment terms at Unity as were in effect for them at ironSource prior to the merger, including wage rate or base salary, severance rights and employee benefits (including cash bonus opportunities, retirement, health and welfare benefits, but excluding equity incentive compensation and change in control or retention bonuses), and will furthermore be credited, under Unity’s employee benefit plans, for their years of service accumulated under the corresponding ironSource employee benefit plans.
For detailed information, please see “The Merger—Interests of Certain of IronSource’s Directors and Executive Officers in the Merger.
Q:
Can I change my vote after I have signed and returned my proxy card or voting instruction form?
A:
Beneficial Owners: If your ironSource shares are held on the NYSE in a stock brokerage account or by a bank or other nominee, in order to change your voting instructions, you must follow the relevant directions from your broker, bank or other nominee, and must do so prior to the deadline for submitting voting instructions (i.e., by 11:59 p.m. Eastern Standard Time on October 6, 2022).
Shareholders of Record: Shareholders of record may revoke the authority granted by their execution of proxies at any time before the effective exercise thereof by filing with us a written notice of revocation or duly executed proxy bearing a later date, or by voting in person at the ironSource special general meeting. Shares represented by any proxy in the enclosed form (including a proxy serving as revocation of an earlier proxy), or shares that are subject to a written revocation, if the proxy or revocation is properly executed and received by our transfer agent by 11:59 p.m. Eastern Standard Time on October 6, 2022, or at ironSource’s Israeli offices by 10:00 a.m. (Israel time), on October 7, 2022, will be voted (or not voted, as appropriate) as indicated therein with respect to the ironSource merger proposal and as determined by the Board concerning any other matter that may be presented to the ironSource special general meeting, as described above.
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Q:
If I purchased my ironSource Class A ordinary shares after the ironSource record date, may I vote these shares at the ironSource special general meeting?
A:
No. A shareholder is not entitled to vote shares purchased after the ironSource record date because the shareholder was not the record holder of those shares on the record date. Only the holder as of the ironSource record date may vote shares. However, such shareholder’s ironSource Class A ordinary shares (and, if the holder also holds them, ironSource Class B ordinary shares), if held as of the effective time of the merger, will be automatically converted into and represent the right to receive the per share merger consideration, consisting of 0.1089 of a share of Unity common stock per ironSource Class A ordinary share (and, if applicable, per ironSource Class B ordinary share) rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and, subject to the withholding of any applicable taxes.
Q:
What happens if I sell my ironSource shares before the ironSource special general meeting?
A:
The ironSource record date for the ironSource special general meeting is earlier than the date of the ironSource special general meeting and the date that the merger is expected to be completed. If you transfer your ironSource ordinary shares after the ironSource record date but before the ironSource special general meeting, you will retain your right to vote at the ironSource special general meeting, but will have transferred the right to receive the merger consideration with respect to such ironSource ordinary shares. In order to receive the merger consideration, you must hold your ironSource ordinary shares through the completion of the merger.
Q:
Should I send in my ironSource share certificates now? When can I expect to receive the merger consideration for my shares?
A:
No. Please do not send your ironSource share certificates with your proxy card or voting instruction form.
Prior to the effective time of the merger, Unity will select a bank or trust company reasonably acceptable to ironSource to act as the exchange agent for the merger. If your ironSource shares are in certificated form, after the merger is completed, the exchange agent will send you a letter of transmittal with detailed instructions regarding the surrender and conversion of your ironSource share certificates for the merger consideration.
If your ironSource shares are held in book-entry form, you will not need to complete a letter of transmittal or take any other action in order to receive the merger consideration, as that consideration will automatically be issued to you upon the closing of the merger.
Q:
What are the material U.S. federal income tax consequences of the merger to ironSource shareholders?
A:
The parties intend the merger to qualify as a “reorganization” under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”) and/or Section 368(a)(2)(E) of the Code. Assuming the merger so qualifies, and subject to the discussion under “The Merger—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger” a U.S. Holder (as defined on page 171) of ironSource ordinary shares generally will not recognize gain or loss for U.S. federal income tax purposes on the exchange of ironSource ordinary shares for shares of Unity common stock pursuant to the merger. If the merger does not qualify as such a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, the receipt of Unity common stock in exchange for ironSource ordinary shares in the merger would generally constitute a taxable exchange for U.S. federal income tax purposes and the tax consequences of the merger could materially differ from those described herein.
Neither Unity nor ironSource has sought, nor do they intend to seek, any ruling from the Internal Revenue Service (the “IRS”), nor is the closing of the merger conditioned on the receipt of, any ruling from the IRS or any opinion of counsel with respect to the qualification of the merger as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation. Furthermore, neither Unity nor ironSource or any of their respective advisors
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or affiliates, makes any representations or provides any assurances regarding the tax consequences of the merger, including whether the merger qualifies as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code.
For a more complete description of the U.S. federal income tax consequences of the merger, see “—Material U.S. Federal Income Tax Considerations” beginning on page 171.
Q:
How can I obtain additional information about ironSource?
A:
ironSource’s Annual Report on Form 20-F for the year ended December 31, 2021, and other SEC filings may be accessed on the Internet at www.sec.gov or on the investor relations page of ironSource’s website at https://investors.is.com/. The information provided on our website is not part of this joint proxy statement/prospectus and therefore is not incorporated by reference herein. For a more detailed description of the information available, please refer to “Where You Can Find More Information.
Q:
What should I do if I have questions about the ironSource special general meeting, the merger or this document?
A:
If you have any questions about the ironSource special general meeting, the merger or this document, or if you need additional copies of this document or the enclosed proxy card, you should contact:
ironSource Ltd.
121 Menachem Begin Street
Tel Aviv 6701203, Israel
Attention: Investor Relations
Telephone: +972-74-799-0001
Email: ir@is.com
If your bank, broker or other nominee holds your shares, you may also call your bank, broker or other nominee for additional information.
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SUMMARY
This summary highlights selected information included in this joint proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this joint proxy statement/prospectus and its annexes carefully and in their entirety and the other documents to which Unity and ironSource refer before you decide how to vote with respect to the proposals to be considered and voted on at the Unity special meeting or ironSource special general meeting. In addition, Unity and ironSource incorporate by reference important business and financial information about Unity and ironSource into this joint proxy statement/prospectus, as further described in the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively. Each item in this summary includes a page reference directing you to a more complete description of that item in this joint proxy statement/prospectus.
The Companies (page 65)
Unity Software Inc.
30 3rd Street
San Francisco, California 94103
Phone: (415) 539-3162
Unity is the world’s leading platform for creating and operating interactive, real-time 3D content. Unity’s platform provides a comprehensive set of software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. Unity serves customers of all sizes, at every stage of maturity, from individual creators to large enterprises.
Ursa Aroma Merger Subsidiary Ltd.
c/o Unity Software Inc.
30 3rd Street
San Francisco, California 94103
Phone: (415) 539-3162
Merger Sub, an Israeli company, is a direct wholly owned subsidiary of Unity. Merger Sub is newly formed, and was organized for the purpose of entering into the merger agreement and effecting the merger. Merger Sub has engaged in no business activities to date and it has no material assets or liabilities of any kind, other than those incident to its formation and those incurred in connection with the merger.
ironSource Ltd.
121 Menachem Begin Street
Tel Aviv 6701203, Israel
Phone: +972-747990001
ironSource is a leading business platform for the App Economy. App developers use ironSource’s platform to turn their apps into successful, scalable businesses, leveraging a comprehensive set of software solutions which help them grow and engage users, monetize content, and analyze and optimize business performance to drive more overall growth. The ironSource platform also empowers telecom operators to create a richer device experience, incorporating relevant app and service recommendations to engage users throughout the lifecycle of the device. By providing a comprehensive business platform for the core constituents of the App Economy, ironSource allows customers to focus on what they do best, creating great apps and user experiences, while enabling their business expansion in the App Economy.
The Merger and the Merger Agreement (pages 83 and 137)
The terms and conditions of the merger are contained in the merger agreement, which is attached to this document as Annex A and is incorporated by reference herein in its entirety. Unity and ironSource encourage you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.
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The Unity board and the ironSource board (excluding directors who may be deemed to have a personal interest, as defined under the Companies Law, concerning the merger) each has unanimously approved and adopted the merger agreement and the transactions contemplated by the merger agreement. Pursuant to the terms and subject to the conditions included in the merger agreement, Merger Sub, a wholly owned subsidiary of Unity, will merge with and into ironSource, with ironSource continuing in existence as the surviving company and a direct wholly owned subsidiary of Unity.
Merger Consideration (page 138)
As a result of the merger, each ironSource ordinary share (subject to certain exceptions set forth in the merger agreement) will be converted into the right to receive 0.1089 of a share of Unity common stock (which we refer to as the “exchange ratio”), rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes (which we refer to as the “merger consideration”). ironSource shareholders will not be entitled to receive any fractional shares of Unity common stock in the merger.
Risk Factors (page 44)
The merger and an investment in Unity common stock involve risks, some of which are related to the transactions contemplated by the merger agreement. You should carefully consider the information about these risks set forth under the section titled “Risk Factors” beginning on page 44, together with the other information included or incorporated by reference in this joint proxy statement/prospectus, particularly the risk factors contained in Unity’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in ironSource’s Annual Report on Form 20-F and Current Reports on Form 6-K and in other filings they each make with the SEC. ironSource shareholders should carefully consider the risks set out in that section before deciding how to vote with respect to the ironSource merger proposal being considered and voted on at the ironSource special general meeting, and Unity stockholders should carefully consider the risks set out in that section before deciding how to vote with respect to the Unity issuance proposal and the Unity adjournment proposal being considered and voted on at the Unity special meeting. For additional information, see the sections entitled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively.
Treatment of the ironSource Equity Awards (page 139)
ironSource Options
At the effective time, each ironSource option that is outstanding and unexercised immediately prior to the effective time and held by any person who is a Continuing Service Provider, whether vested or unvested, will, without any action on the part of Unity, ironSource or the holder thereof, cease to represent a right to acquire ironSource ordinary shares and will be assumed by Unity as a Converted Option, which will be subject to, the same terms and conditions (including tax route, status of vesting and vesting schedule) as applied to the respective ironSource option immediately prior to the effective time, except that such Converted Option will (a) represent an option to acquire a number of shares of Unity common stock, rounded down to the nearest whole number of shares, equal to the product obtained by multiplying (i) the number of ironSource ordinary shares subject to such ironSource option immediately prior to the effective time, by (ii) the exchange ratio, and (b) have an exercise price per share of Unity common stock equal to the quotient obtained by dividing (i) the per share exercise price for ironSource ordinary shares subject to the corresponding ironSource option immediately prior to the effective time by (ii) the exchange ratio, rounded up to the nearest whole cent; provided, that such exercise price and number of shares of Unity common stock subject to such Converted Option that is intended to qualify as incentive stock options under Section 422 of the Code will be determined consistent with the applicable requirements of the Code.
At the effective time, each ironSource option that is outstanding and held by any individual who is not a Continuing Service Provider of ironSource will, (a) if such ironSource option is vested (taking into account any acceleration of vesting as a result of the consummation of the merger) and unexercised immediately prior to the effective time, in each case, without any action on the part of Unity, ironSource or any other person, be cancelled, with the holder of such ironSource option becoming entitled to receive at the effective time, in full satisfaction of the rights of such holder with respect thereto, the merger consideration in respect of a number of
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ironSource ordinary shares equal to the quotient obtained by dividing (a) the product of (i) the excess, if any, of the per share cash equivalent consideration (determined in accordance with the terms of the merger agreement) over the per share exercise price of such ironSource option, multiplied by (ii) the number of ironSource ordinary shares subject to such ironSource option, by (b) the per share cash equivalent consideration, less a number of shares of Unity common stock having a value equal to any applicable tax withholding obligations, or (b) if such ironSource option (i) is unvested (taking into account any acceleration of vesting as a result of the consummation of the merger) immediately prior to the effective time or (ii) has an exercise per share equal to or greater than the per share cash equivalent consideration, be cancelled immediately prior to the effective time for no consideration.
Notwithstanding the foregoing, certain ironSource options may be settled in cash or ironSource ordinary shares by ironSource immediately prior to the closing of the merger.
ironSource RSUs
At the effective time, each ironSource RSU that is outstanding and unvested immediately prior to the effective time and each ironSource RSU that is outstanding and vested immediately prior to the effective time (taking into account any acceleration of vesting as a result of the consummation of the merger) but has not been settled prior to the effective time, and, in each case, held by any person who is a Continuing Service Provider of ironSource will, without any action on the part of Unity, ironSource or the holder thereof, be assumed and converted automatically into a Converted RSU Award, with such Converted RSU Award subject to substantially the same terms and conditions (including tax route, status of vesting and vesting schedule) applicable to the respective ironSource RSUs, except that the number of shares of Unity common stock subject to such Converted RSU Award will equal to the product obtained by multiplying (i) the total number of ironSource ordinary shares subject to such ironSource RSU immediately prior to the effective time by (ii) the exchange ratio, with any fractional shares rounded up to the nearest whole share.
At the effective time, each ironSource RSU that is outstanding and held by any individual who is not a Continuing Service Provider of ironSource will (a) if such ironSource RSU is vested immediately prior to the effective time (taking into account any acceleration of vesting as a result of the consummation of the merger) but has not been settled prior to the effective time, without any action on the part of Unity, ironSource or the holder thereof, be cancelled, with the holder of such ironSource RSU becoming entitled to receive at the effective time (or such later date required by Section 409A of the Code), in full satisfaction of the rights of such holder with respect thereto, the merger consideration in respect of each ironSource ordinary share subject to such ironSource RSU immediately prior to the effective time, less a number of shares of Unity common stock having a value equal to any applicable tax withholding obligations, and (b) if such ironSource RSU is unvested (taking into account any acceleration of vesting as a result of the consummation of the merger) as of immediately prior to the effective time, be cancelled immediately prior to the effective time for no consideration.
With respect to options and RSUs granted under Section 102 of the ITO, Unity shall deposit with the trustee appointed by ironSource the Converted Options and Converted RSU Awards or any other merger consideration, in accordance with the terms and conditions of Section 102 of the ITO and an applicable tax ruling, if obtained.
Recommendation of the Unity Board of Directors and Unity’s Reasons for the Merger (page 97)
The Unity board unanimously recommends that you vote “FOR” the Unity issuance proposal and “FOR” the Unity adjournment proposal. For the factors considered by the Unity board in reaching this decision and additional information on the recommendation of the Unity board, see the section titled “The Merger— Recommendation of the Unity Board of Directors and Unity’s Reasons for the Merger” beginning on page 97.
Recommendation of the ironSource Board of Directors and ironSource’s Reasons for the Merger (page 101)
After careful consideration, the ironSource board has (i) determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable, fair to and in the best interests of ironSource and its shareholders and that, considering the financial position of the merging companies, and assuming, among other things, the accuracy of the representations and warranties of Unity and Merger Sub in the merger agreement, no reasonable concern exists that the surviving company, as a result of the merger, will be unable to fulfill the obligations of ironSource to its creditors; (ii) approved the merger agreement and the
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transactions contemplated by the merger agreement, including the merger; and (iii) resolved to direct that the merger agreement be submitted to the shareholders of ironSource for approval and adoption and recommend that the shareholders of ironSource vote in favor of the approval and adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement, all upon the terms and subject to the conditions set forth in the merger agreement. Accordingly, the ironSource board recommends that ironSource shareholders vote “FOR” the ironSource merger proposal. The directors who may be deemed to have a personal interest, as defined under the Companies Law, in the merger, did not provide a vote for adopting the foregoing resolutions. For a discussion of the factors that the ironSource board considered in determining to recommend the approval and adoption of the ironSource merger proposal, see the section titled “The Merger—Recommendation of the ironSource Board of Directors and ironSource’s Reasons for the Merger” beginning on page 101.
Opinions of Financial Advisers (pages 105 and 114)
Opinion of Unity’s Financial Adviser
Unity retained Morgan Stanley & Co. LLC (“Morgan Stanley”) to act as a financial adviser to the Unity board in connection with the proposed merger. The Unity board selected Morgan Stanley to act as its financial adviser because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. At the meeting of the Unity board on July 12, 2022, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Morgan Stanley as set forth in the written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Unity.
The full text of the written opinion of Morgan Stanley, dated as of July 12, 2022, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex B and is incorporated herein by reference. The summary of the opinion of Morgan Stanley is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read the entire opinion carefully and in its entirety. Morgan Stanley’s opinion was rendered for the benefit of the Unity board, in its capacity as such, and addressed only the fairness from a financial point of view of the exchange ratio pursuant to the merger agreement to Unity as of the date of the opinion. Morgan Stanley’s opinion did not address any other aspect of the merger or related transactions, including the relative merits of the merger as compared to any other alternative business transaction, or other alternatives, or the price at which shares of Unity common stock would trade at any time in the future. The opinion was addressed to, and rendered for the benefit of, the Unity board and was not intended to, and does not, constitute advice or a recommendation to any ironSource shareholder or Unity stockholder as to how to vote or act on any matter with respect to the merger or related transactions or any other action with respect to the transactions contemplated by the merger agreement, including the merger. For a further discussion of Morgan Stanley’s opinion, see “The Merger—Opinion of Unity’s Financial Adviser,” beginning on page 105.
Opinion of ironSource’s Financial Adviser
ironSource has retained Jefferies LLC (“Jefferies”) as its financial adviser in connection with the merger. As part of this engagement, Jefferies delivered a written opinion, dated July 11, 2022, to the ironSource board as to the fairness, from a financial point of view and as of such date, to the holders of ironSource ordinary shares of the exchange ratio provided for in the merger pursuant to the merger agreement.
The full text of Jefferies’ opinion, which describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex C to this joint proxy statement/prospectus and is incorporated here by reference. ironSource encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the ironSource board (in its capacity as such) in its evaluation of the exchange ratio from a financial point of view and did not address any other aspect of the merger or any other matter. Jefferies’ opinion did not address the relative merits of the merger or other transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to ironSource, nor did it address the underlying business decision by ironSource to engage in the merger or any term, aspect or
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implication of any other agreement entered into in connection with, or contemplated by or resulting from, the merger or otherwise. Jefferies’ opinion did not constitute a recommendation as to how the ironSource board or any security holder should vote or act with respect to the merger or any other matter. The summary of Jefferies’ opinion is qualified in its entirety by reference to the full text of Jefferies’ opinion. For a further discussion of Jefferies’ opinion, see “The Merger—Opinion of ironSource’s Financial Adviser,” beginning on page 114.
Special Meeting of Unity Stockholders (page 66)
Date, Time, Place and Purpose of the Unity Special Meeting
The Unity special meeting will be held on October 7, 2022 at 10:00 a.m., Pacific Time, via a live interactive audio webcast on the Internet. The purpose of the Unity special meeting is to consider and vote on the Unity issuance proposal and the Unity adjournment proposal. Approval of the Unity issuance proposal by Unity stockholders is a condition to the obligation of Unity and ironSource to complete the merger. Approval of the Unity adjournment proposal is not a condition to the obligation of either Unity or ironSource to complete the merger.
Unity Record Date and Outstanding Shares of Unity Common Stock
Only stockholders of record of issued and outstanding shares of Unity common stock as of the close of business on September 2, 2022 (which we refer to as the “Unity record date”) are entitled to notice of, and to vote at, the Unity special meeting or any subsequent reconvening of the Unity special meeting following any adjournments and postponements of the Unity special meeting.
As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, there were 300,469,115 shares of Unity common stock issued and outstanding and entitled to vote at the Unity special meeting. You may cast one vote for each share of Unity common stock that you held as of the close of business on the Unity record date.
A complete list of Unity stockholders entitled to vote at the Unity special meeting will be available for inspection at Unity’s principal office at 30 3rd Street, San Francisco, CA 94103 during regular business hours for a period of no less than 10 days before the Unity special meeting and during the Unity special meeting via the Unity special meeting website at http://www.virtualshareholdermeeting.com/U2022SM.
Quorum; Abstentions
A quorum of Unity stockholders is necessary for Unity to hold a valid meeting. The presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the voting power of the outstanding shares of Unity common stock entitled to vote shall constitute a quorum for the transaction of business at the Unity special meeting.
If you submit a properly executed proxy card, even if you do not vote for the proposal or vote to abstain in respect of the proposal, your shares of Unity common stock will be counted for purposes of determining whether a quorum is present for the transaction of business at the Unity special meeting.
Executed but un-voted proxies will be voted in accordance with the recommendation of the Unity board.
Required Vote to Approve the Unity Issuance Proposal
Approval of the Unity issuance proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Abstentions will have the same effect as votes “AGAINST” the proposal.
The Unity issuance proposal is described in the section titled “Proposals Submitted to Unity Stockholders” beginning on page 70.
Required Vote to Approve the Unity Adjournment Proposal
Approval of the Unity adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on such proposal. Abstentions will have the same effect as votes “AGAINST” the proposal.
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The Unity adjournment proposal is described in the section titled “Proposals Submitted to Unity Stockholders” beginning on page 70.
Voting by Unity Directors and Executive Officers; Unity Voting Agreement
As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, Unity’s current and expected directors and executive officers, and their affiliates, as a group, owned and were entitled to vote 86,064,677 shares of Unity common stock, or approximately 28.6% of the total outstanding shares of Unity common stock.
Concurrently with the execution of the merger agreement, certain Unity stockholders, including certain of Unity’s current and expected directors and officers, entered into a voting agreement with ironSource, pursuant to which, among other things, and subject to the terms and conditions of the voting agreement, each party agreed to vote, or cause to be voted, all shares of Unity common stock beneficially owned by such party, (i) in favor of the consummation of the transactions contemplated by the merger agreement, all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, such as the Unity issuance proposal and the Unity adjournment proposal, and any other transaction contemplated by the merger agreement, and (ii) against certain alternative business combination transactions described in the merger agreement, any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of Unity set forth in the merger agreement or of such Unity stockholder set forth in the Unity Voting Agreement, or any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, be inconsistent with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the Unity Voting Agreement or the merger agreement. The Unity Voting Agreement terminates upon certain events, including the termination of the merger agreement in accordance with its terms. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the shares of Unity common stock subject to the voting agreement represent approximately 28.5% of the outstanding Unity common stock. For more information, see the section titled “The Voting Agreements—Unity Voting Agreement” and Annex E to this joint proxy statement/prospectus.
Unity currently expects that all of its directors and executive officers will vote their shares “FOR” the Unity issuance proposal and “FOR” the Unity adjournment proposal.
Adjournment
If a quorum is not present or if there are not sufficient votes for the approval of the Unity issuance proposal and the Unity stockholders approve the Unity adjournment proposal, Unity expects that the Unity special meeting will be adjourned by the chairman of the Unity special meeting to solicit additional proxies. At any subsequent reconvening of the Unity special meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the Unity special meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent meeting.
Management of Unity after the Merger (page 131)
In connection with the merger, prior to the closing of the merger, (a) Unity will take all necessary corporate action so that, upon and after the closing of the merger, the size of the Unity board will be increased by three members (to a total of thirteen members), (b) Unity will designate three individuals, one of whom will be the Chief Executive Officer, in accordance with the merger agreement shortly prior to the date of this joint proxy statement/prospectus, the ironSource board resolved to designate Messrs. Shlomo Dovrat and David Kostman, as nominees to be appointed to the Unity board upon consummation of the merger, (c) Unity will designate such ironSource Nominees and (d) Unity will appoint the ironSource Nominees to the Unity board, in different classes, with such appointments effective upon the closing of the merger. Immediately following the effective time of the merger, all ten current Unity directors, Roelof Botha, Egon Durban, David Helgason, Alyssa Henry, Michelle K. Lee, John Riccitiello, Barry Schuler, Robynne Sisco, Mary Schmidt Campbell, Ph.D and Keisha Smith-Jeremie, are expected to continue as director of Unity.
Following the closing of the merger, Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer, along with other members of ironSource’s senior management team, will take on key roles in Unity's executive management team. John Riccitiello will continue to serve as Unity’s Chief Executive Officer and Unity will continue to be headquartered in San Francisco, California.
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Special General Meeting of ironSource Shareholders (page 72)
Date, Time, Place and Agenda
The ironSource special general meeting will be held at the principal executive offices of ironSource, located at 121 Menachem Begin Street, Tel Aviv, Israel, at 4:00 p.m. (Israel time), on October 7, 2022. The meeting is being held for the purpose of considering a proposal to approve the merger of ironSource with Merger Sub, a wholly owned subsidiary of Unity, including approval of the merger agreement, the merger, the merger consideration, as provided by the merger agreement, and all other transactions and arrangements contemplated under the merger agreement, in accordance with the terms of the merger agreement. We refer to this as the ironSource merger proposal.
ironSource does not currently expect there to be any other matters on the agenda at the ironSource special general meeting; however, if any other matter is properly presented at the meeting, including voting on the adjournment or postponement of the special general meeting, the persons named in the enclosed proxy card will vote upon such matters in accordance with their discretion.
ironSource Record Date
ironSource has fixed September 2, 2022 as the record date for the ironSource special general meeting. If you were a ironSource shareholder at the close of business on the ironSource record date, you are entitled to vote on matters that come before the ironSource special general meeting. There are 692,926,373 ironSource Class A ordinary shares and 333,717,320 ironSource Class B ordinary shares entitled to be voted at the ironSource special general meeting.
Required Votes
Under ironSource’s articles of association and the Companies Law, the approval of the ironSource merger proposal requires the affirmative vote of the holders of a majority of the voting power represented at the special general meetings (which will be combined into a single meeting, the ironSource special general meeting), in person or by proxy and voting thereon (excluding abstentions and broker non-votes), of each of:
the ironSource Class A ordinary shares, voting as a separate class;
the ironSource Class B ordinary shares, voting as a separate class; and
the ironSource Class A ordinary shares and ironSource Class B ordinary shares, voting together as a single class, in which the ironSource Class A ordinary shares will be entitled to one vote per share and the ironSource Class B ordinary shares will be entitled to five votes per share
At each of the foregoing three meetings that are required for approval of the ironSource merger proposal, the fulfillment of the following conditions as part of the vote that is held will be required: (i) the majority vote must include a majority of shares voted in favor of the merger proposal that are not held by (a) Unity, Merger Sub or any person or entity holding, directly or indirectly, 25% or more of the voting power or the right to appoint the chief executive officer or 25% or more of the directors of Unity or Merger Sub, (b) a person or entity acting on behalf of Unity, Merger Sub or a person or entity described in clause (a) above, or (c) a family member of, or an entity controlled by Unity, Merger Sub or any of the foregoing (each of (a), (b) and (c) above are referred to as a “Unity Affiliate”), and (ii) as required under Sections 270(4) and 275(a) of the Companies Law (due to a potential personal interest of certain shareholders of ironSource in the approval of the proposal by the respective class or combined classes of shares), the fulfillment of either of the following conditions as part of the vote that is held will be required – (x) the majority vote obtained in favor of the ironSource merger proposal also includes a majority of the shares held by shareholders who are not deemed to have a personal interest (as defined under the Companies Law) in the approval of the proposal that are voted at the applicable ironSource meeting, excluding abstentions and broker non-votes, or (y) the total number of shares held by such non-conflicted shareholders (as described in the immediately preceding bullet-point) voted against the ironSource merger proposal does not exceed 2% of the aggregate voting power in ironSource (on a per class or combined class basis).
For purposes of the foregoing conditions, a “personal interest” (i) includes an interest of any member of a shareholder’s immediate family (i.e., spouse, sibling, parent, parent’s parent, descendant, the spouse’s descendant, sibling or parent, and the spouse of each of these) or an interest of an entity with respect to which the
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shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or its voting power or has the right to appoint a director or the chief executive officer; and (ii) excludes an interest arising solely from the ownership of shares of ironSource. In determining whether a vote cast by proxy is disinterested, the conflict of interest/“personal interest” of the proxy holder is also considered and will cause that vote to be treated as the vote of an interested shareholder, even if the shareholder granting the proxy does not have a conflict of interest/personal interest in the matter being voted upon.
Under Section 268 of the Companies Law, a “controlling shareholder” is any shareholder that has the ability to direct a company’s activities (other than by means of being a director or office holder of the company) including, with respect to the ironSource merger proposal, a person who holds 25% or more of the voting rights at the general meeting of ironSource if there is no other person who holds more than 50% of the voting rights of ironSource. For these purposes, two or more persons holding voting rights in a company, each of whom has a personal interest in the approval of the transaction being brought for approval of a company’s shareholders are considered to be joint holders. A person is presumed to be a controlling shareholder if he, she or it holds or controls, by himself, herself or itself, or together with others, one-half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer. In order for your vote to be counted in respect of the ironSource merger proposal, you must affirm on the proxy card and voting instruction form that you receive that you are not a Unity Affiliate nor you have a personal interest in the vote (as described above) (by indicating “FOR” in Item 1A of the proxy card or voting instruction form). If you do not so affirm, your vote will not count towards the relevant tallies in respect of the votes on the ironSource merger proposal.
In connection with the merger, (i) certain members of the ironSource board as of the time of approval of the merger (namely, Tomer Bar-Zeev, Arnon Harish and Eyal Milrad) who serve as executive officers of ironSource, as well as certain other employees who are also shareholders of ironSource, disclosed to the ironSource board prior to the approval of the merger agreement by the board their potential personal interest in the merger (in their capacity as employees of ironSource), and advised that they expect to enter into new employment terms with Unity, which are expected to be discussed between them and Unity after the execution of the merger agreement, (ii) ironSource’s Chief Executive Officer disclosed to the ironSource board prior to the approval of the merger agreement by the board that he is expected to serve as a director on the Unity board after the merger and that such service may give rise to a personal interest, and (iii) shortly before the date of this notice, the ironSource board resolved in accordance with the merger agreement to designate Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger, and such service may give rise to a personal interest of such directors and of Viola Ventures III, LP. The aggregate voting rights of the ironSource shareholders who are deemed to have a personal interest in the merger by virtue of the foregoing are expected to exceed 25% of the total voting rights in the combined meeting of the ironSource Class A ordinary shares and ironSource Class B ordinary shares, the total voting rights in the separate class meetings of the ironSource Class A ordinary shares and ironSource Class B ordinary shares. In light of those personal interests (as described above in sub-sections (i) and (ii)), the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board, and further, the designation of Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger (as described in sub-section (iii)) was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board.
Please also see the section titled “The ironSource Special General Meeting.
Voting by ironSource Directors and Executive Officers; ironSource Voting Agreements
As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, ironSource directors and executive officers, and their affiliates, as a group, held in the aggregate approximately 20.3%, 38% and 32.9% of the issued and outstanding ironSource Class A ordinary shares, issued and outstanding ironSource Class B ordinary shares, and voting power of the combined classes, respectively.
Concurrently with the execution of the merger agreement, certain ironSource shareholders entered into the ironSource Voting Agreements. Pursuant to the ironSource Voting Agreements each ironSource shareholder has agreed, among other things, to vote or cause to be voted certain issued and outstanding ironSource ordinary
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shares beneficially owned by them and specified in such agreements at every meeting of ironSource respective shareholders during the term of the ironSource Voting Agreements (i) in favor of (A) the consummation of the transactions contemplated by the merger agreement, including the merger, (B) all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, and (C) any other transaction contemplated by the merger agreement or other matters that would reasonably be expected to facilitate the merger, including any proposal to adjourn or postpone any meeting of the ironSource shareholders to a later date if there are not sufficient votes to approve the adoption of the merger agreement; and (ii) against (A) certain alternative business combination transactions described in the merger agreement; (B) any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of ironSource set forth in the merger agreement or of the ironSource shareholder set forth in the ironSource Voting Agreement; or (C) any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the ironSource Voting Agreements or the merger agreement. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the ironSource ordinary shares that are subject to the ironSource Voting Agreements consist of approximately 37.5% of the issued and outstanding ironSource Class A ordinary shares, approximately 36.5% of the issued and outstanding ironSource Class B ordinary shares and approximately 37% of the issued and outstanding voting right of the combined ironSource Class A ordinary shares and Class B ordinary shares. For more information, see the section titled “Voting Agreements—ironSource Voting Agreements” and Annex D to this joint proxy statement/prospectus.
ironSource currently expects that all of its directors and executive officers will vote their shares “FOR” the ironSource merger proposal.
Adjournment
If within one-half hour from the time appointed for the holding of the meeting a quorum is not present, the meeting shall be adjourned to October 14, 2022, at the same time and place. At any such adjourned meeting, any shareholder (not in default under the ironSource articles of association) present in person or by proxy, shall constitute a quorum.
Interests of Unity Directors and Executive Officers in the Merger (page 131)
In considering the recommendation of the Unity board with respect to the Unity issuance proposal, Unity stockholders should be aware that the directors and executive officers of Unity have interests in the merger that may be different from, or in addition to, the interests of Unity stockholders generally. These interests are described in more detail in the section titled “The Merger—Interests of Unity’s Directors and Executive Officers in the Merger” beginning on page 131. The members of the Unity board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, in unanimously approving the merger agreement and in determining to recommend that Unity stockholders approve the Unity issuance proposal.
Interests of ironSource Directors and Executive Officers in the Merger (page 133)
When considering the recommendation by the ironSource board to vote “FOR” the ironSource merger proposal, you should be aware that directors and executive officers of ironSource have certain interests in the merger that may be different from, or in addition to, the interests of ironSource shareholders generally, including:
Each of Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer, Arnon Harish, ironSource’s President, and Eyal Milrad, ironSource’s Chief Strategy Officer, who were directors of ironSource at the time that the merger was considered by the ironSource board, as well as the other executive officers of ironSource, is anticipated to agree with Unity on new employment terms for his employment, post-merger.
Also, in accordance with the merger agreement, Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer is expected to be appointed to the Unity board upon consummation of the merger, and further, in accordance with the merger agreement shortly prior to the date of this joint proxy statement/prospectus, the ironSource board resolved to designate Messrs. Shlomo Dovrat and David Kostman, as nominees to be appointed to the Unity board upon consummation of the merger and in this respect may be eligible to compensation as generally provided by Unity to its non-executive board members.
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In addition, it is noted that the former and current directors and officers of ironSource will be entitled to continued indemnification and the continuation of directors’ and officers’ liability insurance for a period of seven years after the merger and that outstanding ironSource options and ironSource RSUs that are held by ironSource’s executive officers and directors—just like ironSource options and ironSource RSUs held by other employees or service providers—will be entitled to receive merger consideration to the extent described under the section titled “—Treatment of the ironSource Equity Awards”.
Further, directors and officers of ironSource who are Continuing Service Providers (like all other Continuing Service Providers) will be entitled, for the initial 12-month period after the closing of the merger, to at least as favorable employment terms at Unity as were in effect for them at ironSource prior to the merger, including wage rate or base salary, severance rights and employee benefits (including cash bonus opportunities, retirement, health and welfare benefits, but excluding equity incentive compensation and change in control or retention bonuses), and will furthermore be credited, under Unity’s employee benefit plans, for their years of service accumulated under the corresponding ironSource employee benefit plans.
As of the ironSource record date for the ironSource special general meeting, the directors and executive officers of ironSource held in the aggregate approximately 20.3%, 38% and 32.9% of the issued and outstanding ironSource Class A ordinary shares, issued and outstanding ironSource Class B ordinary shares, and voting power of the combined classes, respectively.
In light of the above interests of Tomer Bar-Zeev, ironSource’s Chairman and Chief Executive Officer, Arnon Harish, ironSource’s President, and Eyal Milrad ironSource’s Chief Strategy Officer, the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board.
See “Security Ownership of Certain Beneficial Owners and Management of ironSource” and “The Merger—Interests of ironSource’s Directors and Executive Officers in the Merger.
Listing of Shares of Unity Common Stock; Delisting and Deregistration of ironSource Ordinary Shares (page 136)
If the merger is completed, the shares of Unity common stock to be issued in the merger will be listed for trading on the NYSE, ironSource ordinary shares will be delisted from the NYSE and deregistered under the Exchange Act, and ironSource will no longer be required to file periodic reports with the SEC pursuant to the Exchange Act.
Conditions to the Completion of the Merger (page 163)
Conditions to Each Party’s Obligations
The respective obligations of each party to consummate the merger will be subject to the satisfaction on or prior to the closing date of each of the following conditions, any of which may be waived in whole or in part by Unity, Merger Sub and ironSource, as the case may be, to the extent permitted by applicable law:
ironSource shareholder approval and Unity stockholder approval. The Unity issuance proposal must have been approved by the requisite majority at the Unity special meeting (the “Unity stockholder approval”) and the ironSource merger proposal must have been approved by the requisite majorities of the class and combined meetings to be held at the ironSource special general meeting (the “ironSource shareholder approval”).
NYSE Listing. The shares of Unity common stock to be issued in the merger will have been approved for listing on the NYSE (or any successor inter-dealer quotation system or stock exchange thereto) subject to official notice of issuance.
Registration Statement. The registration statement of which this joint proxy statement/prospectus forms a part will have become effective under the Securities Act and will not be the subject of any stop order or any proceedings by the SEC seeking a stop order.
Government Consents. The waiting period (or extensions thereof) under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) relating to the transactions contemplated by the merger agreement will have expired or been terminated.
No Legal Prohibition. No governmental entity of competent jurisdiction will have (i) enacted, issued or promulgated any law that is in effect as of immediately prior to the effective time or (ii) issued or
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granted any order or injunction (whether temporary, preliminary or permanent) that is in effect as of immediately prior to the effective time, in each case, which has the effect of restraining, enjoining or otherwise prohibiting the consummation of the merger.
ISA No-Action Letter; Dual-Listing. Unity will have obtained either the ISA No-Action Letter or a Dual Listing Permit (each as defined in “The Merger Agreement” beginning on page 161). Unity obtained the ISA No-Action Letter on August 22, 2022.
Israeli Statutory Waiting Periods. At least 50 days will have elapsed after the filing of the ironSource merger proposal with the Companies Registrar of the State of Israel (referred to as the “Companies Registrar”) and at least 30 days will have elapsed after the ironSource shareholder approval and the approval by the sole shareholder of Merger Sub.
Conditions to Obligations of Unity and Merger Sub
The obligations of Unity and Merger Sub to consummate the merger will be subject to the satisfaction on or prior to the closing date of each of the following conditions, any of which may be waived in whole or in part by Unity and Merger Sub, as the case may be, to the extent permitted by applicable law:
Representations and Warranties of ironSource. The accuracy of representations and warranties of ironSource will be true and correct, subject in some instances to materiality or “material adverse effect” qualifiers, at and as of the effective date of the merger (other than representations that by their terms speak specifically as of another date or period of time).
Performance of Obligations of ironSource. The obligations, covenants and agreements of ironSource to be performed on or before the closing in accordance with the merger agreement will have been performed in all material respects.
No ironSource Material Adverse Effect. An ironSource material adverse effect (as defined in the merger agreement) will not have occurred on or after the date of the merger agreement that is continuing.
ironSource Officer’s Certificate. Unity will have received a certificate, dated as of the closing date, signed by the Chief Executive Officer or Chief Financial Officer of ironSource certifying that each of the foregoing conditions has been satisfied.
Israeli Tax Withholding. The receipt of a written ruling, confirmation or instruction of the ITA with respect to certain Israeli tax withholding obligations with respect to holders of ironSource ordinary shares.
Conditions to Obligations of ironSource
The obligations of ironSource to consummate the merger will be subject to the satisfaction on or prior to the closing date of each of the following conditions, any of which may be waived in whole or in part by ironSource to the extent permitted by applicable law:
Representations and Warranties of Unity and Merger Sub. The accuracy of the representations and warranties of Unity and Merger Sub will be true and correct, subject in some instances to materiality or “material adverse effect” qualifiers, at and as of the effective date of the merger (other than representations that by their terms speak specifically as of another date or period of time).
Performance of Obligations of Unity. The obligations, covenants and agreements of Unity and Merger Sub to be performed on or before the closing in accordance with the merger agreement will have been performed in all material respects.
No Unity Material Adverse Effect. A Unity material adverse effect (as defined in the merger agreement) will not have occurred on or after the date of the merger agreement that is continuing.
Unity Officer’s Certificate. ironSource will have received a certificate, dated as of the closing date, signed by the Chief Executive Officer or Chief Financial Officer of Unity certifying that each of the foregoing conditions has been satisfied.
Israeli Tax Ruling. ironSource will have received certain tax rulings from the ITA, as described in the merger agreement.
ironSource Nominees Appointment. Unity shall have complied in all respects with its obligations with respect to the ironSource nominees, as described in the merger agreement.
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Lock Up Undertakings. If required pursuant to the merger agreement, the agreements of certain shareholders of ironSource and certain stockholders of Unity containing certain restrictions on dispositions of their respective shares of Unity common stock shall be in full force and effect and not terminated or rescinded by the signatories thereto.
For more information, see “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 163.
No Solicitation; Changes of Recommendation (page 152)
No Solicitation by ironSource
ironSource has agreed that, between the date of the merger agreement and the earlier of the effective time or the date, if any, on which the merger agreement is validly terminated, ironSource will not, and will cause its controlled affiliates and its and their respective directors, officers and employees not to, and will instruct its and its controlled affiliates’ respective other representatives not to, directly or indirectly:
solicit, initiate or knowingly encourage or facilitate (including by way of providing non-public information) any inquiry, proposal or offer, or the making, submission or announcement of any inquiry, proposal or offer, which constitutes or would reasonably be expected to lead to a ironSource Acquisition Proposal (as such term is defined in the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals” beginning on page 156) (subject to certain exceptions contained in the merger agreement);
participate in any negotiations regarding, or furnish to any person any non-public information relating to, ironSource or any ironSource subsidiary in connection with an actual or potential ironSource Acquisition Proposal;
adopt, approve, endorse or recommend, or propose to adopt, approve, endorse or recommend, any ironSource Acquisition Proposal;
withdraw, change, amend, modify or qualify, or propose to withdraw, change, amend, modify or qualify, in a manner adverse to Unity, the recommendation of the ironSource board that ironSource shareholders provide the ironSource shareholder approval;
if an ironSource Acquisition Proposal has been publicly disclosed, fail to publicly recommend against any such ironSource Acquisition Proposal within ten business days after the public disclosure of such ironSource Acquisition Proposal (or subsequently withdraw, change, amend, modify or qualify, in a manner adverse to Unity, such rejection of such ironSource Acquisition Proposal) and reaffirm the recommendation of the ironSource board that ironSource shareholders provide the ironSource shareholder approval within such ten business day period (or, if earlier, by the second business day prior to the ironSource special general meeting);
fail to include the recommendation of the ironSource board that ironSource shareholders provide the ironSource shareholder approval in this joint proxy statement/prospectus;
approve, or authorize, or cause ironSource or any ironSource subsidiary to enter into, any merger agreement, acquisition agreement, letter of intent, memorandum of understanding, agreement in principal, option agreement, joint venture agreement, partnership agreement or similar agreement or document providing for, any ironSource Acquisition Proposal (other than certain acceptable confidentiality agreements described in the merger agreement);
call or convene a general meeting of ironSource shareholders to consider a proposal that would reasonably be expected to materially impair, prevent or delay the consummation of the transactions contemplated by the merger agreement; or
resolve or agree to do any of the foregoing (any act described in the third through ninth bullets above is referred to as an “ironSource Change of Recommendation”).
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Exceptions to No Solicitation by ironSource
Notwithstanding the limitations contained in the merger agreement, prior to the ironSource shareholder approval being obtained (in each case, subject to certain limitations contained in the merger agreement):
if ironSource receives an unsolicited, bona fide, written ironSource Acquisition Proposal that did not result from a breach of the merger agreement, which the ironSource board determines in good faith after consultation with ironSource’s outside legal counsel and financial advisers (i) constitutes an ironSource Superior Proposal (as such term is defined in the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals” beginning on page 156) or (ii) would reasonably be expected to result in an ironSource Superior Proposal and, in each case, that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Israeli law (provided, however, that in order to determine the appropriate standards that would apply to such fiduciary duties, the ironSource board may also consider and act on the basis of the fiduciary duties owed by a board of directors to the shareholders of a company under Delaware law), then ironSource may take the following actions:
furnish nonpublic information with respect to ironSource and its subsidiaries to the person making such ironSource Acquisition Proposal (subject to certain confidentiality provisions described in the merger agreement)), and
engage in discussions or negotiations with such person with respect to such ironSource Acquisition Proposal; and
the ironSource board may (in each case, subject to certain limitations and notice provisions contained in the merger agreement):
make an ironSource Change of Recommendation in response to certain intervening material events described in the merger agreement if the ironSource board has determined in good faith after consultation with ironSource’s outside legal counsel and financial advisers that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Israeli law (provided, however, that in order to determine the appropriate standards that would apply to such fiduciary duties, the ironSource board may also consider and act on the basis of the fiduciary duties owed by a board of directors to the shareholders of a company under Delaware law); provided that:
prior to ironSource taking any such action, ironSource will provide Unity with four business days’ prior written notice advising Unity that the ironSource board intends to effect a ironSource Change of Recommendation and specifying, in reasonable detail, the reasons therefor, and during such four business day period, ironSource will cause its representatives (including its executive officers) to negotiate in good faith (to the extent Unity desires to negotiate) any proposal by Unity to amend the terms and conditions of the merger agreement in a manner that would obviate the need to effect a ironSource Change of Recommendation and at the end of such four business day period the ironSource board again makes the determination to make such ironSource Change of Recommendation (after in good faith taking into account any amendments proposed by ironSource); or
make an ironSource Change of Recommendation and cause ironSource to terminate the merger agreement in order to enter into an acquisition agreement providing for an unsolicited ironSource Acquisition Proposal received after the date of the merger agreement (which did not result from a breach of the merger agreement and such ironSource Acquisition Proposal is not withdrawn) if the ironSource board determines in good faith after consultation with ironSource’s outside legal counsel and financial advisers that such ironSource Acquisition Proposal constitutes an ironSource Superior Proposal, but only if the ironSource board has determined in good faith after consultation with ironSource’s outside legal counsel and financial advisers that failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Israeli Law (provided, however, that in order to determine the appropriate standards that would apply to such fiduciary duties, the ironSource board may also consider and act on the basis of the fiduciary duties owed by a board of directors to the shareholders of a company under Delaware law); provided that:
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prior to ironSource taking any such action, ironSource will provide Unity with four business days’ prior written notice advising Unity that the ironSource board intends to take such action and specifying the material terms and conditions of the ironSource Acquisition Proposal, including a copy of any proposed definitive documentation, and during such four business day period, ironSource will cause its representatives (including its executive officers) to negotiate in good faith (to the extent Unity desires to negotiate) any proposal by Unity to amend the terms and conditions of the merger agreement such that such ironSource Acquisition Proposal would no longer constitute a ironSource Superior Proposal and at the end of such four business day period the ironSource board again makes such ironSource Change of Recommendation (after in good faith taking into account the amendments proposed by Unity).
No Solicitation by Unity
Unity has agreed that, between the date of the merger agreement and the earlier of the effective time or the date, if any, on which the merger agreement is validly terminated, Unity will not, and will cause its controlled affiliates and its and their respective directors, officers and employees not to, and will instruct its and its controlled affiliates’ respective other representatives not to, directly or indirectly:
solicit, initiate or knowingly encourage or facilitate (including by way of providing non-public information) any inquiry, proposal or offer, or the making, submission or announcement of any inquiry, proposal or offer, which constitutes or would reasonably be expected to lead to a Unity Acquisition Proposal ((as such term is defined in the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals” beginning on page 156)) (subject to certain exceptions contained in the merger agreement);
participate in any negotiations regarding, or furnish to any person any non-public information relating to, Unity or any Unity subsidiary in connection with an actual or potential Unity Acquisition Proposal;
adopt, approve, endorse or recommend, or propose to adopt, approve, endorse or recommend, any Unity Acquisition Proposal;
withdraw, change, amend, modify or qualify, or propose to withdraw, change, amend, modify or qualify, in a manner adverse to ironSource, the recommendation of the Unity board that Unity stockholders provide the Unity stockholder approval;
if a Unity Acquisition Proposal has been publicly disclosed, fail to publicly recommend against any such Unity Acquisition Proposal within ten business days after the public disclosure of such Unity Acquisition Proposal (or subsequently withdraw, change, amend, modify or qualify, in a manner adverse to ironSource, such rejection of such Unity Acquisition Proposal) and reaffirm the recommendation of the Unity board that Unity stockholders provide the Unity stockholder approval within such ten business day period (or, if earlier, by the second business day prior to the Unity special meeting);
fail to include the recommendation of the Unity board that stockholders provide the Unity stockholder approval in this joint proxy statement/prospectus;
approve, or authorize, or cause Unity or any Unity subsidiary to enter into, any merger agreement, acquisition agreement, letter of intent, memorandum of understanding, agreement in principal, option agreement, joint venture agreement, partnership agreement or similar agreement or document providing for, any Unity Acquisition Proposal (other than certain acceptable confidentiality agreements described in the merger agreement);
call or convene a general meeting of the stockholders of Unity to consider a proposal that would reasonably be expected to materially impair, prevent or delay the consummation of the transactions contemplated by the merger agreement; or
resolve or agree to do any of the foregoing (any act described in the third through ninth bullets above is referred to as a “Unity Change of Recommendation”).
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Exceptions to No Solicitation by Unity
Notwithstanding the limitations contained in the merger agreement, prior to the Unity stockholder approval being obtained (in each case, subject to certain limitations contained in the merger agreement):
if Unity receives an unsolicited, bona fide, written Unity Acquisition Proposal that did not result from a breach of the merger agreement, which the Unity board determines in good faith after consultation with Unity’s outside legal counsel and financial advisers (i) constitutes a Unity Superior Proposal (as such term is defined in the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals”) or (ii) would reasonably be expected to result in a Unity Superior Proposal and, in each case, that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Delaware law, then Unity may take the following actions:
furnish nonpublic information with respect to Unity and its subsidiaries to the person making such Unity Acquisition Proposal (subject to certain confidentiality provisions described in the merger agreement); and
engage in discussions or negotiations with such person with respect to such Unity Acquisition Proposal.
the Unity board may (in each case, subject to certain limitations and notice requirements contained in the merger agreement):
make a Unity Change of Recommendation in response to certain intervening material events described in the merger agreement if the Unity board has determined in good faith after consultation with Unity’s outside legal counsel and financial advisers that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Delaware law; provided that:
prior to Unity taking any such action, Unity will provide ironSource with four business days’ prior written notice advising ironSource that the Unity board intends to effect a Unity Change of Recommendation and specifying, in reasonable detail, the reasons therefor, and during such four business day period, Unity will cause its representatives (including its executive officers) to negotiate in good faith (to the extent ironSource desires to negotiate) any proposal by ironSource to amend the terms and conditions of the merger agreement in a manner that would obviate the need to effect a Unity Change of Recommendation and at the end of such four business day period the Unity board again makes the determination to make such Unity Change of Recommendation (after in good faith taking into account any amendments proposed by ironSource); or
make a Unity Change of Recommendation and cause Unity to terminate the merger agreement in order to enter into a Unity acquisition agreement providing for an unsolicited Unity Acquisition Proposal received after the date of the merger agreement (which did not result from a breach of the merger agreement and such Unity Acquisition Proposal is not withdrawn) if the Unity board determines in good faith after consultation with Unity’s outside legal counsel and financial advisers that such Unity Acquisition Proposal constitutes a Unity Superior Proposal, but only if the Unity board has determined in good faith after consultation with Unity’s outside legal counsel and financial advisers that failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Delaware law; provided that:
prior to Unity taking any such action, Unity will provide ironSource with four business days’ prior written notice advising ironSource that the Unity board intends to take such action and specifying the material terms and conditions of the Unity Acquisition Proposal, including a copy of any proposed definitive documentation, and during such four business day period, Unity will cause its representatives (including its executive officers) to negotiate in good faith (to the extent ironSource desires to negotiate) any proposal by ironSource to amend the terms and conditions of the merger agreement such that such Unity Acquisition Proposal would no
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longer constitute a Unity Superior Proposal and at the end of such four business day period the Unity board again makes such Unity Change of Recommendation (after in good faith taking into account the amendments proposed by ironSource).
Termination of the Merger Agreement (page 166)
The merger agreement may be terminated and the merger and the other transactions contemplated thereby may be abandoned at any time before the closing by mutual written consent of Unity and ironSource and as follows (with any termination by Unity also being an effective termination by Merger Sub):
By mutual written consent of ironSource and Unity.
By either ironSource or Unity:
if a governmental entity of competent jurisdiction issues a final, non­appealable order, injunction, decree or ruling in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement; or
if the closing has not occurred on or before the Outside Date (as defined in the merger agreement), subject to certain exceptions described in the merger agreement; or
if the required ironSource shareholder approval or the Unity stockholder approvals are not obtained at the ironSource special general meeting of shareholders or the Unity special meeting of stockholders, respectively; or
By ironSource:
in the event that (A) Unity and/or Merger Sub breaches, fails to perform or violates their respective covenants or agreements under the merger agreement or (B) any of the representations and warranties of Unity or Merger Sub set forth in the merger agreement becomes inaccurate, in either case subject to certain exceptions and qualifications described in the merger agreement, and such breach, failure to perform, violation or inaccuracy is not capable of being cured by the Outside Date or, if capable of being cured by the Outside Date, is not cured by Unity or Merger Sub, as applicable, before the date set forth in the merger agreement, provided that ironSource will not have the right to terminate the merger agreement if ironSource is then in breach of any of its representations, warranties, covenants or agreements contained in the merger agreement, which breach would give rise to the failure of certain closing conditions set forth in the merger agreement; or
if (i) prior to obtaining approval of the Unity issuance proposal, the Unity board effects a Unity Change of Recommendation, or (ii) Unity has materially breached the section of the merger agreement describe under “The Merger AgreementNo Solicitation; Changes of Recommendation—No Solicitation by Unity”; or
prior to obtaining approval of the ironSource merger proposal, effect an ironSource Change of Recommendation and substantially concurrently enter into a definitive agreement providing for a ironSource Superior Proposal; provided that (x) ironSource has complied in all material respects with the terms of the section of the merger agreement described under “The Merger AgreementNo Solicitation; Changes of RecommendationNo Solicitation by ironSource and (y) substantially concurrently with or prior to (and as a condition to) the termination of the merger agreement, ironSource pays to Unity the ironSource Termination Fee described below under “The Merger AgreementTerminationTermination Fees”; or
By Unity:
in the event that (A) ironSource breaches, fails to perform or violates its covenants or agreements under the merger agreement or (B) any of the representations and warranties of ironSource set forth in the merger agreement become inaccurate, in either case subject to certain exceptions and qualifications described in the merger agreement, and such breach, failure to perform, violation or inaccuracy is not capable of being cured by the Outside date, or if capable of being cured by the Outside Date, is not cured by ironSource before the date set forth in the merger agreement, provided that Unity will not have the right to terminate the merger agreement if Unity or Merger
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Sub, as applicable, is then in breach of any of its representations, warranties, covenants or agreements contained in the merger agreement, which breach would give rise to the failure of certain closing conditions set forth in the merger agreement; or
if (i) prior to obtaining approval of the ironSource merger proposal, the ironSource board effects an ironSource Change of Recommendation, or (ii) ironSource has materially breached the section of the merger agreement describe under “The Merger AgreementNo Solicitation; Changes of RecommendationNo Solicitation by ironSource”; or
prior to obtaining approval of the Unity issuance proposal, effect a Unity Change of Recommendation and substantially concurrently enter into a definitive agreement providing for a Unity Superior Proposal; provided that (x) Unity has complied in all material respects with the terms of the section of the merger agreement describe under “The Merger AgreementNo Solicitation; Changes of RecommendationNo Solicitation by Unity” and (y) substantially concurrently with or prior to (and as a condition to) the termination of the merger agreement, Unity pays to ironSource the Unity Termination Fee described below under “The Merger Agreement t—Termination Fees”.
Termination Fee and Expenses (page 168)
Termination Fees Payable by Unity
If the merger agreement is terminated under specified circumstances, including because the Unity board changes its recommendation regarding the Unity issuance proposal, Unity may be required to pay ironSource a termination fee of $150.0 million.
Termination Fees Payable by ironSource
If the merger agreement is terminated under specified circumstances, including because the ironSource board changes its recommendation regarding the ironSource merger proposal, ironSource may be required to pay Unity a termination fee of $150.0 million.
Expenses
If the merger agreement is terminated because of a failure of ironSource’s shareholders or Unity’s stockholders, as applicable, to adopt and approve the proposals required to complete the merger, ironSource and Unity, as applicable, may be required to reimburse the other party for its actual transaction expenses in an amount not to exceed $20.0 million, provided that any payment of the ironSource or Unity transaction expenses shall not affect ironSource’s or Unity’s right, as the case may be, to receive any termination fee otherwise due pursuant to the merger agreement, but will reduce, on a dollar-for-dollar basis.
Appraisal Rights (page 144)
Appraisal rights, which are also sometimes known as dissenters’ rights, are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined immediately prior to the effective time of the merger in cash, instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.
Under Delaware law, Unity stockholders are not entitled to appraisal rights in connection with the merger or the issuance of shares of Unity common stock as contemplated by the merger agreement.
Under Israeli law, holders of ironSource ordinary shares are not entitled to statutory appraisal rights in connection with the merger.
Litigation Relating to the Merger (page 136)
On August 8, 2022, a putative class action complaint, captioned Assad v. Botha et al., Case No. 2022-0691, was filed in the Delaware Court of Chancery against Unity and the Unity board. The complaint alleges that the Unity board breached its fiduciary duties by failing to disclose all material information necessary to allow Unity stockholders to make a fully informed decision on whether to approve the issuance of new shares of Unity
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common stock as a part of Unity’s preliminary joint proxy statement/prospectus on Form S-4 filed in connection with the merger. The plaintiff is a purported Unity stockholder and seeks to represent a class of Unity stockholders who will vote in connection with the Unity issuance proposal. The complaint seeks additional disclosure and an award of attorneys’ fees, among other remedies. Unity believes this lawsuit is without merit and intends to vigorously defend the case.
Additional lawsuits arising out of the merger may be filed in the future. The defendants believe that the action discussed above is without merit and intend to defend vigorously against the pending lawsuit and any other lawsuits challenging the merger. However, there can be no assurance that defendants will be successful in the outcome of the pending or any potential future lawsuit. For more information regarding the complaints and the risks associated with these complaints pending any future litigation concerning the merger and associated risks and any other similar litigation, see the sections entitled “The Merger—Litigation Relating to the Merger” beginning on page 136 and “Risk Factors—Risk Factors Relating to the Merger— Lawsuits that have been filed or that may be filed against ironSource, Unity, Merger Sub and the members of the ironSource and/or Unity board in connection with the merger in the future, the outcome of which are uncertain, could result in an adverse ruling and/or an injunction delaying or preventing the completion of the merger and/or substantial costs to Unity and/or ironSource” beginning on page 49.
Material U.S. Federal Income Tax Consequences of the Merger (page 171)
The parties intend the merger to qualify as a “reorganization” under of Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code. Assuming the merger so qualifies, and subject to the discussion under “Material U.S. Federal Income Tax Considerations,” a U.S. Holder (as defined on page 171) generally will not recognize gain or loss for U.S. federal income tax purposes on the exchange of ironSource ordinary shares for shares of Unity common stock pursuant to the merger. If the merger does not qualify as such a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, the receipt of Unity common stock in exchange for ironSource ordinary shares in the merger would generally constitute a taxable exchange for U.S. federal income tax purposes and the corresponding tax consequences of the merger could materially differ from those described herein.
Neither Unity nor ironSource has sought, nor do they intend to seek, any ruling from the IRS, nor is the closing of the merger conditioned on the receipt of, any ruling from the IRS or any opinion of counsel with respect to the qualification of the merger as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation. Furthermore, neither Unity nor ironSource or any of their respective advisors or affiliates, makes any representations or provides any assurances regarding the tax consequences of the merger, including whether the merger qualifies as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code. For a more complete description of the U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Considerations” beginning on page 171.
Material Israeli Tax Consequences of the Merger (page 178)
Generally, the exchange of ironSource ordinary shares for the merger consideration would be treated as a sale and subject to Israeli tax both for Israeli and non-Israeli resident shareholders of ironSource. However, certain relief and/or exemptions may be available under Israeli law or under applicable tax treaties. In addition, ironSource, with the assistance of Unity, has submitted an application for a ruling from the ITA confirming that (i) the exchange of ironSource ordinary shares for the merger consideration as a tax free reorganization pursuant to Section 103K of the ITO, and (ii) as such, no withholding is required, all subject to the conditions to be detailed in such ruling. Obtaining the 103K tax ruling is a closing condition to the consummation of the merger.
This joint proxy statement/prospectus contains a discussion of the material Israeli income tax consequences of the merger and the ownership and disposition of Unity common stock received in the merger. This discussion does not address any non-Israel tax consequences. You should consult your own tax advisors regarding the particular Israeli income tax consequences to you of the merger and of the ownership and disposition of Unity common stock received in the merger in light of your particular circumstances, as well as the particular tax consequences to you under any other tax laws.
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Accounting Treatment of the Merger (page 136)
Unity and ironSource prepare their respective financial statements in accordance with accounting principles generally accepted in the United States (which we refer to as “GAAP”). The accounting guidance for business combinations requires the use of the acquisition method of accounting for the merger, which requires the determination of the acquirer, the purchase price, the acquisition date, the fair value of assets and liabilities of the acquiree and the measurement of goodwill. Unity will be treated as the acquirer for accounting purposes.
Comparison of Rights of Stockholders of Unity and Shareholders of ironSource (page 200)
The rights of ironSource shareholders who receive shares of Unity common stock in the merger will be governed by the amended and restated certificate of incorporation of Unity (which we refer to as the “Unity charter”), and the amended and restated bylaws of Unity (which we refer to as the “Unity bylaws”), which are both governed by Delaware law, rather than by the amended and restated articles of association of ironSource (which we refer to as the “ironSource articles of association”), which are governed by Israeli law. As a result, ironSource shareholders will have different rights once they become Unity stockholders due to the differences in the organizational documents of ironSource and Unity and the differences between Israeli and Delaware law. The key differences are described in the section titled “Comparison of Rights of Stockholders of Unity and Shareholders of ironSource” beginning on page 200.
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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined financial data was prepared using the acquisition method of accounting with Unity as the accounting acquirer. The selected unaudited pro forma condensed combined balance sheet data assumes the merger of Unity and ironSource took place on June 30, 2022. The selected unaudited pro forma condensed combined statements of operations data assumes the merger of Unity and ironSource took place on January 1, 2021.
The following selected unaudited pro forma condensed combined financial data is for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section titled “Risk Factors.” The following selected unaudited pro forma condensed combined financial data should be read in conjunction with the sections titled “The Merger Agreement” and Unaudited Pro Forma Condensed Combined Financial Information” and related notes included in this joint proxy statement/prospectus.
Selected Unaudited Pro Forma Condensed Combined Statement of
Operations Data (In thousands, except per share amounts)
Six months
ended
June 30,
2022
Year ended
December 31,
2021
Revenue
992,876
1,660,432
Net loss
(412,077)
(709,356)
Net loss per share attributable to common stockholders:
 
 
Basic
(1.01)
(1.80)
Diluted
(1.01)
(1.80)
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data (in thousands)
As of
June 30,
2022
Total assets
10,131,584
 
Total liabilities
3,152,826
 
Total stockholder’s equity
6,978,758
 
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA AND
PER SHARE FINANCIAL INFORMATION
The following tables summarize selected per share data for (i) Unity and ironSource for the six months ended June 30, 2022, in each case, on an unaudited historical basis, and audited historical financial information of Unity and ironSource for the year ended December 31, 2021, (ii) Unity for the six months ended June 30, 2022 and the year ended December 31, 2021 on an unaudited pro forma combined basis giving effect to the merger using the acquisition method of accounting and (iii) ironSource for the six months ended June 30, 2022 and the year ended December 31, 2021 on an unaudited pro forma equivalent basis based on the exchange ratio of 0.1089 of a share of Unity common stock per share for ironSource ordinary shares.
The following table reflects historical information about basic and diluted net income per share attributable to common stockholders for the six months ended June 30, 2022 and the year ended December 31, 2021, in the case of Unity and ironSource, and the book value per Unity common share and ironSource ordinary share as of June 30, 2022 in the case of Unity and ironSource, in each case, on a historical basis, and for the combined company on an unaudited pro forma condensed combined basis after giving effect to the merger. The pro forma data of the combined company assumes the merger was completed on January 1, 2021 and was derived by combining the historical consolidated financial information of Unity and ironSource. For a discussion of the assumptions and adjustments made in preparing the unaudited pro forma combined financial information presented in this document, see the section titled “Unaudited Pro Forma Condensed Combined Financial Information.”
The unaudited pro forma per share data below is presented for illustrative purposes only. The pro forma adjustments to the statement of operations data are based on the assumption that the merger was completed on January 1, 2021, and the pro forma adjustments to the balance sheet data are based on the assumption that the merger was completed on June 30, 2022.
Either company’s actual historical financial condition and results of operations may have been different had the companies always been combined. You should not rely on this information as being indicative of the historical financial condition and results of operations that would have actually been achieved or of the future results of Unity after the completion of the merger.
You should read the information below together with the historical consolidated financial statements and related notes of Unity and ironSource as of and for the applicable periods, which have been incorporated by reference into this joint proxy statement/prospectus, along with the information in the section titled “Unaudited Pro Forma Condensed Combined Financial Information” and related notes included in this joint proxy statement/prospectus.
 
Unity
ironSource
 
Historical
Pro Forma
Combined
Historical
Pro Forma
Equivalent(1)
Net Income (loss) per share
 
 
 
 
Basic
 
 
 
 
Six months ended June 30, 2022
(1.29)
(1.01)
0.03
(0.11)
The year ended December 31, 2021
(1.89)
(1.80)
0.07
(0.20)
Diluted
 
 
 
 
Six months ended June 30, 2022
(1.29)
(1.01)
0.02
(0.11)
The year ended December 31, 2021
(1.89)
(1.80)
0.06
(0.20)
Book Value per Share
 
 
 
 
As of June 30, 2022
7.72
17.12
1.16
1.86
(1)
The pro forma equivalent per share information of ironSource is calculated by multiplying the pro forma combined per share information of Unity by the exchange ratio of 0.1089.
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COMPARATIVE MARKET PRICES AND DIVIDEND INFORMATION
Unity’s common stock trades on the NYSE under the symbol “U.” ironSource’s Class A ordinary shares are listed on the NYSE under the symbol “IS.” The table below sets forth the closing prices per share of Unity common stock as reported on the NYSE and ironSource Class A ordinary shares as reported on the NYSE, in each case as of (i) July 12, 2022, the last full trading day before the boards of directors of Unity and ironSource approved the execution of the merger agreement by Unity and ironSource, and (ii) September 2, 2022, the latest practicable trading day before the date of this joint proxy statement/prospectus. The ironSource pro forma equivalent closing share price is equal to the closing price of a share of Unity common stock on each such date multiplied by 0.1089, which is the exchange ratio rounded up or down to the nearest cent.
 
Unity
Common Stock
ironSource
Class A
Ordinary Shares
ironSource
Pro Forma
Equivalent
July 12, 2022
$39.76
$2.23
$4.33
September 2, 2022
$40.79
$3.84
$4.44
The market price of Unity common stock and ironSource Class A ordinary shares will fluctuate between the date of this joint proxy statement/prospectus and the effective time of the merger.
Following the transaction, Unity common stock will continue to be listed on the NYSE and, until the completion of the merger, ironSource Class A ordinary shares will continue to be listed on the NYSE.
As of September 2, 2022, the record date for the Unity annual meeting, there were approximately 354 holders of record of Unity common stock.
As of September 2, 2022, the record date for the ironSource special general meeting, there were approximately 133 holders of record of ironSource Class A ordinary shares and 71 holders of record of ironSource Class B ordinary shares.
Dividends
Unity has never declared or paid any cash dividends on Unity common stock and does not anticipate paying cash dividends on Unity common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the merger will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.
ironSource does not anticipate paying cash dividends on ironSource ordinary shares for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the merger will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.
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RISK FACTORS
In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 63, ironSource shareholders should carefully consider the following risks before deciding how to vote with respect to the ironSource merger proposal to be considered and voted on at the ironSource special general meeting, and Unity stockholders should carefully consider the following risks before deciding how to vote with respect to the Unity issuance proposal and the adjournment proposal to be considered and voted on at the Unity special meeting. In addition, ironSource shareholders and Unity stockholders should also read and consider the risks associated with each of the businesses of ironSource and Unity because these risks will also affect the combined company. These risks can be found in ironSource’s Annual Report on Form 20-F for the year ended December 31, 2021 and its subsequent Current Reports on Form 6-K and other documents it files with the SEC and in Unity’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022 and other documents it files with the SEC, in each case incorporated by reference into this joint proxy statement/prospectus. ironSource shareholders and Unity stockholders should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. For additional information, see the sections entitled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively.
Risk Factors Relating to the Merger
The merger consideration is fixed and will not be adjusted. Because the market price of Unity common stock may fluctuate, ironSource shareholders cannot be sure of the market value of the stock consideration they will receive in exchange for their ironSource ordinary shares in connection with the transactions.
In connection with the merger, each ironSource ordinary share issued and outstanding immediately prior to the effective time of the merger (subject to certain exceptions set forth in the merger agreement) will be converted into the right to receive 0.1089 of a share of Unity common stock, rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes. Accordingly, the market value of the stock consideration that ironSource shareholders will receive will vary based on the price of Unity common stock at the time ironSource shareholders receive the merger consideration. The market price of Unity common stock may decline after the date of this joint proxy/prospectus, after ironSource shareholders exchange their shares and/or after the closing of the merger.
A decline in the market price of Unity common stock could result from a variety of factors beyond Unity’s control, including, among other things, the possibility that Unity may not achieve the expected benefits of the merger with ironSource as rapidly or to the extent anticipated, ironSource’s business may not perform as anticipated following the closing of the merger, the effect of Unity’s merger with ironSource on Unity’s financial results may not meet the expectations of Unity, financial analysts or investors, or the addition and integration of ironSource’s business may be unsuccessful, may take longer or be more disruptive than anticipated, as well as numerous factors affecting Unity and its businesses that are unrelated to ironSource.
If the merger is completed, there will be a lapse of time between each of the date of this joint proxy statement/prospectus, the date on which ironSource shareholders vote to approve the ironSource merger proposal at the ironSource special general meeting, and the date on which ironSource shareholders entitled to receive the merger consideration actually receive the merger consideration. The market value of shares of Unity common stock may decline during and after these periods as a result of a variety of factors and, consequently, at the time that ironSource shareholders must decide whether to approve the ironSource merger proposal they will not know the actual market value of the merger consideration they will receive when the merger is completed. The actual value of the merger consideration received by ironSource shareholders at the completion of the merger will depend on the market value of the shares of Unity common stock at the time of the completion of the merger.
You are urged to obtain current market quotations for ironSource ordinary shares and for shares of Unity common stock in determining whether to vote in favor of the Unity issuance proposal, in the case of Unity stockholders, or the ironSource merger proposal, in the case of ironSource shareholders.
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If the merger is completed, ironSource shareholders will receive Unity shares as the merger consideration and will accordingly become Unity stockholders. Unity common stock may be affected by different factors than those that affect ironSource ordinary shares, and Unity stockholders will have different rights than ironSource shareholders.
Upon consummation of the transactions, ironSource shareholders will receive Unity shares as the merger consideration and will accordingly become Unity stockholders. Unity’s business differs from that of ironSource, and Unity’s results of operations and stock price may be adversely affected by factors different from those that would affect ironSource’s results of operations and share price. Following the completion of the merger, ironSource will be part of a larger company and, as a result, decisions affecting ironSource may be made in respect of the larger combined business as a whole rather than the ironSource business individually. For a discussion of the businesses of Unity and ironSource and of some important factors to consider in connection with those businesses, see the section titled “Information About the Companies” and the documents incorporated by reference in the section titled “Where You Can Find More Information,” including, in particular, in the sections titled “Risk Factors” in each of Unity’s and ironSource’s Annual Report on Form 10-K and Form 20-F, respectively, for the year ended December 31, 2021 and Unity’s subsequently filed Quarterly Reports on Form 10-Q and ironSource’s subsequently filed Reports of Foreign Private Issuer on Form 6-K and any other SEC documents they may file.
In addition, holders of shares of Unity common stock will have rights as Unity stockholders that differ from the rights they had as ironSource shareholders before the transactions. For a comparison of the rights of Unity stockholders to the rights of ironSource shareholders, see the section titled “Comparison of Rights of Stockholders of Unity and Shareholders of ironSource.”
ironSource shareholders will be forfeiting all rights with respect to their ironSource ordinary shares other than the right to receive the merger consideration, including the right to participate directly in any earnings or future growth of ironSource.
If the merger is completed, ironSource shareholders will cease to have any equity interest in ironSource and will not participate in ironSource’s earnings or any future growth, except indirectly through ownership of Unity common stock received as part of the merger consideration.
Certain of Unity’s and ironSource’s directors and officers potentially have interests in the transaction that differ from, or are in addition to, the interests of Unity stockholders and ironSource shareholders generally.
You should be aware that some of the officers and directors of Unity and ironSource may be deemed to have interests in the merger that are different from, or in addition to, your interests as a Unity stockholder or an ironSource shareholder. These interests may include, among others, new employment terms that certain officers of ironSource are expected to agree with Unity with respect to their employment after the merger, the expected appointment of the Chief Executive Officer of ironSource to serve as a director of Unity, certain agreements governing a potential private investment in Unity common stock by affiliates of certain directors of Unity, certain agreements that certain executive officers have entered into with Unity that provide for grants of Unity equity awards following the first effective time and certain indemnification obligations. For additional information, see the sections entitled “The Merger—Interests of Unity’s Directors and Executive Officers in the Merger” and “The MergerInterests of ironSource’s Directors and Executive Officers in the Merger” and “The Merger Agreement—Employee Matters.
As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, ironSource directors, executive officers, and their respective affiliates, as a group, beneficially owned approximately 20.3% of the issued and outstanding ironSource Class A ordinary shares, approximately 38% of the issued and outstanding ironSource Class B ordinary shares, and approximately 32.9% of the issued and outstanding voting right of the combined ironSource Class A ordinary shares and Class B ordinary shares.
Certain shareholders of Unity and ironSource have entered into voting agreements with Unity and ironSource, as applicable, to vote in favor of certain proposals.
Concurrently with the execution of the merger agreement, certain ironSource shareholders entered into the ironSource Voting Agreements. Pursuant to the ironSource Voting Agreements each ironSource shareholder has agreed, among other things, to vote or cause to be voted certain issued and outstanding ironSource ordinary
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shares beneficially owned and specified in such agreements by them at every meeting of those respective ironSource shareholders during the term of the ironSource Voting Agreements (i) in favor of: (A) the consummation of the transactions contemplated by the merger agreement, including the merger, (B) all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, and (C) any other transaction contemplated by the merger agreement or other matters that would reasonably be expected to facilitate the merger, including any proposal to adjourn or postpone any meeting of the ironSource shareholders to a later date if there are not sufficient votes to approve the adoption of the merger agreement; and (ii) against: (A) certain alternative business combination transactions described in the merger agreement; (B) any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of ironSource as set forth in the merger agreement or of the ironSource shareholders as set forth in the ironSource Voting Agreements; or (C) any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the ironSource Voting Agreements or the merger agreement. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the ironSource ordinary shares that are subject to the ironSource Voting Agreements consist of approximately 37.5% of the issued and outstanding ironSource Class A ordinary shares, approximately 36.5% of the issued and outstanding ironSource Class B ordinary shares and approximately 37% of the issued and outstanding voting right of the combined ironSource Class A ordinary shares and Class B ordinary shares. For more information, see the section titled “Voting Agreements—ironSource Voting Agreements” and Annex D to this joint proxy statement/prospectus.
In addition, concurrently with the execution of the merger agreement, certain Unity stockholders entered into the Unity Voting Agreement. Pursuant to the Unity Voting Agreement, such Unity stockholders have agreed, among other things, to vote or cause to be voted any issued and outstanding shares of Unity common stock beneficially owned by such stockholders, or that may otherwise become beneficially owned by them at every meeting of Unity stockholders during the term of the Unity Voting Agreement (i) in favor of: (A) the consummation of the transactions contemplated by the merger agreement, including the issuance of shares of Unity common stock, (B) all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, (C) any other transaction contemplated by the merger agreement, and (D) any proposal to adjourn or postpone any meeting of the Unity stockholders to a later date if there are not sufficient votes to approve the proposals necessary to consummate the transactions contemplated by the merger agreement; and (ii) against: (A) certain alternative business combination transactions described in the merger agreement; (B) any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of Unity as set forth in the merger agreement or of the Unity stockholders as set forth in the Unity Voting Agreement; or (C) any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the Unity Voting Agreement or the merger agreement. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the Unity stockholders subject to the Unity Voting Agreement beneficially owned approximately 28.5% of the issued and outstanding shares of Unity common stock. For more information, see the section titled “The Voting Agreements—Unity Voting Agreement” and Annex E to this joint proxy statement/prospectus.
ironSource and existing Unity stockholders will have a reduced ownership and voting interest in the combined company as compared to their existing ownership and voting interest in ironSource and Unity, respectively, and will exercise less influence over management of the combined company.
Currently, ironSource shareholders have the right to vote in the election of the ironSource board and the power to approve or reject any matters requiring shareholder approval under Israeli law and the ironSource articles of association. Upon completion of the merger, each ironSource shareholder who receives shares of Unity common stock in the merger will become a stockholder of Unity with a percentage ownership of Unity that is smaller than such ironSource shareholder’s current percentage ownership of ironSource. Based on the number of shares of Unity common stock and ironSource ordinary shares outstanding as of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, it is expected that Unity will issue approximately 111.8 million shares of Unity common stock in the merger, after which current Unity stockholders would own approximately 72.9% of the outstanding shares of Unity common stock and former ironSource shareholders would own approximately 27.1% of the outstanding shares of Unity common stock. At closing of
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the merger, on a fully diluted basis, current Unity stockholders are expected to own approximately 73.5% of the outstanding shares of Unity common stock and former ironSource shareholders are expected to own approximately 26.5% of the outstanding shares of Unity common stock.
Consequently, even if all former ironSource shareholders voted together on all matters presented to Unity stockholders from time to time, the former ironSource shareholders would exercise significantly less influence over Unity after the completion of the merger relative to their influence over ironSource prior to the completion of the merger, and thus would have a less significant impact on the approval or rejection of future Unity proposals submitted to a stockholder vote. In addition, existing Unity stockholders, as a general matter, are expected to exercise less influence over Unity after the completion of the merger relative to their influence over Unity prior to the completion of the merger.
The merger will result in changes to the Unity board and management that may affect the strategy of the combined company as compared to that of Unity and ironSource independently.
If the parties complete the merger, the composition of the Unity board and management team will change from the current board of directors and management teams of Unity. Upon completion of the merger, the Unity board will consist of thirteen members, with the current Chief Executive Officer of ironSource and two directors from the current ironSource board and ten directors from the current Unity board. The new composition of the Unity board and the management team may affect the business strategy and operating decisions of the combined company upon the completion of the merger. See “The Merger Agreement—Organizational Documents; Directors and Officers.”
Unity and ironSource will incur significant transaction and merger-related costs in connection with the merger, which may be in excess of those anticipated by Unity or ironSource.
Each of Unity and ironSource has incurred and expects to continue to incur a number of non-recurring costs associated with negotiating and completing the merger, combining the operations of the two companies and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. The substantial majority of these non-recurring expenses will consist of transaction costs related to the merger and include, among other things, employee retention costs, fees paid to financial, legal and accounting advisors, regulatory fees, exchange fees, exchange/transfer agent fees, severance and benefit costs, proxy solicitation costs and filing fees.
Unity and ironSource will also incur transaction fees and costs and restructuring costs during and/or following the completion of the merger related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the merger and the integration of ironSource’s business, which give rise to related costs. Unity and ironSource will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. While Unity has assumed that certain integration and implementation expenses would be incurred in connection with the merger and the other transactions contemplated by the merger agreement, there are many factors beyond Unity’s control that could affect the total amount or the timing of those expenses. Although Unity and ironSource each expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Unity and ironSource to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. For additional information, see the risk factor entitled “The integration of ironSource into Unity may not be as successful as anticipated” below. The costs described above, as well as other unanticipated costs and expenses are difficult to estimate and could have a material adverse effect on the financial condition and operating results of Unity following the completion of the merger. Many of these costs will be borne by Unity and/or ironSource even if the merger is not completed.
Moreover, diversion of management focus and resources from the day-to-day operation of the business to matters relating to the transactions could adversely affect each of Unity and ironSource’s business, regardless of whether the merger is completed.
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The merger is subject to the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that could have an adverse effect on Unity or ironSource or, if not obtained, could prevent completion of the transactions.
Completion of the merger is conditioned upon the receipt of certain U.S. and Israeli governmental approvals. Although each party has agreed to use its respective reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained and that the other conditions to completing the merger will be satisfied. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the merger or require changes to the terms of the merger or other agreements to be entered into in connection with the merger agreement. Under the terms of the merger agreement, Unity and ironSource are not required to litigate or consent to any agreement or understanding to divest, change or otherwise dispose of any Unity assets or portion of Unity’s business, or impose any restriction on the operation of their respective business. Unity and ironSource cannot provide any assurance that these approvals will be obtained or that there will not be any adverse consequences to Unity’s or ironSource’s business resulting from the failure to obtain these governmental approvals or from conditions that could be imposed in connection with obtaining these governmental approvals.
Completion of the merger is also conditioned upon the authorization for listing of the Unity common stock to be issued in connection with the merger on the NYSE. Although Unity has agreed to use its reasonable best efforts to obtain the requisite stock exchange approval, there can be no assurance that such approval will be obtained and that the other conditions to completing the merger will be satisfied.
Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the transaction or of imposing additional costs or limitations on the combined company following completion of the merger, any of which may have an adverse effect on the combined company and may diminish the anticipated benefits of the merger. For additional information about the regulatory approvals process, see “The Merger—Regulatory Approvals Required for the Merger.”
Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the merger.
The merger is subject to a number of conditions to closing as specified in the merger agreement. These closing conditions include, among others, the effectiveness of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part registering the issuance of shares of Unity common stock to ironSource shareholders in connection with the merger and the absence of any stop order or proceedings by the SEC with respect thereto; obtaining the requisite approvals of Unity stockholders and ironSource shareholders in connection with the merger; the expiration or earlier termination of any applicable waiting period (and any extension thereof) under the HSR Act and the Companies Law and other requisite regulatory approvals obtained or terminated, as applicable; approval for listing on the NYSE of the shares of Unity common stock to be issued in connection with the merger; obtaining either a no-action letter from the ISA or a dual listing permit for a registration statement with respect to the dual listing of Unity common stock on the TASE; obtaining the 103K tax ruling under the ITO; and the absence of governmental restraints or prohibitions preventing the consummation of the merger. The obligation of each of Unity and ironSource to complete the merger is also conditioned on, among other things, the accuracy of the representations and warranties made by the other party on the date of the merger agreement and on the closing date (subject to certain materiality and material adverse effect qualifiers), and the performance by the other party in all material respects of its obligations under the merger agreement. No assurance can be given that the required stockholder approvals and governmental and regulatory consents and approvals will be obtained or that the required conditions to closing will be satisfied. If all required consents and approvals are obtained and the required conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the merger could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Unity and ironSource expect to achieve if the merger were to be successfully completed within its expected time frame. As of the date of this joint proxy/prospectus, certain of the closing conditions have been obtained. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section titled “The Merger Agreement—Conditions to the Completion of the Merger.”
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Unity and ironSource may waive one or more conditions set forth in the merger agreement without resoliciting the approval of Unity stockholders or ironSource shareholders.
Certain conditions to Unity’s and ironSource’s obligations to complete the merger and the other transactions contemplated by the merger agreement may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of Unity and ironSource. In the event that any such waiver does not require re-solicitation of stockholders or shareholders, as applicable, the parties will have the discretion to complete the merger and the other transactions contemplated by the merger agreement without seeking further approval of Unity stockholders or ironSource shareholders.
Lawsuits that have been filed or that may be filed against ironSource, Unity, Merger Sub and the members of the ironSource and/or Unity board in connection with the merger in the future, the outcome of which are uncertain, could result in an adverse ruling and/or an injunction delaying or preventing the completion of the merger and/or substantial costs to Unity and/or ironSource.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the merger agreement. On August 8, 2022, a putative class action complaint, captioned Assad v. Botha et al., Case No. 2022-0691, was filed in the Delaware Court of Chancery against Unity and the Unity board. The complaint alleges that the Unity board breached its fiduciary duties by failing to disclose all material information necessary to allow Unity stockholders to make a fully informed decision on whether to approve the issuance of new shares of Unity common stock as a part of Unity’s preliminary joint proxy statement/prospectus on Form S-4 filed in connection with the merger. The plaintiff is a purported Unity stockholder and seeks to represent a class of Unity stockholders who will vote in connection with the Unity issuance proposal. The complaint seeks additional disclosure and an award of attorneys’ fees, among other remedies. Unity believes this lawsuit is without merit and intends to vigorously defend the case. Even if a lawsuit is without merit, defending it can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Unity’s and ironSource’s respective liquidity and financial condition.
One of the conditions to the closing of the merger is that no injunction by any governmental entity having jurisdiction over Unity, ironSource, or Merger Sub has been entered and continues to be in effect and no law has been adopted, in either case that restrains, enjoins or otherwise prohibits the closing of the merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the merger, that injunction may delay or prevent the merger from being completed within the expected time frame or at all, which may adversely affect Unity’s, ironSource’s or the combined company’s respective business, financial position and results of operations.
There can be no assurance that any of the defendants will be successful in the outcome of the current complaint or any potential future lawsuits and that additional complains will not be filed with respect to the merger. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Unity’s, ironSource’s or the combined company’s business, financial condition, results of operations and cash flows. See the section titled “The Merger—Litigation Related to the Merger” for additional information.
The merger may not be completed and the merger agreement may be terminated in accordance with its terms.
The merger is subject to a number of conditions, some of which are described above, that must be satisfied or waived prior to the closing, which are described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger.” These conditions to the closing may not be satisfied or waived in a timely manner or at all, and, accordingly, the merger may be delayed or may not be completed.
Either Unity or ironSource may choose not to proceed with the merger by terminating the merger agreement if (i) the closing has not occurred on or before the outside date defined in the merger agreement, (ii) a governmental entity issues a final, non-appealable ruling that restrains or prohibits the consummation of the merger or the related transactions or (iii) if Unity and/or ironSource does not obtain the required approval of the Condition Precedent Proposals from its stockholders and shareholders, respectively. In addition, the parties to the merger agreement may also mutually decide to terminate the merger agreement at any time. In addition, if the merger agreement is terminated under specified circumstances, including because the ironSource board changes its recommendation regarding the ironSource merger proposal, ironSource may be required to pay Unity a
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termination fee of $150.0 million. If the merger agreement is terminated under other specified circumstances, including because the Unity board changes its recommendation, Unity may be required to pay ironSource a termination fee of $150.0 million. Finally, Unity and/or ironSource may elect to terminate the merger agreement in certain other circumstances as further detailed in the section titled “The Merger Agreement—Termination.”
The Unity board and the ironSource board have not requested, and do not anticipate requesting, an updated opinion from their respective financial advisers reflecting changes in circumstances that may have occurred since the signing of the merger agreement.
At the meeting of the Unity board on July 12, 2022, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Morgan Stanley as set forth in the written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Unity. Jefferies delivered a written opinion, dated July 11, 2022, to the ironSource board as to the fairness, from a financial point of view and as of such date, to the holders of ironSource ordinary shares of the exchange ratio provided for in the merger pursuant to the merger agreement. Neither the Unity board nor the ironSource board has obtained an updated opinion from their respective financial advisers as of the date of this joint proxy statement/prospectus, and the Unity board and the ironSource board have not requested, and do not anticipate requesting, an updated opinion from their respective financial advisers reflecting changes in circumstances that may have occurred since the signing of the merger agreement. As a result, neither the Unity board nor the ironSource board will receive an updated, revised or reaffirmed opinion prior to the consummation of the merger. Changes in the operations and prospects of Unity or ironSource, general market and economic conditions and other factors that may be beyond the control of Unity or ironSource, may significantly alter the value of Unity or ironSource or the prices of the shares of Unity common stock or of the ironSource Class A ordinary shares by the time the merger is completed. The opinions of Morgan Stanley and Jefferies speak as of the date each opinion was rendered, and do not speak as of the time the merger will be completed or as of any date other than the date of each such opinion. The opinions of Morgan Stanley and Jefferies do not address the fairness, from a financial point of view, of the merger consideration or the exchange ratio, as applicable, at any time other than the time each such opinion was delivered.
For a description of the opinions that Unity and ironSource received from their respective financial advisers, see the sections titled The Merger—Opinion of Unity’s Financial Adviser” and “The Merger—Opinion of ironSource’s Financial Adviser.” A copy of the opinion of Morgan Stanley, Unity’s financial adviser, and a copy of the opinion of Jefferies, ironSource’s financial adviser, are attached as Annex B and Annex C to this joint proxy statement/prospectus, respectively, and are incorporated by reference herein in their entirety.
After the merger, ironSource shareholders will have a significantly lower ownership and voting interest in Unity than they currently have in ironSource, and will exercise less influence over management.
Based on the number of shares of Unity common stock and ironSource ordinary shares outstanding as of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, it is expected that Unity will issue approximately 111.8 million shares of Unity common stock in the merger, after which current Unity stockholders would own approximately 72.9% of the outstanding shares of Unity common stock and former ironSource shareholders would own approximately 27.1% of the outstanding shares of Unity common stock. At closing of the merger, on a fully diluted basis, current Unity stockholders are expected to own approximately 73.5% of the outstanding shares of Unity common stock and former ironSource shareholders are expected to own approximately 26.5% of the outstanding shares of Unity common stock. Consequently, ironSource shareholders will have substantially less influence over the management and policies of Unity than they currently have over ironSource.
The merger agreement limits the ability of ironSource and Unity, respectively, to pursue alternatives to the merger, may discourage certain other companies from making favorable alternative transaction proposals and, in specified circumstances, could require ironSource or Unity, as applicable, to pay a termination fee.
The merger agreement contains provisions that may make it more difficult for ironSource and Unity to enter into alternative transactions. The merger agreement provides restrictions, subject to certain exceptions relating to the exercise of fiduciary duties by the ironSource and/or Unity boards, respectively, with respect to ironSource’s and Unity’s ability to solicit, initiate or knowingly encourage or facilitate or participate in any negotiates
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regarding a proposal or inquiry that could reasonably be expected to lead to a proposal to acquire 15% or more of the respective assets or capital stock of ironSource or Unity, as applicable, or any merger, consolidation, share exchange, joint venture, recapitalization, reorganization or similar transaction in which the security holders of Unity or ironSource, as applicable hold less than 85% of the equity interests in the surviving company following such transaction. The merger agreement further provides that under specified circumstances, including after a change of recommendation by the Unity and/or ironSource board, as applicable, and a subsequent termination of the merger agreement by the other party in accordance with its terms, the terminating party may be required to pay a termination fee. For additional information, see the sections entitled “The Merger Agreement—No Solicitation; Changes of Recommendation” and “The Merger Agreement—Termination.
Until the completion of the merger or the termination of the merger agreement pursuant to its terms, Unity and ironSource are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Unity, ironSource and/or their respective security holders.
From and after the date of the merger agreement and prior to the completion of the merger or the termination of the merger agreement pursuant to its terms, the merger agreement restricts Unity and ironSource from taking specified actions without the consent of the other party and requires that the business of ironSource and its subsidiaries be conducted in the ordinary course. These restrictions may prevent Unity or ironSource, as applicable, from taking actions during the pendency of the merger that would have been beneficial. Adverse effects arising from these restrictions during the pendency of the merger could be exacerbated by any delays in the completion of the merger or termination of the merger agreement. See the section titled “The Merger Agreement—Interim Operations of ironSource and Unity Pending the Merger.”
Failure to complete the merger could negatively impact the price of shares of Unity common stock and the price of ironSource ordinary shares, as well as Unity’s and ironSource’s respective future businesses and financial results.
The merger agreement contains a number of conditions that must be satisfied or waived prior to the completion of the merger, which are described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger.” There can be no assurance that all of the conditions to the merger will be so satisfied or waived. If these conditions are not satisfied or waived, Unity and ironSource will be unable to complete the merger.
If the merger is not completed for any reason, Unity’s and ironSource’s respective businesses and financial results may be adversely affected, including as follows:
Unity and ironSource may experience negative reactions from the financial markets, including negative impacts on the market price of Unity common stock and ironSource ordinary shares;
the manner in which industry contacts, business partners and other third parties perceive Unity and ironSource may be negatively impacted, which in turn could affect Unity’s and ironSource’s marketing operations or their ability to compete for new business or obtain renewals in the marketplace more broadly;
Unity and ironSource will be required to pay their respective costs relating to the merger, such as financial advisory, legal, accounting costs and associated fees and expenses, whether or not the merger is completed;
there may be disruptions to each company’s respective business resulting from the announcement and pendency of the merger, and any adverse changes in their relationships with their respective customers, partners, suppliers, other business partners and employees may continue or intensify; and
Unity and ironSource will have expended time and resources that could otherwise have been spent on Unity’s and ironSource’s existing businesses and the pursuit of other opportunities that could have been beneficial to each company.
In addition to the above risks, if the merger agreement is terminated and either party’s board of directors seeks an alternative transaction, such party’s stockholders or shareholders, as applicable, cannot be certain that such party will be able to find a party willing to engage in a transaction on more attractive terms than the merger.
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Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the merger.
The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of the professionals currently employed by Unity and ironSource. It is possible that these employees may decide not to remain with Unity or ironSource, as applicable, while the merger is pending, or with the combined company. If key employees of either company terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Unity and ironSource to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Unity and ironSource may not be able to locate suitable replacements for any key employees that leave either company or offer employment to potential replacements on reasonable terms. Moreover, there could be disruptions to or distractions for the workforce and management, including disruptions associated with integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of Unity and ironSource to the same extent that those companies have been able to attract or retain their own employees in the past.
The merger, and uncertainty regarding the merger, may cause customers, partners, or suppliers to delay or defer decisions concerning Unity or ironSource and adversely affect each company’s ability to effectively manage its respective business, which could adversely affect each company’s business, operating results and financial position and, following the completion of the merger, the combined company’s.
The merger will happen only if the stated conditions are met, including the approval of the Unity issuance proposal, the approval of the ironSource merger proposal and the receipt of required regulatory approvals, among other conditions. Many of the conditions are beyond the control of Unity and ironSource, and both parties also have certain rights to terminate the merger agreement. Accordingly, there may be uncertainty regarding the completion of the merger. This uncertainty may cause existing or prospective customers, partners, or suppliers to:
delay, defer, or cease purchasing products or services from, providing products or services to, Unity, ironSource or the combined company;
delay or defer other decisions concerning Unity, ironSource or the combined company, including entering into contracts with Unity or ironSource or making other decisions concerning Unity or ironSource or seek to change or cancel existing business relationships with Unity or ironSource; or
otherwise seek to change the terms on which they do business with Unity, ironSource or the combined company.
Any such disruptions, such as delays or deferrals of those decisions or changes in existing agreements could adversely affect the respective business, operating results and financial position of Unity and ironSource, whether or not the merger is ultimately completed, and following the completion of the merger, the combined company, including an adverse effect on the combined company’s ability to realize the anticipated synergies and other benefits of the merger. The risk, and adverse effect, of any such disruptions could be exacerbated by a delay in completion of the merger or termination of the merger agreement.
Whether or not the merger is completed, the announcement and pendency of the merger could cause disruptions in the businesses of Unity and ironSource, which could have an adverse effect on their respective businesses and financial results.
Whether or not the merger is completed, the announcement and pendency of the merger could cause disruptions in the businesses of Unity and ironSource, including by diverting the attention of Unity and ironSource’s respective management and employee teams, such as those involved in day-to-day operations and sales, toward the completion of the merger. In addition, Unity and ironSource have each diverted significant management resources in an effort to complete the merger and are each subject to restrictions contained in the merger agreement on the conduct of their respective businesses. If the merger is not completed, Unity and ironSource will have incurred significant costs, including the diversion of management resources, for which they will have received little or no benefit.
Unity stockholders and ironSource shareholders will not be entitled to appraisal rights in the merger.
Appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their
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shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to such stockholders in connection with the extraordinary transaction. Under the Delaware General Corporation Law (which we refer to as the “DGCL”), stockholders generally do not have appraisal rights if the shares of stock they hold are either listed on a national securities exchange or held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash in lieu of fractional shares or (d) any combination of the foregoing.
Because the merger is of Merger Sub with and into ironSource and holders of Unity common stock will continue to hold their shares following completion of the merger, holders of Unity common stock are not entitled to appraisal rights in connection with the merger. Holders of ironSource are not entitled to appraisal rights in connection with the merger under Israeli law. See the section titled “No Appraisal Rights.”
If the merger does not qualify as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, U.S. Holders of ironSource ordinary shares may recognize gain or loss for U.S. federal income tax purposes.
The parties intend the merger to qualify as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code; however, the merger is not conditioned on the receipt of an opinion from counsel that the merger will so qualify and neither Unity nor ironSource or any of their respective advisors or affiliates, makes any representations or provides any assurances regarding the tax consequences of the merger, including whether the merger qualifies as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code. If the merger were to fail to qualify as a “reorganization” under Section 368(a) of the Code, U.S. Holders (as defined on page 171) of ironSource ordinary shares generally would recognize gain or loss, as applicable, equal to the difference between (i) the fair market value of the Unity common stock received by such U.S. Holder in the merger, if any, and (ii) such U.S. Holder’s adjusted tax basis in its ironSource ordinary shares. Moreover, if the merger were to be treated as “reorganization” under Section 368(a) of the Code, but not specifically under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, the U.S. federal income tax consequences to a U.S. Holder could be materially different than those described herein. See the discussion below under the heading “The Merger—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger—General Treatment of the Merger.
U.S. Holders of ironSource ordinary shares are urged to carefully review the section titled “The Merger—Material U.S. Federal Income Tax Considerations” for more information and to consult with their tax advisors as to the particular consequences that may apply to such U.S. Holder as a result of the merger.
If the merger is treated as a “reorganization” under Section 368(a) of the Code, but not as a “reorganization” under Section 368(a)(1)(B) and/or (a)(2)(E) of the Code, U.S. Holders of ironSource ordinary shares may be subject to adverse tax consequences.
The parties intend the merger to qualify as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code. However, while not expected to be the case, due to certain group restructuring transactions Unity intends to complete following the merger, it is possible that the merger could be treated by the IRS as an “inbound asset reorganization” under Section 368(a) of the Code subject to Section 367(b) of the Code rather than a “stock reorganization” under Section (a)(1)(B) of the Code and/or Section (a)(2)(E) of the Code. In such case, U.S. Holders of ironSource ordinary shares with an aggregate fair market value of $50,000 or more, but less than 10% (actually or constructively) of (i) the total combined voting power of all classes of ironSource ordinary shares entitled to vote and (ii) the total value of all classes of ironSource ordinary shares at the time of the merger (the “10% threshold”), would recognize gain (but not loss) with respect to the ironSource ordinary shares exchanged for Unity common stock in the merger unless the U.S. Holder instead elected to include in income (as dividend income) the “all earnings and profits amount,” as such term is defined in U.S. Treasury Regulation Section 1.367(b)-2(d), attributable to its ironSource ordinary shares. U.S. Holders owning ironSource ordinary shares with an aggregate value of $50,000 or more but less than the 10% threshold should consult their tax advisors about the possibility of making a “protective” election to include as a dividend the “all earnings and profits amount” in case (while not expected) the merger was characterized as an “inbound asset reorganization” under Section 368 of the Code subject to Section 367(b) of
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the Code instead of a “stock reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code. U.S. Holders owning ironSource ordinary shares exceeding the 10% threshold will generally be required to include in income as a dividend the “all earnings and profits amount,” as such term is defined in U.S. Treasury Regulation Section 1.367(b)-2(d), attributable to its ironSource ordinary shares. See the discussion below under the heading “The Merger—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger—General Treatment of the Merger.
U.S. Holders of ironSource ordinary shares are urged to carefully review the section titled “The Merger— Material U.S. Federal Income Tax Considerations” for more information and to consult with their tax advisors as to the particular consequences that may apply to such U.S. Holder as a result of the merger.
Even if the merger qualifies as a reorganization under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, a U.S. Holder may still recognize gain as a result of the merger if ironSource is or was classified as a PFIC for any taxable year during which a U.S. Holder held ironSource ordinary shares.
Even if the merger qualifies as a “reorganization” under Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, if ironSource was a PFIC, or “passive foreign investment company,” for any taxable year during which a U.S. Holder (as defined on page 171) owned (or is deemed to own) ironSource ordinary shares, under certain proposed Treasury Regulations, certain adverse U.S. federal income tax consequences, including recognition of gain, could apply to such U.S. Holder as a result of the merger, unless certain exceptions apply. ironSource does not believe it was a PFIC in for its taxable year ended December 31, 2021 and, based on the current and anticipated composition of its and its subsidiaries’ income, assets and operations, ironSource does not expect to be a PFIC for the taxable year ending December 31, 2022, or a short taxable year if the current taxable year ends before December 31, 2022 as a result of any group restructuring following the merger. U.S. Holders of ironSource ordinary shares should consult their tax advisors regarding the possible classification of ironSource as a PFIC and the resulting U.S. federal income tax considerations.
Additionally, the application of the PFIC rules to a U.S. Holder that received ironSource ordinary shares in exchange for shares of Thoma Bravo Advantage pursuant to the acquisition by ironSource of Thoma Bravo Advantage on June 28, 2021 may be materially different due to the status of Thoma Bravo Advantage as a potential PFIC prior to the acquisition of Thoma Bravo Advantage by ironSource and special rules that may apply PFIC taint to ironSource ordinary shares received in exchange for such Thoma Bravo Advantage shares. All U.S. Holders that received ironSource ordinary shares in exchange for shares of Thoma Bravo Advantage are urged to consult their own tax advisors regarding the application of the PFIC rules to them.
See the section titled “The Merger—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger to U.S. Holders—Passive Foreign Investment Company Rules.”
Following the merger, Non-U.S. Holders of Unity common stock may be subject to U.S. federal withholding and income tax.
Distributions to Non-U.S. Holders (as defined on page 171) with respect to Unity common stock will generally be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) to the extent such distributions are dividends for U.S. federal income tax purposes and are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. Dividends that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States will generally be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates and, for Non-U.S. Holders that are corporations, may be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified by an applicable income tax treaty).
Additionally, and subject to the limitations and qualifications described in the section titled “The Merger—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences to Non-U.S. Holders of Unity Common Stock Following the Merger”, if Unity is a U.S. real property holding corporation, or “USRPHC,” for U.S. federal income tax purposes, a Non-U.S. Holder may be subject to U.S. federal income tax on the sale or other disposition of Unity common stock. Unity does not believe it is a USRPHC and does not anticipate becoming a USRPHC following the merger. Because the determination of whether Unity is a USRPHC depends on the fair market value of its U.S. real property interests relative to the fair market value of its other business assets and its non-U.S. real property interests, however, there can be no assurance Unity will not become a USRPHC in the future.
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Non-U.S. Holders of ironSource ordinary shares are urged to carefully review the section titled “The Merger—Material U.S. Federal Income Tax Considerations” for more information and to consult with their own tax advisors as to the particular consequences that may apply to such Non-U.S. Holder as a result of the U.S. Domestication.
ironSource shareholders may be subject to Israeli capital gains tax in connection with the merger and absent receipt of a ruling or exemption, will generally be subject to Israeli tax withholding on the merger consideration.
As a consequence of the merger, holders of ironSource shares will be treated as having sold their ironSource shares in the merger. When an Israeli company is sold, regardless of whether the consideration in the sale is cash or shares, its shareholders are generally subject to Israeli taxation. The ITO, distinguishes between ‘Real Capital Gain’ and ‘Inflationary Surplus’. The Inflationary Surplus is the portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli CPI or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The Real Capital Gain is the excess of the total capital gain over the Inflationary Surplus.
The capital gains tax rate applicable to the Real Capital Gain is 25% for individuals, 30% for individuals who are Major Stockholders on the date of sale or on any date falling within the 12-month period preceding that date of sale and 23% for corporations. An additional tax at a rate of three percent on the Real Capital Gain may be imposed upon individual shareholders whose annual income from all sources that is taxable in Israel exceeds a certain amount. The Inflationary Surplus is generally exempt from tax, provided that the shares being sold were acquired after December 31, 1993.
Shareholders of a company, such as ironSource, the shares of which are traded on an authorized stock exchange outside Israel, or on a regulated market outside of Israel, who are non-Israeli residents, are generally exempt from Israeli capital gains tax, provided that certain conditions are met (e.g., including that the capital gain is not allocable to a permanent establishment that the non-Israeli resident shareholder maintains in Israel). In addition, such sale may be exempt from Israeli capital gain tax (or be subject to a reduced tax rate) under the provisions of an applicable tax treaty between Israel and the seller’s country of residence. In both cases, in order to benefit from the exemption or reduced tax rate, the recipient is generally required to obtain a valid certificate from ITA allowing for such exemption or reduced tax rate.
ironSource has submitted an application for a tax ruling from the ITA pursuant to Section 103K of the ITO, confirming the exchange of ironSource ordinary shares for the merger consideration as a tax free reorganization, and including the arrangement to be applied with respect to shares and equity awards that are subject to tax pursuant to Section 102 and 3(i) of the ITO, all subject to statutory or other customary conditions, obligations and restrictions regularly associated with such a ruling to be included within the ruling. No assurance can be given that the tax ruling will be obtained before the closing or at all, or that, if obtained, such rulings will be granted under the conditions requested by ironSource, or that such ruling will apply to shares and equity awards that are subject to tax pursuant to Section 102 and 3(i) of the ITO and in either of such case, one or more alternative tax ruling(s) or instructions of the ITA will be required. The 103K tax ruling, if obtained, is subject to ironSource, Unity and their equityholders’ compliance with certain requirements under Section 103K of the ITO, which include, among others, a requirement that at least one or more of the equityholders of ironSource and Unity immediately after the consummation of the merger that are deemed to be “controlling” shareholders under Section 103K of the ITO prior to the merger, continue to hold rights in Unity, which constitute at least 25% of the total rights in Unity held by all such holders in the aggregate as of the closing of the merger during the two year period commencing on the closing of the merger (the “Restrictions Period” and the “25% Requirement”, respectively). In the event that either Unity, ironSource or their equityholders fail to comply with the conditions of the 103K tax ruling, including the 25% Requirement, then the exchange of the ironSource ordinary shares for the merger consideration shall be deemed a taxable event to all the shareholders of ironSource as of the date of the consummation of the merger, unless such shareholders are otherwise exempt from tax under Israeli law or an applicable tax treaty. Certain shareholders of ironSource and certain stockholders of Unity entered into lock-up agreements restricting each such shareholder or stockholder, during the Restrictions Period, from transferring more than 70% of the Unity common stock held by such shareholder or stockholder after giving effect to the merger (the “Merger Lockup”). No assurance can be given that the applicable stockholders will comply with the Merger Lockup, or that the 25% Requirement or other conditions under the 103K tax ruling will be otherwise complied with. It should be noted that obtaining the 103K tax ruling is an ironSource closing condition for the transaction, and ironSource will not withdraw the application for such ruling without the prior written consent of Unity
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(not to be unreasonably withheld). To the extent ironSource wishes to withdraw the application for such ruling and subject to Unity's prior written consent (not to be unreasonably withheld), ironSource may prepare and file with the ITA, in full coordination with Unity, an application/s for a tax ruling/s (i) confirming the deferral of Israeli tax liability for any holders of ironSource shares that elect to be subject to a tax arrangement pursuant to Section 104H of the ITO, until such dates as set forth in Section 104H of the ITO (the “104H tax arrangement”) (ii) providing withholding procedures with respect to holders of ordinary shares of ironSource not otherwise covered under the 104H tax arrangement, and (iii) governing the Israeli tax treatment applicable to holders of ironSource equity awards, including restricted share units and options that are subject to tax pursuant to Section 102 and 3(i) of the ITO. There can be no assurance that such tax rulings will be granted before the closing of the merger, if at all, or that, if obtained, such tax rulings will be granted under the conditions requested by ironSource. ironSource and Unity undertook in the merger agreement to cooperate with each other with respect to the preparation and filing of such applications and in the preparation of any written or oral submissions that may be necessary, proper or advisable to obtain any of the applicable tax rulings. Unity undertook in the merger agreement, at all times following the closing of the merger, (i) to comply, and to cause its subsidiaries to comply, with all of the terms and conditions of the 103K tax ruling (including statutory requirements of Section 103K of the ITO) (or, if applicable, the 104H tax arrangement), and (ii) to refrain from taking or failing to take such actions, which actions or omissions would or would be reasonably expected to breach, jeopardize or adversely change the effectiveness of, and/or the favorable tax treatment prescribed under, such tax rulings). The final text of such applications and the final text of such tax rulings is subject to the prior written confirmation of ironSource and Unity (which confirmation not to be unreasonably withheld, conditioned or delayed), and the parties undertook in the merger agreement (i) not to object to any restrictions, conditions or obligations that are either statutorily required pursuant to Section 103K, 104H or other applicable sections of the ITO, or are otherwise regularly associated with such rulings and reasonably required by the ITA, and (ii) to use reasonable best efforts to promptly take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable law to obtain such tax rulings.
Whether or not a particular shareholder is actually subject to Israeli capital gains tax in connection with the merger, absent receipt by ironSource of a tax ruling from the ITA prior to closing, all ironSource shareholders will be subject to Israeli tax withholding at the rate of 25% and 23% (for corporations) on the merger consideration (unless the shareholder requests and obtains an individual certificate of exemption or a reduced tax rate from the ITA, as described below). To the extent any Israeli tax is imposed on the merger consideration there is no assurance that such tax may be creditable for U.S. federal income tax purposes.
The Israeli tax consequences of the merger to ironSource shareholders and holders of certain ironSource equity awards and shares issued subject to Section 102 or 3(i) of the ITO may vary depending upon the particular circumstances of each shareholder or holder of ironSource equity awards or ordinary shares issued subject to Section 102 or 3(i) of the ITO, as applicable, and the final tax rulings, if issued by the ITA.
The tax consequences of the merger are complex and will depend on your particular circumstances. You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you, including the consequences under any applicable, state, local, foreign or other tax laws or tax treaties.
For a more detailed description of the material Israeli tax consequences of the merger, see the section titled “Material Israeli Tax Consequences of the Merger”.
Risks Relating to the Combined Company
The integration of ironSource into Unity may not be as successful as anticipated.
The merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks, potential liabilities associated with the acquired business, and uncertainties related to design, operation and integration of ironSource’s internal control over financial reporting. The success of the merger will depend on, among other things, Unity’s ability to realize the anticipated benefits and operational scale efficiencies from combining the businesses of Unity and ironSource. This success will depend largely on Unity’s ability to successfully integrate the business of ironSource. If Unity is not able to successfully integrate ironSource’s business within the anticipated time frame, or at all, the anticipated operational scale efficiencies and other benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected. Difficulties in integrating ironSource into Unity may result in ironSource performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies. Unity’s and ironSource’s existing businesses could also be negatively impacted by the merger.
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Potential difficulties that may be encountered in the integration process include, among other factors:
the inability to successfully integrate ironSource into Unity in a manner that permits Unity to achieve the full revenue growth or cost savings anticipated from the merger;
complexities associated with managing the larger, more complex, integrated business;
not realizing anticipated operating synergies;
integrating personnel from the two companies and the loss of key employees;
potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger;
integrating relationships with industry contacts and business partners;
performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating ironSource’s operations into Unity; and
the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the merger and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company. An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.
The combined company may fail to realize all of the anticipated benefits of the merger or those benefits may take longer to realize than expected.
Unity believes that there are significant benefits and synergies that may be realized through leveraging the products, scale and combined enterprise customer bases of Unity and ironSource. However, the efforts to realize these benefits and synergies will be a complex process and may disrupt both companies’ existing operations if not implemented in a timely and efficient manner. The full benefits of the transactions contemplated by the merger agreement, including the anticipated sales or growth opportunities, may not be realized as expected or may not be achieved within the anticipated time frame, or at all. In addition, the combined company may incur additional or unexpected costs in order to realize these revenue synergies. Failure to achieve the anticipated benefits of the merger could adversely affect the combined company’s results of operations or cash flows, cause dilution to the earnings per share of the combined company, decrease or delay any accretive effect of the merger and negatively impact the price of the combined company.
Following completion of the merger, Unity’s success will depend, in part, on its ability to manage its expansion, which poses numerous risks and uncertainties, including the need to integrate the operations and business of ironSource into its existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with industry contacts and business partners.
In addition, Unity and ironSource will be required to devote significant attention and resources prior to closing of the merger to prepare for the post-closing integration and operation of the combined company, and Unity will be required post-closing to devote significant attention and resources to successfully align the business practices and operations of Unity and ironSource. This process may disrupt the businesses and, if ineffective, would limit the anticipated benefits of the merger.
The combined company may not be able to retain customers, partners or suppliers, or customers, partners or suppliers may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations.
As a result of the merger, the combined company may experience impacts on relationships with customers, partners or suppliers that may harm the combined company’s business and results of operations. Certain customers, partners or suppliers may seek to terminate or modify contractual obligations following the merger
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whether or not contractual rights are triggered as a result of the merger. There can be no guarantee that customers, partners or suppliers will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the merger. If any customers, partners or suppliers seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed, including the effect on Unity’s ability to realize the anticipated benefits of the merger. The risk, and adverse effect, of such disruptions could be exacerbated by a delay in completion of the merger or termination of the merger agreement.
Uncertainties associated with the merger may cause a loss of management personnel and other key employees, which could adversely affect the future business and operations of the combined company.
Unity and ironSource are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. Each company’s success until the merger and the combined company’s success after the merger will depend in part upon the ability of Unity and ironSource to retain key management personnel and other key employees. Current and prospective employees of Unity and ironSource may experience uncertainty about their roles within the combined company following the merger, which may have an adverse effect on the ability of each of Unity and ironSource to attract or retain key management and other key personnel. Accordingly, no assurance can be given that the combined company will be able to attract or retain key management personnel and other key employees of Unity and ironSource to the same extent that Unity and ironSource have previously been able to attract or retain their own employees.
The Unity share issuance and potential future Unity share issuances may cause the market price of Unity common stock to decline.
Based on 1,026,643,693 ironSource ordinary shares issued and outstanding as of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, and the exchange ratio of 0.1089, it is expected that Unity will issue approximately 111.8 million shares of Unity common stock in the merger. Former ironSource shareholders may decide not to hold the shares of Unity common stock that they will receive in the merger, and Unity stockholders may decide to reduce their investment in Unity as a result of the changes to Unity’s investment profile as a result of the merger. Both the issuance of this amount of new shares in the merger, as well as the potential issuance and sale of any shares of Unity common stock underlying new equity awards of Unity (options and RSUs) to be issued in the merger in replacement of corresponding ironSource equity awards, and/or potential issuance of Unity common stock upon conversion of the convertible notes pursuant to the PIPE, and any subsequent sales of these issued shares may cause the market price of Unity common stock to decline.
Sales of substantial amounts of Unity shares in the open market by former ironSource shareholders could depress its stock price.
Other than shares held by persons who will be affiliates of Unity after the closing, Unity shares that are issued to ironSource shareholders, including those Unity shares issued upon the exercise of outstanding stock options or RSUs, will be freely tradable without restrictions or further registration under the Securities Act. If the merger is completed and if former ironSource shareholders and ironSource employees sell substantial amounts of Unity common stock in the public market following consummation of the merger, the market price of Unity common stock may decrease.
The market price of Unity common stock will continue to fluctuate after the merger, and may decline if the benefits of the merger do not meet the expectations of financial analysts.
Upon completion of the merger, holders of ironSource ordinary shares will become holders of shares of Unity common stock. The market price of Unity common stock has been and may continue to be volatile and may fluctuate significantly following completion of the merger, including if Unity does not achieve the perceived benefits of the merger as rapidly, or to the extent anticipated by, financial analysts or the effect of the merger on Unity’s financial results is not consistent with the expectations of financial analysts. If the price of Unity’s common stock decreases after the merger, holders of ironSource ordinary shares will lose some or all of the value of their investment in Unity common stock. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the Unity common stock, regardless of Unity’s actual operating performance.
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The Notes to be issued pursuant to the PIPE Closing and to be outstanding after consummation of the merger, and the issuance of shares of Unity common stock upon conversion of the Notes, if any, may impact Unity’s financial results, result in dilution to Unity stockholders, create downward pressure on the price of Unity common stock, and restrict the combined company’s ability to raise additional capital.
In connection with the merger, Unity entered into the Investment Agreement relating to the issuance and sale to the PIPE Investors of $1.0 billion in aggregate principal amount of Unity’s 2.0% Convertible Senior Notes due 2027, which is expected to close promptly following the closing of the merger, subject to the closing of the merger and certain customary closing conditions. The Notes will bear interest at a rate of 2.0% per annum and interest on the Notes will be payable semi-annually in arrears. The Notes will mature five years from the date of issuance, subject to earlier conversion or repurchase. Following the PIPE Closing and any time until the trading day prior to the maturity date of the Notes, a holder of the Notes will have the right, at such holder’s option, to convert its Notes into cash, shares of Unity common stock or a combination thereof, based on an initial conversion rate of 20.4526 shares of Unity common stock per $1,000 principal amount of the Notes (which is equal to an initial conversion price of approximately $48.89 per share), subject to customary anti-dilution and other adjustments, including in connection with any make-whole adjustment as a result of certain extraordinary transactions. The proceeds from the PIPE Closing are expected to be used following the closing of the merger to partially fund the repurchase of up to $2.5 billion of shares of Unity common stock in open market transactions. For more information regarding the PIPE Closing and the proposed share repurchases, please see “The Merger—Interests of Unity’s Directors and Executive Officers in the Merger—PIPE.” Following the closing of the merger and the PIPE Closing, the combined company’s indebtedness will substantially increase due to the issuance of the Notes. Further, while Unity expects the share repurchases to be accretive to the combined company’s earnings per share, the issuance of shares of Unity common stock upon conversion of the Notes, if any, could adversely affect the combined company’s earnings per share. If shares of Unity common stock are issued to the holders of the Notes upon conversion, there will be dilution to Unity stockholders’ equity and the market price of Unity common stock may decrease due to the additional selling pressure in the market. Any downward pressure on the price of Unity common stock caused by the sale, or potential sale, of shares issuable upon conversion of the Notes could also encourage short sales by third parties, creating additional downward pressure on Unity’s share price.
The potential share repurchase, while intended to help offset dilution from the merger, may not achieve such goal and the amount of such repurchases may be impacted by new legislation.
The proceeds from the PIPE Closing are expected to be used following the closing of the merger to partially fund the repurchase of up to $2.5 billion of shares of Unity common stock in open market transactions. However, Unity is not obligated to repurchase any shares of Unity common stock and there is no assurance that Unity will do so on the timeline intended.
While Unity’s expects the potential share repurchases to be accretive to the combined company’s earnings per share with the objective to offset potential dilution to Unity’s stockholders as a result of the issuance of the merger consideration, there may be factors that will reduce the expected anti-dilutive effects of the potential repurchases. Although the Notes were priced at a premium to the market price of Unity common stock at the time of signing, and Unity intends to repurchase the shares at prices lower than the conversion price of the Notes, Unity can provide no assurance that the combined company’s stock price will not fluctuate significantly prior to any share repurchases, including as a result of downward pressure on the price of Unity’s common stock caused by the conversion of the Notes, as discussed above. As a result, if Unity is unable to repurchase shares of Unity common stock at a price that is lower than the conversion price of the Notes, any anti-dilutive effect of such repurchases may be less than expected and dilution resulting from the issuance of merger consideration may be more than expected.
In addition, to the extent any repurchases are made on or after January 1, 2023, such repurchases will be subject to the 1% Repurchase Tax enacted by the Inflation Reduction Act of 2022, which may be offset by shares newly issued during that fiscal year. The Repurchase Tax has been and will be taken into account by Unity with respect to its decisions to repurchase shares, but there can be no assurance that such tax will not reduce the number of shares Unity is able to or ultimately decides to repurchase. For more information please see “The Merger-Interests of Unity’s Directors and Executive Officers in the Merger-PIPE” and “The Merger—Unity Share Repurchases.”
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Unity’s and ironSource’s business relationships may be subject to disruption due to uncertainty associated with the merger.
Parties with which Unity or ironSource do business may experience uncertainty associated with the merger, including with respect to current or future business relationships with Unity or ironSource. Unity’s and ironSource’s business relationships may be subject to disruption as parties with which Unity or ironSource do business may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than Unity or ironSource. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of each company, including an adverse effect on Unity’s ability to realize the anticipated benefits of the merger. The risk, and adverse effect, of such disruptions could be exacerbated by a delay in completion of the merger or termination of the merger agreement.
Completion of the merger may trigger change-in-control or other provisions in certain agreements to which ironSource is a party.
The completion of the merger may trigger change-in-control or other provisions in certain agreements to which ironSource is a party. If Unity and/or ironSource are unable to negotiate waivers of those provisions, the counterparties to such agreements may exercise such party’s rights and remedies under the applicable agreements, potentially terminating the agreements or seeking monetary damages. Even if Unity and/or ironSource are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to the combined company. Any of the foregoing or similar developments may have an adverse impact on the business, financial condition and results of operations of the combined company, or the ability of Unity to successfully integrate ironSource’s business.
The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.
The combined company may be exposed to increased litigation from stockholders, customers, partners, suppliers, consumers and other third parties due to the combination of Unity’s and ironSource’s businesses following the merger. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.
The unaudited pro forma financial statements are presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the merger.
The unaudited pro forma financial statements contained in this joint proxy statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and are not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the combination been completed on the dates indicated. The actual financial positions and results of operations of the combined company following the merger may be different, and possibly materially different, from the unaudited pro forma financial statements included in this joint proxy statement/prospectus for several reasons. The unaudited pro forma financial statements have been derived from the historical financial statements of Unity and ironSource and certain adjustments and assumptions have been made regarding the combined company after giving effect to the merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. The unaudited pro forma condensed combined financial information reflects adjustments based upon preliminary estimates of the fair value of assets to be acquired and liabilities to be assumed. The final acquisition accounting will be based upon the actual consideration transferred and the fair value of the assets and liabilities of ironSource as of the date of the completion of the combination. Accordingly, the final acquisition accounting may differ materially from the unaudited pro forma condensed combined financial information reflected in this joint proxy statement/prospectus. Moreover, the unaudited pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the merger. For example, the impact of any incremental costs incurred in integrating ironSource into Unity is not reflected in the unaudited pro forma financial statements. While presented with numeric specificity, the unaudited pro forma condensed combined financial information provided in this joint proxy statement/prospectus is based on numerous variables and assumptions (including, but not limited to, those related to industry performance and competition, general business, the software and related industries, and economic, market and financial conditions and additional matters specific to Unity’s or ironSource’s business, as applicable)
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that are inherently subjective and uncertain and are beyond the control of the respective management teams of Unity and ironSource. Other factors may affect the combined company’s financial conditions or results of operations following the merger as well. As a result, the actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these unaudited pro forma financial statements. Any potential decline in the combined company’s financial condition or results of operations may cause significant variations in the stock price of Unity’s common stock following the merger. For additional information, see the section titled “Unaudited Pro Forma Condensed Consolidated Financial Information.”
Declaration, payment and amounts of dividends, if any, distributed to stockholders of the combined company will be uncertain.
Unity does not currently pay dividends and does not currently intend to pay dividends following the merger. The Unity board will have the discretion to determine the dividend policy of the combined company, including the amount and timing of dividends, if any, that the combined company may declare from time to time, which may be impacted by a number of factors, including the combined company’s financial condition, operations, cash flow, debt financing arrangements, general business conditions, and other factors that the Unity board may deem relevant. Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.
After the merger is completed, ironSource shareholders will become stockholders of a Delaware corporation and have their rights as stockholders governed by Unity’s organizational documents and Delaware law.
The rights of ironSource shareholders are currently governed by ironSource’s organizational documents and Israeli law. Upon consummation of the merger, ironSource shareholders will receive Unity common stock that will be governed by Unity’s organizational documents and Delaware law. As a result, there will be differences between the rights currently enjoyed by ironSource shareholders and the rights of ironSource shareholders post-merger. For a detailed discussion of the differences between rights as shareholders of ironSource and rights as a stockholder of Unity, see the section titled “Comparison of Rights of Stockholders of Unity and Shareholders of ironSource” beginning on page 200.
The Unity charter and the Unity bylaws will govern the combined company following the merger and the Unity charter provides an exclusive choice of forum for substantially all disputes between the combined company and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the combined company or its directors, officers or other employees.
The Unity charter provides that, unless Unity consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the exclusive forum for (A) any derivative action or proceeding brought on behalf of Unity; (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of Unity, to Unity or Unity’s stockholders; (C) any action or proceeding asserting a claim against Unity or any current or former director, officer or other employee of Unity, arising out of or pursuant to any provision of the DGCL, Unity’s charter or bylaws; (D) any action or proceeding to interpret, apply, enforce or determine the validity of Unity’s charter or bylaws (including any right, obligation, or remedy thereunder); (E) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (F) any action or proceeding asserting a claim against Unity or any current or former director, officer or other employee of Unity, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Under Unity’s charter, to the fullest extent permitted by law, the federal district courts of the United States of America are the exclusive forum for all claims under the federal securities laws.
Unity stockholders are deemed to have received notice of and consented to such exclusive forum clauses. This exclusive forum provision may limit the ability of a stockholder, including a former ironSource shareholder who becomes a Unity stockholder after the merger is completed, to bring a claim in a judicial forum of its choosing for disputes with the combined company or its directors, officers or other employees, which may discourage lawsuits against the combined company and its directors, officers and other employees. Stockholders
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who do bring a claim in the applicable Unity exclusive forum could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near such forum. In addition, a court located in Unity’s chosen forum may reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to the combined company than to its stockholders. However, enforceability of similar choice of forum provisions in other companies’ charters and bylaws has been challenged in legal proceedings, and it is possible that a court could find the choice of forum provisions contained in Unity’s charter to be inapplicable or unenforceable in respect of, one or more of the specified types of actions or proceedings. If a court were to find the exclusive forum provision contained in Unity’s charter to be inapplicable or unenforceable in an action, the combined company might incur additional costs associated with resolving such action in other jurisdictions, which could have an adverse impact on the combined company’s business and financial condition.
The combined company may record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined company in the future.
The merger will be accounted for as an acquisition of a business by Unity in accordance with GAAP. Under the acquisition method of accounting, the assets and liabilities of ironSource and its subsidiaries will be recorded, as of completion, at their respective fair values and added to those of Unity. The reported financial condition and results of operations of Unity for periods after completion of the merger will reflect ironSource balances and results after completion of the merger, but will not be restated retroactively to reflect the historical financial position or results of operations of ironSource and its subsidiaries for periods prior to the merger. For additional information, see the section titled “Unaudited Pro Forma Condensed Consolidated Financial Information.
Under the acquisition method of accounting, the total purchase price will be allocated to ironSource’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the merger. The excess of the purchase price over those fair values, if any, will be recorded as goodwill. To the extent the value of goodwill or intangible assets, if any, becomes impaired, the combined company may be required to incur material non-cash charges relating to such impairment. The combined company’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
Risks Relating to Unity’s Business
You should read and consider risk factors specific to Unity’s business that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 1A of Unity’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in Part II, Item 1A of Unity’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022, and in other documents that are incorporated by reference herein. For the location of information incorporated by reference in this joint proxy statement/prospectus, see the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively.
Risks Relating to ironSource’s Business
You should read and consider risk factors specific to ironSource’s business that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 3 of ironSource’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021 and in other documents that are incorporated by reference herein. For the location of information incorporated by reference in this joint proxy statement/prospectus, see the sections titled “Where You Can Find More Information” and “Information Incorporated by Reference,” beginning on pages 213 and 214, respectively.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus, and the documents to which Unity and ironSource refer you to in this joint proxy statement/prospectus, as well as oral statements made or to be made by Unity and ironSource, include certain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical fact, included in this joint proxy statement/prospectus that address activities, events or developments that Unity or ironSource expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “goal,” “future,” “assume,” “forecast,” “build,” “focus,” “work,” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the merger, pro forma descriptions of the combined company and its operations, integration and transition plans, synergies, opportunities and anticipated future performance and financial projections. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this joint proxy statement/prospectus. These include:
the risk that the merger agreement may be terminated in accordance with its terms and that the merger may not be completed;
the possibility that Unity stockholders may not approve the Unity issuance proposal;
the possibility that ironSource shareholders may not approve the ironSource merger proposal;
the risk that Unity or ironSource may be unable to obtain governmental and regulatory approvals required for the merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger;
the risk that the parties may not be able to satisfy the conditions to the completion of the merger in a timely manner or at all;
the possibility that Unity and ironSource will incur significant transaction and other costs in connection with the merger, which may be in excess of those anticipated by Unity or ironSource;
the risk that the combined company may be unable to achieve operational or corporate synergies or that it may take longer than expected to achieve those synergies;
the risk that the merger may not qualify as a “reorganization” under the meaning of Section 368(a)(1)(B) of the Code and/or Section 368(a)(2)(E) of the Code, potentially causing ironSource shareholders to recognize gain or loss for U.S. federal income tax purposes;
the risk that Unity may fail to realize other benefits expected from the merger;
the outcome of any litigation relating to the merger;
the risk that the combined company may fail to attract, motivate and retain executives and other key employees following the completion of the merger;
the risk that any announcements relating to, or the completion of, the merger could have adverse effects on the market price of Unity common stock;
the risk related to disruption of management time from ongoing business operations due to the merger;
the risk that the merger and its announcement and/or completion could have an adverse effect on the ability of Unity, ironSource and/or the combined company to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers;
the risk that the businesses will not be integrated successfully; and
the risks to their operating results and businesses generally.
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Such factors are difficult to predict and in many cases may be beyond the control of Unity and ironSource. Unity’s and ironSource’s forward-looking statements are based on assumptions that Unity and ironSource believe to be reasonable but that may not prove to be accurate.
Consequently, all of the forward-looking statements Unity and ironSource make in this joint proxy statement/prospectus are qualified by the information contained or incorporated by reference herein, including the information contained under this heading and the information detailed in ironSource’s Annual Report on Form 20-F for the year ended December 31, 2021 and its subsequent Current Reports on Form 6-K and other documents it files with the SEC and in Unity’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022 and other documents it files with the SEC, in each case incorporated by reference into this joint proxy statement/prospectus. For additional information, see the sections titled “Risk Factors,” “Where You Can Find More Information” and “Information Incorporated by Reference” beginning on pages 44, 213 and 214, respectively.
Unity and ironSource undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which they become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
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INFORMATION ABOUT THE COMPANIES
Unity Software Inc.
30 3rd Street
San Francisco, California 94103
Phone: (415) 539-3162
Unity is the world’s leading platform for creating and operating interactive, real-time 3D content. Unity’s platform provides a comprehensive set of software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. Unity serves customers of all sizes, at every stage of maturity, from individual creators to large enterprises.
Ursa Aroma Merger Subsidiary Ltd.
c/o Unity Software Inc.
30 3rd Street
San Francisco, California 94103
Phone: (415) 539-3162
Merger Sub, an Israeli company, is a direct wholly owned subsidiary of Unity. Merger Sub is newly formed, and was organized for the purpose of entering into the merger agreement and effecting the merger. Merger Sub has engaged in no business activities to date and it has no material assets or liabilities of any kind, other than those incident to its formation and those incurred in connection with the merger.
ironSource Ltd.
121 Menachem Begin Street
Tel Aviv 6701203, Israel
Phone: +972-747990001
ironSource is a leading business platform for the App Economy. App developers use ironSource’s platform to turn their apps into successful, scalable businesses, leveraging a comprehensive set of software solutions which help them grow and engage users, monetize content, and analyze and optimize business performance to drive more overall growth. The ironSource platform also empowers telecom operators to create a richer device experience, incorporating relevant app and service recommendations to engage users throughout the lifecycle of the device. By providing a comprehensive business platform for the core constituents of the App Economy, ironSource allows customers to focus on what they do best, creating great apps and user experiences, while enabling their business expansion in the App Economy.
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THE UNITY SPECIAL MEETING
Date, Time and Place
The Unity special meeting will be held virtually via the Internet on October 7, 2022 at 10:00 a.m., Pacific Time. The Unity special meeting will be held solely via live webcast and there will not be a physical meeting location. Unity stockholders will be able to attend the Unity special meeting online and vote their shares electronically during the meeting by visiting the Unity special meeting website at http://www.virtualshareholdermeeting.com/U2022SM.
You are entitled to attend the Unity special meeting only if, at the close of business on the Unity record date, September 2, 2022, you were a stockholder of record of Unity with your shares registered directly in your name with Unity’s transfer agent, Computershare Trust Company, N.A., you held your shares of Unity common stock beneficially in the name of a broker, bank or other nominee as of the Unity record date, or you hold a valid proxy for the Unity special meeting.
If you were a stockholder of record of Unity at the close of business on the Unity record date and wish to attend the Unity special meeting, you will need the 16-digit control number located on your proxy card.
If a broker, bank or other nominee is the record owner of your shares of Unity common stock, you will need to obtain your specific control number and further instructions from your bank, broker or other nominee.
Purpose of the Unity Special Meeting
The purpose of the Unity special meeting is to consider and vote on:
the Unity issuance proposal; and
the Unity adjournment proposal.
Unity will transact no other business at the Unity special meeting.
Recommendation of the Unity Board of Directors
The Unity board unanimously recommends that Unity stockholders vote:
FOR” the Unity issuance proposal; and
FOR” the Unity adjournment proposal.
For additional information on the recommendation of the Unity board, see the section titled “The Merger—Recommendation of the Unity Board of Directors and Unity’s Reasons for the Merger.
Unity Record Date; Who Can Vote at the Unity Special Meeting
Only holders of record of issued and outstanding shares of Unity common stock as of the close of business on September 2, 2022, the record date for the Unity special meeting, are entitled to notice of, and to vote at, the Unity special meeting or any adjournment or postponement of the Unity special meeting.
As of the close of business on the Unity record date, there were 300,469,115 shares of Unity common stock outstanding and entitled to vote at the Unity special meeting. Each share of Unity common stock is entitled to one vote on each proposal.
A complete list of Unity stockholders entitled to vote at the Unity special meeting will be available for inspection by any stockholder at Unity’s principal place of business during ordinary business hours for a period of no less than 10 days before the Unity special meeting at 30 3rd Street, San Francisco, California 94103. The list of Unity stockholders entitled to vote at the Unity special meeting will also be made available for inspection during the Unity special meeting via the Unity special meeting website at http://www.virtualshareholdermeeting.com/U2022SM.
Quorum
A quorum of Unity stockholders is necessary to hold a valid meeting of Unity stockholders. The presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the voting power of the outstanding shares of Unity common stock entitled to vote shall constitute a quorum for
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the transaction of business at the Unity special meeting. On the Unity record date, there were 300,469,115 shares of Unity common stock outstanding and entitled to vote. Thus, the holders of 150,234,559 shares must be present virtually by remote communication or represented by proxy duly authorized at the Unity special meeting to have a quorum. Abstentions are counted as shares present and entitled to vote for the purposes of determining a quorum. If there is no quorum, the chairperson of the Unity special meeting or the holders of a majority of the voting power of the shares of Unity common stock present virtually by remote communication at the Unity special meeting or represented by proxy duly authorized may adjourn the Unity special meeting to another date.
Vote Required for Approval of the Proposals Submitted to Unity Stockholders
Approval of the Unity issuance proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on the proposal. Abstentions will have the same effect as a vote “AGAINST” such proposals.
Approval of the Unity adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on the proposal. Abstentions will have the same effect as a vote “AGAINST” such proposals.
The Unity issuance proposal and the Unity adjournment proposal are described in the section titled “Proposals Submitted to Unity Stockholders.
Abstentions, Failures to Instruct a Broker How to Vote and Broker Non-Votes.
A quorum of Unity stockholders is necessary to hold a valid meeting. The presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the voting power of the outstanding shares of Unity common stock entitled to vote shall constitute a quorum for the transaction of business at the Unity special meeting. Abstentions are counted as shares present and entitled to vote for the purposes of determining a quorum. Assuming a quorum is present, abstentions will have the same effect as votes cast “AGAINST” the Unity issuance proposal. Assuming a quorum is present, abstentions will have the same effect as votes cast “AGAINST” the Unity adjournment proposal.
A broker non-vote is when a beneficial owner of Unity shares held in street name does not give voting instructions to his, her or its broker, bank or other securities intermediary holding his, her or its shares as to how to vote on matters deemed to be “non-routine” under NYSE rules, the broker, bank or other such agent cannot vote the shares. These un-voted shares are counted as “broker non-votes.” Because there are no discretionary (or routine) matters to be voted on at the Unity special meeting, Unity does not expect to receive any broker non-votes.
Methods of Voting
Voting in Advance of the Unity Special Meeting
Unity stockholders of record as of the Unity record date may vote their shares in advance of the Unity special meeting in three ways:
To vote using the proxy card that may have been delivered to you, simply complete, sign and date the proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Unity special meeting, we will vote your shares as you direct.
To vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the control number from the Notice. Your vote must be received by 11:59 p.m. Eastern Time on October 6, 2022 to be counted.
To vote through the internet in advance of the meeting, go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the control number from your Notice. Your vote must be received by 11:59 p.m. Eastern Time on October 6, 2022 to be counted.
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Questions About Voting
If you have any questions about how to vote or direct a vote in respect of your shares of Unity common stock, you may contact MacKenzie, Unity’s proxy solicitor, toll-free at (800) 322-2885 or, for international callers, +1 (212) 929-5500 or via email at proxy@mackenziepartners.com.
Shares held in “Street Name”
If Unity stockholders hold shares of Unity common stock in an account of a broker or other nominee and they wish to vote such shares, they must return their voting instructions to the broker or other nominee.
If Unity stockholders hold shares of Unity common stock in an account of a broker or other nominee and attend the Unity special meeting, they should bring a letter from their broker or other nominee identifying them as the beneficial owner of such shares of Unity common stock and authorizing them to vote.
If you are a “street name” stockholder, please follow the instructions from your broker, bank, or other nominee to vote by Internet, telephone, or mail before the meeting, or by Internet during the Unity special meeting, in each case by using the 16-digit control number which is in the instructions accompanying your proxy materials, if your broker, bank, or nominee makes those instructions available. If Unity stockholders hold their shares in “street name” and they fail to provide their broker or other nominee with any instructions regarding how to vote their shares of Unity common stock, such shares held by brokers and other nominees will NOT be voted, and will NOT be present for purposes of determining a quorum.
Revocation of Proxies
If you are a Unity stockholder of record, you can change your vote on any of the proposals outlined herein or revoke your proxy by:
notifying Unity’s corporate secretary, in writing, at Unity Software Inc., Attn: Corporate Secretary at 30 3rd Street, San Francisco, CA 94103. Such notice must be received at the above location before 5:00 p.m., Pacific Time, on September 30, 2022;
voting again using the telephone or Internet before 11:59 p.m., Pacific Time, on October 6, 2022 (your latest telephone or Internet proxy is the one that will be counted); or
attending and voting during the Unity special meeting. Simply logging into the Unity special meeting will not, by itself, revoke your proxy.
Unity stockholders are encouraged to change their vote by voting again using the telephone or Internet.
If you are a “street name” stockholder, you may revoke any prior voting instructions by contacting your broker, bank or other nominee or by attending the Unity special meeting and voting by Internet during the meeting by using the 16-digit control number, which is in the instructions accompanying your proxy materials, if your broker, bank, or nominee makes those instructions available.
Tabulation of Votes
Unity will appoint an inspector of election for the Unity special meeting to determine whether a quorum is present and tabulate the affirmative and negative votes, abstentions and non-broker votes, if any.
Solicitation of Proxies; Payment of Solicitation Expenses
The enclosed proxy card is being solicited by Unity and the Unity board. In addition to solicitation by mail, Unity’s directors, officers and employees may solicit proxies in person, by phone or by electronic means. These persons will not be specifically compensated for conducting such solicitation.
Unity has retained MacKenzie to assist in the solicitation process. Unity will pay MacKenzie a fee of approximately $30,000, as well as reasonable and customary documented expenses. Unity also has agreed to indemnify MacKenzie against various liabilities and expenses that relate to or arise out of MacKenzie’s solicitation of proxies (subject to certain exceptions).
Unity will ask brokers, banks and other nominees to forward the proxy solicitation materials to the beneficial owners of shares of Unity common stock held of record by such nominee holders. Unity will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.
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Adjournment
In accordance with the Unity bylaws, whether or not a quorum is present, the chairperson of the Unity special meeting will have the power to adjourn the Unity special meeting from time to time. The Unity chairperson may adjourn the Unity special meeting without notice to Unity stockholders, other than announcement at the Unity special meeting, unless the adjournment is for more than thirty (30) days or if after such adjournment a new record date is fixed for the adjourned meeting, in which case notice of the adjourned meeting shall be given to each Unity stockholder of record entitled to vote at the adjourned Unity special meeting. If the Unity special meeting is adjourned, Unity stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use. At any subsequent reconvening of the Unity special meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Unity special meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent Unity special meeting.
In addition, the merger agreement provides that Unity may adjourn or postpone the Unity special meeting (i) shall be required to adjourn the Unity special meeting (a) to the extent necessary to ensure that any supplement or amendment to this joint prospectus/proxy statement that is required to be filed and disseminated under applicable Law is provided to Unity’s stockholders or (b) if, as of the time for which the Unity special meeting is scheduled, there are insufficient shares of Unity common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business and (ii) may adjourn or postpone the Unity special meeting if, as of the time for which the Unity special meeting is scheduled, Unity reasonably determines in good faith that there are insufficient shares of Unity common stock represented (either in person or by proxy) to obtain approval of the Unity issuance proposal; provided, however, that unless otherwise agreed to by the parties to the merger agreement, the Unity special meeting shall not be adjourned or postponed to a date that is more than 30 days after the date for which the meeting was previously scheduled; and provided, further, that the Unity special meeting shall not be adjourned or postponed to a date on or after two business days prior to the Outside Date.
No Appraisal Rights
Appraisal rights, which are also sometimes known as dissenters’ rights, are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the company pay the fair value for their shares as determined immediately prior to the effective time of the merger in cash, instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.
Under Section 262 of the DGCL, Unity stockholders are not entitled to dissenter or appraisal rights in connection with the issuance of shares of Unity common stock as contemplated by the merger agreement.
Assistance
If you need assistance in completing your proxy card or have questions regarding the Unity special meeting, contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Stockholders Call Toll Free: (800) 322-2885
International Callers: +1 (212) 929-5500
Email: proxy@mackenziepartners.com
Results of the Unity Special Meeting
Within four business days following the Unity special meeting, Unity intends to file the final voting results with the SEC on a Current Report on Form 8-K. If the final voting results have not been certified within that four-business day period, Unity will report the preliminary voting results on a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four days of the date that the final results are certified.
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UNITY STOCKHOLDERS SHOULD CAREFULLY READ THIS JOINT PROXY STATEMENT/ PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE UNITY ISSUANCE PROPOSAL.
PROPOSALS SUBMITTED TO UNITY STOCKHOLDERS
Unity Issuance Proposal
Pursuant to the merger agreement, approval of the issuance of shares of Unity common stock in connection with the merger by Unity stockholders is a condition to the closing of the merger. Unity stockholders must also approve the issuance of shares of Unity common stock in connection with the merger because such approval is required under applicable NYSE rules. Specifically, NYSE Rule 312.03(c)(2) requires Unity stockholder approval if the number of shares of Unity common stock to be issued in connection with the merger is, or will be upon issuance, equal to or in excess of 20% of the number of Unity common stock outstanding before the issuance of the Unity common stock in connection with the merger. Upon consummation of the merger, each ironSource shareholder (subject to certain exceptions set forth in the merger agreement) will receive, for each eligible ironSource ordinary shares that is issued and outstanding as of immediately prior to the first effective time, the merger consideration of 0.1089 shares of Unity common stock rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes. Unity expects to issue up to approximately 111.8 million shares of Unity common stock in connection with the merger based on the number of ironSource ordinary shares and ironSource equity awards outstanding as of September 2, 2022, the latest practicable trading day prior to the date of this joint proxy statement/prospectus. The actual number of shares of Unity common stock to be issued in connection with the merger will be determined at the effective time based on the exchange ratio of 0.1089 of a share of Unity common stock for each ironSource ordinary share and the number of ironSource ordinary shares and eligible ironSource equity awards outstanding at such time. For a summary and detailed information regarding the merger and the merger agreement, including the proposed issuance of Unity common stock to ironSource’s shareholders, see the sections entitled “The Merger” beginning on page 83 and “The Merger Agreement” beginning on page 137. Unity stockholders are asked to approve the issuance of shares of Unity common stock in connection with the merger, which is referred to as the Unity issuance proposal in this joint proxy statement/prospectus.
Approval of the Unity issuance proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on the proposal. Abstentions will have the same effect as a vote “AGAINST” such proposal. If the Unity issuance proposal is not approved, the merger will not be completed even if the other proposals herein are approved.
The Unity board unanimously recommends that Unity stockholders vote “FOR” the Unity issuance proposal.
Unity Adjournment Proposal
Unity stockholders are being asked to approve a proposal that would adjourn the Unity special meeting one or more times to another date, time, place, or format, if necessary or appropriate, to permit, among other things, further solicitation of proxies, if necessary or appropriate, to obtain additional votes in favor of the Unity issuance proposal, which is referred to as the Unity adjournment proposal in this joint proxy statement/prospectus.
If, at the Unity special meeting, the number of shares of Unity common stock present in person, by remote communication, if applicable, or represented by proxy duly authorized and voting in favor of the Unity issuance proposal is insufficient to approve such proposal, Unity intends to move to adjourn the Unity special meeting in order to enable the Unity board to solicit additional proxies for approval of the Unity issuance proposal.
Approval of the Unity adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Unity special meeting and entitled to vote generally on the proposal. Abstentions will have the same effect as a vote “AGAINST” such proposal. Even if the Unity adjournment proposal is not approved at the Unity special meeting, the chairperson of the Unity special meeting may adjourn the Unity special meeting
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pursuant to the Unity bylaws. Notice of any adjourned meeting to Unity stockholders is not required, unless the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting.
The Unity board unanimously recommends that Unity stockholders vote “FOR” the Unity adjournment proposal.
Other Business
No business may be transacted at the Unity special meeting except as set forth in the notice of the Unity special meeting.
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THE IRONSOURCE SPECIAL GENERAL MEETING
General; Date; Time and Place
The ironSource Ltd. special general meeting, referred to as the ironSource special general meeting or the ironSource meeting, will be held on October 7, 2022 at 4:00 p.m. (Israel time), at the Company’s executive offices at 121 Menachem Begin Street, Tel Aviv, Israel, unless it is postponed or adjourned.
Purpose of the ironSource Special General Meeting
The ironSource meeting is being held for the purpose of considering a proposal to approve the merger of ironSource with Merger Sub, a wholly owned subsidiary of Unity, including approval of the merger agreement, the merger, the merger consideration, and all other transactions and arrangements contemplated under the merger agreement, in accordance with the terms of the merger agreement, which we refer to as the ironSource merger proposal.
Shareholders will also be asked to consider and, as applicable, vote upon, any other business that may properly come before the ironSource special general meeting or any adjournment or postponement of the ironSource special general meeting, including voting on the adjournment or postponement of such meetings. ironSource currently does not contemplate that any other matters will be considered at the ironSource special general meeting.
Shareholders Entitled to Vote; ironSource Record Date
Shareholders of record who held ironSource ordinary shares (Class A or Class B) at the close of business on September 2, 2022, or the “ironSource record date”, are entitled to vote at the ironSource special general meeting. Shareholders who, as of the ironSource record date, held ordinary shares (Class A) on the NYSE through a bank, broker or other nominee which is a shareholder of record of ironSource or which appears in the participant list of a securities depository, are considered to be beneficial owners of shares held in street name. These proxy materials are being forwarded to beneficial owners by their bank, broker or other nominee that are considered the holder of record. Beneficial owners have the right to direct how their shares should be voted and are also invited to attend the ironSource special general meeting, but may not vote their shares in person at the meeting without obtaining, prior to the meeting, a legal proxy from such bank, broker or other nominee that authorizes them to vote their shares, and an account statement showing that they held the shares in their account as of the ironSource record date. Proxy materials for shareholders who, as of the ironSource record date, held ordinary shares (Class A or Class B) registered directly in their name (or in the name of a trustee on their behalf) with ironSource’s transfer agent, American Stock Transfer & Trust Company, or the ironSource transfer agent, are being sent directly to the shareholders (or to such trustee) by the ironSource transfer agent, and can vote their shares by attending the ironSource special general meeting or by completing and signing one or more proxy cards.
Alternatively, all of the above-described categories of shareholders as of the ironSource record date may vote their shares or direct how their shares are voted in other manners—without attending the ironSource special general meeting—as detailed below.
As of September 2, 2022 there were 692,926,373 ironSource Class A ordinary shares and 333,717,320 ironSource Class B ordinary shares issued and outstanding. Any ironSource Class A ordinary shares or Class B ordinary shares that are outstanding as of September 2, 2022 the ironSource record date for the ironSource special general meeting, are entitled to be voted at the meeting.
Shareholders who hold both ironSource Class A ordinary shares and ironSource Class B ordinary shares that are registered in their name, will be receiving one proxy card for both classes of shares, and will need to complete, sign and submit such proxy card in order to ensure that their shares are voted in each of the three separate votes (for separate class-related meetings, to be combined into one meeting) that are being held with respect to the ironSource merger proposal at the ironSource special general meeting (i.e., the votes of): (i) the ironSource Class A ordinary shares as a separate class; (ii) the ironSource Class B ordinary shares as a separate class; and (iii) the ironSource Class A and Class B ordinary shares, voting together as a single class, with a ratio of 1:5 votes per share, respectively.
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Recommendation of ironSource’s Board of Directors
After careful consideration, the ironSource board (excluding directors who may be deemed to have a personal interest in the merger, as defined under the Companies Law) has:
determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, ironSource and its shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the surviving company will be unable to fulfill the obligations of ironSource to its creditors;
approved the merger agreement, the merger, the merger consideration and the other transactions and arrangements contemplated under the merger agreement; and
determined to recommend that ironSource’s shareholders vote in favor the merger agreement, the merger, the merger consideration, and the other transactions and arrangements contemplated under the merger agreement.
Accordingly, the ironSource board (excluding directors who may be deemed to have a personal interest in the merger, as defined under the Companies Law) unanimously recommends that you vote FOR the ironSource merger proposal.
Quorum and Voting
Pursuant to ironSource’s articles of association, the quorum required for the ironSource special general meeting—in order to hold each of the three separate class or combined meetings required for approval of the merger—is two or more shareholders, present in person or by proxy and holding shares conferring in the aggregate at least 25% of the voting power of the relevant class of ironSource ordinary shares (Class A or Class B), or, in the case of the combined Class A-Class B meeting, the combined voting power of the ironSource ordinary shares (Class A and Class B), after taking into account the relative voting power of each class (one vote or five votes, per share, respectively). If a quorum is not present within 30 minutes from the time appointed for any of the class or combined meetings to be held at the ironSource special general meeting, the applicable class or combined meeting will stand adjourned either (a) to the same day in the next week, at the same time and place (in which case ironSource will not be obligated to give notice to the relevant shareholders of the adjourned meeting), or (b) to such day and at such time and place as the chairperson of the ironSource special general meeting will determine (which may be earlier or later than the date pursuant to clause (a) above). At the adjourned meeting, any matter that was to be addressed during the ironSource special general meeting will be addressed, and any shareholder (not in default in payment of any sum referred to in the articles) present in person or by proxy shall constitute a quorum.
Banks, brokers and other nominees who hold ironSource Class A ordinary shares in “street name” for clients typically have authority to vote on “routine” proposals even when they have not received instructions from beneficial owners, absent specific instructions from the beneficial owner of the shares to the contrary. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of non-routine matters, such as the adoption and approval of a merger. On the ironSource merger proposal, if a beneficial owner does not provide instructions to his, her or its bank, broker or other nominee, the shares will not be voted (referred to as a “broker non-vote”). Broker non-votes and abstentions will be treated as neither a vote “for” nor “against” any matter, although they will be counted as present in determining whether a quorum is present.
On the ironSource merger proposal to be submitted to the shareholders for consideration at the ironSource special general meeting, only ironSource ordinary shares that are voted on the proposal will be counted toward determining whether such proposal is approved in each of the three class or combined meetings required for approval of the merger (as detailed above). ironSource ordinary shares present at the special general meeting that are not voted on the ironSource merger proposal, or ironSource ordinary shares present by proxy where the holder properly withheld authority to vote on the ironSource merger proposal (including broker non-votes), will not be counted in determining whether the proposal is approved by shareholders.
Each ordinary share is entitled to one vote on the ironSource merger proposal and any other item that comes before the ironSource special general meeting for the relevant class meeting of ironSource ordinary shares (Class A or Class B), or, in the case of the combined Class A-Class B meeting, in accordance with the relative voting power of such share (one vote, and five votes, per Class A ordinary, and Class B ordinary, shares,
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respectively). If two or more persons are registered as joint holders of any ordinary share, the right to attend the ironSource special general meeting will be conferred upon each of such joint owners, but the right to vote at the ironSource special general meeting and/or the right to be counted as part of the quorum thereat will be conferred exclusively upon the more senior among the joint holders attending the special general meeting, in person or by proxy. For this purpose, seniority will be determined by the order in which the names appear in ironSource’s shareholder register.
Voting Results
The preliminary voting results will be announced at the ironSource special general meeting. The final voting results will be tallied by ironSource’s General Counsel based on the information provided by Broadridge Financial Solutions and will be published following the ironSource special general meeting in a Report of Foreign Private Issuer on Form 6-K.
Voting of Proxies and Voting Instruction Forms
Shares Held by ironSource Shareholders of Record
The proxy card that will be mailed to ironSource’s shareholders of record, and that can be completed, signed and returned in the envelope that will be enclosed with it, provides the primary means for authorizing the voting of ironSource ordinary shares by those shareholders. If you have lost or misplaced the proxy card mailed to you, you may print a copy of the proxy card from the Investor Relations page on ironSource’s website at https://investors.is.com/, and may complete and sign the proxy card (indicating the name of the shareholder of record) and return it, to ironSource’s Investor Relations team via e-mail to ir@is.com. ironSource reserves the right to require further identifying information from you if you submit your proxy card in that manner.
All votes from ironSource record shareholders should be received by the ironSource transfer agent by 11:59 p.m., Eastern Standard Time, on October 6, 2022 (or such earlier deadline as may be indicated on the proxy card), or received at ironSource’s Israeli offices by 10:00 a.m. (Israel time), on October 7, 2022, in order to be counted towards the tallies of ironSource Class A ordinary shares, ironSource Class B ordinary shares, and the combined tally of ironSource Class A ordinary shares and ironSource Class B ordinary shares, being voted at the class or combined meetings to be held at the ironSource special general meeting.
In the alternative to the foregoing voting methods, a proxy card may be presented in person to the chairperson of the ironSource special general meeting at such meeting in order to be counted towards the tally of votes at the meeting. If you are an ironSource registered shareholder and attend the ironSource special general meeting, you may vote in person, and if you so vote, your proxy will not be used.
Even if you plan to attend the ironSource special general meeting, if you hold your shares in your own name as the shareholder of record, please vote your shares using a proxy. DO NOT enclose or return your ironSource share certificate(s) with your proxy. Properly executed proxies that do not contain voting instructions will not be voted in respect of the ironSource merger proposal (unless the required confirmation is provided under Item 1A of the proxy card that the shareholder is not a Unity Affiliate nor has personal interest in the vote, in which case the proxy will be voted in favor of the ironSource merger proposal).
ironSource Shares Held in “Street Name” on the NYSE
If your ironSource Class A ordinary shares are held on the NYSE, either in a stock brokerage account or by a bank, broker or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If that is the case, you may instruct your bank, broker or other nominee how to vote by completing and returning the voting instruction form provided by your bank, broker or other nominee, or by providing voting instructions via the Internet (at www.proxyvote.com) or via telephone (as per the directions on the enclosed voting instruction form). If you plan to attend the ironSource special general meeting and vote in person, you will be required to present a “legal proxy” from your bank, broker or other nominee, along with an account statement showing ownership of your ironSource shares as of the ironSource record date, in order to be given a ballot to vote the shares in person at the meeting.
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Revoking or Changing Your Vote
Shares Held by ironSource Registered Shareholders
If you are a shareholder of record of ironSource, any proxy that you give pursuant to this solicitation may be revoked by you at any time before it is voted. Proxies may be revoked in one of three ways:
you can send a written notice stating that you would like to revoke your proxy, which notice must be received in our offices at least six hours prior to the time set for beginning the ironSource special general meeting (i.e., by 10:00 a.m. (Israel time), on October 6, 2022);
you can complete and submit a new proxy card dated later than the first proxy card, which must be received no later than the deadline applicable to a notice of revocation, as described above; or
you can attend the ironSource special general meeting, and file a written notice of revocation or make an oral notice of revocation of your proxy with the chairperson of the special general meeting and then vote in person. Your attendance at the special general meeting will not revoke your proxy in and of itself.
Any written notice of revocation or subsequent proxy submitted to ironSource in advance of the ironSource special general meeting should be delivered to ironSource’s principal executive offices, located at 121 Menachem Begin Street, Tel Aviv 6701203, Israel, Attention: Dalia Litay, General Counsel, or hand-delivered to ironSource’s Chairman of the Board at or before the taking of the vote at the special general meeting.
ironSource Shares Held in “Street Name” on the NYSE
If your shares are held on the NYSE via a stock brokerage account or by a bank or other nominee, in order to change your voting instructions, you must follow the directions from your broker, bank or other nominee as to how to change those instructions.
The Proxy
Assaf Ben Ami, ironSource’s Chief Financial Officer and Dalia Litay, ironSource’s General Counsel, each individually, will serve as proxies for shareholders of ironSource under the enclosed form of proxy with respect to the matter to be voted upon at the ironSource special general meeting.
Required Vote for the ironSource Merger Proposal
The approval of the ironSource merger proposal requires three different class-related votes at special general meetings under ironSource’s articles of association, as amended, and the Companies Law. Those separate meetings at which those class-related votes will occur will be combined at the ironSource special general meeting. The affirmative vote of the holders of a majority of the voting power represented at the ironSource special general meeting in person or by proxy and voting thereon, excluding abstentions and broker non-votes, of each of the following constitute the foregoing required class-related approvals:
(1)
the ironSource Class A ordinary shares, voting as a separate class;
(2)
the ironSource Class B ordinary shares, voting as a separate class, and
(3)
the ironSource Class A ordinary shares and ironSource Class B ordinary shares, voting together as a single class.
In the foregoing combined class meeting of the ironSource Class A ordinary shares and ironSource Class B ordinary shares (i.e., approval (3) above), each ironSource Class A ordinary share is entitled to one vote, whereas each ironSource Class B ordinary share is entitled to five votes.
As described further below, each shareholder of record of ironSource will receive a proxy card in respect of (i) all ironSource Class A ordinary shares, and (ii) all ironSource Class B ordinary shares, held by them. In order to ensure that all of your ironSource ordinary shares (Class A and Class B) are voted in the relevant class meetings and the combined meeting at the ironSource special general meeting, please complete, execute and return the proxy card that you receive. Because voting instruction forms relate only to shares held in “street name”, and all ironSource Class B ordinary shares convert automatically into ironSource Class A ordinary shares upon transfer to “street name”, any voting instruction form that you receive from your bank, broker or other nominee relates only to your ironSource Class A ordinary shares.
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At each of the foregoing three meetings that are required for approval of the ironSource merger proposal, the fulfillment of the following conditions as part of the vote that is held will be required: (i) the majority vote must include a majority of shares voted in favor of the merger proposal that are not held by (a) Unity, Merger Sub or any person or entity holding, directly or indirectly, 25% or more of the voting power or the right to appoint the chief executive officer or 25% or more of the directors of Unity or Merger Sub, (b) a person or entity acting on behalf of Unity, Merger Sub or a person or entity described in clause (a) above, or (c) a family member of, or an entity controlled by Unity, Merger Sub or any of the foregoing (each of (a), (b) and (c) above are referred to as a “Unity Affiliate”), and (ii) as required under Sections 270(4) and 275(a) of the Companies Law (due to a potential personal interest of certain shareholders of ironSource in the approval of the proposal by the respective class or combined classes of shares), the fulfillment of either of the following conditions as part of the vote that is held will be required – (x) the majority vote obtained in favor of the ironSource merger proposal also includes a majority of the shares held by shareholders who are not deemed to have a personal interest (as defined under the Companies Law) in the approval of the proposal that are voted at the applicable ironSource meeting, excluding abstentions and broker non-votes, or (y) the total number of shares held by such non-conflicted shareholders (as described in the immediately preceding bullet-point) voted against the ironSource merger proposal does not exceed 2% of the aggregate voting power in ironSource (on a per class or combined class basis).
For purposes of the foregoing conditions, a “personal interest” (i) includes an interest of any member of a shareholder’s immediate family (i.e., spouse, sibling, parent, parent’s parent, descendant, the spouse’s descendant, sibling or parent, and the spouse of each of these) or an interest of an entity with respect to which the shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or its voting power or has the right to appoint a director or the chief executive officer; and (ii) excludes an interest arising solely from the ownership of shares of ironSource. In determining whether a vote cast by proxy is disinterested, the conflict of interest/“personal interest” of the proxy holder is also considered and will cause that vote to be treated as the vote of an interested shareholder, even if the shareholder granting the proxy does not have a conflict of interest/ personal interest in the matter being voted upon.
Under Section 268 of the Companies Law, a “controlling shareholder” is any shareholder that has the ability to direct a company’s activities (other than by means of being a director or office holder of the company) including, with respect to the ironSource merger proposal, a person who holds 25% or more of the voting rights at the general meeting of ironSource if there is no other person who holds more than 50% of the voting rights of ironSource. For these purposes, two or more persons holding voting rights in a company, each of whom has a personal interest in the approval of the transaction being brought for approval of a company’s shareholders are considered to be joint holders. A person is presumed to be a controlling shareholder if he, she or it holds or controls, by himself, herself or itself, or together with others, one-half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer. In order for your vote to be counted in respect of the ironSource merger proposal, you must affirm on the proxy card and voting instruction form that you receive that you are not a Unity Affiliate nor you have a personal interest in the vote (as described above) (by indicating “FOR” in Item 1A of the proxy card or voting instruction form). If you do not so affirm, your vote will not count towards the relevant tallies in respect of the votes on the ironSource merger proposal.
In connection with the merger, (i) certain members of the ironSource board as of the time of approval of the merger (namely, Tomer Bar-Zeev, Arnon Harish and Eyal Milrad) who serve as executive officers of ironSource, as well as certain other employees who are also shareholders of ironSource, disclosed to the ironSource board prior to the approval of the merger agreement by the board their potential personal interest in the merger (in their capacity as employees of ironSource), and advised that they expect to enter into new employment terms with Unity, which are expected to be discussed between them and Unity after the execution of the merger agreement, (ii) ironSource’s Chief Executive Officer disclosed to the ironSource board prior to the approval of the merger agreement by the board that he is expected to serve as a director on the Unity board after the merger and that such service may give rise to a personal interest, and (iii) shortly before the date of this notice, the ironSource board resolved in accordance with the merger agreement to designate Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger, and such service may give rise to a personal interest of such directors and of Viola Ventures III, LP. The aggregate voting rights of the ironSource shareholders who are deemed to have a personal interest in the merger by virtue of the foregoing are expected to
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exceed 25% of the total voting rights in the combined meeting of the ironSource Class A ordinary shares and ironSource Class B ordinary shares, and of the total voting rights in the separate class meetings of the ironSource Class A ordinary shares and ironSource Class B ordinary shares. In light of those personal interests (as described above in sub-sections (i) and (ii)), the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board, and further, the designation of Messrs. Shlomo Dovrat and David Kostman to serve as directors on the Unity board after the merger (as described in sub-section (iii)) the ironSource merger proposal was also approved by the audit committee of ironSource’s board, prior to being approved by the ironSource board.
Share Ownership of ironSource Directors and Executive Officers
As of the ironSource record date, directors and executive officers of ironSource beneficially owned, in the aggregate, approximately 20.3%, 38% and 32.9% of the issued and outstanding ironSource Class A ordinary shares, issued and outstanding ironSource Class B ordinary shares, and voting power of the combined classes, respectively. See “Security Ownership of Certain Beneficial Owners and Management of ironSource” for more details concerning the beneficial ownership of ironSource ordinary shares by ironSource’s directors and executive officers.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees of ironSource may solicit proxies for the ironSource special general meeting from ironSource’s shareholders personally or by telephone, facsimile and other electronic means without compensation other than reimbursement for their actual expenses. Arrangements also will be made with bankers, brokers and other nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of ironSource ordinary shares held of record by those persons, and ironSource will, if requested, reimburse the record holders for their reasonable out-of-pocket expenses in so doing.
ironSource has retained Morrow Sodali, a proxy solicitation firm, to perform various solicitation services in connection with the ironSource special general meeting of shareholders. ironSource will pay Morrow Sodali a customary fee, plus phone and other related expenses, in connection with its solicitation services. Morrow Sodali has engaged certain of its employees to assist us in connection with the solicitation of proxies.
Please do not send in any ironSource share certificates with your proxy cards or voting instruction forms.
Attending the ironSource Special General Meeting
Only ironSource shareholders, including joint holders, who held shares of record as of the close of business on September 2, 2022 and other persons holding valid proxies for the ironSource special general meeting are entitled to attend the meeting. All shareholders and their proxies should be prepared to present a valid photo identification. In addition, if you are a registered holder of ironSource ordinary shares, your name is subject to verification against the list of registered holders on the record date prior to being admitted to the ironSource special general meeting. ironSource’s shareholders who are not registered holders but hold shares on the NYSE through a bank, broker or other nominee in “street name” and wish to attend the meeting should be prepared to provide proof of beneficial ownership as of the record date, such as a recent account statement as of September 2, 2022, or similar evidence of ownership. A “street name” holder who wishes to vote his, her or its ironSource Class A ordinary shares at the ironSource meeting will be required to present a “legal proxy” from the bank, broker or other nominee through which the share are held. If you do not provide photo identification or the foregoing documentation, or comply with the other procedures outlined above upon request, you will not be admitted to the ironSource special general meeting.
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Contact for Questions and Assistance in Voting
If you have a question about the merger or how to vote or revoke a proxy you should contact:
Morrow Sodali
509 Madison Avenue
New York, New York 10022
Telephone:
(800) 662-5200 (in North America)
(203) 658-9400 (outside of North America)
Email: IS@investor.morrowsodali.com
Other Matters
ironSource is not aware of any other business to be acted upon at the ironSource special general meeting. If, however, other matters are properly brought before the ironSource special general meeting or any adjournment or postponement of the ironSource special general meeting, the persons named as proxy holders will each have discretion to act on those matters, including to vote in their discretion to adjourn or postpone the special general meeting or any adjournment of postponement thereof.
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PROPOSALS SUBMITTED TO IRONSOURCE SHAREHOLDERS
ironSource Merger Proposal
At the ironSource meeting, shareholders will be asked to consider and vote on the following proposal, which is more fully described elsewhere in this joint proxy statement/prospectus:
to approve, pursuant to the Companies Law, the merger agreement, including approval of: (i) the merger transaction pursuant to Sections 314 through 327 of the Companies Law, whereby Merger Sub will merge with and into ironSource, with ironSource surviving and becoming a direct wholly owned subsidiary of Unity (which we refer to as the “merger”); (ii) the merger; (iii) the consideration to be received by ironSource’s shareholders in the merger, other than holders of ‘Cancelled Shares’ (as defined in the merger agreement), consisting of 0.1089 of a share of Unity common stock subject to the withholding of any applicable taxes, for each ironSource ordinary share held as of immediately prior to the effective date of the merger; and (iv) all other transactions and arrangements contemplated by the merger agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A. We refer to this proposal as the “ironSource merger proposal.”
We currently know of no other business to be transacted at the ironSource special general meeting, other than as set forth above; but, if any other matter is properly presented at the meeting, the persons named in the proxy card will vote upon such matters in accordance with their best judgment.
OUR BOARD OF DIRECTORS (EXCLUDING DIRECTORS WHO MAY BE DEEMED TO HAVE A PERSONAL INTEREST, AS DEFINED UNDER THE COMPANIES LAW CONCERNING THE MERGER) UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE IRONSOURCE MERGER PROPOSAL.
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THE VOTING AGREEMENTS
Concurrently with the execution of the merger agreement, on July 13, 2022, certain ironSource shareholders entered into voting agreements with Unity (the “ironSource Voting Agreements”) with respect to any issued and outstanding ironSource ordinary shares beneficially owned by such shareholders, and certain Unity stockholders entered into a voting agreement with ironSource (the ”Unity Voting Agreement”) with respect to any issued and outstanding shares of Unity common stock beneficially owned by such stockholders. The following summary describes certain material provisions of the ironSource Voting Agreements and the Unity Voting Agreement, the forms of which are attached hereto as Annex D and Annex E, respectively, and are incorporated by reference herein in their entirety. The description of the ironSource Voting Agreements and the Unity Voting Agreement in this section and elsewhere in this joint proxy statement/prospectus are qualified in their entirety by reference to the complete text of the ironSource Voting Agreements and the Unity Voting Agreement.
ironSource Voting Agreements
Voting
Each ironSource shareholder subject to an ironSource Voting Agreement has irrevocably and unconditionally agreed that from the date of such shareholder’s applicable ironSource Voting Agreement until its date of termination, such shareholder will vote or cause to be voted at every meeting of ironSource shareholders or any class of ironSource shareholders all the Committed Covered Shares (as defined in the applicable ironSource Voting Agreement) that such shareholder beneficially owns, among other things:
(i)
in favor of:
(A)
the consummation of the transactions contemplated by the merger agreement, including the merger,
(B)
all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement, and
(C)
any other transaction contemplated by the merger agreement or other matters that would reasonably be expected to facilitate the merger, including any proposal to adjourn or postpone any meeting of the ironSource shareholders to a later date if there are not sufficient votes to approve the adoption of the merger agreement; and
(ii)
against:
(A)
certain alternative business combination transactions described in the merger agreement;
(B)
any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of ironSource as set forth in the merger agreement or of any ironSource shareholder as set forth in its ironSource Voting Agreements; or
(C)
any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, be inconsistent with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the ironSource Voting Agreements or the merger agreement.
The obligations of each ironSource shareholder will not be affected by any ironSource Change of Recommendation. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the ironSource ordinary shares that are subject to the ironSource Voting Agreements consist of approximately 37.5% of the issued and outstanding ironSource Class A ordinary shares, approximately 36.5% of the issued and outstanding ironSource Class B ordinary shares and approximately 37% of the issued and outstanding voting right of the combined ironSource Class A ordinary shares and Class B ordinary shares.
Restrictions on Inconsistent Arrangements and Transfers
The ironSource Voting Agreements contain customary provisions restricting the shareholders from taking any action, directly or indirectly, that would reasonably be expected to make any of such shareholder’s representations or warranties under the ironSource Voting Agreements untrue or incorrect in any material respect during the term of such agreements.
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Each shareholder has also agreed that, with limited exceptions, prior to the termination of such shareholder’s ironSource Voting Agreement, such shareholder will not transfer, directly or indirectly, any Covered Shares (as defined in the applicable ironSource Voting Agreement); provided, that, in addition to any permitted transfers under the ironSource Voting Agreements, each shareholder may transfer up to 10% of the Committed Covered Shares.
No Solicitation
Each ironSource shareholder subject to an ironSource Voting Agreement has agreed to be bound by and comply with the provisions of the merger agreement described under the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by ironSource” as if such shareholder was a direct party to the merger agreement.
Termination
The ironSource Voting Agreements will automatically terminate upon the earliest to occur of (i) the written consent of Unity, (ii) the Effective Time, (iii) the valid termination of the merger agreement in accordance with its terms, or (iv) the termination by Unity of any other voting agreement entered into in connection with the merger agreement or the merger.
Unity Voting Agreement
Voting
Each Unity stockholder subject to the Unity Voting Agreement has irrevocably and unconditionally agreed, severally and not jointly, that from the date of the Unity Voting Agreement until its date of termination, such stockholder will vote or cause to be voted at every meeting of Unity stockholders or any class of stockholders all the Covered Shares (as defined in the Unity Voting Agreement) that he, she or it beneficially owns, among other things:
(i)
in favor of:
(A)
the consummation of the transactions contemplated by the merger agreement, including the merger,
(B)
all of the matters, actions and proposals necessary to consummate the transactions contemplated by the merger agreement,
(C)
any other transaction contemplated by the merger agreement, and
(D)
any proposal to adjourn or postpone any meeting of the Unity stockholders to a later date if there are not sufficient votes to approve the adoption of the merger agreement; and
(ii)
against:
(A)
certain alternative business combination transactions described in the merger agreement;
(B)
any action, proposal or transaction that would reasonably be expected to result in a breach of any covenant, agreement, representation or warranty or any other obligation of Unity as set forth in the merger agreement or of any such Unity stockholder as set forth in the Unity Voting Agreement; or
(C)
any other action, proposal or transaction that is intended, or would reasonably be expected, to materially impede, interfere with, be inconsistent with, delay, postpone or prevent the consummation of, or otherwise adversely affect, the merger, the other transactions contemplated by the Unity Voting Agreement or the merger agreement.
The obligations of each Unity stockholder will not be affected by any Unity Change of Recommendation. As of September 2, 2022, the latest practicable date prior to the date of this joint proxy statement/prospectus, the Unity stockholders subject to the Unity Voting Agreement beneficially owned approximately 28.5% of the issued and outstanding shares of Unity common stock.
Restrictions on Inconsistent Arrangements and Transfers
The Unity Voting Agreement contains customary provisions restricting the stockholders from taking any action, directly or indirectly, that would reasonably be expected to make any of such stockholder’s
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representations or warranties under the Unity Voting Agreement untrue or incorrect in any material respect during the term of such agreement.
Each stockholder has also agreed, severally and not jointly, that, with limited exceptions, prior to the termination of the Unity Voting Agreement, he, she or it will not transfer, directly or indirectly, any Covered Shares; provided, that, in addition to any permitted transfers under the Unity Voting Agreement, each stockholder may transfer up to 10% in the aggregate of the Covered Shares held by such stockholder as of the date of the Unity Voting Agreement.
No Solicitation
Each Unity stockholder subject to the Unity Voting Agreement has agreed, severally and not jointly, to be bound by and comply with the provisions of the merger agreement described under the section titled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by Unity” as if such stockholder was a direct party to the merger agreement.
Termination
The Unity Voting Agreement will automatically terminate upon the earliest to occur of (i) the written consent of ironSource, (ii) the Effective Time, (iii) the valid termination of the merger agreement in accordance with its terms, or (iv) the termination by ironSource of any other voting agreement entered into in connection with the merger agreement or the merger.
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THE MERGER
This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this joint proxy statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire merger agreement carefully as it is the legal document that governs the merger.
Transaction Structure
At the effective time of the merger, Merger Sub will merge with and into ironSource, with ironSource surviving the merger. As a result of the merger, the separate corporate existence of Merger Sub will cease and ironSource will be a direct wholly owned subsidiary of Unity.
Consideration to ironSource Shareholders
Upon consummation of the merger, each ironSource shareholder (subject to certain exceptions set forth in the merger agreement) will receive, for each eligible ironSource ordinary shares that is issued and outstanding as of immediately prior to the first effective time, the merger consideration of 0.1089 shares of Unity common stock rounded up or down to the nearest whole share for any fractional shares of Unity common stock resulting from the calculation and subject to the withholding of any applicable taxes. Unity will not issue fractional shares of Unity common stock in the merger.
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the merger agreement, but it does not purport to catalogue every conversation and correspondence among representatives of Unity, ironSource and their respective advisors. All dates and times referred to in the following chronology are Eastern Standard Time unless otherwise indicated. The following disclosures relating to events in which only one of the parties to the merger agreement participated are the sole statements of such participating party. Unless otherwise specifically indicated, such other party to the merger agreement nor any of its affiliates or representatives were involved in such events and interactions and are thus not informed enough to make a basis for any of the below claims related to the specific events and interactions disclosed.
The management and boards of directors of Unity and ironSource regularly reviewed the performance, strategy, competitive position, opportunities and prospects of their respective companies in light of the then-current business and economic environments, as well as developments in the industries in which the companies operate, and the opportunities and challenges facing participants in those industries. In addition, the management and board of directors of each company regularly reviewed and evaluated the possibility of pursuing various strategic alternatives and relationships as part of their respective companies’ ongoing efforts to strengthen their respective overall business and enhance value for their respective shareholders and customers, while taking into account economic, regulatory, competitive and other conditions. As part of these efforts, each of Unity and ironSource regularly maintained commercial relationships with various industry participants.
As a result of their respective regular evaluations and their prior business relationship, Unity’s management team was generally familiar with ironSource, its management team and its businesses, and ironSource’s management team was generally familiar with Unity, its management team and its businesses.
On March 8, 2022, Ms. Ingrid Lestiyo, Senior Vice President and General Manager, Operate Solutions of Unity met with Mr. Tomer Bar-Zeev, Co-Founder, Chairman and Chief Executive Officer of ironSource, in person at Unity’s San Francisco headquarters to discuss future opportunities of collaboration between the two companies.
On March 24, 2022, while ironSource’s management team was attending a gaming conference in San Francisco, Ms. Lestiyo met with Mr. Omer Kaplan, Co-Founder, and Chief Revenue Officer of ironSource in person at Unity’s San Francisco headquarters to discuss a potential partnership between the two companies.
On March 30, 2022, Mr. Kaplan contacted Ms. Lestiyo via email to arrange a video conference to further acquaint themselves and discuss a potential partnership between the two companies.
On April 7, 2022, Ms. Lestiyo, Mr. Luis Visoso, Senior Vice President and Chief Financial Officer of Unity, Mr. Assaf Ben Ami, Chief Financial Officer of ironSource, and Mr. Kaplan met by video conference to discuss in greater detail a potential partnership between the two companies.
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In parallel with the foregoing discussions, members of ironSource’s and Unity’s management teams had numerous internal discussions to further acquaint themselves with each other in connection with a potential business combination. No discussions regarding price, exchange ratio or enterprise value of ironSource were estimated or discussed.
A video conference was held on April 22, 2022, among Messrs. Visoso, Ben Ami and Kaplan, during which the parties continued their discussion from the video conference on April 7. The parties agreed that continued exploratory discussions regarding a potential business combination would be appropriate.
On April 25, 2022, Mr. John Riccitiello, President, Chief Executive Officer and Executive Chairman of Unity met in person with Mr. Bar-Zeev at Unity’s San Francisco headquarters to discuss a potential partnership between the two companies. Mr. Bar-Zeev and Mr. Riccitiello agreed that an additional meeting among the management teams of the two companies would be appropriate in order for each team to learn, on a preliminary basis, about the business, goals and strategies of the other company and consider whether there is a basis for further discussions of a potential business combination.
In late April 2022, members of Unity’s management team and ironSource’s management team met on numerous occasions by video conference, to discuss, among other things, the background and business of their respective companies and potential opportunities to establish a collaboration between both companies. Unity’s management team and ironSource’s management team also had exploratory discussions regarding the potential strategic and financial benefits of a business combination transaction between Unity and ironSource in light of the business and market environments in which the two companies were operating.
On April 28, 2022, as part of regular evaluations of strategic alternatives, representatives of Unity’s management team discussed with representatives of Morgan Stanley & Co. LLC, which is referred to as “Morgan Stanley”, the merits of a combination with ironSource (among other potential alternatives). Morgan Stanley had been involved in Unity’s prior evaluations of strategic alternatives, including business combinations and corporate finance initiatives, and was generally familiar with the businesses of Unity and ironSource. Such discussion included a review of the strategic rationale and potential financial benefits of a combination with ironSource.
Also on April 28, 2022, representatives of Unity’s management team and ironSource’s management team met by video conference, and the parties confirmed their continued interest in exploring a potential business combination. No specific terms or conditions of a potential business combination were discussed.
On May 6, 2022, Mr. Visoso and Mr. Ben Ami met by video conference to discuss next steps in the business combination evaluation process, including the need to enter into a mutual confidentiality agreement and an overview of the due diligence review process.
On May 10, 2022, the ironSource board held their regularly scheduled quarterly meeting. At the meeting, Mr. Bar-Zeev updated the board on his views that the ironSource board should consider exploring strategic opportunities. Mr. Bar-Zeev further explained that ironSource management had engaged in exploratory conversations with respect to a potential business combination, though no discussions were advanced enough to present to the ironSource board. At this meeting, there was no discussions regarding specific terms of a potential business combination. The ironSource board held an initial discussion on the subject of potential strategic opportunities and collaborations and authorized Mr. Bar-Zeev to continue exploratory discussions.
During such time, Mr. Bar-Zeev conducted numerous discussions with individual ironSource board members regarding a possible merger transaction with Unity and potential approaches to discussions on premiums, price and exchange ratios.
On May 16, 2022, representatives of Unity’s management team and ironSource’s management team met by video conference and discussed potential next steps, including the need to sign a confidentiality agreement. Later that day, Unity circulated a draft confidentiality agreement for ironSource’s review.
On May 17, 2022, Unity and ironSource entered into a mutual non-disclosure and confidentiality agreement which allowed for confidential discussions to commence and the exchange of confidential information in connection with the parties’ respective due diligence reviews. The mutual non-disclosure and confidentiality agreement did not contain any standstill or exclusivity provisions.
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From May 19, 2022 through May 20, 2022, Messrs. Riccitiello, Visoso, Bar-Zeev, Kaplan, and Ben Ami as well as Mr. Arnon Harish, Co-Founder, President and director of ironSource and Mr. Eyal Milrad, Co-Founder, Chief Strategy Officer and director of ironSource, met in person at ironSource’s headquarters in Tel Aviv. During these meetings, the participants discussed their (i) respective businesses, (ii) beliefs regarding potential synergy opportunities, (iii) strategic vision for the combined company and (iv) the due diligence review process.
On May 25, 2022, the ironSource board met and held initial discussions with ironSource’s management team, and representatives of Jefferies and Meitar Law Offices, ironSource’s outside Israeli legal counsel, which is referred to as “Meitar,” regarding a potential business combination with Unity. Mr. Bar-Zeev provided a brief description of the discussions held up until that time with Unity, the potential benefits that may be realized in a business combination with Unity and the risks involved in such a transaction. Meitar provided an explanation on the fiduciary duties of the board of directors in connection with a potential business combination and representatives of Jefferies discussed with the ironSource board the potential business combination involving ironSource and Unity, including potential transaction structures and potential strategic alternatives. The ironSource board authorized ironSource’s management team to continue in its discussions with Unity and proceed with a more thorough mutual due diligence process, with the assistance of Jefferies and Meitar, in order to evaluate a possible transaction with Unity. During this meeting, ironSource’s management team also explained that it would be interested in engaging Jefferies as ironSource’s financial adviser in connection with the potential business combination based on Jefferies’ qualifications and expertise as well as its reputation in investment banking and mergers and acquisitions, its prior involvement in ironSource’s strategic transactions (including in ironSource’s business combination with Thoma Bravo Advantage, a Special Purpose Acquisition Company, effected in June 2021) and its overall familiarity with the business of ironSource. At the ironSource board’s direction, ironSource’s management team subsequently engaged Jefferies as its financial adviser in connection with the potential business combination.
On May 25, 2022, Mr. Visoso, Mr. Ben Ami, and representatives of Morrison & Foerster LLP, Unity’s outside legal counsel, which is referred to as “Morrison Foerster”, Deloitte LLP, Unity’s tax advisors, and Meitar, met by video conference to discuss potential antitrust issues and potential tax consequences as well as due diligence matters and other deal related issues.
Between May 31 and June 29, 2022, Adam Foroughi, the Chief Executive Officer of AppLovin Corporation, which is referred to as “AppLovin”, and Mr. Riccitiello held several high level discussions where Mr. Foroughi raised the possibility of pursuing a potential strategic transaction. No specific proposal was made for any particular type of transaction.
In early June 2022, at the request of ironSource, representatives of Jefferies met with ironSource’s management team, and discussed a potential business combination transaction with Unity.
On June 2, 2022, the Unity board held a regularly scheduled board meeting by video conference. Representatives of Cooley LLP, general corporate counsel to Unity, which is referred to as “Cooley,” also participated in the meeting. Unity’s management team provided an overview to the Unity board with respect to ironSource, its businesses and financial information, strategic rationale for a potential business combination with ironSource, and potential benefits that could result from and challenges associated with a potential business combination with ironSource. Following the discussion, the Unity board approved resolutions authorizing the creation of a special committee, which is referred to as the “Aroma Special Committee”, for administrative purposes to take the lead on behalf of the full board in working with Unity’s management and its advisors in evaluating and pursuing the potential business combination, and vested it with the authority to review the potential business combination with ironSource and to consult with Unity’s management team regarding the potential business combination. The Unity board appointed Mr. Roelof Botha, Mr. Egon Durban and Mr. Barry Schuler to serve as the members of the Aroma Special Committee.
Following such Unity board meeting, Mr. Riccitiello spoke by telephone with Mr. Bar-Zeev to update him on the developments following the Unity board meeting, noting the intention to continue progressing towards a potential business combination with ironSource.
On June 5, 2022, the Aroma Special Committee held a meeting by video conference, together with certain other members of the Unity board, representatives of Unity’s management team, representatives of Morgan Stanley and representatives of Morrison Foerster, to review the potential benefits and challenges of a potential
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business combination with ironSource, including potential valuation for a potential combination, potential synergies between the companies and ironSource’s financial performance, and to discuss potential terms as well as expected timeline for the potential business combination.
From June 7, 2022 through June 8, 2022, representatives of Unity’s management team and ironSource’s management team met in person at ironSource’s headquarters in Tel Aviv in order to evaluate whether a potential business combination would be feasible and to discuss the possible legal structure of such a transaction and the potential key terms of the proposed transaction. Also attending these meetings were representatives of Morgan Stanley, representatives of Morrison Foerster and representatives of Herzog, Fox and Ne’eman, Unity’s outside Israeli legal counsel, which is referred to as “Herzog”, as well as representatives of Jefferies and representatives of Meitar. During these meetings, representatives of Unity’s management team and ironSource’s management team engaged in multiple discussions regarding their respective viewpoints on valuation of the potential business combination and on the ironSource revenue synergy model, as well as whether the consideration to be paid by Unity in a transaction would be comprised entirely of Unity stock or be comprised of a mixture of cash and Unity stock. Representatives of Unity’s management team and ironSource’s management team also discussed, among other things, employee retention matters, governance and potential post-transaction arrangements and other terms.
In the course of these meetings, Mr. Visoso initially proposed to ironSource a contemplated all or predominantly all stock transaction in which the consideration paid would result, in the case of an all-stock transaction, in a pro forma ownership percentage held by ironSource shareholders in the combined company of 22.4%. Representatives of ironSource’s management team indicated that they did not believe that the ironSource board would accept such transaction and that the premium per share relative to the trading price of ironSource ordinary shares was not compelling enough to warrant a change in ironSource’s plans to continue to operate as a standalone company. ironSource representatives countered with proposals in which the consideration paid would result in a pro forma ownership percentage held by ironSource shareholders in the combined company in the low thirties. During such time, Mr. Bar-Zeev conducted numerous discussions with individual ironSource board members regarding potential premiums, price and exchange ratios that were being considered and discussed by the ironSource and Unity management teams.
On June 7, 2022, the Aroma Special Committee held a meeting by video conference with representatives of Unity’s management team. Unity’s management team provided an overview of the ongoing negotiations with ironSource, including valuation discussions and the necessity of a vote by the stockholders of Unity. The Aroma Special Committee discussed potential transaction terms, including, among other things, the appropriate merger consideration, including a potential 26% to 26.3% pro forma ownership by ironSource’s shareholders in the combined company. The Aroma Special Committee confirmed management should continue to engage with ironSource to determine if a potential business combination could be achieved on acceptable terms.
Also on June 7, 2022, Mr. Visoso and representatives of affiliates of Silver Lake, which is referred to as “Silver Lake”, and affiliates of Sequoia Capital Operations, LLC, which is referred to as “Sequoia Capital”, which beneficially owned approximately 12% and 13%, respectively, of the issued and outstanding shares of Unity common stock as of June 7, 2022, began discussions regarding the potential financing options to fund the potential repurchase of Unity common stock following the closing of the potential business combination with ironSource.
On June 8, 2022, representatives of Unity’s and ironSource’s management team held further discussions regarding the transaction consideration. Representatives of Unity’s management team proposed a consideration that would result in a 26% pro forma ownership by ironSource’s shareholders in the combined company and representatives of ironSource’s management team countered with a consideration that would result in a 27% pro forma ownership by ironSource’s shareholders in the combined company. The parties ultimately reached an initial understanding that an all stock merger on the basis of a pro-forma ownership ratio in the combined company of 73.5% and 26.5%, with respect to Unity’s stockholders and ironSource’s shareholders, respectively, with an exchange ratio of 0.1089 (such that ironSource shareholders would receive 0.1089 of a share of Unity common stock for each ironSource ordinary share) may be an acceptable path forward for the respective management teams to take back and further discuss with their respective boards. The respective management teams agreed that any potential business combination would be subject to a mutual due diligence process and fully negotiated transaction documents, including a merger agreement and additional ancillary agreements.
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On June 8, 2022, the Aroma Special Committee held a meeting by video conference with representatives of Unity’s management team, during which Unity’s management team provided an update on ongoing negotiations with ironSource, including the fact that the management teams of Unity and ironSource had agreed to proceed with the exploration of a potential business combination on the basis of an all-stock consideration transaction and with an exchange ratio that would result in an approximately 26.5% pro forma ownership by ironSource’s shareholders in the resulting combined company. The Aroma Special Committee also discussed, among other things, valuation scenarios, cost synergies of the two companies and potential integration matters.
Also on June 8, 2022, Mr. Visoso and representatives of Morgan Stanley held a meeting by video conference and discussed potential financing options and sources, including Silver Lake and Sequoia Capital, to fund the potential repurchase of Unity common stock following the closing of the potential business combination with ironSource.
On June 9, 2022, representatives of Unity’s management team, representatives of ironSource’s management team and representatives of their respective financial advisers met in-person and by video conference to discuss, among other things, key open issues and the process and timing to conclude a potential business combination, including the due diligence review process and immediate next steps. On the same day, representatives of Morrison Foerster delivered to representatives of Meitar a preliminary non-binding indication of interest, which is referred to as the “June 9 Term Sheet,” which described the proposed terms, conditions and structure for the combination of Unity and ironSource and which served as the basis for further exploring a potential combination.
On June 10, 2022, the ironSource board met and held a discussion on the main conclusions resulting from the various meetings with Unity as well as the information learned about Unity, potential synergies between the companies and Unity’s business as well as the potential business combination. At this meeting, at the invitation of the ironSource board, representatives of Jefferies reviewed with the ironSource board a preliminary analysis of the proposed business combination between Unity and ironSource. Meitar then provided a presentation on the proposed structure of the potential business combination and its main terms and conditions, including the anticipated tax consequences to shareholders and the process to be followed in considering, evaluating and consummating such a transaction. Meitar also provided a further explanation on the fiduciary duties of the board of directors in connection with a potential business combination. During the ironSource board’s discussion of the potential transaction with Unity, members of ironSource’s management team discussed long-term risks concerning the performance of ironSource’s existing business, including, among other things, the competitive environment and anticipated developments in the industry in which ironSource was operating. ironSource’s management team also explained the advantages in moving forward with a business combination with a significant company in the industry, such as Unity. The directors of the ironSource board discussed in detail the proposed business combination, the scope of the due diligence process and other strategic alternatives that may be available to ironSource. The directors of the ironSource board expressed the view that, to the extent that due diligence findings and business discussions would not yield a different conclusion, the proposed exchange ratio of 0.1089 appeared to be reasonable and that there were certain fundamental elements of the two businesses that lead the board to believe that a combination may result in the creation of a unique and successful combined business. The directors of the ironSource board authorized ironSource’s management team, together with representatives of Jefferies, Meitar and Latham & Watkins LLP, ironSource’s outside United States legal counsel, which is referred to as “Latham”, to proceed in discussions and the mutual due diligence.
Also on June 10, 2022, to facilitate the continued discussion of the June 9 Term Sheet, representatives of Meitar delivered to representatives of Morrison Foerster a revised draft of the June 9 Term Sheet, which contained various changes, including, among others, changes relating to treatment of ironSource’s existing equity awards, termination rights, termination fees, closing conditions and tax treatment of the proposed business combination.
Also on June 10, 2022, representatives of Morrison Foerster sent to representatives of Meitar a legal due diligence request list regarding ironSource.
Also on June 10, 2022, Mr. Visoso and representatives of Silver Lake discussed the potential issuance of approximately $1.0 billion of newly established convertible debt, which is referred to as the “PIPE Transaction”, to Silver Lake and Sequoia Capital to fund the potential repurchase of Unity common stock following the closing of the merger. Mr. Egon Durban, a member of the Unity board, is the Co-Chief Executive Officer and Managing
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Partner of Silver Lake, and Mr. Roelof Botha, a member of the Unity board, is a Managing Member of Sequoia Capital. That same day, representatives of Silver Lake submitted their initial proposal for the PIPE Transaction, which provided a 2.5% coupon and a 20% conversion rate.
On June 12, 2022, representatives of Morrison Foerster sent an initial draft of the merger agreement and voting agreement to representatives of Meitar. That afternoon, representatives of ironSource commenced confirmatory legal due diligence of Unity and sent to representatives of Morrison Foerster a legal due diligence request list. In the weeks following, representatives of Unity and ironSource conducted further financial and operational due diligence reviews of one another. Over the same period, each company’s legal, tax, financial and other advisers assisted each company with their due diligence reviews of the other company based on publicly available information on each company, information made available to them by each company in the virtual data room, information provided to them in emails communication, information provided by written due diligence questions and through extensive due diligence calls with the management team and advisers of each company.
On June 13, 2022, Unity’s management team, ironSource’s management team and representatives from Jefferies and Morgan Stanley met by video conference to discuss Unity’s views on potential revenue synergies and to review such synergy model prepared by both Unity’s and ironSource’s corporate development teams, using assumptions and model inputs agreed by the parties.
On June 13, 2022, Mr. Visoso, Mr. Ben Ami, and other representatives of Unity’s management team and ironSource’s management team met by video conference and discussed some of the matters included in the June 9 Term Sheet. During these discussions, the parties decided to focus on the merger agreement and other definitive documents and agreed that parties would not spend additional time revising or finalizing the June 9 Term Sheet.
Additionally on June 13, 2022, Unity’s management team, ironSource’s management team and representatives of Morrison Foerster, Meitar, and Latham, met by video conference to discuss the registration statement preparation process. The next day, representatives of Morrison Foerster, Meitar and Latham met by video conference to continue the discussion on the preparation of the registration statement. Over the span of a few weeks during the second half of June and early July 2022, members of both Unity’s and ironSource’s management teams, including Messrs. Riccitiello, Visoso, Bar-Zeev, Kaplan, Harish and Ben Ami held various calls and video conferences where updates on the diligence process, open matters and other general topics were discussed.
On June 15, 2022, ironSource opened its virtual data room, and on June 18, 2022, Unity opened its virtual data room. Thereafter the parties exchanged information through the facilitation of review of materials in the electronic data rooms as well as due diligence sessions held among the professional and legal teams of both parties as well as their outside counsel and financial advisers, as discussed above.
On June 17, 2022, the ironSource board met and held a thorough discussion on the potential business combination, the proposed terms and conditions and the status of the negotiations, with representatives of Jefferies and Meitar in attendance. At the request of the ironSource board, representatives of Jefferies reviewed with the ironSource board an updated preliminary financial analysis of the proposed transaction and an update regarding the ongoing due diligence process. ironSource management provided to the board a review of their preliminary due diligence conclusions as well as their observations relating to the potential benefits of the proposed business combination and the matters that will require further discussion in the subsequent weeks. Meitar provided a review on the main legal issues arising from the draft merger agreement and the proposed positions that may be taken by ironSource in their negotiations going forward including, their fiduciary duties, termination matters and considerations, the potential tax structure of the proposed business combination (including the ability to achieve a tax free transaction for Israeli and U.S. holders), the post-business combination board structure of the combined company, key closing conditions and covenants, necessary regulatory approvals and other various considerations to ensure a successful business combination. The board held a discussion on these subjects and authorized management and the advisers to continue in exploring the potential business combination. In addition, the board created an independent transaction committee of the board, consisting of Shlomo Dovrat, David Kostman and Daniel Pindur, and instructed the committee to monitor, oversee and direct the negotiation process of the potential business combination going forward and ultimately provide the board with its conclusions and recommendations.
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On June 17, 2022, representatives of Meitar circulated to representatives of Morrison Foerster a revised draft of the merger agreement, which included proposed changes relating to, among other things, the tax treatment of the proposed business combination, board composition, Israeli tax rulings (including that certain stockholders of the combined company would become subject to certain transfer restrictions for two years after the closing of the proposed transaction, which is referred to as the “Lock Up”), reciprocity of representations and warranties of the parties, non-solicitation provisions, termination rights and fees and fee triggers, corporate governance and closing conditions, and a revised draft of the voting agreement, which included proposed changes relating to, among other things, shares subject to the voting agreement and transfers of shares permitted under the voting agreement. Over the course of the subsequent weeks, the parties and their respective advisors negotiated the open issues and exchanged numerous drafts of the merger agreement and the voting agreement.
Also on June 17, 2022, representatives of Morrison Foerster and representatives of Simpson Thacher & Bartlett LLP, which is referred to as “STB”, counsel for Silver Lake, held a telephonic meeting to discuss the potential PIPE Transaction.
On June 18, 2022, representatives of STB sent initial drafts of transaction documents for the PIPE Transaction, including the investment agreement and the indenture, to representatives of Morrison Foerster. Over the course of the subsequent weeks, the parties and their respective advisors negotiated the open issues and exchanged numerous drafts of the transaction documents for the PIPE Transaction.
On June 20, 2022, representatives of Unity’s management team and ironSource’s management team met by video conference to discuss the proposed structure of the transaction and tax treatment of the potential business combination. On the same day, representatives of Morrison Foerster, Herzog and Meitar met by video conference to discuss certain open issues in the merger agreement, including, among other things, the tax treatment of the potential business combination, board composition, Israeli tax rulings, the Lock Up, reciprocity of representations and warranties of the parties, non-solicitation provisions, termination rights and fees and closing conditions.
On June 20, 2022, the ironSource transaction committee held a meeting with ironSource’s management team and Meitar to discuss the main issues arising from the draft merger agreement provided by Unity as well as the main issues arising from the subsequent conversations that took place between Morrison Foerster, Meitar and Latham, including ironSource’s ability to solicit alternative proposals and the ironSource board’s ability to change its recommendation in response to an unsolicited superior proposal, the proposed termination fee and fee triggers, corporate governance matters, the post-business combination treatment of equity awards and the interim operating covenants applicable to each company. The ironSource transaction committee provided guidance and instructions on the main open issues.
On June 21, 2022 and June 22, 2022, representatives of Unity’s management team and ironSource’s management team met in person at Unity’s San Francisco headquarters to discuss the process and timeline of the potential business combination, key deliverables and certain other open issues in the merger agreement.
During the same period, numerous discussions occurred with respect to potential synergies between the companies, including their respective monetization businesses, potential ads and publishing business synergies, and the supporting documentation and models prepared by both Unity’s and ironSource’s corporate development teams, using assumptions and model inputs agreed to by the parties. Participants in these discussions included representatives of Unity’s management team and ironSource’s management team, representatives of Morgan Stanley, representatives of Jefferies, and representatives of Silver Lake.
On June 22, 2022, representatives of Unity’s management team, ironSource’s management team, Morrison Foerster, Herzog, Latham and Meitar met in person and by video conference to discuss certain open issues in the merger agreement, including, among other things, the tax treatment of the business combination, board composition, Israeli tax rulings, the Lock Up, reciprocity of representations and warranties of the parties, non-solicitation provisions, termination rights and fees, and closing conditions.
On June 23, 2022, at the Unity board’s direction, Unity’s management team entered into a written engagement letter with Morgan Stanley, formalizing Morgan Stanley’s role as its financial adviser in connection with the potential business combination based on Morgan Stanley’s qualifications and expertise, as well as its reputation in investment banking, mergers and acquisitions and corporate finance advisory, its prior experience with Unity, and its overall familiarity with the Unity and ironSource businesses. This formalized the engagement that started at the end of April.
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On June 23, 2022 the ironSource transaction committee held a meeting with representatives of Meitar and on June 24, 2022 the ironSource transaction committee held an additional meeting also with the presence of ironSource’s management team as well as representatives of Latham, Meitar and Jefferies, to discuss the progress made in the negotiations of the merger agreement, receive an update on progress made in the due diligence process and further discuss the evaluation of the proposed business combination in light of the additional information learned by each team.
On June 24, 2022, the Mr. Visoso continued discussions with representatives of Silver Lake regarding the PIPE Transaction.
On June 25, 2022, after discussion with and at the direction of Unity’s management team, representatives of Morrison Foerster sent revised drafts of the PIPE Transaction documents to STB and, on June 28, 2022, STB sent revised drafts of the PIPE Transaction documents back to Morrison Foerster. The principal issues of negotiation related to registration rights and preemptive rights, whether Silver Lake would receive contractual rights to board seats and whether Silver Lake would be subject to a standstill following the closing of the PIPE Transaction.
On June 27, 2022, representatives of Morrison Foerster circulated a revised draft of the merger agreement to representatives of Meitar that included proposed changes relating to, among other things, the Israeli tax filings, the Lock Up period, non-solicitation provisions, efforts to obtain antitrust approvals, closing conditions and board composition following the consummation of the proposed business combination.
On June 29, 2022, representatives of Morrison Foerster, Latham and Meitar met by video conference to discuss certain open issues in the merger agreement, including, among other things, the Israeli tax filings, the Lock Up period, closing conditions and board composition following the consummation of the proposed business combination.
Also on June 29, 2022, representatives of Unity’s management team and ironSource’s management team met by video conference to conduct financial and commercial due diligence and to finalize financial models.
On June 30, 2022, the Unity board held a meeting by video conference, which was also attended by representatives of Unity’s management team and representatives of Morgan Stanley and Silver Lake, to discuss the potential business combination with ironSource and the PIPE Transaction. Representatives of Unity’s management team provided an overview on, among other things, the strategic rationale of the proposed business combination, financial forecasts, the proposed transaction terms, and the communications plan in connection with the proposed business combination. A representative of Unity’s legal department also reviewed for the Unity board the fiduciary duties of its members in connection with the potential combination and PIPE transaction. In addition, the Unity board discussed the potential benefits and drawbacks of the PIPE Transaction, as well as the potential conflicts of interest created by Messrs. Durban’s and Botha’s positions as board members of Unity and as, respectively, the Co-Chief Executive Officer of Silver Lake and a Managing Member of Sequoia Capital. Given these potential conflicts of interest, the Unity board authorized the formation of a special committee of the board, which is referred to as the “Unity Finance Committee,” of disinterested directors to, among other things, (i) evaluate and determine the possible terms of the PIPE Transaction; (ii) evaluate and negotiate all elements of the PIPE Transaction; (iii) to report to the Unity board its recommendations and determinations with respect to the PIPE Transaction, including whether such potential transaction should be approved by the Unity board; and (iv) determine to not pursue the PIPE Transaction and to terminate any and all discussions and negotiations in connection with the PIPE Transaction. The Unity board also resolved (i) not to recommend or approve the PIPE Transaction without a prior favorable recommendation from the Unity Finance Committee and (ii) to empower the Unity Finance Committee to select and retain legal counsel, financial advisers, accountants and other advisors as the Unity Finance Committee deemed necessary to assist in discharging its responsibilities. The Unity board appointed Mary Schmidt Campbell, David Helgason, Alyssa Henry, Keisha Smith-Jeremie, Michelle K. Lee, John Riccitiello and Robynne Sisco to serve as the members of the Unity Finance Committee, each of whom was determined by the Unity board to be not affiliated with ironSource and to not have an interest in the PIPE Transaction that is different from, or in addition to, the interests of Unity’s stockholders generally. Morgan Stanley, in its role as financial adviser to Unity and the Unity board, also provided financial advisory services to the Unity Finance Committee in connection with its review of the PIPE transaction.
On June 30, 2022, the ironSource transaction committee met with ironSource management and representatives of Jefferies, Meitar and Latham. At this meeting, at the request of the ironSource transaction
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committee, representatives of Jefferies reviewed with the ironSource transaction committee an updated preliminary financial analysis of the proposed business combination, including a financial analysis of various transaction structures and exchange ratios and a review of potential strategic alternatives. The meeting also included review by Meitar of the status of the negotiations of the merger agreement. At the end of the meeting, the transaction committee authorized management and its legal and financial advisers to continue negotiation of a potential business combination with Unity.
On July 2, 2022, representatives of Meitar circulated a revised draft of the merger agreement to representatives of Morrison Foerster, which included proposed changes relating to, among other things, the Israeli tax filings, the Lock Up period, closing conditions and board composition following the consummation of the proposed business combination.
From July 3, 2022 through July 12, 2022, numerous discussions occurred between representatives of Unity’s management team and ironSource’s management team with respect to, among other things, the parties’ combined businesses, the parties’ long-term projections, the communications strategy and plan, potential synergies between the companies, open issues with respect to the transaction documents, and benefits and challenges with respect to the potential transaction with ironSource. Participants in these discussions also included, at times, representatives of the parties’ respective legal and financial advisers. Around this time, Unity’s management team informed ironSource’s management team about the revenue forecast of their Operate business and its overall impact on Unity’s financial outlook.
Also during this period, representatives of Morrison Foerster, Herzog, Meitar and Latham continued to exchange and negotiate drafts of the merger agreement and voting agreements.
On July 4, 2022, representatives of Unity's management team and representatives of Silver Lake met by video conference to discuss outstanding issues in connection with the PIPE Transaction.
On July 5, 2022, the Unity Finance Committee held a meeting by video conference, together with representatives of Unity’s management team, Morgan Stanley and Goldman Sachs & Co. LLC which is referred to as “Goldman Sachs”, to discuss the terms of the potential PIPE Transaction and the benefits, considerations and potential outcomes of the PIPE Transaction.
On July 5, 2022, a meeting of the ironSource board was held with members of ironSource management as well as representatives of Jefferies, Latham and Meitar in attendance. At this meeting, at the request of the ironSource board, representatives of Jefferies reviewed with the ironSource board an updated preliminary financial analysis of the proposed business combination and provided a review of other potential strategic alternatives. ironSource management presented a comprehensive review of the business analysis of the proposed business combination, their due diligence findings and their integration goals, and Meitar and Latham provided a review of the terms and conditions of the merger agreement and the status of the negotiations on the open issues in the merger agreement as well as their legal due diligence findings. ironSource’s management team also informed the board about the revenue forecast of Unity’s Operate business and its overall impact on Unity’s financial outlook. The ironSource board discussed with members of ironSource’s management team and representatives of Jefferies the updated outlook provided by Unity and determined that the overall analysis of the proposed transaction should not be affected because, given the ironSource board’s view of the broader outlook of the combined company, the exchange ratio and premium on the trading price of the ironSource ordinary shares, represented a reasonable and attractive consideration for ironSource shareholders. Among other things, the ironSource board also discussed the progress in putting together arrangements to facilitate a tax-free transaction for Israeli and U.S. ironSource shareholders who represent the vast majority of ironSource’s shareholders, including the proposed Lock-Up agreements. At this meeting, the ironSource board formally approved the engagement of Jefferies as ironSource's financial adviser in connection with the proposed business combination with Unity, which such engagement was formalized by written agreement between ironSource and Jefferies on July 9, 2022. The ironSource board also discussed the proposed PIPE Transaction contemplated by Unity immediately after the business combination and the positive signaling such investment by Unity’s two major investors would send to the market. In this meeting, Meitar provided to the ironSource board with an updated analysis on the corporate approval process of the proposed business combination. In connection with the proposed business transaction, (i) certain members of the ironSource board as of the time of approval of the merger (namely, Tomer Bar-Zeev, Arnon Harish and Eyal Milrad) who serve as executive officers of ironSource, as well as certain other employees who are also shareholders of ironSource, disclosed to the ironSource board
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prior to the approval of the merger agreement by the board their potential personal interest in the merger (in their capacity as employees of ironSource), and advised that they expect to enter into new employment terms with Unity, which are expected to be discussed between them and Unity after the execution of the merger agreement, and (ii) ironSource’s Chief Executive Officer disclosed to the ironSource board prior to the approval of the merger agreement by the board that he is expected to serve as a director on the Unity board after the merger and that such service may give rise to a personal interest. Accordingly, it was concluded that in addition to the ongoing service of the transaction committee of the board, the audit committee would separately hold a discussion to consider and evaluate the proposed merger, consistent with the requirements of the Companies Law under which a transaction of a company which is considered an extraordinary transaction and in which one or more directors have a personal interest requires prior approval by the audit committee.
During the week of July 5, 2022, the parties substantially completed their due diligence review of one another and members of their respective management teams, with the assistance of their respective legal advisers, conducted extensive negotiation sessions in an attempt to finalize the terms and conditions of the merger agreement and other ancillary documents.
On July 5, 2022, representatives of Unity’s management team and representatives of Silver Lake met by video conference to discuss the terms of the PIPE Transaction. The parties agreed, subject to necessary approvals, on a 2.0% coupon and a conversion rate of 20%.
On July 6, 2022, representatives of Unity, Silver Lake, Morrison Foerster and STB held a meeting by video conference to discuss open issues related to the PIPE Transaction and related documents, including, among other things, transfer restrictions, standstill provisions, voting agreements, merger agreement amendment rights, preemptive rights and board nomination rights. During this meeting, the parties reached agreement that Silver Lake would not be subject to a standstill, but also neither Silver Lake nor Sequoia Capital would receive contractual rights to board seats. Also on this day, representatives of STB conducted a legal due diligence call with members of Unity’s management team, representatives of Morrison Foerster and representatives of Silver Lake.
On July 8, 2022, the Unity Finance Committee held a meeting by video conference with representatives of Unity’s management team, Morgan Stanley, Morrison Foerster and Cooley, to further discuss the PIPE Transaction, the terms thereof, the economic and other benefits and considerations associated with the PIPE Transaction, governance matters related to the PIPE Transaction and the impact on the potential proposed business combination. A representative of Cooley reviewed the Unity board’s fiduciary duties in evaluating and considering a potential transaction. On the same day, representatives of Morrison Foerster sent drafts of the voting agreement and share lock up agreement to STB.
On July 9, 2022, representatives of Morrison Foerster and STB held a meeting by video conference to discuss open issues related to the investment agreement and related matters, including, among other things, transfer restrictions, registration rights, termination rights and merger agreement amendment rights.
On July 10, 2022, the Unity board held a meeting by video conference with representatives of Unity’s management team, Morgan Stanley, Morrison Foerster, Cooley and Silver Lake. At this meeting, Unity’s management team discussed with the Unity board, among other things, strategic rationale for the business combination, the results of the financial, accounting, tax and legal due diligence review of ironSource and its business, an update on the terms and conditions of the merger agreement and the potential financial impact of the business combination on Unity. Morgan Stanley provided the Unity board with a summary of the key financial terms of the potential transaction with ironSource and reviewed its preliminary financial analyses with respect to the potential transaction with ironSource.
On the same day, the Unity Finance Committee held a meeting with representatives of Unity’s management team, Morgan Stanley, Morrison Foerster and Cooley to discuss updates with respect to the PIPE Transaction, including, among other things, pricing considerations and strategic rationale.
On July 10, 2022, the ironSource transaction committee held a meeting to review and consider the status of the merger agreement and the conclusions of ironSource’s business, financial and legal due diligence. At this meeting, at the request of the ironSource transaction committee, representatives of Jefferies reviewed with the ironSource transaction committee an updated preliminary financial analysis of the proposed business combination. Meitar then provided a comprehensive review of the status of the negotiations surrounding the
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transaction and the members of the transaction committee expressed their endorsement of the efforts to conclude the negotiations. At the conclusion of the meeting, the transaction committee resolved unanimously to recommend to the ironSource board to approve the merger agreement and the transactions contemplated thereby, including the merger.
Also on July 10, 2022, representatives of Morrison Foerster circulated a draft of Unity’s disclosure schedules to representatives of Meitar and Latham and representatives of Meitar circulated a draft of ironSource’s disclosure schedules to representatives of Morrison Foerster. Over the course of the subsequent days, the parties and their respective advisors negotiated the open issues and exchanged numerous drafts of their respective disclosure schedules.
On July 11, 2022, STB circulated to representatives of Morrison Foerster on behalf of Silver Lake and Cleary Gottlieb Steen & Hamilton LLP, which is referred to as “Cleary”, counsel for Sequoia Capital, comments to the voting agreement, which comments included removing the prohibition on transfers of shares of Unity common stock between signing of the merger agreement and the Unity stockholder vote. After discussion with representatives of Unity’s management team, the comments were forwarded to Latham and Meitar for review on July 11, 2022.
On July 11, 2022 and July 12, 2022, representatives of Unity's management team and Silver Lake held multiple calls to discuss and finalize open issues in connection with the PIPE Transaction and the voting agreement.
From July 11, 2022 through July 13, 2022, representatives of Morrison Foerster, STB and Cleary, exchanged additional drafts of, and participated in calls regarding, the PIPE Transaction documents. Copies of the PIPE Transaction documents were also provided to Latham and Meitar for review.
On July 11, 2022, the audit committee of the ironSource board convened to discuss the merger agreement and the transactions contemplated thereby. In such meeting, the members of the committee, advised by members of the transaction committee of the ironSource board, concluded that the negotiations were not impacted by the identified potential personal interests that some members of ironSource management may have due to their roles as directors of ironSource, and that the process was conducted in a manner that served the best interests of ironSource and its shareholders. It was also noted that the discussions between ironSource directors (who are also executive officers) and Unity with respect to their future employment terms shall take place only after the signing of the merger agreement and announcement of the business combination. The audit committee then unanimously approved the merger agreement and the transactions contemplated thereby, including the merger, and formally recommended that the ironSource board do the same. In addition, on such day, a meeting of the compensation committee of the ironSource board took place to consider certain provisions of the merger agreement, including a provision concerning the D&O tail insurance policy to be purchased in connection with the merger. The compensation committee authorized the purchase of such policy in accordance with the compensation policy of ironSource, subject to further discussion and evaluation and subject to the consummation of the merger.
On July 11, 2022, the ironSource board convened a meeting in which members of ironSource management and representatives of Jefferies, Meitar and Latham participated. During this meeting, representatives of Meitar provided an additional presentation to the ironSource board of its fiduciary duties in the context of the proposed business combination. Additionally, representatives of Meitar and Latham discussed with the ironSource board the proposed terms and conditions of the merger agreement, including the open points with respect thereto that had been previously identified for the board and the resolution thereof. In the meeting, the ironSource board, with the assistance of members of ironSource’s management team, then discussed in detail the projected financial information that had been previously provided to the ironSource board and representatives of Jefferies. After this discussion, the ironSource board approved the use of the projected financial information of ironSource and Unity by Jefferies and directed Jefferies to use and rely on such projected financial information for purposes of its financial analyses and opinion. Additionally, representatives of Jefferies reviewed with the ironSource board Jefferies’ financial analysis of the exchange ratio and rendered an oral opinion, confirmed by delivery of a written opinion dated July 11, 2022, to the ironSource board to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in the opinion, the exchange ratio provided for in the merger pursuant to the merger agreement was fair, from a financial point of view, to the holders of ironSource ordinary shares. At
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the request of the ironSource board, representatives of Jefferies also provided the ironSource board with a review of other potential strategic alternatives. The ironSource board, with the assistance of representatives from Jefferies, also discussed the revenue forecast of Unity’s Operate business and its overall impact on Unity’s outlook and the potential impact on the business combination with ironSource, and noted that the revenue forecast of Unity's Operate business and its potential impact were incorporated into the financial projections for Unity and reflected in Jefferies' updated financial analysis. The ironSource transaction committee and the audit committee then provided to the board their respective recommendation to approve the merger agreement and the transactions contemplated thereby.
After further discussions with its financial and legal advisors, members of ironSource’s management team rejoined the meeting. Following careful consideration of the proposed merger exchange ratio, risks related to the terms and conditions of the merger agreement, the prospects of continuing to operate ironSource as a stand-alone publicly-held entity, and the views expressed by members of the ironSource board during the meeting, in addition to the other reasons provided herein to approve the merger agreement as well as the countervailing factors described in the section titled ‘‘The Merger—Recommendation of the ironSource Board of Directors and ironSource’s Reasons for the Merger” beginning on page 101 of this joint proxy statement/prospectus, the ironSource board unanimously (excluding Mr. Bar-Zeev, Mr. Harish and Mr. Milard who may be deemed to have a personal interest in approving the merger) (a) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, ironSource and its shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the surviving company will be unable to fulfill the obligations of ironSource to its creditors, (b) approved the merger agreement and the transactions contemplated thereby, including the merger and (c) determined to recommend that the shareholders of ironSource approve the merger agreement and the transactions contemplated thereby, including the merger.
On July 12, 2022, Unity entered into a formal written agreement with Goldman Sachs to provide financial advice to Unity in connection with the potential acquisition of ironSource, effective as of June 16, 2022. Pursuant to the written agreement, Unity agreed to pay Goldman Sachs $2.0 million upon consummation of the potential transaction with ironSource. In addition on July 12, 2022, Goldman Sachs informed the Unity board regarding the investment banking services it had provided to and the amount of fees received from ironSource and affiliates of Silver Lake and Sequoia in the two years prior to July 12, 2022.
On July 12, 2022, the Unity Finance Committee held a meeting by video conference, together with representatives of Unity’s management team, Morgan Stanley, Morrison Foerster, and Cooley. Representatives of Morrison Foerster reminded the Unity Finance Committee of their fiduciary duties and described the legal terms of the PIPE Transaction. Prior to the meeting, Morgan Stanley informed the Unity Finance Committee and the Unity board regarding the services it had provided to and the amount of fees received from affiliates of Silver Lake and Sequoia in the two years prior to July 12, 2022. Representatives of Unity management and Morgan Stanley then advised the Unity Finance Committee regarding the financial impact, strategic rationale and the potential benefits and challenges of the PIPE Transaction and stock buyback. After further discussion and questions, the Unity Finance Committee unanimously found that the PIPE Transaction is advisable and in the best interests of Unity and unanimously resolved to approve and recommend the PIPE transaction and the documents related thereto to the Audit Committee of the Unity board, which is referred to as the “Unity Audit Committee”, and the Unity board. Immediately following this meeting, with Mr. Botha recusing himself, the Unity Audit Committee held a meeting by video conference, together with certain other members of the Unity board and representatives of Unity’s management team, Morgan Stanley, Morrison Foerster, and Cooley, and found that the PIPE Transaction is advisable and in the best interests of Unity and unanimously approved the PIPE Transaction and the documents related thereto. That same day, the Human Capital and Compensation Committee of the Unity board also held a meeting, together with certain other members of the Unity board and representatives of Unity’s management team, Morgan Stanley, Morrison Foerster, and Cooley, and unanimously approved the assumption of ironSource’s equity awards and equity plans by Unity in connection with the potential transaction with ironSource.
Immediately following the committee meetings described above, the Unity board held a meeting by video conference, together with members of Unity’s management team and representatives of Morgan Stanley, Morrison Foerster, Cooley and Silver Lake. The Unity board discussed first the voting agreements being sought from certain members of Unity’s management team and Silver Lake and Sequoia Capital and the limitations
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therein on transferring shares of Unity common stock. Representatives of Morrison Foerster again reviewed the material terms of the substantially final draft of the merger agreement. The Unity board then discussed the transaction documents related to the PIPE Transaction and received the Unity Finance Committee’s recommendation to authorize and approve the PIPE Transaction. In addition, representatives of Morgan Stanley then reviewed with the Unity board its financial analysis of the exchange ratio provided for in the merger agreement, during which time one member of the Unity board left the meeting due to other obligations. Thereafter, Morgan Stanley rendered, for the benefit of the Unity board, its oral opinion, subsequently confirmed in writing, on July 12, 2022, that as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Morgan Stanley as set forth in the written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Unity, as further described in the section “—Opinion of Unity’s Financial Adviser” beginning on page 105 of this joint proxy statement/prospectus. Following a discussion of these matters, the members of the Unity board remaining at the meeting unanimously (i) authorized and directed the officers of Unity to finalize the negotiation of the merger agreement and other transaction documents, (ii) determined that, subject to the finalization of the merger agreement and related matters, the merger agreement and the transactions contemplated thereby, including the merger and the issuance of Unity common stock in the merger, were fair to, and in the best interests of, Unity and Unity’s stockholders, (iii) adopted and approved the merger agreement and the transactions contemplated thereby, including the merger and the issuance of Unity common stock in connection with the merger, and (iv) resolved to recommend that Unity’s stockholders approve the issuance of Unity common stock in connection with the merger. The members of the Unity board remaining also unanimously, among other things, (i) authorized and directed the officers of Unity to finalize the negotiation of the PIPE Transaction and the related documents and (ii) subject to the finalization of the PIPE Transaction documents, authorized and approved the PIPE Transaction and the related documents.
Late in the evening of July 12, 2022, and during the early morning of July 13, 2022, the parties and their respective legal advisors resolved the remaining open issues and finalized the merger agreement and the disclosure schedules. Also during the day on July 12, 2022 through the early morning of July 13, 2022, representatives of Unity, ironSource, Silver Lake and Sequoia Capital, together with their respective legal advisors, resolved the remaining open issues in, and finalized, the voting agreements and the Lock Ups.
Prior to the opening of the U.S. stock markets on July 13, 2022 and following the finalization of all transaction documents, (i) Unity and ironSource executed and delivered the merger agreement, (ii) Unity, Silver Lake and Sequoia Capital executed and delivered the investment agreement, and (iii) the relevant security holders of Unity and ironSource executed and delivered the voting agreements and the Lock Up. On July 13, 2022, prior to the opening of the U.S. stock markets, the companies issued a joint press release and presentation materials announcing entry into the transaction and held a joint investor conference call regarding the merger.
Subsequent to signing the merger agreement, representatives of Unity and ironSource and their respective advisers have worked together to, among other things, prepare this joint proxy statement/prospectus and make the necessary regulatory filings and otherwise move toward closing the merger.
On August 5, 2022, Mr. Riccitiello and Ms. Lestiyo met with Mr. Foroughi by video conference to discuss the ongoing commercial business arrangements of Unity and AppLovin in the ordinary course of business consistent with past practice. There was no discussion of the ironSource transaction or any other strategic transaction at this meeting. Following the meeting, Mr. Foroughi contacted Mr. Riccitiello via email to arrange a follow-up call. As requested by Mr. Foroughi, Mr. Riccitiello called Mr. Foroughi and continued to discuss the ongoing commercial business arrangements of Unity and AppLovin. During this discussion, Mr. Foroughi mentioned the ironSource transaction, but made no proposal or offer on the call and Mr. Riccitiello did not engage in any discussion regarding the ironSource transaction or any other strategic transaction. Following this call, Mr. Foroughi contacted Mr. Riccitiello by text message and requested another call with their respective chief financial officers. Mr. Foroughi did not specify the reason for the to-be scheduled call.
On August 8, 2022, Mr. Riccitiello and Mr. Visoso met with Mr. Foroughi and Mr. Herald Chen, President and Chief Financial Officer of AppLovin, by video conference. Mr. Foroughi informed the representatives of Unity that AppLovin was interested in combining with Unity and indicated that AppLovin's board of directors was scheduled to meet later that day, that AppLovin intended to submit a proposal in respect thereof later that day, and that the proposal would be made public. No specific terms or conditions were discussed during this
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meeting. Representatives of Unity did not engage in any discussion regarding the ironSource transaction or respond to AppLovin’s intention to submit a proposal, other than to inquire on the timing of making the proposal public and to inform AppLovin that Unity could not discuss any such proposal.
On the same day, the Unity board met by video conference with representatives of Unity’s management team, Morrison Foerster, Cooley and Goldman Sachs. A representative of Unity’s management team informed the Unity board that AppLovin intended to submit a proposal to combine with Unity. A representative of Morrison Foerster reviewed and discussed with the Unity board the provisions of the merger agreement setting forth Unity’s obligations and the process and considerations for the Unity board to assess whether or not an alternative transaction proposal constitutes, or would reasonably be expected to result in, a Parent Superior Proposal as defined in the merger agreement. A representative of Morrison Foerster then reviewed with the Unity board its fiduciary duties in connection with the receipt of an alternative proposal. A representative of Goldman Sachs then provided a summary of certain financial information of Unity, ironSource and AppLovin to the Unity board.
Later that day, Unity received an unsolicited, non-binding written proposal from AppLovin, which is referred to as the “AppLovin Proposal”, to combine with Unity in an all-stock transaction. Under the terms of the AppLovin Proposal, Unity shareholders would receive 1.466 AppLovin shares per Unity share, comprised of 1.152 AppLovin Class A shares and 0.314 AppLovin Class C non-voting shares, which would result in Unity shareholders holding a 55% pro forma economic interest in the combined company and 49% pro forma voting interest in the combined company.
Prior to the opening of the U.S. stock markets on August 9, 2022, AppLovin issued a press release publicly disclosing the AppLovin Proposal. That same day, the AppLovin Proposal was subsequently provided to ironSource in accordance with the terms of the merger agreement.
On August 10, 2022, the Unity board held a meeting by video conference with representatives of Unity’s management team, Morrison Foerster, Cooley, Goldman Sachs and Morgan Stanley to review the AppLovin Proposal. Representatives of Unity’s management team provided an overview of AppLovin’s business, the material terms of the AppLovin Proposal and a summary of AppLovin’s financial guidance announcement history. A representative of Morrison Foerster then reviewed and discussed with the Unity board the provisions of the merger agreement setting forth Unity’s obligations with respect to the AppLovin Proposal and the process and considerations for the Unity board to assess whether or not the AppLovin Proposal constitutes, or would reasonably be expected to result in, a Parent Superior Proposal as defined in the merger agreement. A representative of Morrison Foerster then reviewed with the Unity board its fiduciary duties in connection with the AppLovin Proposal. Representatives of Goldman Sachs and Morgan Stanley then reviewed with the Unity board investor feedback with respect to the AppLovin Proposal and relative trading prices of each of Unity, ironSource and AppLovin. The Unity board then, in consultation with representatives of Unity’s management team and financial and legal advisers, evaluated and discussed the financial and strategic considerations with respect to the AppLovin Proposal.
On August 12, 2022, Goldman Sachs and Morgan Stanley sent to the Unity board updated relationship disclosure memorandums, which disclosure included fees that Goldman Sachs and its affiliates and Morgan Stanley and its affiliates had respectively earned in recent years from AppLovin and its significant shareholders.
On August 12, 2022, the Unity board met by video conference with representatives of Unity’s management team, Morrison Foerster, Cooley, Richards, Layton & Finger, Unity’s outside Delaware legal counsel, which is referred to as “RLF”, Goldman Sachs and Morgan Stanley to review the AppLovin Proposal. Before representatives of Goldman Sachs and Morgan Stanley joined the meeting, a representative of Unity’s management team provided an update on Unity’s fee arrangements with each of Morgan Stanley and Goldman Sachs, including that Morgan Stanley would receive the same compensation whether a transaction with ironSource or AppLovin closes and that Goldman Sachs would receive the same compensation whether a transaction with ironSource or AppLovin closes. The Unity board then discussed the disclosure memorandums provided by each of Goldman Sachs and Morgan Stanley and, after consulting with its legal advisors, the Unity board determined that the information in Goldman Sachs’ and Morgan Stanley’s disclosure memorandum did not present any conflicts of interest that suggested they were not qualified to advise Unity in connection with the AppLovin Proposal. Representatives of Unity’s management team then discussed with the Unity board the long-term strategy of Unity and its strategic objectives. Representatives of Goldman Sachs and Morgan Stanley then reviewed with the Unity board their respective financial analyses of the AppLovin Proposal, each of which
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had been made available to the Unity board prior to the meeting. A representative of RLF then reviewed with the Unity board its fiduciary duties in connection with, and its obligations with respect to, the AppLovin Proposal and the process and considerations for the Unity board to assess whether or not the AppLovin Proposal constitutes, or would reasonably be expected to result in, a Parent Superior Proposal as defined in the merger agreement. The Unity board, in consultation with representatives of Unity’s management team and financial and legal advisers, evaluated and discussed the financial and strategic considerations with respect to the AppLovin Proposal. After a comprehensive review and discussion of the AppLovin Proposal, in consultation with representatives of Unity’s management team and financial and legal advisers, the Unity board unanimously determined that the AppLovin Proposal was not and would not reasonably be expected to result in a Parent Superior Proposal as defined in the merger agreement. In reaching this determination, the Unity board took into account, among other things, that a merger with ironSource will form the industry’s first end-to-end platform to power creators’ success as they build, run, manage, grow, and monetize live games and real-time 3D content across their lifecycle, and that the transaction will drive better economic outcomes for stockholders and creators by bringing together the Unity game engine and editor, Unity Ads, and the rest of Unity Gaming Services with ironSource’s best-in-class mediation and publishing platforms. In comparing the AppLovin Proposal to the ironSource transaction, the Unity board determined that the Applovin Proposal would not reasonably be expected to result in a Parent Superior Proposal as defined in the merger agreement from a number of perspectives, including financially and strategically. The Unity board reaffirmed its recommendation to Unity’s stockholders to vote in favor of the Unity issuance proposal and recommended against the AppLovin Proposal.
Prior to the opening of the U.S. stock markets on August 15, 2022, Unity issued a press release announcing the determination by the Unity board with respect to the AppLovin Proposal. During the early morning of August 15, 2022, Mr. Riccitiello texted Mr. Foroughi informing him of the Unity board’s determination with respect to the AppLovin Proposal.
On August 21, 2022, a representative of J.P. Morgan, financial adviser to AppLovin, which is referred to as “JPM”, separately contacted a representative of Morgan Stanley and a representative of Goldman Sachs to inquire whether Unity had an appetite to receive a revised proposal from AppLovin and to seek information about the circumstances surrounding AppLovin’s interest to combine with Unity, respectively. Each of the representatives of Morgan Stanley and Goldman Sachs responded that he could not discuss this matter under the terms of the merger agreement and no terms or conditions were discussed. On August 23, 2022, Unity provided written notice to ironSource with respect to these inquiries in accordance with the terms of the merger agreement.