Item
1.01 Entry into a Material Definitive Agreement
Merger
Agreement
On
September 9, 2022, Alset Capital Acquisition Corp., a Delaware corporation (“ACAX”), entered into an agreement and
plan of merger (the “Merger Agreement”) by and among ACAX, HWH International Inc., a Nevada corporation (“HWH”)
and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of ACAX (“Merger Sub”). ACAX and Merger
Sub are sometimes referred to collectively as the “ACAX Parties.” Pursuant to the Merger Agreement, a business combination
between ACAX and HWH will be effected through the merger of Merger Sub with and into HWH, with HWH surviving the merger as a wholly owned
subsidiary of ACAX (the “Merger”). Upon the closing of the Merger (the “Closing”), it is anticipated
that ACAX will change its name to “HWH International Inc.” The board of directors of ACAX has (i) approved and declared advisable
the Merger Agreement, the Ancillary Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby and (ii)
resolved to recommend approval of the Merger Agreement and related transactions by the stockholders of ACAX.
HWH
is owned and controlled by certain member officers and directors of ACAX and its sponsor. The Merger is expected to be consummated in
the fourth quarter of 2022, following the receipt of the required approval by the stockholders of ACAX and the shareholder of HWH and
the satisfaction of certain other customary closing conditions.
Merger
Consideration
The
total consideration to be paid at Closing (the “Merger Consideration”) by ACAX to the HWH shareholders will be $125,000,000,
and will be payable in shares of Class A common stock, par value $0.0001 per share, of ACAX (“ACAX Common Stock”).
The number of shares of ACAX Common Stock to be paid to the shareholders of HWH as Merger Consideration will be 12,500,000, with each
share being valued at $10.00. All cash proceeds remaining in the trust will be used to pay transaction costs and as growth capital for
HWH.
At
the signing of the Merger Agreement, the authorized capital stock of HWH consists of 500,000,000 shares of common stock, par value $0.001
per share (the “HWH Common Stock”), and 10,000,000 shares of preferred stock, par value $0.001 per share; 10,000
shares of HWH Company Common Stock and no shares of preferred stock are outstanding. Each share of HWH Common Stock issued and outstanding
immediately prior to the consummation of the Merger (other than any dissenting shares) shall be exchanged for and otherwise converted
into the right to receive the applicable Merger Consideration per share pursuant to the Merger Agreement. The effective date and time
of the Merger is referred to in the Merger Agreement as the effective time (the “Effective Time”).
Representations
and Warranties
The
Merger Agreement contains customary representations and warranties of HWH with respect to, among other things: (i) corporate existence
and power; (ii) organizational documents; (iii) capitalization; (iv) authorization to enter into the Merger Agreement and related transactions;
(v) no conflicts and non-contravention; (vi) permits and compliance; (vii) financial statements; (viii) no undisclosed liabilities; (ix)
absence of certain changes; (x) absence of litigation; (xi) employee benefit plans; (xii) labor matters; (xiii) real property and title
to assets; (xiv) intellectual property; (xv) taxes; (xvi) environmental matters; (xvii) material contracts; (xviii) customers and suppliers;
(xix) insurance; (xx) internal controls; (xxi) accuracy of statements; (xxii) COVID-19 matters; (xxiii) delivery of support agreement;
(xxiv) board approval; (xv) brokers and finders’ fees; (xvi) takeover laws; (xxvii) international trade matters and anti-bribery
compliance; (xxix) that HWH is not an investment company; (xxx) withholding; (xxxi) exclusivity of representations and warranties; and
(xxxii) full disclosure.
The
Merger Agreement contains customary representations and warranties of the ACAX Parties with respect to, among other things: (i) corporate
existence and power; (ii) organizational documents; (iii) capitalization; (iv) authorization to enter into the Merger Agreement and related
transactions; (v) no conflicts and non-contravention; (vi) compliance; (viii) ACAX publicly filed documents and financial statements;
(viii) absence of certain changes; (ix) absence of litigation; (x) board approval; (xi) no prior operations of Merger Sub; (xii) amount
in the trust account; (xii) employees; (xiv) taxes; (xv) listing of ACAX securities; (xvi) that ACAX is not an investment company; (xvii)
statements in public filings; (xviii) contracts; (xix) brokers and finders’ fees; (xx) delivery of support agreement; and (xxi)
investigation and reliance.
All
representations and warranties by all parties shall terminate upon the Effective Time, and no representations, warranties, covenants,
obligations or other agreements contained in the Merger Agreement shall survive the Effective Time.
Covenants
The
Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation
of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants
of the parties, including, among others, access to information, cooperation in the preparation of the Registration Statement on Form
S-4 (the “Registration Statement”) and Proxy Statement (as each such term is defined in the Merger Agreement) required
to be filed in connection with the Merger and to obtain all requisite approvals of ACAX’s stockholders. ACAX has also agreed to
include in the Proxy Statement the recommendation of its board that its stockholders approve all of the proposals to be presented at
the special meeting of ACAX’s stockholders that will be called in order to approve the Merger and related transactions (the “ACAX
Special Meeting”).
Conduct
between Signing and Closing
Each
of ACAX, Merger Sub and HWH has agreed that from the date of the Merger Agreement until the Closing Date or, if earlier, the valid termination
of the Merger Agreement in accordance with its terms, it will not initiate, encourage or engage in any negotiations with any party relating
to an Alternative Transaction (as defined in the Merger Agreement), take any action intended to facilitate an Alternative Transaction
or approve, recommend or enter into any agreement relating to an Alternative Transaction. ACAX and HWH also have agreed to operate their
respective companies in the ordinary course through the Closing Date.
Conditions
to Closing
The
consummation of the Merger is conditioned upon, among other things, (i) the absence of any applicable law or order that makes the transactions
contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions; (ii) the Registration Statement
shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”); (iii) approval by
ACAX’s stockholders of the Merger and related transactions; (iv) approval by HWH’s shareholders of the Merger and related
transactions; (v) the aggregate cash available to ACAX at the Closing (after giving effect to any redemptions by ACAX’s stockholders
and the payment of all authorized transaction expenses) being at least $30,000,000; (vi) all Ancillary Agreements shall have been executed
by all parties thereto; and (vii) all required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and with
any other governmental authority shall have been completed and cleared.
Solely
with respect to the ACAX Parties, the consummation of the Merger is conditioned upon, among other things: (i) HWH having duly performed
or complied with all of its obligations under the Merger Agreement in all material respects; (ii) the representations and warranties
of HWH being true and correct in all material respects; (iii) no event having occurred that would result in a Company Material Adverse
Effect (as defined in the Merger Agreement); (iv) HWH providing ACAX a certificate from an authorized officer of HWH as to the accuracy
of the foregoing conditions; (v) after giving effect to the Merger, ACAX shall have at least $5,000,001 in net tangible assets (as determined
in accordance with Rule 3a51-1(g)(1) of the Exchange Act); and (vi) ACAX shall have received executed employment agreements from certain
HWH executives, in a form reasonably acceptable to ACAX.
Solely
with respect to HWH, the consummation of the Merger is conditioned upon, among other things: (i) the ACAX Parties having duly performed
or complied with all of their obligations under the Merger Agreement in all material respects; (ii) the representations and warranties
of the ACAX Parties being true and correct in all material respects; (iii) no event having occurred that would result in an ACAX Material
Adverse Effect (as defined in the Merger Agreement; and (iv) each of the ACAX Parties providing HWH a certificate from an authorized
officer as to the accuracy of the foregoing conditions.
Termination
The
Merger Agreement may be terminated as follows:
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(i) |
By
the mutual consent of ACAX and HWH;
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(ii) |
by
ACAX, if any of the representations or warranties of HWH set forth in the Merger Agreement shall not be true and correct, or if HWH
has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation to consummate the Merger),
in each case such that the conditions to closing would not be satisfied and the breach or breaches causing such representations or
warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured (or waived
by ACAX) by the earlier of (i) the Outside Date (as defined below) or (ii) 10 days after written notice thereof is delivered to HWH;
provided, however that ACAX is not then in material breach of any representation, warranty, covenant, or obligation in the Merger
Agreement, which breach has not been cured; |
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(iii) |
by
HWH, if any of the representations or warranties of ACAX or Merger Sub set forth in the Merger Agreement shall not be true and correct,
or if ACAX or Merger Sub has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation
to consummate the Merger), in each case such that the conditions to closing would not be satisfied and the breach or breaches causing
such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable,
are not cured (or waived by HWH) by the earlier of (i) the Outside Date or (ii) 10 days after written notice thereof is delivered
to ACAX; provided, however that HWH is not then in material breach of any representation, warranty, covenant, or obligation in the
Merger Agreement, which breach has not been cured; |
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(iv) |
by
either ACAX or HWH: |
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(A)
on or after May 1, 2023 (the “Outside Date”), if the Merger shall not have been consummated prior to the Outside
Date; provided, however, that this right to terminate the Merger Agreement shall not be available to a party if the failure of the
Merger to have been consummated before the Outside Date was due to such party’s breach of or failure to perform any of its
covenants or agreements set forth in the Merger Agreement; or; |
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(B)
if any applicable law or order that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation
of such transactions shall have become final and non-appealable; |
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(C)
if ACAX has not received approval from its stockholders of the Merger and related transactions at the ACAX Special Meeting; |
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(vi) |
by
ACAX if the HWH shareholder’s written consent approving the Merger and related transactions shall not have been obtained within
three business days following the Registration Statement being declared effective by the Securities and Exchange Commission (the
“SEC”); |
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(vii) |
by
ACAX within five business days after receiving notice that the fairness opinion described in the Prospectus and delivered to ACAX
does not meet the terms of the Prospectus; |
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(viii) |
by
ACAX, in the event that HWH’s audited financial statements for 2019, 2020 and 2021 have not been delivered to the Parent Parties
on or before September 30, 2022, and remain undelivered prior to the termination of the Merger Agreement. |
Certain
Related Agreements
Sponsor
Support Agreement
Concurrently
with the execution of the Merger Agreement, ACAX, HWH and a shareholder of ACAX (the “ACAX Shareholder”) entered into
a certain Sponsor Support Agreement dated September 9, 2022 (the “Sponsor Support Agreement”) pursuant to which
the ACAX Shareholder agreed to vote all shares of ACAX Common Stock beneficially owned by them, including any additional shares of
ACAX they acquire ownership of or the power to vote, in favor of the Merger and related transactions.
The
foregoing description of the Sponsor Support Agreement is qualified in its entirety by reference to the full text of the Sponsor Support
Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the terms of which are incorporated herein
by reference.
Shareholder
Support Agreement
Concurrently
with the execution of the Merger Agreement, ACAX, HWH, and a shareholder of HWH (the “HWH Shareholder”) entered into
a certain Shareholder Support Agreement dated September 9, 2022 (the “Shareholder Support Agreement”), pursuant to
which the HWH Shareholder agreed to vote all HWH Common Stock beneficially owned by them, including any additional shares of HWH they
acquire ownership of or the power to vote, in favor of the Merger and related transactions.
The
foregoing description of the Shareholder Support Agreement is qualified in its entirety by reference to the full text of the Shareholder
Support Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K, and the terms of which are incorporated
herein by reference.
Agreement
to be Executed at Closing
Amended
and Restated Registration Rights Agreement
The
Merger Agreement contemplates that, at or prior to the Closing, ACAX, certain stockholders of ACAX and HWH’s shareholder will enter
into an Amended and Restated Registration Rights Agreement which will, among other things, govern the registration and lock-up of certain
shares of HWH’s common stock for resale.