Item 1.01 Entry into a Material definitive Agreement.
As previously disclosed, on April 30, 2022, MCAF entered into that certain
Agreement and Plan of Merger (as may be amended, supplemented or otherwise
modified from time to time, the "Merger Agreement"), by and among MCAF, CH AUTO
Inc., a Cayman Islands exempted company ("CH AUTO" or "Pubco"), Ch-Auto Merger
Sub Corp., a Delaware corporation and wholly owned subsidiary of Pubco ("Merger
Sub") and CH-AUTO TECHNOLOGY CORPORATION LTD., a company organized under the
laws of the People's Republic of China (the "Company"), pursuant to which, among
other things, MCAF, Pubco, Merger Sub and the Company intend to effect a merger
of Merger Sub with and into MCAF whereby MCAF will be the surviving corporation
(the "Surviving Corporation") and a wholly owned subsidiary of Pubco (the
"Merger") in accordance with the Merger Agreement and the General Corporation
Law of the State of Delaware (the "DGCL"). In connection with the Merger, the
name of the Surviving Corporation shall be changed to CH Autotech USA, Inc.
Following the Merger, Pubco expects its ordinary shares to be traded on the
Nasdaq Stock Market. On December 23, 2022, MCAF disclosed that the parties to
the Merger Agreement amended the Merger Agreement by executing an Amended and
Restated Agreement and Plan of Merger, dated December 23, 2022 (the "A&R Merger
Agreement"). All capitalized terms used herein and not defined shall have the
meanings ascribed to them in the A&R Merger Agreement.
On March 1, 2023, MCAF, CH-AUTO, Pubco and Merger Sub entered into an amendment
(the "Amendment") to the A&R Merger Agreement. The Amendment provides that (i)
instead of acquiring at least 90% of the CH AUTO, MCAF would only need to
acquire at least 71.2184% of CH AUTO to consummate the Closing, (ii) immediately
after the Closing, Pubco's board of directors (the "Post-Closing Pubco Board")
will consist of five (5) members, among which one (1) person shall be designated
by Sponsor, four (4) persons shall be designated by CH AUTO and at least two (2)
persons of the Post-Closing Pubco Board shall qualify as independent directors
under the Securities Act and Nasdaq rules, (iii) modified the timing of CH
AUTO's delivery of the Equityholder Allocation Schedule, (iv) simultaneously
with and in exchange for the issuance of the CH AUTO Merger Consideration, but
before the Closing of the Merger, Pubco's subsidiary, CH-Auto (Hong Kong)
Limited ("CH-Auto HK"), or a then-established wholly-owned PRC subsidiary of
CH-Auto HK (together with CH-Auto HK, the "Holding Company", as the context may
require), shall acquire all the shares of CH AUTO's equity securities (the
"Company Common Stock") held by each Company Reorganization Stockholder at par
value or other value as agreed between the Holding Company and the Company
Reorganization Stockholders (the "HK Share Purchase"); provided however, certain
Company Reorganization Stockholders that are the directors, supervisors or
senior executives of the Company (each a "DSO Stockholder" and together, the
"DSO Stockholders") shall each transfer up to 25% of the stocks of CH AUTO held
by him or her due to restrictions under the PRC laws. Each DSO Stockholder shall
further enter into a voting rights proxy agreement (the "Voting Rights Proxy
Agreement") and an economic rights transfer agreement (the "Economic Rights
Transfer Agreement") with the Holding Company (the "HK Voting Rights
Entrustment"), pursuant to which each DSO Stockholder shall transfer and assign
to the Holding Company (i) all of their respective voting rights in connection
with the remaining shares of Company Common Stock held by them (the "DSO's
Remaining Shares") pursuant to the Voting Rights Proxy Agreement and (ii) all of
their economic rights, including the right to receive dividends, in connection
the DSO's Remaining Shares, pursuant to the Economic Rights Transfer Agreement.
The Pubco Ordinary Shares issued to each DSO Shareholder in exchange for such
DSO's Remaining Shares, shall be subject to restrictions on transfer,
conveyance, assignment and further encumbrance until the DSO Shareholder
transfers and conveys the underlying shares of Company Common Stock to the
Holding Company. Upon the completion of the HK Share Purchase, and after giving
effect to the HK Voting Right Entrustment (the "Reorganization Closing"), the
Holding Company shall (1) have the ability to direct, directly or indirectly, at
least 71.2184% of the voting rights of all outstanding equity securities of CH
AUTO entitled to vote, (2) own, directly or indirectly, at least 71.2184% of the
economic rights of all the outstanding equity securities in CH AUTO, and (3)
own, directly or indirectly own at least 37.8426% of the then-issued and
outstanding equity interests in CH AUTO; (v) revised the definitions of Company
Employee Option and Company FA Option, (vi) CH AUTO shall advance MCAF the
aggregate amount of Seven Hundred and Fifty Thousand Dollars ($750,000) in two
payments (the "Loans") to fund the payment of the expenses incurred, in
connection with two (2) extensions of the period of time for MCAF to consummate
a business combination and for working capital for the Company; (vi) in the
event CH AUTO funds the initial payment of the Loan, the Outside Date shall be
extended from May 15, 2023 to July 2, 2023, (viii) revised the timing, steps and
procedure for the Reorganization and (ix) permitted CH AUTO to convert
outstanding debt from a lender in the amount of RMB 39 million into 15.6 million
shares of CH AUTO, at a conversion price of RMB 2.5 per share. The transactions
contemplated by the A&R Agreement and the Amendment are collectively referred to
as the "Business Combination."
The foregoing summary of the Amendment does not purport to be complete and is
qualified in its entirety by reference to the actual Amendment which is filed
with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein
by reference.
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IMPORTANT NOTICES
Additional Information and Where to Find It
In connection with the Business Combination, Pubco and MCAF will file relevant
materials with the Securities and Exchange Commission (the "SEC"), including the
registration statement and accompanying proxy statement on Form F-4 (the
"Registration Statement"). The Registration Statement will include a proxy
statement to be distributed to holders of MCAF's common stock in connection with
MCAF's solicitation of proxies for the vote by MCAF shareholders with respect to
the proposed transaction and other matters as described in the Registration
Statement, as well as the prospectus relating to the offer of securities to be
issued to the Company's stockholders in connection with the proposed business
combination. After the Registration Statement has been filed and declared
effective, MCAF will mail a definitive proxy statement, when available, to its
stockholders. Investors and security holders and other interested parties are
urged to read the Registration Statement, any amendments thereto and any other
documents filed with the SEC carefully and in their entirety when they become
available because they will contain important information about MCAF, the
Company and the proposed business combination. Additionally, MCAF will file
other relevant materials with the SEC in connection with the business
combination. Copies of these documents may be obtained free of charge at the
SEC's web site at www.sec.gov. Securityholders of MCAF are urged to read the
Registration Statement and the other relevant materials when they become
available before making any voting decision with respect to the proposed
business combination because they will contain important information. The
Registration Statement and proxy statement, once available, may also be obtained
without charge at the SEC's website at www.sec.gov or by writing to MCAF at 311
West 43rd Street, 12th Floor, New York, NY 10036. INVESTORS AND SECURITY HOLDERS
OF MCAF ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE
TRANSACTIONS THAT MCAF WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MCAF, THE COMPANY AND THE
TRANSACTIONS.
Important Notice Regarding Forward-Looking Statements
This Current Report on Form 8-K contains certain "forward-looking statements"
within the meaning of the Securities Act of 1933 and the Securities Exchange Act
of 1934, both as amended. Statements that are not historical facts, including
statements about the pending transactions described above, and the parties'
perspectives and expectations, are forward-looking statements. Such statements
include, but are not limited to, statements regarding the proposed transaction,
including the anticipated initial enterprise value and post-closing equity
value, the benefits of the proposed transaction, integration plans, expected
synergies and revenue opportunities, anticipated future financial and operating
performance and results, including estimates for growth, the expected management
and governance of the combined company, and the expected timing of the
transactions. The words "expect," "believe," "estimate," "intend," "plan" and
similar expressions indicate forward-looking statements. These forward-looking
statements are not guarantees of future performance and are subject to various
risks and uncertainties, assumptions (including assumptions about general
economic, market, industry and operational factors), known or unknown, which
could cause the actual results to vary materially from those indicated or
anticipated.
The forward-looking statements are based on the current expectations of the
management of MCAF and the Company, as applicable, and are inherently subject to
uncertainties and changes in circumstances and their potential effects and speak
only as of the date of such statement. There can be no assurance that future
developments will be those that have been anticipated. These forward-looking
statements involve a number of risks, uncertainties or other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements including: risks
related to the Company's businesses and strategies; the ability to complete the
proposed business combination due to the failure to obtain approval from MCAF's
stockholders or satisfy other closing conditions in the definitive merger
agreement; the amount of any redemptions by existing holders of MCAF's common
stock; the ability to recognize the anticipated benefits of the business
combination; in the final prospectus of Mountain Crest Acquisition Corp. IV for
its initial public offering dated June 29, 2021; and in Mountain Crest
Acquisition Corp. IV's other filings with the SEC. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated or
anticipated by such forward-looking statements. Accordingly, you are cautioned
not to place undue reliance on these forward-looking statements. Forward-looking
statements relate only to the date they were made, and MCAF, the Company and
their subsidiaries undertake no obligation to update forward-looking statements
to reflect events or circumstances after the date they were made except as
required by law or applicable regulation.
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Participants in Solicitation
MCAF the Company and their respective directors and executive officers may be
deemed participants in the solicitation of proxies with respect to the proposed
business combination under the rules of the SEC. Securityholders may obtain more
detailed information regarding the names, affiliations, and interests of certain
of MCAF's executive officers and directors in the solicitation by reading MCAF's
Registration Statement and other relevant materials filed with the SEC in
connection with the proposed business combination when they become available.
Information about MCAF's directors and executive officers and their ownership of
MCAF common stock is set forth in MCAF's prospectus related to its initial
public offering dated June 29, 2021, as modified or supplemented by any Form 3
or Form 4 filed with the SEC since the date of that filing. Other information
regarding the interests of MCAF's participants in the proxy solicitation, which
in some cases, may be different than those of their stockholders generally, will
be set forth in the Registration Statement relating to the proposed business
combination when it becomes available. These documents can be obtained free of
charge at the SEC's web site at www.sec.gov.
The Company and its directors and executive officers may also be deemed to be
participants in the solicitation of proxies from the stockholders of MCAF in
connection with the proposed business combination. A list of the names of such
directors and executive officers and information regarding their interests in
the proposed business combination will be included in the Registration Statement
for the proposed business combination.
No Offer or Solicitation
This Current Report on Form 8-K is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or in respect of
the transactions described above and shall not constitute an offer to sell or a
solicitation of an offer to buy the securities of MCAF or the Company, nor shall
there be any sale of any such securities in any state or jurisdiction in which
such offer, solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of such state or jurisdiction. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended, or an
exemption therefrom.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
2.1 Amendment to the Amended and Restated Agreement and Plan of Merger,
dated March 1, 2023 by and between Mountain Crest Acquisition Corp. IV,
CH Auto Technology Corporation Ltd., CH Auto, Inc. and CH Auto Merger
Sub, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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