Item 1.01 Entry into a Material definitive Agreement.
The Merger Agreement
On April 30, 2022, Mountain Crest Acquisition Corp. IV, a Delaware corporation
("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
(Pubco"), CH-AUTO Company Merger Sub Corp., a Delware corporation and wholly
owned subsidiary of Pubco ("Company Merger Sub") and CH-AUTO TECHNOLOGY
CORPORATION LTD., a company orgianized under the law of the People's Republic of
China (the "Company"), pursuant to which, among other things, MCAF, Pubco,
Company Merger Sub and the Company intend to effect a merger of Company Merger
Sub with and into MCAF whereby MCAF will be the surviving corporation (the
"Sutviving 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. All capitalized terms used herein and not defined shall have the
meanings ascribed to them in the Merger Agreement.
Based upon the execution of the Merger Agreement, the period of time for MCAF to
complete a business combination under its certificate of incorporation is
extended for a period of 6 months from July 2, 2022 to January 2, 2023.
Consideration
At the Effective Time, by virtue of the Merger and conditioned on the
consummation of the Merger, each share of MCAF Common Stock that is issued and
outstanding immediately prior to the Effective Time shall automatically be
cancelled and cease to exist in exchange for the right to receive one newly
issued Pubco Class A Ordinary Share without interest. As of the Effective Time,
each MCAF Stockholder shall cease to have any other rights in and to MCAF.
Immediately after the Registration Statement on Form F-4 Effective Date (as
defined in Merger Agreement) but no later than five (5) Business Days prior to
the Closing, the Company shall deliver to Pubco and MCAF a schedule setting
forth the names of each stockholder and such stockholder's respective percentage
of the Company Merger Consideration (the "Equityholder Allocation Schedule").
Immediately after the delivery of the Equityholder Allocation Schedule, Pubco
shall conduct a reverse stock split (the "Pubco Reverse Stock Split") of its
then issued and outstanding Pubco Class A Ordinary Shares. At the effective time
of the Pubco Reverse Stock Split, each Pubco Shareholder who holds Pubco
Ordinary Shares immediately before the Pubco Reverse Stock Split (the "Pubco
Reorganization Shareholder") shall automatically receive the corresponding
Company Merger Consideration as set forth in the Equityholder Allocation
Schedule, without any change in the par value of $0.00001 per share, in exchange
for all the Pubco Class A Ordinary Shares held by such Pubco Reorganization
Shareholder immediately prior to the Pubco Reverse Stock Split. The
corresponding Company Merger Consideration issued to each Pubco Reorganization
Shareholder shall be equal to the product of (i) the number of Pubco Class A
Ordinary Shares held by such Pubco Reorganization Shareholder immediately prior
to the delivery of the applicable Equityholder Allocation Schedule multiplied by
(ii) the Conversion Ratio.
Concurrently with the Pubco Reverse Stock Split, by virtue of the Reorganization
and without any action on the part of MCAF, Company Merger Sub, the Company, or
their respective stockholders, Pubco shall issue to each Company stockholder
that participates in the Reorganization or each's designee(s) (the "Company
Reorganization Stockholders") the corresponding Company Merger Consideration as
set forth in the Equityholder Allocation Schedule at par value per share or
other value as determined as part of the Reorganization by the board of
directors of Pubco. The corresponding Company Merger Consideration issued to
each Company Reorganization Stockholder shall be equal to the product of (i) the
number of shares of Company Common Stock held by such Company Reorganization
Stockholder on an as-converted and fully-diluted basis immediately prior to the
delivery of the applicable Equityholder Allocation Schedule multiplied by (ii)
the Conversion Ratio. The Company Reorganization Stockholders, other than the
founders of the Company who shall receive Pubco Class B Ordinary Shares, shall
receive Pubco Class A Ordinary Shares.
Immediately after the issuance of the Company Merger Consideration but before
the Closing, Pubco's subisidary, CH-Auto (Hong Kong) Limited ("Ch-Auto HK"),
shall acquire all the shares of Company Common Stock held by each Company
Reorganization Stockholder at par value or other value as agreed between Ch-Auto
HK and the Company Reorganization Stockholders. Upon the completion of the
acquisition in the preceding sentence, Ch-Auto HK shall directly own no less
than ninety percent (90%) of the then-issued and outstanding equity interests in
the Company representing no less than ninety percent (90%) of the voting rights
of all the outstanding shares of Company Common Stock entitled to vote in the
Company.
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The Closing
MCAF and the Company have agreed that the closing of the Merger (the "Closing")
shall occur no later than November 15, 2022 (the "Outside Date"), provided that
the Outside Date shall be extended to May 15, 2023, subject to approval of an
amendment to the Organizational Documents of MCAF to extend the date by which
the MCAF may complete a business combination, (x) if on five (5) Business Days
prior to January 2, 2023, the Merger is not reasonably expected to be
consummated on January 2, 2023, the Company shall deposit to a bank account
designated by MCAF by wire transfer of immediately available funds an amount
that equals to one percent (1%) multiplied by the amount of cash then available
in the Trust Account, and (y) if on five (5) Business Days prior to April 2,
2023, the Merger is not reasonably expected to be consummated on April 2, 2023,
the Company shall deposit to a bank account designated by MCAF by wire transfer
of immediately available funds an amount that equals to one percent (1%)
multiplied by the amount of cash then available in the Trust Account.
Representations and Warranties
In the Merger Agreement, the Company makes certain representations and
warranties (with certain exceptions set forth in the disclosure schedule to the
Merger Agreement) relating to, among other things: (a) proper corporate
existence and power of the Company and its subsidiaries (together, the "Company
Parties") and similar corporate matters; (b) authorization, execution, delivery
and enforceability of the Merger Agreement and other Transaction Documents; (c)
consents and required approvals, (d) non-contravention, (e) capitalization; (f)
financial statements, (g) liabilities, (h) internal accounting controls, (i)
absence of certain developments, (j) accounts receivable, (k) compliance with
law, (l) title to properties, (m) international trade matters and anti-briberty
. . .
Item 7.01 Regulation FD Disclosure
On May 2, 2022 MCAF and the Company issued a press release announcing the
execution of the Merger Agreement. Attached hereto as Exhibit 99.1 and
incorporated into this Item 7.01 by reference is the copy of the press release.
The information in this Item 7.01 (including Exhibit 99.1) is being furnished
and shall not be deemed to be filed for purposes of Section 18 of the Exchange
Act , or otherwise be subject to the liabilities of that section, nor shall it
be deemed to be incorporated by reference in any filing under the Securities Act
of 1933, as amended, or the Exchange Act, regardless of any general
incorporation language in such filings. This Current Report on Form 8-K will not
be deemed an admission as to the materiality of any information of the
information in this Item 7.01.
IMPORTANT NOTICES
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; other risks and uncertainties included under the header "Risk
Factors" in the Registration Statement to be filed by Pubco, in the final
prospectus of Mountain Crest Acquistion Corp. IV for its initial public offering
dated June 29, 2021; and in Mountain Crest Acquistion 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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Additional Information and Where to Find It
In connection with the transaction described herein, Pubco and MCAF will file
relevant materials with the Securities and Exchange Commission (the "SEC"),
including the Registration Statement on Form F-4 and a proxy statement (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.
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.
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Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
2.1* Merger Agreement dated April 30, 2022 by and between Mountain Crest
Acquisition Corp. IV, CH-Auto Technology Corporation, Ltd. CH-Auto
Technology Corporation, Ltd., and Wensheng Liu, in his capacity as the
Company Shareholders' Representative
10.1 SPAC Stockholder Support Agreement dated as of April 30, 2022, by and
among Mountain Crest Acquisition Corp. IV, CH-AUTO INC., CH-AUTO
TECHNOLOGY CORPORATION, LTD., and certain holders of Mountain Crest
Acquisition Corp. IV's common stock
10.2 Company Support Agreement dated as of April 30, 2022, by and among
CH-AUTO INC., CH-AUTO TECHNOLOGY CORPORATION, LTD. and Mountain Crest
Acquisition Corp. IV, and certain holders of the equity intersts of
CH-AUTO TECHNOLOGY CORPORATION, LTD.
10.3 Form of Company Lock-Up Agreement
10.4 Form of Amended and Restated Registration Rights Agreement
99.1 Press Release dated May 2, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The registrant hereby undertakes to furnish copies of any of
the omitted schedules and exhibits upon request by the SEC.
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