TMNA Tingo Inc (CE)

On October 6, 2022, Tingo, Inc. (“Tingo” or the “Company”) entered into a Second Amended and Restated Agreement and Plan of Merger (“Second Amended Merger Agreement” or simply, the “Merger Agreement”) with MICT, Inc. (“MICT”), a Delaware corporation whose common shares are traded on the Nasdaq Capital Market under the symbol ‘MICT’, and representatives of the shareholders of both Tingo and MICT. A copy of the Second Amended Merger Agreement is attached to this Current Report as Exhibit 2.1.

The Second Amended Merger Agreement is the result of the efforts of Tingo and MICT to restructure the transaction as a multi-phase forward triangular merger, instead of a reverse triangular merger as had been previously agreed. Under the terms of the Second Amended Merger Agreement, Tingo will contribute all of the ownership of its operating subsidiary, Tingo Mobile PLC (“Tingo Mobile”), to a newly organized holding company incorporated in the British Virgin Islands (“Tingo BVI Sub”). MICT will also create a new subsidiary incorporated in the British Virgin Islands which will then be merged with and into Tingo BVI Sub, resulting in Tingo Mobile being wholly-owned by MICT (hereinafter, the “Merger”).

The Second Amended Merger Agreement restates and replaces that certain Amended and Restated Agreement and Plan of Merger entered into by the Company, MICT, and MICT Merger Sub, Inc. on June 15, 2022 (“Previous Merger Agreement”) which was summarized in the Company’s Current Report on Form 8-K filed on June 15, 2022, which Current Report is hereby incorporated by reference.

Amendment to Senior Secured Loan

Simultaneous with the execution of the Second Amended Merger Agreement, MICT extended to Tingo a loan in the principal amount of $23,700,000 with an interest rate of 5% per year (the “Amended Purchaser Loan”, attached hereto as Exhibit 10.1), and which shall amend and restate the loan agreement between MICT and Tingo dated May 10, 2022, for a principal amount of $3,500,000 (the “Previous Loan”). Pursuant to the Amended Purchaser Loan, MICT shall pay to Tingo the difference in the principal amount between the Amended Purchaser Loan and the Previous Loan within three (3) Business Days of the signing of the Second Amended Merger Agreement.

Summary of the Second Amended Merger Agreement

The following summary of the Second Amended Merger Agreement does not purport to be complete, and is qualified by the full text of the Merger Agreement. Tingo shareholders and other interested parties are urged to read the Merger Agreement in its entirety.

Structure and Consideration. The Merger will result in Tingo Mobile becoming an indirect wholly-owned subsidiary of MICT, and the operations of Tingo Mobile, as an agri-fintech company, becoming the predominant operations of the consolidated businesses. The aggregate consideration tendered by MICT to Tingo, the sole shareholder of Tingo Mobile, will consist of newly-issued common stock of MICT equal to 19.9% of its outstanding shares, calculated as of the closing date of the Merger (the “Common Consideration Shares”) and two series of convertible preferred shares – Series A Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”). The Series A Preferred Stock, Series B Preferred Stock, and the Consideration Shares are collectively referred to herein as “Merger Consideration”.

Series A Preferred Stock. Upon the approval of MICT’s stockholders, the Series A Preferred Stock shall convert into 20.1% of the outstanding shares of MICT common stock, calculated as of the closing date of the Merger. If such shareholder approval is not obtained by June 30, 2023, all issued and outstanding shares of Series A Preferred Stock shall be redeemed by MICT in exchange for Tingo receiving 27% of the total issued and outstanding shares of a Delaware-incorporated subsidiary of MICT (“Delaware Sub”) that will be the sole owner of Tingo Mobile (the “Series A Redemption”).

Series B Preferred Stock. Upon approval by Nasdaq of the change of control of MICT and upon the approval of MICT’s stockholders, the Series B Preferred Stock shall convert into 35.0% of the outstanding shares of MICT common stock, calculated as of the closing date of the Merger. If such shareholder or Nasdaq approval is not obtained by June 30, 2023, Tingo shall have the right to (i) cause the Series A Redemption to take place within 90 days; and (ii) cause MICT to redeem all of the Series B Preferred Stock for (x) $666,666,667, or (y) an amount of common stock of Delaware Sub equivalent in value to $666,666,667 (reduced from the aggregate value of the Series B Preferred Stock at issuance, which is $1,000,000,000).

Escrow. As part of the Second Amended Merger Agreement, 5% of the Merger Consideration will be held in escrow for a period of up to two years after the closing date of the Merger. The securities placed in escrow will shall be the sole source of payment for any indemnification claims made by MICT in connection with the Merger.

Exemption from Registration Claimed. The Merger Consideration will be issued and sold pursuant to an exemption to registration under Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”). With respect to the Common Consideration Shares and the shares of MICT common stock that are issuable in connection with the Merger as a result of the conversion of the Series A Preferred and the Series B Preferred, MICT will prepare and file with the Securities and Exchange Commission (“SEC”), a registration statement on Form S-4 with respect to these securities.

Representations and Warranties. The Merger Agreement generally contains reciprocal representations and warranties of MICT and Tingo that are customary for a public company merger, and are qualified by information contained in SEC filings made by any party to the Merger Agreement.

Conditions to Completion. The completion of the Merger is subject to the satisfaction or, to the extent legally permissible, the waiver of a number of conditions in the Merger Agreement, such as:

Post-Closing MICT Board. The Second Amended Merger Agreement provides that the post-closing board of directors of MICT shall consist of six members, with four designated by MICT and two designated by Tingo.

Post-Closing Undertakings/Obligations. Following the closing date of the Merger, MICT is required to undertake all reasonable efforts to effect the following:

Covenants. The Merger Agreement also contains mutual customary pre-closing covenants of each of MICT and Tingo, including covenants, among others, each to conduct their businesses in the ordinary course and in compliance in all material respects with all applicable laws and to refrain from taking certain actions without the other party’s consent.

Termination of the Merger Agreement. The Merger Agreement may be terminated at any time prior to the completion of the Merger in any of the following ways:

The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Tingo, MICT, or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement (a) were made by the parties thereto only for purposes of that agreement and as of specific dates; (b) were made solely for the benefit of the parties to the Merger Agreement; (c) may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement (such disclosures include information that has been included in public disclosures, as well as additional non-public information); (d) may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and (e) may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding Tingo, MICT or their respective businesses. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, MICT or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company and MICT that is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q and other documents that are filed with the SEC by each company.

Governing Law and Arbitration. The Merger Agreement is governed by New York law and, subject to the required arbitration provisions, the parties are subject to exclusive jurisdiction of federal and state courts located in New York, New York (and any appellate courts thereof). Any disputes under the Merger Agreement, other than claims for injunctive or temporary equitable relief or enforcement of an arbitration award, will be subject to arbitration by the American Arbitration Association, to be held in New York, New York.