Company: NCEL
Filing Date: 2025-05-16
Form Type: 20-F
Source: 0001213900-25-044868
Chunk: 137

Company: NewcelX Ltd.
Filing Date: 2025-05-16
Form: 20-F
Item: Item 3
Chunk 137
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 to use, valuable intellectual property. Such
an outcome could have a material adverse effect on its business. Even if it is successful in defending against such claims, litigation
could result in substantial costs and be a distraction to management and other employees. In addition, the combined company may receive
less revenue from future products if any of its employees successfully claim for compensation for their work in developing the combined
company’s intellectual property, which in turn could impact the combined company’s future profitability.

Under applicable employment laws, the combined
company may not be able to enforce covenants not to compete and therefore may be unable to prevent its competitors from benefiting from
the expertise of some of its former employees. In addition, employees may be entitled to seek compensation for their inventions irrespective
of their agreements with it.

The combined company generally
enters into non-competition agreements with its employees and certain key consultants. These agreements prohibit employees and certain
key consultants, if they cease working for the combined company, from competing directly with it or working for its competitors or clients
for a limited period of time. The combined company may be unable to enforce these agreements under the laws of the jurisdictions in which
the combined company’s employees work and it may be difficult for it to restrict its competitors from benefitting from the expertise
its former employees or consultants developed while working for it. For example, Israeli courts have required employers seeking to enforce
non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a
limited number of material interests of the employer which have been recognized by the courts, such as the secrecy of a company’s
confidential commercial information or the protection of its intellectual property. If the combined company cannot demonstrate that such
interests will be harmed, it may be unable to prevent its competitors from benefiting from the expertise of its former employees or consultants
and its ability to remain competitive may be diminished.

In addition, under Israeli
law, if the combined company wishes to obtain ownership over inventions developed by its employees, which inventions were developed while
performing their employment activities, but outside the performance of their contractual duties, the combined company is required to compensate
the employee for the rights to their respective inventions. There can be no guarantee that the combined company will be able to obtain
any such inventions and the failure to obtain such ownership rights over employee inventions could have a material adverse effect on its
operations and ability to effectively compete.

Risks Related to Israeli Law and its Operations
in